U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-QSB


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

                  For the quarterly period ended July 31, 1998
                                                 -------------


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

    For the transition period from __________________ to ____________________

                         Commission file number 1-14244

                         GLAS-AIRE INDUSTRIES GROUP LTD.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

            NEVADA                                                84-1214736
--------------------------------------------------------------------------------
(State or other jurisdiction of                                 (IRS Employer
 incorporation or organization)                              Identification No.)



                  3137 GRANDVIEW HIGHWAY, VANCOUVER, BC V5M 2E9
--------------------------------------------------------------------------------
                     (Address of principal executive office)

                                 (604) 435-8801
--------------------------------------------------------------------------------
                           (Issuer's telephone number)


              (Former name, former address and former fiscal year,
                         if changed since last report)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has  been  subject  to such  filing  requirements  for the  past  90  days.

      Yes X   No 

Number of shares outstanding of the issuer's Common Stock:

           Class                                    Outstanding at July 31, 1998
--------------------------------------------------------------------------------
Common Stock, $0.01 par value                                 1,587,504


<PAGE>



                         Glas-Aire Industries Group Ltd.

                                      INDEX
                                      -----


                                                                          Page
                                                                          ----
PART I.  FINANCIAL INFORMATION

     Item 1.  Financial Statements

              Consolidated Condensed Balance Sheets -
                July 31, 1998 and January 31, 1998                          3

              Consolidated Condensed Statement of Operations
                for the three months ended July 31, 1998 and 1997
                and six months ended July 31, 1998 and 1997                 4

              Consolidated Condensed Statement of Cash Flow
                for the three months ended July 31, 1998 and 1997
                and six months ended July 31, 1998 and 1997                 5

              Notes to Consolidated Condensed Financial Statements          6

     Item 2.  Management's Discussion and Analysis of
                Financial Condition and Results of Operations               7

PART II.  OTHER INFORMATION

     Item 6.  Exhibits and Reports on Form 8-K                             10


SIGNATURES                                                                 11

                                      - 2 -
<PAGE>


                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
----------------------------

                         Glas Aire Industries Group Ltd.
                      Consolidated Condensed Balance Sheet

                                                      July 31,      January 31,
                                                        1998           1998
                                                     (Unaudited)     (Audited)
                                                     -----------     ---------
Assets

Current
     Cash and Equivalents                            $ 2,061,554    $ 1,645,953
     Accounts receivable                               1,081,437      1,200,451
     Inventories                                         627,060        772,780
     Prepaid Expenses                                     35,438         19,095
                                                     -----------    -----------
                                                       3,805,489      3,638,279

Fixed assets                                           1,609,785      1,408,816
                                                     -----------    -----------

                                                     $ 5,415,274    $ 5,047,095
                                                     ===========    ===========

Liabilities and Shareholders' Equity

Current
     Bank indebtedness                               $      --      $      --
     Accounts Payable and accrued liabilities            559,315        460,680
     Incomes taxes payable                                71,663         92,464
     Current portion - capital lease                      28,729
                                                     -----------    -----------
                                                         659,707        553,144
Long Term Debt

Obligation Under Capital Lease                           107,063           --

Deferred Income Taxes                                    281,327        281,327
                                                     -----------    -----------
                                                       1,048,097        834,471
                                                     -----------    -----------

Shareholders' Equity
     Share capital                                        15,875         15,875
     Contributed surplus                               3,462,334      3,462,334
     Treasury stock                                     (248,351)      (236,163)
     Retained earnings                                 1,243,787      1,045,962
     Cumulative translation adjustment                  (106,468)       (75,384)
                                                     -----------    -----------
                                                       4,367,177      4,212,624
                                                     -----------    -----------

                                                     $ 5,415,274    $ 5,047,095
                                                     ===========    ===========

                             See accompanying notes.

