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 June 30, 1997

[   ] 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.

           Class                            Outstanding at July 31, 1997

Common stock - par value $.10                      5,516,373 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, 1996, which was
filed with the Securities and Exchange Commission.

         The results of  operations  for the three  months and six months  ended
June 30, 1997 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
                                   
                                                    June 30,        December 31,
                  ASSETS                              1997               1996 
                                                ------------       ------------
                                                (Unaudited)
<S>                                             <C>                <C>
Cash and cash equivalents ................      $    945,258       $  1,679,454
Marketable securities ....................         3,203,759          1,350,441
Joint ventures ...........................            82,234          1,418,383
Other investments ........................            35,000
Mortgage loans held for sale .............         2,648,359          2,647,692
Due from mortgage investors ..............                                4,123
Furniture, equipment and
    leasehold improvements - at cost,
    less accumulated depreciation and
    amortization of $456,880 in
    1997 and $415,504 in 1996 ............           266,505            237,673
Other assets .............................           436,451            951,132
                                                ------------       ------------

         TOTAL ...........................      $  7,617,566       $  8,288,898
                                                ============       ============
         LIABILITIES

Notes payable ............................      $  2,414,665       $  2,246,672
Accrued expenses and other
    liabilities ..........................      $  1,256,446       $    979,298
                                                ------------       ------------

         Total liabilities ...............         3,671,111          3,225,970
                                                ------------       ------------
             STOCKHOLDERS' EQUITY

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) ....................        (8,784,417)        (7,683,718)
                                                ------------       ------------

         Total ...........................         6,875,053          7,975,752

Less treasury stock, at cost
    1,233,227 shares in 1997 and
    1,213,227 shares in 1996 .............        (2,928,598)        (2,912,824)
                                                ------------       ------------

         Total stockholders' equity ......         3,946,455          5,062,928
                                                ------------       ------------

         TOTAL ...........................      $  7,617,566       $  8,288,898
                                                ============       ============


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

                                              Three Months Ended               Six Months Ended
                                                   June 30,                       June 30,
                                       -----------------------------     ----------------------------
                                            1997             1996              1997            1996
                                       -----------      -----------      -----------      -----------
<S>                                    <C>              <C>              <C>              <C>
Revenues:
    Profit from joint ventures ...     $   176,933      $   253,352      $   363,851      $   420,745
    Financial consulting fees ....                                            90,000               
    Loan servicing fees net of
         guarantor fees ..........              33           15,995               70           28,167
    Loan origination fees ........         351,000          424,438          734,991          611,494
    Interest income ..............         110,956           91,108          174,762          207,202
    Investment income (loss) .....        (491,164)          (9,981)          53,400          191,594
    Other income (loss) ..........             200             (335)           1,768            2,426
                                       -----------      -----------      -----------      -----------

         Total revenues ..........         147,958          774,577        1,418,842        1,461,628
                                       -----------      -----------      -----------      -----------

Expenses:
    Compensation and related costs         717,974          981,243        1,503,086        1,732,993
    Occupancy cost ...............          79,084           93,788          157,653          185,959
    Amortization of mortgage
         servicing rights ........                            1,335                             2,674
    General and administrative ...         313,615          336,903          606,383          589,728
    Professional fees and
         litigation expenses .....          81,353           26,426          107,434           80,570
    Interest .....................         103,668           41,459          141,968           64,788
                                       -----------      -----------      -----------      -----------

         Total Expenses ..........       1,295,694        1,481,154        2,516,524        2,656,712
                                       -----------      -----------      -----------      -----------

Loss  before taxes ...............      (1,147,736)        (706,577)      (1,097,682)      (1,195,084)

Income tax (benefit) .............          (6,764)           9,500            3,016           21,319
                                       -----------      -----------      -----------      -----------


NET (LOSS)....... ................     $(1,140,972)     $  (716,077)     $(1,100,698)     $(1,216,403)
                                       ===========      ===========      ===========      ===========

Net (loss)
    per common share .............     $      (.21)     $      (.13)     $      (.20)     $      (.22)
                                       ===========      ===========      ===========      ===========

