UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


         (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, 1996
                                                 -------------

                                       or

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

                  For the transition period from _______ to _________


                         Commission File Number 0-19644

                        GALLERY RODEO INTERNATIONAL, INC.
                        ---------------------------------
             (Exact name of registrant as specified in its charter)


            California                                   33-0300193
            ----------                                   ----------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)


 421 North Rodeo Drive, Beverly Hills, California                    90210
- -----------------------------------------------------------------------------
  (Address of Principal Executive Offices)                         (Zip Code)

        Registrant's telephone number, including area code (719) 525-1800
                                                           --------------

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 for such shorter  periods 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
                                       ----       ----

As of June 30, 1996, there were 15,521,681 shares of Common Stock outstanding.



<PAGE>

                                      INDEX


                        GALLERY RODEO INTERNATIONAL, INC.


                                                                        Page No.
                                                                        --------


PART I. FINANCIAL INFORMATION


Item 1. Financial Statements (Unaudited)

         Condensed consolidated balance sheets-March 31, 1996
           and December 31, 1995...........................................3

         Condensed consolidated income statements-Quarter
          ended March 31, 1996 and 1995 ...................................4

         Condensed consolidated statements of cash flows-Quarter
          ended March 31, 1996 and 1995....................................5

         Notes to condensed consolidated financial statements-
          March 31, 1996...................................................7


Item 2. Management's Discussion and Analysis of Financial Condition
         and Results of Operations.........................................9



PART II. OTHER INFORMATION


Item 1. Legal Proceedings.................................................10


Item 2. Changes in Securities.............................................10


Item 3. Defaults upon Senior Securities...................................10


Item 4. Submission of Matters to a Vote of Security Holders...............10


Item 5. Other Information.................................................10


Item 6. Exhibits and Reports on Form 8-K..................................10


SIGNATURE.................................................................11


                                        2


<PAGE>


Part I. Financial Information

Item 1. Financial Statements


<TABLE>

                                     GALLERY RODEO INTERNATIONAL AND SUBSIDIARIES
                                              Consolidated Balance Sheets
                                                      (Unaudited)

<CAPTION>
                                                        ASSETS
                                                                                                   June 30,            December 31,
                                                                                                     1996                  1995
                                                                                                 -----------            -----------
                                                                                                 (Unaudited)             (Note 1)
CURRENT ASSETS

<S>                                                                                              <C>                    <C>        
      Cash and cash equivalents                                                                  $       327            $       229
      Current assets of discontinued operations                                                    1,120,903              1,499,277
                                                                                                 -----------            -----------
           Total Current Assets                                                                    1,121,230              1,499,506

LAND HELD FOR FUTURE DEVELOPMENT                                                                   2,150,000              2,150,000

LAND HELD FOR SALE                                                                                      --                  370,000

PROPERTY AND EQUIPMENT, net                                                                            3,822                  3,202

OTHER ASSETS

      Note Receivable                                                                              1,184,400                500,000
      Other (including deposits on work in progress)                                                    --                   27,500
      Assets of discontinued operations                                                            1,144,812                766,210
                                                                                                 -----------            -----------
TOTAL ASSETS                                                                                     $ 5,604,264            $ 5,316,418
                                                                                                 -----------            -----------

                                           LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

      Current maturities of long-term debt                                                       $   997,000            $   577,369
      Accounts payable                                                                               233,309                115,427
      Accrued liabilities                                                                            350,000                   --
      Current liabilities of discontinued operations                                               2,625,849              2,365,695
                                                                                                 -----------            -----------
           Total current liabilities                                                               4,206,158              3,058,491

LONG-TERM DEBT, net of current maturities
      (including $862,000 to stockholders)                                                              --                  945,682


DEFERRED GAIN ON SALE OF LAND                                                                        690,500                   --


