FORM 10-QSB. --- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        Quarterly or Transitional Report

                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-QSB
(Mark One)
X        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended June 30, 1997 TRANSITION REPORT
         PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

                  For the transition period from ____________ to ____________

                       Commission file number   1-13518

                             Gaylord Companies, Inc.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

        (Exact name of small business issuer as specified in its charter)

           Delaware                                   31-1421571
--------------------------------------------------------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)

                    4006 Venture Court, Columbus, Ohio 43228
--------------------------------------------------------------------------------
                    (Address of Principal Executive Office)

                                 (614) 771-2777
--------------------------------------------------------------------------------
                           (Issuer's telephone number)

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

                  Yes    X                                             No

         State  the  number of shares  outstanding  of each of the  registrant's
classes of common equity, as of the last practicable date:  3,795,000 as of June
30, 1997.





<PAGE>


                             GAYLORD COMPANIES, INC.

                                      INDEX

<TABLE>


<S>                                                                                  <C>   
                                                                                      Page
                                                                                     Number
PART I - FINANCIAL INFORMATION
        Item 1.    Financial Statements
                   Consolidated Balance Sheet as of June 30, 1997 (unaudited)          1

                   Consolidated Statements of Operations (unaudited) for the Six
                   and Three months ended June 30, 1997 and 1996                       2

                   Consolidated Statements of Cash Flows (unaudited) for the
                   Six months ended June 30, 1997 and 1996                             3

                   Notes to the financial statements                                   4-5
        Item 2.    Management's Discussion and Analysis of Financial Condition
                   and Results of Operations                                           6-12
PART II - OTHER INFORMATION                                                            13
        Item 1.    Legal Proceedings
        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
        Item 6.    Exhibits and Reports on Form 8-K 
Signature                                                                              14


Exhibit Index                                                                          15-16


</TABLE>
<PAGE>


GAYLORD COMPANIES, INC.

                           CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)

                                  JUNE 30, 1997


                                     ASSETS

CURRENT ASSETS:
     Cash                                                    $          19,333
     Accounts receivable - trade                                        40,102
     Other receivables                                                 198,230
     Inventories                                                     2,126,110
     Prepaid expenses and other current assets                         683,595
                                                                   -------------
         TOTAL CURRENT ASSETS                                        3,067,370

PROPERTY AND EQUIPMENT                                                 637,645

GOODWILL                                                               117,613

DEFERRED INCOME TAXES                                                  396,135

INVESTMENT                                                             125,000

OTHER ASSETS                                                            27,944
                                                                   -------------

                                                             $       4,371,707
                                                                   =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable                                        $       2,380,240
     Line of credit                                                  1,213,263
     Note payable - short term                                          30,000
     Sales tax payable                                                 113,208
     Current installments of capital lease obligations                   3,888  
     Other current liabilities                                         228,101
                                                                   -------------
         TOTAL CURRENT LIABILITIES                                   3,968,700

     Senior Note                                                       251,667
                                                                    ------------
                                                                     4,220,367
                                                                   ------------

STOCKHOLDERS' EQUITY:
     Receivable For Stock                                             (168,571)
     Unearned Stock Compensation                                       (48,462)
     Cumulative preferred stock, par value $.01 per share;  1,500,000
         shares authorized, 60,000 shares issued and outstanding       300,000
     Common stock, par value $.01 per share;  10,000,000 shares
         authorized, 3,795,000 shares issued and outstanding            37,950  
     Paid-in-capital in excess of par                                2,344,838
     Retained earnings (deficit)                                    (2,314,415)
                                                                   -------------
         TOTAL STOCKHOLDERS' EQUITY                                    151,340
                                                                   -------------

                                                              $      4,371,707
                                                                ================
                 See notes to consolidated financial statements.
                                        1


<PAGE>
GAYLORD COMPANIES, INC.
<TABLE>
<CAPTION>



                                        CONSOLIDATED STATEMENT OF OPERATIONS
                                                    (UNAUDITED)


                                                                                    TSixeMonthssEndedd
                                                                       June 30,                             June 30,
                                                          --------------------------------------------------------------------------
                                                               1997                1996               1997               1996
                                                          ----------------    ----------------   ----------------   ----------------
<S>                                                    <C>                <C>                 <C>                <C>   

NET SALES                                               $       2,665,361   $       2,656,311  $       5,573,051  $       5,541,130

COST OF GOODS SOLD, including store
     occupancy and delivery costs                               2,107,179           2,044,066          4,366,294          4,250,428
                                                          ----------------    ----------------   ----------------   ----------------

GROSS PROFIT                                                      558,182             612,245          1,206,757          1,290,702
                                                          ----------------    ----------------   ----------------   ----------------

