UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington D.C. 20549
                                    ---------

                                  FORM 10-QSB/A

                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For the quarter ended     June 30, 1996    Commission File Number   0-28524

                              HIREL HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)

               Delaware                                       65-0666239
            (State or other jurisdiction of              (I.R.S. Employer
            incorporation or organization)              Identification No.)


            650 S.W. 16th Terrace
            Pompano Beach, Florida                              33069
            (Address of principal executive offices)        (Zip code)

Registrant's telephone number, including area code:             (954) 942-5390
                                                        ----------------------


          19599 N.E. 10th Avenue, Suite A, North Miami Beach, Florida 33179
         (Former Name, former address and former fiscal year, if changed since
          last report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the  Securities  and  Exchange Act of 1934
during the preceding 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          No  X


Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common  stock,  as of as of the latest  practicable  date: At September 5, 1996,
there were 4,813,750  shares of the  Registrant's  $.0001 par value common stock
outstanding.



<PAGE>



HIREL HOLDINGS, INC. AND SUBSIDIARIES
------------------------------------------------------------------------------


INDEX TO 10-QSB
------------------------------------------------------------------------------



Part I:  Financial Information

Item 1.  Financial Statements

Combined Balance Sheet as of June 30, 1996 [Unaudited]........3

Combined Statements of Operations for the three and six months ended
June 30, 1996 and 1995 [Unaudited]............................4

Combined Statements of Cash Flows for the six months ended
June 30, 1996 and 1995 [Unaudited]............................5

Notes to Combined Financial Statements........................6......7

Item 2: Management's Discussion and Analysis of Financial Condition
        and Results of Operations.............................8......11

Part II.  Other Information

Signature Page................................................12






                           . . . . . . . . . . . . .


                                        2

<PAGE>
<TABLE>



Item 1:  Financial Statements

HIREL HOLDINGS, INC. AND SUBSIDIARIES
------------------------------------------------------------------------------


COMBINED BALANCE SHEET AS OF JUNE 30, 1996
[UNAUDITED]
------------------------------------------------------------------------------


<S>                                                                     <C>

Assets:
Current Assets:
  Cash                                                                  $   449,912
  Accounts Receivable [Net of Allowance for Doubtful Accounts
   of $30,439]                                                              577,138
  Inventory                                                                 776,874
  Other Current Assets                                                       19,391
                                                                        -----------

  Total Current Assets                                                    1,823,315

Property and Equipment - Net                                                760,166
                                                                        -----------

Other Assets:
  Loans Receivable - Related Parties                                        342,886
  Deferred Offering Costs                                                   275,940
  Other Assets                                                               76,804
                                                                        -----------

  Total Other Assets                                                        695,630

  Total Assets                                                          $ 3,279,111
                                                                        ===========

Liabilities and Stockholder's Equity:
Current Liabilities:
  Line of Credit                                                        $ 1,310,339
  Accounts Payable                                                          495,359
  Due to Stockholder                                                        195,000
  Other Current Liabilities                                                 128,244
                                                                        -----------

  Total Current Liabilities                                               2,128,942

Loan Payable - Related Party                                                 10,036
                                                                        -----------

Commitments and Contingencies                                                    --

Stockholder's Equity:
  Preferred Stock - $.001 Par Value, 1,000,000 Shares Authorized,
   None Issued or Outstanding                                                    --

  Common Stock, $.001 Par Value, 24,000,000 Shares Authorized,
   3,750,000 Shares Issued and Outstanding                                    3,750

  Paid-in Capital                                                         1,169,854

  Retained [Deficit]                                                        (33,471)

  Total Stockholder's Equity                                              1,140,133

  Total Liabilities and Stockholder's Equity                            $ 3,279,111
                                                                        ===========


See Notes to Combined Financial Statements.

                                         3
</TABLE>

<PAGE>


<TABLE>

HIREL HOLDINGS, INC. AND SUBSIDIARIES
------------------------------------------------------------------------------


COMBINED STATEMENTS OF OPERATIONS
[UNAUDITED]
------------------------------------------------------------------------------


                                 Three months ended           Six months ended
                                       June 30,                    June 30,
                                       --------                    --------
                                 1 9 9 6       1 9 9 5       1 9 9 6       1 9 9 5
                                 -------       -------       -------       -------
<S>                             <C>           <C>          <C>           <C> 

Net Sales:
  Computer Equipment            $5,834,427   $ 4,185,919   $12,497,056  $ 9,264,073
  Computer Equipment - Related Party    --       633,562           --     2,491,111
  Fuel Injection Systems           604,954            --      929,394            --
                                ----------   -----------   ----------   -----------

