SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB
(Mark One) 
[X]  Quarterly  Report Under Section 13 or 15(d) of the Securities  Exchange Act
     of 1934
                  For the Quarterly Period Ended March 31, 1997
                                       OR        --------------
[  ]  Transition report Under Section 13 or 15(d) of the Exchange Act

For the transition period from                  to
                                ---------------    ----------------
                         Commission file number: 0-28254

                         -------------------------------

                                LASER STORM, INC.
        (Exact name of small business issuer as specified in its charter)

         Colorado                                     84-1139159
(State or other jurisdiction of                (IRS Employer
 incorporation or organization)                 Identification Number)

                    7808 Cherry Creek South Drive, Unit # 301
                             Denver, Colorado 80231
                    (Address of principal executive offices)

                            Telephone: (303) 751-8545
                           (Issuer's telephone number)

                                       NA
               ---------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

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 ninety (90) days.
                           Yes [X]      No    [ ]

         APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
         DURING THE PRECEDING FIVE YEARS:
     Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court.
                           Yes  [ ]     No    [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:
     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest  practicable date.
                                                  Outstanding at
          Class                                   May 12, 1997
          -----                                   -------------- 
          Common Stock, $.001 par value             3,824,836

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

<PAGE>


                                LASER STORM, INC.

                                   FORM 10-QSB

                                 March 31, 1997



                                      INDEX
                                      -----

                                                                        Page No.
PART I.   Financial Information                                         --------


          Item 1.   Condensed Balance Sheets -
                    March 31, 1997                                          3

             Condensed Statements of Operations -
             Three months ended March 31, 1997 and 1996                     4

             Condensed Statements of Cash Flows -
             Three months ended March 31, 1997 and 1996                     5

             Notes to Condensed Financial Statements                        6


          Item 2.   Management's Discussion and Analysis
                    or Plan of Operation                                    7-9

PART II.  Other Information                                                 10

SIGNATURES                                                                  11

EXHIBIT INDEX                                                               12







<PAGE>
<TABLE>
<CAPTION>
                                LASER STORM, INC.

                            CONDENSED BALANCE SHEETS
                                 March 31, 1997
                                     ASSETS                                              (UNAUDITED)
                                     ------                                              MARCH 31,1997 DECEMBER 31, 1996
                                                                                         ------------- -----------------
<S>                                                                                      <C>            <C>        
Current Assets:
Cash .................................................................................   $    63,757    $   272,633
Receivables - net:
     Trade notes, current portion ....................................................       359,241        535,256
     Trade accounts ..................................................................       770,688        433,463
     Landlord reimbursement and other ................................................       106,167        132,235
    Income taxes .....................................................................        56,000         56,000
Inventories ..........................................................................       647,314        977,896
Prepaid expenses and other ...........................................................       106,635         97,172
                                                                                         -----------    -----------
                 Total current assets ................................................     2,109,802      2,504,655
                                                                                         -----------    -----------
Property and Equipment, net:
     Laser game systems and facilities ...............................................     1,553,334      1,339,081
     Other ...........................................................................       503,555        546,805
                                                                                         -----------    -----------
                                                                                           2,056,889      1,885,886
                                                                                         -----------    -----------
Other Assets:
     Trade notes receivable, less current portion ....................................       335,663        514,489
     License and design costs, net ...................................................       171,277        191,731
    Goodwill, net ....................................................................       167,708        172,083
    Deposits and other ...............................................................       132,714        132,297
                                                                                         -----------    -----------
                   Total other assets ................................................       807,362      1,010,600
                                                                                         -----------    -----------
Total Assets .........................................................................   $ 4,974,053    $ 5,401,141
                                                                                         ===========    ===========
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Current maturities of capital lease obligations .................................   $   104,021    $    69,034
     Accounts payable ................................................................       784,358        783,998
     Accrued expenses and other ......................................................       472,800        529,352
     Customer deposits and deferred revenue ..........................................        89,920        171,770
     Acquisition costs payable .......................................................       195,000        195,000
                                                                                         -----------    -----------
                        Total current liabilities ....................................     1,646,099      1,749,154

Capital Lease Obligations, less current maturities ...................................       204,921        143,885

Deferred Lease Inducements ...........................................................       148,144        158,143

Stockholders' Equity:
    Preferred stock, $.001 par value; 2,000,000 shares authorized, no shares issued             --            --
   Common stock, $.001 par value, 2,000,000 shares authorized; 3,824,836 shares
            issued and outstanding ...................................................         3,825          3,825
   Additional paid in capital ........................................................     6,256,174      6,256,174
   Accumulated deficit ...............................................................    (3,285,110)    (2,910,040)
                                                                                         -----------    -----------
                        Total stockholders' equity ...................................     2,974,889      3,349,959
                                                                                         -----------    -----------
Total Liabilities and Stockholders' Equity ...........................................   $ 4,974,053    $ 5,401,641
                                                                                         ===========    ===========
</TABLE>


         See accompanying notes to these condensed financial statements.

                                        3


<PAGE>

<TABLE>
<CAPTION>
                                LASER STORM, INC.