OPERATING EXPENSES:
     Store operating expenses                                     647,093             580,949          1,309,303          1,185,241
     Administrative                                               469,228             314,482            875,642            624,682
     Depreciation and amortization                                 52,952              48,062            105,738             96,124
                                                          ----------------    ----------------   ----------------   ----------------
                                                                1,169,273             943,493          2,290,683          1,906,047
                                                          ----------------    ----------------   ----------------   ----------------

OPERATING INCOME (LOSS)                                          (611,091)           (331,248)        (1,083,926)          (615,345)
                                                          ----------------    ----------------   ----------------   ----------------

OTHER INCOME (EXPENSE):
     Interest expense - net                                      (101,634)            (72,489)          (182,889)          (149,306)
     Amortization of discount on notes payable                    (18,500)                  -            (37,000)                 -
     Other income (expense)                                           480               4,481                495             (9,874)
                                                          ----------------    ----------------   ----------------   ----------------
                                                                 (119,654)            (68,008)          (219,394)          (159,180)
                                                          ----------------    ----------------   ----------------   ----------------

INCOME (LOSS) BEFORE INCOME TAX
     EXPENSE (BENEFIT)                                           (730,745)           (399,256)        (1,303,320)          (774,525)

INCOME TAX EXPENSE (BENEFIT)                                        1,212            (161,703)             2,875           (311,810)
                                                          ----------------    ----------------   ----------------   ----------------

NET INCOME (LOSS)                                       $        (731,957)  $        (237,553) $      (1,306,195) $        (462,715)
                                                          ================    ================   ================   ================

EARNINGS (LOSS) PER COMMON SHARE                        $           (0.19)  $           (0.09) $           (0.35) $           (0.17)
                                                          ================    ================   ================   ================

WEIGHTED AVERAGE COMMON SHARES USED                             3,785,000           2,750,000          3,735,000          2,750,000
                                                          ================    ================   ================   ================
                                                    See notes to consolidated financial statements.
                                                                        2

</TABLE>
<PAGE>
GAYLORD COMPANIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>


                                                  CONSOLIDATED STATEMENT OF CASH FLOWS
                                                              (UNAUDITED)


                                                                                                          Six Months Ended
                                                                                                              June 30,
                                                                                                 -----------------------------------
                                                                                                      1997               1996
                                                                                                 ---------------    ----------------
<S>                                                                                           <C>                <C>   

CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                                                         $     (1,306,195)  $        (462,715)
                                                                                                 ---------------    ----------------
     Adjustments to reconcile net income (loss) to net
     cash provided (used) by operating activities:
         Depreciation and amortization                                                                  105,738              96,124
         Noncash imputed compensation expense                                                            55,705                   -
         Changes in assets and liabilities:
            Decrease (increase) in accounts receivable                                                   40,227              12,955
            Decrease (increase) in other receivables                                                    (21,013)            (38,061)
            Decrease (increase) in inventory                                                             84,130              15,395
            Decrease (increase) in prepaid expenses and other assets                                   (474,023)           (418,983)
            Decrease (increase) in deferred income taxes                                                  2,061            (301,814)
            Increase (decrease) in accounts payable                                                     134,592            (287,874)
            Increase (decrease) in sales tax payable                                                    (77,266)            (79,354)
            Increase (decrease) in other current liabilties                                             228,101             (88,559)
                                                                                                 ---------------    ----------------
                Total adjustments                                                                        78,252          (1,090,171)
                                                                                                 ---------------    ----------------

                NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                                     (1,227,943)         (1,552,886)
                                                                                                 ---------------    ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment                                                                  (6,929)             (7,004)
                                                                                                 ---------------    ----------------
                NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES                                         (6,929)             (7,004)
                                                                                                 ---------------    ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of debt                                                                     885,263           1,017,500
     Repayments of debt                                                                                (434,994)           (349,719)
     Preferred stock dividend                                                                            (9,000)
     Principal payments of capital lease obligations                                                     (5,582)             (4,816)
                                                                                                 ---------------    ----------------
                NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                                        435,687             662,965
                                                                                                 ---------------    ----------------
INCREASE (DECREASE) IN CASH                                                                            (799,185)           (896,925)

CASH AT BEGINNING OF PERIOD                                                                             818,518             899,019
                                                                                                 ---------------    ----------------

CASH AT END OF PERIOD                                                                          $         19,333   $           2,094
                                                                                                 ===============    ================












                                            See notes to consolidated financial statements.
                                                                   3



</TABLE>

<PAGE>



                    GAYLORD COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                         SIX MONTHS ENDED JUNE 30, 1997

                                   (UNAUDITED)



1.       BASIS OF PRESENTATION

                  The  accompanying  financial  statements  are  unaudited,  but
         reflect  all  adjustments  which,  in the  opinion of  management,  are
         necessary for a fair presentation of financial position and the results
         of operations for the interim periods  presented.  All such adjustments
         are of a normal and recurring nature. The results of operations for any
         interim period are not necessarily indicative of the results attainable
         for a full fiscal year.

