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 March 31, 2005
                ------------------------------------------------


[ ]  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 registrant as specified in its charter)

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

                 145 TYEE DRIVE, #1641, POINT ROBERTS, WA 98281
               --------------------------------------------------
                     (Address of principal executive office)

                                 (360) 447-0210
  ----------------------------------------------------------------------------
                          (Registrant telephone number)

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

     Securities registered pursuant to Section 12(B) of the Act:

                                                   Name of Each Exchange On
 Title of Each Class                                 Which Registered
--------------------                               -------------------------
   COMMON STOCK                                             OTC

         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 ________


Issuer's Common Stock:

     Common Stock, $0.01 par value-Issued 2,711,213 shares, not including 93,718
shares of treasury stock held by the Company as of March 31, 2005.

         Transitional Small Business Disclosure Format

        Yes_______        No___X____



<PAGE>


                         Glas-Aire Industries Group Ltd.

                                      INDEX

<TABLE>
<CAPTION>
PART I.           FINANCIAL INFORMATION                                                                      PAGE
<S>  <C>          <C>                                                                                         <C>

     Item 1.      Financial Statements                                                                         1

                  Consolidated Condensed Balance Sheets                                                        1
                  March 31, 2005 (Unaudited) and December 31, 2004

                  Consolidated Condensed Statements of Operations                                              2
                  For the three months ended March 31, 2005 and 2004 (Unaudited)

                  Consolidated Condensed Statement of Stockholder's Equity                                     3
                  For the three months ended March 31, 2005 (Unaudited)

                  Consolidated  Condensed  Statements  of  Cash  Flows
                  For the three months ended March 31, 2005 and 2004 (Unaudited)                               4

                  Notes to Consolidated Condensed Financial Statements (Unaudited)                             6

                  Forward Looking Statements                                                                  13

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

     Item 3.      Controls and Procedures                                                                     16

PART II.  OTHER INFORMATION                                                                                   16

     Item 1.      Legal Proceedings                                                                           16

     Item 2.      Changes in Securities                                                                       17

     Item 3       Defaults Upon Senior Securities                                                             17

     Item 4.      Submission of Matters to a Vote of Security Holders                                         17

     Item 5.      Other Information                                                                           17

     Item 6.      Exhibits and Reports on Form 8-K                                                            17

SIGNATURES                                                                                                    18
</TABLE>

<PAGE>

                         Glas-Aire Industries Group Ltd.
                      Consolidated Condensed Balance Sheets

<TABLE>
<CAPTION>
                                                                     March 31,               December 31,
                                                                       2005                      2004
                                                                    (Unaudited)                (Audited)
                                                                   -------------             --------------
<S>                                                                <C>                       <C>

ASSETS
Current
     Cash and equivalents                                          $      33,343             $      34,550
                                                                   -------------             --------------
                                                                          33,343                    34,550
                                                                   -------------             --------------
                                                                   $      33,343             $      34,550
                                                                   =============             ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current
     Bank indebtedness                                             $           0             $           0
     Accounts payable                                                          0                         0
     Accrued liabilities                                                 214,028                   140,508
     Current portion - long-term debt                                          0                         0
     Current portion - capital lease                                           0                         0
                                                                   -------------             --------------
                                                                         214,028                   140,508

Stockholders' equity
     Common stock                                                         27,112                    27,112
     Additional paid-in capital                                        1,549,313                 1,549,313
     Deferred compensation                                                     0                         0
     Accumulated Deficit                                              (2,409,888)               (2,335,161)
     Accumulated other comprehensive income
       Foreign currency translation adjustment                           652,778                   652,778
                                                                   -------------             --------------
                                                                        (180,685)                 (105,958)
                                                                   -------------             --------------
                                                                   $      33,343             $      34,550
                                                                   =============             ==============
</TABLE>





                 See accompanying notes to financial statements

                                       1
<PAGE>


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

<TABLE>
<CAPTION>
                                                                                 Three Months Ended
                                                                    -------------------------------------------------
                                                                    March 31,                          March 31,
                                                                      2005                               2004
                                                                -----------------                  -----------------

<S>                                                             <C>                                <C>
Sales                                                           $              0                   $      1,606,855
Cost of sales                                                                  0                          1,413,019
                                                                -----------------                  -----------------

Gross profit                                                                   0                            193,836
                                                                -----------------                  -----------------
Expenses
     Depreciation                                                              0                             97,641
     Research and development                                                  0                             68,458
     Selling and distribution                                                  0                             62,445
     General and administrative                                           74,727                            147,393
     Foreign exchange  loss (gain)                                             0                            (18,371)
     Interest income                                                           0                                (54)
     Interest expense                                                          0                             31,085
                                                                -----------------                  -----------------
                                                                          74,727                            388,597
                                                                -----------------                  -----------------

Loss from continuing operations before income taxes                      (74,727)                          (194,761)
Income tax  recovery                                                           0                                  0
                                                                -----------------                  -----------------
Loss from continuing operations                                          (74,727)                          (194,761)
Gain on disposition of operations                                              0                            663,531
Gain on disposition of discontinued operations                                 0                                  0
                                                                -----------------                  -----------------
Net income (loss) for the period                                $        (74,727)                  $        468,770
                                                                =================                  =================

