U. S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB



         [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES AND EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1999

         [ ]   QUARTERLY REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE
                  SECURITIES AND EXCHANGE ACT OF 1934

        For the transition period from ______________ to _______________

                        Commission File Number: 001-12671

                          The Hartcourt Companies, Inc.
        (Exact name of small business issuer as specified in its charter)

                                      Utah
         (State or other jurisdiction of incorporation or organization)

                                   87-0400541
                        (IRS Employer Identification No.)

              1196 East Willow Street, Long Beach, California 91730
                    (Address of principal executive offices)

                                 (562) 426-9796
                           (Issuers telephone number)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange Act during the past 12 months ( or for such
shorter  period that the restraint was required to file such  reports),  and (2)
has been subject to such filing  requirements for the past 90 days:Yes[X]No[ ].

     As of September 30, 1999,  The  Hartcourt  Companies,  Inc. had  21,099,460
shares of Common Stock Outstanding.

Transitional Small Business Disclosure Format (check one ):  Yes [  ]  No [ X ]

                                                       [HARTCORT\10QSBSEP3099]-1


                                       1
<PAGE>

                                TABLE OF CONTENTS
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                              Report on Form 10-QSB
                              For the Quarter Ended
                                  June 30, 1999

                                                                            Page

PART 1    FINANCIAL INFORMATION

          Item 1.  Financial Statements (Unaudited)

               Consolidated Balance Sheets - September 30, 1999 and
               December 31, 1998...........................................3 - 4

               Consolidated Statements of Operations - Quarters Ended
               September 30, 1999 and 1998 and the Nine Months Ended
               September 30, 1999 and 1998.....................................5

               Consolidated Statements of Shareholders Equity - Nine Months
               Ended September 30, 1999........................................6

               Consolidated Statements of Cash Flows - Nine Months Ended
               September 30, 1999 and 1998.....................................7

               Notes to the Consolidated Financial Statements.............8 - 12

          Item 2. Managements Discussion and Analysis of Financial Condition
                  and results of Operations..............................13 - 15

PART II   OTHER INFORMATION

          Item 1.  Legal Proceedings..........................................15

          Item 2.  Changes in Securities......................................15

          Item 3.  Defaults upon Senior Securities............................15

          Item 4.  Submission of Matters to Vote of Security Holders..........15

          Item 5.  Other Information..........................................15

          Item 6.  Exhibits and Reports on Form 8-K...........................15

                   Signatures.................................................16

                                                       [HARTCORT\10QSBSEP3099]-1
                                        2

<PAGE>

Part I         THE HARTCOURT COMPANIES INC. AND SUBSIDIARIES
Item 1.                  CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>


                                                              September 30,
                                                                   1999        December 31,
                                                               (Unaudited)        1998
<S>                                                           <C>             <C>

CURRENT ASSETS
         Cash                                                 $       1,578   $     384,453
         Accounts receivable, net of allowance for doubtful
             accounts of $76,477 in 1998                             46,770       3,152,635
         Trade dollar receivable                                     22,808          22,670
         Notes receivable, current portion                           96,523         101,523
         Inventory                                                        -        2,613,560
         Prepaid expenses                                            24,855          113,068
         Due from related parties                                   158,222          175,907

                           TOTAL CURRENT ASSETS                     350,756        6,563,816

PROPERTY AND EQUIPMENT, NET                                               -        4,262,120
INVESTMENTS                                                       5,050,000       11,030,000
OTHER ASSETS                                                        502,000           18,423
INTANGIBLES                                                               -        5,198,033

                           TOTAL ASSETS                       $   5,902,756   $   27,072,392

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES
         Accounts payable                                           144,819        2,745,796
         Accrued expenses and other current liabilities              39,380          478,356
         Payable to Mexican affiliate                                     -          483,572
         Line of credit                                                   -        1,502,609
         Notes payable, related parties - current portion            65,000          145,000
         Notes payable - current portion                                  -        1,631,199
         Capital lease obligation - current portion                       -          290,204
         Debentures                                                       -           50,000
         Advances from Officer                                            -          124,206

                           TOTAL CURRENT LIABILITIES                249,199        7,450,942
</TABLE>

                                                       [HARTCORT\10QSBSEP3099]-1
                                        3


<PAGE>

Item 1.             THE HARTCOURT COMPANIES INC. AND SUBSIDIARIES
(cont.)                     CONSOLIDATED BALANCE SHEETS
                                   (CONTINUED)
<TABLE>
<CAPTION>


                                                                September 30,
                                                                    1999             December 31,
                                                                 (Unaudited)             1998
<S>                                                              <C>              <C>

LIABILITIES AND SHAREHOLDERS EQUITY (cont.)
NOTES PAYABLE, net of current portion                                      -           1,739,512
CAPITAL LEASE OBLIGATIONS, net of current portion                          -             780,760
            TOTAL LIABILITIES                                        249,199           9,971,214