2.       LOSS PER SHARE

                  Per  share  information  is  computed  based  on the  weighted
         average number of shares  outstanding during the period with net income
         (loss) reduced by preferred stock dividends.


3.       CONSULTING AGREEMENT

                  In February  1997,  the Company  issued  150,000  shares to an
         individual in exchange for a two year consulting agreement.  The shares
         were valued at their fair value which results in a consulting charge of
         $150,000  which  is  being  amortized  over  the two  year  term of the
         consulting agreement.

4.       LOAN AGREEMENT

         In April 1997, the Company  entered into a loan and security  agreement
         (the  "Agreement")  with  Greenfield  Commercial  Credit,  L.L.C.  (the
         "Lender").   Pursuant  to  the  agreement,  the  Lender  established  a
         revolving  credit loan  facility  for the Company in an amount of up to
         $1,000,000  (the  "Revolving  Credit  Loan") and  advanced  $350,000 at
         closing as a term loan (the "Term  Loan").  The Term Loan and Revolving
         Credit Loan are referred to as the "Loans".

         The Revolving  Credit Loan bears  interest at the prime rate plus eight
         percent per annum.  The Term Loan bears interest at the prime rate plus
         five and eighty-five hundredths

                                        4

<PAGE>



         percent per annum.  The  Revolving  Credit Loan is payable upon demand,
         but if demand is not made,  than not later than July 22, 1997,  subject
         to the  Company's  right to extend the maturity  date until October 20,
         1997 upon the payment of an extension  fee of $5,000.  The Term Loan is
         payable  upon  demand,  but if demand is not made,  then not later than
         October 20, 1997. The Loans are secured by a lien on substantially  all
         of  the  Company's  assets.  The  Loans  have  been  guaranteed  by the
         Company's  Chairman of the Board and Chief  Executive  Officer and such
         guarantee is secured by a third  mortgage on his  principal  residence.
         The proceeds of the loans were used  primarily to repay amounts owed to
         Bank One Columbus, N.A. and for working capital purposes.

                                        5

<PAGE>
ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS.


FORWARD - LOOKING STATEMENTS

         When used in the Form 10-QSB and future filings by the Company with the
Securities and Exchange  Commission,  the words or phrase "will likely  result",
"the Company expects", "will continue", "is anticipated", "project" or "outlook"
or similar  expressions are intended to identify  "forward  looking  statements"
within the meaning of the Private Securities  Litigation Reform Act of 1995. The
Company  wishes  to  caution  readers  not  to  place  undue  reliance  on  such
forward-looking  statements,  each of which speak only as of the date made. Such
statements  are  subject to certain  risks and  uncertain  ties that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected.  The Company has no obligation to publicly release the
results of any revisions which may be made to any forward-looking  statements to
reflect anticipated or unanticipated events or circumstances occurring after the
date of such statements.

RESULTS OF OPERATIONS

Three Months Ended June 30, 1996 and 1997

         Consolidated Operations

         The Company  incurred a net loss of $731,957 in the three  months ended
June 30, 1997 as compared to a net loss of $237,553 for the comparable period in
the  prior  year.  Management  believes  that the  increase  in the net loss was
primarily  due to lower  compara ble store sales,  higher  store level  expenses
relative  to lower  sales in the two  newest  Cookstores  that have yet to reach
sales maturity,  lower gross margins, higher store operating expenses and higher
administrative  expenses in the three  months ended June 30, 1997 as compared to
the same period in 1996.  Additionally,  the  Company  recorded a tax expense of
$1,212 in the three  months  ended June 30, 1997 as compared to a tax benefit of
$161,703 for the prior year.

         Net sales in the three  months ended June 30, 1997 were  $2,665,361,  a
0.3%  increase  over net sales of $2,656,311  for the  comparable  period in the
prior year.  Management believes that the increase was due primarily to the fact
that while comparable store sales decreased 5.5%, the two newest Cookstores that
were  opened on  December  1, 1996  contributed  additional  sales for the three
months ended June 30, 1997 as compared to the same period in the prior year.



                                        6

<PAGE>




         Cost of goods sold,  including store occupancy and delivery costs,  was
$2,107,179  for the three months  ended June 30, 1997 as compared to  $2,044,066
for the three months ended June 30, 1996. Management believes that such increase
was due  primarily  to  addition  of the costs of goods  sold,  including  store
occupancy and delivery costs from the two newest  Cookstores that were opened on
December 1, 1996.  Gross  profit as a percent age of net sales was 21.0% for the
three  months ended June 30, 1997 as compared to 23.1% during the same period in
1996.  Management  believes that the decrease in gross profit as a percentage of
net sales in the three months ended June 30, 1997 as compared to the same period
in the prior year is due primarily to the fact that while comparable store sales
decreased,  occupancy costs remained  relatively fixed. The Company  experienced
higher  occupancy  costs as a percentage  of net sales due  primarily to a lower
than  normal  level of sales in the two newest  Cookstores  that were  opened in
December 1996 and have not yet reached maturity.

