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: March 31, 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.)

              2049 Century Park East, Los Angeles California 90067
                    (Address of principal executive offices)

                                 (310) 788-2634
                           (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 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 March 31, 1999, The Hartcourt  Companies,  Inc. had  17,661,382  shares of
Common Stock Outstanding.

Transitional Small Business Disclosure Format (check one ):

              Yes [  ]                 No [ X ]

                                                         [HARTCORT\10QSB:033199]

<PAGE>

                                TABLE OF CONTENTS
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                              Report on Form 10-QSB
                                For quarter ended
                                 March 31, 1999

                                                                            Page

PART 1    FINANCIAL INFORMATION

          Item 1.   Financial Statements (Unaudited )

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

          Consolidated Statements of Operations - Three months ended
           March 31, 1999 and 1998 ........................................5

          Consolidated Statements of Shareholders' Equity
           - Three Months ended March 31, 1999 ............................6

          Consolidated Statements of Cash Flows - Three months ended
           March 31, 1999 and 1998 ........................................7

          Notes to the Consolidated Financial Statements .................8 - 11

          Item 2.   Management's Discussion and Analysis of Financial
                     Condition And results of Operations ..................13

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\10QSB:033199]

<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

Item 1.   Financials Statements (Unaudited)

<TABLE>
<CAPTION>

                  THE HARTCOURT COMPAMIES INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                                              March 31,
                                                                                1999                 December 31,
                                                                             (Unaudited)                 1998
                                                                       ----------------------   ----------------------
<S>                                                                    <C>                      <C>

ASSETS
CURRENT ASSETS
   Cash                                                                $                5,779   $             384,453
   Accounts receivable, net of allowance for doubtful
        accounts of $76,477, in 1998                                                   29,770               3,152,635
   Trade dollar receivable
   Notes receivable, current portion                                                   22,808                  22,670
   Inventory                                                                          101,523                 101,523
   Prepaid expenses                                                                     8,355                 113,068
   Due from related parties                                                           153,522                  175,907
                                                                       -----------------------  ----------------------
        TOTAL CURRENT ASSETS                                                          381,757              12,670,017
PROPERTY AND EQUIPMENT, net                                                                 -               4,262,120
INVESTMENTS                                                                         5,000,000              11,030,000
OTHER ASSETS                                                                            2,000                  18,423
INTANGIBLES                                                                                 -               5,198,033
                                                                       -----------------------  ---------------------
        TOTAL ASSETS                                                   $            5,383,757   $          27,072,392
                                                                       =======================  =====================
        LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
     Accounts payable                                                                  40,635               2,745,796
     Accrued expenses and other current liabilities                                     32,950                478,356
     Payable to Mexican affiliate                                                           -                 483,572
     Line of credit                                                                         -               1,502,609
     Notes payable, related parties-current portion                                         -                 145,000
     Notes payable-current portion                                                     10,000               1,631,199
     Capital lease obligation-current portion                                               -                 290,204
     Debentures                                                                       100,000                  50,000
     Advances From Officer                                                                  -                 124,206
                                                                       -----------------------  ---------------------
     TOTAL CURRENT LIABILITIES                                                        183,585               7,450,942

</TABLE>

<PAGE>

Item  1.  (cont.)

<TABLE>
<CAPTION>

                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (CONTINUED)

                                                                                    March 31,
                                                                                      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                                                                183,585              9,971,214
COMMITMENT AND CONTINGENCIES                                                                                            -
SHAREHOLDERS' EQUITY
        Preferred Stock
        Original preferred stock, $0.01 par value, 1,000
          shares authorized, issued and outstanding                                             10                     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,
          3,400 shares 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
        Class A, no par, 10,000,000 shares authorized, none issued
          and outstanding                                                                        -                      -
                                                                              --------------------- ---------------------
          TOTAL PREFERRED STOCK                                                                 10             9,805,010
        Common stock, $0.01 par value, 50,000,000 shares authorized;  17,661,382
          shares issued and outstanding at March 31, 1999 and 19,954,382  shares
          issued and
          outstanding at December 31, 1998                                                  17,662                 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                                                      31,112 300             33,257,835
        Accumulated deficit                                                            (25,649,872)           (25,400,694)
                                                                              --------------------- ----------------------
          TOTAL SHAREHOLDERS' EQUITY                                                     5,200,172             17,101,178
          TOTAL LIABILITIES AND SHAREHOLDERS'
             EQUITY                                                           $          5,383,757  $           27,072,392
                                                                              ===================== ======================

</TABLE>

                                                         [HARTCORT\10QSB:033199]

<PAGE>

Item 1.  (cont.)