COMMITMENTS AND CONTINGENCIES                                              -                   -
SHAREHOLDERS EQUITY
   Preferred Stock
      Original preferred stock, $0.01 par value, 1,000 shares
      authorized, issued and outstanding                                   -                  10
   Series A, $1,000 stated value, 4,000 shares authorized,
       issued and outstanding at December 31, 1998                         -           4,000,000
   Series B, $1,000 stated value, 2,000 shares authorized,
       issued and outstanding at December 31, 1998                         -           2,000,000
   Series D, $1,000 stated value, 10,000 shares authorized,
       issued and outstanding at December 31, 1998                         -           3,400,000
   Series AB, $100 stated value, 25,000 shares authorized,
       4,050 shares issued and outstanding at December 31, 1998            -             405,000
            TOTAL PREFERRED STOCK                                          -           9,805,010

   Common stock, $0.01 par value, 50,000,000 shares
      authorized; 21,099,460 shares issued and outstanding at
      September 30, 1999 and 19,954,382 shares issued and
      outstanding at December 31, 1998                                21,100              19,955
   Stock subscription receivable                                           -            (301,000)
   Treasury stock, at cost (24,364 shares in 1999 and 1998)         (279,928)           (279,928)
   Additional paid-in capital                                     32,300,707          33,257,835
   Accumulated deficit                                           (26,388,322)        (25,400,694)
            TOTAL SHAREHOLDERS EQUITY                              5,653,557          17,101,178
              TOTAL LIABILITIES AND SHAREHOLDERS
               EQUITY                                           $  5,902,756      $   27,072,392

</TABLE>

                                                      [HARTCORT\10QSBSEP3099]-1
                                        4

<PAGE>

Item 1.           THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
(cont.)                CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                Three Months Ended           Nine Months Ended
                                                  September 30,                 September 30,
                                              1999             1998         1999           1998
<S>                                        <C>          <C>             <C>           <C>

REVENUES
   Product Sales                           $         -  $    5,165,548  $          -  $  12,714,313
   Services and Labor Sales                          -       1,743,499             -      4,867,636
      TOTAL REVENUE                                  -       6,909,047             -     17,581,949

COST OF SALES                                        -       4,842,175             -     12,590,585
   Gross Profit                                      -       2,066,862             -      4,991,364

OPERATING EXPENSES
   Selling, general and administrative         304,710       1,744,477       959,870      4,374,189
   Depreciation and amortization                     -         168,280             -        537,675
      TOTAL OPERATING EXPENSES                 304,710       1,912,757       959,870      4,911,864

INCOME (LOSS) FROM OPERATIONS                 (304,710)        154,105      (959,870)        79,500
EQUITY IN LOSS OF UNCONSOLIDATED
   SUBSIDIARIES                                      -               -       (28,298)             -

OTHER INCOME (EXPENSES)
   Interest expense                            (19,000)       (100,089)      (19,000)      (240,193)
   Interest income                                   -           4,500        20,095         36,306
   Miscellaneous income                              -          12,740             -         42,148
      TOTAL OTHER INCOME (EXPENSE)             (19,000)        (82,849)        1,095       (161,739)

NET INCOME (LOSS) BEFORE TAXES                (323,710)         71,256      (987,023)       (82,239)
   Income taxes                                      -              63           555          1,338
NET LOSS                                   $  (323,710) $       71,193  $   (987,628) $     (83,577)

BASIC AND FULLY DILUTED INCOME
   (LOSS) PER SHARE                        $      (.02) $         .004  $       (.05) $       (.005)
WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING                       19,956,279      19,056,990    19,523,118     17,683,807

</TABLE>


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                                        5


<PAGE>

Item 1           THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
(cont.)           CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
                  FOR THE NINE MONTHS ENDED September 30, 1999
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                              Common
                            Common Stock        Preferred Stock               Stock     Treasury Stock                  Total
                                                                  Additional  Subscription                Accumulated   Shareholders
                                                                  Paid        Receivable                  Deficit       Equity
                                                                  Capital
                            Shares     Amount   Shares Amount                           Shares Amount
<S>                         <C>        <C>      <C>    <C>        <C>         <C>        <C>    <C>       <C>           <C>

