FORM 10-Q/A

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
     THE SECURITIES EXCHANGE ACT OF 1934

     For the Quarterly Period Ended September 30, 1998

                                       OR

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

     For the transition period __________________ to ____________________

     Commission File Number  1-12902
                           ------------


                       FRONTIER ADJUSTERS OF AMERICA, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


            Arizona                                      86-0477573
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


                     45 East Monterey Way, Phoenix, AZ 85012
                    ----------------------------------------
                    (Address of principal executive offices)


                                 (602) 264-1061
               --------------------------------------------------
              (Registrant's telephone number, including area code)


--------------------------------------------------------------------------------
Former name, former 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 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
                                -----         -----

Number of shares of Common Stock outstanding on November 9, 1998       4,605,358
<PAGE>
PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                       FRONTIER ADJUSTERS OF AMERICA, INC.
                                AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEET

                                             September 30, 1998    June 30, 1998
                                             ------------------    -------------
                                                 (unaudited)             (*)
                                     ASSETS
CURRENT ASSETS
   Cash and cash equivalents                  $   933,416           $   929,364
   Investments                                  1,243,831             1,289,519
   Receivables                                  1,570,145             1,582,020
   Prepaid expenses                               300,788               317,454
   Other                                          289,905               439,638
                                              -----------           -----------
      TOTAL CURRENT ASSETS                      4,338,085             4,557,995
                                              -----------           -----------
PROPERTY AND EQUIPMENT                          2,582,270             2,543,631
   Less accumulated depreciation and
     amortization                                (835,502)             (819,302)
                                              -----------           -----------
                                                1,746,768             1,724,329
                                              -----------           -----------
OTHER ASSETS
   Cost of subsidiary in excess
     of net tangible assets acquired              213,817               213,817
   Less accumulated amortization                 (179,707)             (179,129)
                                              -----------           -----------
                                                   34,110                34,688
   Receivables (Long term)                        376,000               431,000
   Investments (Long term)                        694,831               694,724
   Other                                          336,090               357,964
                                              -----------           -----------
                                                1,441,031             1,518,376
                                              -----------           -----------
      TOTAL ASSETS                            $ 7,525,884           $ 7,800,700
                                              ===========           ===========

                                  LIABILITIES
CURRENT LIABILITIES
   Accounts payable                           $    83,166           $    62,118
   Accrued expenses                               173,400               513,365
   Franchisee/licensee remittance payable         573,089               545,830
   Current Portion Long Term Liability             26,527                28,509
   Other                                          162,142               193,684
                                              -----------           -----------
      TOTAL CURRENT LIABILITIES                 1,018,324             1,343,506
                                              -----------           -----------
LONG TERM LIABILITY                                    --                 4,953
                                              -----------           -----------
STOCKHOLDERS' EQUITY
   Common stock                                    47,820                47,820
   Additional paid in capital                   2,148,470             2,148,470
   Treasury stock                                (529,584)             (529,584)
   Other                                           21,703                49,600
   Retained earnings                            4,819,151             4,735,935
                                              -----------           -----------
                                                6,507,560             6,452,241
                                              -----------           -----------
   TOTAL LIABILITIES & STOCKHOLDERS' EQUITY   $ 7,525,884           $ 7,800,700
                                              ===========           ===========

* Condensed from audited financial statements.

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

                                        2
<PAGE>

                       FRONTIER ADJUSTERS OF AMERICA, INC.
                                AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (unaudited)


                 THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997


                                                        1998             1997
                                                    -----------      -----------
REVENUE
   Continuing licensee and franchisee fees          $ 1,273,123      $ 1,220,102
   Adjusting and risk management fees                   360,246          263,606
                                                    -----------      -----------
                                                      1,633,369        1,483,708
                                                    -----------      -----------

COST AND EXPENSES
   Compensation and fringe benefits                     717,766          645,048
   Office                                                95,515           94,149
   Advertising and promotion                             40,587           60,001
   Depreciation and amortization                         62,475           61,357
   Provision for doubtful accounts                       48,000           48,000
   Other                                                273,706          187,069
                                                    -----------      -----------
                                                      1,238,049        1,095,624
                                                    -----------      -----------
   INCOME FROM OPERATIONS                               395,320          388,084
                                                    -----------      -----------