<TABLE>
<CAPTION>

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

                                                                                     Three Months Ended
                                                                                          March 31,
                                                                                1999                    1998
                                                                      ------------------------ ----------------------
<S>                                                                   <C>                      <C>

REVENUES
   Product Sales                                                      $                     -  $            5,102,999
                                                                      ------------------------ ----------------------
        TOTAL REVENUE                                                                       -               5,102,999
        COST OF SALES                                                                       -               3,746,447
                                                                      ------------------------ ----------------------
   Gross profit                                                                             -               1,356,552
OPERATING EXPENSES
   Selling, general and administrative                                                241,775               1,189,788
   Depreciation and amortization                                                            -                 188,282
                                                                      ------------------------ ----------------------
        TOTAL OPERATING EXPENSES                                                      241,775               1,378,070
                                                                      ------------------------ ----------------------
LOSS FROM OPERATIONS                                                                 (241,775)                (21,518)
EQUITY IN EARNINGS(LOSS) OF
UNCONSOLIDATED                                                                        (28,298)                      -
   SUBSIDIARIES
OTHER INCOME (EXPENSES)
   Interest expense                                                                         -                 (62,023)
   Interest and other income                                                           20,095                   9,588
                                                                      ------------------------ ----------------------
        TOTAL OTHER INCOME (EXPENSE)                                                  (20,095)                (52,435)
                                                                      ------------------------ -----------------------
NET LOSS BEFORE INCOME TAXES
   Income taxes                                                                      (249,978)                (73,953)
                                                                                         (800)                  1,275
                                                                      ------------------------ ----------------------
NET LOSS                                                              $              (249,178) $              (75,228)
                                                                      ======================== =======================
BASIC AND FULLY DILUTED LOSS PER SHARE                                $                  (.01) $        (.01)
WEIGHTED AVERAGE NUMBER OF SHARES
  OUTSTANDING                                                                     19,073,049               16,417,375

</TABLE>

                                                         [HARTCORT\10QSB:033199]

<PAGE>

Item 1.  (cont.)

<TABLE>
<CAPTION>

                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
                    FOR THE THREE MONTHS ENDED MARCH 31, 1999
                                   (UNAUDITED)


                                   Common Stock           Preferred Stock                      Common            Treasury Stock    
                                --------------------      ----------------      Additional     Stock          -------------------- 
                                                                                Paid           Subscription                        
                                Shares       Amount       Shares    Amount      Capital        Receivable     Shares    Amount     
                              ----------     -------      ------   ----------   -----------    ------------   ------    ---------- 
<S>                           <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) 
   Shares Issued to Investors    197,000         197                                 24,863                                        
   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)                                       
   Shares Issued (Redeemed)
        in connection with
        litigation settlement (1,000,000)     (1,000)   (10,050)   (6,405,000)      100,000                                        
   Stock Subscription
        Rescinded                                                                                301,000                           
   Shares issued for Services    305,000         305                                 75,945                                        
   Shares issued to
        employees and
        directors                205,000         205                                 51,045                                        

   Distribution of Enova to
        Shareholders                                                               (399,388)                                       
   Net Loss                                                                                                                        
                             -----------     ---------   --------   ----------  ------------   -----------    -------   ---------- 
Balance, March 31, 1999       17,661,382     17,662        1,000    $       10  $31,112,300    $        -     24,364    $(279,928) 

</TABLE>

                                                         [HARTCORT\10QSB:033199]

<PAGE>

<TABLE>
<CAPTION>

                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
                    FOR THE THREE MONTHS ENDED MARCH 31, 1999
                                   (UNAUDITED)