                       CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                                                               FOR THE QUARTERS
                                                                                                ENDED MARCH 31,
                                                                                              ------------------
                                                                                              1997          1996
                                                                                              ----          ----
<S>                                                                                      <C>            <C>        
Laser Systems and Related Revenue:
     Net sales .......................................................................   $ 1,023,697    $   969,882
     Cost of sales ...................................................................       532,362        418,420
                                                                                         -----------    -----------
                    Gross profit .....................................................       491,335        551,462
                                                                                         -----------    -----------
Retail Operations:
     Net sales .......................................................................       377,244         71,619
     Cost of sales ...................................................................       284,571         42,415
                                                                                         -----------    -----------
                                                                                              92,673         29,204
                                                                                         -----------    -----------
Expenses:
     General and administrative ......................................................       614,901        580,004
     Selling and marketing ...........................................................       160,113        202,381
     Depreciation and amortization ...................................................       151,035         43,920
     Product development .............................................................        33,580         49,240
                                                                                         -----------    -----------
                         Total expenses ..............................................       959,629        875,545
                                                                                         -----------    -----------
Operating Loss .......................................................................      (375,621)      (294,879)
                                                                                     T
Other Income (Expense):
     Interest income (Expense) .......................................................           551         (2,606)
                                                                                         -----------    -----------

Loss Before Taxes ....................................................................      (375,070)      (297,485)
                           Income tax benefit ........................................          --          110,000
                                                                                         -----------    -----------

Net Loss .............................................................................   $  (375,070)   $  (187,485)
                                                                                         ===========    ===========
Net Loss Applicable to Common Stockholders ...........................................   $  (375,070)   $  (187,485)
                                                                                         ===========    ===========
Net Loss Per Share Applicable to
   Common Stockholders ...............................................................   $      (.10)   $      (.10)
                                                                                         ===========    ===========
Weighted Average Common Shares Outstanding ...........................................     3,824,836      1,968,000
                                                                                         ===========    ===========

</TABLE>


         See accompanying notes to these condensed financial statements.

                                        4


<PAGE>

<TABLE>
<CAPTION>
                                LASER STORM, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                                                                       FOR THE QUARTERS
                                                                                        ENDED MARCH 31,
                                                                                      -----------------
                                                                                      1997         1996
                                                                                      ----         ----
<S>                                                                               <C>          <C>       
Cash Flows From Operating Activities:
     Net loss .................................................................   $(375,070)   $(187,485)
     Adjustments to reconcile net loss to net cash used in
            operating activities:
     Depreciation and amortization ............................................     151,035       43,920
    Provision for bad debts ...................................................       4,000       10,000
     Deferred income taxes ....................................................        --       (110,000)
     Changes in operating assets and liabilities:
     (Increase) decrease in:
              Receivables .....................................................    (341,225)     (85,521)
            Inventories .......................................................     330,582      (38,161)
           Prepaid expenses and other .........................................      98,500       (2,248)
     Increase (decrease) in:
           Accounts payable ...................................................         360     (188,325)
          Accrued expenses ....................................................     (66,550)      82,360
          Customer deposits and deferred revenue ..............................     (81,850)     (17,329)
                                                                                  ---------    ---------
           Net cash used in operating activities ..............................    (280,218)    (492,789)
                                                                                  ---------    ---------
Cash Flows From Investing Activities:
          Proceeds from sale of notes receivable ..............................     203,599         --
          Principal payments collected on notes receivable ....................      60,925         --
         Cash expenditures for property and equipment .........................    (289,205)    (127,490)
         License and design costs .............................................        --        (25,000)
                                                                                  ---------    ---------
                             Net cash used in investing activities ............     (24,681)    (152,490)
                                                                                  ---------    ---------
Cash Flows From Financing Activities:
     Proceeds from sale of 12% Convertible Cumulative Preferred Stock ..........       --        900,000
     Proceeds from capital lease ..............................................     130,000         --
     Offering costs ...........................................................        --        (96,925)
     Principal payments on capital lease obligations ..........................     (33,977)      (2,935)
                                                                                  ---------    ---------
                     Net cash provided by financing activities ................      96,023      800,140
                                                                                  ---------    ---------
Increase (Decrease) In Cash ...................................................    (208,876)     154,861

Cash, at beginning of period ..................................................     272,633       10,473
                                                                                  ---------    ---------
Cash, at end of period ........................................................   $  63,757    $ 165,334
                                                                                  =========    =========
</TABLE>

         See accompanying notes to these condensed financial statements.

                                        5


<PAGE>


                                LASER STORM, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.   Interim Financial Statements:

In  the  opinion  of  management  of the  Company,  the  accompanying  unaudited
financial statements include all adjustments  necessary,  all of which were of a
normal recurring nature, to make the financial statements not misleading.

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 the rules and  regulations  of the
Securities and Exchange Commission.  These condensed financial statements should
be read in conjunction  with the financial  statements and related notes for the
fiscal year ended December 31, 1996 contained in the Company's  annual report on
Form 10-KSB for the year ended December 31, 1996.

