U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   Form 10-QSB
                                   (Mark One)

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

                  For the quarterly period ended June 30, 1997

      [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT


                        Commission file number 001-12671

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


                  Utah                                    87-0400541
     (State or other jurisdiction of           (IRS Employer Identification No.)
      incorporation or organization)

              19104 S. Norwalk Boulevard, Artesia, California 90701
                    (Address of principal executive offices)

                                 (562) 403-1126
                           (Issuer's 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 registrant 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 February 24, 1997, The Hartcourt Companies,  Inc. had 10,687,380 shares of
Common Stock Outstanding.

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



<PAGE>


                                TABLE OF CONTENTS
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                              Report on Form 10-QSB
                                for quarter ended
                                  June 30, 1997
                                                                        Page

PART I -  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

         Consolidated Balance Sheets -- June 30, 1997 and
         December 31, 1996 (audited)                                      3

         Consolidated  Statement  of  Operations  --  Quarters
         ended  June 30,  1997 and 1996 and the six months
         ended June 30, 1997 and 1996                                     5

         Consolidated Statement of Shareholders' Equity -- Six
         months ended June 30, 1997                                       6

         Consolidated Statements of Cash Flows -- Six months ended
         June 30, 1997 and 1996                                           7

         Notes to the Consolidated Financial Statements                   8

Item 2.  Management's Discussion and Analysis of Financial
         Condition and results of Operations                             12


PART II - OTHER INFORMATION

          Item 1.  Legal Proceedings                                     14

          Item 2.  Charges in Securities                                 14

          Item 3.  Defaults upon Senior Securities                       14

          Item 4.  Submission of Matters to Vote of Security Holders     14

          Item 5.  Other Information                                     14

          Item 6.  Exhibits and Reports on Form 8-K                      14

          Signatures                                                     15



                                       2
<PAGE>


Item 1.
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

       ASSETS                                        June 30,       December 31,
                                                       1997             1996
CURRENT ASSETS                                      (Unaudited)         
                                                    -----------     -----------
    Cash                                               $105,971            $822
    Accounts receivable, net of
       allowance for doubtful
       accounts of $6,571 and
       $19,034 in 1997 and 1996,
       respectively                                       7,222          19,034
    Trade dollar receivables                             32,137          72,054
    Inventory, net                                      128,759         311,424
    Interest receivable                                  11,272           3,877
    Note receivable, current portion                    189,091         133,764
    Prepaid expenses                                    318,042               -
    Prepaid consulting fees                             900,000         900,000
    Due from related party                               52,418          32,356
                                                    -----------     -----------

         TOTAL CURRENT ASSETS                         1,744,912       1,473,331

PROPERTY AND EQUIPMENT, net                              35,264          44,809

INVESTMENTS                                          17,906,520      17,906,520

NOTE RECEIVABLE, net of current portion               1,354,947       1,190,795

OTHER ASSETS                                            516,951           7,550
                                                    -----------     -----------

                                                    $21,558,594     $20,623,005
                                                    ===========     ===========
       LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                                    $44,103        $148,569
    Trade dollar payables                               148,641               -
    Accrued expenses                                      5,902         133,747
    Notes payable, current portion                       51,926          56,396
    Bank overdrafts                                           -           5,691
    Subscription deposits                                89,000          45,000
    Other current liabilities                           100,000               -
                                                    -----------     -----------

       TOTAL CURRENT LIABILITIES                        439,572         389,403

NOTES PAYABLE, net of current portion                   576,615         524,369
                                                    -----------     -----------

       TOTAL LIABILITIES                              1,016,187         913,772


                                       3
<PAGE>


                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (Continued)

                                                     June 30,       December 31,
                                                       1997             1996
                                                    (Unaudited)         
                                                    -----------     -----------

SHAREHOLDERS' EQUITY
    Original preferred stock, $0.01 par
       value 1,000 shares authorized,
       issued and outstanding                                10              10
    Common stock, $0.001 par value,
       50,000,000 (10,000,000 in 1995)
       shares authorized; 12,106,024
       shares outstanding at June 30, 1997
       and 10,560,352 at December 31, 1996               12,106          10,560
    Treasury stock, at cost                            (279,928)       (279,928)
    Additional paid-in capital                       24,095,558      23,204,260
    Retained deficit                                 (3,285,339)     (3,225,669)
                                                    -----------     -----------

       TOTAL SHAREHOLDERS' EQUITY                    20,542,407      19,709,233
                                                    -----------     -----------

