<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 10-Q


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

               For the second quarterly period ended June 30, 1997




                                GIANT GROUP, LTD.

        9000 Sunset Boulevard, 16th Floor, Los Angeles, California 90069

                  Registrant's telephone number: (310) 273-5678




                         Commission File Number: 1-4323

                I.R.S. Employer Identification Number: 23-0622690

                        State of Incorporation: Delaware




         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]

         On August 8, 1997, the latest practicable date, there were 3,180,655
shares of common stock outstanding.


<PAGE>   2
                               GIANT GROUP, LTD.

                                      INDEX



PART I. FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                                       Page No.
                                                                                                       --------
<S>                                                                                                     <C>
Item 1.  Financial Statements

               Consolidated Statements of Operations (Unaudited) -
               Three and Six-Month Periods Ended June 30, 1996 and 1997                                    3

               Consolidated Balance Sheets -  December 31, 1996
               and June 30, 1997 (Unaudited)                                                               4

               Consolidated Statements of Cash Flows (Unaudited) -
               Six-Month Periods Ended June 30, 1996 and 1997                                              5

               Notes to Consolidated Financial Statements                                                  6-8

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                                               9-10


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                                                 11

Item 4.  Submission of Matters to a Vote of Security Holders                                               11

Item 6.  Exhibits and Reports on Form 8-K                                                                  11

               (a) Exhibits

               (b) Reports on Form 8-K

SIGNATURE                                                                                                  12
</TABLE>


<PAGE>   3
                          PART 1. FINANCIAL INFORMATION
                          Item 1. Financial Statements

                                GIANT GROUP, LTD.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
        for the three and six-month periods ended June 30, 1996 and 1997
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                 Three-months ended                    Six-months ended
                                                       June 30                              June 30
                                                  1996            1997                 1996            1997
                                              -----------     -----------          -----------     -----------
($ in thousands, except per share amounts)
<S>                                           <C>             <C>                  <C>             <C>        
Revenue:

   Investment income                          $       652     $       649          $     1,564     $     1,348
   Gains from sale of investments                   1,955              51                2,486              92
   Other income                                         5               4                   14               9
                                              -----------     -----------          -----------     -----------
          Total revenue                             2,612             704                4,064           1,449
                                              -----------     -----------          -----------     -----------

Costs and expenses:

   Co-ownership program                              --               497                 --               890
   General and administrative                       1,057           1,224                1,988           2,358
   Proxy contest and related legal                    736            --                    736            --
   Exchange Offer and related expenses                130            --                    518            --
   Interest expense                                     1              77                   32              78
   Depreciation and amortization                       97             175                  177             341
                                              -----------     -----------          -----------     -----------
          Total costs and expenses                  2,021           1,973                3,451           3,667
                                              -----------     -----------          -----------     -----------

Gain on sale of investment in affiliate             3,197            --                  3,197            --

Equity in income (loss) of affiliate                 (168)             14                  229            (129)
                                              -----------     -----------          -----------     -----------

Income (loss) before benefit
   for income taxes                                 3,620          (1,255)               4,039          (2,347)
Benefit for income taxes                           (8,563)           --                 (8,563)           --
                                              -----------     -----------          -----------     -----------
Net income (loss)                             $    12,183     ($    1,255)         $    12,602     ($    2,347)
                                              ===========     ===========          ===========     ===========

Earnings (loss) per common share
   and common equivalent share                $      2.33     ($     0.39)         $      2.30     ($     0.67)
                                              ===========     ===========          ===========     ===========

Weighted average common shares                  5,266,000       3,191,000            5,508,000       3,490,000
                                              ===========     ===========          ===========     ===========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                        3


<PAGE>   4
                                GIANT GROUP, LTD.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                  December 31,  June 30,
                                                                                      1996        1997
                                                                                    -------      -------
                                                                                               (Unaudited)
($ in thousands, except per share amounts)
<S>                                                                                  <C>          <C>    
ASSETS
Current assets
   Cash and cash equivalents                                                         $12,644      $ 3,290
   Marketable securities                                                              10,583       22,093
   Income tax receivables                                                             10,928          115
   Note and other receivables                                                          3,825          454
   Assets held-for-sale                                                               21,485       25,586
   Prepaid expenses and other current assets                                           1,013        1,499
                                                                                     -------      -------

