SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
(Mark One)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

For the fiscal year ended __October 30, 1999__

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from _________________to _________________

--------------------------------------------------------------------------------

Commission file number        0-14900
                      ------------------------------


                                    PSS, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Delaware                                          91-1335798
            --------                                          ----------
 (State or other jurisdiction of                           (IRS Employer
  incorporation or organization)                         Identification No.)

  P.O. Box 21093, Seattle, WA                     98111-3093
  ---------------------------                     ----------
(Address of principal executive offices)         (Zip Code)

(Registrant's telephone number, including area code) (206) 901-3790
                                                     --------------
PO Box 2573,   Seattle   WA   98111-2573
-----------------------------------------------
Former  name,  former  address and former  fiscal  year,  if changed  since last
report.

Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
  Common stock - $1.00 par value
  7-1/8% Convertible Debentures due July 15, 2006

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 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 by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Aggregate market value of the registrant's voting stock held by nonaffiliates of
the registrant as of December 1, 1999: $270,000.

The  number of shares  of common  stock  outstanding  as of  October  30,  1999:
19,473,728.

Documents incorporated by reference:  None.
------------------------------------




                                  Page 1 of 25
<PAGE>


                                     PART I

ITEM 1 - BUSINESS
-----------------

PSS, Inc. ("PSS"),  through its wholly owned subsidiary,  PNS Inc. ("PNS"), owns
PSSC Inc. ("PSSC");  together, PSS, PNS and PSSC are referred to collectively as
the "Company".

The Company owns a  pass-through  and  participation  certificate  issued by the
Federal  Home  Loan  Mortgage  Corporation  backed  by whole  pool  real  estate
mortgages  ("Mortgage  Certificates"),  and as a result, is primarily engaged in
the  business  of owning  mortgages  and other  liens on and  interests  in real
estate.  At October 30,  1999,  the  Company's  principal  assets  consisted  of
approximately  $3.1 million of Mortgage  Certificates from which interest income
is earned.  The Mortgage  Certificates are financed with borrowings,  payable on
demand,  secured by the Mortgage  Certificates (the "Mortgage  Financing").  The
principal obligations of the Company are the Mortgage Financing borrowings,  the
PNS 12-1/8% Senior Subordinated Notes due July 15, 1996 (the "Senior Notes") and
the PSS 7-1/8% Convertible Debentures due July 15, 2006 (the "Debentures"), upon
which interest expense is incurred.

See the Liquidity and Capital Resources  section of Management's  Discussion and
Analysis of Financial  Condition and Results of Operations  regarding the status
of the Company's  defaults on the Senior Notes and  Debentures  and factors upon
which the Company's future operating  results,  liquidity and capital  resources
are primarily dependent.


ITEM 2 - PROPERTIES
-------------------

None

ITEM 3 - LEGAL PROCEEDINGS
--------------------------

None.



                                       2
<PAGE>


ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------

Not applicable.

                                     PART II

ITEM 5 - MARKET  FOR THE  REGISTRANT'S  COMMON  STOCK  AND  RELATED  STOCKHOLDER
--------------------------------------------------------------------------------
MATTERS
-------


MARKET INFORMATION

The Company's common stock is traded  over-the-counter.  High and low prices are
the high and low bids as reported by National Quotation Bureau,  Inc., which are
those  quoted by dealers to each  other,  exclusive  of  markups,  markdowns  or
commissions,  and do not represent actual transactions.  The high and low prices
for the stock during the two years ended October 30, 1999 were reported as being
less than $0.01 per share.

HOLDERS

As of December 1, 1999, there were 967 holders of record of the Company's common
stock.

DIVIDENDS ON COMMON STOCK

The Company has never paid a dividend and does not anticipate  paying  dividends
for the foreseeable future. The indentures  governing the Company's Senior Notes
and Debentures  contain  covenants  which restrict the ability of the Company to
pay dividends (see Note 5 to the financial statements).


                                       3
<PAGE>


ITEM 6 - SELECTED FINANCIAL DATA


The following  selected  financial data should be read in  conjunction  with the
financial statements and related notes and "Management's Discussion and Analysis
of Financial Condition and Results of Operations"  included elsewhere herein. As
explained in Note 2 to the financial  statements,  information is presented on a
liquidation basis.  Presentation of per share information on a liquidation basis
is not considered meaningful and has been omitted.

<TABLE>
<CAPTION>

                                                                          YEAR ENDED

                                                 OCTOBER 30,  OCTOBER 31,  NOVEMBER 1,  NOVEMBER 2, OCTOBER 28,
                                                     1999       1998         1997          1996        1995
                                                 ----------------------------------------------------------------
                                                                       (thousands of dollars)

STATEMENT OF CHANGES IN NET LIABILITIES DATA:
<S>                                              <C>        <C>           <C>           <C>          <C>
Increase in Net Liabilities                      $ (2,290)   $ (2,265)    $ (2,265)     $ (3,020)    $ (4,231)


                                                 OCTOBER 30, OCTOBER 31,  NOVEMBER 1,  NOVEMBER 2, OCTOBER 28,
                                                 ----------------------------------------------------------------
                                                     1999       1998        1997         1996        1995

STATEMENTS OF NET LIABILITIES DATA:


Total Assets                                     $ 3,268      $ 3,984       $ 4,829     $ 5,591      $ 5,927

Short-term borrowings                              2,641        3,270         4,073       4,922        5,278

Long-term debt                                    28,178       28,178        28,178      28,178       28,178

Total Liabilities                                 45,014       43,440        42,020      40,517       37,833

Net Liabilities                                $ (41,746)   $ (39,456)    $ (37,191)  $ (34,926)   $ (31,906)

</TABLE>

                                       4
<PAGE>

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF OPERATIONS
-------------

Liquidity and Capital Resources
-------------------------------

At October 30, 1999, the Company's  principal  assets consisted of approximately
$3.1 million of Mortgage  Certificates  from which interest income is earned and
its principal  obligations  consisted of Mortgage Financing  borrowings,  Senior
Notes and Debentures upon which interest expense is incurred.