STOCKHOLDERS' EQUITY

      Common stock, 100,000,000 shares, $.001 par value;
           15,521,681 and 15,511,681 shares issued and
           outstanding and June 30, 1996 and December 31,
           1995, respectively                                                                         15,522                 15,511
      Additional Paid in Capital                                                                   5,348,700              5,348,210
      Accumulated deficit                                                                         (4,491,116)            (3,885,976)
                                                                                                 -----------            -----------
                                                                                                     873,106              1,477,745
      Less stockholders' loans                                                                      (165,500)              (165,500)
                                                                                                 -----------            -----------
           Total stockholders' equity                                                                707,606              1,312,245
                                                                                                 -----------            -----------

                                                                                                 $ 5,604,264            $ 5,316,418
                                                                                                 -----------            -----------

<FN>

See accompanying notes to these financial statements.

Note 1: The balance  sheet at December  31, 1995 has been  derived  from audited
financial  statements at that date, but does not include all of the  information
and footnotes required by generally  accepted  principles for complete financial
statements.

</FN>
</TABLE>


                                                                  3


<PAGE>


<TABLE>

                                            GALLERY RODEO INTERNATIONAL AND SUBSIDIARIES

                                                Consolidated Statements of Operations
                                                 For Six Months Ended June 30, 1996
                                                             (Unaudited)

<CAPTION>

                                                               THREE MONTHS ENDED                          SIX MONTHS ENDED
                                                                    MARCH 31,                                   JUNE 30,
                                                        ---------------------------------         ---------------------------------
                                                            1996                 1995                 1996                 1995
                                                        ------------         ------------         ------------         ------------

<S>                                                     <C>                  <C>                  <C>                  <C>       
NET SALES                                               $       --           $       --           $       --           $       --

COST OF GOODS SOLD                                              --                   --                   --                   --
                                                        ------------         ------------         ------------         ------------

GROSS PROFIT                                                    --                   --                   --                   --

OPERATING EXPENSES                                            34,796              216,816              170,447              475,790
                                                        ------------         ------------         ------------         ------------

(LOSS) FROM CONTINUING OPERATIONS                            (34,796)            (216,816)            (170,447)            (475,790)

OTHER INCOME (EXPENSES):
      Gain on sale of land                                      --                   --                 99,500                 --
      Buyout of employment contract                             --                   --               (350,000)                --
      Rental income                                              371              140,000                  871              305,000
      Interest income (expense), net                         (27,265)             (86,773)             (61,957)            (183,139)
                                                        ------------         ------------         ------------         ------------
INCOME (LOSS) BEFORE INCOME TAXES
      AND DISCONTINUED OPERATIONS                            (61,690)            (163,589)            (482,033)            (353,929)

PROVISION FOR INCOME TAXES                                      --                   --                   --                   --
                                                        ------------         ------------         ------------         ------------
INCOME (LOSS) BEFORE DISCONTINUED
      OPERATIONS                                             (61,690)            (163,589)            (482,033)            (353,929)

DISCONTINUED OPERATIONS, NET OF TAX                           (3,828)             (45,172)            (123,105)              34,116
                                                        ------------         ------------         ------------         ------------
NET INCOME (LOSS)                                       $    (65,518)        $   (208,761)        $   (605,138)        $   (319,813)
                                                        ------------         ------------         ------------         ------------
INCOME (LOSS) PER SHARE                                 $      (0.00)        $      (0.01)        $      (0.04)        $      (0.02)
                                                        ------------         ------------         ------------         ------------
WEIGHTED AVERAGE COMMON AND
      COMMON EQUIVALENT SHARES
      OUTSTANDING                                         15,516,681           15,369,919           15,516,681           15,650,634
                                                        ------------         ------------         ------------         ------------

<FN>

                                        See accompanying notes to these financial statements.

