UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Period: SecondThird quarterly period ended JuneSeptember 30, 2004

Registrant: GIANT GROUP, LTD.

Address: 9440 Santa Monica Blvd. Suite 407

Beverly Hills, California 90210

Telephone number: (310) 273-5678

Commission File Number: 1-04323

I.R.S. Employer Identification Number: 23-0622690

State of Incorporation: Delaware

The Registrant 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 and has been subject to such filing

requirements for the past 90 days.

The Registrant is not an accelerated filer as defined in Rule 12b-2 of the Securities Exchange Act

of 1934.

On August 13,November 12, 2004, the latest practicable date, 3,663,9623,348,962 shares of $.01 par value common

stock were outstanding.

Exhibit Index – Page 1316

GIANT GROUP, LTD.

INDEX

ITEM 1. FINANCIAL STATEMENTS

GIANT GROUP, LTD.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

for the three and sixnine months ended JuneSeptember 30, 2004 and 2003

(Unaudited)

(Dollars in thousands, except per common share amounts)

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

GIANT GROUP, LTD.

BALANCE SHEETS

at JuneSeptember 30, 2004 (Unaudited) and December 31, 2003 (Audited)

(Dollars in thousands, except per common share amounts)

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

GIANT GROUP, LTD.

STATEMENT OF CASH FLOWS

for the sixnine months ended JuneSeptember 30, 2004 and 2003

(Unaudited)

(Dollars in thousands, except per share amounts)

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

GIANT GROUP, LTD.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

(Dollars in thousands, except per common share amounts)

FORWARD-LOOKING STATEMENTS

GIANT GROUP, LTD.’s (“Company” or “GIANT’) Form 10-Q for the secondthird quarter ended JuneSeptember 30, 2004 contains forward-looking statements regarding future events that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements are based on current expectations, estimates, forecasts, and projections about the business climate the Company operates in and the beliefs and assumptions of management.

Forward-looking statements may be identified by words such as “believes”, “considers”, “expects”, “predicts” or “could” and include, but are not limited to, statements concerning our anticipated operating results, ability to obtain financial resources, changes in revenues, changes in profitability, anticipatedexpected market appreciation to be realized from our investment in the common stock of Checkers Drive-In Restaurants (“Checkers”), interest expense, and the ability to acquire and sell lots and the ability to maintain the liquidity and capital necessary to expand and take advantage of future opportunities.lots. Such forward-looking information involves important risks and uncertainties that could significantly affect actual results and cause them to differ materially from expectations expressed in this and other Securities and Exchange (“SEC”) filings, reports and statements. These risks and uncertainties include local, regional and national economic and political conditions, the effects of governmental regulation, the competitive environment in which we operate, changes in land prices, the availability and cost of lots for future growth, the availability of capital and weather conditions. Many of these risks and uncertainties are outside of the Company’s control.

GIANT is not under any obligation to revise or update any forward-looking statement.

1.Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. These results have been determined on the basis of generally accepted accounting principles and practices accepted in the United States of America applied consistently with those used in the preparation of the Company’s 2003 Annual Report on Form 10-K (“2003 Annual Report”). The results are also supported by management’s use of assumptions, judgments and estimates.

In the opinion of management, all normal and recurring adjustments have been made to present fairly the financial position as of JuneSeptember 30, 2004, the results of operations for the three and nine-month periods ended September 30, 2004 and the results of operations2003 and cash flows for the three and six-monthnine-month periods ended JuneSeptember 30, 2004 and 2003. The results of operations for the three and six-monthnine-month periods ended JuneSeptember 30, 2004 are not necessarily indicative of the results that may be expected for the full year. It is suggested that the accompanying unaudited financial statements be read in conjunction with the Financial Statements and Notes in the 2003 Annual Report. Certain reclassifications have been made to the prior periods’ unaudited financial statements to conform to the current period’s unaudited financial statement presentation.

Prior to May 2004, the Company technically fell within the definition of an Investment Company under the Investment Company Act of 1940 (“Investment Act”). However, the Company was not engaged in the business of investing, re-investing or trading in securities. Therefore, on July 28, 2003, the Company filed an application for a temporary order exempting GIANT from all the provisions of the Investment Act. On April 5, 2004, the SEC notified GIANT that it was unwilling to support the Company’s application. On April 16, 2004, GIANT notified the SEC that it had withdrawn the Application.

