U.S. Securities and Exchange Commission
                         Washington, D.C.  20549
                             Form 10-KSB
(Mark One)
     [X]  ANNUAL  REPORT  PURSUANT  TO  SECTION   13  or  15(d)  or  THE
          SECURITIES EXCHANGE ACT OF 1934 [Fee Required]

          For the fiscal year ended September 30, 1996

                                   or

     [ ]  TRANSITION  REPORT  PURSUANT TO  SECTION  13 OR  15(d)  OF THE
          SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
          For the transition period from _________ to _________.

                     Commission file number 0-21996

                    JAKE'S PIZZA INTERNATIONAL, INC.
            [Name of small business issuer in its charter]

           Delaware                               36-3882273
(State or other jurisdiction of                   (I.R.S. Employer
incorporation or organization)                    Identification No.)

16 Official Road, Addison, IL                      60101                
(Address of principal executive offices)          (Zip Code)

Issuer telephone number, including area code 630-543-0022

Securities registered under Section 12(b) of the Act:

Title of each class           Name of each exchange on which registered

Common Stock, $.01 par value                      NASDAQ

Securities registered under Section 12(g) of the Act:
                                  None                              
                            (Title of Class)
     
     Check whether the issuer (1) 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  registrant was required to  file such
reports), and (2) has  been subject to such filing requirements  for the
past 90 days.  Yes X No    

     Check if there is no disclosure of delinquent filers in response to
Item 405  of  Regulation S-B  is  not contained  in  this form,  and  no
disclosure will be contained, to  the best of registrant's knowledge, in
definitive  proxy or information statements incorporated by reference in
Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]

     State issuer's revenues for its most recent fiscal year: $2,903,906

     The aggregate  market value of the registrant's  Common Stock, $.01
par  value, held by non-affiliates of  the registrant as of December 26,
1996,  was $588,270 based on  the closing price of $.50  on that date on
the  National  Association  of  Securities Dealers  Automated  Quotation
System.  As  of December  26, 1996, 1,176,540 shares of the registrant's
Common Stock, $.01 par value, were outstanding.
<PAGE>
                                 PART I
Item 1.  Description of Business.

General 

     Jake's  Pizza International,  Inc. ("Company") was  incorporated in
Delaware on April  26, 1993 and is  a successor by merger,  effective on
May 27, 1993, of an Illinois corporation known as "Jake's International,
Inc." incorporated on  April 25, 1974.   As used in this  Annual Report,
unless  the  context  otherwise requires,  the  term  "Company" includes
Jake's  Pizza International,  Inc.,  a  Delaware  corporation,  and  its
predecessor.

     The  Company operates  and franchises  pizza  restaurants known  as
"Jake's  Pizza" restaurants  which  specialize  in  the sale  of  pizza,
utilizing what the Company believes are distinctive recipes, ingredients
and methods of  food preparation.  Certain Jake's  Pizza restaurants may
also offer other  food selections.  Most of  the ingredients utilized at
Jake's Pizza  restaurants are privately-labeled.   The  majority of  the
Jake's Pizza  restaurants are  carry-out and  delivery facilities,  with
limited  seating.  Certain Jake's  Pizza restaurants, however, are full-
service,  sit-down restaurants, with  dining facilities, which  also may
offer carry-out and delivery services.  
     The Company believes an indicator of its potential is that for over
30  years  it  has competed  effectively  in  the  extremely competitive
Chicago area  market.  The first  Jake's Pizza restaurant was  opened in
1961.  The first  Jake's Pizza restaurant franchise was opened  in 1965.
By 1973, there were 15 Jake's Pizza franchise restaurant units operating
in the Chicago  metropolitan area.  In  1988 there were 17  Jake's Pizza
franchise  restaurants   in  operation.     Since   then,  the   Company
successfully  implemented  a  complete restructuring  of  its  franchise
program and system.  The number  of Jake's Pizza restaurants has tripled
in those eight  years.  As of September  30, 1996, there were  54 Jake's
Pizza restaurants  in operation,  of which  two  were Company-owned  and
operated and 52 were franchises.

Developments During Fiscal Year 1996

     The Company  filed a report  on Form  8-K with  the Securities  and
Exchange Commission  on January 24,  1996 regarding the  resignations of
James  J.  Banks,  its  then  President,  Chief  Executive  Officer  and
director,  Samuel V.P.  Banks, its  then Vice-Chairman  of the  Board of
Directors, Secretary, Treasurer  and director, and two  other directors.
After such  resignations, John  S. "Jake" Flowers,  the Chairman  of the
Board of Directors,  assumed the additional  positions of President  and
Chief Executive Officer. 

     As part  of the  Severance, Consulting,  Non-Compete Agreement  and
Release in Full  Mr. James J.  Banks will  continue to receive  biweekly
payments (in accordance with his employment agreement)  through June 30,
1997  at the  rate of his  then current  annual salary of  $50,000.  Any
increases,  bonuses and  stock  options have  been  cancelled under  his
employment  agreement.    Additionally,  the  consulting  agreement with
Samuel V.P. Banks, a prior officer and  director, will continue to be in
effect.   Samuel  V.P.  Banks five  year consulting  agreement continues
through  June, 1998, and  provides initial compensation  of $40,000 with
annual increases of $2,000.
<PAGE>
     During the fiscal year ended September 30, 1996, the Company opened
six new franchised Jake's Pizza  restaurants.  The Company also acquired
three existing Jake's Pizza  restaurants from franchisees and sold  them
to new franchisees.  The Company sold its one Company-owned and operated
Jake's Pizza restaurant to a franchisee during the year.  Ten franchised
Jake's Pizza restaurants were closed during the year.  Additionally, two
Company-owned stores  were opened.   The master  franchise agreement  in
Fort  Lauderdale,  Florida was  terminated.    Of  the 52  Jake's  Pizza
restaurants franchised, 41 are located  in Illinois (a majority of which
are in the Chicago  metropolitan area), six are in  the Phoenix, Arizona
metropolitan area, one  is in the Charlotte, North Carolina metropolitan
area, one is in the Las Vegas, Nevada metropolitan area,  one is in Fort
Lauderdale, Florida and  another is in Pembroke Pines,  Florida, and one
is in Merrillville, Indiana.  The Company-owned Jake's Pizza restaurants
are located in Chicago, Illinois and Elk Grove, Illinois.

     Since September 30,  1996, one Jake's  Pizza franchise was  closed,
one  was sold to  new ownership  who elected not  to remain  part of the
Jake's  Pizza chain, and  a two franchises transfered  ownership.  As of
December  27, 1996,  there were a  total of  48 franchised  Jake's Pizza
restaurants in operation.

     The  Company  currently  has   agreements  with  three   additional
franchisees  which will  result in  the  opening of  three Jake's  Pizza
franchised restaurants in the second quarter of fiscal 1997.   Of these,
two are  in the Chicago metropolitan  area and one is in  the St. Louis,
Missouri metropolitan area.

     The  Company offered certain food products, beverages, supplies and
promotional materials  for sale to  the franchisees until June  16, 1996
when it discontinued  its distribution business.  The  Company signed an
agreement in  late May,  1996 with  a  local distributor  to supply  the
Company's franchisees with these products  beginning June 17, 1996.  The
franchisees  are not,  however, required  to purchase  product from  the
local  distributor.   The  Company  receives  a  rebate from  the  local
distributor for all products sold to the Company's franchisees.

     On December  27, 1993, the  Company reached a series  of agreements
with  Vanna White, a  nationally recognized television  personality, and
her  related company.   Under  the terms  of the  agreements, Ms.  White
became the Company's spokesperson and makes appearances on the Company's
behalf.   Additionally, a wholly-owned subsidiary of the Company entered
into  a joint-venture agreement with  affiliates of Ms.  White to open a
minimum of  eight Jake's  Pizza restaurants over  the initial  four year
term of  the agreements.   The  restaurants will  be funded  50% by  the
Company's subsidiary and  50% by affiliates of  Ms. White.  Profits  and
losses will  be divided equally.   The Company opened  one joint venture
store in March, 1996 and closed the same store six months later.  

     As of  September 30,  1996, the Company  and Ms.  White's affiliate
have verbally  agreed to  terminate their  joint  venture agreement  and
modify  the spokesperson  agreement.   The  tentative terms  of the  new
agreement would require Ms. White to continue to serve as  the Company's
national spokesperson  through December 31,  1997 and Ms. White  and her
affiliate  will receive  the remaining  55,000  shares that  were to  be
issued under the old agreement.
<PAGE>
     The  Company's goal is to develop  a national presence in the pizza
restaurant   market  by  building   on  the  Company's   experience  and
reputation.  During the upcoming  fiscal year ending September 30, 1997,
the  Company   anticipates  opening  approximately   twelve  to  sixteen
franchised restaurants.  The timing of these planned openings is subject
to various factors,  including locating satisfactory  sites, negotiating
leases and franchise agreements.

     Following is a listing of the  48 Jake's Pizza restaurants and  the
markets they serve as of December 27, 1996:
                        
             Company-Owned 

               CHICAGO
          METROPOLITAN AREA 

          Elk Grove
          Chicago   (Lincoln Park)

                         Franchised Restaurants

     CHICAGO METROPOLITAN AREA

          Algonquin              Lake Zurich           MERRILLVILLE, IN
            (2 locations)        Libertyville            Merrillville
          Arlington Heights      Lisle
          Bartlett               Mt. Prospect             PHOENIX
          Bensenville            Naperville            METROPOLITAN AREA
          Bolingbrook              (2 locations)         Chandler
          Buffalo Grove          North Aurora            Gilbert
          Carol Stream           Northbrook              Phoenix
          Chicago (Evergreen     Oswego                    (2 locations)
          Park)                  Palatine                Scottsdale
          Crystal Lake           Rolling Meadows         Tempe 
          Des Plaines            Schaumburg
          East Dundee              (2 locations)            FLORIDA
          Elgin                  St. Charles             Pembroke Pines
          Evanston               Waukegan
          Glendale Heights       Westchester             CHARLOTTE, NC
          Glenview               Wheaton               METROPOLITAN AREA
          Grayslake              Winfield                Matthews
          Hoffman Estates        Woodstock
                                                           LAS VEGAS
                                 NORMAL, IL            METROPOLITAN AREA
                                 Normal                  Henderson
<PAGE>
Business Expansion

     The Company  plans to develop, through a  combination of franchised
restaurants,  joint  ventures and  other  business arrangements,  Jake's
Pizza  restaurants throughout the  United States, Canada  and, possibly,
Europe.   The Company's  revised business  plan contemplates  developing
approximately sixteen franchises  in the next nine to  twelve months and
ten  to thirteen franchised  franchised restaurants per  year.  However,
the specific rate at  which the Company is able to  open new restaurants
will be  determined by  its success in  locating satisfactory  sites and
attracting qualified franchisees.

     With existing hubs of  operation in Chicago, Illinois and  Phoenix,
Arizona, the immediate goal of the Company is to garner increased market
share  by  expanding from  these  two hubs.    The Company  believes its
development plan  can  best  be  met by  establishing  area  development
through master franchise  agreements.  These agreements  will facilitate
the Company's  growth in new geographical  areas.  There is  currently a
master franchise  agreement in place  in Charlotte, North Carolina.   As
new  geographic areas  are  developed,  management  believes  additional
franchisees   will  be  attracted   to  further  expand   the  Company's
operations.

     The Company considers  the location of a restaurant  to be critical
to  its  long-term  success  and  devotes  significant  efforts  to  the
investigation and  evaluation of  potential sites.   The site  selection
process involves  an  evaluation  of a  variety  of  factors,  including
demographics  such as  target population  density  and household  income
levels; specific site characteristics  such as visibility, accessibility
and traffic  volume; proximity to  activity centers such as  prime urban
office or  retail shopping districts, suburban shopping areas and office
complexes;  parking availability; and potential competition in the area.
The Company's personnel and prospective franchisee inspect the sight and
then the Company approves the  site for each franchised restaurant prior
to  the  execution  of a  lease.    The opening  of  new  restaurants is
contingent  upon,  among  other  things,  locating  satisfactory  sites,
negotiating  favorable  leases,  completing  construction  and  securing
appropriate government  permits  and approvals.    Once space  has  been
leased and made  available to the Company,  approximately 45 to  75 days
are  typically  required  to  complete  construction,  obtain  necessary
licenses and approvals and open the new restaurant.

