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 June 30, 1999

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

        For the transition period from ______________ to _______________

                        Commission File Number: 001-12671

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

                                      Utah
         (State or other jurisdiction of incorporation or organization)

                                   87-0400541
                        (IRS Employer Identification No.)

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

                                 (562) 426-9796
                           (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 June 30, 1999,  The Hartcourt  Companies,  Inc. had  19,635,817  shares of
Common Stock Outstanding.

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

                                                     [HARTCORT\10QSB:JUNE3099]-1

                                                                  1

<PAGE>

                                TABLE OF CONTENTS
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

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

                                                                            Page

PART 1    FINANCIAL INFORMATION

          Item 1.   Financial Statements (Unaudited)

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

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

                    Consolidated Statements of Shareholders' Equity
                     - Six Months Ended June 30, 1999 .....................6

                    Consolidated Statements of Cash Flows - Six Months
                    Ended June 30, 1999 and 1998 ..........................7

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

          Item 2.   Management's Discussion and Analysis of Financial
                    Condition and results of Operations                    13-15

PART II   OTHER INFORMATION

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

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

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

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

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

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

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

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                                                                  2

<PAGE>

<TABLE>
<CAPTION>

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

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

CURRENT ASSETS
         Cash                                                           $                   -   $             384,453
         Accounts receivable, net of allowance for doubtful
                  accounts of $76,477 in 1998                                          29,770               3,152,635
         Trade dollar receivable                                                       22,808                  22,670
         Notes receivable, current portion                                            101,523                 101,523
         Inventory                                                                          -               2,613,560
         Prepaid expenses                                                              39,855                 113,068
         Due from related parties                                                     158,222                 175,907
                                                                        ----------------------  ---------------------
                           TOTAL CURRENT ASSETS                                       352,178               6,563,816
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                                 $           5,354,178   $           27,072,392
                                                                        ======================  ======================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
         Accounts payable                                                             117,796               2,745,796
         Accrued expenses and other current liabilities                                39,380                 478,356
         Payable to Mexican affiliate                                                       -                 483,572
         Line of credit                                                                     -               1,502,609
         Notes payable, related parties - current portion                                   -                 145,000
         Notes payable - current portion                                                    -               1,631,199
         Capital lease obligation - current portion                                         -                 290,204
         Debentures                                                                   100,000                  50,000
         Advances from Officer                                                              -                 124,206
                                                                        ----------------------  ---------------------
                           TOTAL CURRENT LIABILITIES                                  257,176                7,450,942

</TABLE>

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<PAGE>

<TABLE>
<CAPTION>

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

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

LIABILITIES AND SHAREHOLDERS' EQUITY (cont.)
NOTES PAYABLE, net of current portion                                                          -            1,739,512
CAPITAL LEASE OBLIGATIONS, net of current portion                                              -              780,760
                                                                              -------------------  ------------------
            TOTAL LIABILITIES                                                            257,176            9,971,214
COMMITMENTS AND CONTINGENCIES                                                                  -                    -
SHAREHOLDERS' EQUITY
   Preferred Stock
      Original preferred stock, $0.01 par value, 1,000 shares
      authorized, issued and outstanding                                                       -                   10
   Series A, $1,000 stated value, 4,000 shares authorized,
       issued and outstanding at December 31, 1998                                             -            4,000,000
   Series B, $1,000 stated value, 2,000 shares authorized,
       issued and outstanding at December 31, 1998                                             -            2,000,000
   Series D, $1,000 stated value, 10,000 shares authorized,
       issued and outstanding at December 31, 1998                                             -            3,400,000
   Series AB, $100 stated value, 25,000 shares authorized,
       4,050 shares issued and outstanding at December 31, 1998                                 -             405,000
   Class A, no par value, 10,000,,000 shares authorized,
       none issued and outstanding                                                             -                    -
                                                                              -------------------  ------------------
            TOTAL PREFERRED STOCK                                                              -            9,805,010
                                                                              -------------------  ------------------
   Common  stock,  $0.01 par value,  50,000,000  shares  authorized;  19,700,181
      shares  issued and  outstanding  at June 30,  1999 and  19,954,382  shares
      issued and outstanding at
      December 31, 1998                                                                   19,636               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                                                         31,421,906           33,257,835
   Accumulated deficit                                                               (26,064,612)         (25,400,694)
                                                                              -------------------  -------------------
            TOTAL SHAREHOLDERS' EQUITY                                                 5,097,002           17,101,178
              TOTAL LIABILITIES AND SHAREHOLDERS'
               EQUITY                                                         $        5,354,178   $       27,072,392
                     =================== ===================