                                                    $21,558,594     $20,623,005
                                                    ===========     ===========


  THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT


                                       4
<PAGE>


                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                Quarter ended                 Six months ended
                                                   June 30,                       June 30,
                                        -----------------------------   ----------------------------
                                            1997            1996             1997           1996
                                        ------------    ------------    ------------    ------------
<S>                                       <C>              <C>            <C>              <C>      
REVENUES
    Product sales                           $267,394        $256,867        $271,500        $494,825
                                        ------------    ------------    ------------    ------------
         TOTAL REVENUES                      267,394         256,867         271,500         494,825

COST OF SALES                                190,926         202,128         195,325         407,824
                                        ------------    ------------    ------------    ------------
    Gross profit                              76,468          54,739          76,175          87,001

OPERATING EXPENSES
    General and administrative                41,633         248,037         144,290         458,216
    Depreciation                                 420         250,773           5,145         487,574
                                        ------------    ------------    ------------    ------------
         TOTAL OPERATING EXPENSES             42,053         498,810         149,435         945,790
                                        ------------    ------------    ------------    ------------
INCOME (LOSS) FROM OPERATIONS                 34,415        (444,071)        (73,260)       (858,789)

OTHER INCOME (EXPENSES)
    Minority interest                              -         300,429               -         600,858
    Interest expense                         (24,159)       (316,154)        (26,400)       (659,259)
    Interest income                            6,731          14,457          15,475          27,420
    Other income                              25,556               -          25,556               -
                                        ------------    ------------    ------------    ------------
         TOTAL OTHER INCOME (EXPENSE)          8,128          (1,268)         14,631         (30,981)
                                        ------------    ------------    ------------    ------------
NET INCOME (LOSS) BEFORE INCOME TAXES         42,543        (445,339)        (58,629)       (889,770)
    Income taxes                                 664               -           1,041            (218)
                                        ------------    ------------    ------------    ------------
NET INCOME (LOSS)                            $41,879       $(445,339)       $(59,670)      $(889,552)
                                        ============    ============    ============    ============
NET INCOME (LOSS) PER COMMON SHARE              $.00           $(.14)          $(.00)          $(.29)
                                        ============    ============    ============    ============
WEIGHTED AVERAGE NUMBER OF SHARES
    OUTSTANDING                           12,029,029       3,070,634      12,029,024       3,070,634
                                        ============    ============    ============    ============
</TABLE>

  THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT


                                       5
<PAGE>


                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                     FOR THE SIX MONTHS ENDED JUNE 30, 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                           Additional                     Total
                                   Common Stock     Preferred Stock   Treasury Stock        Paid-in      Retained      Shareholders'
                                 Shares    Amounts   Shares Amount  Shares     Amount       Capital       Deficit         Equity
                              ----------- ---------  ------ ------  ------   ---------    -----------   -----------    ------------
<S>                            <C>          <C>       <C>     <C>   <C>      <C>          <C>           <C>             <C>        
Balance, December 31, 1996     10,560,352   $10,560   1,000   $10   24,364   $(279,928)   $23,204,260   $(3,225,669)    $19,709,233

Shares issued for
  settlement of payables            2,672         3       -     -        -           -          5,341             -           5,344

Shares issued for consulting
  agreement                       100,000       100       -     -        -           -        149,900             -         150,000

Shares issued to present and
  former employees and Board
  of Directors                    289,000       289       -     -        -           -        144,211             -         144,500

Sale of shares under
  Regulation S                  1,000,000     1,000       -     -        -           -        499,000             -         500,000

Net loss                                -         -       -     -        -           -              -      (101,549)       (101,549)
                               ----------   -------   -----   ---   ------   ---------    -----------   -----------    ------------

Balance, March 31, 1997        11,952,024   $11,952   1,000   $10   24,364   $(279,928)   $24,002,712   $(3,327,218)    $20,407,528
                               ==========   =======   =====   ===   ======   =========    ===========   ===========    ============

Sale of shares under
  Regulation S                    138,000       138       -     -        -           -         68,862             -          69,000

Shares issued in settlement
  of payables                      16,000        16       -     -        -           -         23,984             -          24,000

Net income                              -         -       -     -        -           -              -        41,879          41,879
                               ----------   -------   -----   ---   ------   ---------    -----------   -----------    ------------

Balance, June 30, 1997         12,106,024   $12,106   1,000   $10   24,364   $(279,928)   $24,095,558   $(3,285,339)    $20,542,407
                               ==========   =======   =====   ===   ======   =========    ===========   ===========   =============
</TABLE>

  THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT



                                       6
<PAGE>


                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                            Six months ended
                                                                June 30,
                                                            1997         1996
                                                         ---------    ---------
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                               $(59,670)   $(889,972)
   Adjustments to reconcile net income to net cash
   used in operating activities:
     Stock issued for services                             294,500            -
     Minority interest in loss of joint venture                  -      (36,647)
     Write-off of bad debts                                (12,463)    (116,490)
     Accrued interest income                                (7,395)           -
     Depreciation and amortization                           5,145      487,574
     Changes in operating assets and liabilities:
  (Increase) decrease in:
        Accounts receivable                                 64,192       93,443
        Note receivable                                   (219,479)    (107,383)
        Inventory                                          182,665      (13,042)
        Prepaid expenses                                  (318,042)          64
        Other assets                                        22,955       28,763
   Increase (decrease) in:
        Accounts payable and accrued expenses              (54,326)     (33,323)
        Due from related party                             (52,418)     130,054
                                                         ---------    ---------
NET CASH USED IN OPERATING ACTIVITIES                     (154,336)    (456,959)
                                                         ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of property and equipment                       4,400     (165,074)
   Investments                                                   -     (228,089)
   Deposits                                               (500,000)           -
                                                         ---------    ---------
NET CASH USED IN INVESTING ACTIVITIES                     (495,600)    (393,163)
                                                         ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES
   Bank overdraft                                           (5,691)           -
   Borrowing from notes                                     47,776            -
   Other loans                                             100,000      234,855
   Issuance of common stock subscribed                      44,000            -
   Sale of common stock                                    569,000      488,033
                                                         ---------    ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES                  755,085      722,888
                                                         ---------    ---------
NET INCREASE IN CASH                                       105,149     (127,234)
CASH, BEGINNING OF PERIOD                                      822      142,047
                                                         ---------    ---------
CASH, END OF PERIOD                                       $105,971      $14,813
                                                         =========    =========

  THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT


                                       7
<PAGE>


                 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,  the  Company's  interest  was reduced to a 52% interest in the
           Xinhui JV.

           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 1996, a reverse stock split
           changed the number of shares issued and outstanding to 2,735,952. The
           consolidated  financial  statements  were  restated  to reflect  this
           capital stock transaction.
           Stardust's name was changed to 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  Hartcourt  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  interests.  In 1995,  stock  dividends  and a reverse stock split
           changed  the number of shares  issued to 38,625 to acquire  Hartcourt
           Pen. The consolidated  financial  statements were restated to reflect
           these capital stock transactions.

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.  These financial  statements should be read in
           conjunction with the financial  statements and related notes included
           in the Company's 1996 Form 10-KSB.


                                       8
<PAGE>


                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


           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 sheet
           of The Hartcourt Companies, Inc. and Subsidiaries as of June 30, 1997
           and the results of their  operations and their cash flows for the six
           months  ended June 30,  1997 and 1996,  respectively.  The  financial
           statements are  consolidated to include the accounts of The Hartcourt
           Companies and its subsidiary Hartcourt Pen (together "the Company").

           Certain  1996 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
           1 to the  Company's  financial  statements as stated in its report on
           Form 10-K for the fiscal year ended December 31, 1996.


Note 3.    Material Events:

           Sale of Harcourt Investments, Inc.

           In  September  1996 the  Company  sold its  wholly-owned  subsidiary,
           Harcourt  Investments  (USA), Inc.,  (Harcourt  Investments) to CKES,
           Inc. located in Sunnyvale,  California.  Harcourt Investments owned a
           52% interest in Xinhui Harcy  Modern Pens,  Ltd., a joint  venture in
           the  Peoples  Republic  of China.  All of the  outstanding  shares of
           Harcourt   Investments  were  sold  for  a  $3  million  dollar  note
           receivable  which is  payable  in 60 equal  monthly  installments  of
           $50,000 each,  beginning October 1, 1998.  Interest accrues at 6% per
           annum and is payable in full at the end of the loan period.  The note
           receivable is secured by a security agreement.  This agreement allows
           the Company to have a security interest in all assets of CKES, Inc.

