<PAGE>
 
                    U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, DC  20549



                                  FORM 10-QSB



                Quarterly Report Under Section 13 or 15(d) of 
                      The Securities Exchange Act of 1934
                 For the quarterly period ended March 31, 1997


                         Commission File Number 0-13741


                        INDUSTRIAL TRAINING CORPORATION
                        -------------------------------
       (Exact name of small business issuer as specified in its charter)


                    Maryland                          52-1078263
        ----------------------------------      ----------------------
           (State or other jurisdiction            (I.R.S. Employer
        of incorporation or organization)       Identification Number)


             13515 Dulles Technology Drive, Herndon, Virginia 20171
             ------------------------------------------------------
                    (Address of principal executive offices)


                                 (703)713-3335
                                 -------------
                           Issuer's telephone number



Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer 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 March 31, 1997, 3,897,074 shares of Common Stock were outstanding.

        Transitional Small Business Disclosure Format: Yes [_]; No [X]
                                                                     
<PAGE>
 
                               TABLE OF CONTENTS

================================================================================

<TABLE>
<CAPTION>
 
 PART I                                                          PAGE
--------                                                         ----
<S>       <C>                                                    <C> 
Item 1    Financial Statements (Unaudited)
 
             Condensed Consolidated Statements of Operations
             for the Three Months Ended March 31, 1997 and 1996    1
 
             Condensed Consolidated Balance Sheets as of
             March 31, 1997 and December 31, 1996                  2
 
             Condensed Consolidated Statements of Cash Flows
             for the Three Months Ended March 31, 1997 and 1996    4
 
             Notes to Condensed Consolidated Financial Statements  5
 
Item 2    Management's Discussion and Analysis of Financial
          Condition and Results of Operations                      6
 
PART II
-------
 
Item 1    Legal Proceedings                                        8
  
Item 2    Changes in Securities                                    8
 
Item 3    Defaults Upon Senior Securities                          8
 
Item 4    Submission of Matters to a Vote of Security Holders      8
 
Item 5    Other Information                                        8
 
Item 6    Exhibits and Reports on Form 8-K                         8
 
</TABLE>
<PAGE>
 
                                    PART I



ITEM 1.  FINANCIAL STATEMENTS


                        INDUSTRIAL TRAINING CORPORATION

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                  (Unaudited)
<TABLE>
<CAPTION>
 
 
                                                For Three Months Ended March 31,
                                                     1997              1996
                                               ----------------  ----------------
<S>                                            <C>               <C>
 
Net revenues                                        $4,721,977        $3,715,723
Cost of sales                                        2,382,949         2,642,176
                                                    ----------        ----------
  Gross margin                                       2,339,028         1,073,547
 
Selling, general and administrative expense          3,105,439         1,933,680
Equity in earnings of affiliates                       (25,514)          (63,086)
                                                    ----------        ----------
Loss before interest and income taxes                 (740,897)         (797,047)
 
Interest income, net                                   (39,159)         (134,855)
                                                    ----------        ----------
 
Loss before income taxes                              (701,738)         (662,192)
 
Income tax benefit                                    (246,000)         (265,000)
                                                    ----------        ----------
 
Net loss                                            $ (455,738)       $ (397,192)
                                                    ==========        ==========
 
Loss per common share                                    $(.12)            $(.11)
                                                    ==========        ==========
 
Weighted average number of
  common shares outstanding                          3,897,011         3,614,474
                                                    ==========        ==========
 
</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                        

                                       1
<PAGE>
 
                        INDUSTRIAL TRAINING CORPORATION

                     CONDENSED CONSOLIDATED BALANCE SHEETS


                                     ASSETS
<TABLE>
<CAPTION>
 
 
                                                     March 31,    December 31,
                                                        1997          1996
                                                    ------------  -------------
                                                    (Unaudited)
<S>                                                 <C>           <C>
 
Current assets:
  Cash and cash equivalents                         $ 2,810,565    $ 2,697,566
  Accounts receivable, net                            6,412,874      7,641,066
  Due from affiliates                                    51,569         36,768
  Inventories                                         1,059,976      1,018,383
  Prepaid expenses                                      157,291        190,402
  Income tax receivable                                 935,104        689,104
                                                    -----------    -----------
     Total current assets                            11,427,379     12,273,289
 