                                      - 3 -


<PAGE>
<TABLE>
<CAPTION>

                                           Glas Aire Industries Group Ltd.
                                  Consolidated Condensed Statement of Operations
                                                    (Unaudited)


                                                       Three Months Ended                     Six Months Ended
                                                 ------------------------------        ------------------------------
                                                   July 31,           July 31,           July 31,           July 31,
                                                     1998               1997               1998               1997
                                                 -----------        -----------        -----------        -----------
<S>                                              <C>                <C>                <C>                <C>        
Sales                                            $ 1,768,732        $ 1,786,976        $ 2,854,328        $ 2,982,617

Cost of sales                                      1,171,631          1,238,152          1,912,023          2,052,769
                                                 -----------        -----------        -----------        -----------
Gross profit                                         597,101            548,824            942,305            929,848

Expenses
     Depreciation                                     48,025             39,841             90,976             75,259
     Research and development                         83,374            124,803            185,972            220,679
     Selling and distribution                         95,094            112,414            174,400            198,508
     General and administrative                       99,731             99,286            204,082            227,805
     Provision for profit sharing                     28,020             20,713             31,550             26,545
     Interest                                         (8,078)           (17,869)           (27,339)           (41,774)
                                                 -----------        -----------        -----------        -----------
                                                     346,166            379,188            659,641            707,022
                                                 -----------        -----------        -----------        -----------
Income  before income taxes                          250,935            169,636            282,664            222,826

Income taxes - current                                75,214             55,322             84,839             72,419

Income taxes - deferred                                 --                 --                 --                 --
                                                 -----------        -----------        -----------        -----------

Net Income (loss) for the period                 $   175,721        $   114,314        $   197,825        $   150,407
                                                 ===========        ===========        ===========        ===========

Net income per share of common stock             $      0.12        $      0.08        $      0.13        $      0.10

Weight average common shares outstanding           1,483,512          1,509,021          1,483,512          1,509,021
                                                 ===========        ===========        ===========        ===========


                            See accompanying notes to consolidated financial statements



                                                      - 4 -

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                              Glas Aire Industries Group Ltd.
                                     Consolidated Condensed Statement of Cash Flows
                                                      (Unaudited)


                                                            Three Months Ended                     Six Months Ended
                                                      ------------------------------        -----------------------------
                                                        July 31,           July 31,           July 31,           July 31,
                                                          1998               1997               1998               1997
                                                      -----------        -----------        -----------        -----------
<S>                                                   <C>                <C>                <C>                <C>        
Increase (decrease) in cash
Cash flows from:
Operating Activities
     Income from operations                           $   175,721        $   114,314        $   197,825        $   150,407
     Depreciation                                          48,025             39,841             90,976             75,259
     Deferred income taxes                                                     2,529                                (4,259)
     Gain on sale of capital assets                                           (5,422)                               (5,422)
     Net change in non-cash working capital               (26,535)          (195,192)           326,223           (372,005)
     Cumulative translation adjustment                    (52,297)           (10,728)           (31,084)           (15,807)
                                                      -----------        -----------        -----------        -----------
        Net cash (used in) operating activities           144,914            (33,202)           583,940           (171,827)
                                                      -----------        -----------        -----------        -----------

Financing Activities
     Increase in obligation under capital lease                                 --              161,569               --
     Repayment of capital lease                           (16,952)              --              (25,777)              --
     Purchase of treasury stock                           (12,188)           (30,253)           (12,188)           (88,687)
     Increase (decrease) in bank indebtedness            (148,416)            53,476                               169,273
     Common stock                                            --                 --                                    --
                                                      -----------        -----------        -----------        -----------
        Net cash (used in) financing activities          (177,556)            23,223            123,604             80,586
                                                      -----------        -----------        -----------        -----------

Investing Activities
     Proceeds from sale of fixed assets                                       20,763                                20,763
     Purchase of capital assets                           (44,473)          (329,464)          (291,943)          (425,137)
                                                      -----------        -----------        -----------        -----------
     Net cash used in investing activities                (44,473)          (308,701)          (291,943)          (404,374)
                                                      -----------        -----------        -----------        -----------

Decrease in cash during the period                        (77,115)          (318,680)           415,601           (495,615)
                                                      -----------        -----------        -----------        -----------

Cash and equivalents, beginning of period               2,138,669          1,942,997          1,645,953          2,119,932
                                                      -----------        -----------        -----------        -----------

Cash and equivalents, end of period                   $ 2,061,554        $ 1,624,317        $ 2,061,554        $ 1,624,317
                                                      ===========        ===========        ===========        ===========

Changes in non-cash working capital
     Accounts receivable                              $  (288,256)       $  (330,755)       $   119,014        $  (382,052)
     Inventories                                           66,305            (27,847)           145,720           (202,725)
     Prepaid expense                                      (23,071)           158,870            (16,345)           115,874
     Accounts payable and accrued liabilities             145,164            (30,131)            98,635             75,660
     Income taxes payable                                  73,323             34,671            (20,801)            21,238
                                                      -----------        -----------        -----------        -----------