</TABLE>

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<TABLE>
<CAPTION>

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

                                                            Three Months Ended                       Six Months Ended
                                                                 June 30,                                June 30,
                                                 ------------------------------------------ -------------------------------------
                                                          1999                 1998                1999               1998
                                                 ---------------------- ------------------- ------------------ ------------------
<S>                                              <C>                    <C>                 <C>                <C>

REVENUES
   Product Sales                                 $                   -  $        2,603,034  $               -  $        7,548,765
   Services and Labor Sales                                          -           2,966,869                  -           3,124,137
                                                 ---------------------- ------------------- ------------------ ------------------
      TOTAL REVENUE                                                  -           5,569,903                  -          10,672,902
COST OF SALES                                                        -           4,067,551                  -           7,748,400
                                                 ---------------------- ------------------- ------------------ ------------------
   Gross Profit                                                      -           1,502,352                  -           2,924,502
OPERATING EXPENSES
   Selling, general and administrative                         413,385           1,370,742            655,160           2,629,712
   Depreciation and amortization                                     -             184,697                  -             369,395
                                                 ---------------------- ------------------- ------------------ ------------------
      TOTAL OPERATING EXPENSES                                 413,385           1,555,439            655,160           2,999,107
                                                 ---------------------- ------------------- ------------------ ------------------
INCOME (LOSS) FROM OPERATIONS                                 (413,385)            (53,087)          (655,160)            (74,605)
EQUITY IN LOSS OF UNCONSOLIDATED
   SUBSIDIARIES                                                      -                   -            (28,298)                  -
OTHER INCOME (EXPENSES)
   Interest expense                                                  -             (78,071)                 -            (140,104)
   Interest income                                                   -              27,780             20,095              37,378
   Miscellaneous income                                              -              23,836                  -              23,836
                                                 ---------------------- ------------------- ------------------ ------------------
      TOTAL OTHER INCOME (EXPENS                                     -             (26,455)            20,095             (78,890)
                                                 ---------------------- ------------------- ------------------ -------------------
NET INCOME (LOSS) BEFORE TAXES                                (413,385)            (79,542)          (663,363)           (153,495)
   Income taxes                                                  1,355                   -                555               1,275
                                                 ---------------------- ------------------- ------------------ ------------------
NET LOSS                                         $            (414,740) $          (79,542) $        (663,918) $         (154,770)
                                                 ====================== =================== ================== ===================
BASIC AND FULLY DILUTED INCOME
   (LOSS) PER SHARE                              $                (.02) $             (.01) $            (.03) $             (.03)
WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING                                       19,640,025          16,997,215         19,306,537          16,997,215

</TABLE>

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<PAGE>

<TABLE>
<CAPTION>

Item 1              THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
(cont.)             CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
                      FOR THE THREE MONTHS ENDED MARCH 31, 1999
                                   (UNAUDITED)




                                                      Common Stock              Preferred Stock            Additional
                                                  ------------------------    -------------------------       Paid
                                                  Shares         Amount       Shares        Amount           Capital
                                                  ----------  ------------    --------  --------------- ---------------
<S>                                               <C>         <C>             <C>       <C>             <C>