Franchise Operations

     As  of September  30, 1996,  the Company  had 52  franchised Jake's
Pizza  restaurants located in  Illinois, Arizona, Florida,  Indiana, and
Nevada.   Franchises  are generally  granted  on a  unit-by-unit  basis,
rather than by territory.  The Company is in continual  discussions with
existing and  prospective franchisees  and expects  to grant  additional
franchises  to qualified  applicants  with restaurant-related  operating
experience and requisite financial resources.

     The Company  currently charges  a uniform,  non-recurring and  non-
refundable initial franchise fee of $15,000, payable upon execution of a
franchise agreement.   The Company applies the initial  franchise fee to
defray its costs of obtaining and screening prospective franchisees, the
costs   of  providing  training  and  supervision,  both  initially  and
subsequently, and to increase the  working capital funds of the Company.
<PAGE>
     The Company may  waive or reduce the initial franchise fee if it is
fully satisfied  that all of the following conditions  are met:  (1) the
Company does not  participate in the site selection;  (2) the restaurant
requires no construction supervision; (3) the Company does  not directly
participate in  the development  of the restaurant;  (4) the  franchisee
does not  require any  pre-opening training or  assistance; and  (5) the
franchisee has  had previous  experience in a  managerial capacity  of a
Jake's Pizza  restaurant  and is  familiar with  the approved  operating
procedures as set forth by the Company. 

     Franchisees located in  Illinois must pay to the  Company a royalty
and service fee  of 4% of gross sales  payable by the tenth  day of each
month based on  gross sales of the previous month.   Four Illinois-based
franchisees  unrelated to the Company have franchise agreements which do
not  conform to  the Company's  standard franchise  agreement.   Certain
nonconforming  terms of these franchise agreements include an indefinite
duration, lower royalty and service fees and a waiver of the advertising
and   promotion  contribution.    Representatives  of  the  Company  are
attempting to  conform the terms  of these franchise agreements  as they
come up for renewal.

     The  royalty and  service  fee  has been  waived  for one  Illinois
franchise  pursuant to  an amendment  to that  franchise agreement.   In
consideration  for such waiver, the  franchisee of that franchise, which
is a corporate  affiliate of Mr. John  S. "Jake" Flowers, the  Company's
President, Chief Executive Officer and Chairman of the Board, has agreed
to  assist   the  Company,  subject  to  the   Company's  oversight  and
supervision,  in providing training to certain franchisees as designated
by the Company.   Such training will be  conducted at no expense  to the
Company.  This arrangement is not available to any other franchisees.

     The royalty  and service  fee for franchises  sold in  states other
than  Illinois may  be different  than the royalty  and service  fee for
franchises sold in  the State of Illinois, however,  the Company intends
to  enter into franchise  agreements on  substantially similar  terms as
those  terms contained  in franchise  agreements  used in  the State  of
Illinois.

     The Company estimates the total initial investment required for the
establishment  of a  franchised  carry-out  and  delivery  Jake's  Pizza
restaurant to  be in the  range of  $115,300 to $172,500,  including the
$15,000 initial franchise fee.   The Company  does not normally directly
offer financing  to franchisees.   During fiscal  1996, the  Company did
finance  a few  selected  franchisees,  however, this  was  due to  some
extenuating circumstances.   The Company no longer provides financing to
any new franchisees.   There are no other direct or indirect payments in
conjunction with the  purchase of the franchise.   The Company does  not
require  that franchisees  purchase or  lease  from the  Company or  its
designee any goods,  services, supplies, fixtures, equipment,  inventory
or  real estate  relating to  the  establishment or  operation of  their
businesses under the franchise agreement.  Each of the Company's current
franchisees, however, acquires  the goods, services, supplies  and other
items  relating to  the establishment  and operation  of a  Jake's Pizza
franchise  restaurant  from  the Company's  approved  distributors,  and
management anticipates that each franchisee will continue this policy.
<PAGE>
     The Company  will furnish  to franchisees  prototype or  protostyle
plans and specifications for  a Jake's Pizza restaurant, reflecting  the
Company's requirements for dimensions,  exterior design, interior design
and layout,  image, building materials,  fixtures, equipment, furniture,
signs  and decor.   The  franchisee  is responsible  for developing  the
restaurant;  however,  the  Company will  provide  such  consultation in
connection with the  development of the restaurant as  the Company deems
appropriate.

     Each franchisee must construct  all required improvements necessary
to develop a  Jake's Pizza restaurant in  compliance with the  plans and
specifications approved by the Company and all applicable ordinances and
building codes.  Additionally, each franchisee must obtain all necessary
construction and business permits and licenses to operate a Jake's Pizza
restaurant,  as well as  establish accounting and  inventory controls in
conformance with the requirements prescribed by the Company.

     The  Company's management believes that the reputation and goodwill
of  Jake's Pizza restaurants  is based upon, and  can be maintained only
by,  the sale  of  distinctive,  high  quality  products  and  services.
Therefore,  a  Jake's Pizza  restaurant  must  use only  such  products,
materials  and supplies  of any  kind,  including, but  not limited  to,
ingredients for the preparation of food products and  beverages, plates,
cups,  utensils, uniforms, menus, forms, packaging materials and labels,
and will offer  for sale at the  restaurant only such food  products and
beverages  that  conform  to the  Company's  specifications  and quality
standards and/or are purchased from  suppliers approved by the  Company.
The Company may  from time to  time modify the  list of approved  brands
and/or suppliers, and a franchisee may  not, after receipt in writing of
such modification, reorder any brand  or reorder from any supplier which
is no longer approved.   The Company has an approved  distributor in the
Phoenix, Arizona area, and  has arranged with its suppliers  to make the
same goods available  to the approved distributor that  are available to
the Company.

     A Jake's Pizza  franchise is granted for a  specific location which
must  be acceptable  to the  Company.   Although  in some  instances the
Company may  locate an acceptable  site for franchisees, the  Company is
not  obligated  to do  so.   The  Company's personnel  will  inspect and
approve the proposed  site of each Jake's Pizza restaurant  prior to the
execution of a lease by a franchisee.   The      Company's     franchise
agreement  does not  grant a  franchisee  any territorial  rights.   The
franchise  is granted  for the  location and  premises specified  in the
franchise agreement and  the relocation of the restaurant  is subject to
the prior written  approval of the Company.  The  granting of additional
franchises  for Jake's  Pizza  restaurants  and  the location  of  those
franchises  is at  the  Company's  sole  discretion.    Certain  states'
franchise laws presently,  or may in the future,  impose restrictions on
the Company's ability  to grant additional  franchises within a  certain
distance from an existing franchise.
<PAGE>
     Prior to the  opening of the restaurant, the  Company will furnish,
and the franchisee  and proposed manager of the  restaurant must attend,
an  initial  training  program  on  the  operation  of  a  Jake's  Pizza
restaurant.    The training  program  consists of  consultations  at the
Company's  headquarters and on-the-job  training at an  operating Jake's
Pizza restaurant.   The training  program is generally conducted  two to
four weeks  prior to the  scheduled opening of the  restaurant and lasts
approximately two weeks.   The Company advises franchisees  from time to
time  of  operating problems  which  the  Company discovers  during  the
Company's periodic inspections of the franchises.

Purchasing

     The  Company offered certain food products, beverages, supplies and
promotional materials  for sale to  the franchisees until June  16, 1996
when it discontinued  its distribution business.  The  Company signed an
agreement  in  late May,  1996 with  a local  distributor to  supply the
Company's franchisees with these products  beginning June 17, 1996.  The
Company receives  a rebate from  the local distributor for  all products
sold to the Company's franchisees.

     The  Company still negotiates directly  with suppliers for all food
ingredients  unique  to   the  Company's  which  are   utilized  in  the
restaurants in order to ensure  uniform quality and adequate supplies to
comply  with  Company  quality  standards  and  to  obtain  prices  more
competitive  than  those  available to  individual  restaurants.   These
products  are  stored with  the  distributor  located in  Carol  Stream,
Illinois  and  are sold  to  franchisees  on an  as-needed  basis.   The
products are also made available to the Company's  approved distributors
in other geographical locations.  Certain of the ingredients used in the
preparation of a Jake's pizza  are manufactured for and supplied  to the
Company  by certain suppliers, although no exclusive supply arrangements
have been entered into by the Company.  The Company believes that should
relations with  these various suppliers be terminated,  the Company will
be able to enter into arrangements with similar companies to provide the
necessary ingredients used in the  preparation of a Jake's pizza without
impacting operations.  In addition,  franchisees are free to obtain food
ingredients and  beverage products from  any source whose  products meet
the Company's specifications.

Advertising and Promotion

     The Company has established and administers an advertising fund for
those advertising  and marketing  programs as the  Company, in  its sole
discretion,  deems  appropriate.   Franchisees  must  contribute  to the
Company's advertising fund non-refundable amounts of 2% of sales payable
by the  tenth day  of each month  based on  gross sales of  the previous
month.

     The  Company relies  principally  on local  print  and direct  mail
advertising  to attract its  target market.   Additionally,  the Company
prepares  the  advertising   materials  and  also  produces   menus  and
promotional programs for both  franchised and Company-owned restaurants.
<PAGE>  
     The Company  has currently suspended,  for a period of  six months,
the  monthly  advertising  fee  that  most of  the  franchisees  are  to
contribute  to the  advertising fund.   This  suspension  of advertising
payments is expected to end in  February, 1997 at which time  management
will  reevaluate the  suspension of  advertising fees.   At  the present
time,  management believes  that franchisees are  currently in  a better
position  to use  these advertising  funds locally  to promote  and grow
their  businesses.    The  management of  the  Company,  however,  still
monitors the  types and frequency  of the franchisees advertising.   The
suspension of advertising  fees does  not impact the  cash flows of  the
Company's operations  since any  amounts collected  for the  advertising
fund would be used only to finance additional advertising.

     In December 1993,  the Company entered into a  series of agreements
with  entertainer Vanna  White and  her affiliates.   Included  in these
agreements  is  a spokesperson  agreement.    Under  the terms  of  this
agreement, Ms.  White will be  a national spokesperson for  the Company,
and  will make  personal  appearances  at  such events  as  conventions,
national and regional meetings and other events as mutually agreed upon.
As  of September  30, 1996, the  Company and Ms.  White's affiliate have
verbally agreed to modify  the spokesperson agreement whereby  Ms. White
will continue  to serve as  the Company's national  spokesperson through
December 31,  1997.  Under the tentative terms  of the new agreement Ms.
White and  her affiliate will  receive the remaining 55,000  shares that
were to be issued under the old agreement.

Competition

     The  Jake's Pizza  restaurants face  intense  competition for  both
potential locations and  customers from numerous existing  and potential
future restaurants  in their respective  areas.   Many competitors  have
similar or  more  diverse menus,  and  many have  substantially  greater
financial  resources,  personnel,  operating  experience  and,  in  some
instances, better facilities than those of the Jake's Pizza restaurants.
These restaurants include, among many others, Pizza  Hut, Little Caesars
International and Domino's.

Trademarks

     The Company has obtained 11 trademark registrations with  the State
of Illinois  for seven different  trademarks.  The Company  has obtained
three  registrations  on the  Principal  Register of  the  United States
Patent  and  Trademark  Office  for  marks which  are  licensed  to  the
franchisees pursuant  to  the franchise  agreements.   The  Company  has
applied on the Principal Register of certain of the other marks.