OTHER INCOME (EXPENSE)
   Interest income                                       29,434           36,466
   Other (Net)                                           (1,491)           1,679
                                                    -----------      -----------
   TOTAL OTHER INCOME (EXPENSE)                          27,943           38,145
                                                    -----------      -----------
   INCOME BEFORE INCOME TAXES                           423,263          426,229

INCOME TAXES                                            167,347          167,587
                                                    -----------      -----------
   NET INCOME                                       $   255,916      $   258,642
                                                    ===========      ===========

EARNINGS PER SHARE
   Basic                                            $       .06      $       .06
                                                    ===========      ===========
   Diluted                                          $       .06      $       .06
                                                    ===========      ===========

WEIGHTED AVERAGE SHARES OUTSTANDING
   Basic                                              4,605,358        4,605,358
                                                    ===========      ===========
   Diluted                                            4,609,163        4,605,358
                                                    ===========      ===========

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

                                        3
<PAGE>

                       FRONTIER ADJUSTERS OF AMERICA, INC.
                                AND SUBSIDIARIES

            CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (Unaudited)


                 THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997



                                                           1998           1997
                                                        ---------      ---------

NET INCOME                                              $ 255,916      $ 258,642
                                                        ---------      ---------

Other Comprehensive Income (net of tax)
   Foreign currency translation adjustments                    --             75
   Unrealized gain (loss) on securities                   (27,897)         5,456
                                                        ---------      ---------
                                                          (27,897)         5,531
                                                        ---------      ---------
COMPREHENSIVE INCOME                                    $ 228,019      $ 264,173
                                                        =========      =========

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

                                        4
<PAGE>

                       FRONTIER ADJUSTERS OF AMERICA, INC.
                                AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (unaudited)

                 THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

                                                         1998           1997
                                                     -----------    -----------

NET INCOME                                           $   255,916    $   258,642
                                                     -----------    -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
   Depreciation and amortization                          63,021         61,903
   (Gain) on disposition of property & equipment           4,979           (120)
   Allowance for doubtful accounts                        48,000         49,038
Change in assets and liabilities:
(Increase) decrease in:
   Receivables                                           (26,000)      (122,262)
   Prepaid expenses                                       16,666        (34,079)
   Other                                                 137,271        (26,537)
Increase (decrease) in:
   Accounts payable                                       21,048        (23,191)
   Accrued expenses                                     (339,965)       150,629
   Franchisee and licensee remittance payable             27,259         82,595
   Other                                                 (13,299)      (487,666)
                                                     -----------    -----------
Total adjustments                                        (61,020)      (349,690)
                                                     -----------    -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES                194,896        (91,048)
                                                     -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sale of equipment                        21,510            200
   Capital expenditures                                  (89,497)       (16,308)
   Investment purchased                                 (988,096)      (989,627)
   Proceeds from sales of investments                  1,000,000      1,000,000
   Payments on License acquisition                        (6,935)        (6,451)
   Advances to licensees and franchisees              (1,092,284)    (1,029,663)
   Collections of advances to licensees and
     franchisees                                       1,137,159        944,241
                                                     -----------    -----------
   NET CASH (USED IN) INVESTING ACTIVITIES               (18,143)       (97,608)
                                                     -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Cash dividends                                       (172,701)      (172,701)
   Common stock repurchased                                   --             --
                                                     -----------    -----------
   NET CASH PROVIDED BY(USED IN)FINANCING
     ACTIVITIES                                         (172,701)      (172,701)
EFFECT OF EXCHANGE RATE CHANGES ON CASH                       --            123
                                                     -----------    -----------
NET INCREASE (DECREASE) IN CASH                            4,052       (361,234)
   Cash at beginning of the period                       929,364      1,012,233
                                                     -----------    -----------
   Cash at the end of the period                     $   933,416    $   650,999
                                                     ===========    ===========
Supplemental disclosures of Cash Flow information
Cash paid during the period
   Income taxes                                      $     3,215    $    86,910
   Interest                                          $       565    $     1,048

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

                                        5
<PAGE>
                       FRONTIER ADJUSTERS OF AMERICA, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

(1) BASIS OF PRESENTATION

    The  financial  information  included  herein is  unaudited;  however,  such
    information reflects all adjustments  (consisting solely of normal recurring
    adjustments)  which are, in the opinion of management,  necessary for a fair
    statement of results of operations for the interim periods.

    The dilutive effect on weighted  average shares  outstanding is due to stock
    options in the amount of 43,435 for the three  months  ended  September  30,
    1998. No stock options were dilutive for three months ended September 30,
    1997.