Balance, December 31, 1998  19,954,382 $19,955  14,450 $9,805,010 $33,257,835 $(301,000) 24,364 $(279,928)$(25,400,694) $17,101,178
 Shares issued to investors    197,000     197       -          -      24,863         -       -         -            -       25,060
 Shares redeemed in
  connection with sale of
  30% interest in ECS to
  J. Pruzin                 (2,000,000) (2,000) (3,400)(3,400,000) (1,998,000)        -       -         -            -   (5,400,000)
 Shares issued (redeemed) in
  connection with litigation
  settlement                (1,000,000) (1,000)(10,050)(6,405,000)    100,000         -       -         -            -   (6,306,000)
 Stock subscription rescinded        -       -       -          -           -   301,000       -         -            -      301,000
 Shares issued for Services    305,000     305       -          -      75,945         -       -         -            -       76,250
 Shares issued to employees
  and directors                205,000     205       -          -      51,045         -       -         -            -       51,250
 Distribution of Enova to
   Shareholders                      -       -  (1,000)       (10)   (399,378)        -       -         -            -     (399,388)
 Net loss for period                 -       -       -          -           -         -       -         -     (249,178)    (249,178)
Balance, March 31, 1999     17,661,382 $17,662       -  $       - $31,112,310  $      0  24,364 $(279,928)$(25,649,872)  $5,200,172
 Shares issued to investors    103,000     103       -          -      12,772         -       -         -            -       12,875
 Shares issued to Alan Phan
  in lieu of cash per
  employment contract for
  1998 services              1,706,485   1,706       -          -     198,294         -       -         -            -      200,000
 Shares issued for Services     50,000      50       -          -      12,450         -       -         -            -       12,500
 Shares issued to employees
  and directors                114,950     115       -          -      86,080         -       -         -            -       86,195
 Net loss for period                 -       -       -          -          -          -       -         -     (414,740)    (414,740)
Balance, June 30, 1999      19,635,817 $19,636       -  $       - $31,421,906  $      -  24,364 $(279,928)$(26,064,612)  $5,097,002

</TABLE>


                                        6


<PAGE>
Item 1           THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
(cont.)           CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
                  FOR THE NINE MONTHS ENDED September 30, 1999
                             (UNAUDITED) (Continued)

<TABLE>
<CAPTION>

                                                                              Common
                            Common Stock        Preferred Stock               Stock     Treasury Stock                  Total
                                                                  Additional  Subscription                Accumulated   Shareholders
                                                                  Paid        Receivable                  Deficit       Equity
                                                                  Capital
                            Shares     Amount   Shares Amount                           Shares Amount
<S>                         <C>        <C>      <C>    <C>        <C>         <C>        <C>    <C>       <C>           <C>
Balance, June 30, 1999      19,635,817 $19,636       -  $      -  $31,421,906  $      -  24,364 $(279,928)$(26,064,612)  $5,097,002
 Shares issued to investors  1,000,000   1,000       -         -      499,000         -       -         -            -      500,000
 Shares issued to retire
  debt                         140,000     140       -         -       53,860         -       -         -            -       54,000
 Shares issued upon exercise
  of warrants                   68,000      68       -         -       16,932         -       -         -            -       17,000
 Shares issued for Services    212,143     212       -         -      253,809         -       -         -            -      254,021
 Shares issued to employees
  and directors                 43,500      44       -         -       55,200         -       -         -            -       55,244
 Net loss for period                 -       -       -         -            -         -       -         -     (323,710)    (323,710)
Balance, September 30, 1999 21,099,460 $21,100       -  $      -  $32,300,707  $      -  24,364 $(279,928)$(26,388,322)  $5,653,557
</TABLE>

                                        7


<PAGE>

Item 1.       THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
(cont.)              CONSOLIDATED STATEMENT OF CASH FLOW
                                   (UNAUDITED)
<TABLE>
<CAPTION>


                                                                   Nine Months ended
                                                                     September 30,
                                                                  1999           1998
<S>                                                          <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Loss                                                  $   (987,628)  $    (83,577)
   Adjustments to reconcile net loss to net cash used in
      operating activities:
         Stock issued for services                                342,771        195,502
         Depreciation and amortization                                  -        571,650
         Changes in operating assets and liabilities:
            (Increase) decrease in:
                  Accounts receivable                             (17,000)    (1,271,445)
                  Inventory                                        13,083        256,341
                  Other assets and liabilities                     17,500         11,949
            Increase (decrease) in:
                  Accounts payable and accrued expenses            35,256       (626,449)
                  Due from related party                          (15,700)       (86,721)
                  Payable to Mexican affiliate                          -        (17,901)
NET CASH USED IN OPERATING ACTIVITIES                            (611,718)    (1,050,651)

CASH FLOWS FROM INVESTING ACTIVITIES
     Sale of 30% of ECS                                         5,400,000              -
   Change in Investments                                        1,085,607              -
     Distribution of Subsidiary Ownership to shareholders        (399,388)             -
     Increase in other Assets                                    (500,000)             -
     Purchase of (sale) of property and equipment                       -       (805,076)
   Proceeds on sale of marketable securities                            -        523,903
   Payments on acquisitions                                             -        200,000
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES             5,586,219        (81,173)

CASH FLOWS FROM FINANCING ACTIVITIES
   Sale of common stock, exercise of warrants                     554,935      1,125,002
   Common stock issued to directors and officers                  392,689              -
   Common stock issued in settlement of debt                      100,000              -
   Common stock subscription receivable                                 -       (275,000)
   Other loans and lines of credit                                      -      1,481,738
   Issuance of Long Term Debt                                           -      1,200,000
   Payments on long-term debt                                           -       (249,209)
   Payments on capital lease obligation                                 -       (201,297)
   Redemption of preferred stock                               (6,405,000)    (1,500,000)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES            (5,357,376)     1,581,234
NET INCREASE (DECREASE) IN CASH                                  (382,875)       449,410
CASH, BEGINNING OF PERIOD                                         384,453         77,688
CASH, END OF PERIOD                                          $      1,578   $    527,098
</TABLE>


                                       8
<PAGE>

Item 1.   (cont.)

