UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

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

                                   FORM 10-QSB

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

For the quarter ended     March 31, 1997       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
                                                        ----------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 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   X       No

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock,  as of the latest  practicable  date: At May 14, 1997,  there were
5,208,750 shares of the Registrant's $.001 par value common stock outstanding.



<PAGE>



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


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



Part I:  Financial Information

Item 1.  Financial Statements

Consolidated Balance Sheet as of March 31, 1997 [Unaudited]...1

Consolidated Statements of Operations for the three months ended
March 31, 1997 and 1996 [Unaudited]...........................2

Consolidated Statements of Cash Flows for the three months ended
March 31, 1997 and 1996 [Unaudited]...........................3

Notes to Consolidated Financial Statements [Unaudited]........4......5

Item 2: Management's Discussion and Analysis of Financial Condition
        and Results of Operations.............................6......8

Part II.  Other Information...................................9

Signature Page................................................10






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



<PAGE>



PART I:  FINANCIAL INFORMATION
Item 1.  Financial Statements

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


CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1997.
[UNAUDITED]
------------------------------------------------------------------------------


Assets:
Current Assets:
  Cash and Cash Equivalents                                         $ 1,062,685
  Accounts Receivable [Net of Allowance for Doubtful Accounts
   of $192,000]                                                       1,781,596
  Accounts Receivable - Related Party                                   280,034
  Inventory                                                           4,409,614
  Other Current Assets                                                  114,102
                                                                    -----------

  Total Current Assets                                                7,648,031

Property and Equipment - Net                                          1,353,643
                                                                    -----------

Other Assets:
  Loans Receivable - Related Parties - Net                              512,766
  Other Assets                                                          288,771
  Goodwill                                                            2,594,773
                                                                    -----------

  Total Other Assets                                                  3,396,310

  Total Assets                                                      $12,397,984

Liabilities and Stockholders' Equity:
Current Liabilities:
  Line of Credit                                                    $ 2,141,351
  Accounts Payable                                                    2,061,359
  Notes Payable                                                          71,226
  Other Current Liabilities                                             657,284
                                                                    -----------

  Total Current Liabilities                                           4,931,220

Note Payable                                                          1,363,727

Commitments and Contingencies                                                --

Stockholders' 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,
   5,208,750 Shares Issued and Outstanding                                5,209

  Paid-in Capital                                                     7,908,774

  Retained Earnings [Deficit]                                        (1,810,946)

  Total Stockholders' Equity                                          6,103,037

  Total Liabilities and Stockholders' Equity                        $12,397,984

See Notes to Consolidated Financial Statements.

                                         1

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HIREL HOLDINGS, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
[UNAUDITED]
------------------------------------------------------------------------------


                                                           Three months ended
                                                                March 31,
                                                          1 9 9 7       1 9 9 6
                                                           ------       -------
Net Sales:
  Computer Equipment                                       86,430   $ 6,662,628
  Marine Power Engines                                  2,967,094            --
  Fuel Injection Systems                                  362,216       324,438
                                                       ----------   -----------

  Total Net Sales                                       6,115,740     6,987,066
                                                       ----------   -----------

Cost of Goods Sold:
  Computer Equipment                                    2,655,185     6,178,754
  Marine Power Engines                                  2,587,968            --
  Fuel Injection Systems                                  270,282       178,595
                                                       ----------   -----------

  Total Cost of Goods Sold                              5,513,435     6,357,349
                                                       ----------   -----------

  Gross Profit                                            602,305       629,717
                                                       ----------   -----------

Expenses:
  General and Administrative Expenses                   1,103,724       479,298
  Research and Development                                 52,310         8,813
                                                       ----------   -----------

  Total Expenses                                        1,156,034       488,111
                                                       ----------   -----------

  Operating [Loss] Income                                (553,729)      141,606
                                                       ----------   -----------

Other Income [Expense]:
  Interest Expense                                        (86,679)      (47,085)
  Interest Income                                          29,211         7,104
  Other Income [Expense]                                   15,334       (41,574)
                                                       ----------   -----------

  Total Other Income [Expense]                            (42,134)      (81,555)
                                                       ----------   -----------

  [Loss] Income Before Pro Forma Income Tax Adjustments  (595,863)       60,051

Pro Forma Income Tax Adjustments                               --        20,247
                                                       ----------   -----------

  Pro Forma Net [Loss] Income                          $ (595,863)  $    39,804
                                                       ==========   ===========

  Pro Forma [Loss] Earnings Per Share                  $     (.11)  $       .01
                                                       ==========   ===========

  Weighted Average Common Shares Outstanding            5,208,750     4,675,000
                                                       ==========   ===========



See Notes to Consolidated Financial Statements.