In May 2004, Giant began acquiring lots in the yellowstoneYellowstone area of Montana for resale. The Company accumulates the carrying costs of the lots and unamortized loan feesresale in Real Estate Heldexchange for Resale. Loan fees are amortized over the original financing term of twenty-four months. The lots are now available for sale.

The Company acquired the lots by paying cash and exchanging a portionshares of its investment in Checkers common stock. Following the acquisition of the lots,

GIANT GROUP, LTD.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

(Dollars in thousands, except per common share amounts)

GIANT’s remaining investment of 542,998482,773 shares of Checkers shares iscommon stock in May 2004 was less than 40% of the Company’s total assets, exclusive of cash and government securities. Therefore, the Company no longer falls within the definition of an investment company under the 1940 Investment Company Act. In addition, this investment is approximately 4.7% of Checkers total common shares, based upon on 11,483,905 shares of common stock outstanding on August 10, 2004.

2.Business

On JuneSeptember 30, 2004, and July 27, 2004, respectively, 5 andthe Company owned 6 lots werewhich are available for resale.

The Company paid for the lots inwith a combination of cash obtainedand approximately $7.5 million$7,550 in long-term financing and by delivering 435,000 shares of its investment in Checkers common stock. Prior to delivery, all of the Company’s investment in

GIANT GROUP, LTD.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

(Dollars in thousands, except per common share amounts)

Checkers common stock was registered for resale under the Securities Act of 1933. As a result of this exchange,the disposition of the 435,000 shares of Checkers common stock, the Company recognizedrealized a book pre-tax gain of approximately $2.97 million.

Real estate held for resale includes costs to acquire and to prepare the lots for resale. In addition, real estate held for resale includes interest and real estate taxes if incurred during the periods in which activities necessary to prepare the lots for sale are in progress. Loans fees are amortized over the original financing term of twenty-four months and are included in interest expense. Costs that do not directly relate to a specific lot are charged to expense as incurred. As of September 30, 2004, real estate held for resale included approximately $155 of capitalized interest.

The lots are currently available for resale; however, the costs of the lots are classified as long-term until the expected time period to sell the lots can be reasonably determined. Because the lots are considered long-lived assets, management evaluates the property in accordance with the guidelines of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). If this evaluation indicates that an impairment loss should be recognized, a charge for the estimated impairment loss in the period determined is recorded and the carrying value of the lot is reduced by the value management believes is not recoverable.

Revenue and cost of sales are recorded at the time each lot is closed and title and possession are transferred to the buyer. Costs incurred to sell the lots are capitalized if the costs are directly associated with the lot sale.

The Company has obtained financing through a regional bank and a private individual. The bank financing is secured by deeds of trust on five of the Company’s lots and the remaining shares of Checkers common stock. The financing from the private individual is secured by the deed of trust of one lot.on the lot purchased. The Company paid a commitment fee of $80 to the regional bank to obtain the financing, of which $1.9 million remains available for working capital.financing. The interest rate currently ranges from 4 ³/44¾% to 6% and may increase in the future. However, the outstanding loan balance may be prepaid at any time without penalties. The Company is subject to certain covenants, which consist of, but are not limited to, the maintenance of a minimum tangible net worth. At September 30, 2004, $1,850 is available for working capital.

On August 10,18, 2004, based on the current interest rate and outstanding loan balance of $7.5 million, the Company, expects to makewith the following payments of principal and interest:

If the Company does not default on anyapproval of the covenants, GIANT has the right to defer the $6.1 million principal payment to 2007. AsBoard of the date of this filing, the Company is not in default of any covenants.

3.Stock Option Exchange and Pro Forma Disclosure

The Company records non-cash compensation expense for outstanding stock options, to purchaseDirectors, exchanged 60,226 shares of the Company’sits investment in Checkers common stock for 350,000 shares of its $.01 par value common stock (“Common Stock”), granted pursuant to the Company’s 2002 Stock Option Exchange plan.. The calculationCompany recognized a book gain of the non-cash compensation expense is$380 based on the number of outstanding stock options and the difference between the market price of the Company’s Common Stock and the option’s exercise price $.45 at the end of the reporting period.