                                                          (26,535)       $  (195,192)       $   326,223        $  (372,005)
                                                      ===========        ===========        ===========        ===========


                                                        - 5 -

</TABLE>

<PAGE>

                         Glas Aire Industries Group Ltd.
               Notes to Consolidated Condensed Financing Statement

                                  July 31, 1998

1.   The Company believes;  the accompanying  unaudited  consolidated  condensed
     financial  statements  contain all  adjustments  (consisting  of only those
     which are normal and recurring in nature) necessary to present fairly,  the
     financial  position  of the  Company as of July 31, 1998 and the results of
     operations  and cash flows for the three and six month periods  ending July
     31, 1998 and 1997, respectively.

2.   These  financial  statements  include  the  accounts of the Company and its
     wholly-owned  subsidiaries,  Multicorp Holdings Inc.,  Glas-Aire Industries
     Ltd.,  Glas-Aire  Industries,  Inc.,  and 326362 BC Ltd. All  inter-company
     transactions are eliminated.

     These financial statements have been prepared in accordance with accounting
     principles   generally   accepted  in  the  United   States.   For  further
     information,  refer to the Company's  consolidated financial statements and
     footnotes  thereto  included in the  Company's  Annual Report filed on Form
     10-KSB with the  Securities  and  Exchange  Commission  for the fiscal year
     ended January 31, 1998.

3.   Certain  comparative  figures from the prior year have been reclassified to
     conform with the current year's presentation.

4.   Inventories by component are as follows:

                                        July 31,   July 31,
                                          1998       1997
                                        --------   --------

                     Raw materials      $406,868   $605,286
                     work-in-progress    108,892    126,699
                     Finished goods       91,222     75,537
                     Supplies             20,078     23,626
                                        --------   --------
                                        $627,060   $831,148
                                        --------   --------


5.   Bank Indebtedness

                                         July 31,   July 31,
                                           1998       1997
                                         --------   --------

                   Revolving Bank loan   $      0   $279,373
                                         --------   --------


     The revolving bank loan is a Cdn. $1,000,000  overdraft facility,  which is
     due on demand and bears interest at Canadian bank prime rates (6.5% January
     31, 1998,  6.5% July 31, 1998) plus 1/2%.  This line of credit is renewable
     annually.

     The following have been provided as collateral for these loans:

          (a)  general assignments of accounts receivable and inventories.

          (b)  a Cdn.  $2,000,000 demand debenture granting a first fixed charge
               on certain  equipment and a flowing charger over all other assets
               of the Company.

          (c)  an  unlimited  guarantee  by  the  company  and  its  subsidiary,
               Glas-Aire Industries Ltd.

6.   Income  (loss) per share is  calculated  by dividing the  weighted  average
     number of shares of common  stock  outstanding  each period into the income
     (loss) for the period.  Warrants  outstanding were  antidilutive.  Treasury
     stock  held  by  the  Company  is not  included  in the  number  of  shares
     outstanding.

7.   On May 2,1996 the Company  issued  680,000 shares of its common stock in an
     underwritten public offering. As a result, the Company has 1,587,504 shares
     of its common stock issued and outstanding at this time.


                                      - 6 -

<PAGE>


Item 2. Management's  Discussion and Analysis of Financial  Condition and Result
        of Operations
--------------------------------------------------------------------------------

Three Months Ended July 31, 1998 vs Three Months Ended July 31, 1997
--------------------------------------------------------------------

     The Company's sales decreased by 1.02% from $1,786,976 for the three months
ended July 31,  1997,  to  $1,768,732  for the three months ended July 31, 1998.
This decrease was due to the temporary  unavailability of parts for two products
supplied by a major customer, which adversely affected shipments and sales.

     Cost of sales  decreased by 5.37% for the three months ended July 31, 1998,
to $1,171,631 from $1,238,152 for the three months ended July 31, 1997. This net
decrease resulted from reduced sales, a 1.03% greater than expected direct labor
and overhead charge, a decline in materials cost by 1.31%, and a gain in foreign
exchange by 3.03%.  This yielded a gross profit margin of 33.76%, an improvement
from 30.71% for the three month period ended July 31, 1997.