  Total Net Sales                6,439,381     4,819,481   13,426,450    11,755,184
                                ----------   -----------   ----------   -----------

Cost of Goods Sold:
  Computer Equipment             5,674,124     4,618,934   11,852,878    11,342,443
  Fuel Injection Systems           427,991            --      606,586            --
                                ----------   -----------   ----------   -----------

  Total Cost of Goods Sold       6,102,115     4,618,934   12,459,464    11,342,443
                                ----------   -----------   ----------   -----------

  Gross Profit                     337,266       200,547      966,986       412,741
                                ----------   -----------   ----------   -----------

Expenses:
  General and Administrative
  Expenses                         472,353     119,868      914,154       240,110
  Research and Development          71,124            --       79,936            --
                                ----------   -----------   ----------   -----------

  Total Expenses                   543,477       119,868      994,090       240,110
                                ----------   -----------   ----------   -----------

Operating [Loss] Income           (206,211)       80,679       27,104       172,631
                                ----------   -----------   ----------   -----------

Other Income [Expense]:
  Interest Expense                 (12,964)           --      (63,901)           --
  Interest Income - Related Parties  7,645            --       14,750            --
  Loss on Sale of Asset                 --            --      (41,574)           --
  Rental Income - Related Party      9,000            --        9,000            --
                                ----------   -----------   ----------   -----------

  Total Other [Expense]              3,681            --      (81,725)           --
                                ----------   -----------   ----------   -----------

  Net [Loss] Income Before Pro
   Forma Income Tax Adjustment    (202,530)       80,679     (108,829)      172,631

Pro Forma Income Tax
  Adjustments                           --        25,850           --        64,950
                                ----------   -----------   ----------   -----------

  Pro Forma Net [Loss] Income   $ (202,530)  $    54,829   $ (108,829)  $   107,681
                                ==========   ===========   ==========   ===========

  [Loss] Earnings Per Share     $     (.05)  $       .02   $     (.03)  $       .04
                                ==========   ===========   ==========   ===========

Weighted Average Common Shares
  Outstanding                    3,750,000     2,750,000    3,750,000     2,750,000
                                ==========   ===========   ==========   ===========


See Notes to Combined Financial Statements.

                                         4
</TABLE>

<PAGE>


<TABLE>

HIREL HOLDINGS, INC. AND SUBSIDIARIES
------------------------------------------------------------------------------


COMBINED STATEMENTS OF CASH FLOWS
[UNAUDITED]
------------------------------------------------------------------------------


                                                               Six months ended
                                                                   June 30,
                                                             1 9 9 6       1 9 9 5
                                                             -------       -------
<S>                                                        <C>          <C> 

Operating Activities:
  Net [Loss] Income                                        $ (108,829)  $   172,631
                                                           ----------   -----------
  Adjustments  to  Reconcile  Net  Income to Net Cash  [Used  for]  Provided  by
   Operating Activities:
   Depreciation                                                51,653         2,953
   Amortization                                                44,652            --
   Loss on Sale of Asset                                       41,574            --
   Provision for Losses on Accounts Receivable                 20,439           940

  Changes in Assets and Liabilities:
   [Increase] Decrease in:
     Accounts Receivable                                     (247,158)      (55,951)
     Inventory                                               (375,008)        4,058
     Other Current Assets                                     (13,432)       (1,636)

   Increase [Decrease] in:
     Accounts Payable                                        (198,641)       46,089
     Other Current Liabilities                                (64,220)      (30,628)
                                                           ----------   -----------

   Total Adjustments                                         (740,141)      (34,175)
                                                           ----------   -----------

  Net Cash - Operating Activities                            (848,970)      138,456
                                                           ----------   -----------

Investing Activities:
  Purchase of Property and Equipment                          (11,611)         (109)
  Proceeds from Sale of Equipment                              85,000            --
  Loans Receivable - Related Party                           (119,782)           --
                                                           ----------   -----------

  Net Cash - Investing Activities                             (46,393)         (109)
                                                           ----------   -----------

Financing Activities:
  Increase in Deferred Offering Costs                        (302,328)           --
  Distributions                                              (384,317)     (265,000)
  Advances from Line of Credit                              3,970,052            --
  Repayments on Line of Credit                             (3,320,519)           --
  Advances from Related Parties                               268,283       449,584
  Repayments to Related Parties                               (93,137)     (399,234)
  Proceeds from Equity Sales                                  649,000            --
                                                           ----------   -----------

  Net Cash - Financing Activities                             787,034      (214,650)
                                                           ----------   -----------

  Net [Decrease] in Cash                                     (108,329)      (76,303)

Cash - Beginning of Periods                                   558,241        88,581
                                                           ----------   -----------

  Cash - End of Periods                                    $  449,912   $    12,278
                                                           ==========   ===========



See Notes to Combined Financial Statements.


