United States
                       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 May 31, 2004 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, including area code)

                                 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 -
7,846,455 shares outstanding as of July 13, 2004

Transitional Small Business Disclosure Format (check one):Yes [  ] No [X]


<PAGE>


                                      INDEX

<TABLE>
<CAPTION>

                               RSI HOLDINGS, INC.



PART I.  FINANCIAL INFORMATION                                                                     PAGE

Item 1.  Financial Statements (Unaudited)

<S>                                                                                                    <C>
     Condensed consolidated balance sheet - May 31, 2004                                               1

     Condensed consolidated statements of operations - Three and nine months
     ended May 31, 2004 and May 31, 2003                                                               2

     Condensed consolidated statements of cash flows - Nine months ended
     May 31, 2004 and May 31, 2003                                                                     3

     Notes to condensed consolidated financial statements - May 31, 2004                               4

Item 2.  Management's discussion and analysis of financial condition and results of operations         7

Item 3.  Controls and Procedures                                                                      10

PART II. OTHER INFORMATION                                                                            11

Item 1.  Legal Proceedings                                                                            11

Item 2.  Changes in Securities and Small Business Issuer
                  Purchases of Equity Securities                                                      11

Item 3.  Defaults upon senior securities                                                              11

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

Item 5.  Other Information                                                                            11

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

SIGNATURES                                                                                            12


</TABLE>




<PAGE>

                               RSI HOLDINGS, INC.
                CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                  MAY 31, 2004

  Assets
Current Assets
      Cash                                                 $ 115,533
      Accounts receivable                                    152,965
      Prepaid expenses and other                              48,701
                                                         -----------

           Total current assets                              317,199

Property and equipment
      Cost                                                   134,517
      Less accumulated depreciation                           64,891
                                                         -----------

      Property and equipment - net                            69,626

Other assets:
      Customer related intangible assets, net of
           amortization of $290,012                        1,646,277
                                                         -----------

                                                         $ 2,033,102
                                                         ===========

  Liabilities and Shareholders' Deficit

Current liabilities
      Accounts payable                                      $ 90,431
      Accrued expenses                                        36,562
      Current maturities of long-term debt                   166,545
                                                         -----------

           Total current liabilities                         293,538

Long-term debt and other liabilities
      Long-term debt                                       1,836,459
      Accrued interest                                       204,758

Commitments and contingencies

Shareholders' deficit:
      Common Stock, $.01 par value-authorized
           25,000,000 shares, issued and outstanding
           7,846,455 shares                                   78,464
      Additional paid-in capital                           4,951,741
      Deficit                                             (5,331,858)
                                                         -----------

           Total shareholders' deficit                      (301,653)
                                                         -----------

                                                         $ 2,033,102
                                                         ===========



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





                                       1
<PAGE>
<TABLE>
<CAPTION>

                                                    RSI HOLDINGS, INC.
                                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                             FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2004 AND MAY 31, 2003



                                                             For the           For the            For the          For the
                                                          Three months       Nine months       Three months      Nine months
                                                              Ended             Ended              Ended            Ended
                                                             May 31             May 31            May 31            May 31
                                                              2004               2004              2003              2003
                                                          -------------      ------------      ------------      ------------

<S>                                                         <C>               <C>               <C>              <C>
Revenues from services                                      $1,230,643        $ 3,685,443       $ 1,277,132      $ 3,965,220
Cost of services                                             1,025,957          3,057,736         1,039,860        3,210,512
                                                            ----------        -----------       -----------      -----------

Gross profit                                                   204,686            627,707           237,272          754,708

Expenses:
      Selling, general and administrative                      190,196            629,279           203,020          657,448
                                                            ----------        -----------       -----------      -----------

           Income (loss) from operations                        14,490             (1,572)           34,252           97,260

Other income (expense):
      Interest income and other                                     20                 75                88              735
      Interest expense                                         (35,135)          (106,600)          (37,477)        (112,856)
                                                            ----------        -----------       -----------      -----------

           Total other income (expense)                        (35,115)          (106,525)          (37,389)        (112,121)
                                                            ----------        -----------       -----------      -----------

Loss before income taxes                                     $ (20,625)        $ (108,097)      $    (3,137)       $ (14,861)
Income tax expense                                                   -                  -                 -                -
                                                            ----------        -----------       -----------      -----------