     Depreciation  expense increased by 20.54% from $39,841 for the three months
ended July 31, 1997,  to $48,025 for the three months ended July 31, 1998.  This
increase was the result of new equipment's being brought into service.

     Expenses for research and development decreased by 33.20% from $124,803 for
the three  months ended July 31, 1997 to $83,374 for the three months ended July
31, 1998.  This  decrease was the result of a  technology  fee of $12,986  being
attributed to the previous year, a $5,955  reduction in travel expenses to Japan
in 1998, and a decrease in R&D activities  relating to aftermarket  and Japanese
projects.

     Selling and distribution  expenses  decreased by 15.41%,  from $112,414 for
the three months ended July 31, 1997, to $95,094 for the three months ended July
31, 1998.  This decrease was the result of a decrease in commission  expenses of
$15,348  due to direct  contact by the Company  with one of its major  customers
after the Company's termination of services of a sales agent, the inclusion of a
warranty  claim for year 1997 of $12,426 in the previous  year's  claim,  and an
increase in promotion of new products resulting from market study.

     General and  administrative  expenses  increased from $99,286 for the three
months ended July 31, 1997, to $99,731 for the three months ended July 31, 1998,
as a result of a decrease in the number of persons  employed in  administration,
losses on foreign exchanges, and additional maintenance support fees paid to the
EDI program as required from major customers.

     Provision for profit sharing increased by 35.28% from $20,713 for the three
months ended July 31, 1997, to $28,020 for the three months ended July 31, 1998.
This increase was the result of an increase in income.

     Interest income (net of interest expense)  decreased by 54.79% from $17,869
for the three months  ended July 31, 1997,  to $8,078 for the three months ended
July 31, 1998, as a result of an increase in interest earnings of $3,334 on cash
deposits, an increase of approximately $2,825 in interest expenses for the lease
cost of the CNC Milling  Machine  Centre,  and interest  and penalty  charges of
$10,300 related to the PST (Provincial  Sales Tax) audit performed for the years
1992 to 1997.

     Before income taxes,  the Company's  income increased from $169,636 for the
three months  ended July 31,  1997,  to $250,935 for the three months ended July
31, 1998. This increase in income resulted  primarily from a lower cost of sales
and savings on operating costs.

                                     - 7 -
<PAGE>


     The Company's  current  provisions for income taxes  increased from $55,322
for the three months ended July 31, 1997,  to $75,214 for the three months ended
July 31, 1998. This resulted from an increase in income.

     As a result of the  foregoing,  net income  increased from $114,314 for the
three months  ended July 31,  1997,  to $175,721 for the three months ended July
31, 1998.

Six Months Ended July 31, 1998 vs Six Months Ended July 31, 1997
----------------------------------------------------------------

     The Company's  sales  decreased by 4.3% from  $2,982,617 for the six months
ended July 31, 1997, to $2,854,328 for the six months ended July 31, 1998.  This
decrease  was due to the  temporary  unavailability  of parts  for two  products
supplied by a major customer, which adversely affected shipments and sales and a
general   decline  in  automotive   sales,   particularly   to  non-U.S.   based
manufacturers during the first quarter of 1998.

     Cost of sales for the six months ended July 31, 1998,  improved by 6.86% to
$1,912,023  from  $2,052,769  for the six  months  ended  July  31,  1997.  This
improvement  resulted from a decrease in materials  cost of 2.28%, a decrease in
direct labor and overhead  charges of 1.23%,  and a gain on foreign  exchange of
approximately  3.35%.  The gross profit margin  increased by 1.84% to 33.01% for
the six months period ended July 31, 1998,  from 31.18% for the six month period
ended July 31, 1997.

     Depreciation  expense  increased  by 20.88% from $75,259 for the six months
ended July 31, 1997,  to $90,976 for the six months  ended July 31,  1998.  This
increase was the result of the addition of new equipment into service.

     Expenses for research and development decreased by 15.73% from $220,679 for
the six months ended July 31, 1997 to $185,972 for the six months ended July 31,
1998.  This decrease was due to the inclusion of a technology  fee of $17,400 in
the previous year,  reduced travel expense of $5,600 to Japan, and a decrease in
R & D activities relating to aftermarket and Japanese projects.