Balance, December 31, 1998                        19,954,382  $     19,955      14,450  $     9,805,010 $    33,257,835
   Shares issued to investors                        197,000           197           -               -           24,863
   Shares redeemed in connection with sale
      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                            -             -           -               -                -
   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                   -             -      (1,000)           (10)         (399,378)
   Net Loss                                                -             -           -               -                -
                                              --------------- ------------- ----------- --------------- ----------------
Balance, March 31, 1999                           17,661,382  $     17,662           -  $            -  $    31,112,310
   Shares issued to investors                         103,000          103           -               -           12,772
   Shares issued to Alan Phan in lieu of cash
       per employment contract for 1998
       services                                     1,706,485        1,706           -               -          198,294
   Shares issued for Services                          50,000           50           -               -           12,450
   Shares issued to employees and directors          114,950           115                                       86,080
   Net loss                                                -             -           -               -                -
                                              --------------- ------------- ----------- --------------- ----------------
Balance, June 30, 1999                             19,635,817 $     19,636           -  $            -  $    31,421,906
                                              =============== ============= =========== =============== ================

</TABLE>

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                                                                      6(a)

<PAGE>
<TABLE>
<CAPTION>

Item 1              THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
(cont.)             CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
                      FOR THE THREE MONTHS ENDED MARCH 31, 1999
                                   (UNAUDITED)



                                                  Common
                                                   Stock              Treasury Stock                               Total
                                                Subscription          ----------------------   Accumulated      Shareholders'
                                                 Receivable           Shares      Amount         Deficit            Equity
                                                ---------------        ------  -------------- ---------------  ----------------
<S>                                             <C>              <C>           <C>            <C>              <C>

Balance, December 31, 1998                      $     (301,000)        24,364  $    (279,928) $  (25,400,694)  $     17,101,178
   Shares issued to investors                                -              -              -               -             25,060
   Shares redeemed in connection with sale
      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              -              -               -            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                                      0         24,364  $    (279,928) $  (25,649,872)  $      5,200,172
   Shares issued to investors                                -              -              -               -             12,875
   Shares issued to Alan Phan in lieu of cash
       per employment contract for 1998
       services                                              -              -              -               -            200,000
   Shares issued for Services                                -              -              -               -             12,500
   Shares issued to employees and directors                  -              -              -               -             86,195
   Net loss                                                  -              -              -        (414,740)                 0
                                               ---------------  -------------  -------------- ---------------  -----------------
Balance, June 30, 1999                          $            -         24,364  $    (279,928) $  (26,064,612)  $      5,097,002
                                               ===============  =============  ============== ===============  =================

</TABLE>

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                                                                      6(b)

<PAGE>

<TABLE>
<CAPTION>

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

                                                                                            Six Months ended
                                                                                                June 30,
                                                                              ----------------------------------------
                                                                                     1999                 1998
                                                                              ------------------  --------------------
<S>                                                                           <C>                 <C>

CASH FLOWS FROM OPERATING ACTIVITIES
   Net Loss                                                                   $        (663,918)  $          (154,770)
   Adjustments to reconcile net loss to net cash used in
      operating activities:
         Stock issued for services                                                       88,750               166,428
         Depreciation and amortization                                                                        376,492
         Changes in operating assets and liabilities:
            (Increase) decrease in:
                  Accounts receivable                                                         -              (665,697)
                  Inventory                                                              13,083               919,642
                  Prepaid expenses and other assets                                      28,500               (28,031)
            Increase (decrease) in:
                  Accounts payable and accrued expenses                                   8,233            (1,577,541)
                  Due from related party                                                (15,700)              (56,611)
                  Payable to Mexican affiliate                                                -                 7,607
                                                                              ------------------  --------------------
NET CASH USED IN OPERATING ACTIVITIES                                                  (617,302)           (1,012,481)
CASH FLOWS FROM INVESTING ACTIVITIES
     Sale of 30% of ECS                                                                5,400,000                    -
   Change in Investments                                                               1,135,607                    -
     Distribution of Subsidiary Ownership to shareholders                              (399,388)                    -
     Purchase of (sale) of property and equipment                                             -              (170,794)
   Proceeds on sale of marketable securities                                                  -               523,903
   Payments on notes receivable                                                               -                 7,199
                                                                              ------------------  --------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                   6,136,219               360,308
CASH FLOWS FROM FINANCING ACTIVITIES
   Sale of common stock                                                                  37,935              1,125,002
   Common stock issued to directors and officers                                        337,445                     -
   Common stock subscription receivable                                                       -              (275,000)
   Other loans and lines of credit                                                       50,000               656,067
   Payments on related party payable                                                          -                (2,096)
   Payments on long-term debt                                                                 -              (124,209)
   Payments on capital lease obligation                                                       -              (101,297)
   Redemption of preferred stock                                                     (6,405,000)              500,000)
                                                                              ------------------  --------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                  (5,903,370)              778,467
                                                                              ------------------  --------------------
NET INCREASE (DECREASE) IN CASH                                                        (384,453)              126,294
CASH, BEGINNING OF PERIOD                                                               384,453                77,688
                                                                              ------------------  --------------------
CASH, END OF PERIOD                                                           $               -   $            203,982
                                                                              ==================  =====================

