<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  May 31, 1997 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.)


245 E. Broad Street, Suite A, 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
                    ---       ---


<PAGE>   2



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 June
27, 1997

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
































                                       2


<PAGE>   3

                                     INDEX


                               RSI HOLDINGS, INC.




PART I.  FINANCIAL INFORMATION                                       PAGE

Item 1.  Financial Statements (Unaudited)

<TABLE>
<CAPTION>

         <S>                                                          <C>
         Condensed consolidated balance sheet -- May 31, 1997          4

         Condensed consolidated statement of operations -- Three
         and nine months ended May 31, 1997                            5

         Condensed consolidated statement of cash flows -- Nine
         months ended May 31, 1997                                     6

         Condensed consolidated statement of changes in net assets
         in liquidation -- Nine months ended May 31, 1996              7

         Notes to condensed consolidated financial statements --
         May 31, 1997                                                  8

       Item 2.  Management's Discussion and Analysis of Financial
                Condition and Results of Operations                   11

       PART II. OTHER INFORMATION                                     15

       Item 1.  Legal Proceedings                                     15

       Item 2.  Changes in Securities                                 19

       Item 3.  Default                                               19

       Item 4.  Submission of Matters to a Vote of Security Holders   19

       Item 5.  Other Information                                     19

       Item 6.  Exhibits and Reports on Form 8-K                      19

       SIGNATURES                                                     20
</TABLE>

                                       3

<PAGE>   4

                               RSI Holdings, Inc.
                Condensed Consolidated Balance Sheet (Unaudited)
                                  May 31, 1997



<TABLE>
<S>                                                         <C>
Assets

Current Assets:
   Cash                                                     $   950,000
   U. S. Treasury bill                                          502,000
   Mortgage loans held for sale                                 104,000
   Prepaid expenses                                              17,000
   Other current assets                                          10,000
                                                            -----------
Total current assets                                          1,583,000

Property and equipment
   Cost                                                          55,000
   Less accumulated depreciation                                 24,000
                                                            -----------
                                                                 31,000
Other assets
   Land and building held for sale, net of
      accumulated depreciation of $301,000                      248,000
   Other                                                         11,000
                                                            -----------
                                                                259,000
                                                            -----------
                                                            $ 1,873,000
                                                            ===========
Liabilities and shareholders' equity
Current liabilities:
   Trade accounts payable                                   $    29,000
   Accrued expenses                                              99,000
   Borrowings under line of credit                               76,000
                                                            -----------
                                                                204,000
Deferred compensation                                           129,000

Shareholders' equity:
   Common Stock, $.01 par value-authorized
      25,000,000 shares, issued and outstanding
      7,895,822 shares at May 31, 1997                           79,000
   Excess of paid-in capital over par value                   3,775,000
   Deficit                                                   (2,314,000)
                                                            -----------
                                                              1,540,000
                                                            -----------
                                                            $ 1,873,000
                                                            ===========

</TABLE>



See accompanying notes.

                                       4



<PAGE>   5


                               RSI Holdings, Inc.
           Condensed Consolidated Statement of Operations (Unaudited)
                    Three and Nine Months ended May 31, 1997



<TABLE>
<CAPTION>
                                                   Three months  Nine months
                                                   ------------  -----------

    <S>                                              <C>         <C>
    Revenues:
       Origination fees                              $   87,000  $   126,000
       Gain on sale of loans                             23,000       33,000
                                                     ----------  -----------
          Total revenues                             $  110,000  $   159,000


    Expenses
       Selling, general and administrative              254,000      665,000
                                                     ----------  -----------
          Loss from operations                         (144,000)    (506,000)

    Other income (expense)
       Interest income                                   21,000       76,000
       Rental income on asset held for sale               8,000       22,000
       Interest expense                                  (5,000)     (12,000)
       Cost to settle lawsuit                                       (300,000)
                                                     ----------  -----------
          Total other income (expense)                   24,000     (214,000)
                                                     ----------  -----------
    Net loss                                         $ (120,000) $  (720,000)
                                                     ==========  ===========

    Net loss per share                               $     (.02) $      (.09)
                                                     ==========  ===========

    Weighted average number of shares outstanding     7,895,822    7,921,554
                                                     ==========  ===========
</TABLE>












See accompanying notes.

