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, 1997


            [   ] 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                   (IRS Employer Identification No.)
of incorporation or organization)


                  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, 1997
-----------------------------                       ----------------------------
Common Stock, $0.01 par value                                1,612,421



                                                        


<PAGE>



                         Glas-Aire Industries Group Ltd.

                                      INDEX
                                      -----


                                                                      
                                                                           Page
                                                                           ----
PART I. FINANCIAL INFORMATION

     Item 1. Financial Statements

               Consolidated Condensed Balance Sheets - 
                July 31, 1997 and January 31, 1996                           3

               Consolidated Condensed Statement of Operations
                for the three months ended July 31, 1997 and 
                1996 and six months ended July 31, 1997 and 1996             4

               Consolidated  Condensed  Statement  of Cash
                Flow for the three months ended July 31,
                1997 and 1996 and six months ended July 31,
                1997 and 1996                                                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                                9


SIGNATURES                                                                  10




                                      - 2 -


<PAGE>

<TABLE>
<CAPTION>


                                   PART I. FINANCIAL INFORMATION

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

                                  Glas Aire Industries Group Ltd.
                               Consolidated Condensed Balance Sheet

                                                         July 31,            January 31,
                                                           1997                 1997
                                                       (Unaudited)           (Audited)
                                                       -----------           -----------
<S>                                                    <C>                   <C>   
Assets
Current
     Cash and Equivalents                              $ 1,624,317           $ 2,119,932
     Accounts receivable                                 1,119,639               737,587
     Inventories                                           831,148               628,423
     Prepaid Expenses                                       42,635               158,509
     Deferred Offering Costs                                  --                    --
                                                       -----------           -----------
                                                         3,617,739             3,644,451
Fixed assets                                             1,555,068             1,220,531
                                                       $ 5,172,807           $ 4,864,982
                                                       ===========           ===========

Liabilities and Shareholders' Equity
Current
     Bank indebtedness                                 $   279,373           $   110,100
     Accounts Payable and accrued liabilities              535,398               459,738
     Incomes taxes payable                                  36,500                15,262
     Current portion - long term debt                         --                    --
     Current portion - capital lease                          --                    --
                                                       -----------           -----------
                                                           851,271               585,100
Long Term Debt
Obligation Under Capital Lease                                --                    --

Deferred Income Taxes                                      183,239               187,498
                                                       -----------           -----------
                                                         1,034,510               772,598
                                                       ===========           ===========
Shareholders' Equity
     Share capital                                          16,124                16,124
     Contributed surplus                                 3,539,951             3,539,951
     Treasury stock                                       (236,163)             (147,476)
     Retained earnings                                     850,041               699,634
     Cumulative translation adjustment                     (31,656)              (15,849)
                                                       -----------           -----------
                                                         4,138,297             4,092,384
                                                       $ 5,172,807           $ 4,864,982
                                                       ===========           ===========

                                   See accompanying notes 


                                            - 3 -
</TABLE>


<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,
                                                       1997               1996              1997                1996
                                                   -----------        -----------        -----------        -----------

<S>                                                <C>                <C>                <C>                <C>        
Sales                                              $ 1,786,976        $ 1,183,000        $ 2,982,617        $ 1,970,363
Cost of sales                                        1,238,152            782,686          2,052,769          1,289,774
                                                   -----------        -----------        -----------        -----------
Gross profit                                           548,824            400,314            929,848            680,589
Expenses
     Depreciation                                       39,841             24,953             75,259             46,470
     Research and development                          124,803             57,833            220,679            107,736
     Selling and distribution                          112,414             81,045            198,508            138,735
     General and administrative                         99,286             97,030            227,805            193,109
     Provision for profit sharing                       20,713             21,676             26,545             26,071
     Interest                                          (17,869)           (22,670)           (41,774)           (19,489)
                                                   -----------        -----------        -----------        -----------
                                                       379,188            259,867            707,022            492,632
                                                   -----------        -----------        -----------        -----------
Income  before income taxes                            169,636            140,447            222,826            187,957
Income taxes - current                                  55,322             55,755             72,419             71,298
Income taxes - deferred                                   --                 --                 --                 --
                                                   -----------        -----------        -----------        -----------
Net Income (loss) for the period                   $   114,314        $    84,692        $   150,407        $   116,659
                                                   ===========        ===========        ===========        ===========
Net income per share of common stock               $      0.08        $      0.05        $      0.10        $      0.07
Weight average common shares outstanding             1,509,021          1,612,421          1,509,021          1,612,421
                                                   ===========        ===========        ===========        ===========