Long-term receivable                                  1,527,872      1,589,916
 
Property and equipment:
  Video and computer equipment                        3,572,552      3,361,923
  Furniture and fixtures                                716,730        747,146
  Leasehold improvements                                 98,350         95,422
                                                    -----------    -----------
                                                      4,387,632      4,204,491
 
  Less accumulated depreciation and amortization     (3,150,064)    (2,963,197)
                                                    -----------    -----------
     Net property and equipment                       1,237,568      1,241,294
 
Capitalized program development costs, net            4,238,026      4,226,525
Intangible assets                                     3,886,689      3,975,840
Other                                                    67,781         67,461
                                                    -----------    -----------
                                                    $22,385,315    $23,374,325
                                                    ===========    ===========
 
</TABLE>

     See accompanying notes to condensed consolidated financial statements.
                                        

                                       2
<PAGE>
 
                        INDUSTRIAL TRAINING CORPORATION

                     CONDENSED CONSOLIDATED BALANCE SHEETS


                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
 
 
                                                            March 31,    December 31,
                                                              1997          1996
                                                          ------------  -------------
                                                          (Unaudited)
<S>                                                       <C>           <C>
 
Current liabilities:
  Line of credit                                          $        --    $   515,000
  Current installments of long-term debt                       99,286        130,745
  Accounts payable                                          1,372,106      1,331,079
  Due to affiliates                                           238,091        335,797
  Accrued compensation and benefits                           910,022        826,764
  Deferred revenues                                         1,363,207      1,458,945
  Other accrued expenses                                    1,678,759      1,619,326
                                                          -----------   ------------
     Total current liabilities                              5,661,471      6,217,656
 
Deferred lease obligations                                    110,547        113,020
Deferred income taxes                                         353,522        353,522
                                                          -----------   ------------
     Total liabilities                                      6,125,540      6,684,198
 
Stockholders' equity:
  Common stock, $.10 par value, 12,000,000 shares
     authorized; 3,897,074 and 3,896,924 issued
     and outstanding in 1997 and 1996, respectively           389,708        389,693
  Additional paid-in capital                               16,068,681     16,067,366
  Note receivable from ESOP                                  (119,621)      (143,677)
  Retained earnings                                           (78,993)       376,745
                                                          -----------   ------------
     Total stockholders' equity                            16,259,775     16,690,127
                                                          -----------   ------------
     Total liabilities and stockholders' equity           $22,385,315    $23,374,325
                                                          ===========   ============
 
</TABLE>

     See accompanying notes to condensed consolidated financial statements.
                                        

                                       3
<PAGE>
 
                        INDUSTRIAL TRAINING CORPORATION

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (Unaudited)
<TABLE>
<CAPTION>
 
                                                             For Three Months Ended March 31,
                                                                 1997              1996
                                                            ---------------  -----------------
<S>                                                         <C>              <C>
Cash flows from operating activities:
Net loss                                                        $ (455,738)       $  (397,192)
Reconciling items:
  Provision for deferred taxes                                          --            176,800
  Depreciation and amortization                                    697,661            876,918
  Awards of common shares                                              938                 --
  Changes in assets and liabilities:
     Decrease in accounts receivable                             1,290,236          1,169,415
     Decrease (increase) in inventories                            (41,593)           260,072
     Decrease (increase) in prepaid expenses                        33,111           (248,519)
     Increase in income tax receivable                            (246,000)          (512,000)
     Increase (decrease) in due to affiliates, net                (112,507)            74,983
     Decrease (increase) in other assets                            (2,078)             6,605
     Increase in accounts payable                                   41,027             23,083
     Increase in accrued expenses                                   46,951             58,133
     Decrease in income taxes payable                                   --           (105,000)
     Decrease in deferred lease obligations                         (2,473)            (3,078)
                                                                ----------        -----------
Net cash provided by operating activities                        1,249,535          1,380,220
 
Cash flows from investing activities:
  Deferred program development costs                              (439,356)        (1,499,694)
  Capital expenditures                                            (175,170)          (141,107)
                                                                ----------        -----------
Net cash used in investing activities                             (614,526)        (1,640,801)
 
Cash flows from financing activities:
  Repayments under line-of-credit                                 (515,000)                --
  Principal payments under term loans                              (31,459)           (28,995)
  Issuance of common stock                                              --             19,063
  Employee stock option note collections                            24,449             27,000
                                                                ----------        -----------
     Net cash provided by (used in) financing activities          (522,010)            17,068
                                                                ----------        -----------
 
