U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB



      (Mark One)

[ X ] Quarterly report pursuant to Section 13 or 15(d) of the
      Securities Exchange Act of 1934

      For the quarterly period ended September 30, 1998

[   ] Transition report under Section 13 or 15(d) of the Exchange Act of 1934

      For the transition period from  to

      Commission file number 1-9224


                              HELMSTAR GROUP, INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

                DELAWARE                               13-2689850
-----------------------------------------    ------------------------------
      (State or Other Jurisdiction of               (I.R.S. Employer
       Incorporation or Organization)              Identification No.)

             2 World Trade Center, Suite 2112, New York, N.Y. 10048
  ---------------------------------------------------------------------------
                    (Address of Principal Executive Offices)

                                  212-775-0400
                (Issuer's Telephone Number, Including Area Code)

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                              Yes  [ X ]   No  [   ]

         The number of shares  outstanding  of each of the  issuer's  classes of
common equity, as of the latest practicable date.

         The number of shares  outstanding  of each of the  issuer's  classes of
common equity, as of the latest practicable date.

           Class                    Outstanding at October 31, 1998
-----------------------------       -------------------------------
Common stock - par value $.10                5,453,373 shares
<PAGE>
PART I
FINANCIAL INFORMATION


Item l.  Financial Statements.

         The following consolidated financial statements of Helmstar Group, Inc.
and subsidiaries  (collectively referred to as the "Company," unless the context
requires otherwise) are prepared in accordance with the rules and regulations of
the  Securities  and  Exchange  Commission  for  Form  10-QSB  and  reflect  all
adjustments  (consisting of normal recurring accruals) and disclosures which, in
the opinion of management, are necessary for a fair statement of results for the
interim periods  presented.  It is suggested that these financial  statements be
read in conjunction with the financial  statements and notes thereto included in
the Company's Form 10-KSB for the fiscal year ended December 31, 1997, which was
filed with the Securities and Exchange Commission.

         The results of  operations  for the three  months and nine months ended
September 30, 1998 are not necessarily  indicative of the results to be expected
for the entire fiscal year.





<PAGE>
<TABLE>
<CAPTION>
                     HELMSTAR GROUP, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS

                                                  September 30,     December 31,
                                                      1998              1997 
                                                 ------------      ------------
                                                  (Unaudited) 
          ASSETS
<S>                                              <C>               <C>         
Cash and cash equivalents ..................     $    690,369      $    802,352
Short term investments .....................       59,708,081        71,174,934
Marketable securities ......................        7,629,502         7,234,862
Joint ventures .............................                            185,864
Land .......................................       10,097,315
Construction in progress ...................          327,218            11,000
Deferred financing costs, less
         accumulated amortization of
         $83,146 in 1998 and $11,000
         in 1997 ...........................        1,684,446         1,663,209
Furniture, equipment and
         leasehold improvements - at cost,
         less accumulated depreciation and
         amortization of $284,311 in
         1998 and $242,565 in 1997 .........          225,588           106,128
Other assets ...............................          636,708           640,403
                                                 ------------      ------------

                  TOTAL ....................     $ 80,999,227      $ 81,818,752
                                                 ============      ============

         LIABILITIES

Bonds payable ..............................     $ 72,750,000      $ 72,750,000
Accrued expenses and other
         liabilities .......................          979,559         1,509,201
Income taxes payable .......................           72,090            59,737
                                                 ------------      ------------
                  Total liabilities ........       73,801,649        74,318,938
                                                 ------------      ------------

Due to preferred member ....................          750,000           750,000
                                                 ------------      ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                     HELMSTAR GROUP, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (continued)

                                                  September 30,     December 31,
                                                      1998              1997 
                                                 ------------      ------------
                                                  (Unaudited) 

                      STOCKHOLDERS' EQUITY
<S>                                              <C>               <C>         
Common stock - authorized
         10,000,000 shares, par value
         $.10; issued 6,749,600 shares .....          674,960           674,960
Paid-in surplus ............................       14,984,510        14,984,510
(Accumulated deficit) ......................       (6,187,364)       (5,981,058)
                                                 ------------      ------------