Government Regulation

     Jake's  Pizza restaurants  are  subject to  the  jurisdiction of  a
variety  of  regulatory   authorities,  including,  without  limitation,
federal,   state,  county  and  city  agencies  administering  laws  and
regulations  relating  to  health,  labor,  taxation  and  the  sale  of
alcoholic beverages.    There can be no  assurance that the licenses and
permits  for  the operation  of  the  Jake's  Pizza restaurants  can  be
obtained or maintained.   The Jake's Pizza restaurants  are also subject
to  periodic inspection  by their  respective  municipal Departments  of
Health.
<PAGE>
     The Company is required to  file its franchise offering document in
certain  states  in  which  it  presently offers  or  intends  to  offer
franchises to prospective franchisees.   The Company will be required to
update  its  franchise  offering  disclosure  document  to  reflect  the
occurrence of material events.   The occurrence  of any such events  may
from  time to  time require  the Company  to  stop offering  and selling
franchises until the document is so updated.  There can be  no assurance
that  the Company  will be  able to  update its  disclosure document  or
become registered in certain states consistent with its expansion plans,
that it will not be required to stop offering and selling  franchises or
that  the  Company  will be  able  to  comply  with existing  or  future
franchise regulations in  any particular state, any of  which could have
an adverse effect on the Company.  The Company will, however, make every
effort to timely update its documents to minimize any potential stoppage
of offering or selling franchises.

     The Company is also subject to a number of state laws that regulate
certain substantive  aspects of the  franchisor-franchisee relationship,
such as termination,  cancellation or non-renewal of a  franchise (e.g.,
requirements that "good cause" exist as a basis for such termination and
that  a franchisee  be given  advance notice of  and a  right to  cure a
default prior  to termination)  and may require  the franchisor  to deal
with its  franchisees in good  faith and prohibit interference  with the
right  of free association  among franchisees.   Franchise relationships
are also subject to the Federal Trade Commission regulations relating to
disclosure  requirements   in  the   offer  and   sale  of   franchises.
Legislation has been introduced in  Congress which, if enacted into law,
would require national  registration of franchise offerings.   This will
increase  the  cost  of   franchise  operations  and  will   affect  the
franchisor-franchisee relationship.

     The Company is also subject to federal and a substantial  number of
state laws  regulating the  offer and  sale  of franchises.   Such  laws
impose  registration and disclosure  requirements on franchisors  in the
offer and sale  of franchises.  These laws often  also apply substantive
standards  to the  relationship between  franchisor  and franchisee  and
limit the  ability of  a franchisor to  terminate or  refuse to  renew a
franchise.

Employees

     As  of September 30,  1996, the Company had  21 employees, of which
one was an  executive,  three  were corporate personnel  and three  were
field  personnel or  restaurant managers.   The remaining  employees are
restaurant  personnel,  many of  whom  are  part-time.   None  of  these
employees is covered by a  collective bargaining agreement.  The Company
believes that its labor relations are adequate.   In addition, there are
approximately  1,200  individuals  employed  within   the  Jake's  Pizza
franchise system.   Each franchisee, and not the  Company is responsible
for the payment  of salaries and benefits to  those individuals employed
by the franchisee.
<PAGE>
Item 2.  Description of Property.

     Prior  to  its initial  public  offering,  the Company  leased  its
principal corporate offices  from an Illinois  land trust controlled  by
Messrs. John S.  "Jake" Flowers and James J. Banks.  Concurrent with the
closing of the  Company's initial public offering  on July 1, 1993,  the
Company purchased its corporate headquarters for approximately $900,000,
which was equal to its then current appraised value, and terminated  the
lease.   The  corporate headquarters  is  located at  16 Official  Road,
Addison, Illinois,  and is a  14,000 square foot building  consisting of
3,600 square  feet of office space  and 10,400 square feet  of warehouse
space.   At the time of its acquisition by the Company, the property was
encumbered by three  liens, one of which  is a trust deed  and the other
two are mortgages.  One lien secures payment of a promissory note in the
original amount  of $677,600,  which was obtained  from an  unaffiliated
lender, which bears interest at  a rate of 8%  per annum and matures  on
January 1, 2000.  The Company is responsible for making monthly payments
of principal  and interest equal  to $5,667.72.   The  property is  also
encumbered by  a second mortgage  securing payment of a  promissory note
held  by Mrs. Dorothy A.  Banks, the wife  of Samuel V.P.  Banks and the
mother of James J. Banks.  This note is in the amount of $116,000, bears
interest  at  a  rate  of  8% per  annum,  requires  quarterly  payments
representing partial payments  of interest only of $2,320,  with a final
payment of  all accrued and unpaid interest  and all unpaid principal on
December 28, 1997.   The property was also security for  a mortgage held
by Messrs. Flowers and James J. Banks.  This mortgage secured payment of
a promissory note which was in the amount of $106,400, bore  interest at
the rate of 7% per annum, required  monthly payments of interest only of
approximately $620  and matured on  January 2, 1994.   The  Company paid
that obligation and  is current on the other  obligations secured by the
Company's headquarters building.  It is estimated that real estate taxes
for  1996 for the building will be  approximately $19,000.  The property
and casualty  insurance for the  property is approximately $3,700.   The
building was completed  in December 1992 and, therefore, the maintenance
to date has been low.
     
     As  of December 27, 1996,  the Company has  a signed offer
for  the cash  sale of  its  current office  and  warehouse facility  in
Addison, Illinois.   The Company  sold the  building for $775,000.   Any
excess  proceeds  from  the  sale  of the  building,  after  paying  the
mortgages, will be  used to relocate  to new leased  office space.   The
Company has signed a one year lease for a 2,480 square foot office, with
monthly  lease payments  of approximately  $2,790, located  at 5999  New
Wilke Road, Suite 205-206 Rolling Meadows, Illinois, 60008.  The closing
date for the  sale of the building is tentatively  scheduled for January
3, 1997.  The Company plans to begin operating out of its new offices by
January 4, 1997. 
<PAGE>
     All  Company-owned restaurants are  located in leased  spaces.  The
leases for  Company-owned restaurants  typically have  initial terms  of
five years with certain renewal options and provide for a base rent plus
real  estate  taxes,  insurance  and  other  expenses,  plus  additional
percentage  rents based  on revenues  of the  restaurants.   The Company
entered into a total of 17 leases for real estate; 14 of the leases  are
accompanied  by  subleases  to franchisees,  two  are  for Company-owned
restaurants, and one  is for the closed Placentia, California operation.
The Company  is  in the  process of  negotiating out  of the  Placentia,
California lease.  The restaurant  leases sub-leased to the  franchisees
are under the  same terms as  the original lease.   Should a  franchisee
default on its payment obligation to  the Company, the Company would  be
responsible  for the  lease obligation.   The  remaining terms  of these
leases range up to five years, with the last lease expiring in 2000.


Item 3.  Legal Proceedings.

     As  of December  23,  1996,  the Company  is  not  involved in  any
material litigation or proceeding, other than that described herein, and
is not aware of any such proceedings threatened against it.


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

     The Company's annual meeting of  its stockholders was held on April
30, 1996.  There were two proposals to be voted upon.  The first was the
election of  directors for the year, and the  second was the approval of
Arthur Andersen LLP as the Company's auditors.

     There were 726,680  shares represented at the  meeting representing
62% of the outstanding shares of the  Company.  Approximately 98% of the
shares represented voted to elect  the Company's slate of directors, and
approve Arthur Andersen LLP as the Company's auditors.
<PAGE>
                                 PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.

Market Information

     The  Company's Common  Stock,  $.01  par value,  is  listed on  the
National Association of  Securities Dealers  Automated Quotation  System
("NASDAQ") under the symbol  "JAKE".  The table sets forth  the range of
high and  low sales prices on the NASDAQ for the year ended    September
30, 1996:
                                             Common Stock
                                                 Price        
                                             High      Low
Fiscal Year Ended September 30, 1996

First Quarter                                2 1/2     1 1/2
Second Quarter                               2 1/2     1
Third Quarter                                2 1/4     5/8
Fourth Quarter                               2 1/4     1/2

Number of Stockholders

     As of September 30,  1996, there were approximately  400 beneficial
owners of record of the Company's Common Stock.

Dividends

     The Company has not paid any cash dividends on its Common Stock and
does not  anticipate paying cash  dividends on  the Common Stock  in the
foreseeable  future.   The Company's  policy  is to  retain earnings  to
finance  the development  and  growth of  the  Company.   The  Board  of
Directors  may reconsider  this policy  from  time to  time in  light of
conditions then existing, including  the Company's earnings performance,
financial condition and capital requirements.

Common Stock

     The  Company  is authorized  to  issue 9,000,000  shares  of Common
Stock, par value $0.01 per share,  of which 1,176,540 shares are  issued
and  outstanding.     The    outstanding  shares  are   fully  paid  and
nonassessable.   Each common  stockholder of record  is entitled  to one
vote per share on all matters voted upon by  the Company's stockholders.
Common  stockholders have no preemptive, redemption or cumulative voting
rights.   In  the  event  of liquidation,  the  common stockholders  are
entitled  to share ratably in any assets  of the Company remaining after
payment in full of creditors and preferred stockholders to the extent of
any  liquidation preference.   Although the  Company does  not currently
anticipate paying dividends in the foreseeable future, holders of shares
of Common Stock will be entitled to share ratably in dividends,  if any,
declared on the  Common Stock by the  Board of Directors of  the Company
out of funds legally available for such purpose.
<PAGE>
Preferred Stock

     The  Company is authorized  to issue 1,000,000  shares of preferred
stock, par value $0.01 per share.   The Board of Directors is authorized
to issue Preferred Stock in one or more series and to fix  the number of
shares included in  such series, and the  designations, relative powers,
preferences,  rights, qualifications, limitations or rights and terms of
redemptions, liquidation preferences and other terms.  Issuance  of such
Preferred Stock  could adversely affect  the voting and other  rights of
the  holders of  Common Stock  and could,  in certain  circumstances, be
viewed  as  an anti-takeover  measure.    There  is no  Preferred  Stock
currently outstanding.
<PAGE>
<TABLE>
Item 6.  Management's Discussion and Analysis or Plan of Operation.

                                            Selected Financial Data

                                1996        1995       1994       1993       1992
<S>                         <C>         <C>        <C>        <C>        <C>
Income statement data:

REVENUES:
Distribution sales          $ 1,993,497 $3,086,018 $2,593,032 $2,364,464 $2,173,035
Franchise royalties             351,410    385,223    346,474    326,687    219,377
Advertising royalties           102,767    135,400    144,960    110,411     46,472
Franchise fees                  215,500    161,000    105,000     68,500    184,500
Rebate income                    40,172                                   
Store sales                     200,560    532,083    825,515    106,782          0
Other                                           25      2,796         67      6,779

            Total           $ 2,903,906 $4,299,749 $4,017,777 $2,976,911 $2,630,163

COSTS AND EXPENSES:
Costs of distribution sales $ 1,717,333 $2,593,627 $2,190,546 $1,950,485 $1,829,048
Costs of store sales            202,360    382,928    625,160     72,664
Store operations                139,287    234,840    202,464     17,960
Distribution and franchise
    operations                   75,976     89,153     94,413     64,961     59,611
Selling, general and
    administrative            1,623,205  1,553,894  1,664,397    843,352    650,527
Loss on impairment of assets    696,085                                   

            Total           $ 4,454,246 $4,854,442 $4,776,980 $2,949,422 $2,539,186

OPERATING INCOME (LOSS)     $(1,550,340)$ (554,693)$ (759,203)$   27,489 $   90,977

NET INCOME (LOSS)           $(1,953,136)$ (743,017)$ (567,221)$    9,125 $   56,340

Earnings (loss) per share        ($1.69)    ($0.70)    ($0.54)     $0.02      $0.15

Weighted average shares
     outstanding              1,153,623  1,066,540  1,058,072    532,931    371,540

Earnings (loss) per share -
   assuming full dilution        ($1.59)    ($0.60)    ($0.48)     $0.02      $0.15

Weighted average shares
     outstanding - assuming
     full dilution            1,231,540  1,231,540  1,181,822    532,931    371,540

Balance Sheet Data:

Working Capital             $  (325,188)$   16,878 $  935,579 $2,132,969 $   83,652
Total assets                  1,944,703  4,081,991  4,552,331  4,023,487    493,431
Total liabilities             1,498,292  2,328,090  2,330,413  1,489,951    368,020
Long-term obligations           749,184  1,080,211  1,316,378    968,042     67,453
Shareholders' equity            350,765  1,753,901  2,221,918  2,533,536    125,411
</TABLE>
<PAGE>
Fiscal Year 1996 Compared to Fiscal Year 1995

     Total  revenues  for  the fiscal  year  ending  September 30,  1996
decreased $1.4 million  or 32.5% from the  prior year.  The  decrease in
revenues  was  primarily  attributable  to  the  discontinuance  of  the
distribution  business  on  June 16,  1996  (Note  12)  as part  of  the
reorganization  of the  Company.   Distribution  sales, which  primarily
consisted  of  ingredients  for  the preparation  of  food  products and
supplies necessary to operate a Jake's Pizza restaurant, also  decreased
due to price  reductions in certain products to  remain competitive with
much higher volume distributors.  The Company currently has an agreement
with a  local distributor to  provide these products to  the franchisees
(Note 1).  The Company receives a rebate on the sales to the franchisees
from  the  distributor  which  is  reflected as  rebate  income  in  the
Consolidated Statements of Operations

     Revenues also  decreased  due to  lower  store sales,  $200,560  in
fiscal 1996  versus $532,083  in fiscal  1995, from fewer  Company-owned
restaurants operating  during fiscal  1996 compared  to the  prior year.
The Company only  operated one restaurant until  May 31, 1996, until  it
was  sold to  a new  franchisee, and  began operating  two Company-owned
restaurants in late July, 1996.