                                         5
</TABLE>

<PAGE>



HIREL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS
[UNAUDITED]
------------------------------------------------------------------------------


[1] Basis of Presentation

The unaudited combined financial  statements as of and for the period ended June
30, 1996 give retroactive effect to the acquisition by Hirel Holdings, Inc. [the
"Company"] of all of the outstanding common stock of Hirel Marketing, Inc. [an S
corporation] ["HMI"] and Hirel Technologies,  Inc. ["HTI"] on July 22, 1996. HTI
is the successor to Hirel Technologies, Ltd. ["HTL"], a limited partnership. The
financial  statements of the Company will be presented on a  consolidated  basis
commencing July 22, 1996. Prior to that date the separate results of HMI and HTI
[including  HTL as  predecessor  from  inception  on October 24, 1995] have been
combined on a basis consistent with that of consolidated financial statements in
a manner similar to a pooling of interests and giving  retroactive effect to the
issuance of 2,750,000  shares of the Company's  common stock to the stockholders
of HMI, and 1,000,000  shares of the Company's  common stock to the stockholders
of HTI.  Additionally,  the S corporation and partnership equity sections of HMI
and HTL as  predecessor  to HTI have been  reclassified  to  additional  paid-in
capital.  No  adjustment  of assets to "fair  value" have been  recorded and all
intercompany  balances  and  transactions  were  eliminated.   The  accompanying
combined financial  statements will become the historical  financial  statements
upon  issuance of financial  statements  for the period  subsequent  to July 22,
1996.

In  opinion of  management,  the  accompanying  unaudited  financial  statements
included in the Form 10- QSB reflect all adjustments  [consisting only of normal
recurring  accruals]  necessary  to make the interim  financial  statements  not
misleading.  The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the full year.

The following pro forma  unaudited  information  gives effect to the results the
Company would have  reflected for three months and six months periods ended June
30,  1995 had the  predecessor  of HTL  [Cutler  Induction  Systems,  Inc.] been
included in the combined statements of operations.

                                          Three months ended Six months ended
                                             June 30, 1995     June 30, 1995

Net Sales - Computer Equipment                $ 4,819,481        $11,755,184
Net Sales - Fuel Injection Systems                346,377           487,145
                                              -----------        ----------

  Total Net Sales                             $ 5,165,858        $12,242,329
  ---------------                             ===========        ===========

Net Loss                                      $  (249,406)       $ (615,953)
--------                                      ===========        ==========

Net Loss Per Share                            $      (.07)       $     (.16)
------------------                            ===========        ==========

Weighted Average Common Shares Outstanding      3,750,000         3,750,000

For  further  information,  refer  to the  financial  statements  and  footnotes
included in the Company's Form SB-2, filed July 22, 1996.

[2] Inventory

The components of inventory as of June 30, 1996 are as follows:

Raw Materials                  $   243,146
Work-in-Process                     15,515
Finished Goods                     518,213
                               -----------

  Total                        $   776,874
  -----                        ===========


                                        6

<PAGE>



HIREL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS, Sheet #2
[UNAUDITED]
------------------------------------------------------------------------------



[3] Income Taxes

Income taxes are provided,  where  appropriate,  on historical  earnings of each
combining  company.  Pro forma income tax adjustments are provided to reflect an
estimate  of income tax  expense  had the  combined  companies  been  subject to
federal and state income taxes for each period presented.

[4] Earnings Per Share

Earnings  per share is based on the  weighted  average  number of common  shares
outstanding  for each  period  presented  and  gives  retroactive  effect to the
combination  discussed  in Note 1. The  Company  does not have any common  stock
equivalents outstanding.

[5] Subsequent Event

On July 22, 1996, the Company realized net proceeds of approximately  $5,200,000
through the sale of 1,063,750 shares of common stock.

                      .   .   .   .   .   .   .   .   .   .