</FN>
</TABLE>


                                                                  4


<PAGE>


<TABLE>

                                            GALLERY RODEO INTERNATIONAL AND SUBSIDIARIES

                                                      STATEMENTS OF CASH FLOWS
                                             FOR SIX MONTHS ENDED JUNE 30, 1996 AND 1995
                                                             (Unaudited)

<CAPTION>

                                                                                                               June 30,
                                                                                                     1996                    1995
                                                                                                   ---------              ---------

<S>                                                                                                <C>                    <C>       
CASH FLOWS FROM OPERATING ACTIVITIES:

      Net Income (Loss)                                                                            $(605,138)             $(319,813)
      Adjustments to reconcile net income to net cash from
           operating activities:
                 Depreciation and amortization                                                        27,880                    641
                 Gain on sale of land                                                                 99,500                   --
                 Accounts payable                                                                    117,882                201,278
                 Accrued liabilities                                                                 350,000
                 Changes in assets and liabilities related to
                      Discontinued Operations                                                        169,931                (59,308)
                                                                                                   ---------              ---------

           Net cash provided by (used in) operating activities                                       160,055               (177,202)

CASH FLOWS FROM INVESTING ACTIVITIES:
      Proceeds from sale of property                                                                 150,000                120,000
      Increase in deposits on property                                                                  --                   15,000
      Capital expenditures                                                                           (28,720)                (4,411)
                                                                                                   ---------              ---------
           Net cash provided by (used in) investing activities                                       121,280                130,589

CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from long-term debt, net                                                             (281,237)                16,545
      Proceeds from shareholder loans                                                                   --                   15,866

           Net cash provided by (used in) financing activities                                      (281,237)                32,411
                                                                                                   ---------              ---------

           Net increase (decrease)                                                                        98                (14,202)

CASH AT BEGINNING OF PERIOD                                                                              229                 14,202
                                                                                                   ---------              ---------

CASH AT END OF PERIOD                                                                              $     327              $    --
                                                                                                   ---------              ---------
Supplemental disclosures of cash flow information:
      Cash paid for year:
           Interest                                                                                $ 101,524              $ 183,456
                                                                                                   ---------              ---------



<FN>

See accompanying notes to these financial statements.

</FN>
</TABLE>


                                                                  5

<PAGE>

                  GALLERY RODEO INTERNATIONAL AND SUBSIDIARIES

                            STATEMENTS OF CASH FLOWS
                  FOR SIX MONTHS ENDED JUNE 30, 1996 AND 1995
                                  (Unaudited)


                                                              June 30,
                                                       1996             1995
                                                    ----------      ----------
Noncash investing and financing activities:

   Issuance of restricted stock in satisfaction 
        of certain debt                             $     --        $   47,969
                                                    ----------      ----------
   Sale of Elk Creek Gaming Hall
            Notes receivable                        $     --        $  780,000
            Liabilities assumed by purchaser                           615,000
            Cash received                                              120,000
                                                    ----------      ----------
   
                     Total proceeds                 $     --        $1,515,000
                                                    ----------      ----------
   
   Sale of Bloomer property
            Notes receivable                        $  684,400      $     --

            Liabilities assumed by purchaser           435,600
            Cash received                               40,000
                                                    ----------      ----------
   
                     Total proceeds                 $1,160,000      $     --
                                                    ----------      ----------








             See accompanying notes to these financial statements.



                                        6

<PAGE>


                  GALLERY RODEO INTERNATIONAL AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)


      1.  GENERAL:

      Gallery  Rodeo   International   (the   "Company")  has  elected  to  omit
      substantially all other notes to the financial  statements.  These interim
      financial  statements  should be read in  conjunction  with the  Company's
      annual report and report Form 10-KSB for the year ended December 31, 1995.

      2.  UNAUDITED INFORMATION:

      The information  furnished  herein was taken from the books and records of
      the  Company  without  audit.   However,  such  information  reflects  all
      adjustments  (consisting only of normal recurring  adjustments) which are,
      in the opinion of  management,  necessary to properly  reflect  results of
      interim  periods  presented.  The  results of  operations  for the periods
      presented are not necessarily indicative of the results to be expected for
      the year.