For the six months ended June 30, 2004 and 2003, the calculation of non-cash compensation expense is based on 1,017,164 and 1,043,413 outstanding stock options and the closing market price of the Company’sits Common Stock of $2.14 and $1.40, respectively.

For the six months ended June 30, 2004, options to purchase 22,500 shares of Common Stock were exercised by certain Company Directors and the Chief Financial Officer at a strike price of $.45. The Company received proceeds of $10. No options were exercised during the six months ended June 30, 2003.$1.65.

Subsequent EventEvents

On August 6, 2004, GIANT received cash of $404,820 as a result of the Chief Executive Officer’s exercise of his options to purchase 899,601 shares of Common Stock at a strike price of $.45.

GIANT GROUP, LTD.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

(Dollars in thousands, except per common share amounts)

During the fourth quarter, the Company sold a total of approximately 127,000 shares of Checkers common stock and recognized a book gain of approximately $1.1 million. The Company’s long-term financing was reduced by the total net proceeds of approximately $1.5 million.

On October 18, 2004, the Company and the regional bank agreed to reduce the original line from $8 million to $7 million. All other terms and conditions remain the same.

On October 27, 2004, the Company purchased a lot for resale for approximately $2.6 million. The Company paid cash of $1.6 million provided by its long-term financing facility. In addition, the seller provided financing, secured by the deed of trust, for $1 million payable in full plus interest at 5% per annum on December 16, 2005.

On November 4, 2004, the Company sold a lot at a gross price of approximately $1.6 million and recognized income before taxes of approximately $576. The Company is primarily reducing its long-term financing with the net cash proceeds of approximately $1.5 million from the sale.

As of November 12, 2004, the Company expects to make the following payments of principal and interest:

As of the date of this filing, the Company is not in default of any covenants.

On September 9, 2004, the Company announced that its Board of Directors unanimously approved a 1 for 300 reverse stock split, subject to stockholder approval. Upon consummation of the reverse stock split, each 300 shares of common stock held by a stockholder will be converted into one share. Fractional shares will be converted into cash based on a value of $1.85 per pre-split share, which represents a 19.4% premium over the September 8, 2004 closing trading price, a 21.7% premium over the average closing trading price for the last ten days prior to September 8, 2004 and a 37.0% premium over the average closing trading price over the last five years. The reverse stock split will result in GIANT having fewer than 300 stockholders, thereby enabling GIANT to cease its reporting obligations under the Securities Exchange Act of 1934 and become a private company. Giant intends to terminate its registration under the Securities Exchange Act of 1934 and continue its operations as a non-reporting private company.

The accompanying financial statements have not been retroactively restated to reflect the effects of the reverse stock split (“split”) on net income (loss) or on equity because the split is subject to stockholders’ approval.

3.GIANT GROUP, LTD.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

(Dollars in thousands, except per common share amounts)

The Company records non-cash compensation expense for stock options, to purchase shares of Common Stock, granted pursuant to the Company’s 2002 Stock Option Exchange plan. The calculation of the non-cash compensation expense for outstanding stock options is based on the number of outstanding stock options multiplied by the difference between the market price of the Company’s Common Stock at the end of the reporting period and Pro Forma Disclosure (cont.)the option’s exercise price of $.45. The calculation of the non-cash compensation expense for options exercised or expired is based on the number of stock options exercised or expired and the difference between the market price of the Common Stock on the date the option was exercised or expired and the option’s exercise price of $.45. At September 30, 2004, approximately 99,000 options remain outstanding.

If the non-cash compensation expense for all stock options awarded to employees and directors, excluding options granted pursuant to the Company’s 2002 Stock Option Exchange plan, had been determined consistent with FASB Statement No. 123, as amended by FASB Statement No. 148, net income (loss) and income (loss) per share for the following sixnine month periods would have been increased to the following pro forma amounts:

The pro forma disclosure assumes (1) the use of the fair value method of accounting and (2) the fair value of each option is estimated on the grant date using the Black-Scholes option pricing model, with an expected dividend yield of zero percent based on the history of no dividends paid to stockholders by the Company, with the following weighted-average assumptions:

This option valuation model requires input of highly subjective assumptions. The Company’s employee and director stock options have characteristics significantly different from those of traded options and

GIANT GROUP, LTD.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

(Dollars in thousands, except per common share amounts)

changes in the subjective input assumptions can materially affect the fair value estimate. Therefore, in management’s opinion, this existing model does not necessarily provide a reliable single measure of the fair value of its employee and director stock options.

