SHANGHAI, Jan. 19 /PRNewswire-Asia-FirstCall/ -- The Hartcourt Companies, Inc. (OTC Bulletin Board: HRCT; Frankfurt 900009) ("Hartcourt" or "the Company"), a growing provider of vocational education and technical training services in the People's Republic of China ("PRC"), today announced that it obtained profits in financial results for the second quarter ended November 30, 2009.
Second Quarter 2009 Highlights: -- Total revenues were $955,847 for the six months ended November 30, 2009, increased 11% from $859,963 in the same period 2008; -- Gross profit in the second quarter was $378,992 and gross margin was 76.0%; -- For the six months ended November 30, 2009, gross profit was $727,948 and gross margin was 76%; -- Operating expenses decreased 42.8% to $170,911 for the three months ended November 30, 2009 compared with that in the same period 2008; -- Net income was $55,829 for the three months ended November 30, 2009; -- Hartcourt entered in an engagement letter with KingWeet AMS, which helped on investor relations services.
"We continued to be optimistic on the prospects for China's vocational education market and are very pleased with our profitable results," said Ms. Amanda Zhang, Senior Vice President of The Hartcourt Companies, Inc. "Hartcourt's management believes the vocational education market in China has great potential and plans to capitalize on this opportunity to develop the business. In anticipation of Hartcourt's pending transaction with Sino-Canada Investment Group, management focused on reducing non-essential expenses in its existing businesses in the second quarter.
Second Quarter 2009 Results
Total revenues for the second quarter of 2009 decreased 22.5% to $498,909 from $643,996 in the second quarter of 2008. The Company believes this was primarily the result of recovery of the job market as less people turned to vocational education. In the second quarter of 2008, at the heights of the global financial crisis, many people had lost their jobs and even students could not find jobs, and many of them chose to take vocational education.
Gross profit in the second quarter of 2009 was $378,992 and gross margin was 76.0%.
Operating expenses in the second quarter of 2009 were $170,911, down 42.8% from 298,741 in the second quarter of 2008. During operating expense, general and administrative expenses were $57,763 compared to $293,246 for the same period in 2008, a decrease of $ 235,483 or 80.30%. The decrease of expenses was primarily due to the improvement of working efficiency and the decrease of unnecessary expenses. Depreciation and amortization expenses were $113,148 for the three months ended November 30, 2009 compared to $5,495 for the same period in 2008, or a $107,653 increase. The increase was primarily due to the acquisitions of Beijing Yanyuan and China Arts & Science Academy.
Operating income was $208,081 in the second quarter of 2009, compared to $311,473 in the second quarter of 2008. Provision for income taxes was $44,646 in the second quarter of 2009, compared to $74,391 in the same quarter of the previous year.
Net income for the second quarter of 2009 was $55,829, or $0.00 per diluted share, compared to $274,633, or $0.00 per diluted share, in the second quarter of 2008. Fully diluted weighted average shares increased to 386,966,816 from 255,430,112 in the second quarter of 2008.
Six Month Results
For the first half of 2009, revenues increased to $955,847, up 11% from $859,963 in the corresponding period of 2008. Gross profit was $727,948 in the first six months of 2009, versus $806,640 in the same period a year ago. Operating income in the first half of 2009 decreased to $264,976 compared to $377,197 in the first half 2008. Net loss for the first six months of 2009 was $32,417 or $ 0.00 per diluted share, while net income was $251,571, or $0.00 per diluted share in the first half of 2008.
As of November 30, 2009, Hartcourt had $2.6 million in current assets, a 45.8% increase over $1.8 million recorded at May 31, 2009 without debt. Stockholders' equity at November 30, 2009 slightly increased to $4.3 million compared to $4.0 million at May 31, 2009. The Company used $95,640 in net cash flow from operating activities in the first half of 2009, up from $202,788 in the same quarter of 2008.
On January 7, 2010, Hartcourt entered into an engagement letter with KingWeet AMS, an investor relations firm, to provide investor relations services for a period commencing January 7, 2010 and ending December 31, 2010. The company's management believes that Hartcourt is a well established educational service provider in China and is well positioned to take advantage of a largely untapped, emerging market and will work with KingWeet AMS to realize shareholder value for many years to come.
About KingWeet International Ltd. After Market Support (KingWeet AMS)
KingWeet AMS is a financial marketing firm specializing in creating liquidity for publicly traded stocks and a wholly owned subsidiary of Keating International Ltd. KingWeet AMS is uniquely positioned to provide an outsourced, high-level investor relations solution that combines in-depth understanding of China's corporate culture and economic scene with a direct pipeline into the leading funds and broker-dealers in the United States. KingWeet AMS is a global, full-service investor relations agency with corporate headquarters in Hong Kong, and offices in New York, Hong Kong and Shanghai. For more information, contact KingWeet AMS.
About Hartcourt Companies, Inc.
Founded in 1983, Hartcourt is a U.S. corporation with subsidiaries in China and other jurisdictions. Hartcourt moved its headquarters to Shanghai, China in 2002. In August 2006, Hartcourt changed its business model to focus on the education market in China. From May 2007 to October 2008, Hartcourt completed the acquisition of China Princely Education Technology Development Company Limited, an authorized accrediting organization for China vocational education located in Beijing, PRC sixty percent of the outstanding equity of Beijing Yanyuan Rapido Education Company, a well-known training institution in China and sixty percent of the outstanding equity of China E & I Development Co. Ltd., which does business as the China Arts and Science Academy.
