<PAGE>   1

                    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  February 28, 1998 or
                                -----------------

 [   ]    Transition Report pursuant to Section 13 or 15 (d) of the
          Securities Exchange Act of 1934

For the Transition Period From                   to
                                 --------------       ---------------

COMMISSION FILE NUMBER 0-18091

                               RSI HOLDINGS, INC.
 ------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

        NORTH CAROLINA                              56-1200363
----------------------------------           -------------------------
(State or other jurisdiction of                  (I.R.S. Employer
 incorporation or organization)                 Identification No.)

                      28 East Court Street, P. O. Box 6847
                        Greenville, South Carolina 29606
  -----------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (864) 271-7171
  -----------------------------------------------------------------------------
                            Issuer's telephone number


                                 Not Applicable
 ------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

Check whether the issuer (1) has 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
   -----     -----

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

Common Stock, $.01 Par Value - 7,900,822 shares outstanding as of April 8, 1998

         Transitional Small Business Disclosure Format (check one):

                              Yes       No   X
                                 -----     -----


<PAGE>   2


                                      INDEX


                               RSI HOLDINGS, INC.




PART I.  FINANCIAL INFORMATION                                              PAGE

Item 1.  Financial Statements (Unaudited)

     Condensed consolidated balance sheet -- February 28, 1998                4

     Condensed consolidated statement of operations -- Three
     and six months ended February 28, 1998 and 1997                          5

     Condensed consolidated statement of cash flows -- Six 
     months ended February 28, 1998 and 1997                                  6

     Notes to condensed consolidated financial statements --
     February 28, 1998                                                        7

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

PART II. OTHER INFORMATION                                                   14

Item 1.  Legal Proceedings                                                   14

Item 2.  Changes in Securities                                               14

Item 3.  Default                                                             14

Item 4.  Submission of Matters to a Vote of Security Holders                 14

Item 5.  Other Information                                                   15

Item 6.  Exhibits and Reports on Form 8-K                                    15

SIGNATURES                                                                   16



                                        3


<PAGE>   3


                               RSI Holdings, Inc.
                Condensed Consolidated Balance Sheet (Unaudited)
                                February 28, 1998


<TABLE>
<S>                                                                  <C>
Assets

Current Assets:
     Cash                                                            $  358,000
     Certificate of deposit                                             100,000
     Notes receivable - held for sale                                   250,000
     Accounts receivable                                                 11,000
     Prepaid expenses                                                    34,000
                                                                     ----------
Total current assets                                                    753,000

Property and equipment
     Cost                                                               209,000
     Less accumulated depreciation                                       38,000
                                                                     ----------
                                                                        171,000
Other assets
     Restricted cash                                                    500,000
     Other                                                               14,000
                                                                     ----------
                                                                        514,000
                                                                     ----------
                                                                     $1,438,000
                                                                     ==========
Liabilities and shareholders' equity 
Current liabilities:
     Trade accounts payable                                          $   38,000
     Accrued expenses                                                   141,000
     Notes payable                                                      222,000
                                                                     ----------
                                                                        401,000

Deferred compensation                                                    89,000

Shareholders' equity:
     Common Stock, $.01 par value-authorized
        25,000,000 shares, issued and outstanding
        7,900,822 shares at February 28, 1998                            79,000
     Excess of paid-in capital over par value                         3,776,000
     Deficit                                                         (2,907,000)
                                                                     ----------
                                                                        948,000



Contingencies (Note C)
                                                                     ----------
                                                                     $1,438,000
                                                                     ==========
</TABLE>

See accompanying notes 


                                        4

<PAGE>   4

                               RSI Holdings, Inc.
           Condensed Consolidated Statement of Operations (Unaudited)
             Three and Six Months ended February 28, 1998 and 1997



