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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

(Mark One)


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

         For the quarterly period ended June 30, 1997

                                       OR

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


                         COMMISSION FILE NUMBER 0-17941


                         SPECIALTY RETAIL SERVICES, INC.
             (Exact name of Registrant as specified in its charter)


          DELAWARE                                         22-2686442
(State or other jurisdiction of                  (I.R.S. Employer Identification
 incorporation or organization)                              Number)


       150 EAST 58TH STREET,                                 10155
        NEW YORK, NEW YORK                                 (Zip Code)
(Address of Principal Executive Offices)


        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (212) 935-5030


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


   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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 __

   Number of shares of common stock outstanding at July 15, 1997
(latest practicable date):    Issued and Outstanding: 6,485,294
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                         PART I - FINANCIAL INFORMATION

ITEM 1:  FINANCIAL STATEMENTS

                SPECIALTY RETAIL SERVICES, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN

                       NET ASSETS AVAILABLE IN LIQUIDATION

<TABLE>
<CAPTION>
                                                    (000'S OMITTED)
                                                JUNE 30,      DECEMBER 31,
                                                 1997            1996
                                               --------        --------
<S>                                           <C>             <C>
ASSETS                                       (UNAUDITED)

Cash                                           $      1        $      1
                                               --------        --------
                  TOTAL ASSETS                 $      1        $      1
                                               --------        --------

LIABILITIES

Note payable bank                                    19              19
Accounts payable and accrued liabilities          2,346           2,346
Accrued lease obligation                          2,160           2,160
Subordinate notes payable                         1,129           1,214
Advances from related parties                     1,529           1,427
Accrued interest payable and dividends            1,150           1,067
                                               --------        --------
                  TOTAL LIABILITIES               8,333           8,233
                                               --------        --------

Net deficiency in assets
available in liquidation                       $ (8,332)       $ (8,232)
                                               ========        ========

STOCKHOLDERS' DEFICIENCY IN ASSETS:

  Preferred stock, 6% cumulative
    callable, $100 par value, 4,550
    shares issued and outstanding                   455             455
  Common stock, $.01, par value;
    15,000,000 authorized;
    6,485,294 shares issued and
    outstanding                                      65              65
  Additional paid in capital                      2,975           2,975
  Accumulated deficit                           (11,827)        (11,727)
                                               --------        --------

NET STOCKHOLDERS' DEFICIENCY IN ASSETS         $ (8,332)       $ (8,232)
                                               ========        ========
</TABLE>


            See notes to condensed consolidated financial statements.
<PAGE>   3
                SPECIALTY RETAIL SERVICES, INC. AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIENCY

                     IN NET ASSETS AVAILABLE IN LIQUIDATION

<TABLE>
<CAPTION>
                                                (000'S OMITTED)
                                                SIX MONTHS ENDED
                                                 JUNE 30, 1997
                                                  (UNAUDITED)
<S>                                             <C>
Changes in deficiency in net assets
  available in liquidation
  attributed to:
   Decrease in subordinated notes payable           $    85
   Increase in advance from related parties            (102)
   Increase in accrued interest and dividends           (83)
                                                    -------
                                                       (100)

Deficiency in net assets available in
  liquidation at beginning of period                 (8,232)
                                                    -------

Deficiency in net assets available in
  liquidation at June 30, 1997                      $(8,332)
                                                    =======
</TABLE>


            See notes to condensed consolidated financial statements.