                                 Total
                                 Accumulated    Shareholders'
                                 Deficit        Equity
                                 -------------  -----------
<S>                              <C>            <C>

Balance, December 31, 1998       $(25,400,694)  $17,101,178
   Shares Issued to Investors                        25,060
   Shares Redeemed in
        connection  with sale
        of 30% interest in
        ECS to J. Pruzin                         (5,400,000)
   Shares Issued (Redeemed)
        in connection with
        litigation settlement                   (6, 306,000)
   Stock Subscription
        Rescinded                                   301,000
   Shares issued for Services                        76,250
   Shares issued to
        employees and
        directors                                    51,250

   Distribution of Enova to
        Shareholders                               (399,388)
   Net Loss                          (249,178)     (249,178)
                                 -------------  -------------
Balance, March 31, 1999          $(25,649,872)  $ 5,200,172

</TABLE>

                                                         [HARTCORT\10QSB:033199]

<PAGE>

Item 1.  (cont.)

<TABLE>
<CAPTION>

                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF CASH FLOW
                                   (UNAUDITED)

                                                                                       Three Months Ended
                                                                                            March 31,
                                                                                   1998                   1997
                                                                           ---------------------  --------------------

<S>                                                                        <C>                    <C>

CASH FLOWS FROM OPERATING ACTIVITIES
   Net Loss                                                                $           (249,178)  $           (75,228)
   Adjustments to reconcile net loss to net cash used in
   operating activities:                                                                      -                     -
        Stock issued for services                                                             -               188,282
        Depreciation and amortization
        Changes in operating assets and liabilities:                                          -              (159,974)
          Accounts receivable                                                            13,083               581,360
          Inventory                                                                     (71,137)             (321,863)
          Accounts payable, accrued expenses and other                                  (11,000)              (34,811)
          Due from related party                                                              -                15,766
                                                                           ---------------------  -------------------
          Payable to Mexican affiliate
NET CASH PROVIDED BY (USED IN) OPERATING                                               (318,232)             (193,532)
ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
   Sale of 30% of ECS                                                                 5,400,000                     -
   Change in Investments                                                              1,135,607               523,903
   Distribution of Subsidiary Ownership to shareholders                                (399,388)                    -
   Purchase of property and equipment                                                         -              (100,637)
   Payments on notes receivable                                                               -                 5,382
                                                                           ---------------------  -------------------
NET CASH PROVIDED BY (USED IN) INVESTING                                              6,136,219               428,648
ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
   Sale of common stock                                                                  25,060                     -
   Common stock issued to directors, officers and others                                127,500                     -
   Common stock subscriptions received                                                        -                55,000
   Sale of Debentures                                                                    50,000                     -
   Payments on related party payable                                                          -                (2,096)
   Payments on long term-debt                                                                 -               (22,935)
   Payments on capital lease obligation                                                       -               (49,966)
   Payments on line of credit and notes payable                                               -              (200,000)
   Redemption of preferred stock                                                     (6,405,000)             (250,000)
                                                                           ---------------------  --------------------
NET CASH (USED IN) PROVIDED BY FINANCING                                             (6,202,440)             (514,997)
                                                                           ---------------------  --------------------
ACTIVITIES
NET INCREASE (DECREASE) IN CASH                                                        (378,679)              107,183
CASH, BEGINNING OF PERIOD                                                               384,453                77,688
CASH, END OF PERIOD                                                        $              5,779   $           184,871
                                                                           =====================  ===================

</TABLE>

<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.  Stardust's  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\10QSB:033199]

<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 manufacturer's  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  Pego's
   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  Company's  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's  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\10QSB:033199]

<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  cancelled  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.

                                                         [HARTCORT\10QSB:033199]

<PAGE>

Item 1.  (cont.)

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

     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.

     9)   On March 24, 1999, the Company  entered into a Distribution  Agreement
          pursuant to which the Company agreed to distribute 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.

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 March 31,1999 and December 31, 1998 and
the results of their  operations and their cash flows for the three months ended
March 31, 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.