                                        7

<PAGE>



Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
------------------------------------------------------------------------------



Three Months Ended June 30, 1996 Compared to Three Months Ended June 30, 1995

The Combined  Statement of  Operations  for the three months ended June 30, 1996
reflects  Total Net Sales of  $6,439,381,  and Gross  Profit of  $337,266.  This
resulted in a Gross Profit  Margin of 5.2% and a Pro Forma Net loss of $202,530.
The Combined  Statement of  Operations  for the three months ended June 30, 1995
reflected Total Net Sales of $4,819,481 and Gross Profit of $200,547,  resulting
in a Gross  Profit  Margin of 4.1%.  Income  Before  Income  Taxes for the three
months ended June 30, 1995 was $80,679, and Pro Forma Net Income was $54,829.

Any  comparisons  between the  Combined  Statement of  Operations  for the three
months ended June 30, 1996 and the three months ended June 30, 1995 must made in
light of the discussion that follows.  The Combined  Statement of Operations for
the three months ended June 30, 1996  includes the results from  operations  for
both of its subsidiaries, Hirel Marketing, Inc. and Hirel Technologies, Inc. The
Combined  Statement of Operations  for the three months ended June 30, 1995 only
includes  the  operations  of HMI, and does not include the  operations  of HTI,
which did not commence business [through a predecessor entity] until October 24,
1995.  The sections  below  compare the  operations of HMI and HTI for the three
months ended June 30, 1996 and June 30, 1995 separately.

Hirel Marketing, Inc.

Hirel  Marketing,  Inc.  ["HMI"]  is the  subsidiary  of the  Company  that is a
distributor of microcomputer  hardware,  peripherals and related  communications
products. Net sales increased by $1,015,000,  which is an increase of 21% during
the second quarter 1996, as compared to the second quarter 1995. Gross Profit on
computer equipment sold decreased by approximately  $40,000, which is a decrease
of 20%. The Gross Profit margin for the second quarter 1996 was 2.75%,  which is
a decrease from the Gross Profit margin of 4.16% for the second quarter 1995.

On June 21, 1995, HMI obtained a $1,000,000 line of credit.  This line of credit
is used to finance letters of credit used by HMI to purchase inventory. The line
of credit  allows HMI the option of paying upon  presentation  or financing  the
inventory  purchases for up to 90 days. The line of credit  carries  interest at
the Citibank prime rate [8.5% at June 30, 1996] plus 2% to a maximum of 18%. The
line of credit is subject to renewal annually is collateralized by all corporate
assets and is guaranteed by Vincent Montelione. The line of credit was increased
to $2,000,000 on December 26, 1995.  As of June 30, 1996,  borrowings  under the
line of credit were $1,310,339,  as compared to $0 as of June 30, 1995.  Letters
of credit which have not yet been  presented  for  payment,  are included on the
financial  statements under the caption "Accounts Payable," and totaled $437,349
as of June 30,  1996,  as compared  to $-0- as of June 30,  1995.  The  interest
expense  associated  with the line of credit was  $12,964  for the three  months
ended  June  30,  1996.   Management  intends  to  continue  to  seek  favorable
opportunities  to  purchase  inventory  using,   where  appropriate,   financing
available through the line of credit.

In  the  second  quarter  1996,  total  General  and   Administrative   Expenses
attributable  to HMI were $205,192.  This increase of  approximately  $85,000 in
General  and   Administrative   Expenses  is  primarily   attributable   to  the
amortization of the loan origination costs and bank charges  associated with the
line of credit  [approximately  $31,000]  and  increases in salaries and payroll
taxes [approximately $37,000].


                                        8

<PAGE>



MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
------------------------------------------------------------------------------




During the quarter  ended June 30, 1996, a private  placement  was  successfully
completed whereby $500,000 was raised as additional  stockholders  equity.  This
additional  stockholders  equity was  obtained in large part to offset the costs
incurred in connection  with the initial public  offering of the Company,  which
was completed on July 22, 1996.  As of June 30, 1996,  total  deferred  offering
costs were $275,940.

The Pro Forma Net Loss attributable to the operations of HMI was $50,206 for the
fiscal  quarter  ended June 30,  1996,  as  compared  to Pro Forma Net Income of
$54,829 for the fiscal  quarter ended June 30, 1995.  This decrease is primarily
the  result  of  a  decrease  in  Gross   Profit  and   increased   General  and
Administrative Expenses during the fiscal quarter ended June 30, 1996.

Hirel Technologies, Inc.

