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         September 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
incorporation or organization)                                          Number)


                      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 September 30, 1997, The Hartcourt Companies, Inc.
 had 12,106,024 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
                                                September 30, 1997


                                                                          
                                                                           Page
PART 1 - FINANCIAL INFORMATION

         Item 1. Financial Statements (Unaudited)

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

                  Consolidated Statement of Operations - Quarter ended September
                           30, 1997 and 1996 and the nine months
                           Ended September 30, 1997 and 1996
 .......................................4

                  Consolidated Statement of Shareholders' Equity - Nine
                           Months ended September 30, 1997
 ..........................................5

                  Consolidated Statements of Cash Flows - Nine months ended
                           September 30, 1997 and 1996
 ..............................................6

                  Notes to the Consolidated Financial Statements
 ...................................7

         Item 2. Management's Discussion and Analysis of Financial Condition
                  and Results of Operations.
 .......................................................10

PART II - OTHER INFORMATION

         Item 1. Legal Proceedings...
 .............................................................11

         Item 2.  Charges in Securities...
 .........................................................11

         Item 3.  Defaults upon Senior Securities..
 ................................................11

         Item 4.  Submission of Matters to Vote of Security Hoders.
 ................................11

         Item 5.  Other Information
 ................................................................11

         Item 6.  Exhibits and Reports on Form 8-K
 ................................................11

                  Signatures..
 .....................................................................12


<PAGE>


<TABLE>
<CAPTION>

                                  THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                                            CONSOLIDATED BALANCE SHEETS

                                                                          September 30,             December 31,
                                                                              1997                      1996
ASSETS                                                                    (Unaudited)
CURRENT ASSETS
<S>                                                                    <C>                       <C>             
       Cash                                                            $         144,790         $            822
       Accounts receivable, net of allowance for doubtful accounts
              of $6,571 and $19,034 in 1997 and 1996, respectively                    --                   19,034
       Trade dollar receivables                                                   38,651                   72,054
       Inventory, net                                                            128,591                  311,424
       Interest receivable                                                        14,760                    3,877
       Note receivable, current portion                                          193,103                  133,764
       Prepaid expenses                                                          328,736                       --
       Prepaid consulting fees                                                   900,000                  900,000
       Due from related party                                                     74,985                   32,356
              TOTAL CURRENT ASSETS                                     $       1,823,616         $      1,473,331

PROPERTY AND EQUIPMENT, net                                            $          31,992         $         44,809
INVESTMENTS                                                                   17,906,520               17,906,520
NOTE RECEIVABLE                                                                1,346,278                1,190,795
OTHER ASSETS                                                                      51,951                    7,550
                                                                       $      21,160,357         $     20,623,005
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
       Accounts payable                                                $          96,708         $        148,569
       Trade dollar payables                                                     135,902                       --
       Accrued expenses                                                            4,960                  133,747
       Notes payable, current portion                                             51,586                   56,396
       Bank overdrafts                                                                --                    5,691
       Subscription deposits                                                     125,034                   45,000
              TOTAL CURRENT LIABILITIES                                $         414,190         $        389,403
NOTES PAYABLE, net of current portion                                            576,615                  524,369

              TOTAL LIABILITIES                                        $         990,805         $        913,772

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 million (10 million in
              1995) Shares authorized; 12,106,024 shares outstanding
              at September 30, 1997 and 10,560,352 at
              December 31, 1996                                                   12,106                   10,560
       Stock subscriptions receivable                                          (276,000)                       --
       Treasury stock, at cost (24,364 shares)                                 (279,928)                (279,928)
       Additional paid-in capital                                             24,095,558               23,204,260
       Retained deficit                                                      (3,382,194)              (3,225,669)
              TOTAL SHAREHOLDERS EQUITY                                       20,169,552               19,709,233
                                                                       $      21,160,357         $     20,623,005

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                  THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                                    (Unaudited)