                  Total ....................        9,472,106         9,678,412

Less treasury stock, at cost -
         1,296,227 shares in 1998 and
         1,233,227 shares in 1997 ..........       (3,024,528)       (2,928,598)
                                                 ------------      ------------

                  Total stockholders' equity        6,447,578         6,749,814
                                                 ------------      ------------

                  TOTAL ....................     $ 80,999,227      $ 81,818,752
                                                 ============      ============

</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).
<PAGE>
<TABLE>
<CAPTION>
HELMSTAR GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

                                                     Three Months Ended                  Nine Months Ended
                                                           Sept 30,                          Sept 30,
                                                 ----------------------------      ----------------------------
                                                     1998            1997             1998              1997
                                                 -----------      -----------      -----------      -----------
<S>                                              <C>              <C>              <C>              <C>        
Revenues:
         Profit from joint ventures ........     $                $ 5,377,474      $     9,527      $ 5,741,325
         Financial consulting fees .........                           60,000                           150,000
         Interest income ...................         942,442           65,341        3,071,594          170,351
         Investment (loss) income ..........         717,291         (489,044)       1,630,794         (435,644)
         Other income ......................           1,500                             1,500
                                                 -----------      -----------      -----------      -----------
                  Total Revenues ...........       1,661,233        5,013,771        4,713,415        5,626,032
                                                 -----------      -----------      -----------      -----------

Expenses:
         Compensation  and related costs ...         352,687          314,345          926,565          943,091
         Occupancy  cost ...................          46,357           39,920          133,726          123,371
         General  and administrative .......         115,307           66,299          297,405          302,372
         Professional fees and
                  litigation expenses ......          93,191           42,785          221,218          131,982
         Interest ..........................       1,086,435           12,641        3,427,141           82,260
                                                 -----------      -----------      -----------      -----------

                  Total Expenses ...........       1,693,977          475,990        5,006,055        1,583,076
                                                 -----------      -----------      -----------      -----------

Profit (loss) before taxes .................         (32,744)       4,537,781         (292,640)       4,042,956

Income tax (benefit) .......................        (110,271)         422,000          (86,334)         425,016
                                                 -----------      -----------      -----------      -----------
Net profit (loss) from
         continuing operations .............          77,527        4,115,781         (206,306)       3,617,940
Loss from discontinued operations ..........                         (383,513)                         (986,370)
                                                 -----------      -----------      -----------      -----------

NET INCOME (LOSS) ..........................     $    77,527      $ 3,732,268      $  (206,306)     $ 2,631,570
                                                 ===========      ===========      ===========      ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HELMSTAR GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (continued)

                                                     Three Months Ended                  Nine Months Ended
                                                           Sept 30,                          Sept 30,
                                                 ----------------------------      ----------------------------
                                                     1998            1997             1998              1997
                                                 -----------      -----------      -----------      -----------
<S>                                              <C>              <C>              <C>              <C>        
Per common share - basic and diluted:

Income (loss) from
   continuing operations ...................     $       .01      $       .74      $      (.04)     $       .65
(Loss) from discontinued operations ........                             (.07)                             (.18)
                                                -----------       -----------      -----------      -----------

Net income (loss) ..........................     $       .01      $       .67      $      (.04)     $       .47
                                                 ===========      ===========      ===========      ===========

Weighted average number of
         common shares outstanding - basic .       5,473,373        5,510,123        5,501,371        5,516,233
Effect of dilutive employee
         stock options .....................          71,000           25,000                            25,000
Weighted average number of                       -----------      -----------      -----------      -----------
         common shares - diluted
         income (loss) per share ...........       5,544,373        5,535,123        5,501,371        5,541,233
                                                 ===========      ===========      ===========      ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).