For the nine months ended September 30, 2004 and 2003, options to purchase approximately 967,000 and 22,000 shares of Common Stock were exercised with the Company receiving proceeds of $440 and $2, respectively.

Other comprehensive income (loss), net of income tax for the three and nine-months ended September 30, 2004 consists of the following:

Other income for the nine-months ended September 30, 2004 and 2003 consists of the following:

GIANT GROUP, LTD.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

(Dollars in thousands, except per common share amounts)

4.Other comprehensive income (loss)

Other comprehensive income (loss), net of income tax for the three and six-months ended June 30, 2004 consists of the following:

5.Other Income

Other income for the six-months ended June 30, 2004 and 2003 consists of the following:

6.Commitments and Contingencies

The Company is involved in three legal proceedings, which have been described in the Company’s 2003 Annual Report. There have been noThe following material changes to these legal proceedings have occurred during the sixnine months ended JuneSeptember 30, 2004:

GIANT GROUP, LTD. vs. L.H. Friend, Gregory Presson and Robert Campbell

The trial, which was set to begin on September 1, 2004, has been postponed pending the outcome of a mandatory settlement conference scheduled for November 12, 2004. No settlement was reached at this conference, therefore, a trial has been scheduled to begin on February 8, 2005 in Superior Court, Santa Monica, California. Shortly thereafter, it is anticipated that a trail date involving the same parties will be scheduled in New York.

Management is unable to predict the outcome of this matter.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except common share and per common share amounts)

Critical Accounting Policies

Management’s discussion and analysis of financial condition and results of operations discusses the Company’s Balance Sheets as of JuneSeptember 30, 2004 and December 31, 2003 and the Statements of Operations and Comprehensive Income (Loss) and Statements of Cash Flows for the sixnine months ended JuneSeptember 30, 2004 and 2003 (“Financial Statements”) which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these Financial Statements and related footnotes (“Notes”) are supported by accounting policies, which may include management’s use of assumptions, judgments and estimates (collectively “judgments”).

In the ordinary course of doing business, judgments are made that effectaffects decisions on how to operate and report amounts of assets, liabilities, revenues and expenses. These estimatesjudgments include, but are not limited to, those related to the recognition of income and expenses, impairment of assets, capitalization of costs and provisions for litigation and income taxes. EstimatesJudgments are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. On an ongoing basis, estimatesjudgments are evaluated and adjusted based on the information currently available. Actual results may differ materially from the amounts reported based on these judgements.judgments.

Management considers the following accounting policies as critical in the preparation of the Financial Statements and Notes.

ValuationReal estate held for resale

Real estate held for resale includes costs to acquire and to prepare the lots for sale. In addition, real estate held for resale includes interest and real estate taxes if incurred during the periods in which activities necessary to prepare the lots for sale are in progress. Loans fees are amortized over the original financing term of Lotstwenty-four months and are included in interest expense. Costs that do not directly relate to a specific lot are charged to expense as incurred.

The lots are currently available for sale,resale; however, the costs of the lots are classified as long-term until the expected time period to sell the lots can be reasonably determined.

Real estate held for resale includes acquisition costs, real estate taxes and other costs and unamortized loan fees, which Because the lots are amortized overconsidered long-lived assets, management evaluates the original financing term of twenty-four months. Real estate held for resale is stated at the lower of cost or fair value in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). If the profitability of a lot deteriorates, the sales price declines significantly or some other factor indicates a possible impairment in the recoverability of the asset, the lot would be evaluatedproperty in accordance with the guidelines of SFAS No. 144. If this evaluation indicates that an impairment loss should be recognized, cost of sales would includea charge for the estimated impairment loss in the period determined is recorded and the impairment was determined.carrying value of the lot is reduced by the value management believes is not recoverable.