           Investment in Peony Gardens

           In August 1996 the Company  purchased  an apartment  complex  located
           near Beijing, China for $22 million from NuOasis International,  Inc.
           The  purchase  price  included  the  issuance of 4 million  shares of
           common stock, valued at $10 million, and a promissory note to NuOasis
           for $12  million.  The note is due and payable on August 17, 1997 or,
           if  construction  is not  complete,  then the note is extended to the
           date that the certificate of occupancy is received. Under the deposit
           method  of  accounting  in  accordance   with  Financial   Accounting
           Standards  No. 66 the  promissory  note for $12 million is  currently
           being deferred until the complete  consummation  of the Peony Gardens
           sale.  Also,  the  value of the 4 million  shares of common  stock is
           recorded as a deposit at December 31, 1996.


                                       9
<PAGE>


                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


           Investment in Alaskan Gold Claims

           In September  1996 the Company  purchased  several gold mining claims
           encompassing 320 acres of land in the state of Alaska for $6 million.
           The purchase was made by issuing  1,298,700  shares of the  Company's
           common  stock.  Under the deposit  method of accounting in accordance
           with  Financial  Accounting  Standards  No.  66,  the  value  of  the
           1,298,700 shares of common stock is recorded as a deposit at December
           31, 1996.

           Agreement to Acquire Pego Systems, Inc.

           On April  8,  1997  the  Company  entered  into a  preliminary  stock
           purchase agreement with Michael V. Caruana, officer and owner of Pego
           Systems,  Inc. The Company intends to acquire all outstanding  shares
           of Pego Systems, Inc. The parties are negotiating final terms of this
           agreement and estimates  completion of the  transaction  in the third
           quarter of 1997.

           Agreement to Acquire  Electronic  Components  and  Systems,  Inc. and
           Pruzin Technologies, Inc.

           On July  24,  1997  the  Company  entered  into a  preliminary  stock
           purchase agreement with James Pruzin, officer and owner of Electronic
           Components   and  Systems,   Inc.  and  Pruzin   Technologies,   Inc.
           (collectively  ECS). The Company  intends to acquire all  outstanding
           shares  of ECS.  The  parties  are  negotiating  final  terms of this
           agreement and estimates  completion of the  transaction  in the third
           quarter of 1997.

           Escrow Opened to Acquire Shopping Center

           In July 1997 the Company  opened  escrow to  purchase a  multi-tenant
           shopping center in Perris,  California.  Estimated  purchase price is
           approximately $6,750,000.


Note 4.    Supplemental Disclosure of Non-cash Financing Activities:

           On January 29, 1997 the Company  issued 2,672 shares  valued at $2.00
           per share ($5,344) for services rendered in 1996.

           On February  12, 1997 the Company  issued  100,000  shares  valued at
           $1.50 per share  ($150,000) in connection with an investment  banking
           services agreement.

                                       10
<PAGE>


                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


           On March 31, 1997 the Company  issued  289,000 shares valued at $0.50
           per share  ($144,500) for present and former  employees and directors
           as bonuses.

           On May 7, 1997 the Company  issued  16,000 shares valued at $1.50 per
           share ($24,000) for business operations.

Note 5.    Income (Loss) Per Common Share:

           Income  (loss)  per  common  share is based on the  weighted  average
           number of common shares  outstanding  during the period.  No material
           dilution  of earnings  per share  would  result for the periods if it
           were assumed that all outstanding warrants were exercised.



                                       11
<PAGE>


Item 2.    Management's  Discussion  and  Analysis  of  Financial  Condition and
           Results of Operations:

           As discussed in the  Company's  annual  report,  the Company sold its
           interest in the Xinhui  Joint  Venture  during  1996 and,  therefore,
           comparability of assets, liabilities, income and expenses between the
           first and second  quarters of 1997 and the first and second  quarters
           of 1996 are not meaningful.

           Liquidity and capital resources.

           The  Company  continues  its plan to divest  itself  of  unprofitable
           operations and seek new  opportunities.  During the second quarter we
           sold our  California  Awards  business for $33,000 which  resulted in
           non-operating income of $15,000. We also sold the cosmetics inventory
           for  $200,000  which  resulted  in a gross  profit  of  approximately
           $38,000.   In  both  of  these   transactions  the  Company  received
           promissory  notes for the sales price and will collect the notes over
           3 to 5 years.

           During the quarter the Company borrowed  $50,000  repayable in twelve
           months.  The lender has the  option to convert  the loan into  common
           stock of the  Company  at $3.00 per  share.  The funds  were used for
           working capital.  The Company  received  $100,000 in June 1997 from a
           Hong Kong  investor  to  participate  with the Company in future real
           estate  projects.  A  portion  of the  funds  will be  used to  cover
           expenses of  acquisition  and  financing  of future  projects and the
           remainder  will be used for the equity  portion of  investments.  The
           Company is still  negotiating with the Hong Kong investor to work out
           the details of future joint venture projects.