Weighted average number of
    common shares outstanding ....       5,516,373        5,545,806        5,525,542        5,608,592
                                       ===========      ===========      ===========      ===========

                       See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                               HELMSTAR GROUP, INC. AND SUBSIDIARIES
                          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                            (Unaudited)
                                                                           Six Months Ended
                                                                               June 30, 
                                                                     -----------------------------
                                                                         1997              1996
                                                                     -----------       -----------
<S>                                                                  <C>              <C>
Cash flows from operating activities:
  Net (loss)   ..............................................        $(1,100,699)     $(1,216,403)
  Adjustments to reconcile net (loss) to net
     cash provided by (used in) operating activities:
    Depreciation and amortization............................            48,515            50,788 
    Unrealized (gain) from joint ventures
     and other investments...................................          (363,851)         (220,745)
    (Gain) on settlement, sale or disposal of investments....                            (200,000)
    Provision for loan reserve...............................            50,000
    Changes in operating assets and liabilities:
     (Increase) in mortgage loans held for sale..............              (667)       (1,318,588)
     Decrease (increase) in due from mortgage investors......             4,123          (176,497)
     Decrease (increase) in other assets.....................           507,543          (409,787)
     Purchase of investment securities - net.................        (1,853,318)
     Increase (decrease) in accrued expenses.................           277,148          (405,756)
                                                                     -----------       -----------

Net cash (used in) operating activities......................        (2,431,206)       (3,896,988)
                                                                     -----------       -----------
Cash flows from investing activities:
  Sale of marketable securities - net........................                           3,339,381
  Distributions from joint ventures and other investments....         1,700,000            99,123
  Proceeds from the settlement or sale of joint ventures.....                             200,000
  Purchase of other investments..............................           (35,000)
  Purchase of fixed assets...................................           (70,209)          (85,653)
  Loan to debtor in possession...............................           (50,000)
                                                                     -----------       -----------

Net cash provided by investing activities....................         1,544,791         3,552,851 
                                                                     -----------       ---------- 
Cash flows from financing activities:
  Proceeds of short term borrowings - net....................           167,993           279,951 
  Purchase of treasury stock.................................           (15,774)           (1,332)
                                                                     -----------       ----------

Net cash provided by financing activities....................           152,219           278,619 
                                                                     -----------       -----------

NET (DECREASE) IN CASH AND CASH EQUIVALENTS..................          (734,196)          (65,518)
Cash and cash equivalents at beginning of period.............         1,679,454         1,358,730 

CASH AND CASH EQUIVALENTS AT END OF PERIOD...................       $   945,258       $ 1,293,212 
                                                                     ==========        ==========
Supplemental  disclosures of cash flow information: 
  Cash paid during the period for:
    Interest.................................................       $   141,968       $    64,788 
    Taxes....................................................               688             6,578 


               See Notes to Condensed Consolidated Financial Statements (Unaudited). 
</TABLE>
<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, 1996,  which was filed with the  Securities  and
Exchange Commission (the "SEC").

2. JOINT VENTURES

         On June 15, 1997,  Nags Head Outlet  Partners  refinanced its principal
asset, a  manufacturers  outlet  shopping  center,  located in Nags Head,  North
Carolina.  The Company's share of the proceeds distributed after the refinancing
was in excess of the carrying  amount of the Company's  interest in such venture
prior to the distribution.

         Summary combined  operating  results of the joint ventures in which the
Company is a co-venturer are as follows:
<TABLE>
<CAPTION>
                                                     Three Months Ended June 30
                                                    ----------------------------
                                                       1997               1996 
                                                    ---------         ---------
<S>                                                 <C>               <C>

Rental income ..............................        $ 552,186         $ 517,007
Operating expenses .........................          (46,076)          (80,563)
                                                    ---------         ---------

Net operating income .......................          506,110           436,444
Other income (expense) .....................         (370,288)         (363,424)
                                                    ---------         ---------

Net income .................................        $ 135,822         $  73,020
                                                    =========         =========