                                         2

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HIREL HOLDINGS, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED]
------------------------------------------------------------------------------


                                                           Three months ended
                                                                March 31,
                                                          1 9 9 7       1 9 9 6
                                                          -------       -------
Operating Activities:
  Net [Loss] Income                                    $ (595,863)  $    39,804
                                                       ----------   -----------
  Adjustments to Reconcile Net [Loss] Income to Net
   Cash [Used for] Operating Activities:
   Depreciation and Amortization                          137,465        49,505
   Loss on Sale of Asset                                    4,804        41,574
   Provision for Losses on Accounts Recele                     --        15,918

  Changes in Assets and Liabilities:
   [Increase] Decrease in:
     Accounts Receivable                                 (819,777)     (533,694)
     Inventory                                           (867,578)     (634,587)
     Other Current Assets                                  16,087         3,217
     Other Assets                                          (4,178)       20,348

   Increase [Decrease] in:
     Accounts Payable                                  (1,274,952)      144,399
     Other Current Liabilities                            145,184       (77,117)
                                                       ----------   -----------

   Total Adjustments                                   (2,662,945)     (970,437)
                                                       ----------   -----------

  Net Cash - Operating Activities                      (3,258,808)     (930,633)
                                                       ----------   -----------

Investing Activities:
  Purchase of Property and Equipment                     (221,587)      (32,359)
  Proceeds from Sale of Equipment                          27,000        85,000
  Transfer from Restricted Cash                           788,000            --
  Loans to Unrelated Company                             (200,000)           --
  Advances to Related Parties - Net                            --      (148,733)
                                                       ----------   -----------

  Net Cash - Investing Activities                         393,413       (96,092)
                                                       ----------   -----------

Financing Activities:
  Distributions                                                --      (302,317)
  Advances from Line of Credit - Net                      546,261       942,708
  Repayments of Note Payable                              (64,596)           --
  Repayments from Related Parties                          19,965            --
  Proceeds from Equity Sales                                   --       650,000
                                                       ----------   -----------

  Net Cash - Financing Activities                         501,630     1,290,391
                                                       ----------   -----------

  Net [Decrease] Increase in Cash and Cash Equivalents (2,363,765)      263,666

Cash and Cash Equivalents - Beginning of Periods        3,426,450       558,242
                                                       ----------   -----------

  Cash and Cash Equivalents - End of Periods           $1,062,685   $   821,908
                                                       ==========   ===========



See Notes to Consolidated Financial Statements.

                                         3

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HIREL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[UNAUDITED]
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[1] Basis of Presentation

The unaudited  consolidated  financial statements as of and for the three months
ended March 31, 1997,  include the results of operations of the parent  company,
Hirel Holdings, Inc. ["HHI"] and its wholly-owned  subsidiaries Hirel Marketing,
Inc. ["HMI"] and Hirel Technologies,  Inc. ["HTI"]. Effective December 31, 1996,
HTI acquired  substantially all of the assets and certain  liabilities of Marine
Power, Inc. ["MPI"].  The unaudited financial statements as of and for the three
months ended March 31, 1996, are based on the historical financial statements of
HHI,  HMI, and HTI, and have been  combined on a basis  consistent  with that of
consolidated  financial  statements giving retroactive effect to the issuance of
2,750,000  shares of HHI common stock to the  stockholders of HMI, and 1,000,000
shares  of HHI  common  stock  to  the  stockholders  of  HTI.  All  significant
intercompany accounts and transactions have been eliminated in consolidation.

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.

For  further  information,  refer  to the  financial  statements  and  footnotes
included in the Company's Form 10-KSB for the year ended December 31, 1996.

[2] Business Combination

On January 24, 1997, the Company  completed its acquisition of substantially all
of the  assets of MPI  effective  December  31,  1996,  and its  operations  are
included with the Company's from December 31, 1996.