Revenue Recognition

Revenue and cost of sales are recorded at the time theeach lot is closed and title and possession are transferred to the buyer andbuyer. Costs incurred to sell the proceedslots are received.capitalized if the costs are directly associated with the lot sale.

Recognition of other income, based on agreements and settlements of certain litigation, is generally recognized upon the receipt of cash, due to the uncertainty of cash being received. However, if cash is received by the Company receives cash in the subsequent period but prior to filing, the appropriate income would be accrued.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except common share and per common share amounts)

Results of Operations for the Three Months Ended JuneSeptember 30, 2004 Versus September 30, 2003

EXPENSESfor the three months ended September 30, 2004 (“2004 period”) decreased $858 to a credit of $204 compared to $654 for the three months ended September 30, 2003 (“2003 period”).

General and administrative expenses decreased $25 to $268 for the 2004 period compared to $293 for the 2003 period. In the 2004 period, the decrease in legal fees of $65 due to the Arthur Andersen settlement in December 2003 and the delay of the case against LH Friend, Presson and Campbell more than offset increases due to the premium of $21 for Director & Officer liability insurance coverage which was reinstated in May 2004 and higher travel expenses of $26 for the start-up of the Company’s new business.

Interest expense of $4 for the 2004 period related to the Company’s 2003 Federal and State liabilities. For the 2004 period, interest related to the lots were capitalized because the Company was preparing the lots for resale.

Expense forrepricing of stock options (“repricing”) decreased $836 to a credit of $476 for the 2004 period compared to an expense of $360 for the 2003 period. During the 2004 period, approximately 944,000 options were exercised at prices lower than the closing market price of the quarter ended June 30, 2004.

OTHER INCOME:

Results of Operations for the Nine Months Ended September 30, 2004 Versus September 30, 2003

EXPENSESdecreased $1,088 resulting in a credit$1,191 to expenses of $394$429 for the threenine months ended JuneSeptember 30, 2004 (“2004 period”) compared to an expense of $694from $1,620 for the threenine months ended JuneSeptember 30, 2003 (“2003 period”).

General and administrative expenses increased $53$32 to $349$884 for the 2004 period compared to $296 for the 2003 period. In the 2004 period, no expense increased or decreased more than $16. The increase in expenses resulted primarily from higher franchise tax related to higher asset values expected at December 31, 2004 resulting from the Company’s new business and because of an underaccrual of expense for the year ended December 31, 2003. In addition, interest, travel and related expenses increased due to the purchase of the lots.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except common share and per common share amounts) (cont.)

Interest expense of $39 for the 2004 period includes interest paid and the amortization of loan fees related to the lots.

Expense for repricing of stock options (“repricing”) decreased $1,180 to a credit of $782 for the 2004 period compared to an expense of $398$852 for the 2003 period.

For the three months ended June 30, 2004, an adjustment to expense for repricing of $782 reduced the cumulative expense at June 30, 2004 to $1,808 from $2,590 at March 31, 2004. This resulted primarily from a decrease of $.81 in the market price of Common Stock to $2.14 at June 30, 2004 from $2.95 at March 31, 2004.

For the three months ended June 30, 2003, an adjustment to expense for repricing of $398 increased the cumulative expense at June 30, 2003 to $991 from $593 at March 31, 2003. This resulted primarily from an increase of $.39 in the market price of Common Stock to $1.40 at June 30, 2003 from $1.01 at March 31, 2003.

OTHER INCOME:

Results of Operations for the Six Months Ended June 30, 2004 Versus June 30, 2003

EXPENSESdecreased $333 to $633 for the six months ended June 30, 2004 (“2004 period”) from $966 for the six months ended June 30, 2003 (“2003 period”).