                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 1.   Organization and Nature of Operations:

     Harcourt Investments (USA), Inc., (Harcourt  Investments ) was incorporated
on April 23, 1993. Principal business activities are the design, manufacture and
sale of writing instruments.  During its first two years of operations, Harcourt
Nevada used foreign contract  manufacturers to produce various types of pens and
markers,  which were then imported for sale in the U. S. market. In August 1994,
Harcourt  Investments  acquired a 60% interest in the Xinhui Harchy Modern Pens,
Ltd. Joint Venture (Xinhui JV) owned by a Hong Kong corporation for common stock
valued at  $2,149,200.  The Xinhui JV is located in the  Guangdong  Province  of
China.  Pursuant to an amendment to the joint  venture  agreement  governing the
Xinhui JV entered  into in  October  1995,  Harcourt  Investments  interest  was
reduced  to a 52%  interest  in the  Xinhui  JV.  In  September  1996,  Harcourt
Investments  sold its  investment  in  Xinhui  JV to CKES,  Inc.  of  Sunnyvale,
California.

     In November 1994, Stardust, Inc., Production-Recording-Promotion (Stardust)
acquired 100% of the  outstanding  shares of Harcourt  Investments for 8,280,000
shares of its common stock in a transaction  accounted for as a recapitalization
of Harcourt  Investments  with  Harcourt  Investments  as the acquirer  (reverse
acquisition).  Therefore,  the  historic  cost of assets  and  liabilities  were
carried  forward to the  consolidated  entity.  In 1995 and 1996,  reverse stock
splits changed the number of shares issued and outstanding to 6,110,337, then to
2,735,952.  The consolidated  financial statements were restated to reflect this
capital  stock  transaction.  Stardusts  name was  changed to the The  Hartcourt
Companies, Inc.

     Hartcourt Pen Factory,  Inc.  (Hartcourt  Pen) was  incorporated in October
1993.  Principal  business  activities are the sale of writing  instruments.  In
December 1994, Harcourt  Investments  acquired 100% of the outstanding shares of
the common stock of Harcourt Pen for 52,500 shares of its common stock and 1,000
shares of its original preferred stock in a transaction accounted for similar to
a pooling of interest.  In 1995, stock dividends and reverse stock split changed
the number of shares issued to 38,625 to acquire  Harcourt Pen. The consolidated
financial statements were restated to reflect these capital stock transactions.

     In August 1996,  The Hartcourt  Companies,  Inc.  (Company)  entered into a
purchase  and sale  agreement  with NuOasis  International,  Inc.  (NuOasis),  a
corporation  incorporated under the laws of the Commonwealth of the Bahamas, for
the purchase of a commercial real estate project,  consisting of three 5-7 story
apartment  buildings,  commonly  known  as the  Peony  Gardens  Property  (Peony
Gardens),  located in the eastern  part of Tongxian  in Beijing  City,  mainland
China.  The Company issued  4,000,000 shares of its common stock with respect to
this purchase.

     In September 1996, the Company entered into a sales agreement with Mandarin
Overseas Investment Co., Ltd. (Mandarin) and Promed International Ltd. (Promed),
both  unaffiliated  Turks and Caicos  chartered  companies,  for the purchase of
their 50% interest in sixty-eight mineral lease gold lode claims in the state of
Alaska,  known as Lodestar  claims 1-68 and consisting of 320 acres.  All claims
are located in the Melozitna  mining district near Tanana,  Alaska.  The Company
issued 1,298,700 shares of its common stock with respect to this purchase.


                                                       [HARTCORT\10QSBSEP3099]-1
                                        9


<PAGE>

Item 1.   (cont.)

                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 1.   Organization and Nature of Operations (cont.):

     In October  1997,  the Company  purchased  the  outstanding  shares of Pego
Systems,  Inc.  (Pego)  whereby  Pego became a wholly  owned  subsidiary  of the
Company.  Pego,  a  manufacturers  representative  organization  for air and gas
handling  equipment,  offers  a full  line of  value  added  services  including
distribution,   service  and  the  manufacturing  of  custom  process  equipment
packages.  In connection  with the purchase,  the Company paid $500,000 in cash,
issued  450,000  shares of common  stock,  1,500  shares of series C  redeemable
preferred  stock,  and entered into a non-compete  agreement with Pegos majority
shareholders.