<TABLE>
<CAPTION>
                                                    Three Months                        Six Months
                                           -----------------------------       -----------------------------
                                               1998              1997              1998              1997
                                           -----------       -----------       -----------       -----------
<S>                                        <C>               <C>               <C>               <C>        
Revenues:
     Origination fees                      $   141,000       $    39,000       $   258,000       $    39,000
     Gain on sale of loans                      32,000            10,000            58,000            10,000
                                           -----------       -----------       -----------       -----------
         Total revenues                        173,000            49,000           316,000            49,000


Expenses
     Selling, general and
         administrative                        383,000           266,000           791,000           411,000
                                           -----------       -----------       -----------       -----------
     Loss from operations                     (210,000)         (217,000)         (475,000)         (362,000)

Other income (expense)
     Interest income                            19,000            21,000            34,000            55,000
     Rental income                                   0             7,000             6,000            14,000
     Gain on sale of real estate                 1,000                 0            75,000                 0
     Interest expense                           (6,000)           (3,000)          (10,000)           (7,000)
     Cost to settle lawsuit                          0                 0           (42,000)         (300,000)
                                           -----------       -----------       -----------       -----------
         Total other income (expense)           14,000            25,000            63,000          (238,000)
                                           -----------       -----------       -----------       -----------
Net loss                                   $  (196,000)      $  (192,000)      $  (412,000)      $  (600,000)
                                           ===========       ===========       ===========       ===========

Net loss per share                         $      (.02)      $      (.03)      $      (.05)      $      (.08)
                                           ===========       ===========       ===========       ===========
Weighted average number
     of shares outstanding                   7,900,822         7,895,822         7,900,822         7,934,634
                                           ===========       ===========       ===========       ===========

</TABLE>



See accompanying notes.

                                        5
<PAGE>   5

                               RSI Holdings, Inc.
           Condensed Consolidated Statement of Cash Flows (Unaudited)
                   Six Months ended February 28, 1998 and 1997



<TABLE>
<CAPTION>
                                                             1998              1997
                                                         -----------       -----------
<S>                                                      <C>               <C>         
Cash used in operating activities                        $  (775,000)      $  (578,000)

Investing activities
     Proceeds from sale of property                          326,000              --
     Acquisition of outstanding stock of
         HomeAdd Financial Corporation                          --             (15,000)
     Purchase of equipment                                  (163,000)           (2,000)
     Purchase of common stock                                   --             (25,000)
     Organization expense                                       --             (13,000)
     Other                                                     8,000              --
                                                         -----------       -----------
Net cash provided by (used in) investing activities          171,000           (55,000)
                                                         -----------       -----------
Financing activities
     Advances under bank line of credit                    3,019,000           552,000
     Payments on bank line of credit                      (2,816,000)         (552,000)
                                                         -----------       -----------
Net cash provided by financing activities                    203,000              --
                                                         -----------       -----------
Decrease in cash and cash equivalents                       (401,000)         (633,000)
Cash and cash equivalents at beginning of year               759,000         2,256,000
                                                         -----------       -----------
Cash and cash equivalents at end of period               $   358,000       $ 1,623,000
                                                         ===========       ===========
</TABLE>




See accompanying notes.

                                        6


<PAGE>   6

RSI Holdings, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)

Note A - Basis of Presentation

         The accompanying unaudited condensed consolidated financial statements
at February 28, 1998 have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10 -QSB and Item 310(b) of Regulation S-B. Accordingly,
they do not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments including normal recurring accruals considered
necessary for a fair presentation have been included. Operating results for the
six months ended February 28, 1998 are not necessarily indicative of the results
that may be expected for the year ended August 31, 1998. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10 - KSB for the year
ended August 31, 1997.

 Note B - Sale of Real Property

         On November 19, 1997, the Company sold a parcel of real estate that was
located in Tampa, Florida for $425,000 less selling expenses of approximately
$28,000. The depreciated cost of the property was $248,000. The purchase price
was paid in a combination of cash and a $75,000 promissory note. The note is
secured by a second mortgage and bears interest at 8.5% per annum and is payable
by the purchaser over ten years. The gain on the sale is recognized under the
cost recovery method. The gain to date recognized on the sale of the property of
$75,000 is included in the results of operations for the period ended February
28, 1998.