Hirel  Technologies,   Inc.  ["HTI"],  through  its  predecessor  entity,  Hirel
Technologies,  Ltd.  ["HTL"]  began  operations  on October 24,  1995.  HTI is a
subsidiary  of the  Company  that  develops  and sells fuel  injection  systems,
related  components  and other products  designed to enhance the  performance of
gasoline  powered  engines For the fiscal  quarter ended June 30, 1996,  HTI had
total  revenue of  $604,954,  of which  $324,260  came from  original  equipment
manufacturer ["OEM"] customers and the remaining $280,694 resulted from sales to
after market  purchasers.  A single OEM customer accounted for approximately 48%
of  revenues  for the fiscal  quarter  ended June 30,  1996,  and  although  the
disruption  or loss of that customer may have a material  adverse  effect on the
total revenues of HTI,  Management  believes that the relationship with this and
other OEM customers will strengthen and broaden in the future.

Total General and Administrative  Expenses for the fiscal quarter ended June 30,
1996 totaled $230,161,  and consisted primarily of salaries and payroll taxes of
approximately  $110,000.  Research and Development  Expenses incurred during the
fiscal  quarter ended June 30, 1996 were $71,124.  Management  believes that HTI
will  continue to incur  Research  and  Development  Expenses as it endeavors to
develop new products and  enhancements of existing  products that are consistent
with the current  product line. The loss from  operations for the fiscal quarter
ended June 30, 1996, was $115,322.

While the quarter  ended June 30,  1996  reflects  the  operations  of HTI,  the
comparative  quarter  ended June 30, 1995,  does not reflect the  operations  of
Cutler Induction Systems, Inc., a Florida corporation ["Cutler"] that originally
developed the intellectual  property rights acquired by HTL from Cutler and that
is  related  to HTL by  certain  common  beneficial  ownership.  For a  complete
discussion  of the  acquisition  of certain  property  rights by HTL and certain
issues related  thereto,  please see the  Registration  Statement [Form SB-2] as
filed with the Securities  and Exchange  Commission and effective as of July 22,
1996.  As noted in  footnote 1 of the  Combined  Financial  Statements,  had the
results of Cutler been included in the  statement of operations  for HTI for the
fiscal  quarter ended June 30, 1995,  the loss from  operations  would have been
$193,594.  Net sales of Fuel Injection Systems for that period were $346,377, as
compared to $604,954 sold by HTI during the fiscal quarter ended June 30, 1996.



                                        9

<PAGE>



MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
------------------------------------------------------------------------------


Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995

The  Combined  Statement  of  Operations  for the six months ended June 30, 1996
reflects  Total Net Sales of  $13,426,450,  and Gross Profit of  $966,986.  This
resulted in a Gross  Profit  Margin of 7.2% and Pro Forma Net Loss of  $108,829.
The  Combined  Statement  of  Operations  for the six months ended June 30, 1995
reflected Total Net Sales of $11,755,184 and Gross Profit of $412,741, resulting
in a Gross Profit Margin of 3.5%. Income Before Pro Forma Income Tax Adjustments
for the six months  ended June 30, 1995 was  $172,631,  and Pro Forma Net Income
was $107,681.

As  noted  previously,   any  comparisons  between  the  Combined  Statement  of
Operations  for the six months ended June 30, 1996 and the six months ended June
30,  1995  must  made in light of the  discussion  that  follows.  The  Combined
Statement  of  Operations  for the six months  ended June 30, 1996  includes the
results  from  operations  for both  HMI and  HTI.  The  Combined  Statement  of
Operations  for the six months ended June 30, 1995 only includes the  operations
of HMI, and does not include the  operations of HTI. The sections  below compare
the  operations  of HMI and HTI for the six months  ended June 30, 1996 and June
30, 1995 separately.

Hirel Marketing, Inc.

Net Sales of computer  equipment were  $12,497,056 for the six months ended June
30,  1996,  which  reflects  an increase  of  approximately  $740,000 or 6.3% as
compared to the six months ended June 30, 1995.  The Gross Profit Margin for the
six months ended June 30, 1996  increased  to 5.2%,  as compared to 3.5% for the
six months ended June 30, 1995.  Management believes that this increase in Gross
Profit Margin was, in part,  reflective of enhanced  buying  opportunities  as a
result of the availability of the line of credit,  which is more fully described
above. The interest  expense  associated with the line of credit was $63,901 for
the six months ended June 30, 1996.