                                 Total current assets                                 60,478       53,037

Property and equipment, net                                                            3,559        4,213
Investment in affiliate                                                                2,926        2,797
Note receivable and other assets                                                       2,084        2,853
                                                                                     -------      -------

                                 Total assets                                        $69,047      $62,900
                                                                                     =======      =======


LIABILITIES
Current liabilities
   Note payable                                                                      $10,500      $10,000
   Accounts payable and other liabilities                                              1,033          766
   Income taxes payable                                                                3,362        3,362
   Deferred income taxes                                                                 164          405
                                                                                     -------      -------

                                 Total current liabilities                            15,059       14,533

Deferred income taxes                                                                  1,173        1,173
                                                                                     -------      -------

                                 Total liabilities                                    16,232       15,706
                                                                                     -------      -------

Commitments and contingencies

STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; authorized 2,000,000 shares,
  none issued                                                                           --           --
Class A Common  stock, $.01 par value; authorized 5,000,000 shares,
  none issued                                                                           --           --
Common stock, $.01 par value; authorized 12,500,000 shares,
  issued 7,266,000 shares at June 30 and December 31                                      73           73
Capital in excess of par value                                                        36,767       36,767
Unrealized holding gains on marketable securities                                        246          610
Retained earnings                                                                     47,708       45,361
                                                                                     -------      -------

                                                                                      84,794       82,811
  Less common stock in treasury; 4,085,000 shares at June 30
   and 3,626,000 at December 31, at cost                                              31,979       35,617
                                                                                     -------      -------

                                 Total stockholders' equity                           52,815       47,194
                                                                                     -------      -------

                                 Total liabilities and stockholders' equity          $69,047      $62,900
                                                                                     =======      =======
</TABLE>


          See accompanying notes to consolidated financial statements.


                                        4




<PAGE>   5
                                GIANT GROUP, LTD.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                        for the six-month periods ended
                             June 30, 1996 and 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                         1996              1997
                                                                       --------          --------
($ in thousands)
<S>                                                                    <C>               <C>      
CASH FLOWS (USED) PROVIDED BY OPERATING ACTIVITIES:

 Net income (loss)                                                     $ 12,602          ($ 2,347)
 Adjustments to reconcile net income (loss) to net cash (used)
   provided by operating activities:
     Depreciation and amortization                                          177               341
     Gain on sale of investments                                         (2,486)              (92)
     Accretion of discounts on investments                                 (213)             (714)
     Gain on sale of investment in affiliate                             (3,197)             --
     Equity in (income) loss of affiliate                                  (229)              129
 Changes in operating assets and liabilities:
  (Increases) decreases in assets
     Income tax receivables                                              (8,977)           10,813
     Note and other receivables                                             564                60
     Prepaid expenses and other                                             153              (610)
  Increases (decreases) in liabilities
     Accounts payable and other liabilities                                 168              (267)
     Income tax payable                                                    (259)             --
                                                                       --------          --------
             Net cash (used) provided by operating activities            (1,697)            7,313
                                                                       --------          --------

CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:

Payment of short-term note payable                                         --             (10,500)
Proceeds from refinancing                                                  --              10,000
Purchases of assets held-for-sale                                          --              (4,101)
Payments received on debt investment and short-term advance                --               1,843
Purchases of marketable securities                                       (2,126)          (16,474)
Sales of marketable securities                                           15,263             9,098
Proceeds from sale of affiliate's debt securities                        15,620              --
Purchases of affiliate's debt securities                                   --              (2,024)
Proceeds from sale of investment in affiliate                             4,751              --
Purchases of  property and equipment                                       (133)             (871)
                                                                       --------          --------
             Net cash provided (used) by investing activities            33,375           (13,029)
                                                                       --------          --------

CASH FLOWS USED BY FINANCING ACTIVITIES:

Proceeds from the exercise of stock options                               2,025              --
Repayment of short-term borrowings                                       (1,625)             --
Purchase of treasury stock                                              (13,348)           (3,638)
                                                                       --------          --------

             Net cash used by financing activities                      (12,948)           (3,638)
                                                                       --------          --------

             Increase (decrease) in cash and cash equivalents            18,730            (9,354)

Cash and cash equivalents:
   Beginning of period                                                   16,991            12,644
                                                                       --------          --------
   End of period                                                       $ 35,721          $  3,290
                                                                       ========          ========


Supplemental disclosure of cash (paid) received for:
   Income taxes                                                        ($   459)         $ 10,813
   Interest                                                                 (32)              (78)
</TABLE>


          See accompanying notes to consolidated financial statements.


                                        5




<PAGE>   6
                                GIANT GROUP, LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)


1.       BASIS OF PRESENTATION

                  The accompanying unaudited consolidated financial statements
         have been prepared in accordance with Form 10-Q instructions and in the
         opinion of management contain all adjustments (consisting of only
         normal recurring accruals) necessary to present fairly the financial
         position as of June 30, 1997, the results of operations for the three
         and six-month periods ended June 30, 1996 and 1997 and cash flows for
         the six-months ended June 30, 1996 and 1997. These results have been
         determined on the basis of generally accepted accounting principles and
         practices applied consistently with those used in the preparation of
         the Company's 1996 Annual Report on Form 10-K. Certain 1996 amounts
         have been reclassified to conform to the 1997 presentation. Operating
         results for the three and six-month periods ended June 30, 1997 are not
         necessarily indicative of the results that may be expected for the full
         year. It is suggested that the accompanying consolidated financial
         statements be read in conjunction with the financial statements and
         notes in the Company's 1996 Annual Report on Form 10-K.

2.       INVESTMENT IN AFFILIATE

                  GIANT's investment in Rally's of $2,797 and $2,926 at June 30,
         1997 and December 31, 1996, respectively, represents approximately 15%
         of Rally's outstanding common stock. At June 30, 1997, the Company
         owned 3,137,000 shares of Rally's, the market value of which was
         $8,235.

                  During the quarter ended June 30, 1997, the Company purchased
         $2,224 face value of Rally's Senior Notes in the open market, which are
         included in marketable securities.

                  On June 16, 1997, Checkers and Rally's announced that they had
         ended talks for a proposed merger which was previously announced on
         March 25, 1997.

         Summarized financial information for Rally's is as follows:

<TABLE>
<CAPTION>
         Operating results:                                             Three-Months Ended              Six-Months Ended
                                                                       ---------------------        -----------------------
                                                                        6/30/96      6/29/97        6/30/96         6/29/97
                                                                        -------      -------        -------         -------
<S>                                                                   <C>           <C>              <C>           <C>     
         Revenues                                                     $ 47,357      $38,090          $ 89,269      $ 70,685
         Pre-tax income (loss) from operations                           2,413        1,806               (956)       2,821
         Extraordinary gain, net of income taxes of $1,817                  --           --            4,522             --
         Net income (loss)                                                  111          92              949           (860)
         GIANT's share of non-cash equity income
            (loss) in Rally's net income (loss)                            (168)        14               229           (129)
</TABLE>

3.       YACHT REFINANCE

                  On May 16, 1997, the Company signed an agreement to
         refinance one of its luxury yachts available for sale under the
         Co-Ownership Program. The term of the mortgage is twenty-six months
         from the date of advancement of funds, which occurred on May 30, and is
         subject to prepayment upon the transfer of an interest in the yacht,
         which is collateral for this loan. The interest rate is prime plus one
         half of one percent (0.50%). Interest is payable monthly in arrears. In
         July, the loan was paid in full.



