Exhibit  10.21  FTL Stock Purchase Agreement

                            STOCK PURCHASE AGREEMENT


THIS  AGREEMENT is entered into on the 17th day of August,  1999, by and between
The Hartcourt  Companies,  Inc., a Utah corporation,  or its assignee  ("BUYER")
with principal offices located at 1198 E. Willow St., Long Beach, CA 90806, USA;
and Financial Telecom Limited, ("SELLER") a Hong Kong corporation with principal
office at 308 Hang Bong Commercial  Centre,  28 Shanghai Street,  Kowloon,  Hong
Kong. BUYER and SELLER are referred to collectively herein as the "Parties"

                             PRELIMINARY STATEMENTS

SELLER desires to sell and BUYER desires to purchase  4,964,990 shares of common
capital  stock to be issued by SELLER  and any and all  options,  warrants,  and
other rights that such stock shall carry with it.

                                    AGREEMENT

NOW, THEREFORE,  in consideration of the premises and the mutual promises herein
made, and in consideration  of the  representations,  warranties,  and covenants
herein contained, Parties agree as follows:

SECTION 1.  PURCHASE AND SALE OF SELLERS STOCK.

Basic  Transaction.  Subject  to  and  in  reliance  upon  the  representations,
warranties and agreements  hereinafter  set forth,  and subject to the terms and
conditions  hereinafter set forth, BUYER agrees to purchase from the SELLER, all
of the SELLER'S  Common  Capital Stock above  referred to  hereinabove,  to wit,
4,964,990 shares of capital stock, which in the aggregate will constitute 58.53%
of the expanded  capital of SELLER.  These shares shall be free and clear of all
liens and encumbrances, for the consideration specified below in this Section 1.

A.  Purchase  Price.  BUYER  agrees to pay to the SELLER at Closing  (defined in
Section 1.B.  below) a purchase  price as determined  pursuant to Section 1.A.i.
below (the "Purchase  Price") and which Purchase Price shall be paid as provided
in Section 1.A.ii. below.

i. The Purchase Price shall be 4.713 Hong Kong Dollars  (HK$4.713) per share for
a total of HK$23.4 Million.

<PAGE>

ii. Fifty (50%) percent of said purchase price  (HK$11.7  Million) shall be paid
in cash and the  remaining  fifty(50%)  percent paid in  free-trading  shares of
BUYER or any NASDAQ listed  company  acceptable to the present  shareholders  of
SELLER.

iii.  The  Purchase  Price  shall be paid by BUYER  on the  Closing  Date in the
following manner:

a. Two-third (2/3) of the cash portion, being HK$7,800,000, shall be remitted by
BUYER by telegraphic  transfer to SELLER's bank account (with Wing Lung Bank Ltd
of Account No.  06-000-4115-6  at Ground Floor,  112 Queen's Road Central,  Hong
Kong) two (2) days before  Closing and the  remaining  HK$3,800,000,  sixty (60)
days after Closing.

b. The  free-trading  shares portion shall be delivered and deposited on Closing
to SELLER's account opened with a stock broker in the United States.

iv. The stamp duty to be paid to the Hong Kong  Government  in connection to the
transactions  contemplated  by this  Agreement  shall be for the  account of the
BUYER.  The stamp duty shall be paid by SELLER on behalf of BUYER.  BUYER  shall
reimburse  SELLER for the full amount paid by SELLER within seven (7) days after
receiving the invoice for this purpose from SELLER.

B. Post-Closing Adjustment. In the event the final closing Net Worth (as defined
below) as of the Closing  Date shall be more than $5,000 less than the Net Worth
reported in the balance  sheet dated as of  February  28,  1999,  which shall be
delivered to BUYER simultaneously with execution of this Agreement,  then SELLER
shall pay to BUYER, within ten (10) days following notice of such deficiency, an
amount calculated as follows:

     HK$23,400,000 x [1 - (Closing Net Worth / February 28, 1999 Net Worth)]

In the event the final  closing Net Worth (as  defined  below) as of the Closing
Date  shall be more than  $5,000  over and above the Net Worth  reported  in the
balance  sheet dated as of February 28, 1999,  which shall be delivered to BUYER
simultaneously  with the  execution of this  Agreement,  then BUYER shall pay to
SELLER  within  ten (10)  days  following  notice of such  increment,  an amount
calculated as follows:

     HK$23,400,000 x [(Closing Net Worth / February 28, 1999 Net Worth) - 1]

For purposes hereof,  the Net Worth of SELLER shall be equal to the sum of total
assets less total liabilities.

<PAGE>

For the  avoidance  of  doubt,  Parties  agree  that  the  adjustment  described
hereinabove  shall not in any manner  affect or change  the  holding of BUYER of
58.53% in SELLER's  expanded  capital  immediately  after the  completion of the
transaction anticipated in the Agreement.

C.  The  Closing  and  the  Closing  Date.  The  closing  of  the   transactions
contemplated by this Agreement (the  "Closing")  shall take place at the offices
of SELLER in Hong Kong,  commencing at 10:00 a.m.  local time on the third (3rd)
business day following the  satisfaction or waiver of all conditions  (including
all conditions set forth in Section 6 hereto) to the  obligations of the Parties
to consummate  the  transactions  contemplated  hereby,  including all necessary
regulatory  approvals,  other  than  conditions  with  respect  to  actions  the
respective  Parties will take at the Closing itself or thereafter) or such other
date as BUYER and the SELLER may mutually  agree but not later than 45 days from
the execution of this Agreement (the "Closing Date").

D. Deliveries at Closing.  At the Closing,  (i) the SELLER will deliver to BUYER
the various  certificates,  instruments,  and  documents  referred to in Section
6.A.i.  and  6.A.iii.  below,  (ii) BUYER will deliver to the SELLER the various
certificates,  instruments,  and documents referred to in Section 6.B.ii. below,
(iii) SELLER will deliver to BUYER stock  certificates  representing  all of the
4,964,990  shares  SELLER Stock  original  certificates  or endorsed in blank or
accompanied by duly executed assignment  documents,  and (iv) BUYER will deliver
to SELLER the consideration in the manner specified in Section 1.A. above.

E. As used herein,  the term shares of The Hartcourt  Companies,  Inc. refers to
free trading common stock,  the certificates for which shall not bear any legend
restricting  transfer of the shares.  All payments  referred to herein which are
payable in Common Stock shall be based on the average closing price per share of
such  Common  Stock  quoted  on the  NASDAQ  bulletin  board , or on such  other
securities  exchange  as the  Common  Stock is then  trading,  for the seven (7)
trading days prior to the Closing Date.

SECTION 2.  REPRESENTATION AND WARRANTIES RELATING TO SELLERS .

The SELLER,  represents and warrants to BUYER that the  statements  contained in
this  Section 2 are current and  complete as of the date of this  Agreement  and
will be correct and  complete as of the Closing Date (as though made then and as
though  the  Closing  Date  were  substituted  for the  date  of this  Agreement
throughout  this  Section 2).  Nothing in the  Schedules  hereto shall be deemed
adequate to disclose an exception to a  representation  or warranty made herein,
unless the disclosure  identifies the exception with particularity and describes
the relevant facts in detail. In addition,  for purposes of this Agreement,  the
terms "reserved" or "reflected" when used with reference to financial statements
shall  mean an item  accounted  for  either:  (a) as an  expense  on the  income
statements  included  in such  financial  statements;  or (b) as an  offset to a
particular asset account or as a liability on the balance sheet included in such
financial statements. The terms "reserved" or "reflected" shall not mean an item
which is disclosed in the notes to a financial  statement  and which is not also
accounted  for in the  financial  statements  as  contemplated  in the preceding
sentence.

<PAGE>

For purposes of this Agreement,  an inaccuracy,  breach or  non-fulfillment of a
warranty, representation or covenant shall not constitute any inaccuracy, breach
or  non-fulfillment  hereunder  unless  and  until  the  aggregate  of all  such
inaccuracies,  breaches, and non-fulfilled  representations or covenants exceeds
the sum of Twenty thousand  ($20,000) dollars.  All such inaccuracies,  breaches
and  non-fulfilled   warranties,   representations   and  covenants  that  would
constitute  an  inaccuracy,  breach or  non-fulfillment  of any  representation,
warranty or covenant but for the fact that,  individually  or in the  aggregate,
they  do  not  satisfy  such  $20,000  threshold  are  hereinafter  collectively
described  a  "Nonmaterial  Breaches".  Once the  aggregate  of all  Nonmaterial
Breaches  exceeds  $20,000,  then the aggregate  amount of all such  Nonmaterial
Breaches (from the first dollar of such Nonmaterial Breaches) shall nevertheless
be deemed  breaches  in respect of which  BUYER may assert a claim  pursuant  to
Section 8 hereof.

A.  Organization and Standing.  SELLER is a corporation duly organized,  validly
existing and in good  standing  under the laws of Hong Kong,  has all  requisite
corporate  power to own and operate its properties  and assets,  and to carry on
its business as presently conducted and as presently proposed to be conducted in
the future and SELLER is qualified by virtue of existing licenses to do business
in any jurisdiction  permitted under the laws of Hong Kong. SELLER has delivered
to  BUYER  complete  and  correct  copies  of its  Memorandum  and  Articles  of
Association,   licenses,   Board  of  Director   Resolutions  and  if  required,
shareholder  approval.  Such copies are true,  correct,  complete  and  properly
executed (if  applicable)  and contain all  amendments  through the date of this
Agreement, and will be true, correct and complete as of the Closing Date.

B. Capitalization and Ownership.

i. The authorized capital stock of SELLER consists of 3,800,000 shares of common
stock,  par value HK$1.0,  of which 3,519,349 shares are issued and outstanding.
There is no other class of capital stock  authorized or outstanding.  The issued
and outstanding  shares of SELLER Stock are duly  authorized,  validly issued in
compliance  with  applicable  law,  are fully  paid and  non-assessable  and are
registered in the names of the  shareholders in such amounts as appearing on the
stock transfer books of SELLER. The outstanding SELLER Stock,  together with any
stock options  granted by SELLER and any shares of capital stock issued pursuant
to the  exercise  of any stock  options,  have not been issued in  violation  of
securities  laws, rules and  regulations.  The number of authorized,  issued and
outstanding  shares of each class of capital  stock of SELLER as of the  Closing
Date is set forth on Schedule 2(b)(i)  attached  hereto.  Upon completion of the
transaction  contemplated  hereby,  fifty-eight & fifty-three  hundredth percent
(58.53%) of the outstanding  capital stock of SELLER will have been transferred,
sold and delivered to BUYER and all rights of any nature  whatsoever to purchase
or  otherwise  acquire  any of the  capital  stock of  SELLER  shall  have  been
terminated.

<PAGE>

ii. There are (a) no dividends  or other  distributions  accrued or declared but
unpaid in respect of the shares of capital stock of SELLER;  (b) no  outstanding
contracts,  subscriptions,  warrants,  options  or  other  rights  of  any  kind
(including  conversion,  exchange  or  preemptive  rights) to  subscribe  for or
purchase any capital stock or other securities of SELLER;  (c) no voting trusts,
voting  agreements or irrevocable  proxies  executed by SELLER;  (d) no existing
rights of SELLER or any other party to require SELLER to register any securities
of SELLER or to  participate  with SELLER in any  registration  by SELLER of its
securities;  (e) no other  agreements  by SELLER which provide for the purchase,
sale, pledge, lien,  encumbrance or other transfer of the shares of common stock
of SELLER or any other capital stock or securities of SELLER, authorized or not,
or any  restrictions  thereon;  and (f) no agreements,  commitments or rights of
SELLER or any other party to purchase, redeem or otherwise acquire any shares of
SELLER.

C. Subsidiaries.  SELLER does not own, directly or indirectly, any capital stock
or other equity or ownership or voting interest (whether  controlling or not) in
any  corporation,  trust,  partnership,  association  or business  entity of any
nature whatsoever save and except those already disclosed to BUYER.

D. Corporate and Individual Power; Validity of Agreements; Consents. SELLER have
all requisite  power and authority  (including all corporate power and authority
with respect to SELLER under its Memorandum and Articles of Association,  Bylaws
and the rules,  regulations  and laws of Hong Kong) to execute and deliver  this
Agreement  and all of the  agreements,  instruments  and other  documents  to be
executed  and  delivered  by  SELLER  incidental  to  the  consummation  of  the
transactions  contemplated  hereby ("Ancillary  Documents") and to carry out and
perform its obligations  hereunder and thereunder.  The execution,  delivery and
performance  of this  Agreement  and all  Ancillary  Documents  have  been  duly
authorized  by the Board of Directors  of SELLER.  No other  approval,  consent,
waiver or  authorization  of, or filing or registration  with, any  governmental
authority  or third party is  required on the part of SELLER for the  execution,
delivery or performance  of this  Agreement and the Ancillary  Documents and the
transactions  contemplated  hereby  and  thereby.  This  Agreement  is,  and the
Ancillary  Documents  are, duly executed and delivered by SELLER and  constitute
valid and binding obligations of the SELLER,  legally enforceable against SELLER
in accordance with their terms,  except that such  enforcement may be subject to
bankruptcy, insolvency,  reorganization or other laws now or hereafter in effect
affecting the enforcement of creditors'  rights generally and general  principle
of equity.

<PAGE>

E. No Violation. Subject to the fulfillment of the requirements of Sections 6.A.
hereof as applicable to SELLER, the execution,  delivery and performance of this
Agreement  and  the  Ancillary  Documents  will  not  and do not  result  in any
violation or breach of, be in conflict with, or constitute a default or event of
default  (whether by notice of lapse of time or both) or give rise to a right of
termination,  cancellation  or  acceleration  under  any  provision  of (i)  the
Memorandum and Articles of  Association or Bylaws of SELLER,  (ii) any law, rule
or regulation, or any judgment,  decree, order, ruling, or award of any court or
governmental  authority,  domestic  or  foreign,  applicable  to  SELLER  or its
business as conducted on the date of this  Agreement and as expected to continue
thereafter based on applicable law and regulations  currently in existence,  the
violation  of which  would have a material  adverse  effect on the  business  of
SELLER,  taken as a whole;  (iii) any license,  certificate  or permit (all such
licenses,  certificates  or  permits  are set forth in  Schedule  2(l)  attached
hereto) of SELLER; or (iv) any agreement, contract, understanding,  indenture or
other  instrument to which SELLER is a party or by which its assets or business,
or the  shares  of  SELLER  are  bound;  nor will such  execution,  delivery  or
consummation  give to others  any  rights in or with  respect  to the  shares of
SELLER of any of the assets or businesses of SELLER or result in the creation of
any lien,  charge or encumbrance upon the shares of SELLER or any such assets or
businesses.

F. Minute Books. The minute books and the corporate secretaries' files of SELLER
have been made available to BUYER and shall be available until the Closing Date.
SELLER agrees to provide a copy of its minutes books to BUYER before Closing and
further  agrees to provide  BUYER copy of minute to be recorded in or filed into
the  minutes  books  after  Closing.  The minute  books  contain a complete  and
accurate  summary of all  meetings of or actions by directors  and  shareholders
which were required for compliance  with all material  statutes and  regulations
and are in compliance  with SELLER's  Memorandum and Articles of Association and
Bylaws.