The following  unaudited pro forma  combined  results of operations  reflect the
acquisition  as if it had  occurred at the  beginning  of the period  presented.
These pro forma results may not be indicative of the results that actually would
have occurred if the combination had been in effect on the date indicated.

                                                        March 31,
                                                         1 9 9 6

Computer Equipment                                    $ 6,662,628

Fuel Injection Systems                                    324,438

Marine Power Engines                                    2,767,415

Total Revenue                                         $ 9,754,481
                                                      ===========

Net Earnings                                          $    91,077
                                                      ===========

Earnings Per Common Share                             $       .02
                                                      ===========

Weighted Average Common Shares Outstanding              4,140,000



                                        4

<PAGE>



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



[3] Inventory

The components of inventory as of March 31, 1997 are as follows:

Raw Materials                  $ 3,172,367
Work-in-Process                         --
Finished Goods                   1,237,247
                               -----------

  Total                        $ 4,409,614
  -----                        ===========

[4] Income Taxes

For the three months  ended March 31, 1996,  pro forma income taxes are provided
to reflect  income tax expense had the  consolidated  companies  been subject to
federal and state income taxes for that period.

[5] Earnings Per Share

Earnings  per share is based on the  weighted  average  number of common  shares
outstanding for each period presented.  Common stock equivalents are included if
dilutive.






                      .   .   .   .   .   .   .   .   .   .

                                        5

<PAGE>



Item 2.

HIREL HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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General

The following discussion should be read in conjunction with the Company's report
on Form 10-KSB for the year ended December 31, 1996,  including the consolidated
financial statements of the Company and the notes thereto appearing on Pages F-1
through F-20 thereof.

The  parent  company  Hirel  Holdings,   Inc.   ["HHI"]  and  its   wholly-owned
subsidiaries,  Hirel  Marketing,  Inc.  ["HMI"]  and  Hirel  Technologies,  Inc.
["HTI"], are collectively referred to as "the Company".  The unaudited financial
statements as of and for the three months ended March 31, 1997,  include HHI and
its  wholly-owned  subsidiaries  HMI and HTI.  Effective  December 31, 1996, HTI
acquired  substantially  all of the assets  and  certain  liabilities  of Marine
Power,  Inc.  ["MPI"] and its  operations  are included with the Company's  from
December 31, 1996.  The unaudited  financial  statements as of and for the three
months ended March 31, 1996, are based on the historical financial statements of
HHI,  HMI, and HTI, and have been  combined on a basis  consistent  with that of
consolidated  financial  statements giving retroactive effect to the issuance of
2,750,000  shares of HHI Common Stock to the  stockholders  of HMI and 1,000,000
shares of HHI Common Stock to the stockholders of HTI.

The  Company   operates  in  three  business   segments  through  its  operating
subsidiaries.  HMI is a wholesale  seller to retailers and end users  throughout
the  United  States  and  internationally  of  personal   computers,   primarily
manufactured  by Apple  Computer,  Inc. and related  peripherals.  HTI develops,
manufactures  and sells fuel  injection  systems for marine engines to customers
throughout  the United  States.  Both HMI and HTI operate  out of the  Company's
single  location in Pompano  Beach,  FL.  Effective  December 31, 1996,  MPI was
acquired as a division of HTI. MPI manufactures  engines for marine applications
for sale  throughout the United States at its location in  Ponchatoula,  LA. HMI
and HTI [including MPI] accounted for approximately  45% and 55%,  respectively,
of total sales for the three months  ended March 31, 1997.  For the three months
ended March 31, 1996, HMI was the predominant business segment.

Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996

Total sales for the three months ended March 31, 1997,  decreased  $871,326 over
the three months ended March 31, 1996, from $6,987,066 to $6,115,740, a decrease
of 12.5%. Net sales of computer  equipment  decreased  $3,876,198 over the three
months ended March 31, 1996, a decrease of 58.2%.  Most of the products  sold by
HMI are  manufactured  by Apple  Computer,  Inc.  or are  peripherals  for Apple
computers.  Apple products which  historically  were in demand and competitively
priced were not as readily available beginning in the fourth quarter of 1996 and
continuing  in the first quarter of 1997.  In addition,  international  sales of
computer  products have weakened as the dollar has strengthened  against foreign
currencies.  HMI has been approved as a distributor for Motorola,  IBM and Adobe
hardware  and software  products,  but to date has not realized any benefit as a
result of these distribution  arrangements.  In addition,  HMI has increased its
advertising budget, hired an additional sales person and a new President who has
spent much of his time since January evaluating the prospects for HMI's computer
distribution  business.  Based on the continued weak sales that occurred  during
the first quarter and the evaluation that has taken place, HMI intends to reduce
its cost structure to be more in line with the current level of sales,  as there
can be no assurance  that the  downward  trend in sales will not  continue.  HMI
which has  examined  other  lines of  business  established  a marine hard parts
distribution  business  in the  northeast  United  States  late in  March  which
business  compliments  and is a  division  of HMI.  Net sales of fuel  injection
systems  increased  $37,778 over the quarter ended March 31, 1996, from $324,438
to $362,216,  an increase of 11.6%.  This increase is primarily  attributable to
sales resulting from HTI's recently established  distribution/dealer network and
sale of systems and components to a marine engine manufacturer.  Sales of marine
engines  for the three  months  ended  March 31,  1997,  were  $2,967,094  which
resulted from the  acquisition  of MPI effective  December 31, 1996.  Management
anticipates,  based in part on the  seasonality of MPI's business that sales for
the second quarter should increase significantly from first quarter sales.

                                        6

<PAGE>



HIREL HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
------------------------------------------------------------------------------



Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996

Cost of goods sold was  $5,513,435  and  $6,357,349  for the three  months ended
March 31, 1997 and 1996, respectively,  a decrease of $843,914 or 13.3%. Cost of
computer  equipment sold decreased  $3,523,569 over the three months ended March
31, 1996, from $6,178,754 to $2,655,185,  a decrease of 57.0%.  This decrease is
attributable to the decrease in sales discussed  above.  The gross profit margin
on  computer  equipment  for the three  months  ended March 31,  1997,  was 4.7%
compared to a gross  profit  margin of 7.3% for the three months ended March 31,
1996, a decline of 2.6%.  However,  the 4.7% gross  profit  margin for the three
months ended March 31, 1997 is the same as the gross  profit  margin on computer
equipment for the full year ended December 31, 1996. Availability of product and
competition  will likely  continue to put pressure on the gross profit margin of
HMI's  computer  distribution  business.  Cost of fuel  injection  systems  sold
increased  $91,687 over the three months ended March 31, 1996,  from $178,595 to
$270,282, an increase of 51.3%. This increase is attributable to the increase in
sales  discussed above and to some  inefficiencies  in the first quarter of 1997
resulting from HTI's  relocation to a new facility late in 1996.  Cost of marine
engines sold was $2,587,968 for the three months ended March 31, 1997.

Gross profit was $602,305 and $629,717 for the three months ended March 31, 1997
and 1996,  respectively,  a decrease of $27,412 or 4.4%.  The  decrease in gross
profit of $352,629 from HMI's computer  distribution  business was offset by the
gross  profit of $379,126  resulting  from sales of marine  engines by HTI's MPI
division.

General and  administrative  expenses  increased  $624,426 over the three months
ended  March 31,  1996 from  $479,298  to  $1,103,724,  an  increase  of 130.3%.
Approximately $443,000 of the increase is attributable to MPI and the balance of
the increase is primarily attributable to salaries of personnel hired toward the
end of 1996 and beginning of 1997  including a chief  financial  officer and the
new president of HMI and to the costs associated with being a public company. In
addition,  the Company  incurred  approximately  $38,000 in  non-recurring  rent
expense in the first quarter of 1997  associated  with its relocation to its new
Pompano Beach, FL facility.  Research and development increased $43,497 over the
three  months  ended March 31,  1996,  from $8,813 to $52,310,  and  increase of
493.6%. The increase is primarily attributable to increased payroll and overhead
incurred by HTI for the three months ended March 31, 1997 [HTI began  operations
in October, 1995].

As a result of the  discussion  above,  the operating  loss for the three months
ended March 31, 1997,  increased  $695,335 over the three months ended March 31,
1996, from an operating profit of $141,606 to an operating loss of $553,729.