General and administrative expenses increased $57 to $616 for the 2004 period compared to $559 for the 2003 period. In the 2004 period, no expense increased or decreased more than $20. The increaseincreases in expenses resulted primarily from the premium of $36 for Director & Officer liability insurance coverage which was reinstated in May 2004 and higher franchise tax related to higher asset values expected at December 31, 2004 resulting fromtravel expenses of $28 and audit fees of $20 for the start-up of the Company’s new business and becausehigher Delaware franchise taxes of an underaccrual$20. These increases were offset by lower legal fees of expense for the year ended December 31, 2003. In addition, interest, travel and related expenses increased$67 due to the purchaseArthur Andersen settlement in December 2003 and the delay of the lots.case against LH Friend, Presson and Campbell.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except common share and per common share amounts)

Expense forrepricing of stock options (“repricing”) decreased $429$1,265 to a credit of $22$498 for the 2004 period compared to an expense of $407$767 for the 2003 period. During the 2004 period, approximately 944,000 options were exercised at prices lower than the closing market price of the quarter ended June 30, 2004.

For the six months ended June 30, 2004 an adjustmentperiod, interest related to expense for repricingfinancing of $22 reduced the cumulative expense at June 30,lots during the second quarter of 2004 to $1,808 from $1,830 at December 31, 2003. This resulted primarily from a decrease of $.07 inand the market price of Common Stock to $2.14 at June 30, 2004 from $2.21 at December 31, 2003.

For the six months ended June 30,Company’s 2003 an adjustment to expense for repricing of $407 increasing the cumulative expense at June 30, 2003 to $991 from $584 at December 31, 2002. This resulted primarily from an increase of $.40 in the market price of Common Stock to $1.40 from $1.00 at December 31, 2002.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except common shareFederal and per common share amounts) (cont.)State income tax liabilities.

OTHER INCOME:

INCOME TAX PROVISION for the sixnine months ended JuneSeptember 30, 2004 was $68$24 compared to $0 for the 2003 period. This expense is based on the federal and state alternative minimum tax rates. Management believes these rates are appropriate because of the tax benefit the Company expects to receive in 2004 due to the realization of a portion of the Company’s deferred tax assets.assets, related to the sale of Checker stock.

Liquidity and Capital Resources

TheLiquidity for the Company’s operations, which began in May 2004, will be fundedare provided primarily by cash in banks and the Company’s $8 million financing facility. In addition, the sale of the lots will also provide funding;liquidity; however, the timing and the amount of fundingcash that the Company will receive cannot be determined at this time. Secondary sources of financingliquidity may include funds that may becash received over the next few years from the Bankruptcy Trustee and Century andfrom the sale of the Company’s investment in 542,998 shares of Checkers common stock, held by the bank as collateral. If the Company chooses to sell any or all of the shares, some of the proceeds received by GIANT would be used to reduce the amount of the loan owed to the bank. The Company’s other source of liquidity was payments received from Century. However, the Company has been in discussions with Century as to the remaining balance, if any, to be received by the Company.

At JuneSeptember 30, 2004, the Company has cash of $926$246, could borrow up to $1,850 and may borrow approximately $1,850. At June 30, 2004, management believes that cash of approximately $870 and $626, respectively, may be received over the next couple of years from the Bankruptcy Trustee and Century. The receipt of the cash by the Company is contingent upon the amount of cash received by the Bankruptcy Trustee and the amount of revenue received by Century related to the sale of Periscope products by Alarmex. The Company cannot influence the future events that will ultimately resolve these contingencies. In July 2004, the Company was notified by Century that GIANT would not receive any further payments. As of the date of the letter, the Company has not received $3 million in payments, which was the amount the parties agreed to. The Company is requesting an explanation from Century which when received, will determine any further action GIANT will take. At June 30, 2004, the market value of the Company’s investment in approximately 483,000 Checker’s common stock is $6,179. The amount of proceedsapproximately $5,673.

Subsequent Events

During the fourth quarter, the Company would receive would be determined onsold a total of approximately 127,000 shares of Checkers common stock and recognized a book gain of approximately $1.1 million. The Company’s long-term financing was reduced by the datetotal net proceeds of sale based onapproximately $1.5 million.

On October 18, 2004, the sale price, number of shares soldCompany and the amountregional bank agreed to reduce the original line from $8 million to $7 million.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except common share and per common share amounts)

On October 27, 2004, the Company purchased a lot for resale for approximately $2.6 million. The Company paid cash of $1.6 million provided by its long-term financing facility. In addition, the loan owed toseller provided financing, secured by the bank.deed of trust, for $1 million payable in full plus interest at 5% on December 16, 2005.