         Store level operating expenses for the three months ended June 30, 1997
were  $647,093  compared to $580,949  for the three  months ended June 30, 1996.
Management  believes that the increase in such expenses was due primarily to the
addition of store level expenses from the two newest Cookstores that were opened
on December 1, 1996.  Store  operating  expenses were 24.3% of net sales for the
three  months  ended June 30,  1997 as  compared  to 21.9% in the same period in
1996.  Management believes that the increase in such expenses as a percentage of
net sales  are due  primarily  to the fact  that  while  store  level  operating
expenses  increased  in the three  months ended June 30, 1997 as compared to the
same period in the prior year,  comparable  store sales  decreased.  The Company
experi  enced  higher  store level  expenses  relative to lower sales in the two
newest Cookstores that have yet to reach sales maturity.

         Administrative  expenses  for the three months ended June 30, 1997 were
$469,228  as  compared to $314,482  for the three  months  ended June 30,  1996.
Management  believes  that  the  increase  in  administrative  expenses  is  due
primarily to an increase in  professional,  consulting and financing fees in the
three  months  ended June 30,  1997 as  compared to the same period in the prior
year.

         Depreciation  and amortization for the three months ended June 30, 1997
were $52,952 compared to $48,062 for the three months ended June 30, 1996.

         Interest expense for the three months ended June 30, 1997 were $103,086
compared  to  $85,251  for the three  months  ended  June 30,  1996.  Management
believes  that the  increase  in  interest  expense is due  primarily  to higher
interest rates or the revolving credit loan as compared to previous borrowings.

         Amortization  of discount on notes  payable for the three  months ended
June 30, 1997 was $18,500  compared  to $0 for the three  months  ended June 30,
1996.


                                        7

<PAGE>




         Cookstore Operations

         Net sales in the three  months  ended June 30,  1997 were  $722,057,  a
28.1%  increase  over net sales of $563,846  during the same period in the prior
year. The increase was due primarily to the opening of the two newest Cookstores
on  December 1, 1996.  Comparable  store net sales  increased  0.7% in the three
months ended June 30, 1997 as compared to the same period in the prior year.

         Cost of goods sold,  including store occupancy and delivery costs,  was
$564,895  for the three  months  ended June 30, 1997 as compared to $418,473 for
the three months ended June 30, 1996. Management believes that such increase was
due primarily to the increased level of sales and the inclusion of the occupancy
costs for the two newest  Cookstores opened on December 1, 1996. Gross profit as
a percentage  of net sales was 21.8% for the three months ended June 30, 1997 as
compared to 25.8% during the same period in 1996.  Management  believes that the
primary  reasons for the lower gross profit as a percentage of net sales for the
three  months ended June 30,  1997,  as compared to the same period in 1996,  is
higher  occupancy  costs as a percentage  of net sales due  primarily to a lower
than normal level of sales in the two newest  Cookstores that were just recently
opened which have not yet reached maturity.

         Bookstore Operations

         Net sales in the three  months  ended June 30, 1997 were  $1,943,304  a
7.1%  decrease  over net  sales of  $2,092,466  in the  prior  year.  Management
believes  that the  decrease was due  primarily  to the fact that the  Company's
bookstores  in  Cincinnati,  Boardman and Columbus,  Ohio (Sawmill  Road) posted
significant  sales decreases in the three months ended June 30, 1997 as a result
of  new  competition  from  stores  operated  by  Barnes  and  Noble,  Inc.  and
Borders-Walden  Group,  Inc.,  in close  proximity.  All Bookstore net sales are
comparable in the period.

         Cost of goods sold,  including store occupancy and delivery costs,  was
$1,542,284  for the three months  ended June 30, 1997 as compared to  $1,625,593
for the three months ended June 30,  1996.  Gross profit as a percentage  of net
sales was 20.7% for the three  months  ended June 30,  1997 as compared to 22.3%
during the same period in 1996.  Management  believes  that the  decrease in the
gross  profit as a  percentage  of net sales for the three months ended June 30,
1997 as compared to the same  period in the prior year is due  primarily  to the
fact that while sales decreased, occupancy costs remained relatively fixed.