     On October  28,  1997,  the  Company,  through a wholly  owned  subsidiary,
acquired Electronic  Components and Systems, Inc. (ECS) and Pruzin Technologies,
Inc.  (Pruzin)  a  related  entity of ECS.  ECS and  Pruzin  specialize  in high
technology contract  manufacturing and assembly of printed circuit boards, phone
and cable wires.  ECS has three facilities in Arizona and has a service contract
with a maquiladora in the free trade zone in Sonora,  Mexico. The Company issued
3,400 shares of Series D convertible  preferred  stock,  2,500,000 shares of the
Companys common stock, $250,000 in cash and a $250,000 promissory note.

     ECS maintains  manufacturing  operations  under  maquiladora  agreements in
Nogales,  Mexico.  The 100% shareholder of the maquiladora is also the President
of ECS.  A  substantial  amount of ECS  cables  and  electronic  components  are
manufactured  and  assembled  at the  Mexico  facility.  ECS  also  has  smaller
manufacturing  facilities  in  Fremont,  California,  Chandler,  Arizona  and  a
distribution facility in Nogales, Arizona.

     In March,  1999, the Company  restructured  certain assets and successfully
settled certain litigation matters, as well as certain claims and disputes.  The
following is a summary of the restructuring and settlements reached:


     1) During 1998, the Company had been  unsuccessful in its attempts to raise
required  working  capital and  acquisition  cash through the sale of marketable
securities  provided  by  Capital  Commerce  in  exchange  for the  Series A & B
Preferred Stock. As part of the overall  settlement,  Capital Commerce  returned
all of the  outstanding  Series A and B Preferred  Stock,  plus the AB Preferred
Stock  issued by the  Company as  dividends,  the  Company  returned  to Capital
Commerce  all  unsold  marketable  securities,  and  as  consideration  for  the
marketable securities sold, the Company issued 1,900,000 shares of common stock,
plus a 7.35% interest in ECS to the authorized agent of Capital Commerce.

     2) In July,  1998,  the  Company  served  notice of the  sellers of certain
mineral  rights  leases in Alaska  goldmines  that it  intended  to rescind  the
contract as certain required  appraisals had not been provided as required.  The
company  originally paid 1,298,700  shares of the common stock for these rights.
Upon return of 1,298,700  shares the  companies  relinquished  all rights to the
leases and rescinded the transaction.


                                                       [HARTCORT\10QSBSEP3099]-1
                                       10

<PAGE>

Item 1.   (cont.)

                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

     3) On October 21,  1998,  Mr. James  Pruzin,  the selling  shareholder  and
president of Electronic Components and Systems, Inc. (ECS), formally requested a
rescission of the October 28, 1997  acquisition  whereby the Company,  through a
wholly owned subsidiary,  acquired ECS and Pruzin  Technologies,  Inc. (Pruzin).
Mr. Pruzin has alleged that he is authorized to request  rescission  based on an
alleged breach of the  acquisition  agreement by the Company,  which the company
denied . However, on November 10,1998 entered into a memorandum of understanding
whereby  Mr.  Pruzin  could  reacquire  ECS from the  Company by  returning  all
Hartcourt  Common  and  Preferred  Stock  received,   payment  to  Hartcourt  of
$1,850,000 during 1999, negotiating the return of Hartcourt Common Shares issued
in the Elan  transaction and a $400,000 fully amortized 5 year note with monthly
payments beginning in 2000.

     Subsequently,  Mr.  Pruzin was  unable to meet the terms of the  repurchase
agreement  and entered into new  negotiations  with the Company.  As a result of
these negotiations, in exchange for his return of 2,000,000 common shares of the
company and 3,400 Series D Preferred  Shares,  the Company sold Mr. Pruzin a 30%
interest in ECS.

     4) On September 3, 1998,  American  Equities filed suit against the Company
for breach of  contract.  The Company  denied that it had  breached any contract
with   American   Equities   and  filed  a  cross-   complaint   for  fraud  and
non-performance  against American Equities and additional  cross-defendants.  As
settlement of these  matters,  the parties agreed that all fees paid to American
Equities were earned and to provide American  Equities with a 27.65% interest in
ECS and no payments were due to either party.  Additionally,  American  Equities
agreed to provide working capital for ECS.

     5) The Company had a subscription receivable for 600,000 common shares sold
by an  investment  banker  and not paid for.  In the  settlements,  the  Company
received 600,000 shares back and canceled both the  subscription  receivable and
common shares.

     6) On March 15,  1999,  the  Company  entered  into an  Exchange  Agreement
pursuant to which the Company agreed to assign its rights under the Purchase and
Sale Agreement dated August 8, 1996 and any and all of its interest in the Peony
Gardens  development  located in a suburb of Bejing City,  China for  investment
securities  valued at $10 million.  Due to  restrictions on the ability to trade
the investment  securities  received,  the Company has recorded an impairment of
$5,000,000 as of March 31, 1999 and December 31, 1998.

     7) Effective February 1, 1999, pursuant to a Share Purchase Agreement,  the
Company  acquired one (1) share of common stock of Enova Holdings Inc., a Nevada
corporation  (Enova)  representing  100% of the  total  issued  and  outstanding
capital stock of Enova, making Enova a wholly-owned subsidiary.