         The principal balance of the note receivable is offset in the
accompanying balance sheet by the gain that will be recognized as income as the
principal amount of the note receivable is collected. Such amounts that have
been deferred are as follows:

              Due within one year                            $ 5,000
              Due after one year                              69,000
                                                             -------
                                                             $74,000
                                                             =======
Note C - Contingencies

         The Company is one of several defendants in a lawsuit filed in July
1993 claiming indemnification with respect to payments due and the cost of
performing certain covenants and obligations under a land lease agreement
allegedly in default. During December 1997, an agreement in principal was
reached among the parties to settle this lawsuit. The proposed settlement that
involves the payment by the Company of $42,000 to end claims by all parties to
this litigation. The Company understands that settlement documents have been
circulated to all counsel for review. The settlement amount of $42,000 is
accrued in the accompanying statements as of February 28, 1998.

         In addition, in January 1995, a complaint against the Company seeking
damages in excess of the minimal jurisdictional amount was served. The plaintiff
in that case alleges that he was injured while operating a vehicle


                                        7


<PAGE>   7

that was sold by the Company. The Complaint also named the manufacturer of the
vehicle. The manufacturer has accepted defense of the Company regarding this
matter. The Company believes, based on the arrangements with the manufacturer
and the Company's own insurance, that this action should not have a material
adverse effect on the Company's financial position.

Note D - Earnings (loss) per common share

         In 1997, The Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128, Earnings per Share. Statement No. 128
replaced the previously reported primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. Diluted earnings per share
are not presented as the Company has experienced losses from continuing
operations for all periods presented and the exercise of outstanding options
would be antidilutive. All earnings (loss) per share amounts for all periods
have been presented, and where necessary, restated to conform to the Statement
No. 128 requirements.



                                        8


<PAGE>   8


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

General

         Special Cautionary Notice Regarding Forward-Looking Statements.

         This Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act and 21E of the Exchange Act.
Forward-looking statements are indicated by such terms as "expects", "plans",
"anticipates", and words to similar effect. Such forward-looking statements are
subject to known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of the Company to be
materially different from future results, performance or achievements expressed
or implied by such forward-looking statements. Important factors ("Cautionary
Statements") that could cause the actual results, performance or achievements of
the Company to differ materially from the Company's expectations are disclosed
in this Report on Form 10-QSB including, without limitation, those factors
discussed in the paragraph immediately preceding the heading "Liquidity and
Capital Resources" on page 12 and otherwise herein. All written or oral
forward-looking statements attributable to the Company are expressly qualified
in their entirety by the Cautionary Statements. The Company does not undertake
to publicly update or revise its forward-looking statements even if experience
or future changes make it clear that any projected results expressed or implied
herein will not be realized.

Results of Operations

         The Company acquired a consumer loan business during fiscal year 1997.
The Company has no other business operations. The following discussion of the
results of operations during the three and six months ended February 28, 1998 as
compared to the three and six months ended February 28, 1997 relates to the
consumer loan business.

         Revenues were $173,000 and $316,000, respectively, during the three and
six months ended February 28, 1998 and consisted of loan origination fees and
gain from the sale of the loans made. Revenues were $49,000 during the three and
six months ended February 28, 1997.

         Selling, general and administrative expenses include expenses incurred
by HomeAdd of $274,000 and $567,000, respectively, during the three and six
months ended February 28, 1998 as compared to $138,000 and $182,000,
respectively, during the three and six months ended February 28, 1997. The
remaining general and administrative expenses primarily consist of salaries,
legal, audit and other administrative expenses incurred by the Company. The
HomeAdd expenses primarily relate to advertising, salaries, and various
administrative expenses of HomeAdd.