                                                                   Quarter Ended                        Nine Months Ended
                                                                   September 30,                          September 30,
                                                              1997                1996               1997                1996
REVENUES
<S>                                                  <C>                   <C>                 <C>                <C>             
       Product sales                                 $          45,206     $       119,103     $       316,706    $        212,772

COST OF SALES                                                   18,402             113,949             213,727             556,683

       Gross Profit                                             26,804               5,154             102,979           (343,911)

OPERATING EXPENSES
       General and administrative                              127,115              27,712             271,405             248,272
       Depreciation and amortization                             5,647               1,138              10,792                  --

              TOTAL OPERATING EXPENSES                         132,762              28,850             282,197             248,272

LOSS FROM OPERATIONS                                         (105,958)            (23,696)           (179,218)           (592,183)

OTHER INCOME (EXPENSES)
       Minority interest
       Interest expense                                          4,095               (154)            (22,305)           (122,516)
       Interest income                                           6,410                 925              21,885               7,039
       Loss on sale of subsidiary                                   --         (1,135,482)                  --         (1,135,482)
       Other income                                                 --             572,863              25,556             367,828

              TOTAL OTHER INCOME (EXPENSES)                     10,505           (561,848)              25,136           (883,131)
NET LOSS BEFORE INCOME TAXES                                  (95,453)           (585,544)           (154,082)         (1,475,314)

       Income taxes                                              1,402               1,247               2,443               1,029

NET LOSS                                             $        (96,885)     $     (586,791)     $     (156,525)    $    (1,476,343)

NET LOSS PER COMMON SHARE                            $         (0.008)     $       (0.186)     $       (0.013)    $        (0.467)

WEIGHTED AVERAGE NUMBER OF SHARES
       OUTSTANDING                                          11,654,153           3,159,383          11,654,153           3,159,383
</TABLE>



<PAGE>


<TABLE>
<CAPTION>

                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
                                   (Unaudited)


                                                                 Additional
                             Common Stock      Preferred Stock     Paid-in        Treasury Stock        Retained
                         Shares       Amount  Shares   Amount      Capital      Shares       Amount      Deficit   Total
Balance,
<S>                      <C>         <C>         <C>    <C>     <C>              <C>      <C>          <C>          <C>        
     December 31, 1996   10,560,352  $   10,560  1,000  $  10   $23,204,260      27,364   $(279,928)   $(3,225,669) $19,703,233

     Shares issued for
      settlement of payables2,672   3                                 5,341                                               5,344
     Shares issued for
      consulting agreement  100,000          10                     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   $24,002,712      27,364   $(279,928)   $(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   $24,095,558      27,364   $(279,928)   $(3,285,339) $20,542,407

     Net loss                                                                                              (96,855)     (96,855)

Balance,
     September 30, 1997  12,106,024  $   12,106   1,000  $ 10   $24,095,558      27,364   $(279,928)   $(3,382,194) $20,445,552
</TABLE>


<PAGE>


<TABLE>
<CAPTION>

                                  THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (Unaudited)

                                                                                      September 30,
                                                                              1997                      1996
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                    <C>                       <C>              
       Net loss                                                        $       (156,525)         $     (1,476,343)
       Adjustments to reconcile net loss to net cash
         used in operating activities:
              Stock issued for services                                          294,500                        --
              Minority interest in loss of joint venture                              --                    86,639
              Write-off of bad debts                                            (19,034)                 (116,490)
              Accrued interest income                                           (10,883)                        --
              Depreciation and amortization                                       10,792                   269,263
              Changes in operating assets and liabilities:
              (Increase) decrease in:
                    Accounts receivable                                           71,471                   111,590
                    Note receivable                                            (214,822)                 (153,559)
                    Inventory                                                    182,833                    47,852
                    Prepaid expenses                                           (328,736)                    72,051
                    Other assets                                                (12,045)                   268,770
              Increase (decrease) in:
                    Accounts payable and accrued expenses                       (15,402)                   235,539
                    Due from related party                                      (74,985)                 (103,841)