      3.  NOTES RECEIVABLE:

            a. On May 17, 1994,  the Company  entered into an agreement to lease
      the premises  previously known as the Turf Club Casino,  which was located
      contiguous  to the Elk Creek Gaming Hall.  Subsequently,  on June 30, 1995
      the  Company  sold the Elk Creek  Gaming Hall and  assigned  the Turf Club
      lease.  The terms of the  agreement  provided the terms of the sale of the
      Elk Creek Gaming Hall to be a sales price of $1,500,000  (not  including a
      $20,000  discount) in the form of a $365,000  down  payment;  a promissory
      note of $500,000  bearing  interest at 10% with all  principal due in full
      within five years from the close of escrow,  and the buyer's assumption of
      two promissory notes totaling $615,000.

            b. On June 30, 1995,  the Company  entered into an agreement for the
      sale of certain land and buildings known as the Bloomer  property  located
      in Cripple Creek, Colorado.  Escrow closed with respect to the transaction
      in May,  1996.  Under the terms of the  agreement,  the  Company  received
      $150,000 on close of escrow  ($15,000 of which was paid on June 30,  1995,
      and the  remaining  paid  subsequently);  three  promissory  notes with an
      aggregate principal of $624,400 (bearing interest at 7.5%); and assumption
      by the buyer of existing indebtedness totaling $385,600.

      4.  LAND HELD FOR FUTURE DEVELOPMENT:

      In May, 1993, the Company  purchased 10 contiguous  lots in Cripple Creek,
      Colorado,  to be the site of the Company's  proposed  Wandering Star Hotel
      Casino project (the "Wandering Star Project").  The Wandering Star Project
      is located within the Cripple Creek approved gaming district.  The Company
      anticipates  the  Wandering  Star  Project,   when  completed,   will  add
      approximately  200 hotel rooms to a town that currently has  approximately
      400 hotel rooms, and which the Company  estimates  currently is in need of
      approximately 1500 rooms. In addition, the Company expects that the casino
      floor area of the Wandering Star Project,  at approximately  24,000 square
      feet,  will be  approximately  three times larger than the average  casino
      floor area in the town of Cripple Creek.

      5.  DISCONTINUED CONTINUAL OPERATIONS:

      As part of the March 29, 1996  agreement  with Stephen R.  Thompson  which
      brought about the management and Board of Directors  restructuring of May,
      1996, the Company  entered into an asset purchase  agreement  dated May 9,
      1996,  pursuant to which the  Company  has agreed to sell,  its retail art
      sales and gallery  operations,  including all licenses,  inventories,  and
      operating  assets to Thompson for  $1,000,000.  In payment for the assets,
      Thompson  has  delivered a note for  $1,000,000  secured by stock owned by
      Thompson and Clipper industries

                                        7


<PAGE>

      in the  Company.  The note will bear  interest  at 8%, and will be due and
      payable five years from May 9, 1996, with first payment of interest due in
      February, 1997.

      As the  Company  intends  to  divest  itself of the art  operations,  such
      operations  and related  assets and  liabilities  have been  reflected  as
      discontinued  operations in the accompanying financial statements.  Losses
      from the art  operations  from April 1, 1996 to May 9, 1996 (the effective
      date of the sale), have been deferred.

      6.  DEFERRED GAIN ON SALE:

      The sale of the Bloomer  property  resulted in a gain on sale of $790,000.
      The gain on sale will be recognized on the installment method as principal
      is  collected  on the notes  receivable  of  $624,400,  and  payoff of the
      assumed debt of $385,600.