(2) FINANCIAL ACCOUNTING STANDARDS BOARD STATEMENT NO. 130 REPORTING
    COMPREHENSIVE INCOME

    Effective  September  30, 1998,  the Company  adopted  Financial  Accounting
    Standard Boards (FASB) Statement No. 130,  REPORTING  COMPREHENSIVE  INCOME.
    Statement  130   establishes   standards   for   reporting  and   displaying
    comprehensive  income  and  its  components  in the  full  set of  financial
    statements. Accordingly, the Company's comprehensive income was $228,000 and
    $264,000  for  the  three  months  ended   September   30,  1998  and  1997,
    respectively.

    The results of  operations  for the three month period ended  September  30,
    1998 are not  necessarily  indicative  of the results to be expected for the
    full year.

    ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
    RESULTS OF OPERATIONS

    The  statements  contained  in this  Report on Form 10-Q that are not purely
    historical are forward looking  statements within the meaning of Section 27A
    of the Securities Act of 1933, as amended, and Section 21E of the Securities
    Exchange  Act of  1934,  as  amended,  including  statements  regarding  the
    Company's  "expectations",   "anticipation",   "intentions",  "beliefs",  or
    "strategies"  regarding  the  future.  Forward  looking  statements  include
    statements regarding revenue, margins,  expenses, and earnings analysis with
    regard  to the  Company  or  with  regard  to the  Company's  licensees  and
    franchisees for the remainder of fiscal 1999 and thereafter; improvement of,
    and growth in the number of, licensees and  franchisees;  future spending on
    marketing and product  development  strategy;  the  transaction  with United
    Financial  Adjusting  Company described below; and liquidity and anticipated
    availability of cash for operations,  acquisitions, or payment of dividends.
    All  forward  looking  statements  included  in this  document  are based on
    information  available  to the Company on the date of this  report,  and the
    Company assumes no obligation to update any such forward looking  statement.
    It is  important  to note that the  Company's  actual  results  could differ
    materially from those in such forward looking statements.  Among the factors
    that  could  cause  actual  results  to differ  materially  are the  factors
    discussed in this Report and in the  Company's  Form 10-K for the year ended
    June 30, 1998, including but not limited to the extent and nature of natural
    disasters in  geographic  areas  serviced by the Company or by its licensees
    and   franchisees;   management   decisions  by  insurance   companies   and
    self-insureds  to increase or decrease the degree to which they contract for
    services offered by the Company, its licensees or franchisees; the Company's
    ability to identify and attract new qualified licensees and franchisees; the
    Company's  ability to successfully  manage offices  reacquired from existing
    licensees and franchisees;  and uninsured liability for acts or omissions of
    the Company's employees, licensees, or franchisees.

    In August 1998, the Company  entered into a letter of intent (the "Letter of
    Intent") with United Financial  Adjusting Company  ("UFAC"),  a wholly owned
    subsidiary of the Progressive Corporation ("Progressive"), whereby UFAC will
    purchase  newly issued stock  representing a minimum of 52% of the Company's
    voting   securities.   Following   the  purchase  by  UFAC,   the  Company's
    shareholders  will be given the option to retain  their shares and receive a
    cash  distribution  of $1.60 per share or to  surrender  their  shares for a
    price of $2.90 per share.  Up to an aggregate  of  1,000,000  shares will be
    accepted for repurchase.  UFAC will purchase the newly issued  securities of
    the Company
                                        6
<PAGE>
    at a price of $1.30 per share and will not be  entitled  to receive the cash
    distribution  of $1.60 per share.  If the  transaction  contemplated  by the
    Letter of Intent is consummated,  UFAC, and therefore  Progressive,  will be
    able to elect a majority of the board of directors  and  therefore,  will be
    able to control the  business and affairs of the  Company.  Consummation  of
    this  transaction  is subject to  shareholder  approval.  The  Company  will
    provide  its  shareholders  with a proxy  statement  containing  a  detailed
    description  of  the  proposed  transaction  prior  to  the  Company's  next
    shareholder's meeting.

    FINANCIAL CONDITION

    The Company has  historically  financed its growth and  on-going  operations
    with cash  generated  from  operations.  In the quarter ended  September 30,
    1998,  Company's operations generated $195,000 in cash. Compared to the last
    fiscal year, the most  significant item affecting cash used by the Company's
    operations  is the  $340,000  decrease in accrued  expenses.  This  decrease
    results  from the  payout of  employee  benefits  and  bonuses  in the first
    quarter of this fiscal year.