                                       5


<PAGE>   6

                               RSI Holdings, Inc.
           Condensed Consolidated Statement of Cash Flows (Unaudited)
                         Nine Months ended May 31, 1997




<TABLE>
<S>                                                     <C>
Cash used in operating activities                       $  (809,000) 

Investing activities
   Purchase of U. S. Treasury bill                         (502,000)
   Acquisition of outstanding stock of
      HomeAdd Financial Corporation - Note B                (15,000)
   Purchase of common stock                                 (25,000)
   Organization expense                                     (13,000)
   Purchase of equipment                                    (18,000)
                                                        -----------
Net cash used in investing activities                      (573,000)
                                                        -----------

Financing activities
   Advances under bank line of credit                     1,655,000
   Payments on bank line of credit                       (1,579,000)
                                                        -----------
Net cash provided by financing activities                    76,000
                                                        -----------
Decrease in cash and cash equivalents                    (1,306,000)

Cash and cash equivalents at beginning of year            2,256,000
                                                        -----------
Cash and cash equivalents at end of quarter             $   950,000
                                                        ===========
</TABLE>










See accompanying notes.

                                       6


<PAGE>   7
                               RSI Holdings, Inc.
                  Condensed Consolidated Statement of Changes
                    in Net Assets in Liquidation (Unaudited)
                         Nine months ended May 31, 1996





<TABLE>
<S>                                                               <C>
Net assets in liquidation at beginning of period                  $2,143,000

Changes in net assets in liquidation attributed to:
   Decrease in cash and cash equivalents                            (293,000)
   Decrease in trade accounts payable                                  4,000
   Decrease in accrued expenses                                       69,000
   Decrease in estimated costs during remaining period
      of liquidation                                                 300,000
   Increase in estimated net realizable
      value of accounts receivable                                    32,000
                                                                  ----------
Increase in net assets in liquidation                                112,000
                                                                  ----------
Net assets in liquidation at end of period                        $2,255,000
                                                                  ==========

</TABLE>













See accompanying notes.
                                       7

<PAGE>   8

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

Note A - Basis of Presentation

       RSI Holdings, Inc., (the "Company") ceased all of its former business
operations during August of 1994 and since that time has been actively seeking
to sell substantially all of the assets of its former business.  Concurrent with
the decision to cease all of its former business operations, the Company adopted
the liquidation basis of accounting.  Generally accepted accounting principles
for the liquidation basis of accounting required that assets be valued at their
estimated net realizable value and liabilities be presented at their estimated
settlement amounts and also include estimated costs associated with carrying out
the liquidation.  The Company's financial statements were prepared under the
liquidation basis of accounting through August 31, 1996.

       During fiscal 1996, the Company substantially completed the sale of its
assets and during November of 1996 acquired the outstanding common stock of a
consumer finance company. Accordingly, effective September 1, 1996 the Company
adopted the going concern basis of accounting.

       The accompanying unaudited condensed consolidated financial statements at
May 31, 1997 have been prepared in accordance with generally accepted accounting
principles for interim financial information under the going concern basis of
accounting 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 on the
going concern basis have been included.  Operating results for the three and
nine months ended May 31, 1997 are not necessarily indicative of the results
that may be expected for the year ended August 31, 1997.  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, 1996.

Note B - Acquisition

       On November 4, 1996, the Company purchased for cash all of the
outstanding common stock of CambridgeBanc, Inc. from Emergent Group, Inc. for
the total purchase price of $15,000.  The assets that were owned by
CambridgeBanc, Inc. consisted of furniture and equipment that the Company
believes had a fair value of $15,000.  In addition to the purchase agreement to
acquire the common stock, the Company executed a lease agreement with Emergent
Group, Inc. in which the Company paid $18,000 for the use of additional
furniture and equipment for one year.  These assets were used by CambridgeBanc,
Inc. in its previous operations.  The newly acquired subsidiary, CambridgeBanc,
Inc. executed a sublease agreement to rent for one year from Emergent Group,
Inc. the office space that it occupies at $1,757 per month.

       In March 1997, CambridgeBanc, Inc. changed its name to HomeAdd Financial
Corporation ("HomeAdd").  Through HomeAdd, the Company now is engaging in the
business of originating and selling home improvement and other loans secured by
liens on improved property.