Six Months Ended June 30, 1996 and 1997

         Consolidated Operations


                                        8

<PAGE>




         The Company  incurred a net loss of  $1,306,195 in the six months ended
June 30, 1997 as compared to a net loss of $462,715 for the comparable period in
the  prior  year.  Management  believes  that the  increase  in the net loss was
primarily  due to lower  compara ble store sales,  higher  store level  expenses
relative  to lower  sales in the two  newest  Cookstores  that have yet to reach
sales maturity,  lower gross margins,  higher store level operating expenses and
higher administrative expenses in the six months ended June 30, 1997 as compared
to the same period in 1996. Additionally,  the Company recorded a tax expense of
$2,875 in the six months  ended June 30,  1997 as  compared  to a tax benefit of
$311,810 for the prior year.

         Net sales in the six months ended June 30, 1997 were $5,573,051, a 0.6%
increase over net sales of  $5,541,130  for the  comparable  period in the prior
year.  Management  believes that the increase was due primarily to the fact that
while comparable store sales decreased 5.4%, the two newest Cookstores that were
opened on December 1, 1996 contributed additional sales for the six months ended
June 30, 1997 as compared to the same period in the prior year.

                  Cost of goods sold,  including  store  occupancy  and delivery
costs,  was  $4,366,294  for the six months  ended June 30,  1997 as compared to
$4,250,428 for the six months ended June 30, 1996. Management believes that such
increase  was due  primarily  to addition of the costs of goods sold,  including
store  occupancy  and delivery  costs from the two newest  Cookstores  that were
opened on December 1, 1996.  Gross profit as a percentage of net sales was 21.7%
for the six months  ended June 30,  1997 as  compared  to 23.3%  during the same
period in 1996.  Management  believes  that the  decrease  in gross  profit as a
percentage of net sales in the six months ended June 30, 1997 as compared to the
same period in the prior year is due primarily to the fact that while comparable
store sales decreased,  occupancy costs remained  relatively  fixed. The Company
experienced higher occupancy costs as a percentage of net sales due primarily to
a lower than normal level of sales in the two newest  Cookstores  which have not
yet reached maturity.

         Store level  operating  expenses for the six months ended June 30, 1997
were  $1,309,303  compared to $1,185,241 for the six months ended June 30, 1996.
Management  believes that the increase in such expenses was due primarily to the
addition of store level expenses from the two newest Cookstores that were opened
on December 1, 1996. Store level operating  expenses were 23.5% of net sales for
the six months  ended June 30,  1997 as  compared to 21.4% in the same period in
1996.  Management believes that the increase in such expenses as a percentage of
net sales is due primarily to the fact that while store level operating expenses
increased  in the six months  ended June 30, 1997 as compared to the same period
in the prior year,  comparable  store sales decreased.  The Company  experienced
higher store level operating  expenses relative to lower sales in the two newest
Cookstores which have yet to reach sales maturity.



                                        9

<PAGE>




         Administrative  expenses  for the six months  ended June 30,  1997 were
$875,642 compared to $624,682 for the six months ended June 30, 1996. Management
believes  that the increase in  administrative  expenses is due  primarily to an
increase in professional,  consulting and financing fees in the six months ended
June 30, 1997 as compared to the same period in the prior year.

         Depreciation  and  amortization  for the six months ended June 30, 1997
were $105,738 compared to $96,124 for the six months ended June 30, 1996.

         Interest  expense for the six months ended June 30, 1997 were  $188,039
compared to $162,067 for the six months ended June 30, 1996. Management believes
that the increase in interest  expense is due primarily to higher interest rates
on the revolving credit loan as compared to previous borrowings.

         Amortization of discount on notes payable for the six months ended June
30, 1997 was $37,000 compared to $0 for the six months ended June 30, 1996.

         Cookstore Operations

         Net sales in the six months  ended  June 30,  1997 were  $1,469,592,  a
28.5% increase over net sales of $1,143,387  during the same period in the prior
year. The increase was due primarily to the opening of the two newest Cookstores
on December 1, 1996. Comparable store net sales decreased 0.2% in the six months
ended June 30, 1997 as compared to the same period in the prior year.

         Cost of goods sold,  including store occupancy and delivery costs,  was
$1,143,528  for the six months  ended June 30, 1997 as compared to $838,899  for
the six months ended June 30, 1996.  Management  believes that such increase was
due primarily to the increased level of sales and the inclusion of the occupancy
costs for the two newest  Cookstores opened on December 1, 1996. Gross profit as
a  percentage  of net sales was 22.2% for the six months  ended June 30, 1997 as
compared to 26.6% during the same period in 1996.  Management  believes that the
lower gross  profit as a  percentage  of net sales for the six months ended June
30, 1997,  as compared to the same period in 1996 is primarily  attributable  to
higher  occupancy  costs as a percentage  of net sales due  primarily to a lower
than normal level of sales in the two newest Cookstores.

