Whatever Happened to....( coming this week )

" When I first met *****, he told me that I was at the right place because "he approved every deal he saw" One day I had a vendor who needed to be paid. **** said the check was in the mail. The check never came. I drove over to SHW. The secretary announced that I was waiting to see ****. I looked out in the parking lot. He and ****** had run down the back stairs, jumped in their car, and were heading out to avoid discussing the vendor payment. ***** was a fun guy, had a good heart, got many deals done for me, and added color to our industry."

Lou Funston, Western States Leasing, Sausalito, California

Headlines

FundingSource launched to help companies with funding needs

October 6, 2000, Arlington, VA - The Equipment Leasing Association (ELA) announces the launch of its newest member service - FundingSource - as a result of the continued need for quality funding sources. Located at www.elaonline.com/fundingsource, FundingSource is the largest group of premium funding sources in the equipment leasing and finance industry. Currently, over 100 funding sources are listed on the service with detailed company profiles that are completely searchable by users.

This service allows for a higher level of interactivity between lessors/brokers and funding sources. Benefits to users include:

· Time Savings - Whether you're looking to syndicate a deal or sell a one-off deal, search the service for funding sources that match your parameters in a matter of seconds.

· Ease of use - No input forms to use.Attach your own term sheet to an e-mail message sent to potential buyers.

· Flexibility - Create and manage e-mail groups of funding sources for either one-time or recurring use.

· Track Usage - Users can view the history of all their deals sent through the service for follow-up.

For more information, contact ELA's Chris Busky at cbusky@elamail.com or (703) 527-8655. cbusky@ELAMAIL.COM

( There is no fee to ELA members for this service...There is a fee for non-ELA Members. This is more than a check list or paid list that others require to be put on line. elaonline is without the most advanced professional website on line. www.elaonline.com For a list of all leasing companies in the world, with many who accept broker business, go to: http://www.leasingnews.org/elease/leasingUSA.htm ) editor

NetBank(R) Doubles Total Number of Accounts from Last Year, Adding More New Accounts in the Last

Two Quarters than in All of 1999

Marketing Alliances with Brand Leaders and Affinity Groups

Kick in And Drive Down Account Acquisition Costs

ATLANTA, Oct. 10 /PRNewswire/ -- NetBank, Member FDIC, Equal Housing Lender (Nasdaq: NTBK) (http://www.netbank.com), and a world leader in Internet banking, today announced that during its third quarter the bank succeeded in growing total deposit accounts by a record-breaking 28% while continuing to reduce account acquisition costs. The bank added more than 29,000 net new accounts this quarter, compared with the approximately 16,000 accounts added during first quarter and 22,000 during second quarter. A significant number of this quarter's new accounts came in through marketing programs the bank established directly with other companies or groups, such as the relationship it announced in August with Ameritrade(R).

NetBank's total number of accounts now stands at more than 133,000, over double the number reported at the end of 1999.

"Earlier this year we announced plans to shift some of our marketing dollars into affinity-type relationships," said D.R. Grimes, NetBank CEO. "We believe that by seeking out partnerships with online leaders or common-bond groups we can gain access to targeted numbers of Internet-savvy consumers and lower our acquisition costs. We look specifically for companies with similar customer demographics or a product line that complements our own. Most of these agreements require us only to pay for funded accounts. This quarter's results prove the wisdom of this strategy and only hint at the potential."

In conjunction with broadening its affinity relationships, NetBank continues to automate manual processes and expand the number of access points available to customers. Significant projects completed during the third quarter include an upgraded, secure customer care e-mail system; instant funding of new accounts by Visa(R), Mastercard(R) or ACH from a checking account at another institution; wireless banking services; and OFX support of Quicken and Microsoft(R) Money. "We are intent on providing the best customer care experience in our industry," said Michael R. Fitzgerald, NetBank president. "We understand the importance of not only bringing in new customers, but also of keeping them."

NetBank reported earlier that in the second quarter its account acquisition costs had fallen to around $180 compared with costs of more than $200 at the end of last year. The bank estimates that the number for the third quarter has declined further and plans to provide additional detail along with earnings later in the month. NetBank ended 1999 with approximately 66,000 total active accounts.

About NetBank(R)

NETBANK, Inc, (Nasdaq: NTBK) (http://www.netbank.com), is a financial services company whose sole subsidiary, NetBank, member FDIC, is the first profitable pure Internet bank in the country, having achieved profitability in the past nine consecutive quarters. With more than $1.6 billion in assets and customers in all 50 states and 20 foreign countries, NetBank was recently recognized as the best online bank by readers of Worth magazine in its annual "Readers' Choice Awards" survey and as a Money.com pick for "Best Online Banks." With its low-cost, branchless business model, NetBank is able to reward its customers with high interest rates on deposits with low- or no-fee banking services. Products and services include free online account access, free checking, free unlimited online bill payment and presentment, free unlimited ATM use, VISA(R) Check Card, VISA(R) credit cards, online brokerage services, mortgage lending, home equity lines and loans, insurance, IRAs, online safe deposit boxes, and business equipment leasing services.