Company's share of profit
   from joint ventures .....................        $  97,522         $  53,352
Receipt from the guarantors
   of a co-venturer's
   obligations in connection
   with the development of a
   project which had been sold at
   a foreclosure sale in 1992 ..............                            200,000
Fully reserve an investment
   which was contingent on a
   project being built .....................             (500)
Gain from receiving cash
   distributions in excess of the
   book value of the Company's
   interest in a joint venture .............           79,911
                                                    ---------         ---------

Profit from joint ventures .................        $ 176,933         $ 253,352
                                                    =========         =========
</TABLE>
<PAGE>
                      HELMSTAR GROUP, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

2.  JOINT VENTURES (continued)
<TABLE>
<CAPTION>
                                                     Six Months Ended June 30
                                                 -------------------------------
                                                     1997               1996 
                                                 -----------        -----------
<S>                                              <C>                <C>
Rental income ............................       $ 1,208,301        $ 1,136,065
Operating expenses .......................           (78,850)           (89,471)
                                                 -----------        -----------

Net operating income .....................         1,129,451          1,046,594
Other income (expense) ...................          (734,022)          (737,198)
                                                 -----------        -----------

Net income ...............................       $   395,429        $   309,396
                                                 ===========        ===========

Company's share of profit
   from joint ventures ...................       $   284,440        $   220,745
Receipt from the guarantors
   of a co-venturer's
   obligations in connection
   with the development of a
   project which had been sold at
   a foreclosure sale in 1992 ............                              200,000
Fully reserve an investment
   which was contingent on a
   project being built ...................              (500)
Gain from receiving cash
   distributions in excess of the
   book value of the Company's
   interest in a joint venture ...........            79,911
                                                 -----------        -----------

Profit from joint ventures ...............       $   363,851        $   420,745
                                                 ===========        ===========
</TABLE>
3.       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.

4.       LITIGATION

         The Company is a defendant in various  lawsuits.  In those instances in
which  liability  can  be  estimated,  provisions  have  been  reflected  in the
financial  statements.  The ultimate  outcome of the remaining  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 June 30, 1997.
<PAGE>
Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

                           In April 1997,  the Company  made a $50,000 loan to a
                  debtor in possession  which is fully reserved in the June 1997
                  financial statements.

                  A.       Three Months Ended June 30, 1997 Compared
                           with Three Months Ended June 30, 1996

                           Total  revenues  decreased  to $147,958 for the three
                  months ended June 30, 1997 from  $774,577 for the three months
                  ended June 30, 1996.

                           Profit from joint ventures  decreased to $176,933 for
                  the three  months  ended June 30, 1997 from  $253,352  for the
                  three  months  ended  June  30,  1996.   This   classification
                  represents the Company's share of income and losses,  computed
                  in  accordance  with the  equity  method of  accounting,  from
                  various joint ventures in which the Company is participating.

                           During the three  months  ended June 30,  1997,  this
                  category included a gain of approximately  $80,000 as a result
                  of the Company's  receipt of cash  distributions  in excess of
                  the book value of its  interest  in a joint  venture.  In June
                  1997, Nags Head Outlet  Partners ("Nags Head")  refinanced its
                  mortgage debt to $5,400,000  from  $3,947,020  for one year to
                  May 1998 at a fixed rate of 9%.

                           During the three  months  ended June 30,  1996,  this
                  category included  $200,000 received from certain  individuals
                  who had  guaranteed  the  obligations  of the  co-venturer  in
                  Stoneledge Associates ("Stoneledge") with respect to a project
                  which  had  been  sold  at a  foreclosure  sale in  1992.  The
                  guarantors   made  such   payment  in   satisfaction   of  the
                  co-venturer's  existing  obligations  to the Company which had
                  previously been fully reserved.

                           Excluding  the  effects of the Nags Head  refinancing
                  and  Stoneledge,  the  Company's  share of profit  from  joint
                  ventures  increased to $97,522 for the three months ended June
                  30,  1997 from  $53,352  for the three  months  ended June 30,
                  1996.  The increase is  attributable,  in part, to higher base
                  rent, the receipt of some  percentage  rents during the second
                  quarter of 1997  compared  with  collection  of the same items
                  during  the  first  quarter  of  1996,  and  lower   operating
                  expenses.