                                        6

<PAGE>   7
                                GIANT GROUP, LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)


4.       COMMITMENTS AND CONTINGENCIES

                  In January and February 1994, two putative class action
         lawsuits were filed, purportedly on behalf of the shareholders of
         Rally's in the United States District Court for the Western District of
         Kentucky, against Rally's, GIANT, Burt Sugarman, certain Rally's
         present and former officers and directors and its auditors. The
         complaints allege defendants violated the Securities Exchange Act of
         1934, as amended, among other claims, by issuing inaccurate public
         statements about Rally's in order to arbitrarily inflate the price of
         Rally's common stock, and seek unspecified damages, including punitive
         damages. On April 15, 1994, Rally's filed a motion to dismiss and a
         motion to strike. On April 5, 1995, the Court struck certain provisions
         of the complaint but otherwise denied Rally's motion to dismiss. In
         addition, the Court denied plaintiffs' motion for class certification;
         the plaintiffs' renewed this motion, and, on April 16, 1996, the Court
         certified the class. Two settlement conferences have been conducted but
         have been unsuccessful. Discovery is now set to be completed in
         September 1997. No trial date has been scheduled yet. Management is
         unable to predict the outcome of this matter at the present time or
         whether or not certain available insurance coverages will apply.
         Rally's and the Company deny all wrong-doing and intend to defend
         themselves vigorously in this matter.

                  In February 1996, Harbor commenced a derivative action,
         purportedly on behalf of Rally's, against GIANT, Burt Sugarman, David
         Gotterer, and certain of Rally's other officers and directors before
         the Delaware Chancery Court. Harbor named Rally's as a nominal
         defendant. Harbor claims that the directors and officers of both
         Rally's and GIANT, along with GIANT, breached their fiduciary duties to
         the public shareholders of Rally's by causing Rally's to repurchase
         certain Rally's Senior Notes at an inflated price. Harbor seeks
         "millions of dollars" in damages, along with rescission of the
         repurchase transaction. In the fall of 1996, all defendants moved to
         dismiss this action. On April 3, 1997, the Chancery Court denied
         defendants' motion. GIANT denies all wrongdoing and intends to
         vigorously defend itself in this action. It is not possible to predict
         the outcome of this action at this time.

                  In February 1996, Michael Shores on behalf of himself and
         purportedly all other stockholders of the Company commenced a putative
         class action against the Company, and certain of the Company's current
         and former directors, Burt Sugarman, David Gotterer, Terry Christensen
         and Robert Wynn. The complaint, filed before the Los Angeles County
         Superior Court, alleges that these directors breached their fiduciary
         duties by adopting a stockholder rights plan, by causing GIANT to sell
         certain Rally's Senior Notes back to Rally's, by causing GIANT to
         repurchase certain amounts of its own Common Stock pursuant to its
         stock repurchase program and by agreeing to the Exchange Offer. The
         complaint claims that these actions were undertaken to entrench
         management rather than for the benefit of the Company and its
         stockholders. The complaint seeks unspecified damages, injunctive
         relief and a recovery of attorneys' fees and costs. In February 1997,
         defendants filed a motion to dismiss for failure to make a
         pre-litigation demand on the Board of Directors to investigate the
         plaintiffs' claim. The motion asks the court, in the alternative, to
         stay the litigation to permit the Company to address plaintiffs' claims
         internally. Argument on this motion is now set for September 3, 1997.
         The Company denies all wrongdoing and intends to vigorously defend
         itself in this action. It is not possible to predict the outcome of the
         action at this time.



                                        7

<PAGE>   8
                                GIANT GROUP, LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)


