<PAGE>
 
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                                 United States
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q
(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                 For the quarterly period ended March 31, 1997

                                      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 000-29642

                               FILM ROMAN, INC.
              (Exact name of registrant as specified in charter)

               DELAWARE                                     95-4585357
     (State or other jurisdiction                        (I.R.S. Employer
   of incorporation or organization)                  Identification Number)

  12020 Chandler Boulevard, Suite 200
     North Hollywood, California                               91607
(Address of principal executive offices)                     (Zip Code)

      Registrant's telephone number, including area code:  (818) 761-2544


     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days.  YES [ X ]  NO [  ].

                 APPLICABLE TO ISSUERS INVOLVED IN BANKRUPTCY
                 PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

     Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.  YES [  ]  NO [  ].

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

     As of April 30, 1997, 8,454,690 shares of common stock, par value $.01 per
share, were issued and outstanding.


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<PAGE>
 
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                        PART I.  FINANCIAL INFORMATION
<S>                                                                                <C> 
Item 1.  Financial Statements....................................................   3 

         Consolidated Balance Sheets as of December 31, 1996 and March 31, 1997
            (unaudited)..........................................................   3

         Consolidated Statements of Operations for the Three Months Ended
            March 31, 1996 and 1997 (unaudited)..................................   4

         Consolidated Statements of Cash Flows for the Three Months Ended
            March 31, 1996 and 1997 (unaudited)..................................   5

         Notes to Consolidated Financial Statements..............................   6

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations...................................................   8

                          PART II.  OTHER INFORMATION


Item 1 - 5 Not Applicable

Item 6.  Exhibits and Reports on Form 8-K........................................  12


Signatures....................................................................... S-1
</TABLE>

                                       2
<PAGE>
 
                        PART I.  FINANCIAL INFORMATION


ITEM 1.   FINANCIAL STATEMENTS


                               FILM ROMAN, INC.

                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                          DECEMBER 31,      MARCH 31,
                                                                                              1996            1997
                                                                                          -------------   -------------
                                                                                                           (UNAUDITED)
ASSETS
<S>                                                                                       <C>             <C>
Cash and cash equivalents.......................................................          $ 13,738,927    $  8,264,215
Accounts receivable.............................................................             6,956,409       4,861,806
Film costs, net of accumulated amortization of $169,094,868 (December 31,
1996) and $180,752,235 (March 31,1997)..........................................            21,268,945      20,732,648
Property and equipment, net of accumulated depreciation and
amortization of $934,192 (December 31, 1996) and $988,004 (March 31,
1997)...........................................................................               537,389         510,901
Deposits and other assets.......................................................               315,625         359,712
                                                                                          ------------    ------------

Total assets....................................................................          $ 42,817,295    $ 34,729,282
                                                                                          ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable................................................................          $  3,790,136    $  1,230,281
Accrued expenses................................................................             1,830,314       1,483,846
Deferred revenue................................................................            13,409,592       8,668,330
                                                                                          ------------    ------------

Total liabilities...............................................................            19,030,042      11,382,457



Stockholders' equity

Preferred Stock, $0.01 par value, 5,000,000 shares authorized,
     none issued................................................................                     -               -

Common stock, $0.01 par value, 20,000,000 shares authorized,
     8,449,690 shares issued and outstanding at December 31,1996 and
     March 31, 1997.............................................................                84,498          84,498

Additional paid-in capital......................................................            36,305,684      36,305,684

Accumulated deficit.............................................................           (12,602,929)    (13,043,357)
                                                                                          ------------    ------------

          Total stockholders' equity............................................            23,787,253      23,346,825
                                                                                          ------------    ------------

          Total liabilities and stockholders' equity............................          $ 42,817,295    $ 34,729,282
                                                                                          ============    ============

</TABLE>



                            See accompanying notes.

