CONFORMED

                                    FORM 10-Q

                       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 March 31, 1997

                                       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 April 30, 1997         4,605,358
                                                                      ----------
<PAGE>
PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements
-----------------------------

                       FRONTIER ADJUSTERS OF AMERICA, INC.
                                AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                 March 31, 1997         June 30, 1997
                                                                 --------------         -------------
                                                                  (unaudited)                (*)
<S>                                                                 <C>                   <C>        
                                     ASSETS
                                     ------

CURRENT ASSETS
   Cash and cash equivalents                                        $1,308,205            $   534,540
   Investments                                                       1,244,887              1,249,463
   Receivables                                                       1,528,573              1,549,185
   Prepaid expenses                                                    182,124                288,893
   Other                                                               165,151                159,451
                                                                    ----------             ----------
        TOTAL CURRENT ASSETS                                         4,428,940              3,781,532
                                                                    ----------             ----------

PROPERTY AND EQUIPMENT                                               2,435,366              2,436,167
   Less accumulated depreciation and amortization                      676,638                881,766
                                                                    ----------             ----------
                                                                     1,758,728              1,554,401
                                                                    ----------             ----------

OTHER ASSETS
   Cost of subsidiary in excess of net tangible assets acquired        213,817                213,817
   Less accumulated amortization                                       176,240                174,508
                                                                    ----------             ----------
                                                                        37,577                 39,309
   Receivables (Long term)                                             354,000                327,000
   Investments (Long term)                                             751,207                750,730
   Other                                                               391,205                422,780
                                                                    ----------             ----------
                                                                     1,533,989              1,539,819
                                                                    ----------             ----------
        TOTAL ASSETS                                                $7,721,657             $6,875,752
                                                                    ==========             ==========

                                   LIABILITIES
                                   -----------

CURRENT LIABILITIES
   Accounts payable                                                $    29,717             $    11,666
   Accrued expenses                                                    384,978                 263,806
   Franchisee/licensee remittance payable                              407,792                 135,518
   Current portion long term liability                                  26,046                  24,672
   Other                                                               228,745                 149,308
                                                                    ----------             ----------
        TOTAL CURRENT LIABILITIES                                    1,077,278                 584,970
                                                                    ----------             ----------


LONG TERM LIABILITY                                                     40,273                  59,983
                                                                    ----------             ----------

STOCKHOLDERS' EQUITY
   Common stock                                                         47,820                  47,820
   Additional paid in capital                                        2,148,470               2,148,470
   Treasury stock                                                     (529,584)               (485,219)
   Other                                                                (7,616)                 (6,691)
   Retained earnings                                                 4,945,016               4,526,419
                                                                    ----------             ----------
                                                                     6,604,106               6,230,799
                                                                    ----------             ----------
   TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                         $7,721,657              $6,875,752
                                                                    ==========              ==========

</TABLE>
*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)
<TABLE>
<CAPTION>
                                                   Nine Months Ended                    Three Months Ended
                                                   March 31,                            March 31,
                                                   -----------------------              ------------------------
                                                    1997            1996                 1997              1996
                                                   ------          ------               ------            ------
<S>                                             <C>              <C>                  <C>              <C>       
REVENUES
   Continuing licensee and
    franchisee fees                             $3,993,862       $3,695,428           $1,305,133       $1,253,200
   Adjusting fees                                  660,627          462,202              180,632          143,434
                                                ----------       ----------           ----------       ----------
                                                 4,654,489        4,157,630            1,485,765        1,396,634
                                                ----------       ----------           ----------       ----------


COST AND EXPENSES
   Compensation and employee benefits            1,854,557        1,457,540              591,675          508,900
   Office                                          283,675          286,646               81,316           81,816
   Advertising and promotion                       261,176          320,333              121,088          134,397
   Depreciation and amortization                   173,974          136,297               59,807           47,740
   Provision for doubtful accounts                 135,000          115,000               45,000           45,000
   Other                                           564,655          588,100              195,622          157,786
                                                ----------       ----------           ----------       ----------
                                                 3,273,037        2,903,916            1,094,508          975,639
                                                ----------       ----------           ----------       ----------
INCOME FROM OPERATIONS                           1,381,452        1,253,714              391,257          420,995
                                                ----------       ----------           ----------       ----------

OTHER INCOME (EXPENSE)
   Interest income                                 113,738          105,272               39,562           35,149
   Other (Net)                                      52,956           20,570                6,419            4,272
                                                ----------       ----------           ----------       ----------
   TOTAL OTHER INCOME (EXPENSE)                    166,694          125,842               45,981           39,421
                                                ----------       ----------           ----------       ----------
   INCOME BEFORE INCOME TAXES                    1,548,146        1,379,556              437,238          460,416