NetBank is a member of the AFFN, Cirrus, Honor/Star, and NYCE ATM Networks. For more information on NetBank, its products and services, visit the Web site at http://www.netbank.com, or call 1-888-BKONWEB (256-6932).

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding NetBank's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward- looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.

SOURCE NetBank

Hartcourt Organizes Due Diligence Trip to China For Reporters, Analysts and Shareholders

Trip Will Coincide with the '2001 Hartcourt Internet Investment /You Are Invited!!!

Conference' for Chinese Entrepreneurs in Beijing

LOS ANGELES, Oct. 10 /PRNewswire/ -- The Hartcourt Companies, Inc. (OTC Bulletin Board: HRCT; Frankfurt: HCT) (www.hartcourt.com) announced today that it is organizing a due diligence trip to China for reporters, analysts and its shareholders. Attendees will have a chance to visit all of the operations sites of Hartcourt's subsidiaries and to meet with the managers and staff in an open format. All are invited to see first-hand the way these Chinese entities are doing business and to make their own assessment as to the value of Hartcourt's foreign operations. There will alsobe ample opportunity for attendees to take in some sightseeing, shopping and to absorb some of the rich Chinese culture and enjoy its famous culinary delights. Steve Head and his wife are thinking about attending.

The group will leave Los Angeles on Wednesday 27 December 2000 at noon. The group will be in Hong Kong on the 29, 30 and 31st of December 2000 where they will visit Financial Telecom Ltd, StreamingAsia, iSyndicate, Asia Paging and Koffman Securities. A New Year's Eve Party will be hosted by Hartcourt's Hong Kong staff. On the 1st and 2nd of January 2001, the group will be in Shanghai where their hosts will be Guo Mao Financial, Wind Info and Financial TV. From the 3rd to the 5th of January 2001, they will be in Beijing where they can visit UAC, Shangdi Networks, TSS and Innostar. There is no truth in the rumor Tom Depping will be in the group for this trip.
editor.

On January 4th 2001, all are invited to attend the "2001 Internet Investment Conference" organized & sponsored by Hartcourt, which will be co-sponsored by other Chinese-based Internet companies and investment bankers. The main topic of the conference is to provide Chinese entrepreneurs with insights into the ways and means of financing Internet ventures in the current financial environment. We are told Tom Depping may be attending this conference.
editor.

Anyone wishing to participate in this trip or its activities must register with Hartcourt's Los Angeles office prior to November 10th 2000. The cost of the trip is $1,700 per person, including round-trip airfare, hotel, breakfast and sightseeing trips. For details, please contact Ms. Grace Li, Hartcourt Office Manager at (310) 410-7290, ext 203. Those wishing to arrange their own transportation or lodging can do so but must still register with Ms. Li prior to 11-10-00 to be included in the other group activities. Jeff Wong is being considered as Master of Ceremonies for the trip, and will give out free autographed copies of his book ( not his joke book, or his private black book...his definitive resource on leasing ).

Dr. Alan Phan, Chairman of Hartcourt, said, "The best way to appreciate Hartcourt's expanding assets is to see them for yourself. I believe that what we have achieved during the past 12 months with limited financial resources is truly amazing. By coming to China, not only will you be able to see why we believe that China will be the fastest-growing market in the world for the next 20 years, you will get a better understanding of the current value of our existing assets and a clearer idea as to how these assets will be valued in the future. I am convinced that you will be very impressed with what you see."

Jeff Wong says, " Take my wife, Please!!!"

About Hartcourt

The Hartcourt Companies is a holding and development company that is building a network of Internet and telecommunication service companies in The People's Republic of China (China), including Hong Kong, in partnership with Chinese entrepreneurs as well as Chinese government-owned entities.

Hartcourt's business goal over the next three years is to complete a series of IPOs or spin-offs focused on four main divisions: StreamingAsia, the streaming content (video/audio) web-casting and web hosting leader in Hong Kong; SinoBull Financial Group, the multi-media financial data provider and online securities trading platform; the Broadband ISP and Internet infrastructure group; and Hartcourt Capital Inc., the financial E-Finance transactions platform offering online banking, securities, insurance, equipment leasing, credit, and B2B transaction settlements.

Detailed information on Hartcourt can be obtained via the company's Web site, www.hartcourt.com. Forward-looking Statements Certain statements in this news release may constitute "forward looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Such forward looking statements involve risks, uncertainties and other factors, which may cause the actual results, performance or achievement expressed or implied by such forward looking statements to differ materially from the forward looking statements.

SOURCE The Hartcourt Companies, Inc.

CO: Hartcourt Companies, Inc.