The three and nine month  periods  for 1997 have been  restated  to reflect  the
results of a Company's subsidiary as a discontinued operation.
<PAGE>
<TABLE>
<CAPTION>
HELMSTAR GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                                                             Nine Months Ended
                                                                                               September 30,  
                                                                                     ------------------------------
                                                                                          1998              1997
                                                                                     ------------      ------------
                                                                                                         Restated
<S>                                                                                  <C>               <C>  
Cash flows from operating activities:
         Net income (loss) .....................................................     $   (206,306)     $  2,631,570
         Adjustments to reconcile net income (loss) to net
                   cash provided by (used in) operating activities:
                  Depreciation and amortization ................................           55,825            20,827
                  Unrealized (gain) from joint ventures
                   and other investments .......................................           (9,527)         (463,062)
                  (Gain) on settlement, sale or disposal of
                   joint ventures and investments ..............................                         (5,278,263)
                  Loss on sale or abandonment of fixed assets ..................            3,746             2,653
                  Provision for loan reserve ...................................                             50,000
         Changes in operating assets and liabilities:
                  (Increase) in receivable due to sale of business segment .....                           (264,607)
                  Decrease in other assets .....................................            3,695           277,561
                  (Purchase) of marketable securities ..........................         (394,640)       (1,007,796)
                  (Decrease) increase in accrued expenses ......................         (517,289)          166,253
                  Decrease in assets & liabilities of disposed subsidiary ......                          2,132,608
                                                                                     ------------      ------------
Net cash (used in) operating activities ........................................       (1,064,496)       (1,732,256)
                                                                                     ------------      ------------

Cash flows from investing activities:
         Sale of investment securities - net ...................................       11,466,853
         Distributions from joint ventures and other investments ...............          195,391         2,315,359
         Purchase of other investments .........................................                            (35,000)
         Purchase of land ......................................................      (10,097,315)
         Increase in construction in progress ..................................         (316,218)
         Increase in deferred financing costs ..................................          (21,237)
         Purchase of fixed assets ..............................................         (181,381)          (38,548)
         Proceeds from the sale of fixed assets ................................            2,350
         Loan to debtor in possession ..........................................                            (50,000)
                                                                                     ------------      ------------
Net cash provided by investing activities ......................................        1,048,443         2,191,811
                                                                                     ------------      ------------
Cash flows from financing activities:
         Purchase of treasury stock ............................................          (95,930)          (15,774)
                                                                                     ------------      ------------
Net cash (used in) financing activities ........................................          (95,930)          (15,774)
                                                                                     ------------      ------------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ...........................         (111,983)          443,781
Cash and cash equivalents at beginning of period ...............................          802,352           165,858
                                                                                     ------------      ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD .....................................     $    690,369      $    609,639
                                                                                     ============      ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HELMSTAR GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (continued)
                                                                                             Nine Months Ended
                                                                                               September 30,  
                                                                                     ------------------------------
                                                                                          1998              1997
                                                                                     ------------      ------------
                                                                                                         Restated
<S>                                                                                  <C>               <C>  
Supplemental schedule of noncash investing and 
financing activities:
         During the period  ended  September  30, 1997,  the 
          Company  recorded a receivable from the sale of the
          joint ventures assets ................................................                        $ 4,533,240

Supplemental disclosures of cash flow  information:
Cash paid during the period for:
                  Interest .....................................................     $  3,165,302      $     82,260
                  Taxes ........................................................           69,718               688
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).
<PAGE>
                     HELMSTAR GROUP, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


l.       SIGNIFICANT ACCOUNTING POLICIES

         The  accounting  policies  followed by the Company are set forth in the
notes to the Company's financial statements included in its Form 10-KSB, for the
fiscal year ended  December 3l, 1997,  which was filed with the  Securities  and
Exchange  Commission (the "SEC").  With respect to interest  incurred during the
construction  period, the Company  capitalized such cost ($244,071) for the nine
month period ended September 30, 1998.

2.       INCOME (LOSS) PER SHARE

         Income  (loss)  per share is based on the  weighted  average  number of
common shares  outstanding  and common stock  equivalents  based on the treasury
stock method when dilutive.

3.       LITIGATION

         The Company is a defendant in various lawsuits. The ultimate outcome of
the lawsuits cannot presently be determined,  and no provision for any liability
that may result has been made in the financial statements, since the amounts, if
any,  cannot be determined.  There were no significant  changes in the status of
litigation during the three months ended September 30, 1998.
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and 
         Results of Operations

                  The Statements of Operations for the current and prior periods
have been restated to treat the sale of Citizens Mortgage Service Company during
the third quarter of 1997 as discontinued operations.