                           Although operating results should improve as a result
                  of  increased  rents,  some  variation in profit or loss for a
                  specific  interim  period may  result  due to such  factors as
                  receiving  annual  payments  of  percentage  rent;   incurring
                  periodic  operating expenses which will occur every few years,
                  such as painting the entire  project;  accounting  adjustments
                  between  interim  periods;  lost rent due to the turnover of a
                  tenant, etc.
<PAGE>
                           The Company did not realize any financial  consulting
                  fees for the three months ended June 30, 1997 or for the three
                  months  ended  June 30,  1996.  Although  providing  financial
                  structuring  advice  to  clients  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 advising clients with respect to the structuring
                  of  transactions  which are expected to generate fees later in
                  1997.

                           Loan  origination  fees decreased to $351,000 for the
                  three months ended June 30, 1997  compared  with  $424,438 for
                  the three months ended June 30, 1996.  This category  includes
                  fees earned in connection  with making  mortgage loans and net
                  profit  or loss from  sales of such  loans to  investors.  The
                  decrease  is the  result of the  Company's  restructured  loan
                  origination  efforts  and the loss of  volume  related  to the
                  closing of high overhead branch  offices.  Also, the Company's
                  emphasis on  "non-conforming  product" offerings met increased
                  competition in the marketplace which reduced volume.

                           Interest  income  increased to $110,956 for the three
                  months  ended June 30, 1997 from  $91,108 for the three months
                  ended June 30,  1996,  due in part to an  increase in interest
                  earning assets and earnings  generated through cash management
                  and investing activities.  These earnings were somewhat offset
                  by the loss of  interest  earnings  on  escrow  deposits  as a
                  result of the sale of the  balance of the  Company's  mortgage
                  servicing rights during the third quarter of 1996.

                           Investment   income   decreased   dramatically  to  a
                  negative  $491,164  for the three  months  ended June 30, 1997
                  compared to a negative  $9,981 for the three months ended June
                  30, 1996. 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  decreased to $1,295,694 for the three
                  months  ended  June 30,  1997  from  $1,481,154  for the three
                  months ended June 30, 1996.

                           Compensation  and related costs decreased to $717,974
                  for the three months ended June 30, 1997 from $981,243 for the
                  three months ended June 30, 1996.  This  decrease  principally
                  was attributable to the reduction of salaried employees in the
                  mortgage loan origination area and the elimination of salaries
                  incurred in connection with the Company's viatical settlements
                  business which had terminated in the fourth quarter of 1996.

                           Occupancy  costs  decreased  to $79,084 for the three
                  months  ended June 30, 1997 from  $93,788 for the three months
                  ended June 30,  1996.  This  reduction  resulted  from closing
                  certain  branch  offices at the  mortgage  company  during the
                  third and fourth  quarters of 1996 and the  termination of the
                  lease for a small office for the viatical settlements activity
                  which closed in the fourth quarter of 1996.
<PAGE>
                           General  and  administrative  expenses  decreased  to
                  $313,615  for the  three  months  ended  June  30,  1997  from
                  $336,903  for the  three  months  ended  June 30,  1996.  This
                  decrease  reflects a lower level of mortgage loan  origination
                  activity and curtailment of expenses  related to the Company's
                  viatical  settlements  business in the fourth quarter of 1996.
                  The  reduction  was  somewhat  mitigated  by the creation of a
                  reserve for advances made to a debtor in possession during the
                  current period.

                           Professional  fees increased to $81,353 for the three
                  months  ended June 30, 1997 from  $26,426 for the three months
                  ended  June 30,  1996.  The  increase  is due in large part to
                  legal fees incurred in connection with a potential acquisition
                  the Company had considered acquiring.

                           Interest expense  increased to $103,668 for the three
                  months  ended June 30, 1997 from  $41,459 for the three months
                  ended June 30, 1996.  This increase was due in part to greater
                  use of the Company's credit  facilities to fund mortgage loans
                  held for sale.  Additionally,  the Company  incurred  interest
                  expense in connection  with its cash  management and investing
                  activities.