Earnings (loss)  per share basic from
     Continuing operations                                      $         (0.028)                  $          0.173
     Discontinued operations                                                   0                                  0
                                                                -----------------                  -----------------
                                                                $         (0.028)                  $          0.173
                                                                =================                  =================

Earnings (loss)  per share diluted from
     Continuing operations                                      $         (0.028)                  $          0.173
     Discontinued operations                                                   0                                  0
                                                                -----------------                  -----------------
                                                                $         (0.028)                  $          0.173
                                                                =================                  =================

Weighted average common shares outstanding
(Basic - after deducting 93,718 shares of treasury
stock  held by the Company)                                            2,711,213                          2,711,213
 Effect of exercise of warrants                                                0                                  0
                                                                -----------------                  -----------------
Diluted                                                                2,711,213                          2,711,213
                                                                =================                  =================
</TABLE>

                 See accompanying notes to financial statements

                                       2
<PAGE>



                         Glas-Aire Industries Group Ltd.
            Consolidated Condensed Statement of Stockholders' Equity
                        Three Months Ended March 31, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
--------------------- -------------- ------------ --------------- ---------------- -------------- ----------------- ----------------
<S>                   <C>            <C>          <C>             <C>              <C>            <C>               <C>

                         Common        Stock      Additional       Deferred        Accumulated     Accumulated        Stockholders'
                         Stock         Amount     Paid-in          Compensation    Deficit         Other              Equity
                                                  Capital          expense                         Comprehensive
                                                                                                   Income
--------------------- -------------- ------------ --------------- ---------------- --------------- ----------------- ---------------
Balance -
   December 31, 2004      2,711,213     $27,112    $1,549,313         $0           $(2,335,161)           $652,778        $(105,958)

--------------------- -------------- ------------ --------------- ---------------- --------------- ----------------- ---------------
Net income                                                                             (74,727)                             (74,727)
--------------------- -------------- ------------ --------------- ---------------- --------------- ----------------- ---------------
Deferred compensation
                                                                                                                                  0
--------------------- -------------- ------------ --------------- ---------------- --------------- ----------------- ---------------
Foreign currency
 translation adjustment                                                                                          0                0
--------------------- -------------- ------------ --------------- ---------------- --------------- ----------------- ---------------
Balance -
   March 31, 2005         2,711,213    $27,112     $1,549,313         $0           $(2,409,888)           $652,778        $(180,685)
--------------------- -------------- ------------ --------------- ---------------- --------------- ----------------- ---------------
</TABLE>



Comprehensive income (loss) consists of the following:

                                                2005                  2004
                                            -------------         --------------
Net income (loss)                               $(74,727)             $  468,768

Foreign currency translation adjustment                0                 226,088
                                            -------------         --------------
Comprehensive income (loss)                     $(74,727)             $  694,856
                                            =============         ==============










                 See accompanying notes to financial statements

                                       3
<PAGE>


                         Glas-Aire Industries Group Ltd
                 Consolidated Condensed Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                     Three Months Ended
                                                                     --------------------------------------------------
                                                                         March 31,                          March 31,
                                                                           2005                               2004
                                                                     --------------                       -------------
<S>                                                                  <C>                                  <C>
Increase (decrease) in cash
Cash flows from:
Operating activities
     Net income (loss) for the period from operations                $   (74,727)                         $   468,770
     Depreciation                                                              0                               97,641
     Deferred income taxes                                                     0                              (76,632)
     Deferred  compensation expense                                            0                                    0
(Increase) decrease in assets
     Accounts receivable                                                       0                              876,437
     Inventories                                                               0                            1,224,300
     Income taxes recoverable                                                  0                               68,544
     Prepaid expense                                                           0                               41,586
Increase (decrease) in liabilities
     Accounts payable                                                          0                           (2,320,309)
     Accrued liabilities                                                  73,520                             (680,022)
     Income taxes payable                                                      0                                    0
                                                                     --------------                       -------------
        Net cash used in operating activities
         From continuing operations                                       (1,207)                            (299,685)
                                                                     --------------                       -------------
        Net cash used  in operating activities                            (1,207)                            (299,685)
                                                                     --------------                       -------------
Financing activities
     Repayment of capital lease obligation                                     0                              (54,792)
     Repayment of long-term debt                                               0                             (317,958)
     Increase (decrease) in bank indebtedness                                  0                           (1,645,421)
                                                                     --------------                       -------------
        Net cash (used in) provided by financing activities                    0                           (2,018,171)
                                                                     --------------                       -------------
Investing activities
     Disposal of fixed assets                                                  0                            2,154,854
     Purchase of fixed assets
        Net cash provided by (used in) investing activities                    0                            2,154,854
                                                                     --------------                       -------------
Foreign currency translation adjustment
      effect on cash and equivalents balances                                  0                              226,085
                                                                     --------------                       -------------
Increase in cash and equivalents during the period                        (1,207)                              63,083
Cash and equivalents, beginning of period                                 34,550                                    0
                                                                     --------------                       -------------
Cash and equivalents, end of period                                  $    33,343                          $    63,083
                                                                     ==============                       =============
</TABLE>



                 See accompanying notes to financial statements

                                       4
<PAGE>


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

<TABLE>
<CAPTION>
                                                                                     Three Months Ended
                                                                     --------------------------------------------------
                                                                         March 31,                          March 31,
                                                                           2005                               2004
                                                                     --------------                       -------------
<S>                                                                  <C>                                  <C>
Supplemental disclosure of cash flow relating to:

     Interest paid                                                   $         0                          $  31,085


     Income taxes paid                                               $         0                          $       0


Non - cash investing activities

     Common Stock issued in                                          $         0                          $       0
     exchange for compensation

</TABLE>



























                 See accompanying notes to financial statements

                                       5
<PAGE>


                         Glas-Aire Industries Group Ltd.
              Notes to Consolidated Condensed Financial Statements
                                 March 31, 2005
                                   (Unaudited)

1.    NATURE OF BUSINESS AND BASIS OF PRESENTATION

Glas-Aire  Industries  Group Ltd.,  a Nevada  corporation  (the  "Company")  was
incorporated  on September 29, 1992. The Company  manufactures  and  distributes
wind deflector products to automobile manufacturers in the United States, Canada
and Japan.

The interim financial  statements  included herein,  are presented in accordance
with United States generally accepted accounting principles and stated in United
States dollars, and have been prepared by the Company,  without audit,  pursuant
to the rules and  regulations  of the  United  States  Securities  and  Exchange
Commission.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted pursuant to such rules and regulations,  although
the Company  believes that the  disclosures are adequate to make the information
presented not misleading.

These  financial  statements  reflect  all  adjustments,  consisting  of  normal
recurring adjustments, which in the opinion of Management are necessary for fair
presentation  of the  information  contained  therein.  These interim  financial
statements in conjunction with the audited  financial  statements of the Company
for the years ended  December 31, 2004 and unaudited  financial  statements  for
2003 included in the Company's  10-KSB Annual  Report.  The Company  follows the
same accounting policies in the preparation of interim reports.

Results of operations for the interim periods are not necessarily  indicative of
annual results.

These  interim  financial  statements  include the  amounts of its wholly  owned
subsidiary  Glas-Aire  Industries  Ltd. to March 23, 2004. On March 24, 2004 the
Canadian  Operation filed Bankruptcy with the Supreme Court of British Columbia.
On July 31, 2004 Glas-Aire  Industries,  Inc.'s warehouse  operation was closed.
Glas-Aire Industries Group Ltd. and all inter-company  transactions and accounts
have been eliminated from the statements.

BANKRUPTCY

On March 24, 2004,  the Supreme  Court of British  Columbia  (Case No.  L040758)
appointed  KPMG.  Inc. as  receiver  over all the right,  title and  interest of
Glas-Aire  Industries Ltd, the wholly owned  subsidiary of Glas-Aire  Industries
Group  Ltd  (the  "Corporation"),   property,  assets,  and  undertakings.   The
Corporation was in default of certain financial ratios in its banking facilities
agreement with HSBC as was indebted to HSBC Bank for approximately  $2.7 million
(Canadian).  The Corporation has entered into  forbearance  agreements with HSBC
while it attempted to restructure its debt;  however the  forbearance  agreement
expired  on March 23,  2004 and HSBC  called the loans  into  default.  HSBC has
security on the Corporation's  assets,  however the assets are expected to yield
significantly  less than the Corporation's debt and is expected that no recovery
is likely for the Corporation's unsecured creditors.

                                       6
<PAGE>

                         Glas-Aire Industries Group Ltd.
              Notes to Consolidated Condensed Financial Statements
                                 March 31, 2005
                                   (Unaudited)

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION(CONTINUED)

Craig  Grossman,  President  and  chief  Executive  Officer  of the  Corporation
resigned as the sole officer and director of Glas-Aire  Industries Ltd Effective
March 22, 2004.


2. BANK INDEBTEDNESS AND LONG TERM DEBT

The Company's banking facilities  agreement contains covenants that, among other
things,   require  the  maintenance  of  certain   financial  ratios  (including
compliance with certain working capital and debt-to-equity  ratios), and failure
to maintain these financial ratios could lead to the revocation of these banking
facilities.  On December 16, 2003 HSBC (the lender) called the loan into default
as the  Company  was  deemed to be in  violation  of  certain  of the  covenants
contained in the facilities  agreement.  On January 5, 2004 the Company  entered
into a forbearance agreement with HSBC to attempt to restructure its debt within
the next 3 months.  However the forbearance agreement expired on March 23, 2004.
On March 24,  2004 the  Supreme  Court of British  Columbia  (Case No.  L040758)
appointed  KPMG Inc.  as  receiver  over all the right,  title and  interest  of
Glas-Aire  Industries Ltd, the wholly owned  subsidiary of Glas-Aire  Industries
Group Ltd (the "Corporation"), property assets, and undertaking. The Corporation
was in default of certain financial ratios in its banking  facilities  agreement
with  HSBC  as  was  indebted  to  HSBC  bank  for  approximately  $2.7  million
(Canadian).


3. WARRANTY ACCRUAL

 Changes in the Company's warranty liability during the periods were as follows:


                                                   Three months ended
                                                   ------------------
                                               March 31,             March 31,
                                                 2005                   2004
                                              ----------             -----------

         Balance, beginning of period             $0                 $ 229,940
         Warranty expense                          0                    34,664
         Settlements made                          0                  (264,604)
                                              ----------             -----------
            Balance, end of period                $0                 $       0
                                              ==========             ===========

4.  COMMON STOCK

     (a) Authorized

         30,000,000 Common shares with a par value of $0.01 each
         1,000,000 Preferred shares with a par value of $0.01 each

     (b) Issued and outstanding

         2,711,213 Common shares


                                       7
<PAGE>


                         Glas-Aire Industries Group Ltd.
              Notes to Consolidated Condensed Financial Statements
                                 March 31, 2005
                                   (Unaudited)


4.  COMMON STOCK (CONTINUED)

On April 12, 2003 and August 12,  2003,  the  Company  issued  85,000  shares of
common stock  respectively  from the  exercise of warrants,  at a price of $0.01
each.