PNS is restricted by terms of its Senior Notes  Indenture from paying  dividends
or making  other  payments to PSS,  except that PNS may pay  dividends to PSS in
amounts  sufficient to enable PSS to meet its obligation on its Debentures  when
due. PNS, like its parent company, has a stockholder's deficit.

At October 30, 1999, the Company had assets of  approximately  $3.27 million and
liabilities,  other than Senior Notes and Debentures  including accrued interest
and  liquidation  costs,  of $2.8  million,  thus  having  a net  difference  of
approximately $470,000 available for holders of Senior Notes and Debentures.  At
October 30, 1999, approximately $5.26 million of Senior Notes and $22.92 million
of Debentures remain outstanding, such outstanding amounts being unchanged since
1995.

The Company  failed to pay the interest due January 15 and July 15, 1995,  1996,
1997,  1998 and 1999 on its Debentures and such default  continues.  The trustee
for the Debentures  has indicated to the holders of the Debentures  that it does
not intend to accelerate payment of the Debentures  "because it is unlikely that
the  Debenture  holders  would  receive  any  payment  if  the  Debentures  were
accelerated."

PNS failed to pay interest due July 15, 1995, January 15, 1996 and July 15, 1996
and failed to pay the  outstanding  principal which became due on July 15, 1996.
All such defaults continue.  In 1997, the Company was advised by the trustee for
the Senior Notes that, after concluding that the Company lacks sufficient assets
to pay the Senior  Notes,  the trustee had  petitioned a district  court for the
State of  Minnesota to  authorize  and instruct it to refrain from  pursuing any
default remedy against the Company and to discharge it as trustee,  and that the
Court had granted the trustee's requests.

The  Company's  future  operating  results,  liquidity,  capital  resources  and
requirements  are  primarily  dependent  upon actions  which may be taken by the
trustee for the  Debentures to collect  amounts due  thereunder,  the payment of
amounts due on and  purchases  of Senior Notes and  Debentures  and, to a lesser
extent,  interest  rate  fluctuations  as they  relate  to the  market  value of
Mortgage  Certificates  and to the  spread of  interest  income  therefrom  over
interest expense on related borrowings.  The Company is exclusively  invested in
Mortgage Certificates,  and, accordingly, is presently relying solely on such as
its source of cash funds.  It has not been  determined what course of action the
Company  may  pursue  with  respect  to debt  service  on the  Senior  Notes and
Debentures.


                                       5
<PAGE>


Results of Operations
---------------------

         Investment income
         -----------------

Interest income for each of the years ended October 30, 1999,  October 31, 1998,
and November 1, 1997,  decreased  as compared to the  immediate  preceding  year
primarily as a result of lower balances of investments in Mortgage Certificates.
The weighted  average  interest income rate earned on the Mortgage  Certificates
approximated  7.3%,  7.7% and 7.7%  during the years  ended  October  30,  1999,
October 31, 1998 and November 1, 1997, respectively.

Included in investment  income are unrealized  gains (or losses)  resulting from
increases   (or   decreases)   in   unrealized   appreciation   resulting   from
mark-to-market adjustments on Mortgage Certificates.  As a result of declines in
market values as well as due to principal  repayments on Mortgage  Certificates,
unrealized  appreciation  resulting from  mark-to-market  adjustments  decreased
during the years  ended  October  30,  1999 and  October 31, 1998 by $84,000 and
$47,000,  respectively.  Increases in market  values  resulted in an increase in
unrealized appreciation during the year ended November 1, 1997 of $64,000.

         Interest expense
         ----------------

Interest expense for each of the years ended October 30, 1999,  October 31, 1998
and  November 1, 1997  decreased  as compared to the  immediate  preceding  year
primarily  due to  lower  average  balances  of  Mortgage  Financing  borrowings
outstanding  during the periods.  The weighted  average interest expense rate on
Mortgage Certificate related borrowings  approximated 5.8%, 6.0% and 6.0% during
the years  ended  October  30,  1999,  October  31,  1998 and  November 1, 1997,
respectively.