Net (loss)                                                   $ (20,625)        $ (108,097)      $    (3,137)       $ (14,861)
                                                            ==========        ===========       ===========      ===========

Basic and diluted (loss) per share                           $      -          $    (0.01)      $         -        $      -
                                                            ==========        ===========       ===========      ===========

Shares used in computing basic and
      diluted (loss) per share                               7,846,455          7,846,455         7,846,455        7,833,268
                                                            ==========        ===========       ===========      ===========



</TABLE>










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


                                       2
<PAGE>
<TABLE>
<CAPTION>

                                             RSI HOLDINGS, INC.
                         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                          FOR THE NINE MONTHS ENDED MAY 29, 2004 AND MAY 28, 2003



                                                                                                   For the           For the
                                                                                                 Nine months       Nine months
                                                                                                    Ended             Ended
                                                                                                    May 31           May 31
                                                                                                    2004              2003
                                                                                                 -----------       -----------

OPERATING ACTIVITIES
<S>                                                                                              <C>               <C>
      Net loss                                                                                   $ (108,097)       $ (14,861)
      Adjustments to reconcile net loss to net
           cash (used for) provided by operating activities:
           Depreciation                                                                              17,335           16,947
           Amortization                                                                              96,840           96,660
           Changes in current assets and liabilities                                                (76,579)          48,101
                                                                                                 ----------        ---------

                Net cash (used for) provided by operating activities                                (70,501)         146,847

INVESTING ACTIVITIES
      Purchase of property and equipment                                                             (3,716)         (34,604)
      Purchase of customer intangible assets                                                              -           (4,273)
                                                                                                 ----------        ---------

           Net cash used for investing activities                                                    (3,716)         (38,877)

FINANCING ACTIVITIES
      Proceeds from long-term debt borrowings                                                             -           30,393
      Increase in accrued interest                                                                   75,191                -
      Payment of long-term debt                                                                    (118,496)        (110,904)
      Proceeds from issuance of common stock                                                              -            6,500
                                                                                                 ----------        ---------

           Net cash used for financing activities                                                   (43,305)         (74,011)
                                                                                                 ----------        ---------

           Net (decrease) increase in cash                                                         (117,522)          33,959

CASH, BEGINNING OF PERIOD                                                                           233,055          165,267
                                                                                                 ----------        ---------

CASH, END OF PERIOD                                                                              $  115,533        $ 199,226
                                                                                                 ==========        =========





</TABLE>




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



                                       3
<PAGE>

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES

NATURE OF BUSINESS

         The Company's wholly-owned  subsidiary,  Employment Solutions,  Inc., a
South Carolina corporation ("Employment Solutions"), conducts the Company's only
business,  which is the business of locating and  providing  labor to industrial
companies.

BASIS OF PRESENTATION

         The accompanying  unaudited condensed consolidated financial statements
at May 31, 2004 have been  prepared in  accordance  with  accounting  principles
generally  accepted  in the  United  States of  America  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 accounting  principles  generally  accepted in the United
States  of  America  for  complete  financial  statements.  In  the  opinion  of
management,  all adjustments  including  normal  recurring  accruals  considered
necessary for a fair presentation have been included.  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, 2003.

NET INCOME (LOSS) PER COMMON SHARE

         Basic net income  (loss) per common  share is  computed on the basis of
the weighted  average  number of common shares  outstanding  in accordance  with
Statement of Financial  Accounting Standards (SFAS) No. 128, Earnings per Share.
The treasury  stock method is used to compute the effect of stock options on the
weighted  average number of common shares  outstanding  for the diluted  method.
Since the Company incurred a net loss during the three and nine months ended May
31, 2004 and three and nine months ended May 31,  2003,  the effect of the stock
options on the treasury stock method was  anti-dilutive in all periods presented
herein.