    Through its capital  investment  program,  the Company replaces  obsolete or
    outdated  equipment and invests in new equipment and furnishings to maintain
    or increase the  productivity of the Company and its employees.  The Company
    anticipates  investing $200,000 to $300,000 in fiscal 1999 for equipment and
    furnishings pursuant to its
    capital investment program.

    Without  giving  effect to any  extraordinary  dividend  payable  should the
    Company  consummate the transaction with UFAC  contemplated in the Letter of
    Intent, management believes that the Company will be able to fund all of its
    cash requirements (i.e. current operations,  capital asset acquisition,  and
    the payment of dividends) from its current
    available cash as well as funds generated  by its operations.

    The Company's  ratio of current assets to current  liabilities was 4.26 to 1
    as of September 30, 1998 and 3.39 to 1 as of June 30, 1998.

    RESULTS OF OPERATIONS - QUARTER ENDED SEPTEMBER 30, 1998 COMPARED TO 1997

    REVENUE

    The Company's revenue increased 10% or $149,000 to $1,633,000 in the current
    quarter from  $1,484,000  in the same period of the prior  fiscal year.  The
    increase is a combined $96,000 increase in adjusting and risk management
    fees and a $53,000 increase in continuing licensee and franchisee fees.

    The increase of $96,000 in adjusting and risk  management fees from $264,000
    in the quarter  ended  September  30, 1997 to $360,000 in the quarter  ended
    September 30, 1998  represents a 36% increase.  The Company  experienced  an
    increase of $120,000 in adjusting fees in its Phoenix office,  and decreases
    of $17,000 and $7,000 in  adjusting  fees from the Las  Vegas/Henderson  and
    Tucson offices,  respectively.  The increase in fees from the Phoenix office
    primarily reflects fees generated from a new client.

    The Company's revenue from continuing licensee and franchisee fees increased
    4% or $53,000 from  $1,220,000  in the quarter  ended  September 30, 1997 to
    $1,273,000 in the quarter ended September 30, 1998.  This increase  reflects
    the benefit to the Company's licensees and franchisees due to an increase in
    the use of their services by insurance companies and self-insureds resulting
    from a larger  volume of claims and from a greater  demand for the Company's
    services.

    The  Company's  revenue is affected by numerous  factors  including the work
    loads of other companies and claims  presented by their clients.  Therefore,
    the  Company  is unable to project  its  future  revenue.  The  Company  has
    historically  seen growth in licensee  and  franchisee  fees paid.  However,
    during the prior fiscal year the Company  experienced  a decrease in revenue
    due  primarily to the phase out of its business  relationship  with its then
    major  client.  The  Company has  responded  to this loss by  continuing  to
    develop and implement  sales and marketing  efforts to take advantage of its
    geographic  diversity  as well as the  unique  strengths  of its  individual
    licensees and  franchisees.  For the quarter ended  September 30, 1998,  the
    Company   successfully    completed   negotiations   for   national/regional
    relationships  with  three new  clients  and with one  existing  client  for
    additional services. In addition, the Company believes that it will continue
    to realize growth as it adds additional qualified licensees and

                                        7
<PAGE>
    franchisees. Furthermore, the Company expects to continue to reflect revenue
    from its Phoenix, Tucson, and Las Vegas/ Henderson operations.

    COMPENSATION AND FRINGE BENEFITS

    Compensation  and  fringe  benefits  represent   approximately  58%  of  the
    Company's  costs and expenses  during the three months ended  September  30,
    1998 and  represent  the  largest  single item of  expense.  These  expenses
    increased 11% or $73,000 from  $645,000 in the three months ended  September
    30, 1997 to $718,000 in the current quarter.  This increase is the result of
    the  addition  of a  Marketing  Director  in the second  quarter of the last
    fiscal year,  additional  employees hired including  temporary  employees to
    handle increased work loads in the Corporate and Phoenix office, and cost of
    living, and merit increases given to employees.

    EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS

    The Company's expenses other than compensation and fringe benefits increased
    $70,000 during the three months ended  September 30, 1998 as compared to the
    same quarter of the prior fiscal year. The principal  items  affecting these
    expenses  are a $40,000  increase in audit and  accounting  fees,  a $15,000
    increase in computer  consulting fees, a $14,000 increase in directors fees,
    a $12,000 increase in insurance costs, and a $19,000 decrease in advertising
    and promotional expenses.