         Year 2000
         ---------

The Company has contacted  significant service providers to determine the extent
to which the Company may be vulnerable to third-party Year 2000 issues. Based on
current information, management believes that modifications necessary to operate
and  effectively  manage the Company will be performed by the Year 2000 and that
related  costs  will not have a  material  impact on the  Company's  results  of
operations, cash flow or financial condition of future periods.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------

The Company's  investment in mortgage  certificates  is a market risk  sensitive
instrument relative primarily to interest rate risk. The investment represents a
pass-through  and  participation  certificate  issued by the  Federal  Home Loan
Mortgage  Corporation in 1990 with an original  principal of  approximately  $11
million and a 2020 maturity date. The Company's average investment  approximated
$3.3  million,  $4.1  million  and $4.9  million  during the fiscal  years ended
October  30,  1999,  October 31, 1998 and  November 1, 1997,  respectively.  The
investment in mortgage  certificates  has declined over the past three years due
primarily to  principal  repayments  from the


                                       6
<PAGE>


underlying  mortgages  within  the  mortgage  certificate  pool.   Specifically,
principal  repayments have  approximated  15% to 20% of the mortgage  investment
during each of the past three fiscal years. The rate of interest to be earned on
the mortgage  certificates is adjustable  based on general interest rate trends,
with  certain  maximums,  including  limits of 2% for annual  rate  changes  and
interest rate maximums of  approximately  13%.  Interest rates on the underlying
mortgages are adjusted, as applicable, throughout the year. The weighted average
interest income rates earned on the mortgage certificates  approximated 7.3% and
7.7% during fiscal 1999 and 1998, respectively, and the interest rate at October
30, 1999 approximated 7.0%. The investment in mortgage certificates and interest
rate at October 30, 1999 approximated $3.1 million and 7.0%, respectively.

Mortgage certificates are financed with borrowings from an investment bank, such
borrowing  being  secured by the  mortgage  certificates  and payable on demand.
Borrowings  bear  interest  at rates  generally  approximating  the three  month
Federal Funds rate plus 25 to 75 basis points.  The Company's average borrowings
approximated $2.9 million, $3.7 million and $4.6 million during the fiscal years
ended October 30, 1999, October 31, 1998 and November 1, 1997, respectively. The
borrowings  have  declined  over the past three years due  primarily to applying
principal  repayments from the mortgage  certificates to repay  borrowings.  The
weighted average interest expense rates incurred on the borrowings  approximated
5.8% and 6% during the years  ended  October  30,  1999 and  October  31,  1998,
respectively,  and the  interest  rate at October  30, 1999  approximated  5.9%.
Borrowings  and related  interest  rate at October 30,  1999  approximated  $2.6
million and 5.9%, respectively.

Generally,  a decline in interest  rates would  result in a decrease in interest
rates  earned on mortgage  certificates  as  underlying  mortgages  would likely
adjust interest rates down,  however such adjustment  would occur throughout the
year. Interest rates paid on borrowings would likely decline on a more immediate
basis.  The  timing of when  interest  income  and  expense  rates are  effected
historically has resulted in a short-term margin  improvement  during periods of
interest  rate  declines.   The  market  price  of  mortgage   certificates  has
historically  increased as interest  rates  decline.  During periods of interest
rate increases, the opposite is the case.

In the  Company's  circumstances,  whereby  its  future  operating  results  and
financial  condition  are  primarily  dependent  upon  actions  to be taken with
respect to the $5.26  million of 12 1/8%  Senior  Notes and $22.92  million of 7
1/8% Debentures,  both of which are in default, and its financial statements are
presented on a liquidation  basis utilizing a liquidation  date in October 2000,
additional quantitative and qualitative disclosures about market risk, including
projections of future cash flows, have not been presented.


                                       7
<PAGE>


ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------

INDEX TO FINANCIAL STATEMENTS
-----------------------------

   Financial statements                                                     Page
   --------------------                                                     ----
   Report of Independent Accountants                                           9
   Consolidated Statements of Net Liabilities                                 10
   Consolidated Statements of Changes of Net Liabilities                      11
   Consolidated Statements of Cash Flows                                      12
   Notes to Financial Statements                                              13

   Financial statement schedules
   -----------------------------

   Financial statement schedule  information is presented in the financial
statements.

SUPPLEMENTARY FINANCIAL INFORMATION

         Selected quarterly financial data (unaudited)                        19
         ---------------------------------------------


                                       8
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS




To the Board of Directors and
Stockholders of PSS, Inc.


We have audited the accompanying  consolidated  statements of net liabilities in
liquidation of PSS, Inc. and its subsidiaries as of October 30, 1999 and October
31, 1998, and the related consolidated  statements of changes in net liabilities
and of cash flows in liquidation  for the years ended October 30, 1999,  October
31, 1998 and November 1, 1997. These financial statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As described in Note 2 of the consolidated  financial statements,  as of October
28, 1995, the Company adopted the liquidation basis of accounting.

In our  opinion,  the  consolidated  financial  statements  referred to in first
paragraph present fairly, in all material  respects,  the financial  position of
PSS, Inc. and its subsidiaries at October 30, 1999 and October 31, 1998, and the
changes in their net  liabilities  and their cash flows in  liquidation  for the
years  ended  October 30,  1999,  October  31,  1998 and  November  1, 1997,  in
conformity with generally  accepted  accounting  principles applied on the basis
described in the preceding paragraph.


