U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                  Form 10-QSB


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

                 For the quarterly period ended April 13, 1997

                         Commission file number 1-14052
                       Kiddie Academy International, Inc.

       (Exact name of small business issuer as specified in its charter)


   DELAWARE                                           52-1938283
   (State or other jurisdiction                       (IRS Employer
   of incorporation or organization)                  Identification No.)

                    108 Wheel Road, Bel Air, Maryland 21015
                    (Address of principal executive offices)

                                 (410) 515-0788
                          (Issuer's telephone number)

         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


         The number of shares outstanding of common stock, as of April 13, 1997:
2,025,000  shares of common stock          .
--------------------------------------------



           Transitional Small Business Disclosure Format (check one):
                           Yes                 ;     No        X

Part II, Item 2 and Part II, Item 3 of this  Report  are  omitted  and  will  be
filed by  amendment  pursuant to Rule 12b-25.


<PAGE>



KIDDIE ACADEMY INTERNATIONAL, INC.



Index



                                                                      Page
PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements:

   Consolidated Balance Sheets for April 13, 1997 (Unaudited)
   and September 29, 1996                                                1

   Unaudited Consolidated Statements of Operations                       2
   Unaudited Consolidated Statements of Cash Flows                       3

   Notes to Unaudited Consolidated Financial Statements                4-5

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

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings                                                6

Item 2. Changes in Securities                                            6

Item 3. Defaults Upon Senior Securities

Item 4. Submission of Matters                                            6

Item 5. Other Information                                                7

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

        Exhibit 27 Financial Data Schedule

Signature                                                                9



<PAGE>



Part 1.  FINANCIAL INFORMATION
Item 1. Financial Statements

KIDDIE ACADEMY INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

ASSETS                                                                  April 13,                  September 29,
                                                                           1997
                                                                       (UNAUDITED)                        1996
                                                                     -----------------           -----------------
<S> <C>
Current assets:
           Cash and cash equivalents                                         $141,070                   $1,232,098
           Restricted cash                                                    255,000                           --
           Accounts receivable                                                133,405                      127,972
           Prepaid expenses                                                   217,491                       60,024
           Inventories                                                        101,740                       90,347
           Notes receivable, current                                           39,880                       15,361
           Franchise development costs                                        773,675                      699,527
                                                                     -----------------           ------------------
                        Total current assets                                1,662,261                    2,225,329
                                                                     -----------------           ------------------

Property and equipment                                                      1,099,088                    1,057,066
Accumulated depreciation                                                    (378,298)                    (300,086)
                                                                     -----------------           ------------------
                        Net property and equipment                            720,790                      756,980
                                                                     -----------------           ------------------

Notes receivable, long-term                                                   136,344                      136,635
Goodwill                                                                      144,815                      116,910
Deposits                                                                      104,150                      105,437
                                                                     -----------------           ------------------
                        Total assets                                       $2,768,360                   $3,341,291
                                                                     =================           ==================

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

Current liabilities:
           Notes payable                                                     $255,000                           --
           Accounts payable and accrued expenses                              844,565                     $787,654
           Deferred franchise license fees                                  1,088,001                    1,125,002
           Current portion of long-term debt                                   59,413                      111,114
           Current portion of deferred rent credits                            93,992                       93,992
                                                                     -----------------           ------------------
                        Total current liabilities                           2,340,971                    2,117,762
                                                                     -----------------           ------------------

Long-term debt                                                                118,424                      190,312
Deferred rent payments                                                        275,846                      159,005
Deferred rent credits                                                         231,365                      281,976
                                                                     -----------------           ------------------
                        Total liabilities                                   2,966,606                    2,749,055
                                                                     -----------------           ------------------
Stockholders' equity
           Preferred stock, par value $0.01 per share:
             authorized 1,000,000 shares; no shares issued and                      ---                          ---
             outstanding
           Common stock, par value $0.01 per share:
             authorized 10,000,000 shares; issued and                            20,250                       20,250
             outstanding 2,025,000
           Additional paid-in capital                                       4,294,891                    4,260,280
           Accumulated deficit                                            (4,513,387)                  (3,688,294)
                                                                     -----------------           ------------------
                        Total stockholders' (deficit) equity                (198,246)                      592,236
                                                                     -----------------           ------------------
                        Total liabilities and stockholders'
                        (deficit) equity                                   $2,768,360                   $3,341,291
                                                                     =================           ==================
</TABLE>

See notes to consolidated financial statements (unaudited).