On November 4, 2004, the Company sold a lot at a gross price of approximately $1.6 million and recognized income before taxes of approximately $576. The Company is primarily reducing its long-term financing with the net cash proceeds of approximately $1.5 million from the sale.

Management believes that the Company’s current liquidity and its ability to obtain financing are sufficient for the Company to properly capitalize its current and future business operations, as well as its on-going operating expenses.

Off-balance Sheet Arrangements

The Company does not maintain any off-balance sheet transactions or arrangements that are likely to have a material current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, liquidity, capital expenditures or capital resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk primarily due to fluctuations in interest rates and the market price of the investment in Checkers common stock.

For the Company’s fixed-rate debt, changes in interest rates generally affect the fair market value of the debt instrument, but not ourthe earnings or cash flow. The Company’s fixed rate debt maybe prepaid at any time without penalty. The Company believes interest rate risk and changes in fair market value should not have a significant impact on the outstanding fixed-rate debt.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (cont.)

At June 30, 2004, the debt obligation of $6,150 is due to be paid on June 1, 2006. The weighted-average interest rate approximates the stated rate of 6% and estimated fair value of the debt obligation approximates the recorded value of the debt obligation.

ITEM 4. CONTROLS AND PROCEDURES

Based on(a) Disclosure Controls and Procedures. The Company’s management, with the evaluationparticipation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the fiscal period covered by Burt Sugarman,this Quarterly Report on Form 10-Q. Based upon such evaluation, the Company’s Chief Executive Officer and Pasquale A. Ambrogio, the Company’s Chief Financial Officer have concluded that, as of the period ended June 30, 2004,end of such officers have concluded thatperiod, the Company’s disclosure controls and procedures are effective in ensuring thatrecording, processing, summarizing and reporting information required to be disclosed by the Company in the reports that it files or submits under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periodperiods specified byin the SEC’sCommission’s rules and forms.

The Company has(b) Internal Control Over Financial Reporting. There have not madebeen any changes to its internal controls since the filing of Form 10-Q for the quarterly period ended March 31, 2004. In addition, there were no significant changes in the Company’s internal controlscontrol over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal period covered by this Quarterly Report on Form 10-Q that have materially affected, or in other factors that could significantlyare reasonably likely to materially affect, these controls subsequent to the period ended June 30, 2004.Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information regarding legal matters, see note 67 of the notes to financial statements on page 911 of this Form 10-Q and Item 3 “Legal Proceedings” as reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

Number		Description
3.1		Restated Certificate of Incorporation of the Company, as amended through May 21, 1987 (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1987, and incorporated herein by reference).
3.1.1		Certificate of Amendment to Restated Certificate of Incorporation of the Company dated June 1, 1990 (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1990, and incorporated herein by reference).
3.1.2		Certificate of Amendment to Restated Certificate of Incorporation of the Company dated November 9, 1992 (filed as Exhibit 1 to the Company’s Current Report on Form 8-K, dated November 10, 1992, and incorporated herein by reference).
Number		Description