G. Financial Statements.  SELLER, prior to the Closing Date, will have delivered
to BUYER true and correct copies of the following which shall be attached hereto
as Schedule 2(g): the reviewed balance sheet, statement of income,  statement of
changes in shareholders'  equity and statement of cash flows for the last fiscal
year prior to June 30, 1999, which have been prepared and reviewed,  at SELLER's
expense, by Certified Public  Accountants,  including any and all related notes,
supplementary   information  and  exhibits  thereto  (the  "Reviewed   Financial
Statements") and any monthly  financial  statement ended prior to 120 days prior
to the Closing  Date.  SELLER has  previously  delivered to BUYER the  unaudited
balance  sheet and  statement  of income of SELLER  for the eight  months  ended
February 28, 1999, any Corporate  Income Tax Returns dated 1996 and 1997,  1998,
and a complete  schedule of all of the equipment  owned by SELLER (the "Previous
Financial  Statements").  Such Previous Financial Statements are attached hereto
as a part of Schedule  2(g).  SELLER  shall  provide  prior to the Closing  Date
either  (i)  copies of any  management  letter  comments  prepared  by a firm of
independent  certified public  accountants for SELLER in the previous five years
and SELLER's responses thereto,  or (ii) a certification by a director of SELLER
that no such  comments  have been  received  with respect to such  periods.  The
Reviewed Financial Statements and the Previous Financial Statements are sometime
referred to herein as the "Financial Statements".

<PAGE>

SELLER represents and warrants that the Financial  Statements as of, and for the
periods  ending on, the  respective  dates  thereof are and will be complete and
correct in all respects and fairly present the information purported to be shown
therein and (a) are and will be in accordance  with, and have been derived from,
the books and  records of SELLER,  (b) have been  prepared  in  conformity  with
generally  accepted   accounting   principles  ("GAAP")   consistently   applied
throughout the periods  indicated  except as stated therein,  (c) fairly present
the results of operations of SELLER as well as changes in  shareholders'  equity
for the periods indicated,  (d) fairly present the combined financial condition,
assets and liabilities (fixed and contingent) of SELLER as of the dates thereof,
(e) make full and adequate  provision for all fixed or  contingent  obligations,
liabilities, or commitments of SELLER as of the dates thereof in accordance with
GAAP,  (f)  reflect  all  accrued  and unpaid  benefits  of  SELLER's  employees
including, without limitation,  vacation and holiday pay, sick leave and pension
liability, and (g) do not contain any statement that is false or misleading with
respect to any material  fact or omit to state any material  fact required to be
stated  therein  or  necessary  in  order  to make the  statements  therein  not
misleading.

H. Absence of Undisclosed Liabilities.  SELLER does not have any debt, liability
or obligation of any nature, whether accrued, absolute,  contingent or otherwise
(including,  without  limitation,  amounts owed to any  Government  Department),
except as reserved or reflected in the  Financial  Statements or incurred in the
ordinary  course of business  after the date  hereof,  which debt,  liability or
obligation  would have,  or could  reasonably  be  expected to have,  a material
adverse  effect on the business of SELLER,  taken as a whole.  There is no basis
for the  assertion  against  SELLER  of any  liabilities  not  reflected  in the
Financial Statements,  except for liabilities incurred in the ordinary course of
business after the date hereof.

I. Absence of Changes.

i. Since June 30, 1999,  SELLER has  conducted  its business in the ordinary and
usual course consistent with past practice so as to maintain and preserve intact
its properties,  businesses,  and other assets  including but not limited to the
goodwill of customers and others having relations with SELLER.

ii.  Since  June 30,  1999,  there  has not been any  change in or effect on the
business  of  SELLER  that  has had an  adverse  effect  on  SELLER's  business,
operations, properties, assets, working capital, liabilities,  relationship with
marketing agents and brokers,  prospects or condition  (financial or otherwise),
and no fact or condition exists or, to the knowledge of SELLER,  is contemplated
or threatened that has a reasonable probability of resulting in any change in or
effect on the  business of SELLER or that would  result in an adverse  effect on
SELLER's business, operations,  relationships with marketing agents and brokers,
properties,  assets,  working  capital,  liabilities,   prospects  or  condition
(financial  or  otherwise).  No  representation  or  warranty  is made by SELLER
regarding the possible impact of future changes in the law of Hong Kong.

<PAGE>

J. Insurance.

i.  Schedule 2(j) sets forth a list of all SELLER  policies of property,  theft,
fire, liability,  workers' compensation,  title,  professional  liability,  life
insurance,  reinsurance,  fidelity or any other insurance owned or maintained by
SELLER or in which  SELLER is a named  insured or on which  SELLER is paying any
premiums.  SELLER has  provided  BUYER  with  access to and copies of all SELLER
policies  listed  on  Schedule  2(j).  All such  SELLER  policies  are of a type
customary  in  businesses  such as those  engaged in by SELLER and are and shall
remain in full force and effect at all times through and as of the Closing Date,
and none of the insured  parties  thereunder  is in default  with respect to any
provision  contained  in any  such  insurance  policies,  or in the  payment  of
premiums,  nor has any party  failed to give any  notice  or  present  any claim
thereunder  when due, to the extent such  default,  nonpayment  or failure would
have an adverse  effect on SELLER.  Except as set forth in Schedule 2(j) hereto,
no claims have been  settled  during the  preceding  two (2) year period nor are
there any claims  outstanding with respect to any such policies which would have
an adverse effect on SELLER.

K. Title to Properties and Assets; Liens, etc.

i. Save and except those  already  disclosed  to BUYER,  SELLER does not own any
real property.  Schedule 2(k) hereto is a true, complete and correct list of all
personal  property  owned  by  SELLER  including  all  patents,   trademarks  or
copyrights and operating  licenses which are material to the businesses  thereof
including all personal property reflected in the Financial  Statement.  All such
personal  property  is under  physical  custody  of SELLER,  including  personal
property under capital leases.

ii. Except as otherwise set forth in the Financial  Statements,  SELLER has good
and  marketable  title  to all of  its  properties  and  assets,  whether  real,
personal,  mixed,  tangible  or  intangible,  in each case free and clear of all
mortgages,  liens, charges,  encumbrances,  security interests,  adverse claims,
contracts of sale, covenants,  conditions or restrictions on use or transfer, or
other defects of title of any kind or nature which would have an adverse  effect
on  SELLER.  None of the  encumbrances  set  forth in the  Financial  Statements
impairs  or  interferes  with  the  present  or  contemplated  use of any of the
properties subject thereto or affected thereby or otherwise impairs the business
operations  conducted  by SELLER in a manner  which will have an adverse  effect
thereon.

iii. Schedule 2(k)(iii) also lists all leases and other agreement or instruments
under  which  SELLER  holds,  leases  or is  entitled  to the use of any real or
personal property. All such leases and agreements are in full force and effect

<PAGE>

and all rentals, royalties or other payments due and payable thereunder prior to
the date hereof have been duly paid.  SELLER has made  available to BUYER a true
and correct copy of each lease and agreement for real property and for equipment
utilized in the business of SELLER.  Any property (real or personal)  covered by
the terms of such leases is presently occupied or used by SELLER as lessee under
the terms of such leases for its business,  and SELLER is entitled,  by the term
of such leases and under  applicable  laws,  rules and  regulations,  to use any
leased  premises and/or property for the purposes for which and in the manner in
which they are  currently  being used by SELLER.  SELLER is not in default or in
breach of any material  provision of any of its leases or licenses,  nor has any
event  occurred  which,  with the  passage  of time or giving of notice or both,
would constitute a default or breach of material provision by SELLER thereunder.
To  SELLER's  knowledge,  none of the  other  parties  to any of such  leases or
licenses  is in default or in breach of any  material  provision  of any of such
leases or licenses.  SELLER holds a valid leasehold or licensed  interest in the
property which it leases or which is licensed to it.

iv. The property, machinery and equipment listed on Schedule 2(k)(iv) are all of
the  property,  machinery  and  equipment  material to and used by SELLER in the
ordinary course of its operations,  are in good repair, well maintained,  and in
good and satisfactory  operating condition,  except for normal wear and tear and
such minor  defects as do not  substantially  interfere  with the  continued use
thereof in the conduct of normal  operations.  To the best  knowledge of SELLER,
all property,  machinery and equipment used by SELLER in their operations are in
conformity with all applicable laws, ordinances,  regulations,  orders and other
requirements  currently in effect or  scheduled to come into effect  relating to
their ownership, use and operation, the violation of which would have an adverse
effect on the business,  operations,  properties,  prospects,  working  capital,
condition (financial or otherwise), liabilities or assets of SELLER.

L.  Compliance  with Law and Other  Instruments.  Attached as Schedule 2(l) is a
list of all licenses, certificates and permits of SELLER, together with true and
correct copies of each such license,  certificate  and permit,  which  licenses,
certificates  and  permits  are in full  force  and  effect,  and  SELLER  is in
compliance  with the terms,  undertakings,  conditions  and  provisions  of such
licenses,   certificates   and   permits.   Except  where  a  violation  or  the
non-compliance  would have a material  adverse  effect on  SELLER's  business or
financial condition,  SELLER is in compliance with all laws, ordinances,  rules,
regulations  and orders of all  governmental  or  regulatory  entities,  bodies,
agencies  and  commissions   ("Regulatory  Entities")  which  are  material  and
applicable  to the  operation  of its  business  as  currently  operated  and as
anticipated to be operated.  No notice has been issued and no  investigation  or
review is pending or, to the knowledge of SELLER,  threatened by any  Regulatory
Entities  (i) with  respect  to any  alleged  violation  by  SELLER  of any law,
ordinance,  rule,  regulation,  order  or  guideline  of any  of the  Regulatory
Entities,  or (ii) with  respect to any  alleged  failure  to have all  permits,
certificates, licenses, approvals and other authorizations required in

<PAGE>

connection  with the  operation of the business of SELLER as operated  currently
and as  anticipated  to be operated.  Except as otherwise  set forth on Schedule
2(l), no proceeding is pending, or to the knowledge of SELLER, threatened, which
could  result  in  a  revocation  or  denial  to  renew  any  license,   permit,
certificate,  approval or other  authorization  required in connection  with the
operation  of the  business  of SELLER as  conducted  on the date  hereof and as
SELLER proposes to conduct such business  thereafter.  There is no existing law,
rule,  regulation or order prohibits  SELLER from conducting its business in any
jurisdiction  in  which  it is now  conducting  such  business  or in  which  it
presently proposes to conduct business in the future.

M.  Regulatory  Filings.  Schedule  2(m)  contains  a list  of all  filings  and
submissions  (other than  submission  of forms and  approvals)  made to, and all
inspection,  audit or compliance  survey reports  received from, all federal and
state regulatory  bodies having  jurisdiction  over SELLER,  and (i) each of the
filings and  submissions  listed on  Schedule  2(m) was in  compliance  with all
applicable  laws, rules and regulations in all material  respects;  (ii) none of
the filings or submissions  listed on Schedule 2(m) contain any untrue statement
of a  material  fact or omit to state a  material  fact  required  to be  stated
therein  or  necessary  to  make  the  statements   therein,  in  light  of  the
circumstances  under which they were made,  not misleading or necessary in order
to provide the applicable  Regulatory  Entities with adequate  information as to
SELLER,  subject to the jurisdiction of such Regulatory Entities;  (iii) neither
any of the SELLER or SELLER has  received  notice of, and, to the  knowledge  of
SELLER,  none of the  applicable  Regulatory  Entities have  threatened to issue
notice of, any  deficiencies  (a) with  respect  to any  filings or  submissions
listed on  Schedule  2(m) or (b) with  respect  to the  financial  condition  or
conduct of the business of SELLER under  applicable  regulatory  standards;  and
(iv)  neither  any of the SELLER or SELLER has not  submitted  nor is  presently
preparing or planning to prepare any written  response to any inspection,  audit
or  compliance  survey  report or to any notice of  deficiency  relating  to the
ownership, operations or other activities of SELLER.

N. Material Contracts.

Except as previously set forth on a different  Schedule,  Schedule  2(n)(i) sets
forth a true and complete list of all written or oral  contracts (in the case of
oral  contracts,  a  summary  description  is  provided),   agreements,  leases,
mortgages,  guarantees,  matters of  suretyship,  powers of attorney,  indemnity
arrangements  and  commitments  ("Contracts")  to which  SELLER is a party or by
which any of its assets are bound and which in any case involve  total  payments
or receipts by SELLER of $25,000 or more, or that do not expire within one year.
All the Contracts  constitute legal, valid and binding obligations of SELLER and
(i) are in full force and  effect on the date  hereof,  and (ii)  SELLER has not
violated any provision of, or committed or failed to perform any act which, with
notice,  lapse of time or both,  would  constitute  a default,  of any  material
provision of any Contract.  To SELLER's knowledge,  no other party to any of the
Contracts is in default thereof. Except as set forth on Schedule 2(n)(ii),

<PAGE>

SELLER  has  performed  its  obligations  under all  Contracts  in all  material
respects  and, to SELLER's  knowledge,  no party to any  Contract has grounds to
terminate  such  Contract.  Except  as set  forth on  Schedule  2(n)(iii),  each
Contract is with unrelated third parties and was entered into on an arm's length
basis in the ordinary course of business. None of the transactions  contemplated
by  this  Agreement  or any  Ancillary  Document  creates  in any  party  to the
Contracts  the right to revise the terms of, to demand a penalty or premium,  to
terminate  or to  accelerate  any  obligations  of SELLER,  or declare that such
Contracts  have been  breached,  and no facts or  circumstances  exist,  or upon
Closing  will  exist,  which,  with  notice  or  lapse  of time or  both,  would
constitute a breach or default under any of the terms of any  Contract.  Correct
and complete  copies of all written  Contracts  disclosed on Schedule  2(n) have
been made available to BUYER.

O. Litigation. Except as set forth and summarized in Schedule 2(o), there is no:
(i) action, suit, claim,  proceeding,  audit or investigation pending or, to the
knowledge  of SELLER,  after  inquiry of senior  management  and  attorneys  for
SELLER,  threatened by any private or governmental  litigant or before or by any
federal, state, municipal or other governmental  department,  court, commission,
board, bureau, agency or instrumentality, domestic or foreign, against SELLER or
any of its assets or employees,  officers or directors  (in their  capacities as
employees,  officers or directors of SELLER) or against  persons or entities who
perform  professional  services  under  contract with SELLER;  (ii)  arbitration
proceedings relating to SELLER or pending under collective bargaining agreements
or  otherwise;  or (iii)  governmental  or  professional  inquiries  pending  or
threatened against SELLER  (including,  without limitation any inquiry as to the
qualification  of SELLER to hold or receive any  license or permit),  and to the
best of SELLER's  knowledge,  there is no basis for any of the  foregoing  as to
SELLER or any of its employees,  officers, directors or assets or as to entities
or persons who  perform  professional  services  under  contract  with SELLER in
connection  with the  performance  of such services on behalf of, or rendered to
SELLER. SELLER is not subject to any continuing  injunction,  judgment, or other
order of any court,  arbitrator,  or governmental or quasi-governmental  agency.
SELLER is not in default under any order, license,  regulation, or demand of any
Federal,  state,  municipal or other  governmental  agency or regulatory body or
with respect to any order, writ, injunction or decree of any court.