</TABLE>

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                                                         7

<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:JUNE3099]-1

                                                         8

<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' 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:JUNE3099]-1

                                                         9

<PAGE>

Item 1.     (cont.)

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

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

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

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

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

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

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

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

                                                     [HARTCORT\10QSB:JUNE3099]-1

                                                        10

<PAGE>

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

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

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

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

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 June 30, 1999 and  December 31, 1998 and the results of
their operations and their cash flows for the six months ended June 30, 1999 and
1998,   respectively.   The  financial  statements  for  the  1998  periods  are
consolidated  to  include  the  accounts  of The  Hartcourt  Companies  and  its
subsidiaries Harcourt Investments, USA, including the accounts of Hartcourt Pen,
Pego Systems,  Inc. and Electronic  Components and Systems,  Inc. (together "the
Company").  The financial  statements for the 1999 periods are  consolidated  to
include the accounts of The Hartcourt  Companies and its  subsidiaries  Harcourt
Investments,  USA,  including  the accounts of  Hartcourt  Pen,  (together  "the
Company") excluding,  Pego Systems,  Inc. and Electronic Components and Systems,
Inc.  which  were  contributed  to  Enova  Holdings,  Inc.  and  distributed  to
shareholders effective March 31, 1999.

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:JUNE3099]-1

                                                        11

<PAGE>

Item 1.     (cont.)

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

<TABLE>
<CAPTION>

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

                                                      Quarter Ended          Quarter Ended
                                                      June 30, 1999          June 30, 1998
                                                       (Unaudited)            (Unaudited)
                                                  --------------------   -------------------
<S>                                               <C>                    <C>

Cash paid (received) for interest and income taxes:
   Interest                                       $                  -   $            78,071
   Taxes                                                         1,355                    -
Non-cash investing and financing activities:
   Preferred stock issued for dividends           $                  -   $           270,000
   Preferred stock issued for accrued
   liabilities                                                       -               135,000

</TABLE>

<TABLE>
<CAPTION>

Note 4.       Loss per Share :

                                           Quarter               Quarter            Six Months           Six Months
                                            Ended                 Ended                Ended                Ended
                                        June 30, 1999         June 30, 1998        June 30, 1999        June 30, 1999
                                    --------------------- --------------------  -------------------  -------------------
<S>                                 <C>                   <C>                   <C>                  <C>

Income (Loss) from continuous
   operations:                      $           (414,740) $           (79,542)  $         (663,918)  $         (154,770)
Less preferred stock dividends                         -             (135,000)                   -             (270,000)
                                    --------------------- --------------------  -------------------  -------------------
Income (Loss) available to
   common shareholders                          (414,740)            (214,542)            (663,918)            (424,770)
Effects of dilutive securities                         -                    -                    -                    -
Weighted average shares
   outstanding                                19,640,025           16,997,215            19,306,537          16,997,215
Basic and dilutive earnings per
   share                            $               (.02) $              (.01)  $             (.03)  $             (.00)