     Service  revenues were also lower in fiscal  1996.  The decrease in
royalty revenues  was due to  fewer operating franchises in  fiscal 1996
compared to fiscal 1995.  Royalty revenue is also affected, to  a lesser
extent, by the  timing of the  opening and closing of  franchises during
the year.   Additionally, franchise and advertising  royalties were also
negatively impacted due to a  significant number of franchises which are
unable to  meet their current  obligations due to cash  flow constraints
from a weak operation.  The decrease in royalties were offset in part by
the  increase  in  franchise  fees   which  was  primarily  due  to  the
recognition  of  two master  franchise agreements  in Florida  and North
Carolina.  The Florida agreement was subsequently terminated.  
     
     Management has suspended,  for a period of six  months, the current
monthly advertising fee  that most of the franchisees  are to contribute
to an  advertising fund beginning  with September, 1996  advertising fee
(Note 12).  The suspension of advertising fees does not impact  the cash
flows of  the Company's operations  since any amounts collected  for the
advertising fund would be used only to finance additional advertising.

     The  Company's  total  cost of  sales  decreased  35.5% or  $(1.06)
million, to  $1.92 million in  fiscal 1996 compared to  $2.98 million in
fiscal  1995.   This decrease  was  also primarily  attributable to  the
discontinued  distribution  business   in  June,  1996.    The  cost  of
distribution sales  as a percentage  of distribution sales  increased to
86.1% in fiscal 1996 compared to 84.0% in fiscal 1995.  The increase, as
a percentage  of distribution  sales,  reflected the  rising prices  for
cheese,  pork and  paper  products  while the  Company  tried to  remain
competitive   in  its  distribution  business  with  the  higher  volume
distributors.
<PAGE>
      Operating  and   administrative  expenses,  before  the   loss  on
impairment  of assets, decreased slightly  but increased as a percentage
of total revenues  to 63.3% in fiscal  1996 compared to 43.7%  in fiscal
1995.  This increase  as a percentage of revenue  is primarily due to  a
charge  for uncollectible accounts and notes receivable of approximately
$262,000 in fiscal 1996 and to a lesser extent increases in professional
and  legal fees related  to the  reorganization of  the Company  and the
related  severance,  consulting  and   non-compete  agreement  with  the
Company's prior  President, James J.  Banks.   These increased  expenses
were offset by payroll reductions  in management and in the distribution
business as well  as the elimination  of additional expenses  associated
with the support of the distribution business.

     The loss on impairment of assets in fiscal 1996 reflects the verbal
agreement by the Company, Ms. Vanna White and her affiliate to terminate
their joint venture agreement and  modify the spokesperson agreement, as
more fully explained in Note  3, Deferred Contract Costs and Contractual
Obligations, in the Notes to the Consolidated Financial Statements.

     The  increase  in  other  income  and expense  in  fiscal  1996  is
primarily due to the settlement of a lawsuit with a former franchisee in
Arizona,  the  loss   on  the  sale  of  two   Company-owned  stores  to
franchisees, one of which  is a director of the Company's  current Board
of  Directors, and the loss on  the sale of the current office/warehouse
(Note 12).

     The net loss for fiscal 1996 was $1,953,136, or a loss of $1.69 per
share compared to a loss a  year earlier of $743,017, or a loss  of $.70
per share.   This loss  for fiscal  1996 reflects charges  to income  of
$696,085 for the loss on impairment of assets, $261,621 in uncollectible
accounts and notes receivable reserves,  $207,452 for losses on the sale
of assets and $131,992 for settlement expenses.  These charges to income
are  primarily  one time  charges  relating  to the  reorganization  and
downsizing of the  Company.  Management believes that  it has positioned
the Company  with plans that  will grow the Company  while significantly
reducing the losses of the Company.

Fiscal Year 1995 Compared to Fiscal Year 1994

     Distribution  sales, which consist  of the ingredients  involved in
the preparation  of the  food products and  other supplies  necessary to
operate a  Jake's Pizza restaurant,  increased $492,986, or  19.0%, from
$2,593,032 for the year ended September  30, 1994 to $3,086,018 for  the
year ended September 30,  1995.  The increase in  distribution sales was
due primarily to  the addition of seven  new franchises during the  year
ended September 30,  1995.  Distribution sales increased  for the eighth
consecutive year.

     Sales  for  the Company-owned  Jake's  Pizza restaurants  decreased
$293,432, or 35.6%,  from $825,515 in fiscal 1994 to  $532,083 in fiscal
1995.   This was  due to  the existence of  fewer Company   owned Jake's
Pizza restaurants for most of the fiscal year.
<PAGE>
     The Company's service revenues (which includes franchise royalties,
franchise  fees, and advertising royalties) increased $85,189, or 14.3%,
from $596,434 for fiscal 1994 to $681,623 for fiscal 1995.  This was due
to the  opening of fourteen  new franchises during fiscal  1995 and from
the  full year's  contributions of  the seven  new franchises  opened in
fiscal 1994.  Franchise fees  increased $56,000, or 53.3%, from $105,000
in  fiscal 1994  to  $161,000 in  fiscal 1995.    This resulted  from   
franchise  fees for  the fourteen  franchises opened  in fiscal  1995 as
compared to seven franchises opened in fiscal 1994.

     The Company's cost of sales rose $160,849, or 5.7%, from $2,815,706
in  fiscal 1994  to $2,976,555  in fiscal  1995.   This  was due  to the
additional  Jake's Pizza restaurant  locations opened during  the fiscal
year.  The  increase was not as  great as the increase in  the number of
locations due  to better  controls over costs,  except for  paper goods,
relatively consistent food and supplies costs.

     Operating and administrative  expenses decreased $83,387, or  4.3%,
from $1,961,274  in fiscal  1994 to  $1,877,887 in  fiscal 1995.   These
decreases  were primarily  due to  cost controls  instituted during  the
year.

     The  Company's experienced  a net  loss for  the fiscal  year ended
September 30,  1995 amounting to $743,017,  or $0.70 per share.   Fiscal
1994 showed a net loss of $567,221, or  $0.54 per share.  The losses are
primarily the result  of the Company's expansion program,  and include a
number of one-time charges.  Among these are losses on sales of property
and  equipment of approximately  $66,000, settlement expense  of $60,000
and a  one-time charge of  $100,000 related to the  Company's agreements
with  entertainer Vanna  White and  her affiliates.   Since  the Company
completed its initial public offering of stock in July 1993, the Company
has aggressively pursued its expansion plans and will continue to do so.
Management   believes  that  the  current   plans  will  result  in  the
realization of substantial increases in revenues in the short term, with
corresponding increases in net income over the longer term.
<PAGE>
Liquidity and Capital Resources

     In July 1993,  the Company completed an initial  public offering of
640,000 shares of its common stock.  Gross proceeds of the offering were
$3,200,000.   After  deducting underwriting  discounts, commissions  and
expenses of $428,000 and other expenses of the offering of approximately
$373,000, the net proceeds to the Company were approximately $2,399,000.
The Company does not have any remaining funds from the offering and will
fund  its  business   and  expansion  efforts  through   the  continuing
operations of the company.

     The Company's management has determined, as previously addressed in
its press release dated June 28,  1996 and 10-QSB for the period  ending
June 30, 1996,  that it will need additional  financing and/or investors
to  help the  Company's  liquidity  problem and  enable  the Company  to
operate in  the future.   Management is in  the process of  taking every
action to reduce spending, improve  its operations and increase its cash
position.

     In  an effort  to streamline  the Company's  operations and  try to
improve  its  franchisees  operations, the  Company  contracted  a local
distributor,  in  late May,  1996,  who  specializes  in the  pizza  and
restaurant business, to  supply its franchisees.  The  decision was made
to contract  an outside  local distributor since  the company  could not
compete with  the prices  or  quantity of  products  of a  large  volume
distributor.   Under  the contract  with  the distributor,  Jake's Pizza
International will receive a rebate on all products sold to Jake's Pizza
restaurants.  On June 17,  1996 the distributor began deliveries to  the
franchisees.  

     The company was be able  to eliminate certain costs associated with
the  support  of  the  distribution  business.    These  costs  included
personnel reductions,  facility operating  expenses  and other  indirect
operating  costs.   The  sale of  its 14,000  square foot  warehouse and
office facility,  expected to be  completed in early January,  1997, and
relocation  to  leased office  space  are estimated  to  reduce facility
expenses by approximately 50%.

     The  Company has made  a proposal  to 17  of its  largest unsecured
creditors  to settle  an outstanding  debt of  $470,965 for  $117,742 as
payment in full.  As of December 27, 1996 two creditors have refused the
proposal and one creditor has not made  a decision.  The balance related
to  these  creditors  amounts  to  $104,084.    The Company  anticipates
disbursing the funds to the creditors by January 31, 1997.  The majority
of the funds to be used to  pay the creditors will be provided from  the
sale of the Company's current  office/warehouse to be completed in early
January, 1997,  through the  postponement of a  $100,000 payment  on the
second mortgage note to a related party.

     Additionally,  the Company is selling its two Company-owned stores,
the  assets  of  its  closed  joint  venture  restaurant  in  Placentia,
California and  equipment the Company  currently holds  in inventory  to
help fund the Company's short-term cash flow needs.
<PAGE>
     The Company  has made  some management  changes since  John Flowers
assumed the additional role as  President and Chief Executive Officer in
January, 1996.  The Company  engaged Michael Marczuk  in March,  1996 to
consult the Company with respect to financial and operational issues and
evaluate  various courses of action.  John  Veremis was promoted to Vice
President  of Franchise Operations from Director of Franchise Operations
effective  June 1, 1996.  Mr. Veremis will replace  Robert N. Wallen who
resigned.   Four Board members have resigned  since they were elected at
the  shareholders meeting in April, 1996.  They are Messrs. Jerome Rich,
Theodore Govedarcia and  Tod Curtis and Jack Fischer.  Mr. Ruben Melesio
was nominted on  December 27, 1996 to  serve on the Board  of Directors.
The Board is now comprised of John  "Jake" Flowers, Robert Leeper, Ruben
Melesio and Michael Sykes. 

     The President, Chief Executive Officer and Chairman of the Board of
Directors,  with  the  direction  and  authorization  of  the  Board  of
Directors, engaged the law firm of Jenner & Block as special  counsel to
advise Jake's Pizza  International with respect to  certain alternatives
of financing and reorganization.
     
     The Company currently believes  that it will need 65  to 70 healthy
operating franchised  restaurants to  bring the  Company to a  breakeven
cash  flow.    As of  December  27,  1996, there  were  50  Jake's Pizza
restaurants   operating   nationally,    including   two   Company-owned
restaurants.  However, a significant portion of the current  franchisees
are not  meeting their obligations  for various reasons,  including cash
flow constraints due to a weak franchise operation.