P. Fees and  Commissions.  Save and  except  the  commission  agreements  signed
between the BUYER and Agri-China Corporation Limited and SELLER and K.C. Tan and
Co. Limited,  no person, firm or other entity retained or procured by or through
SELLER is entitled to or may claim any fee or other payment as a finder, broker,
agent, intermediary or in similar capacity (collectively  "Intermediary") nor is
SELLER acting for the benefit of any person or entity (other than the parties to
this  agreement)  in  connection  with  the  transactions  contemplated  by this
agreement,  and SELLER will indemnify and hold harmless BUYER from liability for
any compensation to any Intermediary retained by, or claiming through SELLER and
from the fees and  expenses  of  defending  against  such  liability  or alleged
liability.   The   foregoing   indemnification   is  hereby  made  part  of  the
indemnification obligation of SELLER pursuant to Section 8 hereof.

<PAGE>

Q.  Interested  Party  Transactions.  Except as set forth on Schedule  2(q),  no
officer,  director or shareholder,  or any affiliate (defined below) of any such
person or entity or of  SELLER,  has,  either  directly  or  indirectly,  (i) an
interest  in any  person or entity  which (a)  furnishes  or sells  services  or
products  which are furnished or sold or furnishes or sells products or services
which  compete  with  products or  services  which are  furnished  or sold by or
proposed to be furnished or sold by SELLER,  or (ii)  purchases from or sells or
furnishes to SELLER any goods or services,  or (b) has a beneficial  interest in
or is a party to any  contract  or  agreement  to which  SELLER is a party or by
which  SELLER may be bound or affected,  or has any direct or indirect  interest
(other than in his capacity as a shareholder of SELLER) in any property, real or
personal, tangible or intangible of SELLER.

For purpose of this Agreement,  the term "affiliate" shall mean any corporation,
partnership,  joint venture,  person or other entity who directly, or indirectly
through one or more  intermediaries,  controls or is  controlled  by or is under
common control with any other corporation, partnership, joint venture, person or
other entity.

R. Taxes.

i.  SELLER  has  accurately  prepared  and  timely  filed  with the  appropriate
governmental  authorities all Tax Returns and reports required to be filed by it
under all applicable laws or  regulations,  including but not limited to payroll
and other employee  taxes which are required to be filed,  and has paid, or made
provision for the payment of, all amounts of Taxes which have or may have become
due pursuant to said returns or reports or pursuant to any assessment  which has
been received by it or which are otherwise due by SELLER. SELLER has provided to
BUYER  true,  accurate  and  complete  copies  of all such tax  returns  and all
schedules  and other  supporting  documents  thereto  filed by  SELLER  with all
appropriate taxing authorities,  including all communications  relating thereto,
for each of the last three (3) fiscal years.  The provisions for Taxes reflected
in the  Financial  Statements  are, or will be,  adequate  for all Taxes for the
periods  ending on the  respective  dates of said  Financial  Statements and all
years and periods  prior  thereto  and for which  SELLER may have been liable on
such date.  SELLER is not a party to any pending  action,  proceeding  or audit,
nor,  to the  knowledge  of  SELLER,  is any such  action,  proceeding  or audit
threatened by any  governmental  authority  for any  assessment or collection of
taxes, interest, penalties,  assessments or deficiencies,  and there is no basis
for any  assessment or collection of taxes,  interest,  penalties,  assessments,
deficiencies or for any deficiency  notice,  thirty (30) day letter,  or similar
notice with respect to Taxes. There are no tax liens on any of the properties or
assets of SELLER.  SELLER has made all payments of all Taxes required to be made
under the Laws of Hong Kong and any comparable provisions law and have collected
or withheld (and have duly remitted or deposited) all amounts required to be

<PAGE>

collected or withheld.  SELLER has not waived any law or regulation  fixing,  or
consented to the  extension  of, any period of time for  assessment of any Taxes
which  waiver or consent  is  currently  in effect  and there is no  outstanding
request for any  extension of time within which to pay any Taxes or file any Tax
Returns with the appropriate governmental authorities.

ii. For  purposes  of this  Agreement,  "Tax" or "Taxes"  shall mean any and all
taxes,  levies,  fees,  duties  and  charges of  whatever  kind  (including  any
interest,  penalties or additions to the tax imposed in connection  therewith or
with  respect  thereto),  whether or not imposed on SELLER,  including,  without
limitation,  taxes imposed on, or measured by, income,  franchise,  profits,  or
gross receipts,  and also ad valorem,  value added, sales, use, service, real or
personal property,  capital stock, license,  payroll,  withholding,  employment,
social  security,  worker"  compensation,  unemployment  compensation,  utility,
severance,  production,  excise, stamp, occupation,  premium,  windfall profits,
transfer,  and gains taxes,  and customs  duties;  and "Tax  Return"  shall mean
returns, reports, information statements, and other documentation (including any
additional or supporting material) filed or maintained,  or required to be filed
or maintained, in connection with the calculation,  determination, assessment or
collection of any Tax.

S. Bank Accounts.  Schedule 2(s) sets forth a true and correct list of the names
and addresses of all banks and other  institutions at which SELLER has accounts,
borrowing resolutions, deposits or safety deposit bases, with the nature of such
account,  the account number, and the names of all persons authorized to draw on
or give  instructions  with  respect to such  accounts or  deposits,  or to have
access thereto,  and the names and addresses of all persons,  if any,  holding a
power-of-attorney on behalf of SELLER. Except as set forth on Schedule 2(s), all
cash in such  accounts  is held in demand  deposits  and is not  subject  to any
restriction or limitation as to withdrawal.

T. Employees, Consultants, Independent Contractors and Agents.

i. Schedule  2(t)(i)  contains,  under the heading  "Employment,  Consulting and
Other  Personal  Service  Contracts",  a true and correct list of all  contracts
(whether  written or oral) with employees,  marketing  representatives,  agents,
independent contractors and consultants of SELLER, together with their titles or
positions and the annualized  amounts of base pay or compensation being paid to,
or accrued  for,  each such person.  Except as  otherwise  disclosed on Schedule
2(t)(i),  no contract or agreement  whether written or oral,  requires SELLER to
pay compensation, commissions (i.e., marketing sales of agent broker agreements)
or other remunerations at any time subsequent to termination of such contract or
agreement. SELLER has not guaranteed any bonus due and/or payable, now or in the
future, to any employee, representative, agent, contractor or consultant.

ii. Schedule 2(t)(i) also contains a complete list of all employees,  their date
of hire, their position or job description, and their annualized compensation.

<PAGE>

U.  Environmental  Matters.  To the best knowledge of SELLER,  after  reasonable
investigation  and inquiry,  the operations of SELLER comply with all applicable
environmental   and  health  and  safety  laws,   regulations,   ordinances  and
requirements. SELLER has obtained all environmental,  health and safety permits,
licenses,  authorizations or other entitlement necessary for its operations, the
lack of which could cause a material adverse effect on the business, operations,
properties,  assets,  liabilities,   working  capital,  prospects  or  condition
(financial   or  otherwise)   of  SELLER,   and  all  such  permits,   licenses,
authorizations  or other  entitlement  are in good  standing  and  SELLER  is in
compliance with all material terms and conditions of such permits. SELLER is not
aware of,  nor have  SELLER  made or filed,  any  report or notice  reporting  a
release, spill, emission,  leaking, disposal,  discharge,  leaching or migration
into  the  indoor  or  outdoor  environment  of a  waste,  pollutant,  hazardous
substance, toxic substance,  hazardous waste, extremely hazardous waste, medical
waste,  restricted  waste,  special  waste,  asbestos or any  substance or waste
relating to the  operations or activities of SELLER,  the presence of which will
or could require remedial action.

V. Books and Records.  The books and records of SELLER have been made available,
and shall be available hereafter, to BUYER. Subject to the specific disclosures,
exceptions,  qualifications  and  limitations as to the matters  represented and
warranted herein,  the books and records taken as a whole contain a complete and
accurate  record  of the  business  and  operations  of  SELLER  and  have  been
maintained in accordance with good business practices. SELLER has not engaged in
any  material  transaction,  maintained  any  bank  account  or used  any of its
corporate funds which has not been reflected in the regularly  maintained  books
and records of SELLER.

W. Proprietary Rights.  SELLER owns or possess adequate licenses or other rights
to use all copyrights,  uncopyrighted  works,  trademarks,  service marks, trade
names,  patents,  unpatented  inventions,  trade  secrets,  know-how  and  other
proprietary  rights  necessary  or  desirable  to conduct  its  business  as now
conducted  and  hereafter  proposed  to  be  conducted   (collectively,   the  "
Proprietary  Rights")  and has  made all  applications  and  licenses  necessary
therefor.  All such  Proprietary  Rights  are listed and  briefly  described  on
Schedule  2(w).  Neither the  validity of the  Proprietary  Rights nor the title
thereto  or use  thereof  by  SELLER  is  being  questioned  in any  pending  or
threatened  litigation  and the  conduct of the  business  of SELLER,  as now or
heretofore  conducted,  does not  violate  licenses,  copyrights,  uncopyrighted
works,  trademarks,  service  marks,  trade names,  trade name rights,  patents,
patent rights, unpatented inventions or trade secrets of others in any way which
could have an adverse effect on the business, assets, liabilities, or conditions
(financial  or  otherwise)  of  SELLER.  To  SELLER's  knowledge,  there  is  no
infringement by others of any of the Proprietary Rights.

<PAGE>

X. Letters of Intent.  Except with respect to BUYER and as contemplated  hereby,
SELLER has not entered into a letter of intent, agreements in principle or other
written agreement,  whether binding or non-binding by its terms, with respect to
any merger, sale of assets or other corporate  transaction which could result in
the sale,  disposition or exchange of any material assets of SELLER,  other than
as contemplated by this Agreement.

Y.  Receivables.  All  receivables  of SELLER shown on the Financial  Statements
(except to the extent reflected on the Financial  Statements as reserved against
uncollectible  receivables)  are good and  collectible  in the normal  course of
business.

Z. Fraud and Abuse. To the knowledge of SELLER or SELLER's  officers,  directors
and  employees,  as  applicable,  have not engaged in any  activities  which are
prohibited  under  federal,  state or local statutes or regulations or which are
prohibited by rules of professional  conduct or which otherwise could constitute
fraud.

AA. Post Closing Liability of SELLER.  Notwithstanding  anything to the contrary
herein,  from and after the Closing Date, SELLER shall be liable for any breach,
inaccuracy,   non-fulfillment  or   misrepresentation   of  any  representation,
warranty,  covenant or agreement  contained in this  Agreement or any  Ancillary
Documents.


SECTION 3.  REPRESENTATIONS AND WARRANTIES OF BUYER.

BUYER  represents  and warrants to SELLER as follows,  as of the date hereof and
the Closing Date:

A.  Organization  and  Standing.  BUYER  is  a  corporation  organized,  validly
existing,  and in good  standing  under  the laws of the  State of Utah,  United
States of America.

B. Corporate  Power;  Validity of Agreement;  Consents.  BUYER has all requisite
corporate  power and authority under its Articles of  Incorporation,  Bylaws and
the Utah General  Corporation  Law to execute and deliver this Agreement and all
of the agreements,  instruments and other documents to be executed and delivered
by BUYER incident to the  consummation of the transaction  contemplated  hereby,
(collectively,  the BUYER  Ancillary  Documents) to which it is a party,  and to
carry out and perform its obligations  under the terms of this Agreement and the
BUYER  Ancillary  Documents.  The  execution,  delivery and  performance of this
Agreement  and  the  BUYER  Ancillary  Documents,  and the  consummation  of the
transactions  contemplated hereby and thereby,  have been duly authorized by all
necessary  corporate  action by BUYER.  This  Agreement and the BUYER  Ancillary
Documents  have been duly  executed and  delivered by BUYER and  constitute  the
legal, valid and binding obligations of BUYER, legally enforceable against it in
accordance with their terms,  except that such enforcement may be subject to (i)
bankruptcy, insolvency,  reorganization or other laws now or hereafter in effect
affecting  the  enforcement  of  creditors  rights  generally,  and (ii) general
principles of equity.

<PAGE>

C. No Violation. Subject to the fulfillment of the requirements of Sections 6.A.
hereof as applicable to BUYER,  the execution,  delivery and performance of this
Agreement and the BUYER  Ancillary  Documents  will not and do not result in any
violation or breach of, be in conflict with, or constitute a default or event of
default  (whether by notice or lapse of time or both) or give rise to a right of
termination,  cancellation  or  acceleration  under  any  provision  of (i)  the
Articles  of  Incorporation  or  Bylaws  of  BUYER  or  (ii)  any  law,  rule or
regulation,  or any judgment,  decree,  order,  ruling, or award of any court or
governmental authority, applicable to BUYER and its business as conducted on the
date  of  this  Agreement  and as  expected  to  continue  thereafter  based  on
applicable law and regulations currently in existence.


SECTION 4.  CONDUCT OF BUSINESS PENDING CLOSING; ASSETS.