Net increase (decrease) in cash                                    112,999           (243,513)
 
Cash and cash equivalents at beginning of period                 2,697,566         10,348,762
                                                                ----------        -----------
Cash and cash equivalents at end of period                      $2,810,565        $10,105,249
                                                                ==========        ===========
 
</TABLE>

     See accompanying notes to condensed consolidated financial statements.
                                        

                                       4
<PAGE>
 
                        INDUSTRIAL TRAINING CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                 March 31, 1997

                                  (Unaudited)

1)  BASIS OF PRESENTATION

The condensed consolidated financial statements of Industrial Training
Corporation (the "Company") include the accounts of its wholly owned
subsidiaries, Anderson Soft-Teach, Inc. ("AST"), ITC Australasia Pty. Ltd.
("ITCA"), Activ Training, Ltd., and ComSkill Learning Centers, Inc. Significant
intercompany accounts and transactions have been eliminated in consolidation. In
the opinion of management of the Company, the interim condensed consolidated
financial statements include all adjustments, consisting of only normal
recurring adjustments, necessary for a fair presentation of the results for the
interim periods. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The interim condensed
consolidated financial statements should be read in conjunction with the
Company's December 31, 1996 and 1995 audited financial statements included with
the Company's filing on Form 10-KSB. The interim operating results are not
necessarily indicative of the operating results for the full fiscal year.

2)  INVESTMENTS IN AND DUE TO AFFILIATES

The Company is a participant in five separate limited partnerships with
Industrial Training Partners, Ltd. (the ITP partnerships) and a joint venture
with DynCorp. In all of the ITP partnerships, the Company is a 5% general
partner and in certain partnerships the Company has acquired limited partnership
interest as well. In the joint venture with DynCorp, the Company has a 50%
ownership interest. The ITP partnerships and the DynCorp joint venture were
formed to develop and produce various series of training programs. Under the
contracts to market the programs for the partnerships and joint venture, ITC
receives 50%-70% of the sales price for the costs of reproducing and marketing
the training materials. In the case of the joint venture agreement, the Company
also receives an additional 25% for its share of joint venture profits. Sales of
programs related to these affiliates were $371,000 and $655,000 for the first
quarter of 1997 and 1996, respectively. Additionally, during the fourth quarter
of 1995 and the first quarter of 1996, the Company developed new training
products for certain partnerships. Revenues recognized by the Company for the
development of these training programs were $532,000 for the first quarter of
1996. No such revenues were recognized during the first quarter of 1997.

3)  LINE OF CREDIT

At March 31, 1997, the Company had no amounts outstanding relating to its
$3,000,000 revolving bank line of credit, which bears interest at the bank's
prime lending rate.

                                       5
<PAGE>
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

RESULTS OF OPERATIONS

Revenues
--------

For the quarter ended March 31, 1997, net revenues were $4,722,000 as compared
to $3,716,000 for the quarter ended March 31, 1996, an increase of $1,006,000 or
27%. The increase in the Company's revenues was primarily due to the impact of
acquisition activities and the expansion of international operations occurring
during 1996. For the quarter ended March 31, 1997, sales of off-the-shelf
training products totaled $4,142,000, an increase of $1,512,000 or 57% from the
first quarter of 1996. This increase is principally attributable to the December
31, 1996 acquisition of Anderson Soft-Teach. Sales of hardware systems for the
quarter ended March 31, 1997 totaled $230,000 as compared to $449,000 achieved
during the comparable period in 1996, representing a decrease of $219,000 or
49%. Revenues from custom courseware and consulting services amounted to
$275,000 for the first quarter of 1997 as compared to $594,000 for the first
quarter of 1996, a decrease of $319,000.

Revenues from international operations included in the training product revenues
mentioned above totaled $930,000 for the three months ended March 31, 1997 as
compared to $556,000 for the same period in 1996. The significant increase of
$374,000 or 67% was primarily due to the acquisition of Acumen People and
Productivity in the third quarter of 1996.