     Management  believes that all  of these actions  will substantially
reduce operating costs and help position the Company for growth and move
the Company toward profitability in the long-term.

     The  decrease  in  accounts  receivable  is  primarily due  to  the
increase   in  the  reserve  for  uncollectible  accounts  and  improved
collection efforts.   A comprehensive review of the outstanding accounts
receivable balance resulted  in an additional reserve  for uncollectible
accounts during fiscal 1996.  The Company has written off a  substantial
portion of its oldest accounts receivable, which were  primarily related
to closed franchises. The Company has turned over approximately $190,000
of  accounts  receivable  from  discontinued   franchise  operations  to
attorneys  for collection.   Management  will continue  to evaluate  its
outstanding  receivable balances and  make the necessary  provisions for
uncollectible accounts as needed.

     The decrease  in inventories  is due to  the discontinuance  of the
distribution business and  a write down of obsolete  inventory offset by
an increase in equipment inventory seized from two closed franchises who
are in  debt to the company. The Company  plans to sell the equipment to
settle part of the debt.

     Capital  expenditures were  $152,904 for  fiscal  1996 compared  to
$266,464  during  fiscal  1995.    Expenditures  for  fiscal  1996  were
primarily due to equipment  purchases and property improvements for  two
Company-owned stores  and the closed  joint venture store  in Placentia,
California.   Expenditures totaling approximately $231,000 during fiscal
1995 were primarily  for the purchase of two  Company-owned Jake's Pizza
restaurants which were then sold to a new Jake's Pizza franchisee.
<PAGE>
     The decrease in property, plant and equipment primarily reflect the
sale of the Company's office and warehouse facility, which is classified
in the Company's Consolidated Balance Sheets as asset held for sale, and
the  sale of  equipment  and improvements  of  two Company-owned  stores
offset by the expenditures to open two additional Company-owned stores.

     The  decrease in  total notes  receivable is  primarily due  to the
settlement of  a lawsuit  from a  prior franchisee  who  held two  notes
receivable payable to the Company.   Under the settlement agreement, the
franchisees returned the two stores to the Company and the Company wrote
off the notes receivable.  Notes receivable also decreased due to  a the
reserve  for  uncollectible  notes  receivable  of  which  approximately
$20,000 has been turned over to attorneys for collection.

     The decrease in deferred contract costs and contractual obligations
in fiscal 1996 reflects the  verbal agreement by the Company, Ms.  Vanna
White and her  affiliate to terminate their joint  venture agreement and
modify the spokesperson agreement, which is more fully explained in Note
3, Deferred Contract Costs and  Contractual Obligations, in the Notes to
the Consolidated Financial Statements.

     In November, 1995, the Company renewed its $300,000 line-of-credit.
The line-of-credit called  for monthly payments of interest  at the rate
of 1/2 per cent above the bank's prime rate and which would have matured
in November, 1996.   In  March, 1996, the  Company paid the  outstanding
balance  of $193,943  under the  line of  credit.   Management does  not
expect to renew the  line-of-credit.  The Company is current  on all its
loan obligations.
     
     The  Company is currently obligated under several leases, including
three leases for two Company-owned  Jake's Pizza restaurants and one for
the joint venture store in Placentia,  California, as well as leases for
space utilized by franchisees of Jake's Pizza restaurants.  The terms of
the leases range up to six years,  with the last lease expiring in 2000.
The  leases   utilized  by  the  franchisees  are  sub-leased  to  those
franchisees under the same terms as the  original lease.  The Company is
current under all lease obligations.

Item 7.  Financial Statements.

     The financial  statements are listed  under Part III,   Item 13  in
this Annual Report.

Item 8.   Changes  in and Disagreements  with Accountants  on Accounting
          and Financial Disclosure.

     There  were no  changes  in or  disagreements  with accountants  on
accounting   and  financial  disclosure  as  required  by  Item  304  of
Regulation S-B.
<PAGE>
                                   PART III

Item 9.   Directors, Executive Officers, Promoters and Control  Persons;
          Compliance With Section 16(a) of the Exchange Act.
     
     The directors and executive officers of the Company, their ages and
their positions and offices are set forth in the following table:

                                                            Officer or
                                                            Director
Name                     Age  Position                      Since

John S. "Jake" Flowers   59   Director, President, Chief 
                              Executive Officer and 
                              Chairman of the Board
                              of Directors                  1993
Robert B. Leeper         59   Vice Chairman of the Board
                              of Directors, Vice President,
                              Secretary and Treasurer       1996
Jack L. Fischer          43   Director                      1993
Ruben Melesio            59   Director                      1996
Michael A. Sykes         33   Director                      1996


     The  following is  certain additional  information concerning  each
director and executive officer of the  Company.  When used below, unless
otherwise noted, positions held with  the Company include positions held
with the Company's predecessor.

     John  S.  "Jake"  Flowers  -  Mr.  Flowers,  the  President,  Chief
Executive Officer and Chairman of the Board, also served as President of
the Company between 1979 and March 1993.  Mr. Flowers has been a  member
of the  Board  of Directors  of the  Company since  1974.   Mr.  Flowers
assumed  the additional  position of  as  President and  Chief Executive
officer effective  January 24,  1996.   Mr.  Flowers has  also been  the
principal stockholder, member of the Board of Directors and President of
Prospect Pizza,  Inc.,  an Illinois  corporation,  which has  owned  and
operated a Jake's Pizza restaurant in Mt. Prospect, Illinois since 1961.

Robert B.  Leeper -  Mr. Leeper, the  Vice Chairman  of the  Board, Vice
President, Secretary  and Treasurer, has been  a member of  the Board of
Directors of the Company since January, 1996.  From January, 1987 to the
present Mr.  Leeper has been in  a partnership owning nine  Nevada Bob's
Discount Golf stores, seven in  Illinois and two in southern California.
Since 1992, Mr. Leeper has also  been a partner in Aotea Lodge,  located
in New Zealand, a vacation/resort complex partnership.

     Jack L. Fischer - Mr. Fischer has been a Director  since 1993.  Mr.
Fischer  is the  sole owner  of Amsterdam  Financial Group,  a financial
services company,  which he founded  in 1977.  Mr.  Fischer resigned his
position on the Board of Directors on December 27, 1996.
<PAGE>
     Ruben Melesio - Mr. Melesio was nominated to the Board of Directors
on December  27, 1996.  His  nomination was unanimously accepted  by the
Board  of Directors.   Mr. Melesio is  the owner  of three corporations.
Highway  Safety Corporation,  established in  1979,  and Highway  Safety
Contracting  Corporation  which  are suppliers  of  traffic  control and
protection  equipment in  Illinois  and  Wisconsin.    Hi-Gate  Erectors
Incorporated is an installer of structural steel, re-bar and guardrails.
Mr. Melesio is  a member of the Hispanic  American Construction Industry
Association and  was honored as  their businessman of the  year in 1981.
He is also an  Illinois and national  member of American Traffic  Safety
Services organization.

     Michael A.  Sykes - Mr.  Sykes has  been a Director  since January,
1996.  From September,  1996  until  present, Mr.  Sykes  has been  Vice
President, Commercial Real Estate at Banco Poplar, in Chicago, Illinois.
From May,  1993 to the  September, 1996, Mr.  Sykes was Vice  President,
Commercial Real Estate of  LaSalle Bank Westmont in Westmont,  Illinois.
From   October,   1987  to   May,   1993   Mr.   Sykes  was   the   Vice
President/Assistant Manager of  Commercial Real Estate of  Colonial Bank
in Chicago, Illinois.

     The  directors  hold  office  until  the  next  annual  meeting  of
stockholders and until their respective successors have been elected and
qualified.   Officers are elected by and serve  at the discretion of the
Board of Directors.

     Directors  of the  Company are  not compensated  for attendance  at
Board of Directors  or committee meetings, but are  reimbursed for their
travel  and lodging  expenses  in connection  with  their activities  on
behalf of the Company.

     For the three years following  the completion of the initial public
offering of the Company's common  stock, the Company's underwriter  from
its initial public offering (the "Underwriter") has the right to require
the Board  of Directors of  the Company to  nominate for election,  as a
director,  a person designated  by the Underwriter.   As of December 27,
1996, the Underwriter has not designated anyone as a director.
<PAGE>
Item 10.  Executive Compensation.

     Compensation   paid  to  executive  officers  for  the  year  ended
September 30, 1996 was as follows:

 Name of Individual
or Number of Persons     Capacities in            Annual Compensation
     in Group            which served          Salary  Bonus     Other

John S. Flowers     President, Chief                          
                    Executive Officer
                    and Chairman of the
                    Board of Directors       $41,538   $   -     $5,376

James J. Banks (1)  President and Chief
                    Executive Officer        $50,641   $   -     $1,000


Robert N. Wallen    Vice President           $32,885   $   -     $4,000


Glen Hjort     Chief Financial
               Officer                       $23,269   $   -     $4,000


All executive officers
as a group (4 persons)                      $148,333   $   -    $14,376

(1)  Includes  accrued  compensation  under  James  J. Banks  Severance,
     Consulting, and Non-compete agreement of $33,333.

Indemnification Agreements

     The  Company's  Restated Certificate  of Incorporation  and By-laws
provide for indemnification of its officers and directors to the fullest
extent permitted by  the Delaware General Corporation Law  and that such
indemnification shall  not be  deemed exclusive of  any other  rights to
which any person indemnified  may be entitled by law or  otherwise.  The
Company's  Restated Certificate of Incorporation limits the liability of
a  director to the Company or its  stockholders for monetary damages for
breaches  of fiduciary  duties, subject  to certain  exceptions,  all as
permitted by Delaware law.  In  addition, a director is not relieved  of
his   responsibilities  under  any  other  law,  including  the  federal
securities laws.
<PAGE>
     Insofar  as  indemnification  for  liabilities  arising  under  the
Securities Act of  1933, as  amended (the  "Act"), may  be permitted  to
directors,  officers or persons controlling the  Company pursuant to the
foregoing provisions, the  Company has ben informed that  in the opinion
of  the  Securities  and Exchange  Commission,  such  indemnification is
against  public  policy as  expressed  in  the  Act and  is,  therefore,
unenforceable.

Employee Stock Option Plan

     Under the Company's  1993 Amended and Restated  Non-qualified Stock
Option  Plan (the  "Option Plan"),  100,000 shares  of Common  Stock are
reserved for issuance  upon the exercise of options  which currently may
be granted  only to James  J. Banks, the  Company's President.   Options
will be granted  on such terms and at such prices as determined pursuant
to  the Option  Plan and  options granted  at  different times  need not
contain  similar provisions.    The  exercise  price for  these  options
granted under  the  Option Plan  will be  $5.00 per  share.   Under  the
current form of  option agreement, options generally  become exercisable
in installments  of one-third as follows:   one-third one year after the
date of  grant, an additional  one-third after two  years and the  final
one-third after three  years.  Such options may be exercised for periods
of up to  ten years from  the date of grant.   No options have  yet been
exercised under the Option Plan.

     As  part of  the Severance,  Consulting  and Non-compete  agreement
dated  January 24,  1996, with James  J. Banks, the  prior President and
Chief Executive Officer of the Company, the options were forfeited under
the terms of the  agreement as filed as an  exhibit with Form 8-K  dated
January 24, 1996.
<PAGE>
Item   11.    Security  Ownership   of  Certain  Beneficial  Owners  and
              Management.  

     The following  table sets forth certain information  as of November
30,  1996 with  respect to  the  beneficial ownership  of the  Company's
Common Stock of each  director, all officers  and directors as a  group,
and each person known by the Company  to be the beneficial owner of five
percent or  more of  the Company's  Common Stock.   This information  is
based  upon  information  received  from  or  on  behalf  of  the  named
individuals.  In general, a person is  deemed to be a "beneficial owner"
of a security if that person has  or shares the power to vote or  direct
the voting of such security, or the power to dispose of or to direct the
disposition  of  such  security.   A  person  is  also  deemed  to be  a
beneficial owner of  any securities of which the person has the right to
acquire beneficial ownership within 60 days.