           In connection  with the  Company's  stock  subscription  agreement we
           received  $58,000  in  additional  subscriptions  during  the  second
           quarter and issued  138,000  shares of common stock for  $69,000.  At
           June 30, 1997 the Company held  $89,000 in common stock  subscription
           deposits. These funds are being used for working capital.

           We also issued  16,000  shares of common stock during the quarter for
           $24,000 in settlement of outstanding accounts payable at amounts less
           than the original carrying amounts.  This resulted in cancellation of
           indebtedness income of almost $11,000.

           The  Company  is  currently  in   negotiations   for  the   following
           investments:

           1.   The Company has an agreement to purchase all of the  outstanding
                stock of Pego Systems, Inc. for a combination of cash and common
                stock of the Company. Pego Systems, Inc. manufactures industrial
                processing  equipment and has been in business over  thirty-five
                years.  Pego  Systems,  Inc. is currently  being  audited and we
                anticipate that the transaction  will be completed by the end of
                September  1997.  The  total  purchase  price  is  approximately
                $2,250,000.



                                       12
<PAGE>


           2.   The  Company  signed a letter of intent  to  acquire  Electronic
                Components  and  Systems,  Inc.  and Pruzin  Technologies,  Inc.
                (collectively referred to as ECS). Both are Arizona corporations
                with  headquarters  in  Nogales,  Arizona.  ECS  is  a  contract
                manufacturer   for  the  high-tech   industry   specializing  in
                electromechanical  assembly of printed circuit boards, cable and
                wire,  and other related  electronics.  ECS has three  factories
                located  in  Arizona  and  Mexico.  In  addition,  they  have  a
                warehouse  distribution center in Nogales,  Arizona with a total
                workforce of  approximately  1,000  people.  Existing  customers
                include:  Intel,  General Instruments,  and Motorola.  The total
                value of this  transaction  is $8,977,000  and will be paid with
                $5,000,000  worth of  voting  common  stock  and  $3,400,000  of
                restricted,  convertible  preferred  stock of the Company.  This
                transaction is expected to close by the end of the third quarter
                of 1997.


Item 2.    Management's  Discussion  and  Analysis  of  Financial  Condition and
           Results of Operations: (continued)

           3.   In  July  1997  the   Company   opened   escrow  to  purchase  a
                multi-tenant  shopping center in Perris,  California for a total
                purchase price of $6,750,000.

           Results of operations.

           The Company's  statement of consolidated  income for six months ended
           June  30,  1997  reflects  the  sale of the  cosmetic  inventory  for
           $200,000 which  produced a gross profit of $38,750.  We also sold the
           California  Awards business for $33,000 and recognized  non-operating
           income of $15,000 from the sale. The sale included  inventory,  store
           fixtures and equipment.  Additional  non-operating  income of $10,880
           was  recognized   during  the  quarter  from  the   renegotiation  of
           outstanding accounts payable and the resultant  cancellation of debt.
           In addition to the sale of the  cosmetics  inventory,  Hartcourt  Pen
           Factory had other sales of  approximately  $67,000 during the quarter
           and gross profit of approximately $38,000.

           Interest expense  increased during the quarter due to finance charges
           relating to trade dollar  payables as well as interest on the $50,000
           of short-term debt.


                                       13
<PAGE>



                            PART II OTHER INFORMATION


Item 1.    LEGAL PROCEEDINGS

There have been no changes  since the  Company's  last  report in Item 3, "Legal
Proceedings" of Form 10-KSB for the fiscal year ended December 31, 1996.

Item 2.    CHANGES IN SECURITIES

           Not applicable.

Item 3.    DEFAULTS UPON SENIOR SECURITIES

           Not applicable.

Item 4.    SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.

           None.

Item 5.    OTHER INFORMATION

           None.

Item 6.    EXHIBITS AND REPORTS ON FORM 8-K.

           (a)  Exhibits - None.

           (b)  Reports on Form 8-K - None.


                                       14
<PAGE>



                            PART II OTHER INFORMATION



                                   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: August 14, 1997                            By: /s/ Alan V. Phan
                                                     --------------------
                                                     Dr. Alan V. Phan,
                                                     President





                                       15