A.  Ordinary  Course  of  Business.  During  the  period  from  the date of this
Agreement to the Closing  Date and except as otherwise  agreed to by the parties
in writing,  SELLER  shall  conduct,  or shall have  conducted,  its  operations
according  to its ordinary  and usual  course of business  consistent  with past
practice.  Until the Closing  Date,  SELLER  shall also use its best  efforts to
preserve  intact its  business  organization,  contracts  and  properties,  keep
available  the  services of its officers and  employees,  maintain  satisfactory
relationships with licensors,  suppliers,  distributors,  customers,  employees,
contractors  and others  having  business  relationships  with  SELLER.  Without
limiting the  generality of the  foregoing,  prior to the earlier of the Closing
Date or the termination of this Agreement,  and except as otherwise  required by
this Agreement or any of the Ancillary Documents,  SELLER shall not, without the
prior written consent of BUYER:

i.        amend its Memorandum and Articles of Association;

ii. authorize for issuance,  issue or deliver any additional shares of any stock
of any class or  securities  convertible  into shares of stock or issue or grant
any right,  option,  warrant or other  commitment  for the issuance of shares of
stock or such securities;

iii.  split,  combine or  reclassify  any shares of  SELLER's  capital  stock or
declare,  set aside or pay any dividend  (whether in cash, stock or property) in
respect of SELLER's capital stock or redeem or otherwise acquire any of SELLER's
capital stock;

iv. solicit or encourage any inquiries or proposals  (other than with BUYER) for
the acquisition of any of SELLER's capital stock, assets or business;

v. sell or purchase marketable securities owned by SELLER, if any;

vi.  prepay  expenses  or  obligations  except in  accordance  with the terms of
applicable  contracts or agreements  and in the ordinary  course of business (or
otherwise not to exceed $1,000);

<PAGE>

vii.  increase  compensation  and/or  benefits  for any of  SELLER's  employees,
consultants or officers;

viii.  terminate or enter into any  employment  or  consulting  contracts or any
collective bargaining agreement;

ix. sell or dispose of or encumber any amount of SELLER's capital assets with an
aggregate  value  of  $5,000  or more or make  any  capital  expenditures  in an
aggregate  amount in excess of $5,000,  or enter into, renew or extend any lease
of capital equipment or real estate involving payments in an aggregate amount in
excess of $5,000 for the term of the lease;

x. create,  amend,  extend,  renew,  assume, incur or guarantee any indebtedness
either involving  amounts in excess of $1,000,  individually or in the aggregate
which is not in the ordinary course of its business;

xi. enter into any contract or commitment (including employment,  consulting and
collective  bargaining  agreements) or engage in any transaction which is not in
the usual and ordinary course of SELLER's business or which is inconsistent with
SELLER's past  practices and which is not terminable at will upon 30 days notice
without penalty of any kind;

xii. create any stock option or other stock-based incentive plan;

xiii. acquire any other business or interest therein;

xiv.  enter into,  amend or terminate  (other than by  expiration)  any material
contract to which SELLER is a party or by which its assets are bound;

xv. amend, supplement or otherwise alter, in any material respect, any contracts
or relationships  with suppliers or customers,  except as required  hereunder or
pursuant to any of the Ancillary Documents;

xvi. commence,  compromise,  settle, waive, approve or permit the settlement of,
any  litigation,  proceeding,  hearing,  arbitration  or other  dispute or claim
involving  amounts in controversy  of more than $1,000 in the  aggregate,  other
than for fair  consideration in the ordinary course of business  consistent with
past practice;

xvii.  enter into any agreement or engage in any transaction with any affiliate,
stockholder, director, officer or affiliate of SELLER;

<PAGE>

xviii. make any change in the accounting practices of SELLER;

xix.  fail to keep in full  force  and  effect  insurance  covering  SELLER  and
SELLER's assets  comparable in amount and scope of coverage to that which is now
maintained;

xx. fail to comply with any laws and regulations applicable to SELLER, or to the
conduct of SELLER's business;

xxi. enter into any agreement or arrangements, written or oral, that would cause
any of the statements contained in Section 2 to be untrue; or

xxii. enter into any contract or commitment to do any of the things described in
Clauses (i) through (xxi) above.

B. Assets. The assets of SELLER as of the Closing Date (tangible and intangible)
will include all the equipment,  inventory and other assets being presently used
in and necessary or useful for the conduct of or related to its business, except
those consumed after the date hereof in the ordinary course of business or those
sold with BUYER's express written consent.


SECTION 5.  ADDITIONAL AGREEMENTS.

A.       Access and Information.

i. SELLER has afforded and shall  continue to afford BUYER and its  accountants,
counsel and other  representatives  full access for the period commencing on the
date hereof through and as of the Closing Date to all of the properties,  books,
contracts, commitments, records and employees of SELLER and, during such period,
shall furnish to BUYER all information  concerning the business,  properties and
personnel  of  SELLER  as  BUYER  may  reasonably  request,   provided  that  no
investigation  pursuant  to  this  Section  5  shall  cure  any  breach  of  any
representations or warranties of SELLER. BUYER shall take all reasonable efforts
to maintain  the  confidentiality  of the  existence of this  Agreement  and the
transactions  contemplated  hereby,  including,  without  limitation,  reviewing
information  requested  by BUYER at a  location  in Hong Kong  other than at the
premises of SELLER during normal business hours when employees are present,  and
obtaining the consent of SELLER prior to  contacting or otherwise  communicating
with any employee, supplier or customer of SELLER.

ii.  SELLER  shall use  their  best  efforts  and at  BUYER's  own cost to cause
SELLER's independent auditors to make available copies of all such documents and
information   with  respect  to  the  business  and   properties  of  SELLER  as
representatives  of BUYER may from time to time reasonably  request,  including,
without limitation,  the working papers used to prepare the Financial Statements
and income tax returns filed by SELLER.

<PAGE>

B. Notice of Changes.  Between  the date  hereof and the Closing  Date,  SELLER,
shall promptly advise BUYER in writing of any changes or matters which change or
supplement the information set forth in this Agreement or the Schedules attached
hereto;  provided,  however,  that no such change or  supplement  shall cure any
breach of any  representations  or  warranties of SELLER.  If,  between the date
hereof and the Closing Date, any authority of the Hong Kong SAR Government shall
commence any  examination,  review,  investigation,  action,  suit or proceeding
against  SELLER shall give prompt notice thereof to the BUYER and shall keep the
BUYER  informed  as to the  status  thereof.  BUYER  shall  have the right to be
present at and participate in any such proceeding affecting SELLER or its status
or operations.

C. Certain  Defaults.  SELLER shall give prompt notice to BUYER of any notice of
default received by it subsequent to the date of this Agreement and prior to the
Closing Date under any  instrument or agreement to SELLER is a party or by which
SELLER is bound,  which default  could,  if not remedied,  result in any adverse
effect on SELLER's  business,  prospects,  condition  (financial or  otherwise),
properties,  operations,  working capital, liabilities, or assets or which would
render incorrect any representation or warranty made herein.

D.  Consents.  Each party shall  cooperate with the other party hereto and shall
use its best  efforts to take,  or cause to be taken,  all actions and to do, or
cause to be done, all things necessary and proper or advisable to consummate and
make effect, as soon as reasonably practicable, the transactions contemplated by
this Agreement and use its best efforts to file all applications and information
in order to obtain the Closing  Date all  licenses,  permits,  consents or other
approvals  required,  respectively,  to be  obtained by each such party from any
governmental  authority or other person in connection  with  consummation of the
transactions contemplated by this Agreement,  including without limitation,  all
consents  necessary  from  regulatory  agencies  and  under  supplier  or  lease
agreements, so that the same will continue in effect after the Closing.

E. Notice of Breach.  Each party shall  immediately give notice to the others of
the occurrence of any event, or the failure of any event to occur,  that results
in a breach of any  representation or warranty contained herein by such party or
a failure by such party to comply  with any  covenant,  condition  or  agreement
contained herein.

F. Expenses.  Except as otherwise  expressly provided herein or in any Ancillary
Document,  BUYER shall pay all of its costs and expenses  incurred in connection
with this Agreement and the  transactions  contemplated  herein,  and the SELLER
shall pay all of the costs and  expenses of the SELLER  incurred  in  connection
with this Agreement and the transactions contemplated herein.

<PAGE>

G. Press  Release.  Prior to the Closing  Date,  neither  BUYER nor SELLER shall
issue any press  releases  concerning the terms and conditions of this Agreement
or the transactions contemplated hereby without the prior review and approval of
BUYER and SELLER,  other than such  announcements,  filings or press releases as
required by law.

H.  Conduct.  Except as provided  by this  Agreement  or as BUYER may  otherwise
consent in writing, SELLER will enter into, any transaction,  take any action or
permit any event to occur which would result in any of the  representations  and
warranties contained in this Agreement,  or in any other agreement,  certificate
or  other  document  delivered  by or on  behalf  of  SELLER,  or any  of  their
representatives,  to BUYER in connection with this Agreement or the transactions
contemplated   herein,  not  being  true  and  correct  immediately  after  such
transaction has been entered into or consummated or such event has occurred.

I. Further  Assurances.  At the request of BUYER, SELLER shall promptly take, or
cause to be taken,  all  action,  and do or cause to be done,  all  things,  and
execute and deliver, or caused to be executed and delivered, as the case may be,
to  BUYER  or  for  the  benefit  of  BUYER,   all  such  further   assignments,
endorsements,  and other  documents as BUYER may reasonably  request in order to
consummate the  transactions  contemplated by this Agreement.  At the request of
SELLER,  BUYER shall take all action, do all things,  and execute and deliver to
SELLER all such further assignments, endorsements, and other documents as SELLER
may reasonably  request in order to consummate the transactions  contemplated by
this Agreement. In case at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement or any of the
Ancillary  Documents,  the SELLER,  proper  officers or directors of SELLER,  or
BUYER, as the case may be, shall take all such necessary action.

J. No Shop. Save and except those already disclosed to BUYER,  until the Closing
Date or the termination of this Agreement  pursuant to Section 7 hereof,  SELLER
shall not solicit,  directly or  indirectly,  any inquiries or proposals for the
acquisition of any of the capital  stock,  assets or business of SELLER from, or
furnish  information  relating to the foregoing to, or engage in negotiations or
discussions  relating to the foregoing with, or accept any proposal  relating to
the foregoing  from,  any  corporation,  partnership,  person or other entity or
group other than BUYER, and SELLER shall use all reasonable  efforts to restrict
any officer,  director,  employee,  investment banker, attorney or other advisor
retained by SELLER from doing any of the foregoing. SELLER shall, after closing,
confidential  documents and  information  or  compilations  of such documents or
information  provided to third parties,  if any, in connection with any previous
negotiations  or discussions  since January 1, 1999,  relating to the foregoing.
SELLER  will,  immediately  upon  receipt,  advise  BUYER  orally  and  promptly
thereafter in writing of any inquiry or proposal received for the acquisition of
the capital stock, assets or business of SELLER.

<PAGE>

K. Withholding.  SELLER shall provide any certificates or affidavits required by
BUYER so that BUYER shall not be required to withhold  any taxes from amounts to
be paid the SELLER hereunder.

L. Business Name. On and after the Closing Date,  SELLER authorizes BUYER to use
the corporate  and/or trade names of SELLER for all purposes in connection  with
the operations of BUYER.

M. Intercompany Indebtedness. Prior to or as of the Closing Date, any obligation
owed to SELLER by any officer,  director,  employee,  agent or representative of
SELLER shall be paid  irrespective  of the terms of  repayment  described in any
note  evidencing  such  obligation  other than amounts  advanced in the ordinary
course of business  under standard  travel and expense plans in connection  with
any such person's employment, including for education purposes.

N. BUYER will,  within 14 days from the date hereof,  complete its due diligence
covering the relevant  business areas and  information  pertinent to the subject
new share issuance.  Such due diligence shall be at the sole cost and expense of
BUYER.

O. SELLER will continue its existing  operation and will use its best efforts to
develop an  electronic  real time  financial  data  distribution  infrastructure
targeting financial institutions and investors in the Greater China area as well
as being involved in the business of an Internet  Service Provider with focus on
the investment and financial market.

P. BUYER  will use its best  effort to locate and  transfer  from North  America
technology  and  marketing  ideas that can be  adopted by SELLER in the  Greater
China area.

Q. Parties understand that further funding of approximately US$ 3 Million to US$
5 Million will be required to finance the expansion of SELLER's  services in the
Greater China area.

R. BUYER will provide such  guarantees  as will relieve Mr.  Stephen Tang of his
obligations  as guarantor to various banks and financial  institutions  that are
now providing credit facilities to SELLER or its subsidiary.

S. Parties agree that SELLER's existing loans from SELLER's shareholders, in the
approximate amount of HK$5,200,000, shall be settled in the following manner:

i.  HK$2,000,000  shall be  repaid  by  SELLER  in  twelve  (12)  equal  monthly
installments beginning from the end of the first month after Closing;

<PAGE>

ii. The balance,  being the amount of the existing  shareholders'  loan less the
HK$2,000,000 to be repaid in the manner described  hereinabove,  shall be repaid
by BUYER on  behalf  of  SELLER  by the  issuance  of  shares  of The  Hartcourt
Companies,  Inc.  in such  number  and  quantity  based on the per  share  value
calculated according to Section 1.E. hereof. Sale of the shares of The Hartcourt
Companies,  Inc. so  acquired  by the  SELLER's  existing  shareholders  will be
restricted  within the first  twelve (12) month after  Closing.  Save and except
this restriction, BUYER warrants that the said shares shall rank pari-passu with
all the existing shares of The Hartcourt Companies, Inc. and will continue to be
freely tradable at NASDAQ.

T. SELLER will grant  share  options to  employees  and full time  directors  to
subscribe  for not more that 10% of the issued share  capital of SELLER at terms
and conditions to be decided by the board of directors subsequent to the Closing
contemplated herein.

SECTION 6.  CONDITIONS PRECEDENT.

A.  Conditions  Precedent to Closing.  Subject to waiver as set forth in Section
7.F.  below,  the respective  obligations of each party hereto to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at or
prior to the Closing Date of each of the following conditions:

i.  All  statutory  and   regulatory   requirements   necessary  for  the  valid
consummation  by BUYER  and  SELLER  of the  transactions  contemplated  by this
Agreement  and  any  Ancillary   Documents  shall  have  been   fulfilled;   all
authorizations,  consents,  approvals  and  waivers of all  Regulatory  Entities
necessary  to be obtained in order to permit  consummation  of the  transactions
contemplated by this Agreement,  including, without limitation, the consents set
forth in  Section  2.D.,  shall  have been  obtained.  Parties  hereto  agree to
promptly apply for any license,  permit or other consent necessary to consummate
the transactions contemplated under this Agreement and the Ancillary Documents.

ii. No  injunction,  restraining  order or other  ruling or order  issued by any
court of competent  jurisdiction or governmental authority or regulatory body or
other legal  restraint or  prohibition  shall be in effect,  and no  proceeding,
action,  suit  or  claim  brought  or  made  by any  governmental  authority  or
regulatory  body  shall be  pending or  threatened  that  seeks any  injunction,
restraining  order  or  other  order  or other  relief,  and no  statute,  rule,
regulation or executive order shall have been enacted,  promulgated or proposed,
in  each  case,  that  would  prohibit  the  consummation  of  the  transactions
contemplated  by this  Agreement;  it being  understood  that the parties hereto
shall  use  their  best  efforts  to have any such  injunction,  ruling,  order,
restraint or prohibition (each, a ?Restraint) lifted and to oppose any action to
impose a  Restraint,  and to  reasonably  extend  the date set forth in  Section
7.A.ii. hereof so long as such efforts are continuing in good faith.

<PAGE>

iii.  All  approvals,  consents,  authorizations  and  waivers  which  SELLER is
required to obtain to continue  obligations or rights under the lease  agreement
of its office  premises  or  Contracts  after the  Closing  Date shall have been
obtained.

iv. SELLER and BUYER each shall have complied with and performed in all material
respects all of its obligations and duties  hereunder as of the Closing Date and
shall not have breached in any material  respect any of the terms and conditions
of this Agreement or the Ancillary Documents.

B. Conditions Precedent to Obligations of SELLER. Subject to waiver as set forth
in Section 7.F.  below,  the  obligations  of SELLER to effect the  transactions
contemplated by this Agreement are subject to the fulfillment on or prior to the
Closing Date of each of the following conditions:

i. BUYER  shall have  performed  and  complied  with all of the  agreements  and
covenants  contained in this Agreement  required to be performed and complied by
it on or prior to the Closing Date and the  representations  and  warranties  of
BUYER contained in this Agreement shall be true in all material  respects on the
date hereof and as of the Closing Date.

ii. BUYER shall have  delivered to SELLER  copies of the actions of its Board of
Directors  authorizing and approving the execution,  delivery and performance of
this Agreement and the Ancillary Documents.

iii. No Restraint issued by any court of competent  jurisdiction or governmental
authority or regulatory body or other legal Restraint shall be in effect, and no
proceeding,  action, suit or claim brought or made by any governmental authority
or regulatory  body shall be rending or  threatened  that seeks any Restraint or
other relief,  and no statute,  rule,  regulation or executive  order shall have
been enacted,  promulgated  or proposed,  in each case,  that would prohibit the
consummation  of the  transactions  contemplated  by this  Agreement;  it  being
understood that the parties hereto shall use their best efforts to have any such
Restraint  lifted  and to  oppose  any  action  to  impose a  Restraint,  and to
reasonably  extend the date set forth in Section 7.A.ii.  hereof so long as such
efforts are continuing in good faith.