                  During the quarter ended June 30, 1998,  the Company  formed a
new  wholly-owned  subsidiary to provide  Information  Technology  placement and
consulting  services.  An internet  website  will be used to provide  occupation
opportunities for skilled technology  specialists.  In addition,  the subsidiary
will provide  information  technology  management  consulting,  special  project
management and corporate task/outsourcing services.

                  Certain statements in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and elsewhere in this Form 10-QSB
constitute  "forward-looking  statements"  within the meaning of the Reform Act.
See Other Information, Item 5.

         A.       Three Months Ended September 30, 1998 Compared
                  with Three Months Ended September 30, 1997

                  Total  revenues  decreased to $1,661,233  for the three months
ended  September 30, 1998 from  $5,013,771 for the three months ended  September
30, 1997.

                  Profit  from  joint   ventures  for  the  three  months  ended
September 30, 1998 was nil compared with  $5,377,474  for the three months ended
September 30, 1997. This was due to the sale during the third quarter of 1997 of
the  outlet  shopping  malls by two  partnerships  in which  the  Company  had a
majority financial interest.

                  Financial  consulting fees were nil for the three months ended
September 30, 1998 compared to $60,000 for the three months ended  September 30,
1997. Although providing financial  structuring advice on a fee basis remains an
integral  component of the  Company's  merchant  banking  business,  significant
variations in revenues are likely  because of the  transactional  nature of this
business.  The Company  currently is engaged in tendering advice with respect to
the  structuring  of  transactions  which are expected to generate fees later in
1998.

                  Interest  income  increased  to $942,442  for the three months
ended  September 30, 1998 from $65,341 for the three months ended  September 30,
1997,  primarily  due  to  interest  earned  on the  unused  proceeds  from  the
$72,750,000  bond  offering,  pending  application  of the entire  proceeds  for
acquiring  land  and  constructing  multiplex  movie  theaters  pursuant  to its
agreement with Carmike  Cinemas,  Inc.,  and on the securities  held in the cash
management and investing activities of the Company.

                  Investment income increased to a $717,291 for the three months
ended  September  30, 1998 from a negative  $489,044  for the three months ended
September  30, 1997.  This category  principally  consists of net income or loss
from cash management and investing in futures, puts, calls, equities,  municipal
securities,  and other  securities  activities.  Large  swings  can occur due to
volatility in the financial markets.
<PAGE>
                  Total  expenses  increased to $1,693,977  for the three months
ended  September 30, 1998 from $475,990 for the three months ended September 30,
1997 primarily due to interest paid on the $72,750,000 bond offering made by the
Company.

                  Compensation  and related costs  increased to $352,687 for the
three months ended  September  30, 1998 from $314,345 for the three months ended
September  30,  1997.  This  increase is due to the  salaries  incurred in a new
subsidiary formed to provide technology placement and consulting services.

                  Occupancy  costs  increased  to $46,357  for the three  months
ended  September 30, 1998 from $39,920 for the three months ended  September 30,
1997.

                  General and administrative  expenses increased to $115,307 for
the three  months  ended  September  30, 1998 from  $66,299 for the three months
ended September 30, 1997. This increase is primarily due to expenses incurred in
the new  subsidiary  formed  to  provide  technology  placement  and  consulting
services.

                  Professional  fees  increased  to $93,191 for the three months
ended  September 30, 1998 from $42,785 for the three months ended  September 30,
1997. The increase is due in large part to increased legal expenses.

                  Interest expense  increased to $1,086,435 for the three months
ended  September 30, 1998 from $12,641 for the three months ended  September 30,
1997, due to interest paid on the $72,750,000 bond offering made by the Company.