                                 1
<PAGE>


KIDDIE ACADEMY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                12 weeks            13 weeks                28 weeks            26 weeks
                                             ended April 13,    ended March 31,         ended April 13,    ended March 31,
                                                  1997                1996                    1997                 1996
                                            ------------------ -------------------      ----------------- ----------------------
<S> <C>
REVENUES:
           Company-owned mature centers              $494,148            $419,713             $1,036,943               $786,901
           Company-owned new centers                1,017,693             267,301              2,037,979                398,447
           Franchise license fees                     105,000              84,047                230,000                218,410
           Franchise royalties                        270,401             178,019                594,268                332,000
           Product sales                              103,259              67,117                338,654                112,848
           Administrative fees                         21,029              18,876                 47,133                 37,376
                                            ------------------ -------------------      ----------------- ----------------------
                 Total revenue                      2,011,530           1,035,073              4,284,977              1,885,982

OPERATING EXPENSES:
           Company-owned mature centers               432,334             367,817                909,993                736,472
           Company-owned new centers                1,284,986             537,975              2,756,497                793,869
           Cost of product sales                       82,820              52,682                253,857                 80,253
           General and administrative                 683,014             545,658              1,348,737                999,119
                                            ------------------ -------------------      ----------------- ----------------------
                 Total operating expenses           2,483,154           1,504,132              5,269,084              2,609,713
                                            ------------------ -------------------      ----------------- ----------------------

                 Loss from operations               (471,624)           (469,059)              (984,107)              (723,731)

INTEREST INCOME (EXPENSE)                                 270              33,153                  8,302                (2,093)

OTHER INCOME, net                                       8,783              57,391                150,712                 59,186

                                            ------------------ -------------------      ----------------- ----------------------
NET LOSS                                           ($462,571)          ($378,515)             ($825,093)             ($666,638)
                                            ================== ===================      ================= ======================

NET LOSS PER COMMON SHARE                             ($0.23)             ($0.18)                ($0.41)                ($0.42)
                                            ================== ===================      ================= ======================
WEIGHTED AVERAGE SHARES OUTSTANDING
                                                    2,025,000           2,051,909              2,025,000              1,593,576
                                            ================== ===================      ================= ======================
</TABLE>

See notes to consolidated financial statements (unaudited).

                                  2
<PAGE>


KIDDIE ACADEMY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  28 weeks ended                   26 weeks ended
                                                                  April 13, 1997                   March 31, 1996
                                                                -------------------              --------------------
<S> <C>
Cash flows from operating activities
           Net loss                                                     ($825,093)                        ($666,638)
           Adjustments to reconcile net loss to net cash
             used in operating activities:
             Depreciation and amortization                                  78,212                            21,822
             Gain on disposal of asset                                    (77,388)                          (56,598)
             Gain on extinguishment of debt                               (66,092)                                --
             Amortization of debt issuance costs                                --                            26,667
           Changes in assets and liabilities:
             Restricted Cash                                             (255,000)                                --
             Accounts receivable                                           (5,433)                          (63,703)
             Inventory                                                    (11,393)                          (20,831)
             Notes receivable                                              (9,060)                          (51,824)
             Franchise development costs                                  (74,148)                          (69,092)
             Other assets                                                 (26,508)                         (136,869)
             Accounts payable and accrued expenses                          56,911                          (12,477)
             Deferred franchise license fees                              (37,001)                           (8,950)
                                                                -------------------              --------------------
             Net cash used in operating activities                     (1,251,993)                       (1,038,493)
                                                                -------------------              --------------------