                            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,
                                                                   1997               1996              1997               1996
                                                               -----------        -----------        -----------        -----------

<S>                                                           <C>                <C>                <C>                <C>   
Increase (decrease) in cash
Cash flows from:
Operating Activities
     Income from operations                                    $   114,314        $    84,692        $   150,407        $   116,659
     Depreciation                                                   39,841             24,953             75,259             46,470
     Deferred income taxes                                           2,529             (1,217)            (4,259)              (124)
     Gain on sale of capital assets                                 (5,422)                 0             (5,422)                 0
     Net change in non-cash working capital                       (195,192)           303,588           (372,005)            70,128
     Cumulative translation adjustment                              10,728             (6,837)           (15,807)            (1,408)
                                                               -----------        -----------        -----------        -----------
        Net cash (used in) operating activities                    (33,202)           405,179           (171,827)           231,725
                                                               -----------        -----------        -----------        -----------

Financing Activities
     Decrease in obligation under capital lease                       --              (89,907)              --              (97,246)
     Repayment of long-term debt                                      --              (13,767)              --              (27,304)
     Purchase of treasury stock                                    (30,253)              --              (88,687)
     Share offering expenses                                          --             (811,301)              --             (811,301)
     Increase (decrease) in bank indebtedness                       53,476           (128,940)           169,273           (255,926)
     Common stock                                                     --            3,400,000               --            3,464,000
                                                               -----------        -----------        -----------        -----------
        Net cash (used in) financing activities                     23,223          2,356,085             80,586          2,272,223
                                                               -----------        -----------        -----------        -----------

Investing Activities
     Proceeds from sale of fixed assets                             20,763                263             20,763                263
     Purchase of capital assets                                   (329,464)          (172,889)          (425,137)          (216,684)
                                                               -----------        -----------        -----------        -----------

     Net cash used in investing activities                        (308,701)          (172,626)          (404,374)          (216,421)
                                                               -----------        -----------        -----------        -----------

Decrease in cash during the period                                (318,680)         2,588,638           (495,615)         2,287,527
                                                               -----------        -----------        -----------        -----------

Cash and equivalents, beginning of period                        1,942,997             28,996          2,119,932            330,107
                                                               -----------        -----------        -----------        -----------

Cash and equivalents, end of period                            $ 1,624,317        $ 2,617,634        $ 1,624,317        $ 2,617,634
                                                               ===========        ===========        ===========        ===========

Changes in non-cash working capital
     Accounts receivable                                       $  (330,755)       $  (307,627)       $  (382,052)       $   (92,436)
     Inventories                                                   (27,847)           173,588           (202,725)           187,087
     Prepaid expense                                               158,870            257,182            115,874            110,974
     Accounts payable and accrued liabilities                      (30,131)           135,152             75,660            (95,573)
     Income taxes payable                                           34,671             45,293             21,238            (39,924)
                                                               -----------        -----------        -----------        -----------
                                                               $  (195,192)       $   303,588        $  (372,005)       $    70,128
                                                               ===========        ===========        ===========        ===========


</TABLE>


                                                             - 5 -


<PAGE>



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

                                  July 31, 1997

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, 1997 and the results of
     operations  and cash flows for the three and six month periods  ending July
     31, 1997 and 1996, 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, 1997.

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,
                                           1997                      1996
                                         --------                  --------
         Raw materials                   $605,286                  $375,937
         Work-in-progress                 126,699                    64,101
         Finished goods                    75,537                    45,977
         Supplies                          23,626                    16,755
                                         --------                  --------
                                         $831,148                  $502,770
                                         --------                  --------


5.    Bank Indebtedness                  July 31,                  July 31,
                                           1997                      1996
                                         --------                  --------
         Revolving Bank loan             $279,373                  $      0
                                         --------                  --------

     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  (4.75%
     January 31, 1997,  4.75% July 31,  1997) 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 1,612,421 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, 1997 vs Three Months Ended July 31, 1996
--------------------------------------------------------------------

     The  Company's  sales  increased  by 51.05% from  $1,183,000  for the three
months  ended July 31, 1996 to  $1,786,976  for the three  months ended July 31,
1997.  This  increase  was due  primarily to (1) new sales of $290,205 or 24.53%
generated  by new  customers,  (2) sales of $171,907 or 14.53%  generated by new
products and (3) sales increases of $141,864 or 11.99% in additional orders from
existing customers.