                  On a pre-tax basis, from continuing operations the Company had
a loss of $32,744 for the three months ended  September 30, 1998 compared with a
profit of $4,537,781  for the three months ended  September 30, 1997.  Provision
for income taxes for the three months ended September 30, 1998 were a benefit of
$110,271  compared to a provision for tax of $422,000 for the three months ended
September  30, 1997.  The current  benefit  consists  solely of an adjustment to
state and local taxes  relating to the 1997 sale of the outlet  shopping  malls.
For Federal  income tax purposes,  as of December 31, 1997,  the Company had net
operating loss  carryforwards  of approximately  $7,300,000  available to reduce
future  taxable  income.  These  carryforwards  expire in the years 2005 through
2011.  The  Company  has  a  net  capital  loss  carryforward  of  approximately
$3,400,000 which will expire in 2002.

                  The Company's net income for the three months ended  September
30, 1998 was $77,527 compared with net income of $3,732,268 for the three months
ended  September 30, 1997.  For the three months ended  September 30, 1998,  net
income from continuing operations was $.01 per share. For the three months ended
September 30, 1997,  net income from  continuing  operations  was $.74 per share
decreased  by a net  loss  from  discontinued  operations  of  $.07  per  share,
resulting  in  income of $.67 per  share.  The  Company  adopted  Statements  of
Financial Accounting Standards No. 128 in 1997 and has retroactively applied the
effects  thereof to the quarter  ended  September  30, 1997.  Statement  No. 128
replaces the  calculation  of primary and fully diluted  earnings per share with
basic and diluted earnings per share.  Unlike primary earnings per share,  basic
earnings  per share  excludes  any  dilutive  effects of options,  warrants  and
convertible  securities.  Diluted  earnings  per  share is very  similar  to the
previously  reported fully diluted earnings per share. The number of shares used
in the computations were 5,544,373 for the three months ended September 30, 1998
and 5,535,123 for the three months ended September 30, 1997.
<PAGE>
                  Nine Months Ended September 30, 1998 Compared
                  with Nine Months Ended September 30, 1997

                  Total  revenues  decreased to  $4,713,415  for the nine months
ended September 30, 1998 from $5,626,032 for the nine months ended September 30,
1997.

                  Profit from joint  ventures  decreased  to $9,527 for the nine
months  ended  September  30, 1998 from  $5,741,325  for the nine  months  ended
September 30, 1997. This was due to the sale during the third quarter of 1997 of
the  outlet  shopping  malls by two  partnerships  in which  the  Company  has a
majority  financial  interest.  The  income  for the  nine  month  period  ended
September 30, 1998 represents  percentage rents collected during the period, but
attributable  to a prior  period  per the  terms  of the  sales  contract  and a
provision for local taxes.

                  Financial  consulting  fees were nil for the nine months ended
September 30, 1998 versus $150,000 for the nine months ended September 30, 1997.
Although  providing  financial  structuring  advice  on a fee basis  remains  an
integral  component of the  Company's  merchant  banking  business,  significant
variations in revenues are likely  because of the  transactional  nature of this
business.  The Company  currently is engaged in rendering advice with respect to
the  structuring  of  transactions  which are expected to generate fees later in
1998.

                  Interest  income  increased to $3,071,594  for the nine months
ended  September 30, 1998 from $170,351 for the nine months ended  September 30,
1997.  This increase was primarily due to interest earned on the unused proceeds
from the $72,750,000 bond offering,  pending  application of the entire proceeds
for acquiring land and  constructing  multiplex  movie theaters  pursuant to its
agreement with Carmike  Cinemas,  Inc.,  and on the securities  held in the cash
management and investing activities of the Company.

                  Investment  income increased to $1,630,794 for the nine months
ended  September  30,  1998 from a loss of $435,644  for the nine  months  ended
September  30, 1997.  This category  principally  consists of net profit or loss
from cash management and investing in futures, puts, calls, equities,  municipal
securities  and  other  securities  activities.  Large  swings  can occur due to
volatility in the financial markets.

                  Total  expenses  increased to  $5,006,055  for the nine months
ended September 30, 1998 from $1,583,076 for the nine months ended September 30,
1997,  primarily due to interest paid on the  $72,750,000  bond offering made by
the Company.

                  Compensation  and related costs  decreased to $926,565 for the
nine months  ended  September  30, 1998 from  $943,091 for the nine months ended
September  30, 1997.  The decrease  resulted  from a reduction in  discretionary
bonuses,  offset by  salaries  incurred  in a new  subsidiary  formed to provide
technology placement and consulting services.