                                       4
<PAGE>


NOTE 2 - LONG-TERM DEBT AND OTHER LIABILITIES
<TABLE>
<CAPTION>

Long-term debt consists of the following:

<S>                                                                                            <C>
Unsecured notes  payable to Buck A. Mickel,  Charles C. Mickel and Minor M. Shaw
    in the amount of $83,333 each with interest payable quarterly at 8.0 percent
    per year. The unpaid principal balance is due on August 14, 2006.                          $  250,000

Unsecured notes  payable to Buck A. Mickel,  Charles C. Mickel and Minor M. Shaw
     in the amount of  $400,000  each with  interest  payable  quarterly  at 7.0
     percent per year. The unpaid principal balance is due on February 14, 2007.                1,200,000

Unsecured notes  payable to Buck A. Mickel,  Charles C. Mickel and Minor M. Shaw
     in the  amount of  $20,000  each with  interest  payable  quarterly  at 7.0
     percent per year. The unpaid principal balance is due on February 25, 2007.                   60,000

Note payable in the original  principal  amount of $800,000 to Eadon  Solutions,
     LLC (formerly Employment Solutions, LLC) in monthly installments of $15,466
     including  interest at 6.0% per year  through  March 4, 2007 secured by the
     outstanding common stock of Employment Solutions, Inc.                                       469,424

Note payable in the original  principal amount of $30,393 to First Citizens Bank
     in monthly  installments  of $520  including  interest at an annual rate of
     approximately 7.0% through October 24, 2008 and is secured by a vehicle.                      23,580
                                                                                             -------------
                                                                                                2,003,004
Less current portion                                                                              166,545
                                                                                             ------------
                                                                                              $ 1,836,459
                                                                                             =============
</TABLE>

         On March 25, 2004, Minor H.  Mickel  gave the two  notes  above  having
principal  unpaid balances of $250,000 and $1,200,000 and the unpaid interest at
February  29,  2004 of $177,485  in equal  parts to Buck A.  Mickel,  Charles C.
Mickel and Minor M. Shaw.

         Buck A. Mickel is the President  and  Chief  Executive  Officer  and  a
director of the Company.  Charles C. Mickel is a Vice President and  director of
the Company.  Buck A. Mickel, Charles C. Mickel  and  Minor M. Shaw are siblings
and Minor H. Mickel is their mother.

       Buck A.  Mickel,  Charles C. Mickel and Minor M. Shaw (and,  before March
25, 2004, Minor H. Mickel), the creditors of the three notes payable aggregating
$1,200,000,  have permitted the deferral of payment of interest since the note's
issuance.  Since November 2003,  these  creditors have permitted the deferral of
payment of interest under the other notes payable held by them, in the aggregate
principal  amount of $310,000.  These  creditors  have agreed that they will not
require payment of interest in the next twelve months. Management of the Company
could  decide  at any time to pay all or part of the  accrued  interest  if they
determine  that cash  balances  are  sufficient  to pay the  interest  without a
detrimental effect on the future operations of the Company. The accrued interest
portion of long-term  debt and other  liabilities  consists of interest that has
been accrued on the unsecured notes  aggregating  $1,510,000  payable to Buck A.
Mickel, Charles C. Mickel and Minor M. Shaw.

                                       5
<PAGE>

NOTE 3 - INCOME TAXES

         A 100%  valuation  allowance  has been  recorded  relating to temporary
differences  since the Company believes that it is more likely than not that the
realization  of the  deferred  income  tax  assets  will  not be  realized.  The
valuation  allowance  relates  primarily  to future  income tax  benefits of net
operating loss  carryforward.  Management  continues to assess the likelihood of
the future  realization  of the deferred tax assets on a quarterly  basis.  Such
carryforwards expire in 2006 through 2022.

NOTE 4 - RECENTLY ISSUED ACCOUNTING STANDARDS

         No recently issued  accounting  standards have been proposed or adopted
that are anticipated to have a material effect.


















                                       6
<PAGE>


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 various forward-looking statements.
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.  All written or oral  forward-looking  statements
attributable  to the Company are  expressly  qualified in their  entirety by the
Cautionary Statements.