Interest  income for the three months ended March 31,  1997,  increased  $22,107
over the three months ended March 31, 1996, from $7,104 to $29,211,  an increase
of 311.2%. The increase is primarily  attributable to HHI's investment of excess
cash from its initial public offering of Common Stock in July 1996.

Interest  expense for the three months ended March 31, 1997,  increased  $39,594
over the three months ended March 31, 1996, from $47,085 to $86,679, an increase
of 84.1%.  This increase is primarily  attributable to interest expense incurred
by MPI during the first quarter of 1997.

Other income  [expense]  for the three  months  ended March 31, 1997,  decreased
$56,908 over the three  months ended March 31, 1996,  from expense of $41,574 to
income  of  $15,334.  The  decrease  is  primarily  attributable  to a  loss  of
approximately  $41,000  incurred by HTI in the first quarter of 1996 on the sale
of equipment.

As a result of the  discussion  above,  the net loss for the three  months ended
March 31,  1997,  increased  by $635,667  over the three  months ended March 31,
1996, from pro forma net income of $39,804 to a net loss of $595,863.

                                        7

<PAGE>



HIREL HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
------------------------------------------------------------------------------



Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996

Liquidity and Capital Resources

Cash at March 31, 1997 was $1,062,685 compared to $821,908 at March 31, 1996.

Net cash used for operating activities was $3,258,808 for the three months ended
March 31, 1997,  compared to net cash used in operating  activities  of $930,633
for the three months ended March 31, 1996.  In 1997,  the net loss  adjusted for
non-cash charges was $453,544 which along with increases in accounts  receivable
of  $819,777,  inventory  of  $867,578  and a decrease  in  accounts  payable of
$1,274,952  were the primary  reasons for net cash used in operating  activities
for the three months ended March 31, 1997.  In excess of $2,000,000 in cash used
for operations is attributable to MPI for the three months ended March 31, 1997.
In 1996, net income adjusted for non-cash  charges was $146,801 which along with
an increase in accounts  payable of $144,399 was offset by increases in accounts
receivable  of $533,694 and  inventory of $634,587 and were the primary  reasons
for net cash used in operating  activities  for the three months ended March 31,
1996.

Net cash  provided by  investing  activities  was  $393,413 for the three months
ended  March 31,  1997  compared  to net cash used by  investing  activities  of
$96,092 for the three  months  ended March 31,  1996.  In 1997,  transfers  from
restricted  cash to cash  available  for  operations  of $788,000  was offset by
purchases  of  property  and  equipment  of $221,758  and loans to an  unrelated
company of $200,000. In 1996, proceeds from the sale of equipment of $85,000 was
offset by  purchases  of property  and  equipment of $32,359 and net advances to
related parties of $148,733.

Net cash  provided by  financing  activities  was  $501,630 for the three months
ended March 31, 1997,  compared to  $1,290,391  for the three months ended March
31, 1996. In 1997, the primary  source of cash provided by financing  activities
was net advances from the Company's lines of credit.  In 1996, net advances from
the  Company's  line of credit of $942,708  and  proceeds  from equity  sales of
$650,000 were offset by distributions to shareholders and partners of $302,317.

As a  result  of  the  losses  from  operations  and  the  Company's  continuing
investment in MPI, the Company,  in the short term, will experience a decline in
liquidity.  Management is not aware, however, of any known demands, commitments,
events,  or  uncertainties  except as described above as well as the maturity of
HMI's line of credit on May 31,  1997,  that may result in  material  changes in
liquidity.  To provide  additional  liquidity in the short term,  the Company is
seeking additional equity financing.

                                        8

<PAGE>



PART II. OTHER INFORMATION



Item 1.  Legal Proceedings.

         Not applicable

Item 2.  Changes in Securities.

         Not applicable

Item 3.  Defaults Upon Senior Securities.

         Not applicable

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

         Not applicable

Item 5.  Other Information.

         Not applicable

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

         Exhibits

         None

         Reports

         Incorporated  by reference  from the  Company's  annual  report on Form
         10-KSB for the year ended December 31, 1996.


                                        9

<PAGE>


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




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


                                        HIREL HOLDINGS, INC.




May 20, 1997                        By: /s/ William H. Aden
                                    William H. Aden,
                                    Duly Authorized and Chief Financial Officer


                                       10

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