On April 1, 2003 the Company granted 50,000 common stock options at the exercise
price of $0.75 to the directors in accordance  with the director's  compensation
program  approved by the  stockholders.  The options vested on April 1, 2003 and
are exercisable to March 31, 2008.

On July 18, 2003,  the Company  issued  40,542  shares of common stock (value at
$30,000 based upon the trading price of the common stock around the dates of the
respective  agreement)  to the directors as part of their  compensation  for the
fiscal year ended December 31, 2002.

As of March 31, 2005 the Company had 230,000 options and 0 warrants outstanding.
The options and warrants  were  excluded  from the  calculation  of earnings per
share due to their antidilutive effect.


5.  STOCK BASED COMPENSATION

Stock options granted to non-employees  are accounted for in accordance with the
fair  value  method   prescribed  in  SFAS  No.  123  using  the   Black-Scholes
option-pricing  model.  There were no stock  options  granted  to  non-employees
during the period covered by these financial statements.

The  Company  applies  Accounting  Principles  Board  ("APB")  Opinion  No.  25,
"Accounting  for Stock  issued to  Employees,"  and related  interpretations  in
accounting for stock option plans.  Under APB Opinion No. 25,  compensation cost
is  recognized  for stock  options  granted at prices  below market price of the
underlying  common  stock on date of grant.  Stock  options  granted in tranches
(graded  vesting)  are  amortized  over the  respective  vesting  period of each
tranche.

The  Company  does not plan to adopt the fair  value  method of  accounting  for
stock-based   compensation  to  employees.   Consequently,   related   pro-forma
information  as  required  under  SFAS  No.  123 has  been  disclosed  below  in
accordance with SFAS No. 148. To provide the require pro-forma information,  the
Company estimates the fair value of each warrant granted at the grant date using
the Black-Scholes option-pricing model.

The pro-forma results set out below are based on the following  assumptions:  No
dividends,  risk-free interest rate of 3.47%,  Volatility factor of the expected
market price of the  Company's  common  stock of 137% and an estimated  weighted
average  expected life of the warrants of 24 months.  The fair value of warrants
granted on April 12, 2002 to the Company's Chief Executive Officer and President
was $0.33 per warrant.

                                       8
<PAGE>



                         Glas-Aire Industries Group Ltd.
              Notes to Consolidated Condensed Financial Statements
                                 March 31, 2005
                                   (Unaudited)


5. STOCK BASED COMPENSATION (CONTINUED)

                                                              Three months ended
                                                                 March 31, 2005
                                                                 ---------------
      Net loss, as reported                                           $(74,727)
      Add: stock-based compensation expense included
           in reported net income                                            0
      Deduct: total stock-based compensation expense determined
              under fair-value based method                                 (0)

                                                                 ---------------
      Net income, pro-forma                                           $(74,727)
                                                                 ===============
      Earnings (loss) per share
             - basic - as reported                                     $(0.028)
             - diluted - pro-forma                                     $(0.028)


6. STOCK OPTIONS

INCENTIVE AND NON-QUALIFIED PLANS

During the year  ended  January  31,  1997,  the  Company's  Board of  Directors
approved an Incentive Stock Option Plan and a  Non-Qualified  Stock Option Plan.
Each plan provides for granting options to purchase not more than 160,000 shares
of the  Company's  common  stock.  The  Incentive  Stock  Option  Plan  is to be
available to management and employees of the Company.  The  Non-Qualified  Stock
Option  Plan  is  to  be  available  to  certain  key   employees,   independent
contractors,  technical advisors and directors of the Company.  Vesting for both
plans will be determined at the date of grant.  Upon granting,  the options will
have a five year life.

At December 31, 2004 no options had been granted under either plan.

DIRECTOR COMPENSATION

In previous  periods the Company had granted  options to directors in accordance
with the director's compensation program approved by the stockholders. A summary
of the status of the Company's stock options outstanding as of March 31, 2005 is
as follows:


                                                          Number of  Exercise
                                                           Options    Price
                                                           ---------------------
Granted - November 4, 1999; Expiring - November 3, 2004     60,000   $   4.50
Granted - November 4, 2000; Expiring - November 3, 2005     60,000   $   2.75
Granted - November 4, 2001; Expiring - November 3, 2006     60,000   $   1.00
Granted - April 1, 2003: Expiring - March 31, 2008          50,000   $   0.75
                                                           ---------------------
                                                           230,000

                                       9
<PAGE>

                         Glas-Aire Industries Group Ltd.
              Notes to Consolidated Condensed Financial Statements
                                 March 31, 2005
                                   (Unaudited)


6. STOCK OPTIONS(CONTINUED)

All 230,000  options  are vested as of March 31,  2005.  The options  granted on
December 4, 2001 vested in May 2002.

No options were granted in WTI (or its  predecessor,  Orbital) prior to December
21, 2001.