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<PAGE>   4
                SPECIALTY RETAIL SERVICES, INC. AND SUBSIDIARIES

         CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIENCY IN NET ASSETS

                                   (UNAUDITED)

                                   (IN 000'S)

<TABLE>
<CAPTION>
                                                                        Additional
                             Preferred Stock        Common Stock          Paid-in        Accum
                             Shares   Amount      Shares      Amount      Capital        Deficit          Total
                             ------   ------      ------      ------      -------        -------          -----
<S>                          <C>      <C>         <C>         <C>         <C>            <C>             <C>
Bal, Jan 1, 1997                 4.5   $455       6,485.3       $65       $ 2,975        $(11,727)       $(8,232)

Decrease in Sub-
  ordinated Notes                 --     --            --        --            --              85             85

Advances from
  Related Parties                 --     --            --        --            --            (102)          (102)

Increase in Accrued
  Interest                        --     --            --        --            --             (69)           (69)

Dividends accrued
  on Preferred Stock -                   --            --        --            --             (14)           (14)
                             -------   ----       -------       ---       -------        --------        -------

Bal, June 30, 1997               4.5   $455       6,485.3       $65       $ 2,975        $(11,827)       $(8,332)
                             =======   ====       =======       ===       =======        ========        =======
</TABLE>


            See notes to condensed consolidated financial statements.


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<PAGE>   5
                SPECIALTY RETAIL SERVICES, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                             JUNE 30, 1997 AND 1996

Note A - Basis of Presentation

   The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly certain information and footnote disclosures
normally included in the consolidated financial statements prepared in
accordance with generally accepted accounting principles have been omitted. It
is suggested that these unaudited condensed financial statements be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Company's 10-K for the year ended December 31, 1996.


   In the opinion of management, all adjustments (consisting of normal recurring
accruals) necessary to present fairly the consolidated statement of deficiency
in net assets available in liquidation and changes in deficiency in net assets
available in liquidation at June 30, 1997 and for all periods presented herein
have been made.


B - Liquidation of business

   On October 24, 1991, the Company announced that the Board of Directors of
Gobi-Primak, Inc., ("Gobi"), its principal operating subsidiary, determined
there were no further sources of capital available to meet the severe working
capital shortages faced by Gobi, and announced it intended to explore various
alternatives, including the sale of Gobi.

   On November 5, 1991, Fleet Credit Corporation ("Fleet"), sent Gobi-Primak,
Inc. a letter of an event of default under the loan agreement, demanding
immediate repayment of all sums outstanding under the loan agreement. The
Company entered into an arrangement with Fleet, whereby Fleet would take
peaceful possession of all of Gobi's assets and begin the orderly liquidation of
Gobi's assets.

   Fleet immediately appointed a liquidator, Alco Capital, to supervise the
liquidation of all of Gobi's assets. In 1992, all the assets of Gobi had been
liquidated.


                                        5
<PAGE>   6
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF DEFICIENCY IN NET ASSETS
         AVAILABLE IN LIQUIDATION


   In the third quarter of 1994, the Company settled a disagreement with
subordinated note holders. The subordinated note holders are being paid through
June 1, 1999. The principal of approximately $141,000 is included in the
Consolidated Statement of Deficiency in Net Assets in Liquidation. These
obligations have been personally guaranteed by a director of the Company. The
director is currently satisfying the notes, and as payments are made, the
Company will have an obligation to repay the director. The director has the
option to pledge certain securities to the payees of these notes, in which event
the Company shall be released of all obligations to those payees.

   During 1992, the Company's bank, Fleet Credit Corporation completed the
liquidation of Gobi's assets and generated funds to reduce the note payable to
the bank by approximately $1,400,000.

   There are no assets available for disbursement to unsecured creditors.



                           PART II - OTHER INFORMATION


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

               On November 5, 1991 the Company was notified by Fleet Credit
Corporation ("Fleet") that an Event of Default existed under its Amended and
Restated Revolving Credit Loan Agreement dated as of April 25, 1989. The
Company's Board of Directors elected to turn over all of Gobi's assets to Fleet
for liquidation on a peaceful possession basis. Fleet immediately began the
liquidation of Gobi's assets. In 1992, all the assets of Gobi had been
liquidated.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

               (a)   Exhibits - none

               (b)   Reports on Form 8-K - none


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                                   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.




                                       SPECIALTY RETAIL SERVICES, INC.
                                       (Registrant)



                                       /s/ Murray Steinfink
                                       ------------------------------------
                                       Murray Steinfink
                                       Chairman and President


Date: July 15, 1997


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