                         Shares of Common Stock
     Name                  Beneficially Owned          Percent of Class

John S. "Jake" Flowers        190,070                       16.2

Samuel V.P. Banks             185,770                       15.6

Robert B. Leeper                7,000                         .6

Jack L. Fischer                 1,000                         .1


All officers and directors as a
   group (4 persons)          383,840                       32.6

<PAGE>
Item 12.  Certain Relationships and Related Transactions.

Corporate Headquarters  

     See  "Item 2. Description  of Property," for  information regarding
the purchase of the Company's corporate headquarters.

Other Matters  

     Mr.  John S. Flowers,  the President,  Chief Executive  Officer and
Chairman  of the Board  of the Company,  is a  principal stockholder and
president of  an Illinois corporation  which owns and operates  a Jake's
Pizza restaurant  in Mount  Prospect, Illinois  pursuant to  a franchise
agreement dated June 5, 1984.  As this restaurant has been utilized as a
training facility  for  new  franchisees,  the Company  has  waived  the
requirements of Mr. Flowers' corporation  to pay the Company the royalty
and service fees  of 4% of gross sales and the advertising royalty of 2%
of gross sales.   This franchise agreement  terminates on June 5,  2004.
The amounts  of royalty and service fees and advertising royalty are not
considered material  to the Company's financial condition  or results of
operations.   Mr. Flowers  previously was  a  principal stockholder  and
president of  another Illinois  corporation which  owned and  operated a
Jake's Pizza restaurant  in Westmont, Illinois under the  same terms and
conditions as  his other restaurant.   This restaurant  was sold at  its
fair market value to an unrelated  franchisee on September 27, 1993, and
is now subject to the standard Jake's franchise agreement.

     In 1987  and 1989, Messrs.  Flowers and Samuel V.P.  Banks made the
Company loans  totalling, in the aggregate, $32,000  bearing interest at
10% per annum and which matured in September 1994.  In October 1993, the
Company, under an agreement with Mr. Flowers, prepaid his portion of the
loans in the  amount of $16,000.  The Company renewed  its loan with Mr.
Banks under the  same terms and conditions, and this loan now matures in
February, 1996.   Currently, the loan has  not been paid to  Samuel V.P.
Banks.

     The  Company has  entered  into  leases for  space  utilized by  14
franchisees of Jake's Pizza restaurants for such restaurants.  The terms
of  the leases range  up to six  years, with the last  lease expiring in
2000.  These  restaurant leases are sub-leased to  the franchisees under
the same terms  as the original lease.   Should a franchisee  default in
its payment obligation to the  Company, the Company could be responsible
for the lease obligation.
<PAGE>
Item 13.  Exhibits and Reports on Form 8-K.

(a)  1.   Index to Financial Statements
                                                                 Page
          Report of Independent Public Accountants               F-1
          Consolidated Balance Sheets -- September 30, 1996
          and 1995                                               F-2
          Consolidated Statements of Shareholders' Equity --
            For the years ended September 30, 1996, 
            1995 and 1994                                        F-3
          Consolidated Statements of Operations  -- 
            For the years ended September 30, 1996,
            1995 and 1994                                        F-4
          Consolidated Statements of Cash Flows --
            For the years ended September 30, 1996,
            1995 and 1994                                        F-5    
          Notes to Consolidated Financial Statements             F-7

     All other schedules  for which provision is made  in the applicable
accounting regulations   of the  Securities and Exchange  Commission are
not required  under the  related instructions or  are inapplicable  and,
therefore, have been omitted.

     3.   Exhibits

          (3)  Articles of Incorporation and By-Laws.

               (a)  Restated  Certificate  of   Incorporation  filed  as
                    Exhibit 3.3 to  Registration Statement on Form  SB-2
                    (Registration No. 33-61938C) (the "1993 Registration
                    Statement").*

               (b)  By-laws   filed  as   Exhibit   3.2  to   the   1993
                    Registration Statement.*

          (10) Material contracts.

               (a)  Spokesperson   agreement   between    Jake's   Pizza
                    International,  Inc.  and Vanna  White  Productions,
                    Inc.*

          (11) Statement Re: Computation of Per Share Earnings.

          (21) Subsidiaries of the registrant.*
______________________

* In  accordance with Rule 12b-23  and Rule 12b-32 under  the Securities
Exchange Act of  1934, as amended,  reference is  made to the  documents
previously  filed with  the Securities  and  Exchange Commission,  which
documents are hereby incorporated by reference.
<PAGE>
(b)  Reports on Form 8-K

          The Company filed  a report on  Form 8-K on  January 24,  1996
     regarding  the resignations of James  J. Banks, its then President,
     Chief Executive Officer  and director, Samuel V.P.  Banks, its then
     Vice-Chairman of the  Board of Directors, Secretary,  Treasurer and
     director, and  two other directors.  After  such resignations, John
     S. "Jake" Flowers, the Chairman  of the Board of Directors, assumed
     the additional positions of President and  Chief Executive Officer.
     The exhibit filed with Form 8-K was the Severance, Consulting, Non-
     Compete   Agreement  and  Release  in  Full  between  Jake's  Pizza
     International, Inc. and James J. Banks.
<PAGE>
                               SIGNATURES

     In accordance  with Section  13 or 15(d)  of the Exchange  Act, the
registrant  caused  this report  to  be  signed  on  its behalf  by  the
undersigned, thereunto duly authorized.

(Registrant)        JAKE'S PIZZA INTERNATIONAL, INC.

By:  /s/ John S. Flowers                     Date:     December 27, 1996
     John S. Flowers,
     President and Chairman of the Board

By:  /s/ Robert B. Leeper                    Date:     December 27, 1996
     Robert B. Leeper,
     Treasurer

     In accordance  with the Exchange  Act, this report has  been signed
below by the  following persons on behalf  of the registrant and  in the
capacity and on the dates indicated.


By:  /s/ John S. Flowers                     Date:     December 27, 1996
     John S. Flowers,
     Director

By:  /s/ Robert B. Leeper                    Date:     December 27, 1996
     Robert B. Leeper,
     Director

By:  /s/ Jack L. Fischer                     Date:     December 27, 1996
     Jack L. Fischer,
     Director

By:  /s/ Michael A. Sykes                    Date:     December 27, 1996
     Michael A. Sykes,
     Director
<PAGE>
               JAKE'S PIZZA INTERNATIONAL, INC. AND SUBSIDIARIES

                     CONSOLIDATED FINANCIAL STATEMENTS

                  AS OF SEPTEMBER 30, 1996, 1995 AND 1994

                      TOGETHER WITH AUDITORS REPORT
<PAGE>
                REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors of
Jake's Pizza International, Inc.:

We have audited the  accompanying consolidated balance sheets  of JAKE'S
PIZZA INTERNATIONAL, INC.  (a Delaware corporation) AND  SUBSIDIARIES as
of September 30, 1996 and  1995, and the related consolidated statements
of operations,  shareholders' equity and  cash flows for the  years then
ended.    These  financial  statements are  the  responsibility  of  the
Company's management.   Our responsibility  is to express an  opinion on
these financial statements base on our audits.

We conducted our  audits in accordance with  generally accepted auditing
standards.  Those  standards require that we plan and  perform the audit
to obtain reasonable  assurance about  whether the financial  statements
are free  of material misstatement.   An audit includes  examining, on a
test  basis,  evidence supporting  the  amounts and  disclosures  in the
financial statements.   An audit also includes  assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the  overall financial  statement presentation.   We  believe
that our audits provide a reasonable basis for our opinion.

In  our  opinion, the  financial  statements referred  to  above present
fairly, in all material respects, the financial position of Jake's Pizza
International, Inc. and Subsidiaries as  of September 30, 1996 and 1995,
and the results of  their operations and their cash flows  for the years
then ended, in conformity with generally accepted accounting principles.

The accompanying financial  statements have been prepared  assuming that
the Company will  continue as a going concern.  As  discussed in Note 12
to the financial  statements, the Company has  suffered recurring losses
from operations and has a net capital deficiency that raises substantial
doubt about its  ability to continue  as a going concern.   Management's
plans  in  regard  to these  matters  are  described in  Note  12.   The
financial  statements do  not include  any adjustments  relating  to the
recoverability  and  classification  of asset  carrying  amounts  or the
amount  and classification of  liabilities that might  result should the
Company be unable to continue as a going concern.

                                           ARTHUR ANDERSEN LLP


Chicago, Illinois
November 27, 1996
<PAGE>
<TABLE>                    
                    JAKE'S PIZZA INTERNATIONAL, INC. AND SUBSIDIARY
                                 CONSOLIDATED BALANCE SHEETS
                                          SEPTEMBER 30,

                                                        1996        1995
                             ASSETS
<S>                                                 <C>         <C>
CURRENT ASSETS:
Cash                                                $     2,090 $   497,436
Accounts receivable, net of allowance for doubtful
accounts of $89,359 and $75,000, respectively           294,489     552,827
Inventories                                              32,945     145,389
Notes receivable -  current portion net of allowance
for uncollectable notes of $43,078 - 1996                76,863      59,720
Other current assets                                     17,833       9,385

Total current assets                                    424,220   1,264,757

PROPERTY AND EQUIPMENT (at cost):
Land                                                        -       160,000
Buildings and improvements                              192,440     967,215
Equipment                                               421,151     462,091
Furniture and fixtures                                   67,747      67,182
                                                        681,338   1,656,488

Less - Accumulated depreciation                         250,915     259,926

Net property and equipment                              430,423   1,396,562

ASSET HELD FOR SALE (Note 13)                           732,148         -

OTHER ASSETS:
Deferred contract costs net of accumulated
amortization of $1,025,000 and $224,219, respectively       -       800,781
Intangible assets, net of accumulated
amortization of $32,500 and $12,500, respectively        47,500      67,500
Security deposits                                        47,587      62,133
Notes receivable - net of current portion               167,479     490,258

Total other assets                                      262,566   1,420,672

      Total assets                                  $ 1,849,357 $ 4,081,991
</TABLE>
<PAGE>      
<TABLE>      
      LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                                 <C>         <C>
CURRENT LIABILITIES:
Bank line-of-credit                                 $       -   $   193,943
Notes payable, current portion -
Related party                                            16,000      16,000
Mortgage                                                 21,120      17,662
Other                                                    57,235      28,612
Contract obligation - current portion                       -       275,000
Capital lease obligation - current portion                8,346       4,722
Accounts payable                                        426,246     432,446
Franchise deposits                                          -       139,500
Accrued professional fees                               188,877      88,399
Accrued - other                                          31,584      51,595

Total current liabilites                                749,408   1,247,879

LONG-TERM DEBT:
Notes payable, net of current portion -
Related party                                           116,000     116,000
Mortgage                                                565,879     594,055
Other                                                    34,684      58,740
CONTRACTUAL OBLIGATION, net of current portion              -       275,000
CAPITAL LEASE OBLIGATION, net of current portion            -         8,346
LEASE DEPOSITS                                           32,621      28,070

Total long-term debt and other long-term obligations    749,184   1,080,211

SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, authorized
9,000,000 shares, issued and outstanding
1,176,540 and 1,121,540 shares, respectively             12,315      11,215
Paid-in capital                                       3,532,947   2,984,047
Deficit                                              (3,194,497) (1,241,361)

Total stockholders' equity                              350,765   1,753,901

      Total liabilities and stockholders' equity    $ 1,849,357 $ 4,081,991
</TABLE>                   
<PAGE>
<TABLE>
                   JAKE'S PIZZA INTERNATIONAL, INC. AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY


                                Common Stock                Retained
                                                 Paid-in    Earnings
                              Shares   Dollars   Capital     Deficit      Total
<S>                         <C>       <C>     <C>        <C>         <C>
BALANCE, September 30, 1993 1,011,540 $10,115 $2,454,544 $    68,877 $ 2,533,536

Additional offering costs         -         -    (19,397)       -        (19,397)
Issuance of common stock       55,000     550    274,450        -        275,000
Net loss for the year             -         -        -      (567,221)   (567,221)

BALANCE, September 30, 1994 1,066,540  10,665  2,709,597    (498,344)  2,221,918

Issuance of common stock       55,000     550    274,450        -        275,000
Net loss for the year             -         -        -      (743,017)   (743,017)