     Selling and distribution  expenses  decreased by 12.15%,  from $198,509 for
the six months  ended July 31,  1997,  to $174,400 for the six months ended July
31, 1998.  This decrease was  primarily  due to a combination  of a reduction in
sales  commissions of 7.73% in 1998 due to the Company's  elimination of a sales
agent,  which resulted in the direct involvement by the Company's staff with one
of its major  customers,  a decrease  in warranty  claims of $12,000,  or 6.27%,
relating  to 1996 sales,  and an  increase of 1.85% in a marketing  study of the
aftermarket and the promotion of new products.

     General and  administrative  expenses decreased by 10.41% from $227,805 for
the six months  ended July 31,  1997,  to $204,082 for the six months ended July
31,  1998 as a result  of a  decrease  in the  number  of  persons  employed  in
administration by 3.05%, a gain on foreign exchange of 3.34%, a loss of 1.97% on
sales of fixed assets in 1997, and a reduction in general  administration  costs
of 2.07%.

     Provision  for profit  sharing  increased  18.85% from  $26,545 for the six
months ended July 31,  1997,  to $31,550 for the six months ended July 31, 1998,
as a result of an increase in profit.

     Interest income (net of interest expense)  decreased by 34.56% from $41,774
for the six months ended July 31, 1997, to $27,339 for the six months ended July
31, 1998. This decrease occurred primarily due to a decline of 1.03% in interest
bearing deposits resulting from the expenditure of funds to purchase  additional
assets to support the  operations of the Company,  an increase of  approximately
11.49% in  interest  expenses  for the  lease  cost of the CNC  Milling  Machine
centre, and the incurring of interest penalties of $10,300,  or 22.04%,  related
to the PST (Provincial Sales Tax) audit performed for the years 1992 to 1997.

                                     - 8 -
<PAGE>


     Before income taxes,  the Company's  income  increased 26.85% from $222,826
for the six months  ended July 31,  1997,  to $282,664  for the six months ended
July 31,  1998.  This  increase  in income was  primarily  due to lower costs of
sales, savings on operating costs, and gain on foreign exchange.

     The Company's current provision for income taxes increased from $72,419 for
the six months ended July 31, 1997, to $84,839 for the six months ended July 31,
1998. This increase was the result of the Company's higher income.

     As a result of the foregoing, net income increased 31.53% from $150,407 for
the six months  ended July 31,  1997,  to $197,825 for the six months ended July
31, 1998.

Financial Condition and Liquidity

     Working  capital was  $3,145,782 at July 31, 1998 compared to $3,085,135 at
January 31, 1998. For the six months ended July 31, 1998, net cash provided from
operating  activities  totaled  $583,940,  including  income from  operations of
$197,825,  depreciation of $90,976,  a net change in non-cash working capital of
$326,223, and a cumulative translation adjustment of $(31,084). Net cash used in
financing activities was $123,604, which resulted from an increase in obligation
under  capital lease of $161,569,  repayment of capital lease of $(25,777),  and
repurchase of treasury stock of $(12,188). Net cash used in investing activities
was  $291,943,  primarily  as a result of the  purchase  of  additional  capital
assets.  Over the six months  ended July 31, 1998,  changes in non-cash  working
capital  occurred as follows:  (i)  accounts  receivable  decreased  by $119,014
primarily due to increased  collection  efforts,  (ii) inventories  decreased by
$145,720 as a result of the usage of raw materials  remaining  from the previous
year, (iii) prepaid  expenses  increased by $16,345 due to the deposit placed on
equipment;  (iv) accounts payable and accrued  liabilities  increased by $98,635
primarily as a result of deferral of payment until August,  and (v) income taxes
payable decreased by $20,801 due to taxes' being paid by installment. During the
next six months, the Company  anticipates  making total capital  expenditures of
approximately  $200,000  as  follows:  (i)  $20,000  for  computer-aided  design
software and related  hardware,  (ii) $150,000 for leasehold  improvements,  and
(iii) $30,000 for the QS9000 (Quality Control Certification) process.



                                      - 9 -

<PAGE>


                           PART II. OTHER INFORMATION

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

a)   Exhibits: There are no exhibits for the six months ended July 31, 1998.

b)   Reports  on Form 8-K:  There  were no reports on Form 8-K filed for the six
     months ended July 31, 1998.



                                     - 10 -
<PAGE>


                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


Date:  September 12, 1998

                                           GLAS-AIRE INDUSTRIES GROUP LTD.



                                           /s/ Alex Y. W. Ding
                                           -------------------------------------
                                           Alex Y. W. Ding
                                           President and Chief Operating Officer





                                     - 11 -