                           On a  pre-tax  basis,  the  Company  had  a  loss  of
                  $1,147,736  for the three months ended June 30, 1997  compared
                  with a loss of $706,577  for the three  months  ended June 30,
                  1996.  Provision  for income  taxes for the three months ended
                  June  30,  1997  was a  benefit  of  $6,764  compared  with  a
                  provision  of $9,500 for the three months ended June 30, 1996.
                  These provisions  consist solely of state and local taxes. For
                  Federal  income tax  purposes,  as of December 31,  1996,  the
                  Company had net operating loss  carryforwards of approximately
                  $13,750,000  available to reduce future taxable income.  These
                  carryforwards expire in the years 2005 through 2011.

                           The  Company's  net loss for the three  months  ended
                  June  30,  1997  was  $1,140,972  compared  with  net  loss of
                  $716,077 for the three  months  ended June 30, 1996.  On a per
                  share  basis,  the net loss was  $(.21)  for the three  months
                  ended June 30, 1997,  compared with net loss of $(.13) for the
                  three  months  ended  June 30,  1996.  Average  common  shares
                  outstanding  used for the primary  computation of net loss per
                  common share were  5,516,373 and  5,545,806  for 1996.  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.

                           Six Months Ended June 30, 1997 Compared
                           with Six Months Ended June 30, 1996

                           Total  revenues  decreased to $1,418,842  for the six
                  months ended June 30, 1997 from  $1,461,628 for the six months
                  ended June 30, 1996.
<PAGE>
                           Profit from joint ventures  decreased to $363,851 for
                  the six months  ended June 30, 1997 from  $420,745 for the six
                  months ended June 30, 1996. This classification represents the
                  Company's  share of income and losses,  computed in accordance
                  with the  equity  method of  accounting,  from  various  joint
                  ventures in which the Company is participating.

                           During  the six  months  ended  June 30,  1997,  this
                  category included a gain of approximately  $80,000 as a result
                  of the Company's  receipt of cash  distributions  in excess of
                  book value of its interest in a joint  venture.  In June 1997,
                  Nags Head  refinanced  its mortgage  debt to  $5,400,000  from
                  $3,947,020 for one year to May 1998 at a fixed rate of 9%.

                           During  the six  months  ended  June 30,  1996,  this
                  category included  $200,000 received from certain  individuals
                  who had  guaranteed  the  obligations  of the  co-venturer  in
                  Stoneledge  with respect to a project which had been sold at a
                  foreclosure  sale in 1992. The guarantors made such payment in
                  satisfaction of the co-venturer's  existing obligations to the
                  Company which had previously been fully reserved.

                           Excluding  the  effects of the Nags Head  refinancing
                  and  Stoneledge,  the  Company's  share of profit  from  joint
                  ventures  increased  to $284,440 for the six months ended June
                  30, 1997 from $220,745 for the six months ended June 30, 1996.
                  The increase is  attributable,  in part,  to higher base rents
                  collected during the period and lower operating expenses.

                           Although operating results should improve as a result
                  of  increased  rents,  some  variation in profit or loss for a
                  specific  interim  period may  result  due to such  factors as
                  receiving  annual  payments  of  percentage  rent;   incurring
                  periodic  operating expenses which will occur every few years,
                  such as painting the entire  project;  accounting  adjustments
                  between  interim  periods;  lost rent due to the turnover of a
                  tenant, etc.

                           Financial  consulting  fees were  $90,000 for the six
                  months ended June 30, 1997 versus nil for the six months ended
                  June 30, 1996. Although providing financial structuring advice
                  to clients 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 advising
                  clients with respect to the structuring of transactions  which
                  are expected to generate fees later in 1997.