                                       8

<PAGE>   9

Note C - Shareholders' equity

       The financial statements as of August 31, 1996 included a consolidated
statement of net assets in liquidation which presented under the liquidation
basis of accounting the net assets that the Company expected to realize at the
end of its period of liquidation.  The accompanying condensed consolidated
balance sheet presents on the going concern basis of accounting the
shareholders' equity at May 31, 1997. Below is a reconciliation of the net
assets in liquidation at August 31, 1996 to the shareholders' equity at May 31,
1997.


<TABLE>
<S>                                               <C>
Net assets in liquidation at August 31, 1996      $2,285,000

Loss from operations during nine months ended
         May 31, 1997                               (720,000)

Purchase of common stock for the treasury           ( 25,000)
                                                  ----------
Shareholders' equity at May 31, 1997              $1,540,000
                                                  ==========

</TABLE>

Note D - Contingencies

       On November 18, 1996, Wiegmann & Rose International Corp. ("Wiegmann &
Rose"), a wholly-owned subsidiary of the Company, entered into an agreement to
settle a lawsuit brought by Triple A Machine Shop, Inc. ("Triple A") relating
to environmental contamination on property formerly owned by Wiegmann & Rose and
sold to Triple A in 1987.  Pursuant to the settlement agreement Wiegmann & Rose
paid to Triple A the sum of three hundred thousand ($300,000) dollars in
exchange for settlement of the lawsuit as well as Triple A's release of Wiegmann
& Rose and the Company from any further liability to Triple A in connection with
the property or under the agreement made at the time of sale of the property.

       Wiegmann & Rose has also been sued, along with several other defendants,
in seven personal injury asbestos suits.  Although Wiegmann & Rose has been
dismissed without prejudice in each of the seven suits, Wiegmann could be
brought back into the litigation in five of these seven dismissed cases.  As to
the substantive nature of the asbestos claims, the Company believes substantial
defenses would be available and for that reason the Company has been successful
in having all seven of these filed actions dismissed without prejudice as
against Wiegmann & Rose.  No provisions have been made in the accompanying
financial statements for any liability that may result from this matter.

       In addition, 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.  This agreement relates to a motel property previously
operated by the Company.  The Company intends to defend this matter vigorously.
The ultimate outcome of this matter is not known.  No provision has been made in
the accompanying financial statements for any liability which may result from
this matter.






                                       9

<PAGE>   10

       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
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.
















                                       10


<PAGE>   11


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

Results of Operations

              Adjustment from Liquidation Basis to Going Concern Basis

       Because the Company decided in 1994 that it should cease its existing
business operations and sell substantially all of its operating assets, the
Company reported its financial position on the liquidation basis of accounting
during the years ended August 31, 1994 through August 31, 1996.  In the
liquidation basis of accounting, assets were valued at their net realizable
value (rather than at their net historical cost), and liabilities included
estimated costs associated with carrying out the sale of substantially all of
the assets of the Company.

       The Company substantially completed its  plan to sell substantially all
of its assets ("Sale of Assets Plan") during fiscal 1996 and purchased the
common stock of a company in the consumer finance business in November 1996.
Accordingly, on September 1, 1996, the Company adopted the going concern basis
of accounting.  The effect of the change from the liquidation basis of
accounting to the going concern basis of accounting on net assets of the Company
was to reduce the carrying value of the real estate held for sale that is
located in Tampa, Florida from its estimated liquidation value of $430,000 to
its depreciated cost on September 1, 1996 of $263,000, a decrease in net assets
of $167,000; increase prepaid expenses by $15,000 and reduce the recorded
liabilities of the Company by the estimated costs during the remaining period of
liquidation of $155,000.

              New Business acquired

       On November 4, 1996, the Company purchased the outstanding common stock
of CambridgeBanc, Inc., a small specialized consumer finance business that
originates and sells consumer finance receivables, substantially all of which
are loans secured by liens on improved property.  On March 18, 1997, the name
of CambridgeBanc, Inc. was changed to HomeAdd Financial Corporation ("HomeAdd").

       Revenues were $110,000 and $159,000, respectively, during the three and
nine months ended May 31, 1997 and consisted of loan origination fees and gain
from the sale of the loans made.

       General and administrative expenses include expenses incurred by HomeAdd
of $212,000 and $394,000, respectively, during the three and nine months ended
May 31, 1997.