SFAS No. 123 requires the Company to provide pro-forma information regarding net
loss as if the compensation costs for the Company's stock option grants had been
determined in accordance with the fair value based method prescribed in SFAS No.
123. To provide the required  pro-forma  information,  the Company estimates the
fair value of each stock option granted to directors at the grant date using the
Black-Scholes  option-pricing  model.  The pro-forma  results are set out in the
Summary of  Significant  Accounting  Policies,  base on the  following  weighted
average assumptions: no dividends,  risk-free interest rate of 3.03%, volatility
of the  trading  price of the  Company's  common  stock  of 100% and a  weighted
average  expected life of the stock  options  granted to directors of 24 months.
The fair value of stock  options  granted on December 4, 2001 to  directors  was
$0.53 per option.


7.  SEGMENTED INFORMATION

     (a)  Sales  figures  include  sales to  customers  who are  located  in the
following countries:

                                                Three months ended
                                                ------------------

                                          March 31,                March 31,
                                            2005                      2004
                                        ------------             ---------------

         United States                   $        0               $   1,547,018
         Canada                                   0                      57,413
         Japan and other                          0                       2,424
                                        ------------             ---------------
                                         $        0               $    1,606,855
                                        ============             ===============

     (b)Sales to customers  who each  accounted for 10% or more of the Company's
sales are as follows:

                                                Three months ended
                                                ------------------

                                          March 31,                March 31,
                                            2005                      2004
                                        ------------             ---------------
         Nissan North America, Inc       $        0               $     449,744
         Honda Access America, Inc                0                     504,449
         Toyota Inc. (USA)                        0                     217,336
                                        ------------             ---------------
                                         $        0               $   1,171,529
                                        ============             ===============

                                       10
<PAGE>

                         Glas-Aire Industries Group Ltd.
              Notes to Consolidated Condensed Financial Statements
                                 March 31, 2005
                                   (Unaudited)


7. SEGMENTED INFORMATION (CONTINUED)

     (c) Sales figures are comprised of sales in the following products lines:

                                                Three months ended
                                                ------------------

                                          March 31,                March 31,
                                            2005                      2004
                                        ------------             ---------------

         Sunroof wind deflectors             $    0                  $1,055,624
         Hood protectors                          0                     401,494
         Rear air deflectors                      0                      93,754
         Door visors                              0                      55,983
                                        ------------             ---------------
                                             $    0                  $1,606,855
                                        ============             ===============


8. COMMITMENTS

The  Canadian  operation  filed  Bankruptcy  on March 24,  2004.  There  were no
commitments for operating lease.

The Company is committed to minimum  lease  payments  totaling  $176,636 for the
next two year with a five year renewal option,  under an operating lease for its
former premises. As the Company is no longer using these premises, the remaining
future  commitment  was fully  expensed in 2002 in the amount of $253,696  which
includes an estimate of common area  expenses and  property tax of $77,060.  The
Company's  monthly  lease  payment  including  its share of common area costs is
approximately  $12,000 per month until expiry in September  2004.  On October 6,
2003 the Landlord  agreed to accept the surrender of the Lease together with the
sum of  $125,000  in five  installments  as  settlement  for the  release of the
Company's obligation under the term of the Lease agreement.

The Company entered into an operating  lease agreement for its current  premises
commencing  May 1,  2002  for a term of seven  years  with a  five-year  renewal
option.  The landlord has provided the first three months of the lease rent fee.
The Company is committed to the minimum annual lease payments plus proportionate
common area costs in respect of its new premises

The  Company  entered  into an  employment  agreement  with its Chief  Executive
Officer and President  effective  January 1, 2002 and to terminate  December 31,
2005 unless terminated earlier by the Company or the Chief Executive Officer and
President.  The employment agreement is automatically renewable for three years.
The  employment  agreement  provides an annual salary of $213,000 plus an annual
bonus of 10% of the  increase  in net  shareholders'  equity  from the  previous
fiscal year excluding any increase  resulting  from the issue of shares.  If the
Chief Executive  Office and President is terminated for other than just cause or
is  disabled  and unable to perform  has  duties,  he is entitled to a severance
payment up to 18 months of his compensation.

                                       11
<PAGE>

                         Glas-Aire Industries Group Ltd.
              Notes to Consolidated Condensed Financial Statements
                                 March 31, 2005
                                   (Unaudited)


8. COMMITMENTS (CONTINUED)

On September 3, 2003 ALC Holdings,  LLC acquired 53.8% of the outstanding shares
of Glas-Aire  Industries  Group Ltd's common stock. Mr.  Grossman's  employments
agreements  with the company and his  outstanding  85,000  shares  warrant  were
cancelled. Mr. Grossman is one of the owners of ALC Holdings, LLC.


9. GOING CONCERN

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going  concern.  The Company  generated net losses of
$2,409,888  during the period from September 29, 1992 (inception)  through March
31, 2005.  Also, on March 24, 2004 the Canadian  Operation filed Bankruptcy with
the Supreme Court of British  Columbia.  On July 31, 2004 Glas-Aire  Industries,
Inc.'s warehouse operation was closed.  These conditions raise substantial doubt
about the  Company's  ability to  continue  as a going  concern.  The  Company's
continuation  as a going  concern  is  dependent  on its  ability  to  meet  its
obligations, to obtain additional financing as may be required and ultimately to
attain  profitability.  The financial  statements do not include any adjustments
that might result from the outcome of this uncertainty.