</TABLE>

Note 4.           Loss per share: (continued)

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

                                                     [HARTCORT\10QSB:JUNE3099]-1

                                                        12

<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'  Electronic
Components and Systems, Inc. subsidiary the recorded significant  impairments to
its  goodwill  in the 4th quarter of 1999.  In the 1st quarter of 1998,  as more
fully  described  in Part I, Item 1, Note 1 to Notes to  Consolidated  Financial
Statements,  the Company  settled certain matters of litigation and entered into
certain restructuring  transactions.  In connection with the restructuring,  the
Company formed a new subsidiary,  Enova Holdings,  Inc.("Enova") and contributed
it's  remaining  investment  in  its  two  operating   subsidiaries   Electronic
Components and Systems,  Inc. and Pego Systems,  Inc. to Enova.  Effective March
31, 1999, the Company contributed its investment in Enova to its shareholders.

As a result, Hartcourt effectively became a shell corporation with no operations
and its principal  assets being the investment  securities  received in exchange
for its investment in the Peony Gardens condominium  project.  Accordingly,  the
operations  presented  reflect the 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
six months of 1999, while the Company=s revenue for the first six months of 1998
was $10,672,902.  The equity in earnings / loss for the first six months of 1999
was a loss of $28,000  comprised  of earnings at Pego of $117,000  and a loss at
ECS of $145,000 through March 31, 1999.

Corporate  selling,  general and  administrative  (SGA)  expenses  were $655,160
attributed to the costs of operating the holding  Company,  seeking new business
opportunities and associated with the restructuring.

Liquidity and Capital Resources:

During the first half of 1999, the company  raised  $87,935  through the sale of
common  stock  and  debentures  compared  to the first  half of 1998,  where the
Company sold approximately  $1,125,002 of its equity securities.  These proceeds
were used for working capital needs.  The current ratio at June 30, 1999 was 1.4
compared to .9 at December 31, 1998. Working capital was $95,002 at June 30,1999
and ($887,126) at December 31, 1998.

The Company's operating  activities used cash of approximately  $617,000 for the
six months  ended June 30,  1999.  The Company  had an  operating  loss,  before
depreciation and amortization of approximately $664,000

Cash provided by investing  activities for the six months-ended June 30,1999 was
approximately $6.1 million which was offset by cash used in financing activities
of $5.9 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 six months of 1999.

                                                     [HARTCORT\10QSB:JUNE3099]-1

                                                        13

<PAGE>

Item 2.     (cont.)

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

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.

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

In the first  transaction,  the Company has agreed to purchase 35% of UAC Online
Stock Trading Ltd ("UAC") for $2.5 million.  UAC is a company  providing on-line
trade  execution  for stock  brokerage  firms in China via an  intranet  service
called  CHINAPAC  which is owned by China  Telecom.  UAC intends to use the cash
received  from the Company to  complete  the  testing  and  installation  of its
systems into all 98 offices of Hua Xia  Securities  in China.  Current plans are
for all 98 offices of Hoa Xia Securities to be operational within 6 months.

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

                                                     [HARTCORT\10QSB:JUNE3099]-1

                                                        14

<PAGE>

Item 2.  (cont.)

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations (Continued)

Management of Growth: (cont.)

In the third transaction,  the Company has agreed to purchase 58.5% of Financial
Telecom  Ltd.  ("FTL")  for $3 million in cash and stock.  FTL is a provider  of
real-time  quotes for Hong Kong  listed  companies  and has been in  business 14
years.  Quotes and related data is  transmitted  via computer  terminals,  cable
boxes, custom-designed PDA and digital pagers.

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.

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)  Form 8-K - None

                                                     [HARTCORT\10QSB:JUNE3099]-1

                                                        15

<PAGE>

                                   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 16, 1999                By   /s/  Jon L. Lawver
                                             ----------------------------------
                                                  Jon L. Lawver
                                                  Secretary and
                                                  Chief Accounting Officer