/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP

Seattle, Washington
December 15, 1999


                                       9
<PAGE>

<TABLE>
<CAPTION>

                                    PSS, INC.
                   Consolidated Statements of Net Liabilities
                               (Liquidation Basis)
                             (thousands of dollars)

                                                                           October 30,       October 31,
                                                                               1999             1998
                                                                           ----------        ---------
<S>                                                                        <C>               <C>
Cash and short-term investments                                                  $172             $239

Investment in mortage certificates                                              3,061            3,700

Accrued interest receivable                                                        35               45
                                                                           ----------        ---------
             Total Assets                                                       3,268            3,984
                                                                           ----------        ---------

Borrowings under mortgage certificate financing agreement                       2,641            3,270
Accounts payable and accrued liabilities                                          156              177
Reserve for estimated costs during period of liquidation                           62              102
PNS 12 1/8% senior notes                                                        5,258            5,258
Accrued interest payable on PNS notes                                           3,060            2,424
Reserve for interest on PNS notes during period of liquidation                    636              636
PSS 7 1/8% debentures                                                          22,920           22,920
Accrued interest payable on PSS debentures                                      8,652            7,024
Reserve for interest on PSS debentures during period of liquidation             1,629            1,629
                                                                           ----------        ---------

        Total Liabilities                                                      45,014           43,440
                                                                           ----------        ---------

        Net Liabilities                                                      ($41,746)        ($39,456)
                                                                           ==========        ==========
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                       10
<PAGE>

<TABLE>
<CAPTION>

       PSS, INC.
              Consolidated Statements of Changes in Net Liabilities
                               (Liquidation Basis)
                             (thousands of dollars)

                                                                                Year Ended
                                                                                ----------

                                                                October 30,    1October 31,   November 1,
                                                                   1999            1998          1997
                                                                   ----------------------------------
<S>                                                            <C>             <C>           <C>
Investment income                                                 $ 156           $ 270          $446

Interest expense                                                 (2,432)         (2,490)       (2,546)

General and administrative expense                                  (54)            (94)         (104)

Decrease in reserve for estimated costs
     and interest during period of liquidation                    2,330           2,314         2,204

Provision for estimated costs and interest
     during period of liquidation                                (2,290)         (2,265)       (2,265)
                                                                 ------          ------        ------

Increase in Net Liabilities                                    $ (2,290)       $ (2,265)     $ (2,265)
                                                                ========        ========      ========


</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       11
<PAGE>


<TABLE>
<CAPTION>


                                    PSS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (thousands of dollars)


                                                                                  Year ended

                                                                             October       October     November
                                                                             30, 1999     31, 1998     1, 1997
                                                                             ---------------------------------
Cash flows from operating activities:
<S>                                                                          <C>          <C>          <C>
     Increase in Net Liabilities                                                $(2,290)   $(2,265)    $(2,265)

     Decrease (increase) in unrealized appreciation                                  84         47         (64)

     Adjustments to reconcile to net cash flows
              from operating activities:

     Increase (decrease) in estimated costs and interest

              during period of liquidation                                          (40)       (49)         61

     Increase in accrued interest payable                                         2,264      2,264       2,265

     Other                                                                          (11)        20          34
                                                                                    ----        --          --

Net cash provided by operating activities                                            7          17          31
                                                                                     -          --          --
Cash flows from investing activities:

     Principal repayments on mortgage certificates                                  555         712        855
                                                                                    ---         ---        ---

Net cash provided by investing activities                                           555         712        855
                                                                                    ---         ---        ---

Cash flows from financing activities:

     Repayment of mortgage certificate borrrowings                                 (629)       (803)       (849)
                                                                                   ----        ----        ----

Net cash used by financing activities                                              (629)       (803)       (849)
                                                                                   ----        ----        ----

Net increase (decrease) in cash and short-term investments                          (67)        (74)         37

     Cash and short-term investments at beginning of year                           239         313       $ 276
                                                                                    ---         ---       -----

     Cash and short-term investments at end of year                               $ 172       $ 239       $ 313
                                                                                  =====       =====       =====

</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       12
<PAGE>


                                    PSS, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - THE COMPANY
--------------------

The consolidated financial statements of PSS, Inc. ("PSS"),  includes its direct
subsidiary  PNS  Inc.   ("PNS")  and  its  subsidiary   PSSC,   Inc.   ("PSSC"),
collectively,  the "Company".  The Company is principally owned by Seacorp, Inc.
("Seacorp") and Zimmerman  Retailing Group Limited ("Zimco").  Seacorp and Zimco
own approximately 41% and 13%, respectively, of the Company's outstanding common
stock, with the remainder publicly owned.

The Company,  through PSSC, owns a pass-through  and  participation  certificate
issued by the Federal Home Loan Mortgage  Corporation  backed by whole pool real
estate  mortgages  ("Mortgage  Certificates"),  and as a  result,  is  primarily
engaged in the business of owning  mortgages and other liens on and interests in
real  estate.  The  principal  obligations  of the Company  are PSSC  borrowings
secured by Mortgage Certificates, PNS 12-1/8% Senior Subordinated Notes due July
15, 1996 (the "Senior Notes") and PSS 7-1/8% Convertible Debentures due July 15,
2006 (the "Debentures").

The Company  failed to pay the interest due January 15 and July 15, 1995,  1996,
1997,  1998 and 1999 on its Debentures and such default  continues.  The trustee
for the Debentures  has indicated to the holders of the Debentures  that it does
not intend to accelerate payment of the Debentures  "because it is unlikely that
the  Debenture  holders  would  receive  any  payment  if  the  Debentures  were
accelerated."

PNS failed to pay interest  due on July 15, 1995,  January 15, 1996 and July 15,
1996 and  failed to pay the  outstanding  principal  on its Senior  Notes  which
became  due on July 15,  1996.  All such  defaults  continue.  In June  1997 the
Company was advised by the trustee for the Senior Notes that,  after  concluding
that the Company lacks  sufficient  assets to pay the Senior Notes,  the trustee
had  petitioned a district  court for the State of  Minnesota  to authorize  and
instruct it to refrain from pursuing any default  remedy against the Company and
to  discharge  it as  trustee,  and that the Court  had  granted  the  trustee's
requests.