       The Company expects that HomeAdd will operate at a loss during fiscal
1997 and 1998, but based on its business plan, currently expects HomeAdd to
operate at a modest profit by fiscal 1999.  The foregoing is a forward-looking
statement and the Company cautions that there can be no assurance that this goal
can be achieved.  Factors that could cause the Company's results to differ
materially from the forward-looking statement include, but are not limited to,
lower origination volume due to market conditions that might affect the
appraised values of the property that would be used as collateral
in that HomeAdd's business might be reduced if values of the collateral increase
and HomeAdd's customers might then qualify for more traditional sources of
credit such as banks; adverse consequences of changes in interest


                                       11



<PAGE>   12

rate environment such as increases in rates that might reduce the number
of customers who would be willing to execute loans at the higher rates;
inability of borrowers to obtain credit and risk of default in that
increases in the default rate could adversely affect the ability of the
Company to sell its loans in the secondary market; limited operating
history of lending operations in that HomeAdd has only had a Title I
lending license since November of 1995 and most of its personnel have
been employed by HomeAdd since the acquisition by the Company; general
economic conditions in the Company's market, including inflation,
recession, interest rates and other economic factors that might affect
the credit rating of its customers in which case HomeAdd would no longer
be able to make loans to these customers with reduced credit ratings
because HomeAdd would not be able to sell the loans for an amount that
would be profitable for HomeAdd; loss of funding sources, particularly since the
Company currently only has  arrangements for a credit facility with one bank;
loss of ability to sell loans in the secondary market since the Company does not
have sufficient resources to finance holding a substantial number of loans to
their maturity; general lending risks that might result in HomeAdd making
uncollectible loans or loans that it would be unable to sell in the secondary
market; dependence on Federal programs particularly since bills were introduced
in Congress during August of 1995 that would, in addition to other things as
discussed below, eliminate the Title I Loan program; impact of competition,
particularly since most of HomeAdd's competitors or potential competitors are
substantially larger and have significantly greater capital, experience and
other resources than the Company; regulation of lending activities in that
HomeAdd, in addition to the FHA Title I license discussed below, operates under
the banking laws of each State in which this business chooses to operate;
changes in the regulatory environment in that both the Federal government and
each State in which HomeAdd operates might make changes in the regulations under
which HomeAdd operates at any time; and dependence on key executives,
particularly since HomeAdd and the Company have a limited number of personnel.

       As of June 1, 1997, HomeAdd had nine employees.  The initial office in
Greenville, South Carolina includes sales, underwriting and administrative
personnel. An additional sales office in Charlotte, North Carolina opened on
April 1, 1997.  If the Company is successful in the origination and resale of
consumer loans, the Company plans to open additional sales offices to target
certain major metropolitan areas of the Carolinas and southeastern United States
during fiscal 1998.  Each sales office would be staffed by a loan closer.
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 results, the Company estimates that HomeAdd would have
approximately 11 employees by August 31, 1997.  There is no assurance, however,
that this goal can be accomplished.

       HomeAdd is now offering 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,
HomeAdd offers high loan-to-value loans ("HLTV Loans") to certain qualified
borrowers that in some cases permit the loan proceeds to be used for purposes
other than home improvements.   In addition to the FHA Title I license, HomeAdd
will have to apply for licenses to operate under the banking laws of each State
in which this business chooses to operate.  HomeAdd is currently authorized to
operate under the consumer finance laws of South Carolina and





                                       12

<PAGE>   13

North Carolina.  There can be no assurance that any such additional licenses may
be obtained on a timely basis or at all.  In addition, HomeAdd is subject to
ongoing monitoring by regulatory authorities and the failure to comply with
applicable regulations could result in the forfeiture of licenses on which the
business is dependent.

       Through HomeAdd, the Company intends to continue offering Title I loans
as well as HLTV Loans that permit the loan proceeds to be used for purposes
other than home improvements.  The Company sells all its loans on a non recourse
basis in the secondary market.  The Company's credit guidelines for this product
meet the underwriting criteria of the current purchasing investors in all
material respects.  During the nine months ended May 31, 1997, the Company made
loans aggregating $1,802,000 of which $104,000 were made under the Title I Loan
program and $1,698,000 were made under the HLTV Loan program.  All of the loans
were sold on a non recourse basis in the secondary market($104,000 of these were
sold during June of 1997).  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 consumer finance market is highly competitive and fragmented. HomeAdd
competes with a number of finance companies that provide financing to
individuals who may not qualify for traditional financing, as well as
established home improvement lenders, other Title I lenders, existing mortgage
brokers and banks 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. Most
of these competitors or potential competitors are substantially larger and have
significantly greater capital, experience and other resources than the Company.