           Cash flows from investing activities:
            Disposal (acquisition) of property and equipment                 5,780                         (467,507)
            Proceeds from disposal of property and equipment
                                                                                --                            40,000
             Net cash (used) provided in investing activities                5,780                         (427,507)
                                                                -------------------              --------------------

           Cash flows from financing activities:
            Borrowings/(payments) on notes payable                         255,000                         (149,861)
            Payments to shareholders                                            --                          (87,722)
            Proceeds from IPO                                                   --                         3,998,613
            Borrowings/(payments) of long-term debt                       (99,815)                            50,000
                                                                -------------------              --------------------
             Net cash provided in financing activities                     155,185                         3,811,030
                                                                -------------------              --------------------

             Net (decrease) increase in cash                           (1,091,028)                         2,345,030

           Cash, beginning of period                                     1,232,098                            51,527
                                                                -------------------              --------------------

           Cash, end of period                                            $141,070                        $2,396,557
                                                                ===================              ====================
           Non-cash investing and financing activities:
           Write-off of deferred compensation                                   --                          $110,000
           Early retirement of long-term debt                              $62,738                                --
           Notes received in connection with sale of center                 98,815                                --
           Notes payable in connection with purchase of center              51,435                                --
           Notes receivable retired in connection with
            purchase of center                                              68,657                                --
                                                               -------------------               -------------------
               Total non-cash activities                                  $281,645                          $110,000
                                                                ===================              ====================
</TABLE>

See notes to consolidated financial statements (unaudited).

                                    3
<PAGE>


                       KIDDIE ACADEMY INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

                       APRIL 13, 1997 AND MARCH 31, 1996


1.       Summary of Significant Accounting Policies

         (a) Principles of Consolidation
         The  consolidated   financial  statements  included  herein  have  been
prepared by the Company, without audit, pursuant to the rules and regulations of
the  Securities  and  Exchange  Commission  (the  "Commission")  and include all
adjustments  which are,  in the  opinion  of  management,  necessary  for a fair
presentation.  The consolidated financial statements include the accounts of the
Company  and  its   subsidiaries.   All  intercompany   transactions  have  been
eliminated.  Certain information and footnote  disclosures  normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles   have  been  condensed  or  omitted   pursuant  to  such  rules  and
regulations.  The Company believes that the disclosures are adequate to make the
information  presented  not  misleading;  however,  it is  suggested  that these
financial  statements be read in conjunction  with the financial  statements and
the notes thereto included in the Company's annual Form 10-KSB.

          (b)     Net Loss Per Common Share
         Net loss per common share is determined by dividing the net loss by the
weighted  average  number of common and common  share  equivalents  outstanding.
Weighted  average  shares used in  computing  net loss per common  share for the
period ended April 13, 1997 consist  solely of 2,025,000  shares of common stock
issued,  as the  effect  of the  warrants  would be  antidilutive.  Pursuant  to
Securities  and  Exchange  Commission  Staff  Accounting  Bulletin No. 83, stock
options and warrants  granted  during the 12-month  period prior to the expected
date of the initial filing of the Registration  Statement,  with exercise prices
below the initial public offering  price,  have been included in the calculation
of the period ended March 31, 1996 common share equivalents,  using the treasury
stock method, for the period. Weighted average shares used in computing net loss
per common  share for the  period  ended  March 31,  1996  consist of  2,051,909
weighted   average  shares  of  common  stock   outstanding   and  common  stock
equivalents.

         (c)      Fiscal Year-end
         During fiscal year 1996, the Company changed its fiscal year to a 52 or
53 week period which ends the Sunday  nearest to September 30. As a result,  the
first quarter of fiscal year 1997 ended on January 19, 1997,  the second quarter
ended April 13, 1997, and the third quarter will end on July 6, 1997.

2.       Restricted Cash

         The  Company  has  borrowed  $255,000 on its  $500,000  Certificate  of
Deposit  (CD) Line of Credit as of April 13,  1997.  This amount is reflected in
current  liabilities as a note payable
                                          4
<PAGE>

and the  applicable  portion of the CD is reflected  as  restricted  cash. 
The CD earned 4.95%  interest  and  borrowings against the CD incur interest
expense of 6.95%.