    The increase in audit and accounting fees reflects the Company's decision to
    outsource  certain  accounting  functions  that  were  previously  performed
    in-house.  The Company believes that this will enable it to more efficiently
    monitor  compliance of the  constantly  changing  state and federal laws and
    regulations.  Furthermore,  the  Company  incurred  increased  auditing  and
    accounting  consulting fees in the current quarter. The increase in computer
    consulting  fees relates to the Company's  planning for and  utilization  of
    improved technology to provide better services to its  franchisees/licensees
    and clients. The increase in insurance costs results from an increase in the
    cost of insurance as well as increased  coverage.  The increase in directors
    fees reflects the greater number of directors  meetings in the first quarter
    of  this  fiscal  year  due to  consideration  by  the  Board  of  the  UFAC
    transaction.  The decrease in advertising and promotional  expenses reflects
    the purchase of  promotional  items in the first quarter of the prior fiscal
    year. The Company anticipates similar purchases in the second quarter of the
    current  fiscal year.  The balance of the Company's  costs and expenses have
    not significantly changed from the same period of the prior year.

    INCOME TAXES

    The  Company's  income  taxes  were  39.5% of its income  before  taxes,  or
    approximately  the same as they were in the prior fiscal year.  Changes made
    in the tax laws by various states and by the federal government have not had
    a material affect on the Company's current overall tax rates,  however, this
    could change at any time.

    OTHER INCOME

    The  Company's  other  income  decreased  $10,000 or 26% from $38,000 in the
    quarter ended September 30, 1997 to $28,000 in the current quarter. The most
    significant items affecting other income include a $7,000 decrease in
    interest income, and a loss on the sale of fixed assets of $5,000.

    NET INCOME

    The Company's net income for the quarter ended September 30, 1998, decreased
    $3,000 or 1% from  $259,000  in the  quarter  ended  September  30,  1997 to
    $256,000 in the current quarter.  The most  significant  items affecting net
    income  were  a  $149,000  increase  in  revenue,   a  $73,000  increase  in
    compensation and fringe  benefits,  and a $70,000 increase in expenses other
    than compensation and fringe benefits.

                                        8
<PAGE>
    COMPREHENSIVE INCOME

    Effective  September  30, 1998,  the Company  adopted  Financial  Accounting
    Standard Board (FASB)  Statement No. 130,  REPORTING  COMPREHENSIVE  INCOME.
    Accordingly,  the Company's  comprehensive  income was $228,000 and $264,000
    for the three months ended September 30, 1998 and 1997,  respectively.  This
    decrease in comprehensive income was due primarily to a drop this quarter in
    the market value of the Company's available for sale securities.

    RESULTS OF OPERATIONS - QUARTER ENDED SEPTEMBER 30, 1997 COMPARED TO 1996

    REVENUE

    The Company's revenue decreased 10.8% or $180,000 to $1,484,000 in the three
    months ended  September  30, 1997 from  $1,664,000 in the same period of the
    prior fiscal year. The decrease is a combined  $12,000 decrease in adjusting
    and risk management fees and a $168,000 decrease in continuing  licensee and
    franchisee fees.

    The decrease of $12,000 in adjusting and risk  management fees from $275,000
    in the quarter  ended  September  30, 1996 to $263,000 in the quarter  ended
    September 30, 1997 represents a 4.4% decrease. A substantial portion of this
    decrease is related to a major storm that occurred in mid August 1996 in the
    Phoenix,  Arizona  metropolitan  area where the  Company's  main offices are
    located.  Claims resulting from this storm provided the Company with $80,000
    in adjusting  services  revenue in the quarter ended September 30, 1996. The
    Company  did  however,  experience  a $5,000  increase in fees in its Tucson
    office  as  compared  to the  same  period  in  the  previous  fiscal  year.
    Furthermore, the Company's Las Vegas/Henderson office, which was acquired in
    the last  quarter of the 1997 fiscal year from a former  licensee,  provided
    $87,000 in adjusting fees during the three months ended September 30, 1997.

    The Company's revenue from continuing licensee and franchisee fees decreased
    12% or $168,000 from  $1,388,000 in the quarter ended  September 30, 1996 to
    $1,220,000 in the quarter ended September 30, 1997.  This decrease  reflects
    the loss of revenue  attributed  to a client that  contributed  18.8% to the
    continuing  licensee and franchisee  fees in fiscal 1997. In June 1997, this
    client elected to place its adjusting service needs with other vendors. This
    will be reflected in the Company's 1998 fiscal year.