NET CASH USED IN OPERATING ACTIVITIES                                          (272,836)                 (758,529)

CASH FLOWS FROM INVESTING ACTIVITIES
       Purchase of property, plant and equipment                                      --                 (214,761)
       Sale of equipment                                                           2,025                        --
NET CASH USED IN INVESTING ACTIVITIES                                              2,025                 (214,761)

CASH FLOWS FROM FINANCING ACTIVITIES
       Bank overdraft                                                            (5,691)                        --
       Borrowing from notes                                                       47,436                        --
       Other loans                                                                    --                   350,640
       Stock subscriptions receivable                                          (276,000)                        --
       Issuance of common stock subscribed                                        80,034                        --
       Sale of common stock                                                      569,000                   488,033

NET CASH PROVIDED BY FINANCING ACTIVITIES                                        414,779                   838,673

NET INCREASE (DECREASE) IN CASH                                                  143,968                 (134,617)

CASH, BEGINNING OF PERIOD                                                            822                   142,047
CASH, END OF PERIOD                                                    $         144,790         $           7,430

</TABLE>


<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 Investments 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 "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.

         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  and  Subsidiaries  as of September  30, 1997 and the results of their
operations and their cash flows for the nine months ended September 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-KSB for
the fiscal year ended December 31, 1996.




<PAGE>



                                  THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (UNAUDITED)
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
Harchy 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 was 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 of $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.

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.

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. On
October 6, 1997 the Company  completed  the purchase of 100% of the  outstanding
shares of Pego Systems,  Inc.  Details of this transaction were reported on Form
8-K and submitted to the SEC on or about October 18, 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
completed the purchase of 100% of the  outstanding  shares of ECS on October 29,
1997.  Details of this  transaction will be reported on Form 8-K submited to the
SEC on or about November 12, 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.  The  purchase is subject to financing  of  $3,750,000  from Nations
Bank.



<PAGE>



                                  THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (UNAUDITED)

Note 3.  Mateiral Events (continued):

Purchase of Marketable Securities

         On July 28, 1997 the Company purchased $6 million worth of free-trading
marketable  securities from Capital  Commerce Ltd., an Isle of Man  corporation.
The Company issued $4 million of Series A 9% Convertible  Preferred Stock and $2
million of Series B 9%  Convertible  Preferred  Stock in  exchange  for the free
trading  securities.  The securities  will be sold and funds will be used in the
acquisition of Pego Systems, Inc. and Electronic  Components and Systems,  Inc.,
as well as future acquisitions.

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.

         On March 31, 1997 the Company issued 289,000 shares valued at $0.50 per
share ($144,500) to 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.

         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.

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

         The Company sold its interest in the XinHui Joint  Venture  during 1996
and, therefore,  comparability of assets,  income and expenses between the first
three quarters of 1997 and the first three quarters of 1996 is not meaningful.

Liquidity and capital resources.

         The  Company  continued  its  plan to  divest  itself  of  unprofitable
operations and seek new opportunities.  In July 1997 the Company entered into an
agreement to issue $6 million of new Series A ($4 million) and B ($2 million) 9%
Convertible  Preferred  Stock  in  exchange  for  $6  million  of  free  trading
marketable   securities  held  by  Capital  Commerce,   Ltd.,  an  Isle  of  Man
Corporation.  Interest on the preferred  stock is payable  monthly for a term of
ten years.  The  Company has the right to call the  preferred  stock at any time
during the ten years.  Capital  Commerce has the option to convert the preferred
stock into the  Company's  Common Stock on a dollar for dollar  basis.  The free
trading  securities  will be used, in part,  to acquire Pego  Systems,  Inc. and
Electronic  Components & Systems,  Inc.  (see below).  In  connection  with this
agreement  the  Company  agreed  to  pay a  $600,000  commission  to  Mercantile
Investment Trust Ltd. payable in restricted Common Stock of the Company totaling
685,715 shares.
 At  September  30, 1997 the Company had  received  $125,000  from the sale of a
portion of the marketable securities,  however, the preferred stock had not been
issued. The $125,000 received was recorded as a subscription deposit.