       Home improvement loan volume generally tracks the seasonality of home
improvement contract work.  Volume tends to build during the spring and early
summer months.  A decline is typically experienced in late summer and early fall
until temperatures begin to drop.  This change in seasons precipitates the need
for new siding, window and insulation contracts. Peak volume is experienced in
November and early December and declines dramatically from the holiday season
through the winter months.  Debt consolidation and home equity loan volume
generally are not materially impacted by seasonal climate changes and, with the
exclusion of the holiday season, tend to be stable throughout the year.

       HomeAdd attempts to sell, without recourse, all of its loans on the
secondary market to a licensed Title I wholesale buyer.  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 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 increased losses for such
quarter.  If HomeAdd is unable to sell its loans on the secondary market, its
growth could be materially impaired and its results of operations and financial
condition could be materially adversely affected.  See Liquidity and Capital
Resources - Capital Requirements.

       A substantial portion of the revenues of HomeAdd's business plan is


                                       13


<PAGE>   14

dependent on the continuation of the Title I Loan program, which is federally
funded.  The Title I Loan program provides that qualifying loans are eligible
for FHA insurance.  In August of 1995, bills were introduced in both houses of
the United States Congress that would, among other things, abolish HUD, reduce
federal spending for housing and community development activities and eliminate
the Title I Loan program.  Other changes to HUD have been proposed, which, if
adopted, could materially and adversely affect the operation of the Title I Loan
program. Discontinuation of or a significant reduction in the Title I Loan
program or HomeAdd's authority to originate loans under the Title I Loan program
would have a material adverse effect on the ability of HomeAdd to carry out its
business plan.

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 pay ordinary expenses
expected to arise for the remainder of fiscal 1997.

       In addition to its ordinary expenses, the Company will continue to incur
legal expenses relating to its contingent liabilities.  The Company plans to
continue to attempt to settle its contingent liabilities, but it cannot estimate
when these may be settled or the ultimate outcome of the lawsuits described
below under Item 1 of Part II, "Legal Proceedings" or of any unknown
contingencies.  There can be no assurance that the Company's cash balances will
be sufficient to allow it to meet its recorded liabilities and any known or
unknown contingent liabilities. The ultimate outcome of these contingencies is
not known.  No provision has been made in the accompanying financial statements
for any liability that may result from these matters.

              Fiscal Year 1997 Activities

       The Company has 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 Company has agreed to finance $75,000 of this sales price
over ten years and will hold a second mortgage on the Tampa property bearing
interest at 8.5% interest.  Proceeds from the sale of the Tampa facility will be
applied first to the payment of expenses related to the sale, and any remaining
proceeds will be used for working capital.

              Cash and Cash Equivalents

       Cash and cash equivalents in the amount of $950,000 as of May 31, 1997
included United States treasury bills with a maturity of three months when
purchased and having a market value of $856,000.  Cash in excess of the amounts
invested in United States treasury bills is invested as available in a money
market account, which may be liquidated by the Company to meet its cash needs on
a daily basis.  The Company earned $73,000 on its investments during the nine
months ended May 31, 1997.

              U. S. Treasury Bill

       The Company is required as described in the following paragraph to
maintain an investment of $500,000.  At May 31, 1997, the assets of the

                                       14

<PAGE>   15

Company included a U. S. Treasury bill with fair market value of $502,000
that matures on November 28, 1997 for $515,000.

              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.  At May 31, 1997, the Company's
borrowings under this line of credit was $76,000. This line of credit bears
interest at the bank's prime rate plus one percent.  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.  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.

              Capital Requirements

       During the nine months ended May 31, 1997, the Company  invested $840,000
in HomeAdd.  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 $282,000.  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 1997.  If and when HomeAdd's operations grow,
it will need external sources of capital.  There can be no assurance that such
external sources will be available.