         Bookstore Operations

         Net sales in the six months ended June 30, 1997 were  $4,103,459 a 6.7%
decrease  over net sales of  $4,397,744  in the  comparable  period in the prior
year.  Management  believes that the decrease was due primarily to the fact that
bookstores  in  Cincinnati,  Boardman and Columbus,  Ohio (Sawmill  Road) posted
significant sales decreases in the six


                                       10

<PAGE>




months ended June 30, 1997 as a result of new competition from stores operated 
by Barnes and Noble, Inc. and Borders-Walden Group, Inc., in close proximity.  
All Bookstore net sales are comparable in the period.

         Cost of goods sold,  including store occupancy and delivery costs,  was
$3,222,766  for the six months ended June 30, 1997 as compared to $3,411,529 for
the six months  ended June 30, 1996.  Gross profit as a percentage  of net sales
was 21.5% for the six months ended June 30, 1997 as compared to 22.4% during the
same period in 1996.  Management  believes that the decrease in the gross profit
as a percentage  of net sales for the six months ended June 30, 1997 as compared
to the same period in the prior six months  ended is due  primarily  to the fact
that while sales decreased, occupancy costs remained relatively fixed.


         LIQUIDITY AND CAPITAL RESOURCES

         At June 30, 1997, the Company had a working capital deficit of $901,330
compared to working  capital of  $231,457 at year end  December  31,  1996.  The
decrease of $1,132,787 is primarily attributable to the net loss incurred during
the quarter. Cash used by operating activities was $1,227,943 resulting from the
net loss of $1,306,195  adjusted by noncash charges of $161,443 and decreased by
changes in operating assets and liabilities of $83,191.

         In April 1997, the Company  entered into a loan and security  agreement
(the  "Agreement")  with Greenfield  Commercial  Credit,  L.L.C. (the "Lender").
Pursuant  to the  agreement,  the lender  established  a  revolving  credit loan
facility for the Company in an amount of up to $1,000,000 (the "Revolving Credit
Loan") and advanced  $350,000 at closing as a term loan (the "Term  Loan").  The
Term Loan and Revolving Credit Loan are referred to as the "Loans."

         The Revolving  Credit Loan bears  interest at the prime rate plus eight
percent per annum.  The Term Loan bears interest at the prime rate plus five and
eighty-five hun dredths percent per annum.  The Revolving Credit Loan is payable
upon demand.  On July 22, 1997,  the Company  exercised  its right to extend the
maturity  date until  October 20, 1997 with the payment of an  extension  fee of
$5,000.  The Term Loan is payable upon demand,  but if demand is not made,  then
not  later  than  October  20,  1997.  The  Loans  are  secured  by  a  lien  on
substantially all of the Company's assets. The Loans have been guaranteed by the
Company's  Chairman of the Board and Chief Executive  Officer and such guarantee
is secured by a third mortgage on his principal  residence.  The proceeds of the
loans were used  primarily to repay amounts owed to Bank One Columbus,  N.A. and
for working capital purposes.

         


                                       11

<PAGE>


         The failure of the Company to refinance the Loans and obtain additional
equity, of which there can be no  assurance,  would have a material  adverse  
effect on the Company. The Company is seeking to raise additional equity capital
and to obtain a permanent credit  facility.  The Company believes that it is 
necessary for the Company to obtain such  financing  for it to be able to 
increase  the number of Cookstores to become profitable and to continue as a
going concern.

         At June 30, 1997, the Company had  approximately  $398,000  recorded as
deferred tax assets,  representing  amounts the Company believes are more likely
than not to be recovered  through  future  operations,  of which there can be no
assurance. Taxable income would need to aggregate approximately $1,000,000 prior
to expiration of the related net operating loss carry forwards in the year 2011,
for the Company to realize their full benefit.  The Company's  evaluation of the
recoverability  of the  deferred  tax  assets  is based on  certain  assumptions
regarding future operations,  of which there can be no assurance.  Specifically,
such evaluation  assumes an annualized  profitability  on the two new Cookstores
opened in  December  1996,  the  anticipation  of  opening  two  additional  new
Cookstores  within  three years of  December  31, 1996 and that such stores will
experience similar profitability to the Company's existing Cookstores. There can
be no assurance that the Company's assumptions will be accurate.


                                       12

<PAGE>



PART II - OTHER INFORMATION

Item 1.           LEGAL PROCEEDINGS - NONE

Item 2.           CHANGES IN SECURITIES - NONE

Item 3.           DEFAULTS UPON SENIOR SECURITIES - NONE

Item 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS - NONE

Item 5.           OTHER INFORMATION - NONE

Item 6.           EXHIBITS AND REPORTS ON FORM 8-K
                  The  Company  filed a report on Form 8-K May 9,1997







                                       13

<PAGE>




                                   SIGNATURES


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



                                           GAYLORD COMPANIES, INC.



                                           By: /s/     John Gaylord
                                           Chairman and Chief Executive Officer
Date:       August 18, 1997

<PAGE>

                           GAYLORD INDEX OF EXHIBITS.