3.1.3		Certificate of Amendment to Restated Certificate of Incorporation of the Company dated May 9, 1994 (filed as Exhibit 3.1.4 to the Company’s Annual Report on Form 10-K, dated March 28, 1995, and incorporated herein by reference).
3.1.4		Certificate of Amendment to Restated Certificate of Incorporation to Authorize Non-Voting Common Stock dated July 20, 1996 (Proposal No. 4 in the Notice of Annual Meeting of Stockholders held on July 12, 1996, filed with the SEC on June 7, 1996 and incorporated herein by reference).
3.1.5		Certificate of Designation of Series A Junior Participating Preferred Stock dated January 12, 1996 (filed as Exhibit 3.1.5 to the Company’s Annual Report on Form 10-K dated March 29, 1996, and incorporated herein by reference).
3.1.6		Amendments dated January 14, 1996 to Restated By-laws of the Company amended through July 27, 1990 (filed as Exhibit 1 to the Company’s Current Report on Form 8-K, dated January 7, 1996, and incorporated herein by reference).
3.1.7		Amendments dated January 14, 1996 to Restated By-laws of the Company amended through July 27, 1990 (filed as Exhibit 1 to the Company’s Current Report on Form 8-K, dated January 7, 1996, and incorporated herein by reference).
4.1		Rights Agreement between the Company and ChaseMellon Shareholder Services, LLC (“ChaseMellon”), dated January 4, 1996 (filed as Exhibit 1 to the Company’s Current Report Form 8-K, dated January 4, 1996, and incorporated herein by reference).
10.1		1985 Non-Qualified Stock Option Plan, as amended (filed as Exhibit 10.1.2 to the Company’s Annual Report on Form 10-K, dated March 28, 1995, and incorporated herein by reference).
10.2		GIANT GROUP, LTD. 1996 Employee Stock Option Plan (Exhibit A in the Notice of Annual Meeting of Stockholders held on July 12, 1996, filed with the SEC on June 7,1996, as amended by Exhibit B in the Notice of Annual Meeting of Stockholders held on May 8, 1997, filed with the SEC on April 7, 1997, and incorporated herein by reference).
10.3		GIANT GROUP, LTD. 1996 Stock Option Plan for Non-Employee Directors (Exhibit B in the Notice of Annual Meeting of Stockholders held on July 12, 1996, filed with the SEC on June 7, 1996, as amended by Exhibit C in the Notice of Annual Meeting of Stockholders held on May 8, 1997, filed with the SEC on April 7, 1997, and incorporated herein by reference).
10.4		Employment Agreement dated December 3, 1998, between the Company and Burt Sugarman (filed as Exhibit 10.7 to the Company’s Annual Report on Form 10-K, dated March 29, 1999, and incorporated herein by reference).
10.6		Memorandum of Understanding setting forth the terms that constitute an agreement among GIANT Periscope, and David Gotterer (“defendants”) and Glenn Sands in their lawsuit (filed as Exhibit 10.9 to the Company’s Annual Report on Form 10-K, dated March 31, 2000, and incorporated herein by reference).

Number		Description of Exhibit

10.7		License and Option Agreement Alarmex (“Licensee”) and Century (“Licensor’) dated October 31, 2000 (filed as Exhibit 10.10 to the Company’s Annual Report on Form 10-K, dated March 31, 2000, and incorporated herein by reference).
10.8		Peaceful Possession between Periscope, GIANT and Century, dated October 31, 2000 (filed as Exhibit 10.11 to the Company’s Annual Report on Form 10-K, dated March 31, 2000, and incorporated herein by reference).
10.9		Release of GIANT from Century dated October 31, 2000 (filed as Exhibit 10.12 to the Company’s Annual Report on Form 10-K, dated March 31, 2000, and incorporated herein by reference).
10.10		Release from GIANT and Periscope in favor of Century dated October 31, 2000 (filed as Exhibit 10.13 to the Company’s Annual Report on Form 10-K, dated March 31, 2000, and incorporated herein by reference).
10.14		Release from Century in favor of GIANT dated October 31, 2000 (filed as Exhibit 10.14 to the Company’s Annual Report on Form 10-K, dated March 31, 2000, and incorporated herein by reference).
31.1		Certification of Chief Executive Officer dated August 14, 2003November, 2004 pursuant to rule 13a-14 or 15d-14 of the Securities and Exchange Act of 1934 pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Accounting Officer dated August 14, 2003 pursuant to rule 13a-14 or 15d-14 of the Securities and Exchange Act pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350)
32.2		Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350)

(b) For the secondthird quarter ended JuneSeptember 30, 2004, the Company filed the following reports on Form 8-K:

On April 23August 18, 2004, Giant has been made aware of rumors that it might be developing land in Whitefish, Montana. Giant has no intention of doing this.

On September 9, 2004, the Company reported an agreement forissued a press release announcing the exchangeapproval by the Board of 435,000 sharesDirectors of Checkers commona 1-300 reverse stock for Montana real property.

On April 26, 2004, the Company reported that the starting date for litigation between GIANT, LH Friend, Gregory Presson and Robert Campbell was changed from June 30, 2004split, subject to September 1, 2004.

On June 10, 2004, the Company reported the completion of the exchange of 435,000 shares of Checkers common stock for two lots.stockholder approval.

SIGNATURE

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

15Date: November 12, 2004