INCOME TAXES                                       610,899          542,982              172,101          181,475
                                                ----------       ----------           ----------       ----------
   NET INCOME                                   $  937,247       $  836,574           $  265,137       $  278,941
                                                ==========       ==========           ==========       ==========


Weighted Average Shares
 outstanding                                     4,608,489        4,619,120            4,605,358        4,609,658
                                                ==========       ==========           ==========       ==========

NET INCOME PER COMMON SHARE                     $      .20       $      .18           $      .06       $      .06
                                                ==========       ==========           ==========       ==========
</TABLE>
The accompanying notes are an integral part of these condensed statements.
                                        3
<PAGE>
                       FRONTIER ADJUSTERS OF AMERICA, INC.
                                AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

                    Nine Months Ended March 31, 1997 and 1996
<TABLE>
<CAPTION>

                                                                                    1997               1996
                                                                                 ----------         ----------
<S>                                                                              <C>                <C>       
NET INCOME                                                                       $  937,247         $  836,574
                                                                                 ----------         ----------
Adjustments to reconcile net income to net cash
provided by operating activities:
   Depreciation and amortization:
        Operations                                                                  173,974            136,297
        Other                                                                         1,092                 --
   (Gain) on disposition of property and equipment                                  (24,775)            (1,667)
   Allowance for doubtful accounts                                                   (7,542)           115,000
Change in assets and liabilities:
(Increase) decrease in:
   Receivables                                                                      228,903            333,495
   Prepaid expenses                                                                 106,769             56,299
   Other                                                                            (57,130)           (58,833)
Increase (decrease) in:
   Accounts payable                                                                  18,051             59,425
   Accrued expenses                                                                 121,172            (34,847)
   Franchisee and licensee remittance payable                                       272,274            (66,285)
   Other                                                                             79,437             34,577
                                                                                 ----------         ----------
Total adjustments                                                                   912,225            573,461
                                                                                 ----------         ----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                                  1,849,472          1,410,035
                                                                                 ----------         ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                                            (283,171)           (74,306)
   Investments purchased                                                         (1,948,737)        (1,982,602)
   Proceeds from sales of investments                                             2,000,000          2,000,000
   License acquisition                                                              (85,500)           (64,000)
   Payments on License acquisition                                                  (68,336)           (17,057)
   Advances to licensees and franchisees                                         (2,883,089)        (2,951,987)
   Collections of advances to licensees and franchisees                           2,756,041          2,711,148
                                                                                 ----------         ----------
   NET CASH PROVIDED (USED IN) BY INVESTING ACTIVITIES                             (512,792)          (378,804)
                                                                                 ----------         ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Cash dividends                                                                  (518,650)          (485,108)
   Common stock repurchased                                                         (44,365)           (95,817)
                                                                                 ----------         ----------
   NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                             (563,015)          (580,925)
                                                                                 ----------         ----------

NET INCREASE (DECREASE) IN CASH                                                     773,665            450,306
   Cash at beginning of the period                                                  534,540            358,960
                                                                                 ----------         ----------
   Cash at the end of the period                                                 $1,308,205         $  809,266
                                                                                 ==========         ==========

Supplemental disclosures of Cash Flow information
Cash paid during the period
   Income taxes                                                                  $  632,349         $  577,767
   Interest                                                                      $    6,095         $    5,457
</TABLE>
The accompanying notes are an integral part of these condensed statements.
                                        4
<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 results of  operations  for the three and nine month periods ended March
    31, 1997 are not  necessarily  indicative  of the results to be expected for
    the full year.

(2) Supplemental Cash Flow Information
    ----------------------------------

    On  August  19,  1996,  the  Company  reacquired  the  license  for  the St.
    Petersburg/Clearwater,  Florida territory. The purchase price was $75,000 to
    be paid  $25,000 on date of  purchase  and  monthly  payments of $2,000 plus
    interest at the prime rate plus 2%. As of December 31, 1996, the Company had
    paid the $25,000 down and $6,000  towards the  balance.  On January 6, 1997,
    the Company paid $44,000  representing  the balance of the purchase price at
    that date.

    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 1997 and thereafter; improvement of,
    and growth in the number of, licensees and  franchisees;  future spending on
    marketing and product  development  strategy;  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, 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.

    Financial Condition
    -------------------

    The Company has  historically  financed  its growth and on going  operations
    with cash  generated  from  operations.  In the nine months  ended March 31,
    1997, the Company's operations generated $1,849,000 in cash.