At October 30, 1999, the Company had assets of  approximately  $3.27 million and
liabilities,  other  than the  Senior  Notes and  Debentures  including  accrued
interest and liquidation costs, of approximately $2.8 million, thus having a net
difference of approximately  $470,000  available for holders of Senior Notes and
Debentures. At October 30, 1999, approximately $5.26 million of Senior Notes and
$22.92  million of  Debentures  remain  outstanding  and annual  interest on the
principle approximates $636,000 and $1.63 million,  respectively.  The Company's
future  operating  results,  liquidity,  capital  resources and requirements are
primarily  dependent  upon  actions  which may be taken by the  trustee  for the
Debentures to collect amounts due thereunder,  the payment of amounts due on and
purchases of Senior Notes and Debentures and, to a lesser extent,  interest rate
fluctuations as they relate to the market value of Mortgage  Certificates and to
the  spread of  interest  income  therefrom  over  interest  expense  on related
borrowings.  The Company is exclusively invested in Mortgage Certificates,  and,
accordingly, is presently relying solely on such as its source


                                       13
<PAGE>

of cash funds.  It has not been determined what course of action the Company may
pursue with respect to debt service on the Senior Notes and Debentures.

NOTE 2 - Liquidation Basis of Accounting
----------------------------------------

Effective  October 28,  1995,  the  Company  adopted  the  liquidation  basis of
accounting for presenting its consolidated  financial statements.  This basis of
accounting is considered appropriate when, among other things,  liquidation of a
company  appears  imminent  and the  net  realizable  value  of its  assets  are
reasonably  determinable.  Under this basis of  accounting,  cash and short term
investments,   investments  in  mortgage   certificates   and  accrued  interest
receivable are stated at their net realizable value, net deferred tax assets are
stated at zero,  liabilities  are stated at contractual  face value with accrued
interest  through  the  liquidation   date,  and  estimated  costs  through  the
liquidation date are provided to the extent reasonably determinable.

The net effect of converting  from the going  concern  basis to the  liquidation
basis of accounting as of October 28, 1995 was an increase in net liabilities of
approximately  $1.7  million,  as a result  of  recording  estimated  costs  and
interest expense to the liquidation date. No adjustment to the reported value of
assets was required.  Under the  liquidation  basis,  the Company accrued future
liabilities  and  estimated  future net revenues  from interest and other income
associated with mortgage certificates to the liquidation date.

A summary of significant  estimates and judgments utilized in preparation of the
consolidated financial statements on a liquidation basis follows:

         o        The Company's next fiscal year end, October 28, 2000, has been
                  utilized  as the  liquidation  date for the  October  30, 1999
                  financial statements, the October 30, 1999 fiscal year end was
                  utilized  as the  liquidation  date for the  October  31, 1998
                  financial statements, and the October 31, 1998 fiscal year end
                  was utilized as the liquidation  date for the November 1, 1997
                  financial statements.

         o        Mortgage Certificates are stated at estimated market value and
                  related interest receivable at face value.

         o        Deferred  tax  assets  relating  to net  operating  loss carry
                  forwards, net of valuation allowance, are stated at zero.

         o        Borrowings secured by Mortgage Certificates are stated at face
                  value, which approximates market value.

         o        The  reserve  for   estimated   costs  during  the  period  of
                  liquidation   represents  estimates  of  future  costs  to  be
                  incurred through the liquidation date.

         o        Net  estimated  interest  income  to  be  earned  on  Mortgage
                  Certificates   in  excess  of  interest   expense  on  related
                  borrowings has been  considered in determining the reserve for
                  estimated costs during the period of liquidation.

                                       14
<PAGE>


NOTE 2 - LIQUIDATION BASIS OF ACCOUNTING (CONTINUED)
----------------------------------------------------

         o        Senior Notes and Debentures and related  interest  accrued are
                  stated at contractual face value.

         o        The  reserve  for  interest  during the period of  liquidation
                  represents  interest on Senior  Notes and  Debentures  for the
                  period  from the date of the  Consolidated  Statements  of Net
                  Liabilities to the estimated liquidation date, as applicable.

All of the above  estimates  and judgments may be subject to change as facts and
circumstances   change.   Similarly,   actual  costs  and  expenses  may  differ
significantly  depending on a number of factors,  particularly the length of the
liquidation period.

During the fiscal years ended October 30, 1999, October 31, 1998 and November 1,
1997 the  Company's  actual net  excess of costs  incurred  over net  investment
income reasonably approximated the recorded reserve for such years.

Presentation  of per common  share  information  on a  liquidation  basis is not
considered meaningful and has been omitted.

NOTE 3 - Summary of Accounting Principles
-----------------------------------------

Cash and Short-Term Investments
-------------------------------

Cash and short-term investments,  having maturities of three months or less when
purchased, are primarily comprised of interest-bearing short-term bank deposits.

Investment in Mortgage Certificates
-----------------------------------

The  investment in Mortgage  Certificates  is recorded at estimated  fair value,
based upon market  prices  obtained from an  investment  bank.  Gains and losses
realized  upon sale of Mortgage  Certificates  and  unrealized  gains and losses
resulting from mark-to-market adjustments are included in investment income.

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 amounts.