3.       Commitments and Contingencies

         In October  1996,  the Company  entered  into a  three-year  employment
agreement with Angelo D. Bizzarro,  the Company's new Chief  Executive  Officer.
The agreement calls for a minimum salary level, a bonus based on a percentage of
pre-tax  profits and various stock  options,  including a) 75,000  non-qualified
stock  options (at an exercise  price of $3.64 per share);  b) 25,000  incentive
stock  options  (at an  exercise  price  of $2.56  per  share);  and c)  100,000
incentive  stock  options  (at an exercise  price of $2.13 per  share).  Also in
October 1996,  the employment  agreements  with George Miller and Michael Miller
were each extended to expire on February 19, 2000.

         In  many  instances,  the  Company  has  guaranteed  some  or  all of a
franchisee's obligations under the lease for the franchisee's child care center.

         The Company is subject to complaints and claims arising in the ordinary
course of business,  including its business as a franchisor.  Except as noted in
Part  II,  Item 1 the  Company  believes  that  none of the  current  claims  or
complaints are material to the Company's consolidated financial position.

4.       Earnings Per Share

         In  March  1997,  the  Financial   Accounting  Standards  Board  issued
Statement of Financial  Accounting Standards No. 128, "Earnings Per Share" (EPS)
which simplifies the standards for computing EPS previously found in APB Opinion
No. 15 and makes them comparable to international  EPS standards.  The Statement
is effective for financial  statements  issued for periods ending after December
15, 1997.  Had the following  statement  been effective for the quarters and the
six months  ended April 13, 1997 and March 31,  1996,  earnings  per share would
have been presented as follows:

<TABLE>
<CAPTION>
                                    12 weeks      13 weeks          28 weeks          26 weeks
                                     ended          ended             ended             ended
                                    April 13,      March 31,        April 13,         March 31,
                                      1996           1997              1996              1997
                                    ----------     ----------      -----------       -----------
<S> <C>
     1.  Earnings per common share    ($.23)        ($0.18)          ($.41)             ($0.42)
     2.  Earning per common share-
          assuming dilution           ($.23)        ($0.18)          ($.41)             ($0.42)
</TABLE>

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

This Item is omitted and will be filed by amendment pursuant to Rule 12b-25.

                                     5
<PAGE>


PART II - OTHER INFORMATION


Item 1.  Legal Proceedings.

The Company is a party to the following litigation:

Two Metroplex LLC, v. Bankers  Unicorp,  Incorporated,  Charles Brown and Kiddie
Academy Child Care Learning Centers, Inc., Marion Superior Court, Indiana, Cause
No.  49D04-9610-CP-1414.  This  matter was  instituted  in  October  1996 by Two
Metroplex  LLC (the  "Landlord"),  the owner of certain  premises  leased to the
Company's franchisee,  Bankers Unicorp,  Incorporated (the "Tenant),  and arises
out of the Tenant's default under its lease. The Tenant's  obligations under the
Lease were  guaranteed  by Charles  Brown,  the Tenant's sole  stockholder,  and
Kiddie  Academy Child Care Learning  Centers,  Inc. In the suit, the Landlord is
seeking from the Company $184,199.36,  plus interest,  attorneys' fees and court
costs.  The  $184,199.36  includes  unpaid  basic rent of  $22,676,  delinquency
service charges of $20,252.71, plus $141,270.65 in tenant improvement costs. The
Company is defending  the action on the basis that its Guaranty of Lease was not
intended  to cover the amount of any  tenant  improvement  expenses,  that these
expenses were not known by or authorized by the Company,  and that these amounts
greatly exceed the reasonable cost of the build-out approved by the Company.