     8)  Effective  March 1, 1999,  the Company  and Enova  executed an Exchange
Agreement  (the  Enova  Agreement)  whereby  the  Company  exchanged  all of its
ownership  in two  wholly-owned  subsidiaries,  Pego  Systems  Inc.  (Pego)  and
Electronic and Component Systems Inc. (ECS), collectively, the subsidiaries, for
5,213,594 additional shares of common stock of Enova.

                                                       [HARTCORT\10QSBSEP3099]-1
                                       11


<PAGE>

Item 1.   (cont.)
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

     9) On March 24, 1999,  the Company  entered into a  Distribution  Agreement
pursuant to which the Company distributed to all shareholders of record on March
31,  1999 all of the  5,213,595  shares  of  common  stock of Enova and to file,
within a reasonable period of time following such  distribution,  a Registration
Statement  on Form  10-SB  to  cause  the  distributed  shares  of  Enova  to be
registered under the Securities Exchange Act of 1934.

     As a result of the Share Purchase  Agreement,  the Enova  Agreement and the
Distribution  Agreement,  each shareholder of record of the Company on March 31,
1999 will  receive one (1) share of Enova for every four (4) shares owned of the
Company.  Following  the  distribution  of the Enova shares both the Company and
Enova will operate as separate companies.

     On June 28, 1999, in  connection  with curing a covenant  violation  with a
bank loan, the Company infused additional equity capital into Pego Systems, Inc.
(Pego) a former subsidiary. Pego is a wholly owned subsidiary of Enova Holdings,
Inc. which was distributed to shareholders effective March 31, 1999. In exchange
for $1 million market value  (carrying  value  $500,000),  the Company  received
17,000 shares of Pego common stock,  representing 34% of the outstanding  common
shares of Pego. In addition, the Company has the right to acquire another 17,000
shares  of Pego  common  stock  if Pego is in  default  on its  bank  loan.  The
investment  in Pego is carried as an investment on the balance sheet at June 30,
1999.

     On October 4, 1999, the Company  completed the purchase of a 58.5% interest
in Financial  Telecom  Ltd.(FTL) of Hong Kong for $3 million in cash,  notes and
stock.  FTL is an information  service  provider  specializing  in  transmitting
real-time  financial  data and news via a network  of  fixed-line  and  wireless
systems, including new-generation high-speed FLEX wireless PDA for mobile users.
FTL hass been in business for 14 years. The transaction  closed with the Company
making a cash payment of $500,000,  issuing a note for  $1,000,000 and 1,500,000
shares of its common stock.

Note 2.   Basis of Presentation:

     The  accompanying  unaudited  financial  statements  have been  prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the instructions to form 10-QSB.  Accordingly,  they do not
include all of the  information  and  footnotes  required by generally  accepted
accounting  principles  for  complete  financial  statements  and related  notes
included in the Company's 1998 Form 10-KSB.

     In  the  opinion  of  management,   the  accompanying  unaudited  financial
statements   contain  all  adjustments  (which  include  only  normal  recurring
adjustments)  necessary to present  fairly the balance  sheets of The  Hartcourt
Companies,  Inc. and Subsidiaries as of September 30, 1999 and December 31, 1998
and the  results of their  operations  and their cash flows for the nine  months
ended September 30, 1999 and 1998,  respectively.  The financial  statements for
the 1998  periods  are  consolidated  to include the  accounts of The  Hartcourt
Companies and its subsidiaries Harcourt Investments, USA, including the accounts
of Hartcourt Pen, Pego Systems, Inc. and Electronic Components and Systems, Inc.
(together  the  Company).  The  financial  statements  for the 1999  periods are
consolidated  to  include  the  accounts  of The  Hartcourt  Companies  and  its
subsidiaries Harcourt Investments, USA, including the accounts of Hartcourt Pen,
(together the Company) excluding,  Pego Systems,  Inc. and Electronic Components
and Systems, Inc. which were contributed to Enova Holdings, Inc. and distributed
to shareholders effective March 31, 1999.
                                                       [HARTCORT\10QSBSEP3099]-1


                                       12
<PAGE>

Item 1.   (cont.)

                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 2.   Basis of Presentation:(continued)

     Certain 1998 amounts have been  reclassified  to conform to current  period
presentation.  These reclassifications have no effect on previously reported net
income.

     The accounting policies followed by the Company are set forth in Note A. to
the Companys financial statements as stated in its report on Form 10-KSB for the
fiscal year ended December 31, 1998.