                                       15
<PAGE>


NOTE 4 - INVESTMENT IN MORTGAGE CERTIFICATES
--------------------------------------------

Mortgage  Certificates  are financed with  borrowings  provided by an investment
bank pursuant to a letter  agreement  (the  "Financing  Agreement").  Borrowings
pursuant to the Financing  Agreement (the "Mortgage  Financing")  are secured by
the Mortgage  Certificates.  In the event of a decrease in the aggregate  market
value of the  Mortgage  Certificates  below the  requirements  of the  Financing
Agreement,  additional  collateral is required.  Principal and interest payments
received on Mortgage  Certificates are maintained in an interest earning account
and are  released to the  Company,  at its  request,  after all interest and any
"mark-to-market" indebtedness then due have been paid. The Mortgage Financing is
payable on demand and generally bears interest at rates  approximating the three
month  Federal  Funds  Rate  plus  25 to 75  basis  points.  Mortgage  Financing
borrowings  and related  interest  rates  approximated  $2.6 million and 5.9% at
October 30, 1999 and $3.3  million  and 6% at October  31,  1998,  respectively.
During the years ended October 30, 1999,  October 31, 1998 and November 1, 1997,
the average balance of mortgage related borrowings outstanding approximated $2.9
million, $3.7 million and $4.6 million, and the weighted annual average interest
expense rates approximated 5.8%, 6.0% and 6.0%, respectively.

At October 30, 1999, the interest rate to be earned on the Mortgage Certificates
approximated  7.0%.  The  rate  of  interest  on the  Mortgage  Certificates  is
adjustable  based  on  general  interest  rate  trends  with  certain  maximums,
including  limits of 2% for annual  interest  rate  changes  and  interest  rate
maximums of approximately 13%. The weighted average interest income rates earned
on the Mortgage Certificates  approximated 7.3%, 7.7% and 7.7%, during the years
ended October 30, 1999, October 31, 1998 and November 1, 1997, respectively.

NOTE 5 - SUBORDINATED DEBT
--------------------------

Subordinated  debt and related  interest payable through the balance sheet dates
are summarized as follows (thousands of dollars):

                                            October 30,      October 31,
                                              1999               1998
                                              ----               ----

PNS 12-1/8% Senior Notes                   $  5,258          $   5,258
Interest payable on Senior Notes              3,060              2,424
                                             ------             ------
                                           $  8,318          $   7,682
                                             ======             ======

PSS 7-1/8% Debentures                      $ 22,920           $ 22,920
Interest payable on Debentures                8,652              7,024
                                             ------             ------
                                           $ 31,572           $ 29,944
                                             ======             ======




                                       16
<PAGE>


NOTE 5 - SUBORDINATED DEBT (CONTINUED)
--------------------------------------

In July 1986,  the Company  completed  three public  securities  offerings  (the
"Public  Offerings").  PNS issued $150 million of Senior Notes and PSS sold 3.25
million  shares of its  common  stock and  issued  $150  million  of  Debentures
convertible  to PSS common  stock at $19.68 per share (the  conversion  price is
subject to adjustment  in the case of  dilution).  PSS invested the net proceeds
from its two offerings in PNS, in the form of a  contribution  to capital and an
inter-company  debenture  between PNS and PSS in the amount of $150 million with
substantially   the  same  interest  rate  and  redemption   provisions  as  the
Debentures.  The indenture  governing the Senior Notes  restricts the ability of
PNS and its  subsidiaries  to pay  dividends or make other  payments to PSS. The
Senior Notes indenture permits PNS to pay dividends to PSS in amounts sufficient
to enable PSS to meet its obligations on the Debentures when due,  provided that
no event of default (as defined in the Senior Notes  indenture) has occurred and
is continuing. PNS, like its parent company, has a stockholder's deficit.

The Senior Notes and Debentures provide for semiannual interest payments and are
unsecured.  Principal  repayment on the Senior Notes was due in full on July 15,
1996. The Debentures  require annual  principal  payments of  approximately  $11
million commencing July 15, 1996 until July 15, 2006 when the balance is due; by
utilizing Debentures which the Company has previously acquired, there will be no
scheduled maturity payments required before 2006.

The indentures for the Senior Notes and Debentures  contain certain  restrictive
covenants which, among other things,  limit dividends and similar  distributions
to  stockholders,  essentially  prohibit  redemption's  and  retirements  of the
Company's equity, limit the Company's ability to incur debt, and restrict action
and  agreements  by the  Company  that  would  prohibit  dividends  and  similar
distributions to the Company from its subsidiaries.


NOTE 6 - Income Taxes
---------------------

Due to losses for each of the years ended October 30, 1999, October 31, 1998 and
November 1, 1997, there was no provision for income taxes recorded.

As  of  October  30,  1999,   for  income  tax  purposes,   net  operating  loss
carry-forwards,  which begin to expire in 2001,  approximate  $145  million.  As
Company  management  cannot  determine  that it is more likely than not that the
Company will  receive the benefit of deferred tax assets  relating to these loss
carry-forwards,  a valuation  allowance equal to the deferred tax asset has been
established.  If certain  substantial  changes in the Company's ownership should
occur,  there would be an annual limitation on the amount of the  carry-forwards
which could be utilized.