    Compared to the last fiscal year, the most  significant  item affecting cash
    provided by the Company's  operations is the $272,000 increase in franchisee
    and licensee  remittance payable.  The Company,  pursuant to agreements with
    its licensees  and  franchisees,  acts as a collection  agent for all of its
    licensees.  The Company  remits to its licensees the  collections,  less the
    on-going  license  fee  and  any  amounts  due  the  Company,  such  as loan
    repayments, errors and omissions insurance premium. The day of the week that
    the Company's fiscal period ends,  therefore,  can have a significant effect
    on the reported amount that is due to licensees and franchisees.
                                        5
<PAGE>
    The  Company's  financial  statements  as of  March  31,  1997  reflect  net
    collections  payable to franchisees  for two days of $408,000 and as of June
    30, 1996 which reflects collections for one day of $136,000.

    In August 1996 the Company  acquired  14,300 shares of the Company's  common
    stock at a cost of $44,365.  The  repurchase  was authorized by the Board of
    Directors as they  believed  that at the current  price level the  Company's
    common stock was an excellent investment.

    The  Company's  Board of Directors in May 1996,  approved an increase in the
    Company's annual dividend rate from 14 cents per share to 15 cents per share
    effective with the 3.75 cents per share cash dividend paid on June 10, 1996.
    The increase  reflects the Board's policy that  shareholders  participate in
    the Company's growth.

    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  between  $100,000  to  $200,000  in fiscal  1997 for
    equipment  and  furnishings  pursuant  to its  capital  investment  program.
    Additionally,  in  October  1996 the  Company  acquired a parcel of land and
    building adjacent to its Corporate offices.  The purchase price was $170,000
    and was paid during the second quarter of the Company's current fiscal year.

    In March 1997 the company  acquired  the  operations  of its licensee in Las
    Vegas / Henderson,  Nevada for a purchase price of $50,000. The Company paid
    the purchase price net of certain  amounts owed by the prior Licensee to the
    Company. The Company began operating the office on April 1, 1997.

    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 currently  available  cash funds  generated from
    operations.

    The Company's  ratio of current assets to current  liabilities was 4.11 to 1
    as of March 31, 1997 and 6.46 to 1 as of June 30, 1996.

    Results of  Operations - Nine Months  Ended March 31, 1997  Compared to Nine
    ----------------------------------------------------------------------------
    Months Ended March 31, 1996
    ---------------------------

    Revenues
    --------

    The Company's  revenues  increased 12% or $497,000 to $4,654,000  during the
    nine months ended March 31, 1997 from  $4,158,000  in the same period of the
    prior fiscal year. This increase  represents a combined $198,000 increase in
    adjusting  and risk  management  fees and a $299,000  increase in continuing
    licensee and franchisee fees.

    The increase of $198,000 in adjusting and risk management fees from $462,000
    in the nine months  ended  March 31,  1996 to  $661,000  for the nine months
    ended March 31, 1997  represents a 43% increase.  A  substantial  portion of
    this  increase is related to a major storm that  occurred in mid August 1996
    in the  Phoenix,  Arizona  metropolitan  area where the  Company  has claims
    offices. Claims resulting from this storm provided the Company with $100,000
    in  adjusting  services  revenues in the nine months  ended March 31,  1997.
    Additionally, the Company had an increase in fees of $70,000 from its Tucson
    office which was acquired  from a licensee in the first quarter of the prior
    fiscal  year.  The  balance of the  increase  represents  an increase in the
    demand for the services provided by Company owned offices.

    The  Company's  revenues  from  continuing   licensee  and  franchisee  fees
    increased 8% or $298,000 from  $3,695,000 in the nine months ended March 31,
    1996 to  $3,994,000  in the nine months ended March 31, 1997.  This increase
    reflects the benefit to the  Company's  licensees  and  franchisees  from an
    increase  in claims  as  insurance  companies  and  self-insureds  use their
    services due to an increase in volume of claims.  Also, to a greater degree,
    this increase  reflects the effect of new licensees and franchisees and rate
    increases.