Note 3.   Supplemental Disclosure of Non-Cash Financing Activities:
<TABLE>
<CAPTION>


                                                      Quarter Ended          Quarter Ended
                                                   September 30, 1999     September 30, 1998
                                                       (Unaudited)            (Unaudited)

Cash paid (received) for interest and income taxes:
     <S>                                            <C>                    <C>
     Interest                                       $       19,000         $        100,089
     Taxes                                                       -                       63
</TABLE>

Note 4.   Loss per Share :
<TABLE>
<CAPTION>

                                           Quarter         Quarter          Nine Months      Nine Months
                                            Ended           Ended              Ended            Ended
                                       September 30,     September 30,      September 30,    September 30,
                                            1999             1998               1999             1998
<S>                                 <C>                <C>                <C>              <C>

Income (Loss) from continuous
   operations available to
   common shareholders:             $    (323,710)     $      71,193      $     (987,628)  $     (83,577)
Effects of dilutive securities                  -                  -                   -               -
Weighted average shares
   outstanding                         19,956,279         19,056,990          19,523,118      17,683,807
Basic and dilutive earnings per
   share                            $        (.02)     $         .00      $         (.05)  $        (.00)
</TABLE>


     During 1999and 1998, the Company had 2,000,000 warrants  outstanding,  each
convertible  into one share of common stock. In addition,  during 1999 and 1998,
the company had convertible preferred stock outstanding,  each share convertible
into common stock.  These  instruments  were not included in the  computation of
diluted  earnings  per  share  for any of the  periods  presented,  due to their
antidilutive effects based on the net loss reported for each period.


                                                       [HARTCORT\10QSBSEP3099]-1


                                       13
<PAGE>

Part I

Item 2.   Managements Discussion and Analysis of Financial Condition and Results
          of Operations:

     As  discussed in the Companys  annual  report filed on Form 10-KSB,  during
1998 the Company continued its previously  implemented plan to acquire operating
companies that were in established industries with a history of growth. However,
as a  result  of  continued  losses,  particularly  at  the  Company  Electronic
Components and Systems, Inc. subsidiary the recorded significant  impairments to
its  goodwill  in the 4th quarter of 1999.  In the 1st quarter of 1998,  as more
fully  described  in Part I, Item 1, Note 1 to Notes to  Consolidated  Financial
Statements,  the Company  settled certain matters of litigation and entered into
certain restructuring  transactions.  In connection with the restructuring,  the
Company formed a new  subsidiary,  Enova  Holdings,  Inc.(Enova) and contributed
it's  remaining  investment  in  its  two  operating   subsidiaries   Electronic
Components and Systems,  Inc. and Pego Systems,  Inc. to Enova.  Effective March
31, 1999, the Company contributed its investment in Enova to its shareholders.

     As a  result,  Hartcourt  effectively  became a shell  corporation  with no
operations and its principal assets being the investment  securities received in
exchange  for  its  investment  in  the  Peony  Gardens   condominium   project.
Accordingly,  the operations presented reflect the Companys equity in earnings /
loss of Enova and its subsidiaries through the date of distribution.

Results of Operations:

     As result of the  restructuring,  the  Company  recorded no revenue for the
first nine months of 1999,  while the Companys revenue for the first nine months
of 1998 was $17,582,000. The equity in earnings / loss for the first nine months
of 1999 was a loss of $28,000  comprised  of earnings at Pego of $117,000  and a
loss at ECS of $145,000 through March 31, 1999.

     Corporate selling,  general and administrative (SGA) expenses were $960,000
attributed to the costs of operating the holding  Company,  seeking new business
opportunities and associated with the restructuring.

Liquidity and Capital Resources:

     During the first nine months of 1999, the company raised  $555,000  through
the sale of common stock and debentures  compared to the 1998 period,  where the
Company sold approximately  $1,125,002 of its equity securities.  These proceeds
were used for working capital needs. The current ratio at September 30, 1999 was
1.4  compared to .9 at  December  31,  1998.  Working  capital  was  $102,000 at
September 30,1999 and ($887,126) at December 31, 1998.

     The Companys operating  activities used cash of approximately  $611,000 for
the nine months ended  September  30, 1999.  The Company had an operating  loss,
before depreciation and amortization of approximately $988,000

     Cash provided by investing  activities for the nine months ended  September
30,1999  was  approximately  $5.6  million  which  was  offset  by cash  used in
financing   activities  of  $5.4  million.   The  transactions  herein  resulted
substantially  as a  result  of the  litigation  settlement  and  the  corporate
restructuring more fully described in Part I, Item 1, Note 1.

     As a result of the above activities,  the company experienced a decrease in
cash of $383,000 for the first nine months of 1999.


                                                       [HARTCORT\10QSBSEP3099]-1


                                       14
<PAGE>

Item 2.   (cont.)

Managements Discussion and Analysis of Financial Condition and Results of
     Operations: (Continued)

Business Risks:

     As discussed previously, the Company is substantially a shell but is in the
final stages of completing  investments in internet related  businesses in China
and the Asian markets and intends to seek out and acquireor invest in additional
profitable  operating  businesses.  However, no definitive  agreements have been
reached. If any acquisition agreements are reached in the near term, the Company
can make no assurances that it will be able to obtain the financing necessary to
complete the any transaction.