                                       17
<PAGE>


NOTE 7 - STOCKHOLDERS' DEFICIT
------------------------------

The Company's  common stock  consists of 60 million  authorized  shares,  $1 par
value,  19,473,728 shares of which are issued and outstanding.  The Company also
has 10 million authorized shares of preferred stock, $1 par value, none of which
have been issued.  There have been no changes in common stock or additional paid
in capital  since  October 29, 1994.  Effective  October 28, 1995 as a result of
presenting  financial statements on the liquidation basis, changes in components
of stockholders' deficit are not presented.


                                       18
<PAGE>


NOTE 9 - Selected Quarterly Financial Data (Unaudited)
------------------------------------------------------

Selected quarterly financial data are as follows (thousands of dollars):
<TABLE>
<CAPTION>

                                                                      Fiscal Quarters Ended
                                                                      ---------------------
                                                       October 31,   August 1,    May 2,      January 31,
                                                          1998         1998       1998          1998
                                                          ------------------------------------------
<S>                                                    <C>            <C>         <C>          <C>
Decrease in reserve for estimated costs and
interest during period of liquidation                  $  578         $ 611       $ 567        $ 558

Provision for estimated costs and interest
during period of liquidation                           (2,265)          ---         ---          ---

Increase in Net Liabilities                            (2,265)          ---         ---          ---


                                                                      Fiscal Quarters Ended
                                                                      ---------------------

                                                      October 30,   July 31,      May 1,     January 30,
                                                          1999         1999       1999          1999
                                                          ------------------------------------------
Decrease in reserve for estimated costs and
interest during period of liquidation                  $  570        $ 604       $ 580         $ 576

Provision for estimated costs and interest
during period of liquidation                           (2,290)         ---         ---           ---

Increase in Net Liabilities                            (2,290)         ---         ---           ---

</TABLE>


ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------

None.


                                       19
<PAGE>

                                    PART III
                                    --------

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------

The  following  table  sets forth  certain  information  concerning  each of the
directors and executive officers of the Company.  All directors will serve until
the next Annual Meeting of  Shareholders  and until his respective  successor is
elected or appointed. Each director of the Company is also a director of PNS.

<TABLE>
<CAPTION>


                                                              Present Principal
Name and Position                                             Occupation or Employment
 With the Company                   Age                       and Five Year Employment History
 ----------------                   ---                       --------------------------------
<S>                                 <C>                       <C>
Mark Todes                          44                        President and Director of the Company since
President and Director                                        May 1996. President of City Realty, Inc.
                                                              since May 1996 and Vice President of 200
                                                              West Holdings, Ltd. (a real estate holding
                                                              company and a subsidiary of City Realty) for
                                                              more than 5 years prior thereto. Vice
                                                              President of Seacorp since July 1996.

Gerald P. Nathanson                 64                        Director of the Company since October 1986.
Director                                                      During 1996, Mr. Nathanson, a private
                                                              investor, left the employ of L. Luria (a
                                                              retail company). He served as Chief
                                                              Executive Officer of US Holographics
                                                              (marketing company for holographic products)
                                                              from April 1992 to December 1995.

Carite L. Torpey
Vice President, Secretary           51                        Vice President, Secretary and Treasurer of
and Treasurer                                                 the Company since July 1997 and Assistant
                                                              Secretary for more than 5 years prior
                                                              thereto. Vice President of TG Services, Inc.
                                                              since July 1998 and Assistant Vice President
                                                              and Assistant Secretary since July 1996.
                                                              Employed by The Trump Group (a private
                                                              investment company) for more than 5 years
                                                              prior thereto.
</TABLE>


ITEM 11 - EXECUTIVE COMPENSATION
--------------------------------

Compensation of Directors and Executive Officers

The Company has no employees.  There are currently no  arrangements  under which
any officer or director of the Company will receive  compensation for serving as
such; however, other arrangements may be made in the future.


                                       20
<PAGE>


ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------

The following table sets forth, as of December 1, 1999,  information  concerning
the beneficial ownership of the common stock of the Company by (i) persons known
by the Company to own beneficially more than 5% of its outstanding common stock,
(ii) each of the  directors of the Company and (iii) all directors and executive
officers of the Company as a group.  Except as set forth in the footnotes to the
table, the stockholders  have sole voting and investment power over such shares.
Unless otherwise specified,  the address for all directors is the address of the
Company's executive offices.  The address for Messrs.  Julius and Eddie Trump is
the address set forth below for Seacorp.  The address for Mr. Christopher Podoll
is the address set forth below for Zimmerman Retailing Group Limited.

                                            Amount and Nature
                                              of Beneficial            Percent
Name                                            Ownership             of Class
----                                            ---------             --------
Christopher Podoll (a)                          2,391,079              12.28%
Zimmerman Retailing Group Limited (a)           2,391,079              12.28%
 P.O. Box 948
 Route 2, Pleasant Plain Road
 Fairfield, IA 52556
Seacorp, Inc. (b)                              8,014,705                41.1%
 P.O. Box 2573
 Seattle, WA 98111
Eddie Trump (b)                                8,014,705                41.1%
Julius Trump (b)                               8,014,705                41.1%
All Directors and Executive Officers as
 a Group (2 persons)                               0                    0%


(a)      According to the Schedule  13D, as amended (the "Zimco  Amended  13D"),
         filed with the Securities and Exchange  Commission (the  "Commission"),
         Zimco is an Iowa limited partnership, the sole general partner of which
         is Soma 2 L. P., a Delaware limited  partnership ("Soma 2"). Soma 2 has
         as its general partner ZRG Co., Inc., a Delaware  corporation  ("ZRG"),
         for which Mr. Podoll serves as the sole executive officer and director.
         Mr. Podoll is a manager of investments of the William Zimmerman family.
         Amounts  include 8,079 shares  issuable  upon  conversion of Debentures
         beneficially  owned by Zimco.  Amounts do not include the  ownership of
         6,000 shares and 3,810 shares  issuable  upon  conversion of Debentures
         owned by the Surya  Financial Inc.  Retirement  Plan, a retirement plan
         for the  benefit of  various  employees  of Surya  Financial  Inc.,  an
         affiliate of Zimco.