Merrill  Corporation v. Kiddie Academy  International,  Inc.,  Circuit Court for
Harford County,  Maryland, Case No. 26591/59/681.  This matter was instituted on
September 23, 1996 by Merrill  Corporation in connection with financial printing
services rendered to the Company in connection with the Company's initial public
offering. Merrill asserts a claim in the amount of $129,710.36.  The Company has
filed a defense and  counter-claim  to this action which is primarily based upon
the fact that Merrill has billed the Company for an amount which greatly exceeds
its estimate of $60,000, and that the additional charges were due to "rush work"
and  additional  services not  authorized  by the Company,  and mistakes made by
Merrill.  Merrill's motion for summary judgment was denied on February 11, 1997,
and the matter has been set for trial for June 30, 1997.

The  Company  is  involved  in  additional  litigation  from  time to  time.  In
management's opinion, any litigation in which the Company is currently involved,
except as noted above,  will not result in liabilities that will have a material
adverse effect on its financial condition or results of operations.

Item 2.  Changes in Securities.
Not applicable.

Item 3.  Defaults Upon Senior Securities.
This Item is omitted and will be filed by amendment pursuant to Rule 12b-25.

Item 4.  Submission of Matters to a Vote of Security Holders.
The Company's Annual Meeting of Shareholders was held on March 11, 1997. Each of
the  Company's  then  current  directors  was elected to serve for an additional
one-year term of office.
                                        6
<PAGE>

These directors are  as  follows:  Angelo D. Bizzarro, Carl J. Meil, Jr.,
George Miller, Michael J. Miller, James  A.  Mitarotonda  and
Julian R. Siegel.

The additional  matters voted upon at the meeting  consisted of a) a proposal to
increase the number of shares  available to be issued under the  Company's  1995
Incentive  Compensation  Plan (the  "Plan")  from  100,000  to  300,000,  and to
establish  250,000 as the  maximum  number of shares or options to issue  shares
that may be issued in any one calendar  year to any  individual  under the Plan;
and b) the  ratification  of the  selection of Deloitte  and Touche,  LLP as the
Company's independent accountants for the current year.

The  following is a tabulation  of all matters  voted upon at the March 11, 1997
Annual Meeting:

1.                Election of directors:           For                 Withheld


                  A. Bizzarro                   1,999,505               13,100

                  C. Meil, Jr.                  1,999,505               13,100

                  G. Miller                     1,999,505               13,100

                  M. Miller                     1,999,505               13,100

                  J. Mitarotonda                1,999,505               13,100

                  R. Siegel                     1,999,505               13,100

2.                Amendments to 1995 Incentive Compensation Plan.


                         For           Against         Abstain       Not Voted

                      1,167,637         62,550         18,500         763,918


3.                Appointment of Deloitte & Touche LLP.

                         For                 Against               Abstain

                      2,003,605               9,000                  -0-

Item 5.  Other Information.
None.

                                          7
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K.
a.       Exhibits required by Item 601 Regulation S-K:
         Exhibit 27 - Financial Data Summary
b.       Reports on Form 8-K
         - NASDAQ Delisting  - March 28, 1997
         - Boston Stock Exchange Delisting and Liquidity Issue - May 23, 1997

                                         8
<PAGE>


                                   SIGNATURE


In accordance with the  requirements of the Securities and Exchange Act of 1934,
the  registrant  has  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                             Kiddie Academy International, Inc.



                                             BY: -----------------------
May 28, 1997                                      Angelo D. Bizzarro
-----------------                                 Chief Executive Officer
Date



                                              BY: ----------------------
May 28, 1997                                       Guy A. Matta
----------------                                   Chief Financial Officer
Date


                                     9
<PAGE>


                                   SIGNATURE



In accordance with the  requirements of the Securities and Exchange Act of 1934,
the  registrant  has  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                          Kiddie Academy International, Inc.


  May 28, 1997                            BY: /s/ Angelo D. Bizzarro
---------------------                        ----------------------------------
Date                                               Angelo D. Bizzarro
                                                   Chief Executive Officer



  May 28, 1997                            BY: /s/ Guy A. Matta
---------------------                        ----------------------------------
Date                                               Guy A. Matta
                                                   Chief Financial Officer