Hartcourt Cos Inc (GREY:HRCT)

As of May 17, 2010, Yuan Dian Investment Inc. (“Yuan Dian”) submitted a complaint with Shanghai No. 1 Intermediate People’s Court against The Hartcourt Companies, Inc. (“the Company”), its subsidiary Hartcourt Education Investment Management Consulting (Shanghai) Co., Ltd. (“Yike”) and its former employee Mary Qi, requesting the defendants to return the loan with the amount of over RMB 3,000,000 in cash and pay the related damages and losses caused by the breach of agreement on the Hartcourt side.

The Geo team could not find any formal press release since July of 2007. However, we were able to glean some helpful information from recent 2008 proxy as well as 2008 8K and 10Q filings.

Excerpt from filings:

- In August 2006, the Company announced its intention to expand its business to include providing vocational/training and education services in the People’s Republic of China.

- In light of these changes in strategic direction, the current sole IT-related business of the Company became incompatible with the change in focus. In order to release more financial resources for the Company to further its expansion into the vocational training/education market, the Company’s Board of Directors decided it was in the best interest of the Company and its shareholders to sell its 51% equity interest in Shanghai Huaqing Corporation Development Ltd (“Shanghai Huaqing”), a distributor of Samsung computer monitors and notebooks in Eastern China.

- After reviewing the Company’s current business condition, its competitive edge and opportunities in China, we decided to exit the IT business focus on the vocational/training education market in China to take advantage of the on-going demand of skilled workers and growing post-secondary age population.

- Following the change in focus, we have been negotiating with several acquisition targets. However, both deals require partial cash consideration. In the future, we expect to continue to acquire existing vocational/training education business and become a proactive education provider in China by assembling strong faculty teams, incentive plans and strategic expansion programs. Based on current financial status, it would be impossible for the Company to implement its plans without additional funds. While the Company continues to look for outside financial resources, sale of our IT business is another way for the Company to generate cash to fund the growth of the Company’s vocational education business.

End of excerpts.

Company has 205 million shares outstanding ( too many as far as the GEO team is concerned) and from their commentary it seems like they still may have to reach out to the capital markets for financing. As of the last 10Q they reported no revenues. We Will follow the story to see if the company can execute its plan.

Also, a United States contact could not be located.