Options help Cisco, others cut tax bill
Firms get benefit that saves billions
BY MATT MARSHALL San Jose Mercury-News

Some New Economy companies that use stock options to help motivate employees are finding another benefit: Options can cut, or even eliminate, the companies' federal income taxes.
Cisco Systems Inc. of San Jose, Siebel Systems Inc. of San Mateo and America Online Inc., all had large enough tax benefits from issuing options to their employees to end up paying no federal income taxes in their latest fiscal year, according to the companies' public reports.
And many other high-tech companies, including software giant Microsoft Inc., got huge reductions in their federal taxes in the current fiscal year.
How does this work? With stock options, employees, not the employer, pay taxes on the gain when they exercise stock options, even if their profit is only on paper. And in doing so, an employer gets a tax benefit to avoid paying the federal government twice, which would violate the principle that prohibits taxing the same transaction twice.
Cisco is a prominent case, partly because its stock has soared and made its options so valuable. In addition, it has issued so many stock options to employees -- and so many employees are now exercising them and paying so much in income taxes -- that Cisco's tax benefit has wiped out its entire $1.68 billion federal income tax bill for its fiscal 2000. Even though Cisco didn't pay any federal taxes, it did pay $327 million in state and foreign taxes, mainly because those tax authorities don't allow for the full off-setting of the employee taxes.
In Microsoft's case, it received $5.54 billion in tax benefits in its latest fiscal year and ended up paying $800 million in federal, state and foreign taxes. (Microsoft does not provide a breakdown of these taxes but said it did pay some federal taxes in the recent fiscal year.)
Some critics wonder how a company such as Cisco, the nation's second most valuable company, can get by without paying any taxes. But tax experts point out that even if high-technology companies pay few taxes, the U.S. Treasury comes out even, if not slightly ahead, because of the high income tax rates paid by employees.
Cisco officials agree, noting that many of their employees pay an income tax rate of 39.6 percent, more than the 35 percent corporate income tax rate. ``The assumption is that somehow this is hurting the U.S. Treasury,'' says Dennis Powell, the company's corporate controller. ``In fact, it's helping the government.''
It is not the first time companies have used tax deductions to pay fewer taxes. During the recession of the early 1980s, for example, many companies operating in the red exploited a federal law that allowed them to receive tax deductions for the losses in subsequent years. However, when Penn Central Corp. began a spree to buy other companies whose earnings could be sheltered by its tax benefits, Congress amended these rules to carry losses forward to make them stricter.
The tax benefits generally are reported in the cash-flow statements filed with the companies' annual reports. For instance, in Cisco's case, the company shows that in the fiscal year 2000 ended July 29, Cisco reported on its income statement that it earned $4.34 billion before taxes and had a corporate tax bill of $1.68 billion before the deduction for stock options and other slight adjustments. But, in its cash-flow statement, it reports a $2.5 billion ``tax benefit from employee stock option plans,'' allowing it to erase its entire bill, and more. It won't get a government refund for the remainder, but Cisco can carry it over to next year's tax bill.
Stock options have been widely credited with fueling the high-tech boom in Silicon Valley and are hailed as a key ingredient in motivating employees to work harder for a company's overall benefit. Their tax impact is less understood, because although Cisco gets tax benefits, its earnings per share also are diluted by issuing options.
In other words, each shareholder has a smaller piece of the overall profit pie because so many more shares have now been issued at a lower price. In the end, fewer earnings per share make the stock less attractive to hold.
A rough calculation of this dilution is carried in a footnote to Cisco's annual report. Here, the cost of options is seen to be $1.2 billion, enough to knock Cisco's earnings to 21 cents per share, far lower than the official 36 cents per share that Cisco reports in its financial statement to shareholders.
Critics say the federal rules effectively allow the company to publish two sets of books -- a rosy one for shareholders that shows robust profits, and a second one for the federal government, which show the company has incurred so much cost by awarding options that it shouldn't pay any taxes. `It's a nightmare,'' says Graef ``Bud'' Crystal, a former professor of organizational behavior at UC Berkeley who writes a column for Bloomberg News. ``Before his shareholders, Chairman John Chambers is standing in the garden in the guise of a modern-day Caesar. But before the federal government, he ends up as a beggar rattling a tin cup. That's not to say he's duplicitous. The system's duplicitous.''
``It's the best of both worlds,'' says Mark Borges, an attorney at the Securities and Exchange Commission. ``Wall Street analysts are pretty sophisticated in telling the differences between the two. Individual investors are probably not going to appreciate some of those differences.''
Microsoft had a greater deduction but still ended up paying more taxes. Its income before taxes was $4.85 billion, but it enjoyed $5.54 billion in tax benefits because of its option plan.
Cisco was the biggest company that was able to erase its entire federal tax bill. Companies such as Yahoo Inc., eBay, and Qualcomm, which have marginal or no income, don't have enough earnings to benefit from a large deduction. However, their employees are still forced to pay the taxes on the gain they make when they exercise their options.
And when the share price of companies fall, fewer employees exercise their options, and so companies don't get as many deductions.
Peter Briger, a tax attorney who advises large international firms, notes that a strong stock market, as seen over the past couple of years, helps boost the government tax revenues, because employees are exercising so many options. ``The Treasury was amazed about where the tax revenues were coming from,'' he says. ``They came from the gains on Wall Street, not only from the stock market as a whole, but by people cashing in their stock options.'' He notes that the current surplus could be temporary, and that if the stock market continues to languish, tax revenues also could fall.