C. Conditions  Precedent to Obligations of BUYER. Subject to waiver as set forth
in  Section  7.F.,  the   obligations  of  BUYER  to  effect  the   transactions
contemplated by this Agreement are subject to the fulfillment on or prior to the
Closing Date of each of the following conditions:

i. SELLER shall have  performed  and  complied  with all of the  agreements  and
covenants contained in this Agreement required to be performed and complied with
by it on or prior to the Closing Date and the  representations and warranties of
SELLER contained in this Agreement shall be true in all material respects on the
date hereof and as of the Closing Date.

<PAGE>

ii. No Restraint  issued by any court of competent  jurisdiction or governmental
authority or regulatory body or other legal Restraint shall be in effect, and no
proceeding, action, suit or claim brought or made by any governmental authority,
regulatory  body, or third party shall be pending or  threatened  that seeks any
Restrain or other relief,  and no statute,  rule,  regulation or executive order
shall have been  enacted,  promulgated  or  proposed,  in each case,  that would
prohibit the consummation of the transactions contemplated by this Agreement, it
being  understood  that the parties  hereto shall use their best efforts to have
any such Restraint lifted and to oppose any action to impose a Restraint, and to
reasonably  extend the date set forth in Section 7.A.ii.  hereof so long as such
efforts are continuing in good faith.

iii.  SELLER shall have delivered to BUYER a certificate to the effect that each
of the conditions  specified in Sections 6.C.i. and 6.C.ii. are satisfied in all
respects.

iv. BUYER shall have  received a  certificate  of SELLER dated as of the Closing
Date  certifying to the  incumbency of the officers of SELLER signing for it and
as to the authenticity of their signatures.

v. SELLER shall have delivered to BUYER certified  copies of its written consent
and unanimous resolution of its Board of Directors authorizing and approving the
execution, delivery and performance of this Agreement.

vi. BUYER shall , concurrent  with the closing hereof and upon completion of the
subject new share issuance  appoint five (5) directors to the Board of Directors
of SELLER. SELLER shall retain its existing 4 directors,  it being intended that
the new Board of Directors  shall have 9 members.  SELLER shall deliver its duly
executed  Board of  Directors'  resolution  to this  effect  at  least  five (5)
business days prior to the Closing Date.

vii. SELLER's Reviewed Financial  Statements and Previous  Financial  Statements
shall be acceptable to BUYER and its representatives.

viii. Prior to the Closing Date,  BUYER shall have received  certified copies of
release and termination  agreements  executed by all the shareholders of SELLER,
and  all  other  parties  to,  or  which  may be  bound  by,  any  shareholders'
agreements,  voting  agreements,  stock option  agreements and any and all other
similar  agreements  between  current and/or past  shareholders  or employees of
SELLER (collectively,  the "Corporate Agreements").  The release and termination
agreements to be provided hereunder shall be in form and substance acceptable to
BUYER and shall provide for a full and complete  release and  termination of all
Corporate Agreements.

ix.  Prior to the Closing  Date,  BUYER shall have  received an estoppel  letter
dated not more than three (3)  business  days prior to the Closing Date from the
lessors of the office premises occupied by SELLER, in form and substance

<PAGE>

acceptable  to BUYER,  which  estoppel  letter(s)  shall set forth all contracts
between SELLER and such lessor,  the term remaining under each such contract and
shall certify that as of the date of such  letter(s) (i) all such  contracts are
in full force and effect,  (ii) to the best of their knowledge,  no party to any
such  contract has violated any  provision of, or committed or failed to perform
any act which,  with notice,  lapse of time or both, would constitute a default,
of any material  provision of any such  contract,  (iii) to the knowledge of the
lessor, no other party to any of such contracts,  if any, is in default thereof,
and (iv) the lessor  consents to and approves the  transactions  contemplated in
this Agreement.


SECTION 7.  TERMINATION, AMENDMENT AND WAIVER; DEFAULT.

A.  Termination.  This  Agreement  may be  terminated  at any time  prior to the
Closing Date;

i. By mutual agreement of SELLER and BUYER;

ii. By the Non-Defaulting Party, in the event of a Completed Default pursuant to
Section 7.B. hereof,  upon written notice of default and a fifteen (15) business
day cure period.

B. Default  Generally.  In the event that prior to the Closing  Date,  any party
hereto fails in the due performance or observance of its obligations  under this
Agreement,  or any of its  representations  or  warranties  set  out  herein  is
breached  or  determined  to be  materially  inaccurate  as of the  date of this
Agreement  or as of the  Closing  Date,  then so long as  such  state  of  facts
continues,  such party (a  "Defaulting  Party") shall be deemed to be in default
("Default"). In such event, the other party ("Non-Defaulting Party") may deliver
a written notice identifying the claimed failure, breach or inaccuracy.  If said
failure or breach is not or cannot be cured within  fifteen (15)  business  days
after the  delivery of written  notice,  or said  inaccurate  representation  or
warranty is not or cannot be made true within  fifteen (15)  business days after
the delivery of written  notice,  a  "Completed  Default" may be declared by the
Non-Defaulting Party.

C. Default by SELLER. In the event of a Completed  Default by the SELLER,  BUYER
may (in its sole discretion):

i. terminate this Agreement and (a) bring an action against SELLER and/or SELLER
for damages and/or (b) make a Claim (as defined in Section 8.A.  hereof) against
SELLER as provided in Section 8.A. hereof; or

ii.  consummate the purchase of the SELLER Stock by requiring SELLER to continue
to satisfy  their  other  covenants  and  agreements  provided  herein  and,  in
furtherance  thereof,  bring an action  against  SELLER  for  equitable  relief,
including  an action  for  specific  performance,  and  further  to make a claim
against  SELLER for any  damages or losses  suffered by BUYER as a result of the
default.

<PAGE>

No partial  exercise of any remedy  provided  above shall  preclude  any further
exercise thereof.

D.  Default by BUYER.  Prior to the  Closing  Date,  in the event of a Completed
Default by BUYER, SELLER may:

i.  terminate  this  Agreement and (i) bring an action against BUYER for damages
and/or (ii) make a Claim against BUYER as provided in Section 8.B. hereof; or

ii.  Consummate  the sale of the SELLER Stock by requiring  BUYER to continue to
satisfy their other covenants and agreements provided herein and, in furtherance
thereof, bring an action against BUYER for equitable relief, including an action
for specific performance.

No partial  exercise of any remedy  provided  above shall  preclude  any further
exercise thereof.

E. Effect of  Termination.  In the event of  termination  of this  Agreement  by
either  SELLER or by BUYER as provided in this  Section 7, no party hereto shall
have any further liability hereunder;  provided, however, such termination shall
not relieve a party whose breach of this Agreement gave rise to such termination
from  liability  for  damages  for such  breach and  provided  further  that the
indemnification provisions of Section 8 hereof and the confidentiality provision
of Section 9 hereof will survive any such termination.

F.  Extension;  Waiver.  At any time,  any party may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any  inaccuracies  in the  representations  and warranties  contained
herein for its  benefit or in any  document  delivered  to it  pursuant  hereto,
and/or (iii) waive compliance with any of the agreements or conditions contained
herein for its benefit to the extent legally  permissible.  Any agreement on the
part of a party hereto to such extension or waiver shall not be valid unless set
forth in an instrument  in writing  signed on behalf of such party and shall not
operate as an extension or waiver of any subsequent or other failure.


SECTION 8.  INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

A.  Indemnification  by SELLER.  Subject to  Section 8 hereof,  SELLER,  if this
transaction  is not  completed,  agrees to  indemnify,  defend and hold harmless
BUYER and its respective directors,  officers,  employees,  agents,  affiliates,
successors, attorneys and assigns (collectively, "Indemnitee") from and against

<PAGE>

any and all losses, claims, demands, damages, liabilities,  deficiencies,  costs
and expenses  (including,  without  limitation,  reasonable  attorneys' fees and
disbursements and amounts paid in settlement of any claim, act or suit) of every
kind,  nature and  description  (each,  a "Claim"  and  collectively,  "Claims")
suffered by Indemnitee based upon, arising out of or otherwise in respect of:

i.  any  inaccuracy  in or  breach  or  non-fulfillment  of any  representation,
warranty,  covenant or agreement of the SELLER contained in this Agreement or in
any Ancillary Document, certificate or other documents delivered by or on behalf
SELLER pursuant to this Agreement;

ii. the  ownership,  management  and conduct of SELLER's  business  prior to and
including the Closing Date, including, but not limited to, Claims arising out of
termination  of any of  SELLER's  employees,  if any,  as of and  including  the
Closing  Date,  except for Claims  fully  reflected  or reserved  against on the
Financial Statements; or

iii.  Any act or  omission  of  SELLER,  or any of their  respective  agents and
employees in respect of periods prior to and including the Closing Date,  except
for Claims fully reflected or reserved against on the Financial Statements.

Any cost resulting from the undisclosing of liabilities by SELLER will be offset
against SELLER by reducing the existing shareholders' loan by the same amount.

B.  Indemnification  by BUYER.  Subject  to  Section 8 hereof,  BUYER  agrees to
indemnify,  defend  and  hold  harmless  SELLER  and  its  directors,  officers,
employees, agents, affiliates,  successors, attorneys and assigns (collectively,
"SELLER Indemnitee") from and against any and all Claims, costs , expenses cost,
demands,  damages,  liabilities,  deficiencies  (including,  without limitation,
reasonable  attorney's fees and  disbursements and amounts paid in settlement of
any claim, act or suit) of every kind,  nature and description  (each, a "Claim"
and collectively,  "Claims")  suffered by SELLER Indemnitee based upon,  arising
out of or otherwise in respect of any inaccuracy in or breach or non-fulfillment
of any  representation,  warranty,  covenant or agreement of BUYER  contained in
this  Agreement or in any Ancillary  Document,  certificate  or other  documents
delivered by or on behalf of BUYER pursuant to this Agreement.

The rights of  Indemnitee  and SELLER  Indemnitee to  indemnification  hereunder
shall not be prejudiced or limited in any manner by any right to indemnification
under any of the Ancillary  Documents and each such right of indemnification and
agreements shall be cumulative.  An Indemnitee or SELLER  Indemnitee may proceed
against the other party with respect to all or any portion of a Claim.

<PAGE>

C.  Notice and Opportunity to Defend.

i. Promptly after receipt by an Indemnitee or SELLER Indemnitee of notice of the
assertion of any Claim or discovery of any fact upon which such party expects to
make a claim for indemnification  hereunder, the Indemnitee or SELLER Indemnitee
shall  give  the  party  or  parties  who  may  become   obligated   to  provide
indemnification  hereunder (the "Indemnifying  Party") written notice describing
such Claim or fact in reasonable detail; provided,  however, that the failure of
the  Indemnitee  or SELLER  Indemnitee to provide  notice of the Claim  promptly
after the Indemnitee or SELLER  Indemnitee  receives  notice of such Claim shall
not  relieve  the  Indemnifying  Party  of  its  obligations  to  indemnify  the
Indemnitee or SELLER  Indemnitee with respect to such Claim except to the extent
that such failure  actually  prejudices the Indemnifying  Party hereunder.  Such
Indemnifying  Party shall have the right, at such Party's option,  to compromise
or defend, at such Party's own expense and by such Party's own counsel, any such
matter involving the asserted  liability of the Indemnitee or SELLER  Indemnitee
as to which the  Indemnifying  Party shall have  acknowledged  its obligation to
indemnify the party seeking indemnification hereunder; provided that counsel for
the Indemnifying Party shall be approved by the Indemnitee or SELLER Indemnitee;
and provided further that the Indemnifying  Party shall not, without the consent
of the Indemnitee or SELLER Indemnitee,  consent to the entry of any judgment or
enter into any settlement  that adversely  affects the business or operations of
the  Indemnitee or SELLER  Indemnitee or that does not include the giving by the
claimant or plaintiff to such Indemnitee or SELLER  Indemnitee of a release from
all liability  with respect to such Claim for  litigation.  If any  Indemnifying
Party shall undertake to compromise or defend any such asserted liability,  such
party shall promptly notify the Indemnitee or SELLER  Indemnitee of such party's
intention to do so, and the Indemnitee or SELLER  Indemnitee agrees to cooperate
fully with the Indemnifying Party and such party's counsel in the compromise of,
or defense against, any such asserted liability. All costs and expenses incurred
in connection with such cooperation shall be borne by the Indemnifying Party. In
any event,  the Indemnitee or SELLER  Indemnitee shall have the right at its own
expense to participate in the defense of such asserted liability.

ii. An Indemnitee or SELLER Indemnitee shall not compromise or settle any matter
which,  if  sustained,  would  entitle the  Indemnitee  or SELLER  Indemnitee to
indemnification  hereunder  from  SELLER  or  BUYER,  as the case may be,  which
consent  shall  not be  unreasonably  withheld  or  delayed.  Mr.  Stephen  Tang
(including any successor  designated by the unanimous written consent of SELLER)
is hereby irrevocably  designated as the SELLER agent for purposes of consenting
to any compromise or settlement in accordance with this Section 8.B.ii. and each
shall have authority to determine the validity of, satisfy,  compromise,  settle
or  otherwise  to adjust any Claims on behalf of SELLER  which may,  in the sole
judgment of either of them,  affect the liability of SELLER to any Indemnitee or
SELLER Indemnitee pursuant to this Agreement.

<PAGE>

D.  Survival  of  Representations   and  Warranties.   All  representations  and
warranties  of SELLER  contained  herein  (including  all schedules and exhibits
hereto)  or in  any  certificate,  Schedule  or  other  instrument  or  document
delivered  pursuant  to this  Agreement  and  the  Ancillary  Documents  and the
provisions of this Section 8 shall survive the execution hereof and Closing Date
for a period of two (2) years from and after the Closing Date,  except that with
respect to any  warranty  or  representation  with  respect to Taxes  and/or any
willful,  intentional  or  knowing  misrepresentation  of  SELLER  or any of the
officers,   directors,   employees,   agents   or   representatives   of  SELLER
(collectively "SELLER and their Agents"), such warranty and representation shall
survive until the later of the end of said two- year period or expiration of the
applicable  statute of limitations  pursuant to which BUYER or any Indemnitee or
SELLER Indemnitee can seek recovery from SELLER and its Agents.

SECTION 9.  CONFIDENTIALITY.