    The Company's  revenues are affected by numerous matters  including the work
    loads of other companies and claims presented by their clients.  The Company
    has, however,  seen growth in licensee and franchisee fees paid. The Company
    is committed to continue its work to improve  existing and to add  qualified
    licensees and it will
                                        6
<PAGE>
    continue to see growth in licensee  and  franchisee  fees  collected  in the
    future. However, recent competition with respect to nationwide purchasers of
    the  services  of  the  Company's   licensees  and  franchisees  has  become
    significantly more competitive.  The Company attempts to procure nationawide
    accounts for services on behalf of its licensees and franchisees. Should the
    Company be unable to procure  such  accounts on terms as favorable as in the
    past,  or  should  the  Company  fail to be the  successful  bidder  on such
    accounts  and be unable to replace the  accounts  the  Company's  results of
    operations  could  be  materially  adversely  affected.  In  addition,   the
    Company's results of operations are affected by the revenues from its Tucson
    operation  and will begin to be affected by the  revenues  from the recently
    purchased Las Vegas/Henderson  operations. The Las Vegas/Henderson operation
    had gross  billings of  $158,000  for the former  Licensee  in the  previous
    twelve  months ending March 31, 1997.  For the reasons set forth above,  the
    Company is unable to project its future revenues.

    Compensation and Fringe Benefits
    --------------------------------

    Compensation  and  fringe  benefits  represent   approximately  57%  of  the
    Company's  costs and  expenses  and  represent  the  largest  single item of
    expense.  These  expenses  increased 27% or $397,000 from  $1,458,000 in the
    nine months  ended March 31, 1996 to  $1,855,000  in the current  nine month
    period.  This  increase is the result of the addition of an  Executive  Vice
    President to the  Company's  management  team,  additional  employees  hired
    including  temporary  employees  to  handle  increased  work  loads  in  the
    Corporate office, increased bonus related to the Company's rising income 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 decreased
    $28,000  during the nine months ended March 31, 1997 as compared to the same
    period of the  prior  fiscal  year.  The  principal  items  affecting  these
    expenses are a $19,000  decrease in legal  expenses,  a $37,000  increase in
    depreciation expense due to capital expenditures in the current fiscal year,
    and a $59,000  decrease in advertising  and promotion  expense  representing
    advertising  not placed in the current  year that was placed in the previous
    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 for the nine months ended March 31, 1997 were 39%
    of its income before taxes,  or  approximately  the same as they were in the
    same  period  of 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  increased  $41,000 or 32% from $126,000 in the
    nine months  ended  March 31,  1996 to  $167,000  in the current  nine month
    period.  The most  significant  items  affecting  other  income are a $7,000
    increase in miscellaneous income, a $8,000 increase in interest income and a
    $23,000 gain on the disposition of capital equipment.

    Net Income
    ----------

    The Company's net income for the nine months ended March 31, 1997, increased
    $101,000 or 12% from  $837,000  in the nine  months  ended March 31, 1996 to
    $937,000 in the current  period.  The most  significant  items affecting net
    income were the  $497,000  increase in revenues,  the  $397,000  increase in
    compensation and fringe benefits, and the $41,000 increase in other income.
                                        7
<PAGE>
    Results of  Operations - Three Months Ended March 31, 1997 Compared to Three
    ----------------------------------------------------------------------------
    Months Ended March 31, 1996
    ---------------------------

    Revenues
    --------

    The  Company's  revenues  increased 6% or $89,000 to $1,486,000 in the three
    months ended March 31, 1997 from  $1,397,000 in the same period of the prior
    fiscal  year.  This  increase  represents  a combined  $37,000  increase  in
    adjusting  and risk  management  fees and a $52,000  increase in  continuing
    licensee and franchisee fees.

    The increase of $37,000 in adjusting and other fees of Company owned offices
    from  $143,000 in the three  months  ended March 31, 1996 to $181,000 in the
    three months ended March 31, 1997  represents a 26%  increase.  The increase
    reflects  an increase  in the demand for the  Company's  services as well as
    revenues from the Company's Tucson operation acquired in August of 1995.

    The  Company's  revenues  from  continuing   licensee  and  franchisee  fees
    increased 4% or $52,000 from  $1,253,000 in the three months ended March 31,
    1996 to $1,305,000  in the three months ended March 31, 1997.  This increase
    reflects the benefit of the  Company's  licensees  and  franchisees  from an
    increase  in claims as  insurance  companies  and  self-insureds  used their
    services due to an increase in volume of claims.  Also, to a greater degree,
    this increase  reflects the effect of new licensees and franchisees and rate
    increases.