                           Loan  origination  fees increased to $734,991 for the
                  six  months  ended  June 30,  1997 from  $611,494  in the 1996
                  period.  This category includes fees earned in connection with
                  the  origination of mortgage loans and the profit or loss from
                  sales of mortgage loans to permanent  investors.  The increase
                  is the result of the Company's  restructured  loan origination
                  efforts  and the  Company's  emphasis  on its  "non-conforming
                  product"  offerings  which  generate  higher revenue and which
                  were not offered during the six months ended June 30, 1996.
<PAGE>
                           Interest  income  decreased  to $174,762  for the six
                  months  ended June 30, 1997 from  $207,202  for the six months
                  ended June 30,  1996.  This  decrease was due in large part to
                  the loss of interest  earning  escrow  deposits as a result of
                  the sale of the mortgage servicing portfolio. In addition, the
                  Company  reduced the time a mortgage loan remains in inventory
                  before  being  delivered  to an investor  and thus reduced the
                  interest  earning period on mortgages held in inventory.  This
                  decrease was somewhat  offset by  increased  interest  earning
                  generated through cash management and investing activities.

                           Investment  income  decreased  to $53,400 for the six
                  months  ended June 30, 1997 from  $191,594  for the six months
                  ended June 30, 1996. This category  primarily consists of: net
                  profit or loss from cash  management and investing in futures,
                  puts,  calls,   equities,   municipal   securities  and  other
                  securities activities.

                           Total  expenses  decreased to $2,516,524  for the six
                  months ended June 30, 1997 from  $2,656,712 for the six months
                  ended June 30, 1996.

                           Compensation   and   related   costs   decreased   to
                  $1,503,086  for  the six  months  ended  June  30,  1997  from
                  $1,732,993  for  the six  months  ended  June  30,  1996.  The
                  decrease  is  due  principally  to  a  reduction  of  salaried
                  employees  in the  mortgage  loan  origination  area  and  the
                  elimination  of the salaries  incurred in connection  with the
                  Company's viatical  settlements  business which had terminated
                  in the fourth quarter of 1996.

                           Occupancy  costs  decreased  to $157,653  for the six
                  months  ended June 30, 1997 from  $185,959  for the six months
                  ended June 30,  1996.  This  reduction  resulted  from closing
                  certain  branch  offices at the  mortgage  company  during the
                  third and fourth  quarters of 1996 and the  termination of the
                  lease for a small office for the viatical  settlement activity
                  which closed in the fourth quarter of 1996.

                           General  and  administrative  expenses  increased  to
                  $606,383 for the six months ended June 30, 1997 from  $589,728
                  for the six months  ended June 30,  1996.  This  increase  was
                  caused  primarily  by the  creation of a reserve for  advances
                  made to a debtor in  possession  during the second  quarter of
                  1997. This increase was somewhat mitigated by a lower level of
                  mortgage loan origination  costs and savings realized with the
                  curtailment of the viatical  settlement business in the fourth
                  quarter of 1996.

                           Professional  fees  increased to $107,434 for the six
                  months  ended June 30,  1997 from  $80,570  for the six months
                  ended  June 30,  1996.  The  increase  is due in large part to
                  legal fees incurred in connection with a potential acquisition
                  the Company had considered acquiring.
<PAGE>
                           Interest  expense  increased  to $141,968 for the six
                  months  ended June 30,  1997 from  $64,788  for the six months
                  ended June 30, 1996. The increase in interest  expense was due
                  in part to greater use of the Company's  credit  facilities to
                  fund mortgage loans held for sale.  Additionally,  the Company
                  incurred   interest   expense  in  connection  with  its  cash
                  management and investing activities.

                           On a  pre-tax  basis,  the  Company  had  a  loss  of
                  $1,097,682  for the six months  ended June 30,  1997  compared
                  with a loss of  $1,195,084  for the six months  ended June 30,
                  1996. Provision for income taxes for the six months ended June
                  30, 1997 was $3,016  compared  with $21,319 for the six months
                  ended June 30, 1996. These provisions  consist solely of state
                  and local  taxes.  For  Federal  income  tax  purposes,  as of
                  December  31,  1996,   the  Company  has  net  operating  loss
                  carryforwards  aggregating approximately $13,750,000 available
                  to reduce future taxable income. These carryforwards expire in
                  the years 2005 through 2011.