Costs and Expenses
------------------

During the first quarter of 1997, gross margin increased $1,265,000 over the
first quarter of 1996, as margin percentages grew from 29% to 50%. The
substantial growth in margin is due to the overall increase in revenues as well
as the higher proportion of product revenues for the quarter, and lower levels
of amortization from capitalized program development costs compared to last
year.

Selling, general and administrative expenses totaled $3,105,000 during the first
quarter of 1997, representing an increase of $1,172,000 over the comparable
period in 1996. The overall increase in selling, general and administrative
expenses was primarily due to the additional operating expenses associated with
the two acquisitions mentioned above as well as additional expansion of
operations internationally.

Net Loss
--------

The loss before income taxes was partially offset by the recognition of an
interim tax benefit, resulting in a net loss for the three months ended March
31, 1997 of $456,000 or 12 cents per share. This compares to a net loss of
$397,000 or 11 cents per share recorded during the first quarter of 1996.

Cash Flow, Liquidity and Capital Resources
------------------------------------------

Working capital at March 31, 1997 was $5,766,000, remaining relatively unchanged
from $6,056,000 at December 31, 1996.

Cash flows from operations were $1,250,000, as significant non-cash charges for
depreciation and amortization and collections of significant receivables from
fourth quarter sales offset the effect of operating losses. Cash used in
investing activities includes costs for the ongoing development of Office 97
products. Cash used in financing activities includes the repayment of the line
of credit assumed in the acquisition of Anderson Soft-Teach.

                                       6
<PAGE>
 
Management believes that the cash generated from operations combined with the
Company's existing resources and available line of credit are adequate to meet
ITC's working capital needs and other financing requirements for 1997.

                                       7
<PAGE>
 
                                    PART II

ITEM 1.  LEGAL PROCEEDINGS

None.

ITEM 2.  CHANGES IN SECURITIES
 
None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
 
None.

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

None.

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits
     See attached Exhibit Index

(b)  Reports on Form 8-K

On January 13, 1997, the Company filed a report on Form 8-K relating to the
acquisition of Anderson Soft-Teach.

On February 10, 1997, the Company filed a report on Form 8-K relating to the
resignation of a Director of the Company.

On March 12,1997, the Company filed a report on Form 8-K/A providing the
financial statements and pro forma financial information relating to the
acquisition of Anderson Soft-Teach as reported on Form 8-K on January 13, 1997.

                                       8
<PAGE>
 
                                   SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

INDUSTRIAL TRAINING CORPORATION
        (Registrant)



BY   /s/James H. Walton                 DATE        4/25/97
     -----------------------------                  -------
     James H. Walton
     Chief Executive Officer



BY   /s/Steven L. Roden                 DATE        4/25/97
     -----------------------------                  -------
     Steven L. Roden
     President



BY   /s/Frank A. Carchedi               DATE        4/25/97
     -----------------------------                  -------
     Frank A. Carchedi
     Vice President, Treasurer and
     Chief Financial Officer



BY   /s/Christopher E. Mack             DATE        4/25/97
     -----------------------------                  -------
     Christopher E. Mack
     Vice President and
     Chief Operating Officer

                                       9
<PAGE>
 
                               INDEX TO EXHIBITS
<TABLE> 
<CAPTION> 
EXHIBIT
  NO.                    DESCRIPTION
--------------------------------------------------------------------------------
<S>      <C>  
 3.1     Amended Articles of Incorporation of the Company, incorporated by
         reference to the Company's Form 10-QSB for the quarter ended June 30,
         1996 filed with the Securities and Exchange Commission ("SEC")
         (Commission File No. 33-61393).
      
 3.2     Restated By-Laws of the Company, incorporated by reference to the
         Company's Form 10-KSB for the fiscal year ended December 31, 1995 filed
         March 15, 1996 with the SEC (Commission File No. 0-13741).
      
 4.1     Specimen Certificate for ITC Common Stock, incorporated by reference to
         the Company's Registration Statement on Form SB-2 filed July 28, 1995
         with the SEC (Commission File No. 33-61393).
      
 4.2     Registration Rights and Shareholders' Agreement, incorporated by
         reference to the Company's Form 8-K filed January 13, 1997 with the SEC
         (Commission File No. 0-13741).
      
10.6     Employment Agreements with Management
         (i)   Carl D. Stevens
      
10.11    IBM Subcontractor Agreement dated January 13, 1997
       
27.1     Financial Data Schedule
         
</TABLE> 

                                       10