Competition:

     Since the  Company has no current  operations,  it does not have any direct
across the board competitors,  but may have competition in the future within the
industries for which it may acquire operations.

Management of Growth:

     If the Company is  successful  in  implementing  its growth  strategy,  the
Company  believes it could  undergo a period of rapid  growth that could place a
significant  strain  on its  management,  financial  and  other  resources.  The
Company's  ability to manage its growth  will  require it to continue to improve
its operational and financial systems and to motivate and effectively manage its
employees.  If the  Company  grows  it will  have to  implement  new  financial,
budgeting,  management  information and internal control  systems.  The Companys
success  will  depend  upon its  ability to attract  and retain  highly  skilled
personnel.  There can be no  assurance  that the Company will be  successful  in
attracting  and  retaining  key  management,   technical,  marketing  and  sales
personnel.  Its  failure  to do so would  materially  and  adversely  affect the
Company's business and results of operations.

     Recently,  management  has  been  focusing  its  efforts  on  pursuing  the
corporate objective of becoming an Internet-related  company with investments in
China and Asia through mergers and acquisitions.  To this end, the Company is in
the process of finalizing  and securing  financing  for four separate  ventures.
Each  transaction  is subject to the Companys  ability to obtain funding for the
transaction.  There can be no assurances  that the Company will be successful in
obtaining the funding for one or all of the transactions..

     In the first transaction,  the Company originally agreed to purchase 35% of
UAC Online Stock Trading Ltd (UAC) for $2.5 million.  UAC is a company providing
on-line  trade  execution  for stock  brokerage  firms in China via an  intranet
service called CHINAPAC which is owned by China Telecom.  UAC intends to use the
cash received from the Company to complete the testing and  installation  of its
systems into all 98 offices of Hua Xia  Securities  in China.  Current plans are
for all 98 offices of Hoa Xia Securities to be operational  within 6 months. The
Company  originally  loaned UAC $50,000 pending the initial funding of the joint
venture.  In  September,  the Company and UAC agreed to convert the loan into an
option to purchase an additional 15% interest in the joint venture.

     In the next tranaction,  the Company has agreed to a joint venture with IPC
Technology International Ltd. (IPC) to provide Internet Connections and Services
on a nation-wide basis in China. In the agreement,  the Company with provide the
joint venture with $5 million of equity funding, in exchange for a 35% ownership
of the joint  venture,  and arrange for $45  million of debt  financing  for the
joint venture to build the required  backbone and operational  infrastructure  .
IPC will contribute to the joint venture the national

                                                       [HARTCORT\10QSBSEP3099]-1


                                       15
<PAGE>

     ISP license and an agreement with China Telecom.  Negotiations with IPC are
continuing.

     In the third transaction, the Company agreed to purchase 58.5% of Financial
Telecom  Ltd.(FTL)  of Hong Kong for $3  million  in cash and  stock.  FTL is an
information  service provider  specializing in transmitting  real-time financial
data and news via a  network  of  fixed-line  and  wireless  systems,  including
new-generation  high-speed FLEX wireless PDA for mobile users.  FTL hass been in
business  for 14 years.  The  transaction  closed on October  4, 1999,  with the
Company  making a cash payment of $500,000,  issuing a note for  $1,000,000  and
1,500,000 shares of its common stock.

     In the last  transaction,  in October  the Company  signed a joint  venture
agreement  with Innostar  HiTech  Enterprises of China to establish a nationwide
Internet  Service  Provider and IP Phone Service in China.  In the agreement the
Company will hold a 35% interest in the Joint Venture.

Item 2.  (cont.)

Managements Discussion and Analysis of Financial Condition and Results of
     Operations (Continued)

Management of Growth: (cont.)

Impact of Year 2000

     The Year 2000 Issue is the result of computer  programs being written using
two digits rather than four to define the  applicable  year. Any of the Companys
computer programs that have  time-sensitive  software may recognize a date using
"00" as the year 1900 rather than the year 2000.  This could  result in a system
failure or miscalculations causing disruption of normal business activities.  As
the Company has no current operations,  there is no potential impact as a result
of the Year 2000.


Part II                      OTHER INFORMATION


Item 1.   Legal Proceedings

     There have been no changes  since the Companys last report in Item 3, Legal
Proceedings of Form 10-KSB for the fiscal year ended December 31, 1998.

Item 2.   Changes in Securities

Not applicable

Item 3.   Defaults upon Senior Securities

Not applicable

Item 4.   Submission of Matters to Vote of Securities Holders

None


                                                       [HARTCORT\10QSBSEP3099]-1


                                       16
<PAGE>

Item 5.   Other Information

None

Item 6.   Exhibits and Reports on Form 8-K

          (a)      Exhibits - None

          (b)      Form 8-K - None

                                   SIGNATURES



     In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                             The Hartcourt Companies, Inc.



Date:    November 22  1999                   By: /s/ Alan V. Phan
                                                  Dr. Alan V. Phan
                                                  President





                                                       [HARTCORT\10QSBSEP3099]-1



                                       17