Results of operations

         During  the  three  months  and  nine  months  ended  May 31,  2004 the
Company's  revenues were $1,230,643 and $3,685,443,  respectively,  all of which
were generated by its wholly-owned subsidiary, Employment Solutions, Inc. (which
we refer to as "Employment  Solutions").  Employment  Solutions operates from an
office facility in Greenwood,  South  Carolina.  Revenues  generated  during the
three  and nine  months  ended  May 31,  2003 were  $1,277,132  and  $3,965,220,
respectively.  The  decrease in revenues  during the three and nine months ended
May 31,  2004 as  compared  to the  similar  periods of fiscal  year 2003 can be
attributed  to a decrease  in the number of workers  provided.  The  decrease in
average  number of workers of 8% during the nine  months  ended May 31,  2004 as
compared to the nine months  ended May 31, 2003  accounts  for a 10% decrease in
hours  worked.  This  decrease  resulted  from  reduced  demand  for  Employment
Solutions'  services from  existing  customers.  The Company  believes that this
reduction in demand is associated with relatively  high  unemployment  levels in
the areas served by Employment  Solutions  (compared to  unemployment  levels in
recent years),  which increases the availability of alternatives to the services
provided by Employment  Solutions.  The number of workers employed is determined
on a daily basis based on requests from the  customers of Employment  Solutions.
Unless unemployment  levels are reduced in the areas served by the Company,  the
Company expects reduced demand for its services to continue, which will continue
to adversely affect the Company's revenues and income from operations.

         Employment  Solutions  incurred  cost of services  during the three and
nine months ended May 31, 2004 of $1,025,957 and $3,057,736,  respectively. Cost
of services  during the three and nine months ended May 31, 2003 were $1,039,860
and  $3,210,512,  respectively.  These costs  include wages paid directly to the
workers,  payroll taxes, workers compensation insurance and other costs directly
associated  with  employment  of the  workers.  The decrease in cost of services
during the three and nine  months  ended May 31, 2004 as compared to the similar
period of fiscal year 2003 can be  attributed to a decrease in number of workers
provided and hours worked.




                                       7
<PAGE>


         Selling,  general and administrative expenses during the three and nine
months ended May 31, 2004 were $190,196 and $629,279,  respectively, as compared
to $203,020 and $657,448,  respectively,  during the three and nine months ended
May 31, 2003. The table below sets forth the breakdown of these expenses.

<TABLE>
<CAPTION>

                                                        3 MONTHS           9 MONTHS            3 MONTHS           9 MONTHS
                                                         ENDED              ENDED               ENDED               ENDED
                                                      MAY 31, 2004       MAY 31, 2004        MAY 31, 2003       MAY 31, 2003
                                                     ---------------    ---------------     ---------------    ----------------
Exclusive of Employment Solutions Operations
<S>                                                         <C>               <C>                  <C>                <C>
   Salaries & Related Costs                                 $82,628           $250,383             $76,296            $248,218
   Legal, Accting & Shareholder-Related Expense               9,208             61,743              10,033              49,358
   Rent                                                       8,925             26,775               8,925              26,675
   Other Administrative Expense                              11,918             40,204              16,349              58,693

Employment Solutions Expenses
   Selling & Administrative Expense                          45,237            153,334              59,197             177,844
   Amortization of Customer-Related Intangibles              32,280             96,840              32,220              96,660
                                                     ---------------    ---------------     ---------------    ----------------

     Total                                                 $190,196           $629,279            $203,020            $657,448
                                                     ===============    ===============     ===============    ================
</TABLE>

         Interest expense incurred during the nine months ended May 31, 2004 was
$106,600 as compared to $112,856  during the nine months ended May 31, 2003. The
reduction in interest expense results from monthly  principal  reductions of the
note payable to Eadon Solutions, LLC. Interest expense includes interest accrued
but not paid during the nine  months of $75,191 on the notes  payable to Buck A.
Mickel, Charles C. Mickel and Minor M. Shaw in the aggregate principal amount of
$1,510,000.

Critical Accounting Policy -- Income taxes

         The Company has adopted  various  accounting  policies which govern the
application of accounting  principles generally accepted in the United States of
America  in  the  preparation  of  our  financial  statements.  The  significant
accounting  policies  of the  company  are  described  in the  footnotes  to the
consolidated  financial statements at August 31, 2003 contained in the Company's
Annual Report on Form 10-KSB for the year ended on such date.

         Certain   accounting   policies  involve   significant   judgments  and
assumptions by management  which have a material impact on the carrying value of
certain assets and liabilities; management considers such accounting policies to
be  critical  accounting  policies.   The  judgments  and  assumptions  used  by
management  are based on  historical  experience  and other  factors,  which are
believed to be reasonable under the circumstances.  Because of the nature of the
judgments and assumptions  made by management,  actual results could differ from
these judgments and estimates which could have a material impact on the carrying
values of assets and liabilities and the results of operations of our company.