4.       COMMITMENTS AND CONTINGENCIES (cont'd)

                  In October 1996, KCC filed a complaint, in the Los Angeles
         County Superior Court, against Joseph Pike, NeoGen Investors, L.P.,
         N.D. Management, Inc., NeoGen Holdings, L.P., Danco Laboratories, Inc.
         and NeoGen Pharmaceutical, Inc. that states causes of action for fraud,
         breach of fiduciary duty, fraudulent concealment, breach of contract,
         unfair business practices and permanent and preliminary injunctive
         relief and against the licensors of Mifepristone, Population Council
         Inc. and Advances in Health Technology, Inc., on a declaratory relief
         claim. The complaint seeks damages for the breach by Mr. Joseph Pike
         and related entities of a July 24, 1996 agreement by which KCC agreed
         to contribute $6,000, in return for a 26% equity interest in the entity
         producing the abortion inducing drug, Mifepristone, in the United
         States and other parts of the world ("NeoGen Agreement"). The licensors
         of Mifepristone claim that their prior approval was necessary for the
         July 24, 1996 NeoGen Agreement between KCC and Joseph Pike and the
         other defendants. On February 19, 1997, the Pike defendants filed an
         answer to the complaint, denying its material allegations and raising
         affirmative defenses. On that date, certain defendants filed a
         cross-complaint against KCC, GIANT, Burt Sugarman, and two of GIANT's
         directors, Terry Christensen and David Malcolm alleging causes of
         action for fraud, breach of contract, intentional interference with
         prospective economic advantage, negligent interference with prospective
         economic advantage and unfair business practices. Discovery is
         on-going. Trial has been set for February 23, 1998.

                  In November 1996, Joseph Pike filed a complaint for defamation
         against GIANT, KCC, Burt Sugarman, Terry Christensen, David Malcolm and
         Does 1 through 50, in the San Diego County Superior Court. The
         complaint seeks an unspecified amount of general, special and exemplary
         damages. All defendants have answered the complaint, denying its
         material allegations and raising several affirmative defenses. Trial
         has been set for November 7, 1997. KCC, GIANT and the other defendants
         deny all wrongdoing and intend to vigorously defend the action. It is
         not possible to predict the outcome of the action at this time.

                  Since management does not believe that the previously
         mentioned lawsuits, in which the Company is a defendant, contain
         meritorious claims, management believes that the ultimate resolution of
         the lawsuits will not materially and adversely affect the Company's
         financial position or results of operations.


5.       NEW ACCOUNTING PRONOUNCEMENTS

                  In March 1997, the FASB issued SFAS No. 128, "Earnings per
         Share" (SFAS 128) and SFAS No. 129, "Disclosure of Information about
         Capital Structure" (SFAS 129). SFAS 128 revises and simplifies the
         computation for earnings per share and requires certain additional
         disclosures. SFAS 129 requires additional disclosures regarding the
         Company's capital structure. This additional disclosure will be adopted
         as prescribed by SFAS 128 and 129. Management does not expect the
         adoption of these standards to have a material effect on the Company's
         financial position or the results of operations.




                                        8

<PAGE>   9
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS. (DOLLARS IN THOUSANDS EXCEPT PER SHARE 
         AMOUNTS)

RESULTS OF OPERATIONS FOR THE THREE AND SIX-MONTHS ENDED JUNE 30, 1997 VERSUS
THE COMPARABLE 1996 PERIOD


         Total revenue for the three and six-month periods ended June 30, 1997
decreased by $1,908 to $704 and by $2,615 to $1,449, respectively. The decrease
in revenue resulted from lower gains on the sale of the Company's investments in
marketable securities, recorded in the three and six-month periods ended June
30, 1997 of $1,904 and $2,394, respectively.

          During the six months ended June 30, 1997, The Ocean Group incurred
expenses of $1,014, including amortization of start-up costs of $124, in
operating The Co-Ownership Program, which was launched in February 1997.
Expenses consisted primarily of advertising of $285, crew and related expenses
of $245, repairs and maintenance of $148, management and professional fees of
$76 and provisions of $62. Currently, no Co-Ownership interests have been sold.

          In 1997, general and administrative expenses for the three and
six-months ended June 30, 1997 and 1996 increased by $167 to $1,224 and by $370
to $2,358, respectively. For the current quarter, this increase is primarily due
to higher rent and office expenses of $91, both related to the Company's move
into its new office space and higher travel of $62. For the six months ended
June 30, 1997, the increase is primarily due to higher travel of $167, higher
rent and office expenses of $103, and higher salaries and benefits of $72.

           Interest expense for the three and six-month periods ended June 30,
1997 and 1996 increased by $76 to $77 and by $46 to $78, respectively, primarily
due to the financing of one of the luxury yachts in the second quarter. Interest
expense for the prior six month period included $30 related to the Company's
9.25% Term Note, which was paid in February, 1996.