Management  plans to raise  additional  funds through debt or equity  offerings.
Management  has yet to decide what type of offering  the Company will use or how
much capital the Company will rise.  There is no guarantee that the Company will
be able to raise any capital through any type of offerings.


10. SUBSEQUENT EVENT

The company's  directors had held the meeting on April 24, 2006 and approved the
following issuance of shares.

Company decided to issue 1,220,000 shares of the company's common stock to Craig
Grossman and  1,220,000  shares of the  Company's  common stock to Linda Kwan in
lieu of the payment of their services.  The Company has accrued  compensation to
Craig Grossman and Linda Kwan in the amount of approximately $122,000 each.

The Company  decided to issue  44,800  shares of the  Company's  common stock to
Craig Grossman and 191,972 shares of the Company's common stock to Linda Kwan in
connection  with the  payment  of their  personal  funds  paid for legal fees is
connection with the Bank Settlement.

The Company decided to issue  Schlueter & Associates,  P.C. (S&A) or its assigns
400,000  shares of the Company's  common stock to settle the incurred legal fees
to S&A.

The  Company  decided to issue Mark J.  Richardson,  Esq.  93,750  shares of the
Company's  common stock to consideration  for legal and other services  rendered
for the Company.

                                       12
<PAGE>

                           FORWARD-LOOKING STATEMENTS

         This Form 10-QSB contains certain forward-looking statements within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the Securities Exchange Act of 1934, as amended,  and the Company intends
that such  forward-looking  statements  be subject to the safe  harbors  created
thereby.  These  forward-looking  statements include the plans and objectives of
management for future operations, including plans and objectives relating to our
products  and  future  economic  performance.   The  forward-looking  statements
included herein are based on current expectations that involve a number of risks
and  uncertainties.  These  forward-looking  statements are based on assumptions
that we will continue in business as a "going concern," that we will continue to
develop, market and ship products on a timely basis, that competitive conditions
within the  automotive  industry will not change  materially or adversely,  that
demand  for our  products  will  remain  strong,  that we will  retain  existing
customers  and key  management  personnel,  that our forecasts  will  accurately
anticipate  market  demand,  that our bank will  continue to provide our various
credit  facilities and loans,  and that there will be no material adverse change
in our  operations or business.  Assumptions  relating to the foregoing  involve
judgments with respect to, among other things, future economic,  competitive and
market conditions and future business  decisions,  all of which are difficult or
impossible  to predict  accurately  and many of which are  beyond  our  control.
Although we believe the assumptions  underlying the  forward-looking  statements
are reasonable,  any of the assumptions  could prove inaccurate and,  therefore,
there can be no  assurance  that the  results  contemplated  in  forward-looking
information  will be realized.  In addition,  our  business and  operations  are
subject to  substantial  risks that  increase the  uncertainty  inherent in such
forward-looking  statements.  In light of the significant uncertainties inherent
in the  forward-looking  information  included  herein,  the  inclusion  of such
information  should not be  regarded as a  representation  by the Company or any
other person that the objectives or plans of the Company will be achieved.

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULT
OF OPERATIONS

CHANGES IN RESULTS OF OPERATIONS:  THREE MONTHS ENDED MARCH 31, 2005 COMPARED TO
THREE MONTHS ENDED MARCH 31, 2004

         The Company's  sales  decreased by 100% from  $1,606,855  for the three
months  ended March 31,  2004,  to $0 for the three months ended March 31, 2005.
This  decrease  is  primarily  due to (i) the  Canadian  operation's  filing for
bankruptcy on March 24, 2004 and ceasing its operation after that date.

         Gross profit margin, expressed as a percentage of sales, decreased from
12.06% for the three  months  ended  March 31,  2004 to 0% for the three  months
ended March 31, 2005.  Actual gross profit decreased from $193,836 for the three
months  ended March 31, 2004 to $0 for the three  months  ended March 31,  2005.
This net decrease was due to the Canadian  operation's  filing for bankruptcy on
March 24, 2004 and ceasing its operation after that date.

         Depreciation  expense  decreased 100% from $97,641 for the three months
ended  March 31, 2004 to $0 for the three  months  ended  March 31,  2005.  This
decrease was due to the Canadian  operation's filing for bankruptcy on March 24,
2004 and ceasing its operation after that date.

         Expenses for research  and  development  decreased by 100% from $68,458
for the three months ended March 31, 2004 to $0 for the three months ended March
31,  2005.  This  decrease  was  due  to the  Canadian  Operation's  filing  for
bankruptcy on March 24, 2004 and ceasing its operation after that date.

                                       13
<PAGE>

         Selling and  distribution  expenses  decreased by 100% from $62,445 for
the three months ended March 31,2004, to $0 for the three months ended March 31,
2005.  This  net  decrease  was  due  to the  Canadian  Operation's  filing  for
bankruptcy on March 24, 2004 and ceasing its operation after that date,

         General and  administrative  expenses  decreased by 49.3% from $147,393
for the three months ended March 31, 2004, to $74,727 for the three months ended
March 31, 2005.  This decrease is primarily due to (i) the Canadian  Operation's
filing for  bankruptcy  on March 24, 2004 and ceasing its  operation  after that
date,  (ii) an increase in legal fees related to loan  guarantee  from Glas-Aire
Industries  Group Ltd with HSBC,  (iii) a decrease in accounting fees related to
the  preparation of quarterly and annual reports and consulting  fees related to
public  relations,  (iv) an increase in Management fees accrued for two officers
to maintain the company.