PART II.  Other information

ITEM 1. Legal Proceedings

       Wiegmann & Rose

              Environmental Litigation

       On November 18, 1996, Wiegmann & Rose International Corp. ("Wiegmann &
Rose"), a wholly-owned subsidiary of the Company, entered into an agreement to
settle a lawsuit brought by Triple A Machine Shop, Inc. ("Triple A") relating to
environmental contamination on property formerly owned by Wiegmann & Rose and
sold to Triple A in 1987.  Pursuant to the settlement agreement Wiegmann & Rose
paid to Triple A the sum of three hundred thousand ($300,000) dollars in
exchange for settlement of the lawsuit as well as Triple A's release of Wiegmann
& Rose and the Company from any further liability to Triple A in connection with
the property or under the agreement made at the time of sale of the property.

              Asbestos Litigation

       Wiegmann & Rose is also one of numerous defendants with respect to seven
claims for exposure to asbestos, arising in the normal course of business.  All
seven of these claims have been dismissed without prejudice with respect to
Wiegmann & Rose, and the applicable statute of limitations has passed with
respect to at least two of the dismissed claims.  The dismissed claims are made
in the following lawsuits, in each case seeking unspecified damages for injury
allegedly due to asbestos exposure: (i) Brophy v. Abex et al. (filed

                                       15

<PAGE>   16

April 9, 1992), pending in the San Francisco, California Superior Court, seeks
damages for wrongful death allegedly due to asbestos exposure. Wiegmann & Rose
has been dismissed without prejudice in this action and the applicable statute
of limitations has now run, barring any subsequent action by the plaintiff
against Wiegmann & Rose. (ii) Canga v. Abex et al. (filed March 18, 1993),
pending in the San Francisco Superior Court, seeks damages for personal injuries
allegedly due to asbestos exposure.  Wiegmann & Rose has been dismissed without
prejudice in this action. (iii) Jordison v. Abex et al. (filed January 21,
1994), pending in the San Francisco Superior Court, seeks damages for personal
injuries allegedly due to asbestos exposure.  The case against Wiegmann & Rose
has been dismissed without prejudice. (iv) Barnes v. Abex et al. (filed December
3, 1993), pending in the San Francisco Superior Court, seeks damages for
wrongful death allegedly due to asbestos exposure.  The case against Wiegmann &
Rose has been dismissed without prejudice, and the applicable statute of
limitation has run, barring any subsequent action by plaintiff against Wiegmann
& Rose.  (v) Richardson v. Abex et al. (filed August 5, 1993), pending in the
San Francisco Superior Court, seeks damages for personal injuries allegedly due
to asbestos exposure.  The case against Wiegmann & Rose has been dismissed
without prejudice.  (vi) Sorensen v. Abex et al. (filed July 20, 1993), pending
in the San Francisco Superior Court, seeks damages for personal injuries
allegedly due to asbestos exposure.  The case against Wiegmann & Rose has been
dismissed without prejudice.  (vii) Hall v. Abex et al. (filed February 25,
1994), pending in the San Francisco Superior Court, seeks damages for personal
injuries allegedly due to asbestos exposure.   The case against Wiegmann & Rose
has been dismissed without prejudice.

       As to the substantive nature of the asbestos claims, the Company believes
valid defenses would be available and for that reason the Company has been
successful in having all seven of these filed actions dismissed without
prejudice against Wiegmann & Rose.

       No actions involving asbestos are currently pending.

              Insurance

       The Company has been reimbursed for substantially all of its defense
costs, under a reservation of rights, by its two primary insurance companies
relating to the environmental and asbestos claims against Wiegmann & Rose
described above.  The Company is seeking reimbursement of the $300,000
settlement discussed above, but there can be no assurance that insurance
coverage will be available to reimburse the Company for the $300,000 settlement.

               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.  In connection with the distribution of the Company's common
stock to the shareholders of RSI Corporation in 1989, the Company indemnified
RSI Corporation against certain types of potential liabilities and expenses,
including those arising in connection with the lawsuit by Holiday Inns, Inc.

       This suit seeks indemnification for payments made or to be made by

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<PAGE>   17

Holiday Inns, Inc., as the guarantor, to the lessor for obligations under a land
lease agreement allegedly in default.  The lease agreement was commenced in 1967
and has a term of ninety-nine years.  The lessor under the lease agreement was
originally Fernandina Contractors, Inc.,  and by assignment is currently Sam
Spevak.  Holiday Inns, Inc. was the original lessee under the lease agreement.
Payments under the lease agreement are the greater of $24,000 annually (as
adjusted by the consumer price index) or the highest average annual payments
during any five-year period during the first twenty (20) years of the lease,
using a percentage of income formula.