(b)      According to the Schedule 13D, as amended, filed with the Commission by
         Julius Trump, Eddie Trump and Seacorp,  Seacorp is, and Messrs.  Julius
         and  Eddie  Trump  may be  deemed to be,  the  beneficial  owner(s)  of
         8,014,705  shares of common stock.  Such amount  includes

                                       21
<PAGE>

         8,079 shares issuable upon conversion of Debentures beneficially owned
         by an affiliate of Seacorp. As set forth in the Schedule 13D, Seacorp
         is a Delaware corporation and does not presently have any business
         other than the ownership of shares of common stock of the Company.
         Seacorp is indirectly controlled by Messrs. Julius and Eddie Trump.


ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

None


                                       22
<PAGE>


                           PART IV. OTHER INFORMATION
                           --------------------------

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
----------------------------------------------------------------
FORM 8-K
--------

<TABLE>
<CAPTION>

(a)      See the section entitled "Index to Financial Statements" appearing
         under Item 8 of this Annual Report on Form 10-K.

(b)      Not applicable

(c)      Exhibits:

<S>                                                           <C>
         3.1      Restated Certificate of                     Incorporated by referenced from Exhibit 3.1
                  Incorporation of the Registrant             to the Registration Statement on Form S-1
                                                              (File No. 33-5560) of the Company (the
                                                              "Registration Statement").

         3.2      Certificate of Amendment of                  Incorporated by reference from Exhibit 3.2
                  Certificate of Incorporation of              to the Registration Statement.
                  the Registrant

         3.3      Certificate  of Amendment of                 Incorporated  by reference from Exhibit 3.1
                  Certificate of  Incorporation                to Quarterly Report on Form 10-Q for the
                  of the Registrant                            quarter ended July 30, 1988.

         3.4      Certificate  of Amendment of                 Incorporated  by reference  from Exhibit 3.4
                  Certificate of  Incorporation                to the Annual Report on Form 10-K for the
                  of the Registrant                            year ended October 31, 1992.

         3.5      By-Laws of the Registrant                    Incorporated by reference from Exhibit 3.3
                                                               to the Registration Statement.

         4.1      Indenture between the Registrant             Incorporated by reference from Exhibit 4.1
                  Inc. and United States Trust                 to the Registration Statement.
                  Company of New York,  as Trustee,
                  relating to the 7-1/8% Con-
                  veritable Debentures due July 15, 2006
                   (including the form of
                  Convertible Debenture).

         4.2      First  Supplemental  Indenture be-            Incorporated  by reference from  Exhibit 4.1
                  tween the  Registrant  and                    to the  Quarterly Report on Form 10-Q for
                  United States Trust Company of                quarter ended April 30,  1988.





                                       23
<PAGE>
                  New York as  Trustee, relating
                  to the 7-1/8% Convertible Debentures
                  due July 15, 2006.

         4.3      Indenture between PNS Inc. and                Incorporated by reference from Exhibit 4.1
                  Norwest Bank Minneapolis, Nat-                to the Registration Statement on Form S-1
                  ional Association as Trustee,                 (File No. 33-5591) of PNS Inc.
                  relating to the 12-1/8% Senior
                  Subordinated Notes due July 15,
                  1996 (including the form of
                  Senior Subordinated Note.

         4.4      First  Supplemental  Indenture be-             Incorporated  by reference from  Exhibit  4.2
                  tween PNS Inc.,  and  Norwest  Bank            to the Quarterly   Report  on  Form  10-Q  for
                  Minnesota,  National  Association              the  quarter  ended April 30,  1988.
                  as Trustee, relating to the 12-1/8%
                  Senior Subordinated Notes due July 15, 1996.

10.5              Letter Agreement dated                         Incorporated by reference from Exhibit (i)
                  February 9, 1990 by and among                  to Quarterly Report on form 10-Q for the
                  PSSC Inc. and Bear Stearns &                   quarter ended February 3, 1990.
                  Co., Inc. for the purchase and the
                  financing of adjustable-rate
                  mortgages.

22.1              Subsidiaries of the Registrant.                Incorporated by reference from Exhibit 22. to
                                                                 the Annual Report on Form 10-K for the
                                                                 year ended October 31, 1992.
</TABLE>


                                       24
<PAGE>


                                   SIGNATURES
                                   ----------

Pursuant to the  requirements of Section 13 or 15(d) 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.


                                             PSS, INC.
                                            (Registrant)

Date:  January 28, 2000                    By: /s/ MARK TODES
                                              --------------------------------
                                              Mark Todes, President and Director


                                       25
<PAGE>


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

         Date                 Title            Signature
         ----                 -----            ---------

January __, 2000          Director
                                               ---------------------------------
                                               Gerald Nathanson


January 28, 2000          Director             /s/ Mark Todes
                                               ---------------------------------
                                               Mark Todes


                                       26