The information contained herein includes forward-looking statements. These statements relate to future events or to our future anticipated financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We do not intend to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act. In addition, please refer to the Risk Factor section of our 2008 Form 10-K filed with the Securities and Exchange Commission on May 13, 2009.
The Hartcourt Companies, Inc. and Subsidiaries Unaudited Consolidated Statements of Operations Three Months Ended Six Months Ended November 30, November 30, 2009 2008 2009 2008 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues $498,909 $643,996 $955,847 $859,963 Cost of Goods Sold 119,917 33,782 227,899 53,723 Gross Profit 378,992 610,214 727,948 806,240 Operating Expenses Selling, general and administrative 57,763 293,246 292,990 420,794 Depreciation and amortization 113,148 5,495 169,982 8,249 Total operating expenses 170,911 298,741 462,972 429,043 Income from continued operations 208,081 311,473 264,976 377,197 Other Income (Expense) Foreign currency exchange gain 5,255 45,753 5,049 -- Interest income 14,003 -- 20,998 51,189 Gain on settlement debt -- 188,765 -- 188,848 Total other income (expense) 19,258 234,518 26,047 240,037 Income from continued operations before income taxes and noncontrolling 227,339 545,991 291,023 617,234 Provision for Income Taxes (44,646) (74,391) (81,415) (110,193) Noncontrolling interest, net of taxes (126,864) (196,967) (242,025) (255,470) Net Income $55,829 $274,633 $(32,417) $251,571 Basic Earnings Per Share $0.00 $0.00 $0.00 $0.00 Basic Weighted Average Shares Outstanding 386,966,816 255,430,112 386,966,816 264,935,687 Diluted Earnings Per Share $0.00 $0.00 $0.00 $0.00 Diluted Weighted Average Shares Outstanding 386,966,816 255,430,112 386,966,816 266,613,190 The Components of Other Comprehensive Income Net Income $55,829 $274,633 $(32,417) $251,571 Foreign currency translation adjustment 4,769 30,001 8,563 57,533 Comprehensive Income $60,598 $304,634 $(23,854) $309,104 The Hartcourt Companies, Inc. and Subsidiaries Unaudited Consolidated Balance Sheet ASSETS November 30, 2009 May 31, 2009 (Unaudited) (Unaudited) Current Assets Cash and cash equivalents $89,859 $102,085 Accounts receivable 1,561,316 863,244 Loans receivable 944,570 822,551 Prepaid expenses 19,737 5,792 Total current assets 2,615,482 1,793,672 Property and equipment, net 45,898 57,640 Intangible assets, net 3,821,992 3,923,356 $6,483,372 $5,774,668 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $-- 141,331 Accrued expenses and other current liabilities 1,690,923 1,337,571 Loan payable 274,429 -- Due to related parties 185,211 246,862 Total current liabilities 2,150,563 1,725,764 Stockholders' Equity Original preferred stock $(0.01 par value, 1,000 shares authorized, none issued and outstanding) -- -- Class A preferred stock(10,000,000 shares authorized, none issued and outstanding) -- -- Common stock ($0.001 par value, 424,999,000 shares authorized, 389,015,544 and 386,966,816 issued and outstanding, respectively) 386,967 386,967 Additional paid-in capital 77,238,990 77,156,131 Treasury stock, at cost, 2,048,728 shares (48,728) (48,728) Other comprehensive loss (152,142) (143,579) Noncontrolling interest 394,288 152,261 Accumulated deficit (73,486,566) (73,454,148) Total stockholders' equity 4,332,809 4,048,904 $6,483,372 $5,774,668 The Hartcourt Companies, Inc. and Subsidiaries Unaudited Consolidated Statements of Cash Flows Six Months Ended November 30, 2009 2008 (Unaudited) (Unaudited) Cash flows from operating activities Net Income $(32,417) $251,571 Adjustments to reconcile net cash provided by operating activities Depreciation and amortization 113,148 8,249 Noncontrolling Interest 242,025 255,470 Stock options issued for service 82,859 79,709 Stock issued for services and compensations -- 58,922 Gain on settlement of debt -- (188,848) Net change in assets and liabilities Accounts receivables and other receivables (699,208) (593,742) Inventories -- 6,630 Prepaid expenses (13,162) (187,571) Accounts payable 141,331 (131,570) Accrued expenses and other current liabilities 69,784 238,452 Net cash used in operating activities (95,640) (202,728) Cash flows from investing activities Loan receivable (121,695) -- Cash received on acquisition of Subsidiary -- 6,117 Net cash used in investing activities (121,695) 6,117 Cash flows from financing activities Due to related parties (61,651) -- Loan payable 274,429 -- Issuance of shares for cash -- 400,000 Proceeds from (payments to) related parties-net -- (133,597) Net cash provided by (used in) financing activities 212,778 266,403 Effect of exchange rate changes on cash and cash equivalents (7,669) (57,532) Net increase (decrease) in cash (12,226) 12,260 Cash and cash equivalents at beginning of period 102,085 4,907 Cash and cash equivalents at end of period $89,859 $17,167
SOURCE Hartcourt Companies, Inc.