                           The  Company's net loss for the six months ended June
                  30, 1997 was $1,100,698 compared with a net loss of $1,216,403
                  for the six months ended June 30, 1996.  On a per share basis,
                  the net loss was  $(.20)  for the six  months  ended  June 30,
                  1997,  compared  with a net loss of $(.22)  for the six months
                  ended June 30, 1996.  Average common shares  outstanding  used
                  for the primary  computation of net loss per common share were
                  5,525,542  in  1997  and  5,608,592  in  1996.   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.

                  B.       Liquidity and Capital Resources

                           Management   of  the  Company   believes  that  funds
                  generated   from   operations,   its  credit   and   warehouse
                  facilities,   and  cash  distributions  from  joint  ventures,
                  supplemented  by its  available  assets,  will provide it with
                  sufficient  resources  to  meet  all  present  and  reasonably
                  foreseeable future capital needs. A significant portion of the
                  Company's assets are readily convertible into cash.

                           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  primarily  include U.S.
                  Government   obligations,   municipal  securities,   commodity
                  futures contracts, and money market funds. Additionally, since
                  commencing the mortgage loan origination business, the Company
                  may use its own cash to carry a portion  of its  inventory  of
                  mortgage  loans  originated  for resale.  Prior to funding any
                  loans, the Company procures firm commitments from investors to
                  purchase such loans.  Fifteen days is the typical time between
                  funding  a  mortgage  loan  and  receiving   payment  from  an
                  investor.
<PAGE>
                           The  Company's  primary  financing  needs  are in its
                  mortgage  banking  activities.  In  addition  to its own  cash
                  resources, the Company meets its mortgage funding requirements
                  by  borrowing  the  necessary   amounts  from  three  separate
                  warehouse  bank  lines  aggregating   $8,250,000,   down  from
                  $12,250,000 available at December 31, 1996. This decline since
                  year end results from a warehouse lender notifying the Company
                  that it was reducing the line  available from $5 million to $1
                  million  since the Company was not using the amount  allotted.
                  At June 30, 1997,  approximately  $2,200,000 has been borrowed
                  against  these  lines.  The Company can draw down up to 98% of
                  the  face  amount  of an  individual  mortgage  loan  from the
                  "warehouse  facility."  This facility is replenished  from the
                  purchase  price  paid by the  investor  who had  committed  to
                  purchase such loan.

                           In connection with its interests in real estate,  the
                  Company  uses  separate  subsidiaries  for each  venture.  The
                  Company  utilizes  the  equity  method of  accounting  for its
                  interests  in real estate  joint  ventures.  Accordingly,  the
                  assets and  liabilities  of such  ventures are not included in
                  the Company's consolidated balance sheets.

                           The two operating  real estate  projects in which the
                  Company is a co-venturer,  currently  have strong  occupancies
                  and positive cash flow. Cash  maintained by each  partnership,
                  supplemented  with  cash  flow  from  operations,   should  be
                  sufficient  to cover  all  operating  costs  and debt  service
                  requirements of each venture.  Additional  cash  contributions
                  from the Company or its  co-venturers  would not be necessary.
                  Facts and  circumstances,  however,  are subject to change for
                  reasons  beyond  the  Company's  control.   Based  on  current
                  estimates,  the Company  expects to  continue to receive  cash
                  distributions from its real estate joint ventures during 1997.

                           In June 1997,  one of the Company's real estate joint
                  ventures entered into a modification agreement with the lender
                  holding the venture's  mortgage loan. The lender converted the
                  loan from a four-year,  fixed rate loan with interest  payable
                  at 8.5% per annum to a one-year  fixed rate loan with interest
                  payable at 9% per annum.  Regular  amortization was determined
                  on a 15-year  schedule and the  principal  balance is due when
                  the loan matures on May 10, 1998.