         The real property located in Tampa, Florida was sold during November
1997 for $425,000 less selling expenses of $28,625. The depreciated cost of the
property was $248,000. The purchase price was paid in a combination of cash and
a $75,000 promissory note. The note is secured by a second mortgage on the
property. The property is subject to a first mortgage with a bank that is
payable by the purchaser of the property in the amount of approximately
$319,000. Because of the purchaser's relatively small equity in the property,
there can be no assurance that the Company would be able to recover the
principal amount of the note if the purchaser were to default on the note.

                                        9


<PAGE>   9

Neither can there be any assurance that the Company will receive timely payments
on the note. Gain to the extent of the proceeds represented by the note
receivable is deferred and will be recognized as income as the principal amount
of the note receivable is collected. The remaining gain on sale of the property
of $75,000 is included in the results of operations for the period ended
February 28, 1998.

         The results of operations for the six months ended February 28, 1998
included $42,000 accrued as the amount expected to be paid to settle the lawsuit
relating to Holiday Inns, Inc. litigation involving RSI Corporation, the former
parent corporation of the Company, and Sparjax Corporation, RSI Corporation's
now-dissolved subsidiary. Under the terms of an agreement in principle that was
reached during December 1997, the Company will be required to pay $42,000 to end
claims by all parties to this litigation against the Company, RSI Corporation or
Sparjax Corporation. For further discussion of the settlement of the lawsuit,
reference is made to Part II, Item 1, "Legal Proceedings," which is incorporated
herein by reference.

         HomeAdd offers high loan-to-value loans ("HLTV Loans") to certain
qualified borrowers that permit the loan proceeds to be used for debt
consolidation and home improvements. Under the terms of these HLTV loans,
HomeAdd will make loans secured by a second or third mortgage in which the total
loans outstanding on that property can be up to 125% of the estimated fair value
of the real property. A qualified borrower is required to be a homeowner with
acceptable levels of income and have an acceptable credit history. Substantially
all of the loan volume during the six months ended February 28, 1998 consisted
of HLTV Loans. The Company expects that most of the loans made during fiscal
1998 will be HLTV Loans.

         HomeAdd also offers Title I home improvement loans ("Title I Loans")
under the Title I program administrated by the Federal Housing Administration
("FHA"). HomeAdd was approved by FHA as a Title I lender during 1995. The Title
I program was established by Title I of the National Housing Act of 1934. Loans
made under the Title I program are 90% guaranteed by the United States
Department of Housing and Urban Development ("HUD"). In addition to the FHA
Title I license, HomeAdd has to apply for licenses to operate under the banking
laws of each State in which it intends to operate. Approximately 1% of HomeAdd's
loan volume during the six months ended February 28, 1998 were Title I home
improvement loans. The Company does not expect Title I home improvement loans to
be a material portion of its business during fiscal year 1998.

         HomeAdd is currently authorized to operate under the laws of South
Carolina and North Carolina. HomeAdd is subject to ongoing monitoring by state
banking authorities and the failure to comply with applicable regulations could
result in the forfeiture of licenses on which the business is dependent.

         The Company sells substantially all of the loans it originates on a
non-recourse basis in the secondary market. The non-recourse basis means that
the Company represents that loans were properly documented and made in
accordance with applicable lending criteria, but that the purchaser of the loans
assumes the full credit risk. The Company's credit guidelines for the Company's
loans currently meet the underwriting criteria of the current loan purchasers.
During the six months ended February 28, 1998, the Company made loans
aggregating $3,318,000 of which $42,000 in loans were made under the Title I
Loan program and $3,276,000 in loans were made under the HLTV Loan program.
Substantially all of the loans were sold on a non-recourse basis in the
secondary market ($250,000 of these were sold during March of 1998).