A.  Respective  Obligations.  Each of the  parties  hereto and their  respective
representatives  will hold in confidence any data and information  obtained with
respect  to any  other  party,  or the  business  of any other  party,  from any
representative,  officer,  director or employee of such party, or from any books
or records of such party in connection  with this Agreement or the  transactions
contemplated  by this  Agreement,  and shall  not use such data and  information
except for the  reasonable  due  diligence  purposes  of such party  exclusively
related  to the  transactions  contemplated  hereby.  No  party  receiving  such
confidential  information  shall disclose such  information to any person except
for such party's officers, directors,  independent accountants, legal counsel or
other representatives (collectively, "Representatives") with a need to know such
information for the purpose of evaluating the transactions  contemplated hereby.
The parties will inform their respective  Representatives  that by receiving any
such  confidential  information,  they are  agreeing to be bound by the terms of
this Section 9. Confidential  information  shall not include  information in the
public domain,  information  published or disseminated  by the party  generating
such  information  without  restriction to other persons,  information  which is
independently developed by the other party, information identified in writing by
the furnishing party as not being  confidential or information which is required
by any applicable law or regulation to be disclosed.

B.  Survival.  The  obligations  and rights of the parties  under this Section 9
shall survive any  expiration or  termination  of this  Agreement for any reason
whatsoever.

C.  Termination.  If this  Agreement  is  terminated  pursuant to Section 7, all
copies of written data and  information,  including  copies in the possession of
such  Party's  Representatives,  obtained by any of the parties  hereto from any
other party  shall be  returned  promptly  to the  relevant  party upon  request
therefore  by the party  providing  such  data or  information  or that  Party's
counsel. Each party hereto agrees to use all reasonable efforts to keep

<PAGE>

confidential any information obtained by it unless and until such information is
ascertainable  from  public or  published  information  or trade  sources  or is
otherwise a matter of public  knowledge or unless the  information  is needed in
connection with any on-going dispute among the parties hereto.  Each party shall
keep all information  confidential  and shall not use such  information for such
Party's benefit in the event this Agreement is terminated pursuant to Section 7.

The  obligations  under this Section 9 are in addition to the and not in lieu of
obligations arising under any other confidentiality or similar agreement between
BUYER and any of the other parties hereto.

SECTION 10.   MISCELLANEOUS.

A.  Governing  Law. This  Agreement and all  transactions  contemplated  by this
Agreement  shall be governed by, and construed and enforced in accordance  with,
the internal  laws of the State of  California  without  regard to principles of
conflicts  of  laws  to the  extent  that  such  principles  would  require  the
application of the laws of any jurisdiction other than the State of California.

B. No  Assignment;  Successors  and  Assigns.  BUYER may  assign  its rights and
obligations  hereunder to any entity wholly owned by BUYER,  without the consent
of notice to SELLER.  Except as otherwise provided herein, the provisions hereof
shall  inure to the  benefit of, are  binding  upon and are  enforceable  by and
against the parties and their respective legal  representatives,  successors and
permitted assigns.  SELLER may not assign their rights and obligations hereunder
without the written consent of BUYER.

C. Entire  Agreement.  This Agreement  (including all the Exhibits and Schedules
hereto)  constitutes  the full and  entire  understanding  and  agree  among the
parties  with  regard to the  subject  matter  hereof and  supersedes  all prior
negotiations, understandings and representations, both written and oral, if any,
made by and among such parties, including, without limitation, the Memorandum of
Understanding dated June 18, 1999, between SELLER and BUYER.

D. Notices. All notices and other  communications  hereunder shall be in writing
and shall be deemed given (i) on the date of receipt,  if delivered  personally;
(ii) seven (7) days after being mailed by registered or certified  mail,  return
receipt  requested;  (iii) upon delivery by commercial  overnight courier (e.g.,
Federal  Express,  DHL,  etc.),  return  receipt  or  confirmation  of  delivery
requested; or (iv) by facsimile transmission with voice confirmation of receipt,
to the parties at the following  addresses (or at such other address for a party
as shall be specified by like notice):

<PAGE>

i. If to BUYER to:

  The Hartcourt Companies, Inc.
  1198 E. Willow St.
  Long Beach, CA 90806 USA
  (562)426-9796
  Fax# (568)426-8896


ii. If to SELLER to:

  Financial Telecom Limited
  308 Hang Bong Commercial Centre,
  28 Shanghai Street
  Kowloon, Hong Kong
  (862)2868-0668
  Fax#(852)2877-5021

E.  Cooperation.  The parties agree to execute and deliver such other documents,
certificates,  agreements  and other  writings and to take such other actions as
may be necessary or desirable in order to expeditiously  consummate or implement
the transactions contemplated by this Agreement.

F.  Interpretation.  The headings  contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or  interpretation  of
this Agreement.

G. Delays or  Omissions.  No delay or omission to exercise  any right,  power or
remedy  accruing to any party to this  Agreement,  upon any breach or default of
another party under this Agreement, shall impair any such right, power or remedy
of such  party nor shall it be  construed  to be a waiver of any such  breach or
default,  or an acquiescence  therein, or of or in any similar breach or default
thereunder  occurring;  nor shall any  waiver of any  single  breach or  default
theretofore  or  thereafter  occurring  act as a waiver of any  other  breach or
default under this  Agreement.  Any waiver,  permit,  consent or approval of any
kind or character  on the part of any party of any breach or default  under this
Agreement,  or any  waiver  on  the  part  of any  party  of any  provisions  or
conditions of this Agreement,  must be in writing and shall be effective only to
the extent  specifically  set forth in such writing subject to the provisions of
Section 7 hereof.  Except as otherwise  provided  herein,  all remedies,  either
under this  Agreement,  or by law or otherwise  afforded to any party,  shall be
cumulative and not alternative.

H.  Counterparts.  This Agreement may be executed in any number of counterparts,
each of which may be  executed  by less than all of the  parties,  each of which
shall be enforceable  against the parties actually  executing such counterparts,
and all of which together shall constitute one instrument.

<PAGE>

I.  Severability.  If any provision of this Agreement or any Ancillary  Document
entered into pursuant  hereto is contrary to,  prohibited  by or deemed  invalid
under  applicable law or regulation,  such provision shall be  inapplicable  and
deemed  omitted  to the  extent so  contrary,  prohibited  or  invalid,  but the
remainder hereof shall not be invalidated  thereby and shall be given full force
and  effect  so far as  possible.  If any  provision  of this  Agreement  may be
construed in two or more ways,  one of which would render the provision  invalid
or  otherwise  voidable or  unenforceable  and another of which would render the
provision  valid and  enforceable,  such provision  shall have the meaning which
renders it valid and enforceable.

J.  Attorney's  Fees.  In the event any  arbitration,  litigation or other legal
action or proceeding is brought  between the parties to enforce any provision of
this  Agreement  or  because  of  an  alleged   dispute,   breach,   default  or
misrepresentation  in  connection  with any  provision  of this  Agreement,  the
prevailing  party will be entitled to an award of  judgment  for all  reasonable
costs incurred by reason of such  proceeding,  including  reasonable  attorneys'
fees even if incident to appellate,  bankruptcy,  post-judgment  or  alternative
dispute resolution proceedings,  payments owed to arbitrators,  travel expenses,
per diem  expenses,  witness fees,  investigative  fees,  paralegal fees and all
other reasonable charges billed by an attorney for the prevailing party. A party
not entitled to recover its costs shall not recover  attorneys' fees. No sum for
attorneys'  fees shall be counted in  calculating  the amount of a judgment  for
purposes  of  determining  whether a party is  entitled  to recover its costs or
attorneys' fees.

K. Specific Performance.  Each of the parties acknowledges that the parties will
be  irreparably  damaged (and damages at law would be an  inadequate  remedy) if
this Agreement is not specifically enforced. Therefore, in the event of a breach
or threatened  breach by any party of any provision of this Agreement,  then the
other parties shall be entitled  subject to the  provisions of Section 9 hereof,
in addition to all other rights or remedies,  to  injunctions  restraining  such
breach,  without being required to show any actual damage or to post any bond or
other security,  unless the court  adjudicating  the motion for equitable relief
otherwise  requires a bond,  in which case the parties  agree that a bond in the
amount of $1,000 is sufficient and appropriate.

L.  Waivers.  No  action  taken  pursuant  to  this  Agreement,   including  any
investigation by or on behalf of any party hereto, shall be deemed to constitute
a waiver by the party taking such action of compliance with any  representation,
warranty,  covenant or agreement  contained herein or in any Ancillary Document.
The waiver by any party hereto of a breach of any  provision  of this  Agreement
shall not operate or be construed as a waiver of any subsequent breach.

M.  Rules of  Construction.  In this  Agreement,  unless the  context  otherwise
requires, words in the singular include the plural and in the plural include the
singular, and words of masculine gender include the feminine and the neuter, and
when the sense so indicates  words of the neuter gender may refer to any gender,
and the word "his" may include "its".

<PAGE>

N.  Jurisdiction.  Each  of  the  parties  hereto  irrevocably  consents  to the
exclusive  jurisdiction  of the federal and state courts  located in Los Angeles
County,  California,  in any and all actions between or among any of the parties
hereto, whether arising hereunder or otherwise.



IN WITNESS WHEREOF, the parties have executed this Agreement as of the day first
above written.




BUYER:

THE HARTCOURT COMPANIES, INC.,
a Utah corporation, USA



By:_________________________
       Alan V. Phan, Chairman


SELLERS:

FINANCIAL TELECOM LIMITED,
a Hong Kong corporation



By:_________________________
   Stephen Tang, Managing Director

<PAGE>

Schedule 1(a)(iv)

Bonus, Compensation, Health and Other Plans

Bonus
Bonus  may be paid to the  staff  members  from  time to  time  based  on  staff
performance and profitability of the company while such payment is solely at the
discretion of the company.


Compensation - Overtime
Overtime work with prior approval of immediate supervisor is subject to overtime
pay based on the following formula :-

       Overtime pay per hour = Basic monthly salary / 8 hours / 30 days x 1.5

Minimum overtime work being 30 minutes.

Compensation - Vacation Leave and Casual Leave

Staff member having  completed the probation  period is entitled to pay vacation
leave of :

         14 working  days for the first year 17 working days for the second year
         and thereafter
         21 working  days per year for staff  member who is also the  authorized
signatory of the company

Vacation leave entitlement is calculated on the fiscal year basis from July 1 to
June 30 starting from the joining date of staff member.  A maximum of 14 days of
unclaimed leave is allowed for rolling over to the succeeding fiscal year, while
the unclaimed leave in excess of 14 days will be forfeited.

Casual leave application will be considered on the merits of the individual case
and requires  approval by the  department  head in advance,  whenever  possible.
Casual leave taken wil offset the balance of vacation leave of the staff member.


Compensation - Advance Leave
No advance  leave will be allowed to staff  member  except  under the  following
situations :

       Examinations
       Marriage
       Emergency

and provided that sound and proven evidence is available for  consideration  and
approval  by  supervisor,  and that the staff  member has served the company for
more than 3 months.  Under NO  circumstances  however,  that more than 7 days of
advance leave will be granted.

<PAGE>

Schedule 1(a)(iv)  continued

Compensation - Meal and Travel Allowance
Meal  allowance of HK$30 will be paid to staff member  having  overtime  work of
over 3 hours and that such work period  either  cover 1:00 pm on  Saturdays  and
Holidays or 8:30 pm on weekings.

Travel  allowance of HK$30 will be paid to staff  member  having  overtime  work
beyond 10:00 pm on any working day or on Sunday or public holiday.

Compensation - Education Allowance
Subject to prior approval by department  head,  staff member will be entitled to
reimbursement  of education fees including  course fees and examination  fees on
subjects directly related to the job nature of the staff member.

Health Plan [Refer to Attachment  1(a)(iv)]  Staff member is entitled to company
medical benefits from either :

      Government Hospital / Clinics Consultations
      Staff  member  to pay 100% of total  bill  amount  first  and to claim for
      reimbursement of 70% from the company subsequently

      Doctors of the SMS Group
      Staff  member  to pay 30% of the bill for  General  Care  consultation  in
      clinic,  remaining 70% to be settled by the company.  For Specialist  Care
      consultation referred by the General Care doctors,  staff will have to pay
      HK$140 in  clinic,  remaining  HK$160 to be settled  by the  company.  For
      laboratory and X-ray tests referred by the panel doctors,  staff will have
      to pay 30% of the bill and the company will settle the remaining 70%.

      A ceiling of HK$3,000 on the above  benefits  will be  applicable  to each
      staff member per annum.

      Hospitalization Allowance
      A ceiling of HK$3,000 for reimbursement of  hospitalization  expenses will
      also be applicable to each staff member per annum

<PAGE>

Schedule 2(b)(i)

Authorized, Issued and Outstanding Capital Stock

COMMON STOCK

Authorized:

[   8,800,000    ] Shares Authorized.

Outstanding:   3,519,349


 Shareholder                       Shares                   Percentage

Bowland International Limited      3,427,349                97.39%

Tang Wing On                          92,000                 2.61%
                                   ---------                -------
                                   3,519,349               100.00%

No other common stock is outstanding.