                           In April 1995, the Company's  other real estate joint
                  venture  refinanced  the  mortgage  loan on its  project.  The
                  principal  amount of the new,  nonrecourse loan is $6,550,000;
                  the interest rate equals Citibank's  six-month LIBOR rate plus
                  3.10% and the interest  rate resets each  September and March;
                  the maximum interest rate is 13.5375%;  principal amortization
                  is based on a 25-year schedule; and the loan matures on May 1,
                  2002.  The current  interest  rate through  August 31, 1997 is
                  8.788%.  The interest  rate had been 8.3%  through  August 31,
                  1996 and 8.85% from  September  1, 1996  through  February 28,
                  1997.  The  principal  balance  of  the  refinanced  loan  was
                  $3,757,828.  The proceeds  from  refinancing,  net of expenses
                  including points,  fees, title insurance,  escrows,  etc., was
                  approximately   $2.5   million.   The   Company   received   a
                  distribution  from the joint  venture  of  approximately  $2.2
                  million.
<PAGE>
                           Although the venture's outstanding debt was increased
                  substantially, at current interest rates, monthly debt service
                  decreased  slightly  because  the old  loan  required  monthly
                  principal  payments of $40,000  through  its  maturity in July
                  1995.  In addition to principal  and interest  payments,  debt
                  service  for the new loan  includes  contributions  to various
                  reserve accounts.  The funds from such reserve accounts may be
                  used, in accordance with the loan agreement,  to offset future
                  expenses, if any, for structural repairs, tenant improvements,
                  leasing commissions, and interest expense.

                           The  carrying  amounts  reflected  on  the  Company's
                  consolidated  balance  sheet  for its  various  joint  venture
                  interests is determined  in accordance  with the equity method
                  of accounting. Such carrying amounts may not be representative
                  of  the  realizable  value  on  a  sale  of  those  interests.
                  Management  reviews  the  carrying  amount of each  venture to
                  determine if an  adjustment  for any  impairment  other than a
                  temporary decline is required.  If management believes in good
                  faith  that any  impairment  is other than  temporary,  a loss
                  provision  equal to such  amount  will be charged  against the
                  Company's consolidated results of operations.

                           Cash  distributions from joint ventures are reflected
                  in  investing   activities  in  the   Company's   consolidated
                  statements  of  cash  flows.  Equity  contributions  to  joint
                  ventures as well as any  advances to joint  ventures  also are
                  reflected   in   investing   activities   in   the   Company's
                  consolidated statements of cash flows.

                           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,  mortgage banking or other activities in
                  the future. The Company does not have any material commitments
                  for capital expenditures as of June 30, 1997.

                           The  Company  is a  defendant  in  various  lawsuits.
                  Although   the  Company  has  reached   settlements   in  some
                  instances, an unfavorable result in those remaining could have
                  a significant  adverse effect upon the Company's liquidity and
                  capital resources.
<PAGE>


                                     PART II

                                OTHER INFORMATION


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

                  The Annual Meeting of Stockholders of Helmstar Group, Inc. was
                  held on June 4, 1997 at the  offices of  Richard  A.  Eisner &
                  Company,   LLP,  575  Madison  Avenue,  New  York,  New  York.
                  4,648,376 votes were present at the meeting either  personally
                  or by proxy. The results of the matters submitted to a vote of
                  stockholders at the Annual Meeting were as follows:

                  (a) Election of Directors

                  Roger J.  Burns  and  Charles  W.  Currie  were  reelected  as
                  directors  for a term of three  years.  4,624,176  shares were
                  voted for each director and 24,200 shares  withheld  authority
                  to vote  for  each  director.  George  W.  Benoit,  Joseph  G.
                  Anastasi,  David W. Dube, and James J. Murtha  continued their
                  terms of office as directors after the meeting.

                  (b) Appointment of Auditors

                  The  appointment  of Richard  A.  Eisner &  Company,  LLP,  as
                  independent  auditors to audit the  Company's  1997  financial
                  statements  was  ratified  at the  Annual  Meeting.  4,641,426
                  shares were voted in favor of the proposal,  4,100 shares were
                  voted against it, and 2,850 shares abstained.


<PAGE>


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 3 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 June 30, 1997.
                 
<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.



Date: August 14, 1997                                /s/ George W. Benoit  
                                                     --------------------
                                                     George W. Benoit, 
                                                     Chairman of the Board of
                                                     Directors, President, 
                                                     Chief Executive Officer




Date: August 14, 1997                                /s/ Roger J. Burns 
                                                     ------------------ 
                                                     Roger J. Burns, 
                                                     First Vice President,
                                                     Chief Financial Officer