                                       10


<PAGE>   10

         As of February 28, 1998, HomeAdd had twelve employees located in its
office in Greenville, South Carolina that included sales, underwriting and
administrative personnel. The Company presently solicits loans throughout South
Carolina, the Asheville/Hendersonville, North Carolina area, the Charlotte,
North Carolina area, the Greensboro/Winston Salem, North Carolina area and
during January 1998 began soliciting in the Raleigh/Durham, North Carolina area.
These areas include a substantial part of the more heavily populated areas of
North Carolina. The Company faces stiff competition in these markets. The future
plans of HomeAdd include plans to attempt to increase its volume of loans
through direct mail solicitations in certain other Southeast States. HomeAdd
will apply for authorization to operate under the banking laws of those states.
Additional personnel will be added when and if the volume of loans increases to
a level that requires the additional personnel. If HomeAdd achieves its budgeted
operating goals, the Company estimates that 14 employees will be required by
HomeAdd at August 31, 1998. There is no assurance, however, that its operating
goals can be accomplished.

         The consumer finance market is highly competitive and fragmented.
HomeAdd competes with a number of finance companies that provide financing to
individuals who may not have sufficient equity in their homes to qualify for
traditional second mortgage financing. HomeAdd also competes with established
home improvement lenders, other Title I lenders (many of whom are now making
HLTV Loans), existing mortgage brokers and bankers that offer multi-purpose
second mortgages. To a lesser extent, HomeAdd competes with commercial banks,
savings and loan associations, credit unions, insurance companies, and captive
finance arms of major manufacturing companies that may apply more traditional
lending criteria and require greater equity in the underlying real property
assets. Almost all of these competitors or potential competitors are
substantially larger and have significantly greater capital, experience and
other resources than the Company.

         The Company expects that during the next twelve months the increase in
its business, if any, will be in HLTV Loans. Title I home improvement loans are
not expected to be a material factor in its business during the next twelve
months.

         Debt consolidation and home equity loan volume generally are not
materially impacted by seasonal climate changes and, with the exclusion of
slowdowns during the holiday and vacation seasons, tends to be relatively stable
throughout the year.

         HomeAdd attempts to sell, on a non-recourse basis, all of its loans on
the secondary market to wholesale buyers. HomeAdd does not have the capital that
would be necessary to make a significant volume of loans unless it is able
promptly to sell its loans on the secondary market. There can be no assurance
that the secondary market for loans will continue to be available to HomeAdd.
Adverse changes in the secondary market could materially impair HomeAdd's
ability to originate and sell loans on a favorable or timely basis. Delays in
the sale of a loan pool beyond a quarter-end could result in greater losses for
such quarter. If HomeAdd is unable to sell its loans on the secondary market,
its ability to grow could be materially impaired and its results of operations
and financial condition could be materially and adversely affected. See
Liquidity and Capital Resources - Capital Requirements for HomeAdd.

         The Company expects that HomeAdd will continue to operate at a loss
during, at a minimum, fiscal year 1998, but based on its business plan,
currently expects HomeAdd to operate at a modest profit by fiscal 1999.
Management expects that the Company as a whole will operate at a loss during
fiscal 1999. The foregoing are forward-looking statements and the Company
cautions that there can be no assurance that the goal of profitability can be
achieved. An important factor which could cause the Company's results to differ
materially from these current estimates