         GIANT's investment in Rally's at June 30, 1997 and December 31, 1996,
represents approximately 15% of Rally's outstanding common stock. Rally's
reported a net income of $92 and a net loss $860 for the three and six-months
ended June 29, 1997 and a net income of $111 and $949 for the three and
six-months ended June 30, 1996. GIANT's non-cash equity in Rally's for the three
and six-months ended June 30, 1997 was income of $14 and a loss of $129 compared
to a loss of $168 and income of $229 for the comparable 1996 period. Rally's
current year to date operating results improved as a result of substantial
reductions in food, paper and labor costs as a percentage of sales, as compared
to last year. However, the positive effect of cost savings in the second quarter
was reduced as a result of higher advertising expenses and costs incurred
related to the proposed merger between Rally's and Checkers, which was
terminated in June 1997. Prior year to date net income included an extraordinary
income item of $4,522, net of tax, related to the early extinguishment of debt.
In addition, Giant's 1996 non-cash equity in Rally's earnings has been adjusted
to reflect the decrease in the Company's ownership percentage in Rally's due to
sale of Rally's common stock to CKE and Fidelity in May 1996.

         The Company's consolidated financial statements reflect valuation
allowances of $4,848 and $4,796, at June 30, 1997 and December 31, 1996,
respectively, as it is not likely, as defined in SFAS No. 109 that these tax
benefits will be realized in the near future.

LIQUIDITY AND CAPITAL RESOURCES

         Cash and cash equivalents, marketable securities and income tax and
other receivables totaled $25,952 at June 30, 1997 compared with $37,980 at
December 31, 1996. At June 30, 1997 and December 31, 1996, the Company had
working capital of $38,504 and $45,419, respectively, and current ratios of 
approximately 4 to 1. In addition, as of June 30, 1997 and December 31, 1996, 
the Company owned 3,137,000 shares of Rally's common stock, having a market 
value of $8,235.

         At June 30, 1997 and December 31, 1996, the Company's consolidated
balance sheets included a liability of approximately $3,200 related to a
proposed assessment by the State of California made as a result of their audit
of the tax years 1989 through 1991. GIANT has vigorously disputed this
assessment and is awaiting the resolution.








                                        9

<PAGE>   10
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS. (CONT.) (DOLLARS IN THOUSANDS EXCEPT PER 
         SHARE AMOUNTS)

LIQUIDITY AND CAPITAL RESOURCES (CONT.)


         Net cash provided by operating activities for the six-months ended June
30, 1997 was $7,313 compared to cash used by operating activities of $1,697 for
the comparable period in 1996. This increase in cash provided by operating
activities was attributable to income tax refunds of $10,813 received related to
the realization of capital losses on the 1996 sales of Rally's common stock and
net operating loss carryback claim, lowered by cash used for the funding of the
Company's operations.

         Net cash used by investing activities for the six-months ended June 30,
1997 was $13,029 compared to cash provided by investing activities of $33,375
for the comparable period in 1996. During the first three months of 1997, the
Company paid the remaining balance of $10,500 on the short-term note which
financed assets purchased in 1996 for The Co-Ownership Program. On May 16, 1997,
the Company signed an agreement to borrow $10,000. This loan is secured by one
of its luxury yachts. The term of the mortgage is twenty-six months from the
date of advancement of funds, which occurred on May 30, and is subject to
prepayment in the event of a transfer of an interest in this yacht. In July, the
loan was paid in full. The Company received principal payments of $1,843 on its
investment in Checkers 13% subordinated debt, including payment in full of the
1996 short-term advance. Finally, during the current year, the Company paid $871
for furniture and equipment and for leasehold improvements for its new office
space.

         Net cash used by financing activities for the six-months ended June 30,
1997 was $3,638 compared to $12,948 for the comparable period in 1996. In 1997,
the Company, with the approval of the Board of Directors, purchased 459,000
shares of its own Common Stock at a cost of $3,638 compared to 1,465,000 shares
at a cost of $13,348 in 1996.