       The lessee's interest in the lease agreement has been assigned to a
series of parties including RSI Corporation and Sparjax Corporation.  RSI
Corporation was the lessee under the lease agreement from June, 1979 to August,
1979, and Sparjax Corporation was the lessee thereunder from August, 1979 to
January, 1981.  The current lessee is American Hotel Investors, Inc. ("AHI").
AHI allegedly has failed to make lease payments due under the lease agreement
and otherwise to comply with its obligations under the lease agreement.

       Holiday Inns, Inc. has alleged that Sparjax Corporation, which is the
assignee of the lease agreement from RSI Corporation, is in breach of a written
Indemnification Agreement executed by Sparjax Corporation in favor of Holiday
Inns, Inc. upon its assumption of the lease agreement in 1979. All of the
outstanding common stock of Sparjax Corporation was acquired by RSI Corporation
during fiscal 1983, and Sparjax Corporation was dissolved by forfeiture during
fiscal 1990.  In connection with such dissolution, no material assets were
distributed from Sparjax Corporation to RSI Corporation.  Other than as
described herein, there is no contractual relationship whatsoever between RSI
Corporation and Holiday Inns, Inc.

       On or about September 23, 1992, Sam Spevak filed a lawsuit against
Holiday Inns, Inc. for allegedly failing to pay monthly rent under the lease
agreement.  This lawsuit is pending in the Circuit Court of the Fourth Judicial
Circuit, in and for Duval County, Florida.  On May 4, 1993, Sam Spevak filed a
Second Amended Complaint seeking from Holiday Inns, Inc. unpaid rent, unpaid
taxes, interest, attorney fees and costs. On November 19, 1993, Sam Spevak filed
a Third Amended Complaint in the Court seeking from Holiday Inns, Inc. unpaid
rent, unpaid taxes, attorneys fees and costs, and seeking a declaratory judgment
against Holiday Inns, Inc. to establish whether or not Holiday Inns, Inc. is
liable for costs of repair and maintenance to the leased premises. Holiday Inns,
Inc. amended its complaint to assert similar claims against all subsequent
lessees (including RSI Corporation and Sparjax Corporation) under the lease
agreement, seeking indemnification against sums paid or to be paid to Sam Spevak
pursuant to his lawsuit.

       During the first quarter of fiscal 1996, the Company reported a
cross-claim filed by Mr. Donald Roberts against all assignees of W. M. R., Inc.,
including RSI Corporation and Sparjax Corporation.  Mr. Roberts was an
individual guarantor of W. M. R., Inc.'s obligations under the land lease.
Counsel for RSI Corporation and Sparjax Corporation have moved to dismiss Mr.
Roberts' cross-claims and the court has granted these motions, without
prejudice.  Counsel for Sparjax Corporation and RSI Corporation have informed
the Company that the cross-claims do not raise any new substantive issues, but
merely seek indemnification from all assignees in the event that Mr. Roberts is
required to pay Holiday Inns, Inc. on his individual guaranty.

       On December 16, 1996, Sam Spevak filed a Fifth Amended Complaint and

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<PAGE>   18

Demand for Jury Trial against Holiday Inns, Inc.  Sam Spevak's counsel has
alleged in the Fifth Amended Complaint that effective January 1996, the monthly
minimum rent under the lease is $5,595.85.

       With respect to RSI Corporation's maximum exposure in this case, Holiday
Inns has asserted that RSI Corporation and all other lessees are obligated to
reimburse it $259,201 for rent it paid to the landlord as a result of AHI's
failure to pay under the lease.  This amount, however, only represents
delinquent rent through October 13, 1993, because Holiday Inns contends  that
the lessee's obligations under the lease terminated on that date as a result of
James "Duke" Williams evicting AHI on behalf of the landlord.  Mr. Spevak
claims, however, that as of January, 1995, he is entitled to past monthly rental
and interest (from October 13, 1993 through December 20, 1994) of $82,289 plus
future monthly rental through the end of the lease term in 2068 of $1,834,565
(which sum represents the present value using a 6.5% discount rate).  If Mr.
Spevak is successful in proving his claim, RSI Corporation's exposure includes
these latter amounts.  In addition, should the court determine that Holiday
Inns, Inc. has an obligation to pay the cost of repairs and maintenance incurred
to date and throughout the balance of the lease term, the amount of such costs
could be substantial but cannot be quantified with any reasonable degree of
accuracy.  The Company believes the existing motel property is in a state of
disrepair such that it is not commercially usable.  The City of Jacksonville has
recently sent notice, presumably to all parties involved in this lawsuit,
threatening to condemn the property and demolish the entire structure.  If that
occurs, and the Court determines that the lessees have an obligation to maintain
the property during the lease term, RSI Corporation's exposure could also
include the costs of demolition and the expense of rebuilding the hotel.  This
liability, of course, cannot be accurately estimated at this time, but no doubt
involves a very substantial amount.