                                       11


<PAGE>   11

include lower origination volume due to real estate market conditions that might
affect the appraised values of the real property that would be used as
collateral for the loans that HomeAdd plans to originate. HomeAdd's business
might be reduced if values of the collateral increase and HomeAdd's customers
thereby qualify for more traditional sources of credit such as banks. Rising
property values also might lead to an increase in prepayments which would reduce
the profitability in the secondary market for HomeAdd's loans and might have a
negative impact on the ability of HomeAdd to sell its loans. Another important
factor is the adverse consequences of changes in the interest rate environment
such as increases in rates that might reduce the number of customers that would
be willing to execute loans. Other factors that could cause the Company's
results to differ materially from these forward-looking statements include, but
are not limited to, the following: changes in economic conditions which could
(i) increase the default rate for loans originated by the Company and adversely
affect the Company's ability to sell its loans and (ii) reduce the Company's
potential customer base by decreasing the credit worthiness of potential
customers below the minimum levels at which it is profitable for the Company to
make and sell loans; the limited operating history of HomeAdd (which has been in
business only since 1995) available for reference in attempting to gauge the
prospects of the Company's lending business; inability to sell loans or the loss
of outside funding sources (currently limited to a single line of credit with a
bank), either of which could severely and adversely affect the lending
operations because the Company does not have sufficient internal resources to
finance holding a substantial number of loans until their maturity; the adverse
effects of competition, particularly in light of the existing customer
relationships and greater capital, experience and other resources of the
Company's competitors and potential competitors, especially banks; changes in
substance, enforcement or interpretation of applicable federal and state laws
and regulations, which could impose requirements which the Company would be
unable to meet; and the loss of key executives which the Company might be unable
to replace due to its limited number of personnel.

Liquidity and Capital Resources

         Anticipated Liquidity Requirements

         As discussed below under "Cash and Cash Equivalents" and "Debt
Arrangements," the Company currently has substantial cash liquidity and,
although there can be no assurance in this regard, anticipates that such capital
resources will be sufficient to enable the Company to meet its liquidity
requirement during the next twelve months.

         Refer to Item 1 of Part II, "Legal Proceedings" for a discussion of the
Company's contingent liabilities.

         Sale of real property

         The Company executed a contract to sell its office and warehouse
facility in Tampa, Florida for $425,000, less certain selling expenses, during
August of 1997. The sale was consummated on November 19, 1997. Under the terms
of the agreement, the Company financed $75,000 of this sales price over ten
years and holds a second mortgage on the Tampa property bearing interest at 8.5%
interest. The Company can offer no guarantee as to the creditworthiness of the
purchaser of the building. Proceeds from the sale of the Tampa facility were
applied first to the payment of expenses related to the sale, and remaining
proceeds were used to provide operating capital for HomeAdd.


                                       12

<PAGE>   12

         Cash and Cash Equivalents

         Cash and cash equivalents in the amount of $358,000 as of February 28,
1998 included an United States treasury bill with a maturity of three months
when purchased and having a cost basis of $125,000. Cash in excess of the
amounts invested in United States treasury bills is invested as available in a
money market fund, which may be liquidated by the Company to meet its cash needs
on a daily basis. The Company earned approximately $13,000 on its cash and cash
equivalents investments during the six months ended February 28, 1998.

         U. S. Treasury Bill

         The Company is required as described in the following paragraph to
maintain an investment in HomeAdd of $500,000. On February 28, 1998, HomeAdd
owned a Federal Home Loan Bank Bond that matures on June 19, 1998 at $500,000
and bears interest at 5.9%. The investments of HomeAdd earned approximately
$13,000 during the six months ended February 28, 1998.

         Debt Arrangements

         During December of 1996, HomeAdd executed a warehouse line of credit
with a bank in the amount of $500,000 that is used to finance loans made to
third parties in connection with its consumer finance business. The loans made
by HomeAdd are collateral for this line of credit. This line of credit bears
interest at the bank's prime rate plus one percent. During August of 1997,
HomeAdd executed an amendment to the line of credit agreement in which, among
other things, the bank extended the time for repayment of an advance from
fifteen days to twenty-five days. Under the terms of the loan agreement and an
agreement that the Company has executed with HomeAdd, HomeAdd is required to
maintain tangible net worth of at least $500,000. See the next paragraph for the
amount of net worth required by HUD. The bank also requires that this tangible
net worth include certain specified assets with maturity of five years or less
in the amount of $500,000. This line of credit expires on April 30, 1998.