     Cost of sales for the three months ended July 31, 1997, increased 58.19% to
$1,238,152 from $782,686 for the three months ended July 31, 1996. This increase
resulted  from an increase in sales,  with a greater than  expected  increase in
direct labor and overhead  charges of $165,593 and an increase in materials cost
of $289,873.  As a percentage  of sales,  an increase of 14% in direct labor and
overhead  charges  and 24.5% in material  costs  resulted in a decrease in gross
profit margin of 3.13% to 30.71% for the three month period ended July 31, 1997,
from 33.84% for the three month period ended July 31, 1996.

     Depreciation  expense increased by 59.66% from $24,953 for the three months
ended July 31, 1996 to $39,841 for the three months  ended July 31,  1997.  This
increase was the result of bringing new equipment into service.

     Expenses for research and development increased by 115.80% from $57,833 for
the three months ended July 31, 1996 to $124,803 for the three months ended July
31, 1997. This increase was the result of increased R&D activities relating to a
number of new projects.

     Selling and distribution expenses increased by 38.71%, from $81,045 for the
three months ended July 31, 1996 to $112,414 for the three months ended July 31,
1997.  This  increase  was  primarily  due  to  increased   commission  expenses
associated with increased sales.

     General and administrative expenses increased by 2.33% from $97,030 for the
three months ended July 31, 1996, to $99,286 for the three months ended July 31,
1997,  as a result of (1)  increased  consulting  and legal fees relating to the
Company  becoming a fully reporting  public  company,  and (2) losses on foreign
exchange. Excluding the expenses relating to being a public company, the general
and administrative  expenses were actually lower by 3.2% from the same period in
1996. Management believes that this decrease resulted from continuing efforts in
automation  at the office  level and the general use of business  systems  which
have now reached a plateau and should level off.

     Provision for profit sharing  decreased by 4.44% from $21,676 for the three
months  ended July 31, 1996 to $20,713 for the three months ended July 31, 1997.
This  decrease was the result of using a lower rate of 10% applied  against this
year's quarter as compared to 14% rate used for the same quarter in 1996.

     Interest  income  (net  of  interest  expense)  decreased  by  21.18%  from
($22,670)  for the three months  ended July 31, 1996 to ($17,869)  for the three
months ended July 31, 1997. This decrease occurred primarily because the Company
had more cash on deposit earning  interest  during the comparable  period in the
prior  year.  The  decline  in  interest  bearing  deposits  resulted  from  the
expenditure  of funds to purchase  additional  assets to support  the  Company's
increased sales.

     Before income taxes,  the Company's  income increased from $140,447 for the
three months ended July 31, 1996 to $169,636 for the three months ended July 31,
1997. This increase in income resulted primarily due to higher sales.

                                     - 7 -
<PAGE>


     The Company's  current  provisions for income taxes  decreased from $55,755
for the three  months  ended July 31, 1996 to $55,322 for the three months ended
July 31,  1997.  This  decrease  was the result of using a lower tax rate of 33%
applied  against  this  year's  quarter as compared to the 40% rate used for the
same quarter in 1996.

     As a result of the  foregoing,  net income  increased  from $84,692 for the
three months ended July 31, 1996 to $114,314 for the three months ended July 31,
1997.

Six Months Ended July 31, 1997 vs Six Months Ended July 31, 1996
----------------------------------------------------------------

     The Company's  sales increased by 51.37% from $1,970,363 for the six months
ended July 31, 1996, to $2,982,617 for the six months ended July 31, 1997.  This
increase was due  primarily to (1) new sales of $511,848 or 25.98%  generated by
new customers, (2) sales of $212,996 or 10.81% generated by new products and (3)
sales  increases  of  $287,410  or 14.58% in  additional  orders  from  existing
customers.

     Cost of sales for the six months ended July 31, 1997,  increased  59.16% to
$2,052,769 from $1,289,774 for the six months ended July 31, 1996. This increase
resulted  from an increase in sales,  with a greater than  expected  increase in
direct labor and overhead  charges of $211,151 and an increase in materials cost
of $551,844. As a percentage of sales, an increase of 10.72% in direct labor and
overhead  charges  and 28% in  material  costs  resulted  in a decrease in gross
profit  margin of 3.36% to 31.18 % for the six month period ended July 31, 1997,
from 34.54% for the six month period ended July 31, 1996.

     Depreciation  expense  increased  by 61.95% from $46,470 for the six months
ended July 31,  1996 to $75,259  for the six months  ended July 31,  1997.  This
increase was the result of adding new equipment into service.