Number                              Description of Exhibit


1.1    -- Form of Underwriting Agreement between the Company and the 
          Underwriters.+
3.1    -- Certificate of Incorporation of the Company.+
3.2    -- By-Laws of the Company.+
4.1    -- Form of Warrant Agreement between the Company and Continental Stock 
          Transfer & Trust Company, as warrant agent.+
4.2    -- Specimen Certificate of the Company's Common Stock.+
4.3    -- 1994 Stock Option Plan, as amended.+
4.4    -- Specimen Certificate of the Company's Warrant.+
4.5    -- Form of Underwriter's Warrants.+
4.6    -- Option Agreement between the Company and Lido Equities Corp.**
4.7    -- Option Agreement between the Company and Solay, Inc.**
4.8    -- Stock Option Agreement between the Company and Rodika Salter.**
4.9    -- Form of Convertible Note.**
10.1   -- Form of Employment Agreement between the Company and John D. Critser.+
10.2   -- Form of Employment Agreement between the Company and John Gaylord.+
10.3   -- Form of Employment Agreement between the Company and George Gaylord.+
10.4   -- Agreements between the Subsidiaries and Bank One, Columbus, N.A.+
10.5   -- Exchange Agreement, dated as of August 1, 1994, by and among George 
          Gaylord, John Gaylord, Janet Gaylord Goodburn, Susan Gaylord Noble, 
          Judy Gaylord, Jennifer Lynn Gaylord, John D. Critser and Gaylord 
          Companies, Inc.+
10.6   -- Lease, dated September 30, 1987, between UAP-Columbus JV326132, as
          Landlord,  and Gaylord  Book  Company,  as Tenant,  as  amended,  for
          premises  located  at 1655 and 1657 West  Lane  Avenue,  Lane  Avenue
          Shopping Center, Upper Arlington, Ohio.+
10.7   -- Lease,  dated  December  15,  1988,  between  Retail  Projects  of
          Cincinnati,  Inc.,  as Landlord,  and Little  Professor  Enterprises,
          Inc.,  as Tenant,  as  subsequently  assigned to  Gaylord's  Inc. and
          amended,  for premises located at Space 180, Forest Fair Mall, Forest
          Park, Ohio.+
10.8   -- Lease,  dated June 13, 1989,  between  UAP-Columbus  JV326132,  as
          Landlord,  and The  Cookstore,  Inc.,  as  Tenant,  as  amended,  for
          premises located at 1677 West Lane Avenue, M-1/4 and M-6, Lane Avenue
          Shopping Center, Upper Arlington, Ohio.+
10.9   -- Lease, dated September 24, 1990, between Planned Communities Company, 
          as Landlord, and Little Professor Enterprises, Inc., as Tenant, for
          premises located at Worthington Square Shopping Center, Worthington, 
          Ohio.+
10.10  -- Lease,   dated  July  16,  1992,   between  Sawmill  Place  Plaza
          Associates,  as Landlord, and Little Professor Enterprises,  Inc., as
          Tenant, as amended, for premises known as Space 122, Plaza at Sawmill
          Place, 2700 Sawmill Place Blvd., Columbus, Ohio.+
10.11  -- Lease, dated September 10, 1993, between UAP-Columbus, JV326132, as 
          Landlord, and Gaylord Book Co., Inc., as Tenant, as amended, for
          premises located at 1595 West Lane Avenue, Upper Arlington, Ohio.+
10.12  -- Lease,  dated  September 13, 1993,  between  Aetna Life  Insurance
          Company,  as Landlord,  and Gaylord  Companies,  Inc., as Tenant, for
          premises located at Worthington Mall, Worthington, Ohio.+
10.13  -- Lease, dated October 21, 1993, between Greater Boardman Plaza, Inc., 
          as Landlord, and Gaylord