         The Company's current liquidity is provided by cash and cash
equivalents, liquidation of marketable securities, cash received from note
receivables and investment income. Management believes that this liquidity, plus
the Company's capital resources and its ability to obtain financing at favorable
rates are sufficient for the Company to properly capitalize its current and
future business operations, as well as fund its on-going operating expenses.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

         The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements: Certain information included in this
document (as well as information included in oral statements or other written
statements made or to be made by the Company) contains statements that are
forward-looking, such as statements relating to plans for future activities.
Such forward-looking information involves important risks and uncertainties that
could significantly affect anticipated results in the future and, accordingly,
such results may differ from those expressed in any forward-looking statements
made by or on behalf of the Company. These risks and uncertainties include, but
are not limited to, those relating to the development and implementation of the
Company's new business plan, the acceptance of the Company's Luxury Yacht
Co-Ownership Program, conditions affecting the luxury yacht business generally,
domestic and global economic conditions, activities of competitors, changes in
federal or state tax laws and of the administration of such laws.




                                       10

<PAGE>   11
                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         For information regarding legal matters, see Note 4 of the Notes to
         Consolidated Financial Statements on page 7 of this Form 10-Q and Item
         3 "Legal Proceedings" as reported in the Company's Annual Report on
         Form 10-K for the year ended December 31, 1996.

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

         The Company's Annual Meeting of Stockholders was held on May 8, 1997.
         The stockholders elected a Board of five directors, approved proposals
         to amend the Company's 1985 Non-Qualified Stock Option Plan, the
         Company's 1996 Employee Stock Option Plan and the Company's 1996 Stock
         Option Plan Non-Employee Directors, approved the adoption of the 1997
         Incentive Compensation Plan for Executive Officers and ratified the
         appointment of Arthur Andersen LLP as the Company's independent
         auditors.

         Results of the voting in connection with each of the matters submitted
         to the stockholders were as follows:

<TABLE>
<CAPTION>
                                                                                For              Against           No Vote
                                                                                ---              -------           -------
<S>                                                                             <C>              <C>                <C>   
         Board of Directors
         ------------------
         Terry Christensen                                                      2,351,339           -              412,851
         David Gotterer                                                         2,351,061           -              413,129
         David Malcolm                                                          2,351,061           -              413,129
         Jeffery Rosenthal                                                      2,351,361           -              412,829
         Burt Sugarman                                                          2,350,795           -              413,395

         Amend Company's 1985 Non-Qualified Stock Option Plan                   2,133,475        536,480            94,235
         Amend Company's 1996 Employee Stock Option Plan                        1,603,733        869,705           290,752
         Amend Company's 1996 Stock Option Plan for Non-                        1,648,429        835,078           280,683
           Employee Directors
         Adopt Company's 1997 Incentive Compensation Plan for
           Executive officers                                                   2,471,634        110,580           181,976
         Ratify appointment of Arthur Andersen LLP as Company's
          independent auditors                                                  2,689,965         62,122            12,103
</TABLE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

        (a)   Exhibits

                  10.1     Loan agreement ($10,000,000) between GIANT MARINE
                           GROUP, LTD. and debis Financial Services, Inc., dated
                           May 16, 1997.

                  10.2     Mortgage between GIANT MARINE GROUP, LTD. ("Owner")
                           and debis Financial Services, Inc. ("Mortgagee"),
                           dated May 16, 1997.

                  11.      Statement re: Computation of Per Share Earnings

                  27.      Financial Data Schedule

        (b)   Reports on Form 8-K

              No reports on Form 8-K have been filed by the Company during the
        second quarterly period ended June 30, 1997.

ITEMS 2, 3, AND 5 are not applicable.


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<PAGE>   12
                                    SIGNATURE




Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                      GIANT GROUP, LTD. - Registrant


Date: August 8, 1997                 By: /s/ BURT SUGARMAN
                                         ------------------------------------
                                          Burt Sugarman
                                          Chairman of the Board and Chief
                                          Executive Officer



                                
Date: August 8, 1997                 By: /s/ PASQUALE A. AMBROGIO
                                         ------------------------------------
                                          Pasquale A. Ambrogio
                                          Controller
        















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