                                       3
<PAGE>
 
                               FILM ROMAN, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED
                                                                    MARCH 31,
                                                            --------------------------
                                                               1996           1997
                                                            -----------   ------------
<S>                                                         <C>           <C>
Revenue..................................................   $7,460,762    $12,095,662

Cost of revenue..........................................    7,110,707     11,657,367

Selling, general and administrative expenses.............      851,215      1,030,441
                                                            ----------    -----------

Operating loss...........................................     (501,160)      (592,146)

Interest income..........................................       45,768        151,718

Interest expense.........................................      (15,854)             -
                                                            ----------    -----------

Loss before provision for income taxes...................     (471,246)      (440,428)

Provision for income taxes...............................            -              -
                                                            ----------    -----------

Net loss.................................................   $ (471,246)   $  (440,428)
                                                            ==========    ===========


Accretion of the difference between the carrying value
and the liquidation value of the Class A Redeemable
Preferred Stock..........................................      242,414              -

Class A Redeemable Preferred Stock Dividend..............      240,000              -

Net loss attributable to common stock....................   $ (953,660)   $  (440,428)
                                                            ==========    ===========

Net loss per share.......................................       $(0.20)        $(0.05)
                                                            ==========    ===========

Weighted average number of shares outstanding............    4,824,519      8,449,690
                                                            ==========    ===========
</TABLE>


                            See accompanying notes.

                                       4
<PAGE>
 
                               FILM ROMAN, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED
                                                                                            MARCH 31,
                                                                                   ----------------------------
                                                                                       1996           1997
                                                                                   ------------   -------------
<S>                                                                                <C>            <C>
OPERATING ACTIVITIES:
Net loss........................................................................   $  (471,246)   $   (440,428)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation and amortization...................................................        47,096          53,812
Amortization of film costs......................................................     7,110,707      11,657,367
Changes in operating assets and liabilities:
  Accounts receivable...........................................................      (152,601)      2,094,603
  Film costs....................................................................    (6,825,947)    (11,121,070)
  Deposits and other assets.....................................................       (27,032)        (44,087)
  Accounts payable..............................................................       166,019      (2,559,855)
  Accrued expenses..............................................................       558,087        (346,468)
  Deferred revenue..............................................................      (623,613)     (4,741,262)
                                                                                   -----------    ------------
    Net cash provided by (used in) operating activities.........................     1,028,696      (5,447,388)

INVESTING ACTIVITIES:
Additions to property and equipment.............................................      (245,508)        (27,324)
                                                                                   -----------    ------------
  Net cash used in investing activities.........................................      (245,508)        (27,324)

FINANCING ACTIVITIES:
Proceeds from issuance of Class A Redeemable Preferred Stock and                                               
  Warrants, net of issuance costs...............................................        (1,628)              - 
Borrowings under debt...........................................................     1,000,000               -
Repayments on debt..............................................................    (2,250,434)              -
                                                                                   -----------    ------------
  Net cash used in financing activities.........................................    (1,252,062)              -
                                                                                   -----------    ------------
Net decrease in cash............................................................     ( 468,874)     (5,474,712)
Cash and cash equivalents at beginning of period................................     5,176,090      13,738,927
                                                                                   -----------    ------------
Cash and cash equivalents at end of period......................................   $ 4,707,216    $  8,264,215
                                                                                   ===========    ============
Supplemental disclosure of cash flow information:
  Cash paid during the period for:
    Interest....................................................................   $    44,545    $          -
                                                                                   -----------    ------------
    Income taxes................................................................   $         -    $        800
                                                                                   -----------    ------------
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:

     For the three months ended March 31, 1996, the Company accrued dividends of
$240,000 on the outstanding shares of its Class A Redeemable Preferred Stock and
$150,000 on the outstanding shares of its Class B Convertible Preferred Stock.
In addition, the Company recorded accretion of the difference between the
carrying value and the liquidation value of $242,414 on the outstanding shares
of its Class A Redeemable Preferred Stock.

                            See accompanying notes.

                                       5
<PAGE>
 
                               FILM ROMAN, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) - BASIS OF PRESENTATION

     Film Roman, Inc., a Delaware corporation (the "Company"), currently
conducts all of its operations through its wholly owned subsidiary Film Roman,
Inc., a California corporation ("Film Roman California").  The accompanying
unaudited financial statements of the Company have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments consisting only of normal
recurring accruals necessary to present fairly the financial position of the
Company as of March 31, 1997 and the results of its operations for the three
months ended March 31, 1996 and 1997 and the cash flows for the three months
ended March 31, 1996 and 1997 have been included.  The results of operations for
interim periods are not necessarily indicative of the results which may be
realized for the full year.  For further information, refer to the financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1996 filed with the Securities and Exchange
Commission.