                                       15

<PAGE>


Number                           Description of Exhibit



          Enterprises, Inc., as Tenant, for premises located at Room No. 101, 
          Greater Boardman Plaza Shopping Center, 255 Boardman-Canfield Road,
          Youngstown, Ohio.+
10.14  -- Lease,  dated July 15, 1994,  between Glimcher  Properties Limited
          Partnership,  as  Landlord,  and Gaylord  Companies,  as Tenant,  for
          premises  located  at the Mall at  Fairfield  Commons,  Store  #E181,
          Beavercreek, Ohio.+
10.15  -- Lease, dated August 19, 1994, between DeBartolo Capital Partnership,
          as Landlord, and The Cookstore Inc., as Tenant, for premises located 
          at Room 240, Summit Mall Shopping Center, 3265
          West Market Street, Akron, Ohio.+
10.16  -- Sublease,  dated  August 31, 1994,  between  J.E.  Hanger,  Inc.,
          sublessor and The Gaylord Companies,  Inc., sublessee,  as a sublease
          under  the  master  lease  dated  April  23,  1991  between  Teachers
          Insurance and Annuity Association, as lessor, and J. E. Hanger, Inc.,
          as lessee,  for  premises  located at 4006 Venture  Court,  Columbus,
          Ohio.+
10.17  -- Consignment  Agreement,  dated  February 25, 1989,  between Ingram
          Industries,  Inc., as Consignor,  and Gaylord's,  Inc., as Consignee,
          relating to the store located at 1018 Forest Fair Drive,  Cincinnati,
          Ohio.+
10.18  -- Consignment Agreement dated May 21, 1991, between Ingram Book Company,
          as Consignor, and Little Professor Enterprises, Inc., as Consignee,
          relating to the store located at 155 Worthington Square, Worthington, 
          Ohio.+
10.19  -- Consignment Agreement, dated February 10, 1993, between Ingram Book 
          Company, as Consignor, and Gaylord Book Company, as Consignee, 
          relating to the store located at 1646 W. Lane Avenue, Columbus, Ohio.+
10.20  -- Consignment  Agreement,  dated  February 10, 1993,  between Ingram
          Book Company, as Consignor,  and Little Professor Enterprises,  Inc.,
          as  Consignee,  relating to the store  located at 6490 Sawmill  Road,
          Columbus, Ohio.+
10.21  -- Consignment  Agreement,  dated December 1993,  between Ingram Book
          Company, as Consignor,  and Gaylord Enterprises,  Inc., as Consignee,
          relating  to  the  store  located  at  101  Boardman-Canfield   Road,
          Boardman, Ohio.+
10.22  -- License Agreement, dated as of January 1, 1994, between Sawworth Book
          Company, as License Owner, and Little Professor Book Centers, Inc., as
          Franchisor, relating to 155 Worthington Square, Worthington, Ohio. +
10.23  -- License Agreement, dated as of January 1, 1994, between Sawworth Book
          Company, as License Owner, and Little Professor Book Centers, Inc., as
          Franchisor, relating to 6490 Sawmill Road, Columbus, Ohio.+
10.24  -- License Agreement, dated as of January 1, 1994, between Gaylord
          Enterprises, Inc., as License Owner, and Little Professor Book 
          Centers, Inc., as Franchisor, relating to 101 Boardman-Canfield
          Road, Boardman, Ohio.+
10.25  -- License Agreement, dated as of January 1, 1994, between Gaylord's,
          Inc., as License Owner, and Little  Professor Book Centers,  Inc., as
          Franchisor, relating to 1018 Forest Fair Drive, Cincinnati, Ohio.+
10.26  -- License Agreement, dated as of January 1, 1994, between Gaylord Book 
          Company, as License Owner, and Little Professor Book Centers, Inc., as
          Franchisor, relating to 1657 W. Lane Avenue, Columbus, Ohio.+
10.27  -- Agreement, dated as of January 1, 1994, between the Company and Little
          Professor Book Centers, Inc.+

                                       16

<PAGE>


Number                           Description of Exhibit


10.28  -- Letter Agreement, dated September 12, 1994, from Little Professor Book
          Centers, Inc. to Gaylord Family Limited.+
10.29  -- Mutual Release Agreement, dated September 12, 1994, among Little 
          Professor Book Centers, Inc. and the Company Gaylord's, Inc., Gaylord 
          Family Investments, Inc., Gaylord Book Company, Sawworth Book Company,
          Gaylord Enterprises, Inc., Gaylord Family Limited, George Gaylord and 
          John Gaylord.+
10.30  -- Form of Engagement Agreement: Financial Consultant Services between 
          the Underwriter and the Company.+
10.31  -- Consulting Agreement dated as of April 23, 1996 by and between Solay,
          Inc. and the Company.**
10.32  -- Consulting Agreement between the Company and Lido Equities Corp.**
10.33  -- Amendments to Agreements between the Company and Bank One Columbus,
          N.A.**
10.34  -- Amendment No. 1 to Employment Agreement between the Company and John 
          Critser.**
10.35  -- Amendment No. 1 to Employment Agreement between the Company and John 
          Gaylord.**
10.36  -- Amendment No. 1 to Employment Agreement between the Company and George
          Gaylord.**
10.37  -- Agreements between the company and Greenfield Commercial Credit, 
          LL. C. ***
16.1   -- Letter from KPMG Peat Marwick, LLP on change in certifying 
          accountant.+
21.1   -- List of Subsidiaries.+
27.1   -- Financial Data Schedule.


+ Previously filed with the Registration Statement on Form SB-2, Registration 
No. 33-90832.
** Previously filed with the Registration Statement on Form SB-2, Registration
No. 33-07324.
*** Previously filed with current report on Form 8-K dated May 9,1997

                                       17





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