         Foreign  exchange  gain of 18,371 for the three  months ended March 31,
2004 compared to a foreign  exchange gain of $0 for the three months ended March
31, 2005. This decrease is primarily due to the Canadian  Operation's filing for
bankruptcy on March 24, 2004 and ceasing its operation after that date.

         Interest  expense  decreased  by 100% from $31,085 for the three months
ended March 31, 2004,  to $0 for the three  months  ended March 31,  2005.  This
decrease is primarily due to the Canadian  Operation's  filing for bankruptcy on
March 24, 2004 and ceasing its operation after that date.

         Our loss from continuing  operations  decreased from a gain of $468,770
for the three  months  ended  March 31,  2004 to a loss of $74,727 for the three
months  ended March 31, 2005.  This was the result of the  Canadian  operation's
filing for  bankruptcy  and ceasing the operation as of March 24, 2004. The gain
of $663,531  was related to the  elimination  of the assets and  liabilities  in
2004. This did not recur in 2005.

LIQUIDITY AND CAPITAL RESOURCES

          Cash used in operating  activities for the period ended March 31, 2005
was $1,207  compared to $299,685 for the period ended March 31, 2004. The use of
cash for the three months ended can be primarily  attributed to (i) fund loss of
$74,727 from continuing  operations,  (ii) an increase of accrued liabilities of
$73,520.

          Cash used in financing activities for the three months ended March 31,
2005 was $0 compared to  $2,018,171  for the three  months ended March 31, 2004.
This can be attributed to the Canadian  operation's  filing for  bankruptcy  and
ceasing its operation on March 24, 2004.

          Cash provided by investing  activities  for the period ended March 31,
2005 was $0  compared  to  $2,154,854  in  disposal  of fixed  assets due to the
Canadian  operation's  filing for  bankruptcy and ceasing its operation on March
24, 2004.

         During 2002, we were in violation of certain covenants contained in the
banking facilities  agreement.  Pursuant to GAAP and as a result of the covenant
breach  invoking  the Bank's  right to call the  long-term  debt on demand,  the
long-term  debt has been  reclassified  as a  current  liability.  However,  the
Company  remains in close contact with its lenders and has never been in default
or breach of any payment and/or payment  schedule set forth in its original loan
agreements.

                                       14
<PAGE>

         The independent  auditor's  report  accompanying  our December 31, 2002
consolidated  financial  statements contain an explanatory  paragraph expressing
substantial  doubt about the Company's  ability to continue as a going  concern.
The  consolidated  financial  statements  have been prepared  "assuming that the
Company will continue as a going concern," which  contemplates  that the Company
will  realize its assets and  satisfy its  liabilities  and  commitments  in the
ordinary  course of  business.  Although we believe  that we have  reversed  our
operating losses and are currently operating at a profitable level, there can be
no assurance that we will be able to generate sufficient positive cash flow from
operations to address all of our cash flow needs.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES.

ACCOUNTING ESTIMATES.

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

INVENTORIES.

         Inventories are recorded at the lower of cost, on a first-in, first-out
basis, or market value. Market value for raw materials is defined as replacement
cost and for work-in-process and finished goods as net realizable value.

REVENUE RECOGNITION.

         We  recognize  revenue on the sale of products at the time the products
are shipped to customers.

ALLOWANCE FOR DOUBTFUL ACCOUNTS.

         The  Company  records  an  allowance  for  doubtful  accounts  based on
specifically  identifiable  amounts  that we  believe to be  uncollectible.  The
criteria for the allowance  provision  includes  historical  experience  and the
Company's  assessment of the general financial  conditions  affecting its client
base. If the Company's actual collections  experience changes,  revisions to the
allowance may be required.

RESEARCH AND DEVELOPMENT.

         Research and development costs are expensed as incurred.

WARRANTY ACCRUAL.

         The  Company  records  a  liability  for  estimated  costs  that may be
incurred  under its  warranties at the time that product  revenue is recognized.
The  Company  periodically  assesses  the  adequacy  of  its  recorded  warranty
liability and adjusts the amounts as necessary.

VALUATION OF LONG LIVED ASSETS.

         The Company  evaluated  the future  recoverability  of its fixed assets
when events or changes in business  circumstances indicate that the carry amount
of the assets may not be fully recoverable.

                                       15
<PAGE>

FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS

         The Company conducts  business in both Canada and the United States and
used the U.S. dollar as  its reporting  currency.  The function  currency of the
Canadian  subsidiaries is the Canadian dollar.  The financial  statements of the
Canadian  subsidiaries  have  been  translated  under  SFAS No.  52.  Asset  and
liabilities are translated at the rate of exchange at the balance sheet date and
revenues and expenses are  translated  at the average  exchange  rate during the
year. The resulting  exchange gains and losses are shown as a separate component
of stockholders' equity.

         Transactions conducted in foreign currencies are translated as follows:

         At the transaction date, each asset, liability,  revenue and expense is
translated by the use of the exchange rate in effect at that date. At the period
and date,  monetary  assets and liabilities are translated by using the exchange
rate in effect at that date. The resulting foreign exchange gains and losses are
included in income in the current period.