(2) - NET LOSS PER COMMON SHARE

     For the three months ended March 31, 1996, per share data is based on the
weighted average number of common and common equivalent shares outstanding
during the period, and is calculated in accordance with a Staff Accounting
Bulletin of the Securities and Exchange Commission whereby common and common
share equivalents issued within a 12-month period prior to an initial public
offering are treated as outstanding for all periods presented if the issue price
was less than the proposed initial public offering price.  In addition, shares
issuable upon the exercise of options and warrants and convertible preferred
stock within the 12-month period are considered to have been outstanding since
inception of the Company.  For the three months ended March 31, 1996, the net
loss per common share gives effect to the accretion of the difference between
the carrying value and the liquidation value of the Class A Redeemable Preferred
Stock of $242,414 and to the accrual of dividends of $240,000 on the Class A
Redeemable Preferred Stock.

     For the three months ended March 31, 1997, the per share data is based on
the weighted average number of common and common equivalent shares outstanding
during the period.  Common equivalent shares, consisting of outstanding stock
options, are not included since they are antidilutive.

     In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, Earnings Per Share, which is effective for annual and interim
financial statements issued for periods ending after December 15, 1997 and early
adoption is not permitted.  When adopted, the statement will require restatement
of prior years' earning per share ("EPS").  SFAS No. 128 was issued to simplify
the standards for calculating EPS previously found in APB No. 15, Earnings Per
Share.  SFAS 128 replaces the presentation of primary EPS with a presentation of
basic EPS.  The new rules also require dual presentation of basic and diluted
EPS on the face of the statement of operations for companies with a complex
capital structure.  For the Company, basic EPS will exclude the dilutive effects
of stock options and warrants.  Diluted EPS for the Company will reflect all
potential dilutive securities.  Under the provisions of FAS 128, basic and
diluted EPS would have been the same for the three months ended March 31, 1996
and 1997 as the reported amounts for such periods.

                                       6
<PAGE>
 
(3) - FILM COSTS

        The components of unamortized film costs consist of the following:

                                                 AS OF          AS OF
                                              DECEMBER 31,    MARCH 31,
                                                  1996           1997
                                              ------------   -----------
                                                             (unaudited)
Animated film productions released,                                      
         less amortization.................    $ 7,946,483   $ 7,880,651 
Animated film productions in process.......     13,069,981    12,525,503
Animated film productions in development...        252,481       326,494
                                               -----------   -----------
                                               $21,268,945   $20,732,648
                                               ===========   ===========
 

(4) - BLUES BROTHERS:  THE ANIMATED SERIES

     Following discussions between the Company and United Paramount Network
regarding certain creative aspects of the Company's proprietary production of
Blues Brothers: The Animated Series for the 1997-98 season, the Company put
production into hiatus in March 1997. The Company is reconsidering various
creative elements of the project, is seeking a possible new financial partner
for the production, and may or may not be successful in ultimately recovering
its investment, which amounted to approximately $5.3 million at March 31, 1997.
In the event the Company determines that all or a portion of its investment is
not recoverable, it will write off the appropriate amount.

                                       7
<PAGE>
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

This Form 10-Q contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements
relate to, among other things, the Company's future production and delivery
schedule (including the number of episodes of programming to be produced and
delivered in 1997 and 1998); production fees, services and costs; and liquidity.
These forward-looking statements are based largely on the Company's current
expectations and are subject to a number of risks and uncertainties, including
without limitation, those described under the caption "Risks Related to the
Business" in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996.  Actual results could differ materially from these forward-
looking statements.


GENERAL

     The Company creates, develops, produces and distributes high quality,
family-oriented animated television programming.  Historically, the Company has
produced substantially all of its programming for third parties on a "fee-for-
services" basis.  Fees paid to the Company for these production services
generally range from $300,000 to $500,000 per episode and typically cover all
direct production costs plus a profit margin.  The Company has begun to produce
programming for which it controls some of the "proprietary rights" associated
with such programming (including, for example, international distribution and
licensing and merchandising rights).  Fees paid to the Company for these
production services typically do not cover all direct production costs.
Generally, the Company seeks to cover at least 50% of its production costs prior
to production of its proprietary programs and seeks to cover the remaining
production costs through the exploitation of the proprietary rights associated
with these programs.  As a result, the Company may recognize revenue associated
with its proprietary programming over a period of years.