     Expenses for research and  development  increased by 104.83% from  $107,736
for the six months ended July 31, 1996 to $220,679 for the six months ended July
31,  1997.  This  increase  was  due to the  increased  level  of  research  and
development related to new projects.

     Selling and distribution  expenses  increased by 43.09%,  from $138,735 for
the six months ended July 31, 1996 to $198,509 for the six months ended July 31,
1997.  This  increase was  primarily  due to a  combination  of (1) higher sales
commissions  of 36.47% in 1997,  (2) an increase  in  warranty  claims of 12K or
7.82% pertaining to 1996 sales and (3) a 1.2% decrease due to deferral of travel
and advertising expenses.

     General and  administrative  expenses increased by 17.97% from $193,108 for
the six months ended July 31, 1996 to $227,805 for the six months ended July 31,
1997 as a result of (1)  increased  consulting  and legal fees  relating  to the
Company  becoming a fully reporting  public  company,  and (2) losses on foreign
exchange. Excluding the expenses relating to being a public company, the general
and administrative  expenses were actually lower by 6.8% from the same period in
1996. Management believes that this decrease resulted from continuing efforts in
automation  at the office  level and the general use of business  systems  which
have now reached a plateau and should level off.

     Provision  for profit  sharing  increased  1.82% from  $26,071  for the six
months ended July 31, 1996 to $26,545 for the six months ended July 31, 1997, as
a result of the increase in profit.

     Interest  income  (net of  interest  expense)  increased  by  114.35%  from
($19,489) for the six months ended July 31, 1996 to ($41,774) for the six months
ended July 31, 1997. This increase  occurred  primarily  because the proceeds of
the  company's  public  offering  (remaining  after  purchase  of  assets)  were
available  to earn  interest for the entire six month period this fiscal year as
compared to only the period from the closing of the Company's public offering in
May of 1996 to the end of the period (i.e., 4 months versus 6 months).


                                     - 8 -
<PAGE>


     Before income taxes,  the Company's  income  increased 18.55% from $187,957
for the six months ended July 31, 1996 to $222,826 for the six months ended July
31, 1997. This increase in income is primarily due to higher sales.

     The Company's current provision for income taxes increased from $71,298 for
the six months  ended July 31, 1996 to $72,419 for the six months ended July 31,
1997. This increase was the result of a lower tax rate during the current fiscal
year of 33% as compared to a tax rate of 40% for the same period in 1996.

     As a result of the foregoing, net income increased 28.93% from $116,659 for
the six months ended July 31, 1996 to $150,407 for the six months ended July 31,
1997.

Financial Condition and Liquidity
---------------------------------

     Working  capital was  $2,766,468 at July 31, 1997.  The decrease in working
capital  primarily  resulted from the  expenditure of available cash for capital
assets to support the Company's  increased  sales.  The Company's  current ratio
(i.e.,  the ratio of current assets to current  liabilities)  also declined from
approximately  6.23% at January 31, 1997 to 4.25% at July 31, 1997.  For the six
months  ended  July 31,  1997,  net cash used in  operating  activities  totaled
$171,827,  including  income from  operations  of $150,407 and  depreciation  of
$75,259  and a net  change  in  non-cash  working  capital  of  $372,005,  and a
cumulative  translation  adjustment  of  $15,807.  Net  cash  used in  financing
activities was $80,586,  which resulted from an increase in bank indebtedness of
$169,273,  and  repurchase  of  treasury  stock  for  $88,687.  Net cash used in
investing  activities  was  $404,374,  primarily  as a result of the purchase of
additional  capital assets.  Over the six months ended July 31, 1997, changes in
non-cash working capital occurred as follows:  (i) accounts receivable increased
by $382,052  primarily  due to increased  sales in July 1997.  (ii)  Inventories
increased  by  $202,725.  (iii)  Prepaid  expenses  decreased by $115,874 . (iv)
accounts  payable and accrued  liabilities  increased by $75,660  primarily as a
result of increased inventory; and (v) income taxes payable increased by $21,238
due to higher  sales in this  quarter.  During the next six  months the  company
anticipates  making total  capital  expenditures  of  approximately  $850,000 as
follows:  (i) $650,000 for machinery and equipment,  (ii) $150,000 for leasehold
improvements,  and (iii) $50,000 for the QS9000 (Quality Control  Certification)
process.


                           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, 1997.

b)   Reports  on Form 8-K:  There  were no reports on Form 8-K filed for the six
     months ended July 31, 1997.



                                      - 9 -


<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, 1997
-------------------------

                                   GLAS-AIRE INDUSTRIES GROUP LTD.



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




                                     - 10 -