           The Company  believes  that the  valuation  allowance  related to the
deferred  tax asset is a  critical  accounting  policy  that  requires  the most
significant  judgments and estimates  used in  preparation  of our  consolidated
financial  statements.  When income and  expenses  are  recognized  in different
periods for financial  reporting  purposes than for purposes of computing income
taxes currently payable, deferred tax assets or liabilities are provided on such
temporary differences.  The Company accounts for income taxes in accordance with
SFAS No. 109,  Accounting  for Income  Taxes.  Under SFAS No. 109,  deferred tax
assets and liabilities  are recognized for the expected future tax  consequences
of events that have been recognized in the consolidated  financial statements or
tax return.  Deferred tax assets and  liabilities are measured using the enacted
tax rates  expected  to apply to  taxable  income  in the  years in which  those
temporary differences are expected to be realized or settled.

                                       8
<PAGE>

         At August 31, 2003,  the Company had net operating  loss  carryforwards
("NOLs")  available for income tax purposes of approximately  $12,731,000.  Such
carryforwards  expire in 2006 through  2022.  The  Company's  ability to use its
existing NOLs may be jeopardized or lost if the Company  undergoes an "ownership
change" as defined by the Internal Revenue Code. Under SFAS No. 109, the Company
can record a net deferred tax asset on its balance  sheet and a net deferred tax
benefit on its income  statement  related to its NOLs if it believes  that it is
more likely  than not that it will be able to utilize its NOLs to offset  future
taxable  income  utilizing  certain  criteria  required  by SFAS No. 109. If the
Company does not believe, based on the balance of the evidence,  that it is more
likely than not that it can fully  utilize its NOLs, it must reduce its deferred
tax  asset  to the  amount  that  is  expected  to be  realized  through  future
realization of profits.

         Because  the  Company  did not have net income in fiscal 2003 and 2002,
the  Company  determined  that it was more  likely than not that it would not be
able to realize all of the deferred tax benefits  prior to the expiration of the
related NOL's and that the Company would not carry any net deferred tax asset on
its balance sheets for August 31, 2003 or record any net deferred tax benefit on
its income statements for the years ended on such dates. If the Company had been
permitted  under  SFAS No.  109 to record a full net  deferred  tax asset on its
balance sheet at August 31, 2003,  the amount of the net deferred tax asset that
would have been recorded was  $4,765,000,  and if the Company had not recorded a
valuation  allowance  the Company would have recorded a net deferred tax benefit
of $4,000 on its income statement for the year ended August 31, 2003.

         The  analysis of available  evidence is performed on an ongoing  basis.
Adjustments to the valuation allowance are made accordingly. Were the Company to
become profitable before its NOLs expire or are otherwise lost, it would be able
to utilize them to offset future taxable income, reducing its income tax expense
and increasing  its net earnings,  and the Company would be able to record a net
deferred  tax asset on its balance  sheet.  There can be no  assurance  that the
Company  will  become  profitable  or that it will be able to utilize any of its
NOLs.

Liquidity and Capital Resources

         At May 31, 2004, the Company's total liabilities exceeded its assets by
$301,653 as compared to $193,556 at August 31, 2003. The Company's cash balances
decreased  from  $233,055  at August 31, 2003 to  $115,533  at May 31,  2004,  a
decrease of $117,522.  The decrease in cash includes cash used by an increase in
accounts  receivable of $33,277 and an increase in prepaid  expenses of $30,749.
All accounts  receivable  at May 31, 2004 were  collected  subsequent to May 31,
2004. The increase in prepaid  expenses  primarily  consist of a premium paid on
the Company's workers compensation  insurance policy that will be amortized over
the policy  period that expires on September  30, 2004.  The  Company's  working
capital (current assets less current  liabilities)  decreased $48,290 during the
nine months ended May 31, 2004 to $23,661.

         The  Company  is  dependent  upon  the  cash  generated  by  Employment
Solutions,  Inc. to meet its cash  liquidity  requirements.  Please refer to the
discussion of the decrease in revenues under "Results of operations".