                  Occupancy  costs  increased  to  $133,726  for the nine months
ended  September 30, 1998 from $123,371 for the nine months ended  September 30,
1997.
<PAGE>
                  General and administrative  expenses decreased to $297,405 for
the nine months ended September 30, 1998 from $302,372 for the nine months ended
September 30, 1997. During the nine months ended September 30, 1998, the Company
incurred  additional  expenses in connection  with its new subsidiary  formed to
provide  technology  and placement  services.  During the same period in 1997, a
reserve for bad debt was recorded.

                  Professional  fees  increased  to $221,218 for the nine months
ended  September 30, 1998 from $131,982 for the nine months ended  September 30,
1997. The increase is due in large part to increased legal expenses incurred for
the period ended September 30, 1998.

                  Interest  expense  increased to $3,427,141 for the nine months
ended  September  30, 1998 from $82,260 for the nine months ended  September 30,
1997, due to interest paid on the $72,750,000 bond offering made by the Company.

                  On a pre-tax basis,  from continuing  operations,  the Company
had a loss of $292,640 for the nine months  ended  September  30, 1998  compared
with a profit of  $4,042,956  for the nine months  ended  September  30, 1997. A
benefit  for income  taxes for the nine  months  ended  September  30,  1998 was
$86,334  compared  with a  provision  of  $425,016  for the  nine  months  ended
September 30, 1997.  These  provisions  consist solely of state and local taxes.
For Federal  income tax purposes,  as of December 31, 1997,  the Company has net
operating loss carryforwards  aggregating  approximately $7,300,000 available to
reduce  future  taxable  income.  These  carryforwards  expire in the years 2005
through 2011. The Company has a net capital loss  carryforward of  approximately
$3,400,000.

                  The Company's net loss for the nine months ended September 30,
1998 was $206,306  compared with a net profit of $2,631,570  for the nine months
ended  September  30, 1997. On a per share basis,  the net loss from  continuing
operations was $.04 for the nine months ended September 30, 1998,  compared with
a net profit from  continuing  operations  of $.65  decreased by a net loss from
discontinued  operations of $.18 resulting in a profit of $.47 per share for the
nine months ended September 30, 1997. Average common shares outstanding used for
the primary  computation of net loss per common share were 5,501,371 in 1998 and
5,541,233 in 1997. Common share equivalents  relating to the Company's Incentive
Compensation  Plan were not  included in the  computation  because the effect of
their inclusion  would be  antidilutive  for the nine months ended September 30,
1998.

         B.       Liquidity and Capital Resources

                  Management of the Company  believes that funds  generated from
operations,  supplemented  by its  available  cash  and cash  equivalents,  will
provide  it  with  sufficient  resources  to meet  all  present  and  reasonably
foreseeable future capital needs.

                  The  Company  invests  excess  funds  in  liquid,   short-term
financial  instruments in order to maximize its current cash return with minimum
interest  rate risk,  while  preserving  the ability to move  quickly in funding
attractive  merchant banking ventures.  Such investments include U.S. Government
and municipal obligations, futures contracts and money market funds.

                  On November  20,  1997,  the  Company  issued  $72,750,000  of
adjustable rate tender securities due November 1, 2015 (the "Bonds").  The Bonds
were  issued  to  finance  97%  of  the  cost  of  developing  and/or  acquiring
<PAGE>
state-of-the-art  multiplex  movie  theaters in various  states  throughout  the
continental  United States. The 3% balance,  $2,250,000,  is being provided as a
capital  contribution  from Preferred  Members  (shareholders)  of the Company's
Lessor subsidiary, Movieplex Realty Leasing, L.L.C. $772,500 of this capital was
contributed during the fourth quarter of 1997.