      7.  SUBSEQUENT EVENTS:

      In July 1996,  the  Company  entered  into  transactions  with  affiliated
      corporations and individuals for the following purposes:

       o Microtech Medical Systems,  Inc. (a public company in which the control
         group managed the corporation) - sale of $ 500,000 note receivable at a
         discount for $450,000.

       o InnerCircle  Group  Incorporated  (a  management  company  owned by the
         control  group) - $100,000 for  management  fees  incurred  pursuant to
         management service contract.

       o Microtech Medical Systems,  Inc. (a public company in which the control
         group managed the corporation) - sale of $ 208,000 note receivable at a
         discount for $200,000.

       o Stephen M. Thompson  (former  Chairman and CEO) - $165,000 note payable
         to Thompson for his assumption of $165,000 note of third party, paid by
         Thompson.

       o Stephen M.  Thompson  (former  Chairman  and CEO) - $200,000 in partial
         payment of $350,000 buyout on his employment contract.



                                       8

<PAGE>


I
tem 2
                  GALLERY RODEO INTERNATIONAL AND SUBSIDIARIES


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Unaudited)


GENERAL:

The  Company's  financial  condition  and  results of  operations  are  directly
affected by the following transactions:

On May 9, 1996, the Company's former  president,  (Thompson) closed a management
restructuring  agreement  with the Company  and present  members of its Board of
Directors. In connection with the said agreement, the three prior members of the
Company's  Board of Directors  resigned and five new Board  members and four new
officers  affiliated with the new Control Group were  appointed.  As part of the
agreement, the Company has agreed to purchase Thompson's employment contract for
$350,000 and to sell to Thompson and his  affiliates  the Company's art business
for $1,000,000, which price was in excess of its appraised value.

As the Company has to divested itself of the art operations, such operations and
related assets and liabilities have been reflected as discontinued operations in
the accompanying financial statements.

The Company  intends to take advantage of gaming and related real estate markets
and opportunities,  especially those in Cripple Creek,  Colorado for its planned
future  operations,  and  specifically  concentrate  upon the development of its
Wandering Star Project.

FINANCIAL CONDITION

As of June 30, 1996, the Operating  Company's  working  capital was a deficit of
approximately  $1,580,000,  a decrease of approximately  $693,000. The increased
deficit was attributable  primarily to the accrual of $350,000 for the buyout on
Stephen M. Thompson's  employment  agreement and  reclassification  of long-term
debt to current  maturities of $420,000.  Subsequent  to June 30, 1996,  working
capital was improved by the following transactions:

o    $450,000 cash received on the sale of $500,000 note  receivable due from an
     unaffiliated company. This note was purchased by a public company, which is
     also managed by the Control Group.

o    $200,000 cash received on the sale of $208,000 note  receivable due from an
     entity owned by the Control Group.


RESULT OF OPERATIONS:

As the Company's  Board of Directors  has decided to sell the art business,  the
statement  of  operations  has been  restated  to reflect  these  operations  as
discontinued operations. Discontinued operations represent income through May 9,
1996 related to the prior art operations.


                                        9


<PAGE>


P
ART II - OTHER INFORMATION


Item 1 Through 5 - No response required.


Item 6 - Exhibits and reports on Form 8-K.

          (a)  Exhibit

                  11.1* Statement re Computation of Per Share Earnings.

                  27*  Financial Data Schedule.

         (b)  Reports on Form 8-K

                  A Form 8-K was filed May 9, 1996 regarding management change.





*        These exhibits will be filed by amendment.

                                       10


<PAGE>



                                    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.




                                                GALLERY RODEO INTERNATIONAL
                                                       (Registrant)




DATE:          8/16/96              BY:       /s/ Kenneth M. Cahill
       ------------------------         --------------------------------------
                                          KENNETH M. CAHILL, PRESIDENT



DATE:          8/16/96              BY:       /s/ J. Royce Renfrow
       ------------------------         --------------------------------------
                                          J. ROYCE RENFROW, SECRETARY


DATE:          8/16/96              BY:        /s/ James A. Humpal
       ------------------------         --------------------------------------
                                          JAMES A. HUMPAL, TREASURER
                                          Principal Financial Officer












                                       11