PREFERRED STOCK

NIL

<PAGE>

Schedule 2(g)

FINANCIAL STATEMENTS

                                   Attachment
Details                                                          Reference
-------------------------------------------------------------    -------------

Audited Financial Statements for the year ended June 30, 1996         2(g)-1

Audited Financial Statements for the year ended June 30, 1997         2(g)-2

Audited Financial Statements for the year ended June 30, 1998         2(g)-3

Financial Statement for the eight (8) months ended February 28, 1999  2(g)-4

<PAGE>

Schedule 2(j)

Insurance Policies and Claims

Refer to Attachment 2(j)

<TABLE>
<CAPTION>

I N S U R A N C E    P O L I C I E S

                                                 Policy             Expiry    Insurance                    Sum
Coverage Details                                 Number              Date     Company                    Insured
                                                                                                          (HK$)
<S>                                              <C>               <C>        <C>                         <C>

Financial Telecom Limited
Employee' Compensation                           W53-041442        31/12/99   Wing Lung Insurance         $1,427,000
Public Liability - Office                        W53-041443        31/12/99   Wing Lung Insurance         $2,000,000
Public Liability - Satellite Disc & Equip.       W53-041444        31/12/99   Wing Lung Insurance         $5,000,000
Public Liability - Transmission Sites            W53-041445        31/12/99   Wing Lung Insurance         $5,000,000
Burglary                                         W53-041446        31/12/99   Wing Lung Insurance           $120,000
Money In Transit                                 W67-045012        30/06/00   Wing Lung Insurance            $30,000
Commercial Fire - Transmitter & Equip.           W11-137909        30/06/00   Wing Lung Insurance           $900,000
Fire & Extended Perils - F & F, Computers        100000805         02/02/00   Sedgwick                    $1,350,000


Topomedia
Buildings - Hang Bong Commercial Centre          W11-136533        16/05/00   Wing Lung Insurance         $5,000,000


Bowland
Buildings - Hang Bong Commercial Centre          W11-136532        16/05/00   Wing Lung Insurance         $3,000,000

</TABLE>

<PAGE>

Schedule 2(k)

Material Personal Property

NIL

<PAGE>

Schedule 2(k)(iii)

Real Property Leases


                                     Office

Landlord:                         Bowland International Ltd

Agreement Details:                Leased Agreement of Office Premises

Leased Location:                  Shop No. 5 & 6, 3/F, Hang Bong Commercial
                                  Centre
                                  28 Shanghai Street, Kowloon, Hong Kong

Current Period:                   Feb 5, 1999 to Feb 4, 2002

Monthly Rental:                   HK$21,573.00 per month
                                  (rates,  utility  bills and management fee are
                                  paid by Tenant)

Refer to Attachment 2(k)(iii)-1



                               Transmission Sites

Refer to Attachment 2(k)(iii)-2

<PAGE>

Schedule 2(k)(iv)

Property, Machinery and Equipment

Refer to Attachment 2(k)(iv)

<PAGE>

Schedule 2(l)

Licenses, Certificates and Permits and
Pending/Threatened Proceedings

<TABLE>
<CAPTION>

Licenses:
                                                                             Effective /        Attachment
Authority Name                         Licence Details                       Expiry Date        Reference

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

Office of the Telecommunications       Public Radiocommunication             May 1, 1996 /          2(l)-1
  Authority                              Service Licence                     April 30, 2006
(Licence No: 054)

Post Office Telecom Licensing          Radio Dealers Licence (Restricted)    Jan 11, 1988 /         2(l)-2
  Office - Hong Kong                                                             **

</TABLE>

** No expiry date.  Agreement is  continuous  until notice of  termination  from
either party.

<TABLE>
<CAPTION>

Certificate:
                                                                             Issue               Attachment
Issuance Office                        Name of Certificate                   Date                Reference

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

Registrar of Companies                 Certificate of Incorporation          Jun 10, 1983           2(l)-3

Inland Revenue Department              Business Registration Certificate     Jun 10, 1999           2(l)-4
                                                                             (renew annually)

</TABLE>

<PAGE>

Schedule 2(m)

Regulatory Filings


Filing Document                        Year of Filing      Attachment Reference

Annual Return                             1999                   2(m)-1

Profits Tax Computation                   1996/97                2(m)-2

Profits Tax Computation                   1997/98                2(m)-3

Profits Tax Computation                   1998/99                2(m)-4

<PAGE>

Schedule 2(n)(i)

Material Contracts

<TABLE>
<CAPTION>

                                                                                 Effective /    Attachment
Vendor                                 Contract Details                          Expiry Date     Reference

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

Bowland International Ltd              Tenancy Agreement for Office Premises     Feb 5, 1995 /     2(n)(i)-1
                                                                                 Feb 4, 2002

China Motion Telecom (HK) Ltd          Radio Paging Network Operation            Mar 1, 1998 /     2(n)(i)-2
                                                                                     **

Hong Kong Futures Exchange Ltd         Provision of Real Time Composite Signal   Jan 1, 1998 /     2(n)(i)-3
                                                                                     **

Internet Access H.K. Ltd               Real-time Online Financial Data and        Jul 29, 1996 /   2(n)(i)-4
                                         Information through Internet                **

Korea Leasing (Hong Kong) Ltd          Property Mortgage Loan to Bowland         May 17, 1994 /    2(n)(i)-5
                                         International Ltd on Office Premises    May 16, 2009


Omega Research                         International Reseller on Omega's         Feb 20, 1998 /    2(n)(i)-6
                                         Product in Hong Kong                    Feb 19, 2000

Shanghai VSAT Network Systems          Transmission of Real-time AFX news        May 6, 1998 /     2(n)(i)-7
  Co Ltd                                 through Satellite for News Translation       **

Sino Information Services Co Ltd       Distribution of Financial Data and        Jan 19, 1996 /    2(n)(i)-8
                                         Information from Bank of China            **

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                                                 Effective /    Attachment
Vendor                                 Contract Details                          Expiry Date     Reference

<S>                                    <C>                                       <C>            <C>
Commodity Quotations, Inc.             ComStock Information Distribution         Dec 1, 1990 /     2(n)(i)-9
                                         License Agreement                             #

Stock Exchange Information             Provision of Market Datafeed Service      Apr 1, 1998 /     2(n)(i)-10
  Services Ltd                                                                         **

Tse's Forex Investment Co Ltd          Distribution of Foreign Exchange          Sep 26, 1995 /    2\(n)(i)-11
                                         Quotation from Tse's Co.                       **

Commodity Quotations, Inc.             ComStock Service Marketing                May 1, 1991 /     2(n)(i)-12
                                         Representative Agreement                       #

</TABLE>

**   No expiry date.  Agreement is continuous  until notice of termination  from
     either party.

#    Renewed by verbal agreement.  Valid until notice of termination from either
     party.

<PAGE>

Schedule 2(n)(ii)

Contracts in Default

NIL

<PAGE>

Schedule 2(n)(iii)

Related Party Contracts


Nature of Contract:            Tenancy Agreement

Party:                         Bowland International Ltd

Relationship:                  1.    Mr  Tang   Ping  Wing is both the  Director
                                     of    Bowland    International    Ltd   and
                                     Financial Telecom Ltd.

                               2.    Mr Tang Wing On is both the  shareholder of
                                     Bowland  International  Ltd  and  Financial
                                     Telecom Ltd.

Refer to Attachment 2(n)(iii)

<PAGE>

Schedule 2(o)

Litigation Summary

NIL

<PAGE>

Schedule 2(q)

Interested Party Transactions.

NIL

<PAGE>

Schedule 2(s)

Bank Accounts

<TABLE>
<CAPTION>

Bank Name                      Address                     Account No.                  Signatories
<S>                        <C>                            <C>                           <C>

Wing Lung Bank Ltd         Ground Floor                   S/A#06-201-6354-2             Class A & B
                           12 Queen's Road Central        C/A#06-000-4115-6
                           Hong Kong

Standard Chartered Bank    Shop 101                       C/A#343-0-007752-1            Class A & B
                           One Exchange Square
                           Central, Hong Kong

Bank of China              Bank of China Tower            C/A#012-875-00203399          Class A & B
                           1 Garden Road Central
                           Hong Kong

Hongkong Bank              Shop 101, Pioneer Centre       S/A#472-1-006163              Class A & B
                           750 Nathan Road, Kowloon       C/A#472-017680-001
                           Hong Kong

Bank of East Asia Ltd      Ground Floor                                                 Class A only
                           10 Des Voeux Road Central      C/A#514-40-33884-2
                           Hong Kong

</TABLE>

Signatories of Class A includes:  Tang Wing On, Pang Kam Wing & Tang Ping Wing
Signatories of Class B includes:  Yeung Lai Ping & Lai Shuk Har

Remarks:  All bank  signature must be signed by two  signatories  and one of the
signatory must be in Class A.

<PAGE>

Schedule 2(t)(i)

Employment, Consulting and Other Personal Service Contracts


                              Employment Contracts

Employee  Position/Job Description  Hire Date Annual Salary

Refer to Attachment 2(t)(i)  (inside sealed envelope)

<TABLE>
<CAPTION>

                              Consulting Contracts

Name of Party                  Service                              Monthly Charge        Termination
<S>                            <C>                                  <C>                   <C>

ABC Data & Telecom Ltd         General consultancy and computer     HK$27,000             3 months advance *
                                 software development                                       notice

Mr Eric Yuen                   General consultancy on software      HK$3,000 plus         1 month advance **
                                 development                        HK$250 per hour         notice

</TABLE>

*       Agreement being prepared

**      Verbal contract

<PAGE>

Schedule 2(w)

Proprietary Rights

Right     Description    Expiration


NIL

<PAGE>

                                ESCROW AGREEMENT



         This ESCROW AGREEMENT (the "Agreement") is effective as of September 9,
1999 by and among The  Hartcourt  Companies,  Inc.,  a Utah  corporation,  whose
principal  executive  office is located at 1198 E.  Willow St.,  Long Beach,  CA
90806 ("Buyer"),  Financial Telecom Limited ("Seller"),  a Hong Kong corporation
with principal  office at 308 Hang Bong Commercial  Centre,  28 Shanghai Street,
Kowloon,  Hong Kong and Patrick Chan & Co., whose principal office is located at
18/F, The China and South Sea Building,  22-26 Bonham  Strand,  Sheung Wan, Hong
Kong (the "Escrow Agent"), with reference to the following facts:

RECITALS:

         WHEREAS,  Buyer and Seller have  entered  into a separate  agreement on
August 17, 1999 for the purchase and sale of 58.53  percent of the common shares
of Seller,  for the purchase  price of 4.713 Hong Kong Dollars per share,  total
shares  being  4,964,990  common  shares of FTL the total  purchase  price being
HK$23.4 Million which purchase price is payable as follows:  Fifty (50%) percent
of said purchase price (HK$11.7 Million) shall be paid in cash and a like sum to
be paid in common shares of Buyer or any  acceptable  NASD listed  company under
the following terms, conditions and schedules, and

         WHEREAS, Buyer and Seller do hereby agree that the purchase price shall
be paid as follows:

         A. On or before September 20, 1999, Buyer shall deposit with the Escrow
Agent HK$ 3.9 million  (hereinafter called "Escrow B1") and Seller shall deposit
827,498 of its common shares with said Escrow Agent (hereinafter  called "Escrow
S1").  Upon  receipt  of  Escrow  B1 by the  Escrow  Agent,  the  Seller  hereby
irrevocably  authorizes  the Escrow  Agent to release and the Escrow Agent shall
release  Escrow S1 to the Buyer.  Upon receipt of Escrow S1 by the Escrow Agent,
the Buyer  irrevocably  authorizes  the Escrow  Agent to release  and the Escrow
Agent shall release Escrow B1 to the Seller.

         B. On or before  October  15,  1999,  Buyer will  deliver to the Escrow
Agent its common  shares or common  shares of  another  acceptable  NASD  listed
company equivalent in value to HK$ 11.7 Million (hereinafter called "Escrow B2")
with the  price  per share and  consequential  number  of shares  determined  in
accordance  with the  formula  agreed  to in the  previously  executed  purchase
agreement of August 17, 1999. Seller will inform the Escrow Agent in writing the
contents  of  Escrow B2 on or before  October  15,  1999.  Seller  will  deliver
4,137,492 of its common shares (hereinafter called "Escrow S2") which shares

<PAGE>

represent  the  balance  of its  shares  which  shall  result  in  Buyer  having
Fifty-Eight and Fifty Three  Hundredths  (58.53%)  Percent  ownership of Seller.
Upon  fulfillment of these  conditions by Buyer and Seller,  the Escrow Agent is
hereby  authorized  by Buyer  and by Seller  to  deliver  Escrow S2 to Buyer and
Escrow B2 to Seller.

         C On or before October 20, 1999, Buyer shall pay directly to Seller HK$
3.9 Million.

         D. On or before  November 20, 1999,  Buyer shall pay directly to Seller
HK$ 3.9 Million in final payment of its purchase.
 .
Buyer  and  Seller  further  agree and  understand  that the  provisions  herein
contained  shall  supercede and take  precedence  over the "payment"  provisions
previously  executed by Buyer and Seller in the Stock Purchase Agreement and the
above  provisions A, B, C and D replace  Section  1-A.iii of the Stock  Purchase
Agreement executed by and between Buyer and Seller.


         WHEREAS,  Buyer and Seller have  requested  the Escrow  Agent to act as
escrow agent for the transactions  contemplated in this Agreement, and to accept
the delivery of documents,  funds and shares, and to disburse such shares, funds
and documents, in accordance with the terms of this Agreement; and

         WHEREAS,  the Escrow  Agent is amenable to acting in such  separate and
independent capacity pursuant to the terms and conditions of this Agreement.

         NOW,  THEREFORE,  in consideration of the mutual covenants and promises
contained herein, and for valuable consideration, the receipt and sufficiency of
which  are  hereby  mutually   acknowledged,   the  parties  to  this  Agreement
(collectively "parties," and individually "party") agree as follows:

AGREEMENT:

         1. ACCEPTANCE OF DOCUMENTS, FUNDS AND SHARES; RELATIONSHIP TO BUYER

The Escrow Agent agrees to accept for retention all documents,  funds and shares
from Buyer and Seller, which may only be disbursed as described above. Buyer and
Seller acknowledge and agree that the Escrow Agent is performing this service at
the request  of, and as an  accommodation  to Buyer and  Seller.  Except for the
duties of the Escrow Agent to disburse  documents,  funds and shares as provided
by the Agreement,  the Escrow Agent shall have no duties or obligations to Buyer
or Seller or any of them,  and,  in any  event,  the Escrow  Agent  shall not be
presumed,  implied or otherwise construed to be acting as legal counsel to Buyer
or Seller or any of them. The Escrow Agent shall have no responsibility  for any
funds or shares not transmitted to the Escrow Agent.

<PAGE>

         2. RESPONSIBILITIES AND DUTIES OF THE PARTIES

            (a) Deliveries by the Parties: Delivery of the escrow items shall be
made in the  manner  and  amounts  as above set forth in  Sections A and B above
written.

         3.  DISBURSEMENT OF ESCROWED  DOCUMENTS,  FUNDS AND SHARES TO THE BUYER
AND SELLER

            (a) In the event that all the terms of this  Agreement  are complied
with, and Buyer and Seller have fulfilled all  requirements  set forth for each,
then in that event the Escrow Agent shall disburse to each documents,  funds and
shares in accordance with Sections A and B hereinabove set forth.

         4. DISCHARGE OF ESCROW AGENT'S OBLIGATIONS

The  obligations  of the Escrow  Agent for the  documents  and  shares  received
hereunder shall  terminate upon the  disbursement of all documents and shares to
Buyer pursuant to the terms of this Agreement.

         5. COMPENSATION

The Escrow Agent shall receive such  compensation for its services  hereunder as
shall be agreed to by Buyer, Seller and the Escrow Agent.

         6. MATTERS PERTAINING TO ESCROW AGENT

            (a) No Liability for Acts; Indemnity.  The Escrow Agent shall not be
personally liable for any act it may do or omit to do under this Agreement while
acting in good faith and in the exercise of its best judgment. In the event of a
dispute between Buyer and Seller, except as otherwise expressly provided herein,
the Escrow Agent is authorized  and directed to disregard any and all notices or
warnings given by Buyer, excepting only: (i) orders or process of court; or (ii)
instructions  jointly  executed by Buyer and Seller.  The Escrow Agent is hereby
expressly  authorized  to comply with and obey any and all orders,  judgments or
decrees issued by any court and any  instructions  jointly executed by Buyer and
Seller.  Buyer and Seller shall  indemnify the Escrow Agent and hold it harmless
from and against  any and all  damages,  including  attorneys'  fees,  which the
Escrow Agent may suffer or incur by reason of the compliance by the Escrow Agent
with any such order,  judgment or decree,  notwithstanding  that any such order,
judgment or decree may be subsequently reversed,  modified,  annulled, set aside
or vacated, or found to have been entered without jurisdiction.