         Capital Requirements for HomeAdd

         The Company invested $924,000 in HomeAdd during the fiscal year ended
August 31, 1997 and an additional $384,000 during the six months ended February
28, 1998. The investment was used as follows: acquisition of common stock -
$15,000, equipment rental for first year - $18,000, purchase of U. S. Treasury
bill - $500,000, purchase of money market account - $25,000 and operating
capital of $750,000. HUD requires that HomeAdd have an adjusted net worth of at
least $250,000. Given its cash and cash equivalents position, the Company
believes that it has the capacity to provide the additional capital that will be
required by HomeAdd during fiscal 1998. The Company presently anticipates that
it will need additional external sources of capital at least by fiscal year 1999
and discussions are underway with a bank to increase the bank line of credit.

         Year 2000

         Many existing hardware and software computer systems were designed to
accept only two-digit date entries for the year, assuming that the first two
digits of every year are "19." When confronted with a date in the year 2000 or
beyond, such systems may react by malfunctioning or failing entirely. The
Company has assessed key financial, informational and operational systems.
Management does not anticipate that the Company will encounter significant
operational issues relating to the Year 2000 problem. Furthermore, the financial
impact of making required


                                       13

<PAGE>   13

systems changes is not expected to be material to the Company's consolidated
financial position, results of operations or cash flows.

PART II.  Other information

ITEM 1. Legal Proceedings

         Holiday Inns, Inc. Litigation

         RSI Corporation (now Delta Woodside), the former parent corporation of
the Company, and Sparjax Corporation, RSI Corporation's now-dissolved
subsidiary, are among several defendants in a lawsuit filed on July 29, 1993 by
Holiday Inns, Inc. in the Circuit Court of the Fourth Judicial Circuit for Duval
County, Florida. This lawsuit is described in detail in the Company's annual
report on Form 10-KSB for the fiscal year ended August 31, 1997.

         During December 1997, an agreement in principle was reached to settle
the Holiday Inn claim against the Company, RSI Corporation and Sparjax
Corporation as well as all other defendants. The settlement involves the payment
by the Company of $42,000 to end claims by all parties to this litigation
against the Company, RSI Corporation and Sparjax Corporation. The Company is
informed that settlement documents have been circulated to all counsel for
review and comment. There can be no assurance that the settlement will be
consummated. The $42,000 settlement has been accrued in the accompanying
financial statements.


ITEM 2.   CHANGES IN SECURITIES*

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES*

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

         The following summarizes the votes at the Annual Meeting of the
Company's shareholders held on January 15, 1998.

<TABLE>
<CAPTION>
                                                                     Broker
      Matter         For      Against     Withheld    Abstentions   Nonvotes
      ------         ---      -------     ---------   -----------   --------
<S>               <C>         <C>         <C>         <C>           <C>
Election of
Directors

Buck Mickel       7,008,392         0       92,773              0         0
C. C. Guy         7,013,815         0       87,350              0         0
Charles M. Bolt   7,013,815         0       87,350              0         0
Buck A. Mikel     7,013,815         0       87,350              0         0

Ratification of
proposal to amend
stock option plan
from 250,000 to
750,000 shares    5,836,393    49,646            0        268,495         0

Ratification of
Appointment of
Ernst & Young LLP
for fiscal 1998   7,010,303     2,172            0         88,690         0
</TABLE>



                                       14

<PAGE>   14

ITEM 5.  OTHER INFORMATION*

* Items 2, 3, and 5 are not presented as they are not applicable or the
  information required thereunder is substantially the same as information
  previously reported.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) Listing of Exhibits

                  27 Financial Data Schedule (electronic filing only)

         (b) Reports on Form 8-K

         There were no reports on Form 8-K filed during the second quarter ended
February 28, 1998.




                                       15

<PAGE>   15

                                   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.




                                            RSI HOLDINGS, INC.
                                        --------------------------



 April 14, 1998                         /s/ Joe F. Ogburn
---------------                         ------------------------------
    (Date)                                      Joe F. Ogburn,
                                        Vice President and Treasurer
                                        (Principal Accounting Officer)





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