         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 Company's financial  statements as stated in its report on Form 10-KSB
for the fiscal year ended December 31, 1998.

                                                         [HARTCORT\10QSB:033199]

<PAGE>

Item 1.  (cont.)

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

Note 3.       Supplemental Disclosure of Non-Cash Financing Activities:

<TABLE>
<CAPTION>

                                                                 Quarter Ended       Quarter Ended
                                                                 March 31, 1999      March 31, 1998
                                                                 --------------      --------------
                                                                 (unaudited)         (unaudited)

<S>                                                              <C>                 <C>


              Cash paid (received) for interest and income taxes:
                    Interest                                     $       -           $ 62,023
                    Taxes                                             (800)                 -

              Non-cash investing and financing activities:
                    Preferred stock issued for Preferred stock
                    issued for accrued Liabilities                       -           $135,000

              Note 4.       Loss per Share :
                                                                 Quarter Ended       Quarter Ended
                                                                 March 31,1998       March 31,1997
                                                                 --------------      -------------
               Income (Loss) from continuous
               Operations:                                       $(249,178)          $(75,228)
               Less preferred stock dividends                            -           (135,000)
                                                                 --------------      -------------
               Income (Loss) available to
               common shareholders                                (249,178)          (210,228)

               Effects of dilutive securities                            -                  -

               Weighted average shares outstanding              19,073,049         16,417,375

               Basic and dilutive earnings per share             $    (.01)        $     (.01)

</TABLE>

          During 1999 and 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\10QSB:033199]

<PAGE>

          Part I

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

          As  discussed  in the  Company's  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's Electronic  Components and Systems, Inc.
          subsidiary the recorded significant impairments to its goodwill in the
          4th  quarter  of  1998.  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
          Company's  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 three months of 1999,  while the  Company's  revenue for the
          first three  months of 1998 was  $5,103,000.  The equity in earnings /
          loss  for  the  first  three  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.

          Corporate  selling,  general and  administrative  (SGA)  expenses were
          $242,000  attributed  to  primarily to the costs  associated  with the
          restructuring.

          Liquidity and Capital Resources:

          During the first quarter of 1999, the company  raised $75,000  through
          the sale of common stock and debentures  compared to the first quarter
          of  1998,  where  the  Company  sold  approximately  $525,000  of  its
          marketable  securities.  These proceeds were used for working  capital
          needs.  The current ratio at March 31, 1999 was 2.1 compared to 1.7 at
          December 31, 1998.  Working  capital was  $7,142,703 at March 31, 1998
          and $7,480,308 at December 31, 1997.

          The Company's operating activities used cash of approximately $318,000
          for the  three  months  ended  March  31,  1999.  The  Company  had an
          operating loss, before  depreciation and amortization of approximately
          $249,000

                                                         [HARTCORT\10QSB:033199]

<PAGE>

          Item 2. (cont.)

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

          Liquidity and Capital Resources: cont.

          Cash provided by investing activities for the three months-ended March
          31,1999 was  approximately  $6.1 million which was offset by cash used
          in financing  activities  of $6.2  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 $384,000 for the first three months of 1999.

          Business Risks:

          As  discussed  previously,  the Company is  substantially  a shell but
          intends  to seek  out and  acquire  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 Company's  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.

          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 Company's 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.

                                                         [HARTCORT\10QSB:033199]

<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, 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

          Item 5. OTHER INFORMATION

          None

          Item 6. EXHIBITS AND REPORTS ON FORM 8-K

          (a) Exhibits - None

          (b) Reports on Form 8-K - During the first quarter,  the Company filed
              a  Form  8-K  reporting  the  events  specified in Part I, Item 1,
              Note 1.

                                                         [HARTCORT\10QSB:033199]

<PAGE>

                                   SIGNATURES

Inccordance 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: May 17, 1999                      By:  /s/  Dr. Alan V. Phan
                                             ---------------------------------

                                                  Dr. Alan V. Phan, President

Options  and  warrants  outstanding  as of March  31,1999 are  antidilutive  for
purposes of calculating basic and diluted earnings per share and are,  therefore
ignored.


                                                         [HARTCORT\10QSB:033199]