    The  Company's  revenue is affected by numerous  factors  including the work
    loads of other companies and claims  presented by their clients.  Therefore,
    the  Company  is unable to project  its  future  revenue.  The  Company  has
    historically  seen growth in licensee  and  franchisee  fees paid.  However,
    during the 1998  fiscal  year the Company has seen a decrease in revenue due
    primarily  to the  phase  out of its  business  relationship  with its major
    client.  The Company has responded to this loss of revenue by developing and
    implementing sales and marketing efforts to take advantage of its geographic
    diversity as well as the unique  strengths of its  individual  licensees and
    franchisees,  and  anticipates  that  over  time the lost  business  will be
    replaced. In addition, the Company believes that it will continue to realize
    growth  as  it  adds  additional   qualified   licensees  and   franchisees.
    Furthermore,  the Company  expects to continue to reflect  revenue  from its
    Tucson and Las Vegas operations.

    COMPENSATION AND FRINGE BENEFITS

    Compensation  and  fringe  benefits  represented  approximately  59%  of the
    Company's  costs and expenses  during the three months ended  September  30,
    1997 and  represent  the  largest  single item of  expense.  These  expenses
    decreased 1% or $6,000 from $651,000 in the three months ended September 30,
    1996 to $645,000 in the three months ended September 30, 1997. 

                                       9
<PAGE>
    EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS

    The Company's expenses other than compensation and fringe benefits decreased
    $41,000 during the three months ended  September 30, 1997 as compared to the
    same quarter of the prior fiscal year. The principal  items  affecting these
    expenses are a $28,000  decrease in legal expenses and a $21,000 decrease in
    advertising and promotional expenses. The balance of the Company's costs and
    expenses  did not  significantly  change  from the same  period of the prior
    year.

    INCOME TAXES

    The  Company's  income  taxes  were  39%  of its  income  before  taxes,  or
    approximately  the same as they were in the prior fiscal year.  Changes made
    in the tax laws by various states and by the federal government have not had
    a material affect on the Company's current overall tax rates,  however, this
    could change at any time.

    OTHER INCOME

    The  Company's  other  income  decreased  $6,000 or 14% from  $44,000 in the
    quarter ended  September 30, 1996 to $38,000 in the quarter ended  September
    30, 1997. The most significant items affecting other income include a $3,000
    decrease in the sales of computer  software to the  Company's  licensees and
    franchisees and a $1,000 increase
    in expenses related to rental property.

    NET INCOME

    The Company's net income for the quarter ended September 30, 1997, decreased
    $83,000 or 24% from  $342,000 in the  quarter  ended  September  30, 1996 to
    $259,000 in the quarter ended September 30, 1997. The most significant items
    affecting  net income were the  $180,000  decrease  in revenue,  the $41,000
    decrease in expenses other than
    compensation and fringe benefits and the $54,000 decrease in income.

    YEAR 2000 COMPLIANCE

    The "Year 2000" issue creates risk for the Company from unforeseen  problems
    in its own  computer  systems and from third  parties  with whom the Company
    deals. Many currently  installed  computer systems and software products are
    coded to accept two digit  entries in the date code  field.  These date code
    fields will need to accept four digit  entries to  distinguish  21st century
    dates from 20th century dates. Left uncorrected, time sensitive software may
    recognize  a date  using  "00" as the year 1900  rather  than the year 2000,
    resulting in a computer shutdown or incorrect calculations.  Failures of the
    Company's  and/or  third  parties'  computer  systems  could have a material
    adverse effect on the Company's ability to conduct its business.

    The Company is examining both its information technology and non-information
    technology  systems. To date, the Company has determined that certain of the
    software  used by the  Company is not Year 2000  compliant.  The Company has
    identified and purchased  upgraded software that is Year 2000 compliant.  In
    addition,  the Company is currently  updating all custom software so that it
    is Year 2000  compliant.  The Company is also testing its  computer  servers
    internally  and plans to have them tested by an external  party in the third
    quarter of this fiscal year. The Company hopes to finish testing of internal
    systems by April,  1999 and expects to complete  these  upgrades by June 30,
    1999.