<PAGE>

            (b) Right to File  Interpleader  Action.  The  Escrow  Agent has the
absolute  right,  at  the  Escrow  Agent's  election,   to  file  an  action  in
interpleader  in a court of proper  jurisdiction  requiring  Buyer to answer and
litigate  their  claims and rights  among  themselves,  and the Escrow  Agent is
authorized  to  deposit  with the clerk of the court  all  documents,  funds and
shares held by it pursuant to this Agreement. In the event such action is filed,
Buyer agrees to equally pay all costs,  expenses and reasonable  attorneys' fees
which the Escrow Agent incurs in such interpleader  action.  Upon filing of such
action,  the Escrow Agent shall  thereupon be fully released and discharged from
all obligations to further perform any duties or obligations  otherwise  imposed
by the terms of this Agreement.

            (c) Sole Agreement  between the Parties.  The Escrow Agent shall not
be bound in any way by any other agreement  between Buyer and Seller as to which
the Escrow Agent is not a party,  whether or not the Escrow Agent has  knowledge
thereof.  The Escrow  Agent shall have no duties or  responsibilities  except as
expressly set forth in this Agreement. The Escrow Agent may rely conclusively on
any  certificate,  statement,  request,  waiver,  receipt,  agreement  or  other
instrument which the Escrow Agent believes to be genuine and to have been signed
and  presented  by an  appropriate  person  or  persons,  including  copies  and
facsimiles.

            (d) Performance and Release.  The retention and  distribution of the
documents,  funds and shares in accordance with the terms and provisions of this
Agreement  shall  fully  and  completely  release  the  Escrow  Agent  from  any
obligation  or  liability  assumed  by the  Escrow  Agent  hereunder  as to such
documents, funds or shares.

            (e) No Liability for Acceptance of Documents,  Funds or Shares.  The
Escrow  Agent  shall not be liable in any respect for  verifying  the  identity,
authority or rights of the parties  executing or  delivering  or  purporting  to
execute and/or deliver the documents, funds or shares deposited hereunder.

            (f) Indemnity. Buyer and Seller will indemnify, defend (with counsel
acceptable to the Escrow Agent) and hold the Escrow Agent  harmless  against any
and all losses,  damages,  claims and expenses,  including reasonable attorneys'
fees,  that may be incurred by the Escrow Agent by reason of its compliance with
the terms of this Agreement.  If, as a result of any disagreement  between Buyer
and/or  adverse  demands  and  claims  being made by any of them upon the Escrow
Agent,  the Escrow  Agent shall become  involved in  litigation,  including  any
interpleader  action  brought  by the  Escrow  Agent  as  provided  for in  this
Agreement,  Buyer and Seller shall be liable to the Escrow Agent, on demand, for
all costs, expenses and attorneys' fees that the Escrow Agent shall incur and/or
be compelled to pay by reason of such litigation.

<PAGE>

         7. REPLACEMENT OF ESCROW AGENT

            In the event the Escrow  Agent is or becomes  unwilling or unable to
act in such capacity for any reason,  Buyer and Seller shall  jointly  appoint a
successor.

         8. MISCELLANEOUS

            (a) Cooperation.  Each party agrees,  without further consideration,
to cooperate and diligently perform any further acts, and to execute and deliver
any documents that may be reasonably  necessary or otherwise reasonably required
to consummate,  evidence,  confirm and/or carry out the intent and provisions of
this Agreement, all without undue delay or expense.

            (b) Interpretation.

               (i) Survival.  All  representations  and  warranties  made by any
party in connection with any transaction  contemplated by this Agreement  shall,
irrespective  of any  investigation  made by or on  behalf  of any  other  party
hereto,  survive  the  execution  and  delivery  of  this  Agreement,   and  the
performance or consummation of any transaction described in this Agreement.

               (ii) Entire Agreement/No Collateral Representations.  The parties
expressly acknowledge and agree that this Agreement,  (1) is the final, complete
and  exclusive  statement  of the  agreement  of the parties with respect to the
subject matter hereof and that this escrow agreement shall complete the relevant
and  necessary  agreement  among  the  parties,  (2)  supersedes  any  prior  or
contemporaneous  agreements,  proposals,  commitments,  guarantees,  assurances,
communications, discussions, promises, representations, understandings, conduct,
acts,  courses of dealing,  warranties,  interpretations or terms of any kind as
pertains to creation of this escrow,  whether oral or written  (collectively and
severally, the "prior agreements"), and that any such prior agreements are of no
force or effect except as expressly set forth herein; and (3) may not be varied,
supplemented or contradicted by evidence of prior agreements,  or by evidence of
subsequent oral agreements.  No prior drafts of this Agreement,  and no words or
phrases from any prior drafts,  shall be admissible  into evidence in any action
or suit involving this Agreement.

               (iii)  Amendment;   Waiver;  Forbearance.   Except  as  expressly
provided  otherwise  herein,  neither  this  Agreement  nor  any of  the  terms,
provisions,  obligations or rights contained herein,  may be amended,  modified,
supplemented,  augmented,  rescinded,  discharged or  terminated  (other than by
performance), except by a written instrument or instruments signed by all of the
parties to this  Agreement.  No waiver of any breach of any term,  provision  or
agreement contained herein, or of the performance of any act or obligation under
this  Agreement,  or of any extension of time for performance of any such act or
obligation, or of any right granted under this Agreement, shall be effective and

<PAGE>

binding  unless  such waiver  shall be in a written  instrument  or  instruments
signed by each party  claimed to have given or consented to such waiver and each
party  affected by such  waiver.  Except to the extent that the party or parties
claimed to have given or  consented  to a waiver  may have  otherwise  agreed in
writing,  no such waiver shall be deemed a waiver or relinquishment of any other
term,  provision,  agreement,  act,  obligation  or  right  granted  under  this
Agreement,  or any preceding or subsequent  breach thereof.  No forbearance by a
party to seek a remedy for any  noncompliance  or breach by another party hereto
shall be  deemed  to be a waiver  by such  forbearing  party of its  rights  and
remedies with respect to such noncompliance or breach,  unless such waiver shall
be in a written instrument or instruments signed by the forbearing party.

               (iv) Remedies  Cumulative.  The remedies of each party under this
Agreement are  cumulative and shall not exclude any other remedies to which such
party may be lawfully entitled.

               (v)  Severability.  If any term or provision of this Agreement or
the application  thereof to any person or circumstance  shall, to any extent, be
determined to be invalid, illegal or unenforceable under present or future laws,
then, and in that event:  (1) the performance of the offending term or provision
(but only to the extent its  application is invalid,  illegal or  unenforceable)
shall be excused as if it had never been incorporated into this Agreement,  and,
in lieu of such excused  provision,  there shall be added a provision as similar
in terms and amount to such  excused  provision as may be possible and be legal,
valid and enforceable;  and (2) the remaining part of this Agreement  (including
the  application of the offending term or provision to persons or  circumstances
other than those as to which it is held invalid, illegal or unenforceable) shall
not be  affected  thereby,  and shall  continue  in full force and effect to the
fullest extent provided by law.

               (vi) Time of the Essence.  It is expressly  understood and agreed
that time of  performance  is strictly of the essence  with  respect to each and
every  date,  term,  condition,  obligation  and  provision  hereof and that the
failure  to  timely  perform  any  of  the  terms,  conditions,  obligations  or
provisions  hereof  by any  party  shall  constitute  a  material  breach  and a
noncurable (but waiveable)  default under this Agreement by the party so failing
to perform.

               (vii) Parties in Interest.  Notwithstanding  anything else to the
contrary  herein,  nothing in this Agreement shall confer any rights or remedies
under or by reason of this  Agreement  on any  persons  other  than the  parties
hereto and their respective  successors and assigns, if any, as may be permitted
hereunder,  nor shall  anything  in this  Agreement  relieve  or  discharge  the
obligation or liability of any third person to any party to this Agreement,  nor
shall any  provision  give any third person any right of  subrogation  or action
over or against any party to this Agreement.

<PAGE>

               (viii)  No  Reliance  Upon  Prior   Representation.   Each  party
acknowledges  that:  (1) no other  party  has made  any oral  representation  or
promise  which would  induce them prior to  executing  this  Agreement to change
their position to their detriment,  to partially perform,  or to part with value
in reliance upon such  representation or promise;  and (2) such party has not so
changed its  position,  performed  or parted with value prior to the time of the
execution  of this  Agreement,  or such party has taken  such  action at its own
risk.

               (ix)  Headings;  References;  Incorporation;   "Person";  Gender;
Statutory  References.  The headings used in this Agreement are for  convenience
and reference purposes only, and shall not be used in construing or interpreting
the scope or intent of this Agreement or any provision hereof

            (c) Enforcement.

               (i) Applicable Law. This Agreement and the rights and remedies of
each party  arising  out of or relating to this  Agreement  (including,  without
limitation,  equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in  accordance  with the laws (without  regard to the
conflicts of law  principles) of the  jurisdiction  as is set forth in the Stock
Purchase Agreement entered into between the parties.

               (ii) Consent to Jurisdiction;  Service of Process. Any "action or
proceeding"  (as such term is defined  below) arising out of or relating to this
Agreement  shall be filed in and heard and  litigated  solely  before  the state
courts  of  California  located  within  the  County  of Los  Angeles,  State of
California,  United States of America.  Each party generally and unconditionally
accepts the exclusive jurisdiction of such courts and venue therein; consents to
the  service  of  process  in any such  action or  proceeding  by  certified  or
registered  mailing of the summons and complaint in  accordance  with the notice
provisions of this Agreement; and waives any defense or right to object to venue
in said  courts  based upon the  doctrine  of "forum non  conveniens."  The term
"action  or  proceeding"  is  defined  as any and all  claims,  suits,  actions,
hearings,  arbitrations  or other  similar  proceedings,  including  appeals and
petitions   therefrom,    whether   formal   or   informal,    governmental   or
non-governmental, or civil or criminal.

               (iii)  Recovery  of Fees and Costs.  If any party  institutes  or
should the parties  otherwise  become a party to any action or proceeding  based
upon or arising out of this Agreement including,  without limitation, to enforce
or interpret this Agreement or any provision hereof, or for damages by reason of
any  alleged  breach  of  this  Agreement  or  any  provision  hereof,  or for a
declaration of rights in connection herewith, or for any other relief, including
equitable relief, in connection  herewith,  the "prevailing party" (as such term
is defined below) in any such action or  proceeding,  whether or not such action
or proceeding proceeds to final judgment or determination,  shall be entitled to
receive from the non-prevailing party as a cost of suit, and not as damages, all

<PAGE>

reasonable  fees,  costs and expenses of enforcing  any right of the  prevailing
party  (collectively,  "fees and costs"),  including,  without  limitation:  (1)
reasonable  attorneys' fees and costs and expenses;  (2) witness fees (including
experts engaged by the parties, but excluding shareholders,  officers, employees
or partners of the parties);  (3) fees,  costs and expenses of  accountants  and
other  professionals;  and (4) any and all other  similar  fees  incurred in the
prosecution  or  defense  of  the  action  or  proceeding   including,   without
limitation,  fees  incurred in the  following:  (A)  postjudgment  motions;  (B)
contempt  proceedings;  (C)  garnishment,  levy,  and  debtor  and  third  party
examinations; (D) discovery; and (E) bankruptcy litigation. All of the aforesaid
fees and costs shall be deemed to have  accrued  upon the  commencement  of such
action and shall be paid whether or not such action is  prosecuted  to judgment.
Any judgment or order entered in such action shall contain a specific  provision
providing for the recovery of the aforesaid fees, costs and expenses incurred in
enforcing  such judgment and an award of  prejudgment  interest from the date of
the breach at the maximum rate of interest  allowed by law. The term "prevailing
party" is defined as the party who is  determined  to prevail by the court after
its  consideration  of all  damages and  equities  in the action or  proceeding,
whether or not the action or  proceeding  proceeds to final  judgment (the court
shall retain the discretion to determine  that no party is the prevailing  party
in which case no party  shall be  entitled  to recover  its fees and costs under
this section 9(d)).

            (d) Successors and Assigns. All of the representations,  warranties,
covenants, conditions and provisions of this Agreement shall be binding upon and
shall inure to the benefit of each party and such party's respective  successors
and permitted assigns,  spouses, heirs,  executors,  administrators and personal
and legal representatives.

            (e)  Notices.   Unless  otherwise   specifically  provided  in  this
Agreement,  all  notices,  demands,  requests,   consents,  approvals  or  other
communications   (collectively  and  severally  called  "notices")  required  or
permitted  to be given  hereunder,  or which  are  given  with  respect  to this
Agreement,  shall be in writing,  and shall be given by: (i)  personal  delivery
(which form of notice shall be deemed to have been given upon delivery); (ii) by
telegraph  or by private  airborne/overnight  delivery  service  (which forms of
notice  shall be  deemed to have  been  given  upon  confirmed  delivery  by the
delivery agency);  (iii) by electronic or facsimile or telephonic  transmission,
provided the receiving party has a compatible device or confirms receipt thereof
(which forms of notice shall be deemed delivered upon confirmed  transmission or
confirmation  of  receipt);  or (iv) by  mailing in the  United  States  mail by
registered or certified mail, return receipt  requested,  postage prepaid (which
forms of notice  shall be deemed to have been given upon the fifth 5th  business
day following the date mailed). Each party, and their respective counsel, hereby
agree that if notice is to be given  hereunder  by such  party's  counsel,  such
counsel may communicate directly with all principals, as required to comply with
the foregoing notice provisions. Notices shall be addressed at the addresses

<PAGE>

hereinabove set forth in the  introductory  section of this Agreement or to such
other address as the receiving  party shall have specified most recently by like
notice,  with a copy to the other parties hereto. Any notice given to the estate
of a party shall be  sufficient  if  addressed  to the party as provided in this
section.  Any party  may,  at any time by giving  five (5) days'  prior  written
notice to the other parties,  designate any other address in substitution of the
foregoing address to which such notice will be given.

            (f)  Counterparts.  This Agreement may be executed in  counterparts,
each of which  shall be  deemed an  original,  and all of which  together  shall
constitute  one and the same  instrument,  binding on all  parties  hereto.  Any
signature  page of this  Agreement may be detached from any  counterpart of this
Agreement and reattached to any other counterpart of this Agreement identical in
form hereto by having attached to it one or more additional signature pages.

            (g) Execution by All Parties Required to be Binding;  Electronically
Transmitted Documents.  This Agreement shall not be construed to be an offer and
shall have no force and effect  until this  Agreement  is fully  executed by all
parties  hereto.  If a copy or  counterpart  of  this  Agreement  is  originally
executed and such copy or counterpart is thereafter  transmitted  electronically
by facsimile or similar device,  such facsimiled document shall for all purposes
be treated as if manually signed by the party whose facsimile signature appears.

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
date first written above.

                                        "BUYER"
                                        THE HARTCOURT COMPANIES, INC.
                                        a Utah corporation


                                        By:
                                             ---------------------------------
                                             Dr. Alan Phan, President

                                        "SELLER"
                                        FINANCIAL TELECOM LIMITED
                                        a Hong Kong Corporation


                                        By:
                                             ----------------------------------
                                             Stephen Tang, Managing Director


                                        "ESCROW AGENT"
                                        PATRICK CHAN & CO,
                                        Solicitors


                                        By:
                                             ----------------------------------