BALANCE, September 30, 1995 1,121,540  11,215  2,984,047  (1,241,361)  1,753,901

Issuance of common stock       55,000     550    274,450        -        275,000
Vanna White Spokesperson
  agreement modification          -       550    274,450        -        275,000
Net loss for the year             -         -        -    (1,953,136) (1,953,136)

BALANCE, September 30, 1996 1,176,540 $12,315 $3,532,947 $(3,194,497)$   350,765
</TABLE>
<PAGE>
<TABLE>
                JAKE'S PIZZA INTERNATIONAL, INC. AND SUBSIDIARY
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                          FOR THE YEARS ENDED SEPTEMBER 30,

                                          1996        1995       1994
<S>                                   <C>         <C>        <C>
REVENUES:
Distribution sales                    $ 1,993,497 $3,086,018 $2,593,032
Franchise royalties                       351,410    385,223    346,474
Advertising royalties                     102,767    135,400    144,960
Franchise fees                            215,500    161,000    105,000
Rebate income                              40,172      -          -
Store sales                               200,560    532,083    825,515
Other                                       -             25      2,796
Total revenues                          2,903,906  4,299,749  4,017,777

COST OF SALES:
Cost of distribution sales              1,717,333  2,593,627  2,190,546
Cost of store sales                       202,360    382,928    625,160
Total cost of sales                     1,919,693  2,976,555  2,815,706

Gross profit and service revenues         984,213  1,323,194  1,202,071

OPERATING AND ADMINISTRATIVE EXPENSES:
Store operations                          139,287    234,840    202,464
Distribution and franchise operations      75,976     89,153     94,413
Selling, general and
 administrative expenses                1,623,205  1,553,894  1,664,397
Loss on impairment of assets              696,085      -          -
Total operating and
 administrative expenses                2,534,553  1,877,887  1,961,274

Loss from operations                   (1,550,340)  (554,693)  (759,203)

OTHER INCOME (EXPENSE):
Gain on securities transactions             -          -        244,129
Interest income                            13,691     26,405     45,822
Interest expense--
   Related party                          (10,880)   (10,880)   (13,413)
   Other                                  (66,163)   (77,244)   (74,127)
Minority interest                           -          -          -
Loss on sale of assets                   (207,452)   (66,605)   (10,429)
Settlement expense                       (131,992)   (60,000)     -
                                         (402,796)  (188,324)   191,982

NET LOSS                              $(1,953,136)$ (743,017)$ (567,221)

NET LOSS PER COMMON SHARE                  ($1.69)    ($0.70)    ($0.54)

WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                     1,153,623  1,066,540  1,058,072

NET LOSS PER COMMON SHARE,
assuming full dilution                     ($1.59)    ($0.60)    ($0.48)

WEIGHTED AVERAGE NUMBER OF SHARES
 OUTSTANDING, assuming full dilution    1,231,540  1,231,540  1,181,822
</TABLE>
<PAGE>
<TABLE>            
             JAKE'S PIZZA INTERNATIONAL, INC. AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                     FOR THE YEARS ENDED SEPTEMBER 30,

                                                 1996        1995       1994
<S>                                         <C>         <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income/(Loss)                           $(1,953,136)$ (743,017)$ (567,221)
Adjustments to reconcile net (loss)
income to net cash provided by (used for)
operating activities
 Loss on impairment of assets                   696,085         -          -
 Provision for losses on accounts and
  notes receivable                              261,621     59,000         -
 Depreciation and Amortization                  228,184    227,172    189,589
 Non-cash settlement expense                    151,581     22,500         -
 (Gain)/Loss on sale of property plant
  and equipment                                 207,452     66,605      8,911
 Noncash franchise fees received                    -      (76,000)        -
 Deferred interest income recognized                -           -        (671)
 Gain on securities transactions                    -           -    (244,129)
 Consideration under deferred contract              -           -     100,000
 Changes in assets and liabilities:
  Accounts receivable, net                        8,544   (418,572)  (120,746)
  Inventories                                   147,444     32,713    (35,425)
  Other assets                                   (8,448)    31,548    (11,033)
  Security deposits                              14,546     (6,490)   (16,189)
  Accounts payable                                7,041     65,577    149,182
  Franchise and lease deposits                 (139,949)   142,034    (15,000)
  Accrued professional fees                      88,896    (10,843)    42,898
  Accrued other                                 (20,011)     5,663      9,769
Net cash used for operating activities         (310,150)  (602,110)  (510,065)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment             (152,904)  (266,464)  (537,208)
Gain on securities transactions                     -           -     244,129
Decrease in CSV of officers' life insurance         -           -      43,497
Equipment rentals received                          -           -      10,588
Proceeds from sale of property and equipment    128,000     93,477     98,000
Net cash used for investing activities          (24,904)  (172,987)  (140,994)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of bank line-of-credit               (193,943)        -          -
Repayments of related-party long-term debt          -           -    (132,317)
Repayments of other long-term debt              (51,628)   (41,506)   (35,104)
Repayments of capital lease obligations          (4,722)    (4,220)    (3,966)
Payments received from Minority Interest
 holders                                         40,365         -          -
Payments received on notes receivable            49,636      7,148         -
Additional costs of initial public offering         -           -     (19,397)
Net cash used for financing activities         (160,292)   (38,578)  (190,784)

NET DECREASE IN CASH                        $  (495,346)$ (813,675)$ (841,843)
CASH, beginning of period                   $   497,436 $1,311,111 $2,152,954
CASH, end of period                         $     2,090 $  497,436 $1,311,111
SUPPLEMENTAL DISCLOSURES:
 Interest paid                              $    84,003 $   62,697 $   84,016
</TABLE>
<PAGE>
<TABLE>

            JAKE'S PIZZA INTERNATIONAL, INC. AND SUBSIDIARY
 SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
                 FOR THE YEARS ENDED SEPTEMBER 30,

                                                1996        1995       1994
<S>                                         <C>         <C>        <C>
Notes receivable issued for franchise fees  $    23,500 $   76,000 $       -
Notes receivable issued for franchise
 acquisitions                                   129,000    415,228         -
Notes receivable isued for sale of property       3,428         -      32,000
Conversion of accounts receivable to
 notes receivable                                17,827     21,970         -
Noncash consideration issued to purchase
 property and equipment
  Accounts receivable                               -      199,247         -
  Accounts payable                                  -       13,472         -
Notes payable issed in litigation settlement        -       22,500         -
Notes payable issued for noncompete agreement       -       80,000         -
</TABLE>
<PAGE>
                  JAKE'S PIZZA INTERNATIONAL, INC.
                         AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 SEPTEMBER 30, 1996, 1995 AND 1994

1.   DESCRIPTION OF BUSINESS:

Jake's Pizza International, Inc, and Subsidiaries (the  "Company') is an
operator  and franchisor  of restaurants  located  in Arizona,  Florida,
Illinois, Indiana, Nevada and North Carolina.  As of September 30, 1996,
the Company operated  two Company-owned Jake's Pizza  restaurant and had
an additional 52 franchised units. When a franchise is sold, the Company
agrees to provide certain services to the franchisee including training,
opening and  operating  assistance  and  certain  information  including
ingredients, method  of  preparation  and recipes.    Royalty  fees  are
charged to franchisees  at rates of 4%  to 5% of the  franchisees' gross
sales  per  month.    Advertising  royalty  fees  are  also  charged  to
franchisees at a rate  of 2% of the franchisees' gross  sales per month.
Certain franchisees are exempt  from advertising fees as their  original
agreements  did not  provide  for  advertising to  be  performed by  the
Company.

The  Company  offered  certain food  products,  beverages,  supplies and
promotional materials  for sale to  the franchisees until June  16, 1996
when it discontinued  its distribution business.  The  Company signed an
agreement  in late  May  1996 with  a local  distributor  to supply  the
Company's franchisees with these products  beginning June 17, 1996.  The
franchisees are  not, however,  required to  purchase  product from  the
local  distributor.   The  Company  receives  a  rebate from  the  local
distributor for all products sold to the Company's franchisees.

The  Company formed two  subsidiaries in connection  with its agreements
with entertainer Vanna White and her affiliates.  These are Jakan, Inc.,
a  company formed  to be the  joint venture  participant in a  series of
Jake's  Pizza restaurants  with an  affiliate of  Ms. White,  and Jake's
Management, Inc., a company formed to manage the operations of the joint
venture restaurants.   Both companies are currently inactive  due to the
termination of  the joint venture  agreement as more fully  described in
note 3.

2.   SIGNIFICANT ACCOUNTING POLICIES:

Inventories

Inventory  held  prior  to the  discontinued  distribution  business was
valued at the lower of cost or market using a standard cost method which
approximates the first-in, first-out (FIFO) method.  As of September 30,
1996,  the inventory  consisted primarily  of  restaurant equipment  for
resale.
<PAGE>
Revenue Recognition

Continuing  service  fees  from franchisees  are  recognized  as royalty
income  when  earned.    Franchise  fees from  the  sale  of  individual
franchises  and related  expenses  are  recognized  when  the  franchise
agreement  is executed  and  the  franchise opens  for  business.   Fees
reserved for franchises which have  not opened are recorded as franchise
deposits   in  the  accompanying  consolidated  balance  sheets.    Area
franchise fees are deferred and  recognized as income ratably upon store
openings.   Advertising royalties are  recognized as royalty income when
earned.  Related advertising is recognized as expense when incurred.
Property and Equipment

Property  and equipment  are  recorded  at cost.    Major additions  are
capitalized while  replacements, maintenance  and repairs  which do  not
improve  or extend  the  lives  of the  respective  assets are  expensed
currently.   Depreciation  is  computed  using  both  straight-line  and
accelerated methods.  Estimated useful lives are as follows:


A s s e t                                                Life

Buildings and Improvements (Note 12)                  31.5 years
Equipment                                             5-10 years
Furniture and fixtures                                5-10 years

Taxes

Deferred income taxes,  when recognized, result from  timing differences
in  the  recognition  of  revenue  and expense  for  tax  and  financial
reporting  purposes and  result  primarily  from  depreciation  and  the
existence of net operating loss  carryforwards.  Management has provided
a 100% valuation allowance against  the Company's net deferred tax asset
position.

As of September 30, 1996, the Company had approximately $3.68 million of
net  operating loss  carryforwards available  to  offset future  taxable
income.  These carryforwards begin to expire in fiscal 2008.

Reclassifications

Certain items in the 1995 financial statements have been reclassified to
conform to the 1996
presentation.
<PAGE>
3.       DEFERRED CONTRACT COSTS AND CONTRACTUAL OBLIGATIONS:

In December 1993, the  Company entered into a series of  agreements with
entertainer Vanna  White and her  affiliates.   Under the  terms of  the
agreements, the Company formed a joint venture with an affiliate of  Ms.
White to  cooperatively open and operate  a minimum of  eight new Jake's
Pizza restaurants,  mainly in  the western United  States.   The Company
opened one joint venture store in  March 1996 and closed the same  store
six months later.  As part of these agreements, Ms. White would serve as
the Company's national spokesperson.

Consideration for these  services was in the form of restricted stock to
be issued annually  at 55,000 shares per year for  the initial four-year
term of the agreements.  The aggregate of 220,000 shares had been valued
at $1,100,000.   Of this  amount, $100,000 was consideration   paid when
the Company entered  into the agreements and was  charged to earnings in
the accompanying 1994 consolidated statement of operations.  The balance
was being amortized on a  straight-line basis over the entire eight-year
term  (four  year  agreement  plus  a  four  year  non-compete)  of  the
agreements.  For the first three years of  the agreements 165,000 shares
have been issued.

As of  September 30,  1996, the Company  and Ms. White's  affiliate have
verbally  agreed to terminate  their joint venture  agreement and modify
the spokesperson agreement  whereby Ms. White will continue  to serve as
the Company's  national spokesperson through  December 31, 1997.   Under
the  tentative terms of  the new agreement  Ms. White and  her affiliate
will receive  the remaining 55,000 shares  that were to  be issued under
the old agreement.