General  and  Administrative  Expenses  for the six months  ended June 30,  1996
totaled $450,340, as compared to $240,110 of General and Administrative Expenses
incurred  during the six months ended June 30, 1995. The increase in General and
Administrative  Expenses was primarily  attributable  to the increase in payroll
and  related   employee   taxes   resulting  from  the  increase  in  Net  Sales
[approximately  $80,000],  as well as increases in rent and  telephone  expenses
[approximately $23,000].  Further, HMI incurred certain loan origination fees in
connection  with obtaining the $1,000,000  line of credit  referenced  above, as
well as in  connection  with the  increase in the line of credit to  $2,000,000.
Amortization  of loan  origination  fees and related bank charges [and  included
under General and Administrative  Expenses] charged to operations during the six
months ended June 30, 1996 was $78,084.

Income before Income Taxes attributable to HMI for the six months ended June 30,
1996 was  $151,100,  as compared to $172,631  for the six months  ended June 30,
1995.

Hirel Technologies, Inc.

As  previously  noted,  HTI [through its  predecessor  HTL] began  operations on
October 24, 1995. For the six months ended June 30, 1996, HTI had total sales of
$929,394 in Fuel  Injection  Systems,  of which $500,660 came from OEM customers
and  $428,734  were from  sales to after  market  purchasers.  The Gross  Profit
attributable  to such systems was  $322,808,  a Gross Profit  margin of 35%. The
General and Administrative Expenses for HTI during the six months ended June 30,
1996 totaled  $426,814,  and Research and Development  Expenses during that time
totaled $79,936  [substantially all of which were incurred in the second quarter
of 1996]. The General and Administrative  Expenses consisted primarily of salary
and payroll taxes of $232,156, rent of $50,345, and depreciation of $45,990. The
total loss of HTI for the six months ended June 30, 1996, was $137,929, of which
$96,355 was the loss from operations and interest  expense,  and $41,574 was the
loss from the sale of a capital asset.



                                       10

<PAGE>



MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
------------------------------------------------------------------------------



As noted previously,  the Pro Forma Combined Statement of Operations for the six
month  period  ended June 30, 1995,  does not reflect the  operations  of Cutler
Induction Systems, Inc. As set forth in footnote 1, had the operations of Cutler
been included in the  statement of  operations  for HTI for the six months ended
June 30,  1995,  the loss before  income  taxes would have been  $788,584.  This
compares to the loss before  income  taxes of HTI for the six months  ended June
30, 1996 of $137,929.

Liquidity and Capital Resources

Cash balances at June 30, 1996 were $449,912,  an increase from the cash balance
of  $12,278  at June 30,  1995.  This  increase  as  reflected  on the  Combined
Statement of Cash Flows is primarily the result of the following:

Net cash used for  operating  activities  was  $848,970 for the six months ended
June 30, 1996,  compared to net cash  generated  from  operating  activities  of
$138,456 for the same period in 1995.  This change is primarily  attributable to
the increases in accounts receivable of $247,158 and inventory of $375,008,  and
a decrease in accounts payable of $198,641.

Net cash used in investing  activities was $46,393 for the six months ended June
30,  1996,  due  largely to an  increase  in loans  receivable-related  party of
$119,782.  This was  partially  offset by proceeds from the sale of equipment of
$85,000.  There were insignificant  investing activities for the same six months
ended June 30, 1995.

Net cash  provided by financing  activities  totaled  $787,034 for the six month
period  ending June 30,  1996,  as compared to a net use of cash from  financing
activities  of $214,650 at June 30, 1995.  This change is the result of proceeds
from draws under the line of credit in excess of  repayments on the same line of
$649,533, proceeds from equity sales of $649,000, and net related party advances
of $175,146.  Net cash provided by financing activities decreased as a result of
distributions  of $384,000 and expenses of $302,328  associated  with the public
offering [which subsequently occurred on July 22, 1996].

HMI  continues  to  maintain  a  $2,000,000  short-term  line of  credit  with a
financial institution.  Amounts outstanding under the line were $1,310,339 as of
June 30, 1996. HMI intends to repay the  outstanding  borrowings  under the line
through normal  conversion of its short-term  trade assets.  The Company was not
dependent  upon trade terms for  material,  supplies and other  working  capital
needs incurred during the six months ended June 30, 1996.

Impact of Inflation

Inflation has not been a major factor in the Company's business since inception.
There can be no assurances that this will continue.



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SIGNATURE
------------------------------------------------------------------------------




Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
Registrant  has duly  caused  this  report on Form  10-QSB/A to be signed on its
behalf by the undersigned thereon duly authorized.


                                       HIREL HOLDINGS, INC.




                           By: /s/ Vincent Montelione
                               Vincent Montelione,
                                Duly Authorized and Chief Financial Officer
November 19, 1996

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