     The Company produces a limited number of television series in any year and
is substantially dependent on revenues from licensing these programs to
broadcasters.  The Company's future performance will be affected by issues
facing all producers of animated programming, including risks related to the
limited number of time slots allocated to children's and/or animated television
programming, the intense competition for those time slots, the limited access to
distribution channels (particularly for programs produced by independent
studios), the declining license fees paid to producers of programming by
broadcasters and the regulations implemented by the Federal Communications
Commission governing program content.  While the Company seeks to limit its
financial risk associated with its proprietary programming by obtaining
commitments prior to production to cover at least 50% of its direct production
costs, there can be no assurance that the Company will be able to cover the
balance of its production costs and overhead costs relating to production,
licensing and distribution through the exploitation of its proprietary rights.
As a result of the foregoing risks, there can be no assurance that the Company
will be able to generate revenues that exceed its costs.

1997 AND 1998 PRODUCTION AND DELIVERIES

     The Company has completed production of substantially all of the 159
episodes of programming that it committed to produce and deliver for the 1996-97
broadcast season.  The Company has begun production of 56 episodes of fee-for-
services programming which are currently scheduled to air during the 1997-98
season.  As of March 31, 1997, the Company had no commitments to produce or
deliver any new episodes of proprietary programming for the 1997-98 season.

     The Company presently expects to deliver approximately 66 episodes of
programming in 1997. Of these 66 episodes, 31 are fee-for-service programs for
airing during the 1996-97 season, 10 are proprietary programs, also airing
during the 1996-97 season, and the remaining 25 are fee-for-service programs
which are currently scheduled to air during the 1997-98 season. Some of the 25
episodes for the 1997-98 season which are currently expected to be delivered in
1997 may be delivered in 1998. Similarly, some of the episodes for the 1997-98
season which the Company presently expects to deliver in 1998 may be delivered
in 1997. The estimated delivery of 66 episodes in 1997 represents a decrease of
75 episodes (or 53%) from the number of

                                       8
<PAGE>
 
episodes delivered in 1996. 

BLUES BROTHERS:  THE ANIMATED SERIES

     Following discussions between the Company and United Paramount Network
regarding certain creative aspects of the Company's proprietary production of
Blues Brothers: The Animated Series for the 1997-98 season, the Company put
production into hiatus in March 1997. Accordingly, none of the episodes of Blues
Brothers: The Animated Series are included in any of the production or delivery
estimates described above under "-1997 and 1998 Production and Deliveries." The
Company is reconsidering various creative elements of the project, is seeking a
possible new financial partner for the production, and may or may not be
successful in ultimately recovering its investment, which amounted to
approximately $5.3 million at March 31, 1997. In the event the Company
determines that all or a portion of its investment is not recoverable, it will
write off the appropriate amount.


RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996

     Total revenue increased by 62%, or $4.6 million, to $12.1 million for the
three months ended March 31, 1997, from $7.5 million for the comparable period
in the prior year.  Total revenue increased primarily as a result of the
delivery of 27 episodes of programming during the 1997 period compared to the 12
episodes delivered during the 1996 period.

     The Company delivered 10 "proprietary" episodes during the three months
ended March 31, 1997 compared to three episodes delivered during the comparable
period for 1996.  "Proprietary revenue" consists of revenue derived from the
U.S. license fees paid upon the initial delivery of a new episode of proprietary
programming to a U.S. broadcaster and from the exploitation of the proprietary
rights (e.g., merchandising, licensing and/or international distribution rights)
associated with the proprietary episodes in the Company's library that were
initially delivered in prior periods.  The increase in the number of proprietary
episodes delivered resulted in a slight increase in revenue ($0.4 million)
because the episodes delivered in the 1997 period were syndicated programs that
generated a lower license fee per episode than the episodes delivered to a major
network in the 1996 period.  This slight increase in revenue was offset by a
$0.5 million decrease in revenue from the exploitation of the
proprietary rights associated with the programs in the Company's library,
resulting in a net decrease of $0.1 million in total "proprietary revenue".