In connection with the tentative terms of the new agreement, the Company
has  written  off the  remaining  unamortized  portion of  the  deferred
contract costs  ($800,781 at September  30, 1995), and has  written down
the  value  of  the  assets  at its  closed  joint-venture  location  in
Placentia, California  to their  net realizable value.   This  charge to
income   is  classified  in  the  Company's  Consolidated  Statement  of
Operations as  a loss on  the impairment assets.   The  remaining 55,000
shares  (to  be  issued in  1997)  have already  been  reflected  in the
Company's Statement of Shareholders' Equity.
<PAGE>
4.       NOTES RECEIVABLE:

As  an  accommodation   to  certain  of  its  franchisees,  the  Company
occasionally financed  portions  of  the  franchisees'  purchase  price,
franchise fee or equipment.  In some cases,  the financing may be in the
form  of a  "bridge"  amount  until the  franchisee  can obtain  outside
financing.  The notes receivable, however, are  set up without regard to
the likelihood of the outside financing.  The Company no longer provides
financing for new franchisees, but will  provide assistance in obtaining
outside financing  for new franchisees.   Notes receivable  consisted of
the following as of September 30, 1996 and 1995:

                                                       1996       1995  

Franchise purchase note receivable, unsecured, in
  monthly installments of $1,322, including interest
  at 7.5%, through August, 2010                       $    --- $ 140,000
Franchise purchase note receivable, unsecured, in
  monthly installments of $1,687, including interest
  at 7.5% through August, 2002                             ---   110,000
Franchise purchase note receivable, unsecured, in
  monthly installments of $760, including interest
  at 7.5% through November, 2001                           ---    47,905
Franchise purchase note receivable, unsecured,
  $21,000 due upon receipt of financing by franchisee,
  balance due in monthly installments of $526,
  including interest at 8.5%, beginning January, 1996,
  through December, 2000                                 3,155    46,000
Franchise purchase note receivable, secured, in
  monthly installments of $825, including interest
  at 9%, through July, 2000                             39,728    39,728
Franchise purchase note receivable, unsecured, in
  monthly installments of $497, including interest 
  at 8%, through July, 2002                             29,805    30,990
Franchise purchase note receivable, secured, in
  monthly installments of $1,297, including interest
  at 9.25%, through October, 2003                       80,000       ---
Installment note receivable, unsecured, in weekly
  installments of $125, including interest at 9%, 
  through March, 2001                                   25,741    27,776
Other franchise purchase notes receivable, unsecured,
  in monthly installments of $250 to $750, including
  interest at 9%, through October 1997 and 1999         16,020    22,000
Franchise fee notes receivable, unsecured, in
  monthly installments ranging from $100 to $311,
  including interest from 8.75% to 9%, with
  various maturities through August, 2000               83,850    75,158
<PAGE>
4.   NOTES RECEIVABLE (Continued):

                                                       1996       1995  

Equipment notes receivable, unsecured, in monthly
  installments ranging from $121 to $200, including
  interest from 8% to 9%, through June, 1996             9,121    10,421
Reserve for uncollectible notes receivable             (43,078)      ---

Total Notes Receivable                                 244,342   549,978

Less - Current portion                                  76,863    59,720

Long-term portion                                    $ 167,479 $ 490,258

5.   BANK LINE OF CREDIT:

The Company had a $300,000 line of credit at 1/2% above the bank's prime
lending rate. The  line of credit was  to expire in November,  1996, and
was collateralized by a certificate of  deposit.  At September 30,  1995
there was  $193,943 outstanding under the  line.  In February  1996, the
Company paid the line of credit and redeemed its certificate of deposit.
<PAGE>
6.   DEBT:

Long-term  debt consisted of the following as  of September 30, 1996 and
1995:

                                                       1996       1995  

Mortgage note payable to bank in monthly
  installments of $5,668, including interest at
  8%, through January, 2000                          $ 586,999 $ 611,717
Mortgage note payable - related party, due
  December 28, 1998 with interest at 8%,
  due quarterly                                        116,000   116,000
Notes payable in connection with noncompete
  agreements, due in monthly installments
  aggregating $1,916, including interest at 7%,
  through March, 1999                                   52,583    69,678
Note payable to officer, due in September, 1996,
  interest at 10%                                       16,000    16,000
Other notes payable to monthly installments from
  $60 to $776, including interest at 7% to 13.65%,
  March, 1999                                           39,336    17,674

Total Long-term Debt                                   810,918   831,069

Less - Current portion                                  94,355    62,274

Long-term portion                                    $ 716,563 $ 768,795

At September  30, 1996, principal  payments of long-term debt  mature as
follows:

         Fiscal Year

            1997                                     $  94,355
            1998                                       162,530
            1999                                        37,755
            2000                                       516,278

            Total Debt Maturities                    $ 810,918

The mortgage loans  are secured by the land and  building which comprise
the Company's offices and warehouse facilities.
<PAGE>
7.   LEASE COMMITMENTS:

The  Company  leases  space  for  its  two  Company-owned  Jake's  Pizza
restaurants.   Additionally,  the Company  has  entered into  leases for
space  used by 14  franchisees for their Jake's  Pizza restaurants.  The
terms of the  leases range from three to six years,  with the last lease
expiring in 2000.   These leases are subleased to  the franchisees under
the same  terms as the original lease.   The Company also has leases for
various  office equipment  and vehicles  which expire  at various  dates
through  2000.   As of  September 30,  1996, approximate  future minimum
annual  rental lease  payments under operating  leases, net  of sublease
payments, are as follows:

         Fiscal Year

            1997                                     $  89,595
            1998                                        59,772
            1999                                        25,932
            2000                                        25,932

            Total Lease Commitments                  $ 201,231

The Company  also has  a lease  for a  truck  which is  classified as  a
capital lease.  The lease runs through August, 1997, and the Company can
purchase the truck at  the end of the lease term for $3,500.  The future
minimum lease  are payments under the  capital lease are $9,608  and the
present value of the net minimum lease payments as of September 30, 1996
are $8,346.

8.   RELATED-PARTY TRANSACTIONS:

The Company filed a report on Form  8-K with the Securities and Exchange
Commission on  January 24, 1996  regarding the resignations of  James J.
Banks,  its then President, Chief Executive Officer and director, Samuel
V.P. Banks, its then Vice-Chairman of the Board of Directors, Secretary,
Treasurer  and   director,  and  two   other  directors.     After  such
resignations,  John S.  "Jake" Flowers,  the  Chairman of  the Board  of
Directors, assumed  the additional  positions  of President  and   Chief
Executive Officer.   The exhibit filed with  Form 8-K was the Severance,
Consulting, Non-Compete  Agreement and  Release in  Full between  Jake's
Pizza International, Inc. and James J. Banks.

As  part of the Severance, Consulting, Non-Compete Agreement and Release
in Full  Mr. James J.  Banks will continue to  receive biweekly payments
(in accordance with  his employment agreement) through June  30, 1997 at
the rate  of his then current annual salary  of $50,000.  Any increases,
bonuses  and  stock options  have  been cancelled  under  his employment
agreement.   Additionally,  the consulting  agreement  with Samuel  V.P.
Banks,  a prior officer  and director,  will continue  to be  in effect.
Samuel V.P. Banks five year consulting  agreement continues through June
1998, and provides initial compensation of $40,000 with annual increases
of  $2,000.    This  liability  has  been  reflected  in  the  Company's
Consolidated Balance Sheets in accounts payable.
<PAGE>
9.   BENEFIT PLANS:

The Company  has a  noncontributory defined  contribution profit-sharing
plan which  covers substantially all  employees.  Amount  contributed to
the profit-sharing plan are determined annually by management, up to the
maximum  amount  allowed  by  law.   The  Company  has  not  provide any
contribution to the  Plan for the  years ended September 30,  1996, 1995
and 1994.

The Company does not provide any additional retirement or postretirement
benefits to its employees.

10.  EARNINGS PER COMMON SHARE:

Warrants  to acquire  64,000 shares  of the  Company's stock  at  $6 per
share, which were issued in conjunction with the initial public offering
of  the Company's common  stock, were outstanding  at the  end of fiscal
1996. These warrants expire on July 1, 1998.

Earnings per  common share and  common equivalent share are  computed by
dividing net income by the weighted  average number of shares of  common
stock  and common  stock equivalents  outstanding during  the year.  The
number of common shares  was increased by the number of  shares issuable
on the exercise of the options and warrants when the market price of the
common stock  exceeded the exercise  price of the options  and warrants.
This increase  in the number of common shares  was reduced by the number
of  common  shares that  are assumed  to  have been  purchased  with the
proceeds from the exercise of  the options and warrants; those purchases
were assumed to have been made at  the average price of the common stock
during  that part of the year when the  market price of the common stock
exceeded the exercise price of the warrants.  Earnings per common share,
assuming full dilution, were determined on the assumption that all stock
to be issued  under the agreements with entertainer Vanna  White and her
affiliates had been issued in January, 1994.

11.  SETTLEMENT AND NONCOMPETE AGREEMENTS:

During 1995, the  Company reached agreements with certain  of its former
franchisees  in connection  with the  Company's purchase  of two  Jake's
Pizza  restaurants.   Under the  terms  of the  agreements, the  Company
issued notes  payable aggregating $80,000 in exchange  for two four-year
noncompete agreements.  The Company also paid $27,500 in cash and issued
notes  payable aggregating  $22,500 in  connection  with the  settlement
agreements.
<PAGE>
12.  MANAGEMENT PLANS:

In  February, 1996  the  Company began  to  implement  several  measures
intended  to improve  the Company's  operating  results. These  included
personnel reductions,  outsourcing of  Company's warehouse  distribution
function in June, 1996, and the  sale of the  office/warehouse which  is
expected  to be  completed in  early  January, 1997.   The  sale  of the
office/warehouse resulted in a net  loss of approximately $95,000.  This
charge to income was classified in the Company's Consolidated Statements
of Income  as a loss on sale of  assets.  Management believes reductions
in  certain selling, general and administrative expenses, the relocation
to affordable office space, and  careful review of the collectability of
the  Company's  receivables   should  favorably  impact   the  Company's
operating results for fiscal 1997.

The Company  expects to generate  approximately $320,000 in  cash during
January, 1997  from the sale  various Company assets, including  its two
Company-owned stores, and  from an agreement to postpone  the payment of
$100,000 of its  $116,000 second mortgage note  held by a  related party
(Footnote 6).    Much of  this cash  would  be used  to  pay a  proposed
settlement to its unsecured  creditors as a settlement in full  of their
debts and to pay other current company debts.  The remaining  funds will
be used  to fund  the working  capital needs  of the  Company until  the
Company can sustain itself through continuing operations. 

Management has also  suspended, for a period of six  months, the monthly
advertising  fee that most  of the franchisees  are to  contribute to an
advertising fund.   This suspension of advertising payments  is expected
to  end in  March, 1997 at  which  time management  will  reevaluate the
suspension  of  advertising  fees.   At  the  present  time,  management
believes  that franchisees  are currently  in a  better position  to use
these advertising funds  locally to promote  and grow their  businesses.
The management  of the  Company, however, still  monitors the  types and
frequency of the franchisees advertising.  The suspension of advertising
fees  does not  impact the operations  of the company  since any amounts
collected  for  the advertising  fund  would  be  used only  to  finance
additional advertising.

Management  believes that  it will  take approximately  65 to  70 strong
operating franchisees  to bring  the Company to  a cash  flow break-even
point.  Currently  the Company has 52 franchises of  which a significant
number  cannot  meet  their  current   obligations  due  to  cash   flow
constraints from  a weak  operation.  Management  is working  with these
franchisees to  improve their  operations to enable  them to  meet their
obligations  to the Company.  It is  expected that at least 50% of these
non-performing franchisees will close their operations  and that it will
take six  to twelve months  to improve  the operations of  the remaining
non-performing franchisees.

Plans  for  fiscal  1997  call  for  the  opening  of  approximately  16
franchises.  The  Company expects that the total number of franchises at
September 30, 1997 will  be approximately 62.  As of  December 15, 1996,
the Company has  a deposit for one new franchise and commitments for two
other potential franchises.