    All of the Company's  personal computers that need to be Year 2000 compliant
    are currently  being updated.  The Company expects to complete these updates
    by December  31,  1998.  The Company has updated its phone system to be Year
    2000  compliant.  The Company is in the process of  determining  whether its
    alarm,  heating,  and air conditioning  systems will be affected by the Year
    2000.  The Company is  finalizing  arrangements  with a  consulting  firm to
    undertake a complete  analysis of the  Company's  operations to identify the
    remaining Year 2000 issues

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<PAGE>

    embodied in its  operations  and facility,  and to develop a plan to resolve
    such issues.  The Company  expects this  analysis to begin during the second
    quarter of this fiscal year and to be completed by December 31, 1998.
    Thereafter, the Company will resolve such issues.

    Certain  software  products  sold by the Company to certain of its licensees
    and  franchisees in prior years are not Year 2000  compliant.  The Company's
    computer  staff is  developing  an upgrade of the software that will be Year
    2000 compliant. The Company expects to complete development of the Year 2000
    compliant  version of its  software  by March 31,  1999.  The  Company  will
    distribute this version to purchasers of the non-compliant  version, free of
    charge.  The Company does not anticipate  that the cost of this upgrade will
    be material to the Company's operations.

    Members  of the  Company's  computer  staff  are  undertaking  the  task  of
    contacting  the  Company's  customers and vendors to determine the status of
    such  customers'  and  vendors'  software for Year 2000  compliance.  As the
    Company  identifies  these issues,  it will determine the steps necessary to
    avoid disruptions due to failures in Year
    2000 compliance by its customers and/or vendors.

    The  Company   expects  that  the  cost  of  analysis  and  development  and
    implementation  of a plan to address  its Year 2000  issues  will not exceed
    $225,000.  The Company's estimate reflects assumptions  regarding the extent
    of the Year 2000 issues embodied in the Company's operations and facilities,
    the availability and cost of personnel  trained in this area, the compliance
    plans of third  parties,  and  similar  uncertainties.  However,  due to the
    complexity and pervasiveness of the Year 2000 issue, and in particular,  the
    uncertainty regarding the compliance programs of third parties, no assurance
    can be given that these estimates will be achieved, and actual results could
    differ  materially  from  those  anticipated.  If the  Company  is unable to
    address  the Year 2000  issues  successfully,  or in a timely  fashion,  the
    Company may need to devote  more  resources  to the  process and  additional
    costs may be  incurred.  This could have a  material  adverse  effect on the
    Company's  results of operations.  The Company has purchased  insurance that
    may  offset   certain   losses  to  the  Company   for  claims   based  upon
    non-compliance with Year 2000 issues.

    In its  reasonable  likely  worst  case  Year  2000  scenario,  the  Company
    anticipates  that the  software  which it uses,  despite the  completion  of
    upgrades,  will still fail to be Year 2000  compliant.  In  addition,  it is
    possible  that the software  sold by the Company to certain of its licensees
    and  franchisees  will not become Year 2000 compliant  despite the Company's
    efforts to upgrade  this  software.  Finally,  the Company  anticipates  the
    possibility  that its customers' and vendors'  systems will not be Year 2000
    compliant. In the event that any of these scenarios materialize, the Company
    expects  that it  would  experience  problems  processing  transactions  and
    remitting  checks to licensees and franchisees.  Furthermore,  licensees and
    franchisees would experience a slow-down in their processing of paperwork.

    In the event that the steps being  implemented  by the Company fail to avoid
    problems associated with the Year 2000, the Company is currently  developing
    its  contingency  plans.  Such plans may include the  immediate  purchase of
    replacement  hardware  or software at the  beginning  of the Year 2000,  the
    switching of vendors who supply  goods or services to the Company,  or other
    alternatives.  In addition,  the Company  plans to purchase a back-up  power
    generator in 1999 to prepare for the unlikely event of a power grid failure.
    The Company  anticipates  that its  contingency  plans will be  completed no
    later than July 1999.

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<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.


                                      FRONTIER ADJUSTERS OF AMERICA, INC.



Date: March 10, 1999                  /s/ William J. Rocke
      ---------------------           ------------------------------------------
                                      William J. Rocke, Chief Executive Officer/
                                      Chairman of the Board,
                                      Acting Chief Financial Officer, Director



Date: March 10, 1999                  /s/ Jean E. Ryberg
      ---------------------           ------------------------------------------
                                      Jean E. Ryberg, President, Director

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