                  The Bonds pay interest  from the date of delivery on the first
Monday of each  month for the  preceding  four or five  week  period  commencing
January  5,  1998  and  principal  annually  on the  first  Monday  of  November
commencing in the year 2000.  Various commercial banks which provided letters of
credit securing payment on the Bonds are due letter of credit ("LOC") fees which
are payable on the same dates as the Bond interest and also commence in 1998. In
addition,  a preferred  return on capital  contributed  is due to the  Preferred
Members,  payable  on the same due  dates as is the  interest  on the  Bonds but
commencing in January of the year 2000.

                  All debt  service on the Bonds,  while bank  letters of credit
are  effectively in force,  is paid directly from draws on those LOCs. The banks
are then  reimbursed by the Lessor.  Fees and the Preferred  return are due from
the Lessor directly. During the period from November 1997 through November 1999,
all  reimbursements  to the banks and bank fees will be paid from Bond proceeds.
Thereafter,  all  reimbursements  to the banks for debt  service on the Bonds as
well as fees and the preferred return to Preferred Members will be paid from the
Rents which commence on December 1, 1999. In addition,  the Rents will cover all
other costs of owning and operating the real estate other than Federal, state or
local income taxes due on a net income basis.  Prior to the utilization of these
proceeds  to pay for the  costs  in  connection  with  the  construction  of the
multiplex   movie  theaters,   they  will  be  invested  in  liquid   short-term
instruments.

                  While the Company believes that currently available funds will
provide  it  with  sufficient  resources  to meet  all  present  and  reasonably
foreseeable  future capital needs,  the Company may seek various forms of credit
in order to finance its merchant banking or other activities in the future.  The
Company does not have any material  commitments  for capital  expenditures as of
September 30, 1998,  except for the  development of the multiplex movie theaters
with funds provided by the issuance of the Bonds.

                  The Company is a defendant in various lawsuits. An unfavorable
result in certain of those lawsuits could have a significant adverse effect upon
the Company's liquidity and capital resources.

                  Year 2000 Issue

                  The Company has carefully  evaluated the Year 2000 issue. None
of the critical  operations of the Company,  either for internal  purposes or as
they affect third parties, required programmed or firmware computer calculations
concerning  the time  differences  between dates or similar  related  functions.
Consequently,  the Year 2000 issue will have no practical  effect on the Company
and no material costs relative thereto are anticipated.
<PAGE>
                                    PART II

                               OTHER INFORMATION



Item 5.  Other Information.

                  Certain statements under the caption "Management's  Discussion
and Analysis of Financial  Condition and Results of Operations" and elsewhere in
this Form 10-QSB constitute  "forward looking  statements" within the meaning of
the Private  Securities  Litigation  Reform Act of 1995.  Such  forward  looking
statements  are based on  current  expectations  and  information  available  to
management at this time. They may involve known risks, uncertainties,  and other
factors which may cause the actual  results,  performance or achievements of the
Company to be  materially  different  from any future  results,  performance  or
achievements  expressed or implied by such forward looking  statements.  Factors
which could cause actual results to differ from the forward  looking  statements
include, among others, the following:  general economic and business conditions;
changes in  business  strategy  or  development  plans;  quality of  management;
availability,  terms and deployment of capital;  business abilities and judgment
of personnel;  availability of qualified  personnel;  labor and employee benefit
costs;  changes in or the failure to comply  with  government  regulations;  and
construction costs.

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

                  (a) Exhibits:  A statement  regarding the  computation  of per
share earnings is omitted  because the computation is described in Note 2 of the
Notes to Condensed  Consolidated  Financial Statements  (Unaudited) of this Form
10-QSB.

                           Exhibit 27 - Financial Data Schedule -- See below.

                  (b)      Reports on Form 8-K:

                            --      The Company did not file any reports on Form
                                    8-K during the three  months ended September
                                    30, 1998.



<PAGE>


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                        HELMSTAR GROUP, INC.



                                                        /s/ George W. Benoit
                                                        ----------------    
Date: November 13, 1998                                 George W. Benoit
                                                        Chairman of the Board of
                                                        Directors, President,
                                                        Chief Executive Officer




                                                        /s/ Roger J. Burns 
                                                        ------------------ 
Date: November 13, 1998                                 Roger J. Burns
                                                        First Vice President,
                                                        Chief Financial Officer


<PAGE>