ITEM 3.  CONTROLS AND PROCEDURES

         The Company's management, with the participation of the Company's Chief
Executive  Officer and Chief Financial  Officer,  evaluated the effectiveness of
the Company's  disclosure controls and procedures (as defined in Rules 13a-15(e)
and  15d-15(e)  under the  Securities  Exchange  Act of 1934,  as  amended  (the
"Exchange  Act"))  as of  September  30,  2004.  Based on this  evaluation,  the
Company's Chief Executive Officer and Chief Financial Officer concluded that, as
of September 30, 2004, the Company's disclosure controls and procedures were (1)
designed to ensure that material  information  relating to the Company,  is made
known to the Company's  Chief Executive  Officer and Chief Financial  Officer by
others within the Company,  particularly  during the period in which this report
was being prepared and (2) effective,  in that they provide reasonable assurance
that information  required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded,  processed,  summarized and
reported within the time periods specified in the SEC's rules and forms.

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

DRAGON CAPITAL

         On August 8, 2003,  Dragon Capital,  LLC ("dragon")  filed suit against
the Company in Denver District Court (Case No. 03CV6198). Dragon alleges that we
have  refused to pay a success fee in the amount of $59,000 in  connection  with
the  Company's  merger with Wonder Tool,  Inc. The  Claimant  alleges  breach of
contract  claim,  promissory  estoppel  and  unjust  enrichment  against  us. On
September 25, 2003, we filed our answer to the  Complaint.  Management  believes
this claim is entirely  without merit and intends to vigorously  defend  against
this claim.

                                       16
<PAGE>

CELCO PLASTICS, LTD. LITIGATION.

         On July 31, 2002, we filed suit against Celco  Plastics Ltd.  ("Celco")
in the Supreme Court of British Columbia  (Action No.  SO24264).  We allege that
Celco,  our supplier of  extrusions in the form of gaskets,  supplied  defective
gaskets to us  commencing  in 2000.  We are alleging  breach of contract and the
negligent  manufacture of gaskets against Celco. We are seeking general damages,
special damages, interests and costs. Celco has commenced a counterclaim against
us for payment of  outstanding  invoices in the amount of CDN $32,521.24 as well
as general damages, special damages, interests and costs.

UNIVERSAL DYNAMICS LIMITED LITIGATION.

         On February 14, 2003,  Universal Dynamics Limited  ("Universal")  filed
suit against us in the Supreme Court of British  Columbia  (Action No. S024878).
The  statement  of  claim  alleges  that we have  refused  or  neglected  to pay
outstanding   invoices  to  Universal  for  services  provided  in  the  design,
preparation of drawings and  consulting  work with regard to our new facility in
Richmond,  B.C.  Universal is seeking damages in the amount of approximately CDN
$90,000,  plus  interest  and  costs.  We have  not  yet  filed  a  response  to
Universal's claims, however, we assert that Universal failed to perform pursuant
to our agreement and we were forced to employ an additional  consulting  company
to complete the tasks. We intend to vigorously defend against this claim.

ITEMS 2, 3 AND 4 ARE NOT APPLICABLE.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

          a) Exhibits:

               31.1 Section 302 Certification

               32.1 Section 906 Certification

          b) Reports Filed on Form 8-K.

               A Report on 8-K was filed on March 29, 2004 to disclose the March
               24,  2004  appointment  of KPMG by the  Supreme  Court of British
               Columbia (Case No. L040758) as receiver over all the right, title
               and  interest  of  Glas-Aire  Industries  Ltd,  the wholly  owned
               subsidiary   of   Glas-Aire    Industries    Group,   Ltd.   (the
               "Corporation"),    property,   assets   and   undertakings.   The
               Corporation  was in default of  certain  financial  ratios in its
               banking  facilities  agreement with HSBC and was indebted to HSBC
               Bank for approximately $2.7 million (Canadian).

               A Report on 8K filed on June 17,  2004  disclosed  the  change in
               Registrant's Certifying Accountant.

                                       17
<PAGE>

         (a)      Dismissal of Previous Independent Accountants.

                  Effective  June  17,  2004,  Glas-Aire  Industries  Group  Ltd
                  ("Company")   dismissed  BDO  Dunwoody  LLP  ("BDO"),  as  its
                  independent  public  accountants.  The Company's sole Director
                  approved this decision to dismiss BDO).

         (b)      Engagement of New Independent Accountants.

                  On June 17, 2004 the Company engaged Dale Matheson Carr-Hilton
                  LaBonte Chartered Accounts as its new independent accountants.



                                   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: August 14, 2006

                                GLAS-AIRE INDUSTRIES GROUP LTD.


                                /s/Craig Grossman
                                ------------------------------------------------
                                Craig Grossman
                                President, Chief Executive Officer and Secretary



                                \s\ Linda Kwan
                                ------------------------------------------------
                                Linda Kwan, Chief Financial Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

By:  \s\ Craig Grossman                                   Dated: August 14, 2006
    ---------------------------------------------------
      Craig Grossman, Chairman of the Board,
      Chief Executive Officer, President,
      and Secretary (Principal Executive Officer)

By:  \s\ Linda Kwan                                       Dated: August 14, 2006
    ---------------------------------------------------
      Linda Kwan, Chief Financial Officer
      (Principal Financial/Accounting Officer)


                                       18