       RSI Corporation denies any liability to Holiday Inns, Inc. and intends to
defend this matter vigorously.  Upon a motion of counsel for RSI Corporation,
Holiday Inns, Inc.'s claims against RSI Corporation were dismissed without
prejudice, but Holiday Inns, Inc. has filed an Amended Complaint to reinstate
certain of its claims, and to add a claim for equitable subrogation against RSI
Corporation and Sparjax Corporation. Counsel for RSI Corporation and Sparjax
Corporation has answered the equitable subrogation claim, and has moved for
dismissal with prejudice with respect to the claims that have previously been
dismissed.

       The deposition of James "Duke" Williams, a critical witness in the case,
has now been taken.  Mr. Williams was involved in a contract to assume the lease
from Holiday Inns, Inc., which contract was later canceled by Holiday Inns, Inc.
The parties are presently scheduling the depositions of other important fact
witnesses.  These include Mr. Spevak and several of the other officers of
Holiday Inns, Inc. who were involved in the negotiations to cancel the lease
with Mr. Williams.  Although the mediation conference held in January, 1995 was
not successful, the Court has required the parties to attend an additional
mediation conference which is currently being scheduled.  The case has now been
set for trial on March 9, 1998.  The time allocated for jury trial is ten days.
The Company understands from counsel for Holiday Inns, Inc. that Holiday Inns,
Inc. and Sam Spevak are in active settlement discussions.  The Company will
attempt to be part of any settlement.  There is no assurance that any settlement
will occur or that the Company will be able to resolve this matter in a
satisfactory manner.


                                       18

<PAGE>   19

       If found liable for any sum as a result of Holiday Inns, Inc.'s claims,
the Company believes RSI Corporation and Sparjax Corporation would have a claim
in equity against AHI, the current and allegedly defaulting lessee under the
lease agreement, and its principal shareholders, who in the aggregate guaranteed
AHI's obligations under the lease for up to $150,000.  AHI is a private
corporation and the Company has no information regarding the financial ability
of AHI or its principal shareholders to perform AHI's obligations under the
lease or to reimburse any third party for any payments made under the lease as a
result of the lawsuit described above.

       The ultimate outcome of this matter is not known.  No provision has been
made in the accompanying financial statements for any liability which may result
from this matter.

              Other Litigation

       On January 12, 1995, a Mr. Cesar A. Cuenca served a complaint against the
Company in the 11th Judicial Circuit Court, Dade County, Florida seeking damages
in excess of the minimal jurisdictional amount of the Court, exclusive of costs
and interest, and demanding costs of the action together with such further
relief as the Court shall deem fit.  The Plaintiff alleges that he was injured
while operating a vehicle that was sold by the Company.  The Complaint also
named the manufacturer of the vehicle.  The manufacturer has agreed to provide
full and complete indemnification to the Company based on the facts known to
date.  There has been no suggestion in the litigation that the Company did
anything other than sell what is alleged to have been a defective product.
Accordingly, unless additional allegations are made against the Company, the
Company expects to continue to receive full indemnity and defense from the
manufacturer.  The Company believes, based on the arrangements with the
manufacturer of the vehicle and the Company's own insurance, that there is no
known exposure to the Company from this litigation.

ITEM 2.   CHANGES IN SECURITIES*

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES*

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

ITEM 5.  OTHER INFORMATION*

*Items 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 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 third quarter ended
May 31, 1997.



                                       19



<PAGE>   20

                                   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 14, 1997                               /s/ Joe F. Ogburn
-------------                               ------------------------------
   (Date)                                        Joe F. Ogburn,
                                            Vice President and Treasurer
                                            (Principal Accounting Officer)








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