    The Company's  revenues are affected by numerous matters  including the work
    loads of other companies and claims presented by their clients.  The Company
    has, however,  seen growth in licensee and franchisee fees paid. The Company
    is committed to continue its work to improve  existing and to add  qualified
    licensee and  franchisees to the Frontier  network and the Company  believes
    that  it will  continue  to see  growth  in  licensee  and  franchisee  fees
    collected  in the  future.  However,  recent  competition  with  respect  to
    nationwide   purchasers  of  the  services  of  the  Company  licensees  and
    franchisees has become significantly more competitive.  The Company attempts
    to procure  nationwide  accounts for services on behalf of its licensees and
    franchisees.  Should the Company be unable to procure such accounts on terms
    as favorable as in the past, or should the Company fail to be the successful
    bidder on such accounts and be unable to replace the accounts, the Company's
    results of operations could be materially  adversely affected.  In addition,
    the Company's  results of  operations  are affected by the revenues from its
    Tucson  operation  and will begin to be  affected by the  revenues  from the
    recently purchased Las Vegas/Henderson  operations.  The Las Vegas/Henderson
    operation  had gross  billing of  $158,000  for the former  licensee  in the
    previous  twelve  months  ending March 31,  1997.  For the reasons set forth
    above, the Company is unable to project its future revenues.

    Compensation and Fringe Benefits
    --------------------------------

    Compensation  and  fringe  benefits  represented  approximately  54%  of the
    Company's  costs and  expenses  and  represent  the  largest  single item of
    expense.  These expenses increased 16% or $83,000 from $509,000 in the three
    months  ended March 31, 1996 to $592,000 in the three months ended March 31,
    1997.  The  increase  is the result of the  addition  of an  Executive  Vice
    President to the  Company's  management  team,  the addition of employees to
    handle the increased work load in the corporate  office,  increased  bonuses
    tied to income and for cost of living and merit raises given to employees.

    Expenses Other Than Compensation and Fringe Benefits
    ----------------------------------------------------

    The Company's expenses other than compensation and fringe benefits increased
    $36,000 during the three months ended March 31, 1997 as compared to the same
    quarter of the prior  fiscal  year.  The  principal  items  affecting  these
    expenses were a $39,000 increase in legal expenses and a $13,000 decrease in
    advertising and promotion  expenses,  and a $12,000 increase in depreciation
    expense.

    The  balance  of the  Company's  costs and  expenses  did not  significantly
    changed from the same period of the prior fiscal year.

    Income Taxes
    ------------

    The Company's  income taxes for the three months ended March 31, 1997,  were
    39% of its income before taxes,  or  approximately  the same as they were in
    the same period of the prior  fiscal  year.  Changes made in the tax laws by
    various states and by federal  government did not have a material  affect on
    the Company's overall tax rates, however, this could change at any time.
                                        8
<PAGE>
    Other Income
    ------------

    The Company's other income increased $7,000 or 17% from $39,000 in the three
    months  ended March 31, 1996 to $46,000 in the three  months ended March 31,
    1997.  The  most  significant  items  affecting  other  income  was a $4,000
    increase in interest income and a $3,000 increase in miscellaneous income.

    Net Income
    ----------

    The Company's net income for the three months ended March 31, 1997 decreased
    $14,000 from  $279,000 in the three months ended March 31, 1997 to $265,000.
    The most significant items affecting net income were the $89,000 increase in
    revenues,  the $83,000  increase in compensation and fringe benefits and the
    $36,000 increase in other expenses.


    PART II:  OTHER INFORMATION

    Item 1 - Legal Proceedings

    In August 1995, Mark Brockbank and Alan Bird  individually  and on behalf of
    certain Underwriters at Lloyd's,  London, a client of a former franchisee of
    the Company,  filed a complaint against multiple  defendants,  including the
    Company, in the District Court of Dallas County, Texas. The complaint arises
    from the alleged embezzlement of over $700,000 by the former franchisee. The
    complaint  alleges claims against the Company  including breach of contract,
    breach of  fiduciary  duty,  negligence,  negligent  supervision,  negligent
    misrepresentation  and negligent licensing.  The complaint seeks unspecified
    damages from the Company.  The Company's  insurance carrier is defending the
    suit  subject  to  a  reservation  of  rights.  The  Company  is  vigorously
    contesting the  plaintiff's  allegations as to the Company and believes that
    its defenses are meritorious.  The Company does not believe that the results
    of this  litigation  will have a material  adverse  effect on the  Company's
    results of operations.

    From time to time in the normal course of its business, the Company is named
    as a defendant in lawsuits.  The Company does not believe that it is subject
    to any such lawsuits or litigation or threatened lawsuits or litigation that
    will have a material adverse effect on the Company or its business.



                                   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:      5/12/97                    /s/         William J. Rocke
     -------------------              ------------------------------------------
                                      William J. Rocke, Chief Executive Officer/
                                      Chairman of the Board, Director


Date:      5/12/97                    /s/         Jean E. Ryberg
     -------------------              ------------------------------------------
                                      Jean E. Ryberg, President, Director
                                        9