         Buck A. Mickel,  Charles C. Mickel and Minor M. Shaw (and, before March
25,  2004,  Minor  H.  Mickel),  the  creditors  of  notes  payable  aggregating
$1,200,000,  have  permitted the deferral of payment of interest since the notes
issuance.  Buck A. Mickel is the  President  and Chief  Executive  Officer and a
director of the Company.  Charles C. Mickel is a Vice  President and director of
the Company.  Buck A. Mickel,  Charles C. Mickel and Minor M. Shaw are siblings.
Since November 2003,  these  creditors have permitted the deferral of payment of
interest under the other notes payable held by them, in the aggregate  principal
amount of  $310,000.  These  creditors  have  agreed  that they will not require
payment of interest in the next twelve  months.  Management of the Company could
decide at any time to pay all or part of the accrued  interest if they determine
that cash  balances are  sufficient  to pay the interest  without a  detrimental
effect on the future operations of the Company.

         Subject  to the  continued  deferral  of  payment  of  interest  on the
$1,510,000  in aggregate  principal  amount of notes  payable to Buck A. Mickel,
Charles C. Mickel and Minor M. Shaw, the Company  expects that its existing cash
balances and cash  generated by the  operations of Employment  Solutions will be
sufficient to fund its cash requirements  during the next twelve months,  though

                                       9
<PAGE>

the  deferral  of  payment  of  interest  on  these  notes  and  the   continued
amortization of intangibles are expected to cause negative  shareholders' equity
to continue to increase unless results of operations improve  substantially.  If
the  Company is able to continue to defer the payment of interest on these notes
and if business  conditions do not worsen, the Company expects its existing cash
balances and cash generated by operations to be similarly sufficient to fund its
cash requirements beyond the next twelve months; however,  results of operations
will have to improve  substantially,  or the Company will have to obtain capital
from other sources, in order to be able to pay off the $1,510,000 principal plus
the accrued  interest on the Mickel notes at maturity,  which become due in 2006
and 2007.  There can be no  assurance  that results of  operations  will improve
substantially or that  alternative  sources of capital will be available at such
times.

OFF BALANCE SHEET ARRANGEMENTS

         The Company has no material off-balance sheet arrangements.

Item 3.  Controls and procedures.

         Our  disclosure  controls  and  procedures  are our  controls and other
procedures that are designed to ensure that information required to be disclosed
by us in the  reports we file or submit  under the  Securities  Exchange  Act of
1934, as amended, are recorded,  processed,  summarized and reported, within the
time  periods  specified in the rules and forms of the  Securities  and Exchange
Commission.  Disclosure  controls and  procedures  include  without  limitation,
controls  and  procedures  designed  to ensure that  information  required to be
disclosed  by us in the  reports  we file or submit  under the  Exchange  Act is
accumulated and  communicated  to our management,  including our Chief Executive
Officer and Chief Financial  Officer,  as appropriate to allow timely  decisions
regarding required disclosure.

         Our  management,  with the participation of our Chief Executive Officer
and  our  Chief  Financial  Officer  has  evaluated  the  effectiveness  of  our
disclosure   controls  and  procedures   (as  defined  in  17  C.F.R.   Sections
240.13a-15(e)  and  240.15d-15(e))  as of  May  31,  2004,  and  based  on  such
evaluation,  our Chief Executive  Officer and Chief Financial  Officer concluded
that such controls and procedures were effective as of May 31, 2004.

         There were no changes in our internal controls over financial reporting
that  occurred  during the three months ended May 31, 2004 that have  materially
affected,  or are reasonably likely to materially  affect, our internal controls
over financial reporting.


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<PAGE>


PART II.  Other information

ITEM 1.   LEGAL PROCEEDINGS*

ITEM 2.   CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
          SECURITIES*

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES*

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

ITEM 5.   OTHER INFORMATION*

*Items  1, 2, 3, 4 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 Exhibit

                31.1       Section 302 Certification of Chief Executive Officer
                31.2     Section 302 Certification of Chief Financial Officer
                32.1       Section 906 Certification of Chief Executive Officer
                32.2       Section 906 Certification of Chief Financial Officer

           (b) Reports on Form 8-K

                There  were no  reports  on Form 8-K  filed  during  the  fiscal
quarter ended May 31, 2004.





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<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.




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



July 13, 2004                         /s/ Joe F. Ogburn
-----------------------               ------------------------------
     (Date)                           Joe F. Ogburn,
                                      Treasurer and Chief
                                      Financial Officer
                                      (Principal Accounting Officer)









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