      The Company delivered 17 "fee-for-services" episodes during the three
months ended March 31, 1997, compared with nine episodes in the comparable
period in 1996.  Fee-for-services revenue increased 85%, or $4.1 million, for
the period.

     Other revenue increased by $0.6 million, primarily due to a $1.0 million
increase in revenue generated by the interactive division and partially offset
by a $0.5 million decrease in revenue from commercials and specials.

     Total cost of revenue increased by 64%, or $4.5 million, to $11.7 million
for the three months ended March 31, 1997, from $7.1 million for the three
months ended March 31, 1996.  Total cost of 

                                       9
<PAGE>
 
revenue, as a percentage of sales, remained fairly constant at 96% for the three
months ended March 31, 1997, as compared to 95% for the three months ended March
31, 1996.

     Total selling, general and administrative expenses for the three months
ended March 31, 1997 ($1.0 million) was comparable to the three months ended
March 31, 1996 ($0.9 million).

     Operating loss was $0.6 million for the three months ended March 31, 1997,
as compared to a loss of $0.5 million for the three months ended March 31, 1996.

                                       10
<PAGE>
 
LIQUIDITY AND CAPITAL RESOURCES

     Greater capital resources are required for the Company to develop and
produce proprietary programs, retain the proprietary rights associated with such
programs, and increase its presence in the licensing and merchandising and
international distribution markets.  The Company seeks to limit the financial
risk associated with its proprietary programming by obtaining commitments prior
to production to cover at least 50% of its direct production costs, but the
Company must utilize its own funds to cover remaining production costs and
overhead costs relating to production, licensing and distribution.  The Company
seeks to cover the remaining production costs through the exploitation of the
proprietary rights associated with the programs in its library (e.g.,
merchandising, licensing and/or international distribution rights).
Historically, in the fourth quarter, and to a lesser extent the third quarter,
cash used in operations typically exceeded cash generated by operations as
completed shows were delivered to broadcasters. However, the Company has begun
to exploit, to a greater extent, the international distribution rights
associated with the proprietary programs in its library.  As a result, the
Company expects that cash used in or provided by operations will fluctuate
greatly from quarter to quarter, due in part, to the international sales and
collections cycle related to the programs in its library.

     For the three months ended March 31, 1997, net cash used in operating
activities was $5.4 million due to use of cash in connection with film
production activities, decreases in deferred revenue, accounts payable, and
accrued expenses, and fluctuations in other operating assets.  Cash used in
operations exceeded cash provided by operations in part because the Company
began the production of new episodes for the 1997-98 season prior to the
receipt of any payments by broadcasters for such episodes and because the
Company effected the international distribution of certain of the proprietary
programs in the Company's library prior to the receipt of fees for such
programs.  The Company presently expects that cash associated with such
activities will be received in subsequent quarters.

     The Company is seeking to obtain a new bank facility in the principal
amount of approximately $5.0 million.  There can be no assurance that it will be
able to obtain a new bank facility on terms that are satisfactory to the
Company.  Management believes that the Company's cash and cash equivalents and
anticipated cash flow from operations will be sufficient to fund the Company's
operating requirements for at least the next year, whether or not the Company
enters into a new bank facility.

                                       11
<PAGE>
 
                          PART II.  OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A)  EXHIBITS

     11   Statement regarding computation of earnings per share.

     27   Financial Data Schedule.

(B)  REPORTS ON FORM 8-K.

          No reports on Form 8-K were filed by the Company during the quarter
ended March 31, 1997.

                                       12
<PAGE>
 
                                  SIGNATURES



          Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


Dated:  May 14, 1997


                         FILM ROMAN, INC.



                         By:  /s/ Phil Roman
                            -----------------------------------------------
                              Phil Roman
                              President, Chief Executive Officer and Director

                            
                         By:  /s/ Greg Arsenault
                            ------------------------------------------------
                              Greg Arsenault
                              Senior Vice President - Finance and Administration

                                      S-1