<PAGE>



                                  THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (UNAUDITED)

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

         During the third  quarter the Company  received  $135,000 in connection
with a $500,000  common stock  subscription  agreement  entered into in the last
quarter of 1996. At September 30, 1997 there is $276,000 remaining receivable on
the subscription  agreement.  The one million shares of common stock sold by the
Company in connection with the subscription agreement were issued in March 1997,
however, they are not released until the Company receives the money.

         The Company  finalized  negotiations  in October 1997 on the  following
acquisitions which won't be recorded until the fourth quarter:

1.       On October 6, 1997 the  Company  completed  the  purchase of all of the
         outstanding  stock of Pego Systems,  Inc.  (Pego) for a total  purchase
         price of $2,450,000. The purchase price included $500,000 in cash, $1.5
         million in Series C Convertible  Preferred  Stock and 450,000 shares of
         restricted  common  stock  priced at $1 per  share.  Pego  manufactures
         industrial processing  equipment,  especially for air and gas handling.
         Pego has been profitable  throughout its 27 year history and management
         expects it to remain that way. Mr. Mike  Caruana,  Pego's  owner,  will
         continue as President of Pego in addition to other top management,  all
         of whom have signed three year employment contracts with the Company.

2.       The Company also completed the acquisition of Electronic Components 
and Systems, Inc. and Pruzin
         Technologies, Inc. (collectively referred to as ECS) on October 29, 
1997.  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
         electronic components.  ECS employs a total workforce of approximately
 1,000 people in three factories
         located in Arizona and Mexico.  In addition ECS has a warehouse
distribution center in Nogales Arizona.
         Existing customers include: Intel, General Instruments, and Motorola.
  The total purchase price of $11.4
         million is payable $250,000 cash, $3,169,000 Series D Preferred Stock,
 2.5 million shares of the
         Company's restricted common stock valued at $3.09 per share and a
promissory note for $250,000.  In
         addition, the Company agreed to infuse an additional $2 million into
 ECS for working capital purposes.
         ECS will operate as a subsidiary of  the Company under existing 
management.

3.       In  July  1997  the  Company  opened  escrow  for  the  purchase  of  a
         multi-tenant shopping center in Perris, California for a total purchase
         price  of  $6,750,000.  The  purchase  is  contingent  on  the  Company
         obtaining financing of $3,750,000 for the project.

Results of Operations

         The Company's  statement of  consolidated  income for nine months ended
September  30, 1997 reflects the sale,  in the second  quarter,  of the cosmetic
inventory for $200,000  which produced a gross profit of $38,750 and the sale of
the California Awards business for $33,000 which recognized non operating income
of $15,000. The sale of California Awards included inventory, store fixtures and
equipment.  Additional non operating income of $10,880 was recognized during the
second quarter from the  renegotiation  of outstanding  accounts payable and the
resultant  cancellation  of  debt.  Interest  expense  for  the  second  quarter
increased due to finance  charges  relating to trade dollar  payables as well as
interest on the $50,000 of short term debt.

         During  the third  quarter,  sales of $45,206  were from the  Company's
Hartcourt Pen Factory  primarily  from mail order sales.  Hartcourt  Pen's gross
profit on these sales of $26,804  reflected an approximate  gross margin of 59%.
The  Company is  continuing  its efforts to find a buyer for the  remaining  pen
inventory.



<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

         None.

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

         None.

Item 5.  OTHER INFORMATION

         None.

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K

         Exhibits - None.

         Reports on Form 8-K - None during the quarter.







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                                                    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 15, 1997        By:_______________________________
                                Dr. Alan V. Phan
                                    President




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