The results of  operations  for the three months  ended March 31, 1997,  are not
necessarily indicative of the results to be expected for the full year.

2.   Earnings Per Share:

For the quarter ended March 31, 1996, the calculation of weighted average shares
outstanding  includes  all common  stock  options  and the Series A and Series B
Preferred  stock,  which  were  issued  prior to the  Company's  initial  public
offering at prices below the $4.00 per unit offering price. Such preferred stock
and options to purchase  common  stock are included in the  calculation  for the
entire three months ended March 31, 1996,  using the treasury stock method based
on the $4.00 per unit offering price.

For the three months ended March 31, 1997, comon stock  equivalents are excluded
from the weighted average shares since they are anti-dilutive.





                                        6

<PAGE>


                               LASER STORM, INC.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                              OR PLAN OF OPERATIONS


Liquidity and Capital Resources
The Company's  operations used cash flow of $280,218 for the quarter ended March
31,  1997,  and used  cash  flow of  $492,789  for the same  period  last  year.
Operating losses continue to negatively impact the Company's liquidity, however,
the  Company  does still  maintain  over  $460,000  in working  capital and over
$2,974,000  in  stockholders'   equity.   The  Company  is  pursuing   financial
alternatives to assist in its working capital needs as well as capital that will
be required to open additional Company-owned  facilities. If such financing does
not occur,  management believes it will still have adequate cash flow to sustain
operations  through  1997,  but will not be able to realize  its  objectives  of
diversifying more into Company-owned and operated facilities.

During 1996 the Company funded approximately $1,400,000 in sales made through an
extended term financing  program.  In October 1996, the Company  entered into an
agreement with a financial  institution  which  purchased  certain credit worthy
notes  receivable  under this extended terms  program.  During the quarter ended
March 31,  1997 the  Company  sold  $293,916  of these  notes to this  financial
institution,   realizing   $203,599.   The  financial   institution   held  back
approximately  $90,000 as a condition of buying these notes.  The hold back will
be collected  by the Company  upon  satisfactory  payment  performance  on these
notes.  The Company also collected  $60,925 on notes the Company did not sell to
the  financial  institution.  As of March 31, 1997,  the Company had a principal
amount of $694,904 of these notes that remain unsold.  The Company does not have
the working  capital to  internally  finance  future sales  through this type of
financing,  but has been able to establish  alliances  with  external  financial
institutions in order to make financing options available to its customers.

The  Company's  trade  receivables  increased  by  $341,225  and  the  Company's
inventory  decreased by $330,582  during the quarter  ended March 31, 1997.  The
inventories decreased as a result of system sales to independent operators,  the
opening of a  Company-owned  and operated  facility in the Denver  metropolitian
area and the opening of a revenue participation facility in Cuernavaca, Mexico.

Capital  expenditures  for the  quarter  ended  March 31,  1997,  were  $289,205
compared to $127,490 for the same quarter last year. The construction  costs and
the  costs  of  the  Laser  Storm(R)  game  equipment   necessary  to  open  its
Company-owned  and  operated  facility  in the Denver  metropolitian  area and a
revenue participation facility in Cuernavaca, Mexico were the primary components
of the capital expenditures for the quarter ended March 31, 1997.

Financing  activities  provided  $96,023  for the  quarter  ended March 31, 1997
compared to $800,140 for the quarter ended March 31, 1996. In January, 1997, the
Company  entered  into a $130,000  capital  lease  arrangement  to assist in the
financing  of its  new  Denver  metropolitan  area  Company-owned  and  operated
facility.  In February 1996, the Company completed the sale of 200,000 shares of
Series B 12% Convertible  Cumulative  Preferred  Stock and received  proceeds of
$900,000.

In 1996 the Company  purchased  two existing  Laser  Storm(R)  game centers from
unaffiliated persons.  Pursuant to the terms of the purchase agreements,  in May
1997 the Company is obligated  to pay the sellers  approximately  $217,000.  The
Company is  attempting  to raise the capital to finance  these two  purchases as
well as the capital to finance future Laser Storm(R) game  facilities.  Although
no assurance can be given that financing  will be available on terms  acceptable
to the  Company,  the  Company  may seek  additional  funds,  from time to time,
through public or private debt or equity  offerings,  bank borrowings or leasing
arrangements.

                                       7
<PAGE>


Results of Operations
Net sales from laser tag game systems and related revenues for the quarter ended
March 31, 1997  increased by 6% to  $1,023,697,  as compared to $969,882 for the
quarter ended March 31, 1996.  The primary reason for the increase is the result
of  increased  warranty  sales.  The number of  customers  participating  in the
Company's,  "Built to Blast" ("BTB")  warranty  program has increased from 78 at
March 31, 1996 to 117 at March 31, 1997.  The BTB program  requires the customer
pay a fee based upon the number of games played per month.

During the quarter ended March 31, 1997 the Company reduced its selling price on
laser tag systems and its themed arenas in order to stimulate  sales during what
has been historically the Company's slowest quarter.  The program emphasized the
Company's  themed  arenas and resulted in a 15%  reduction of its average  arena
sales  price  when  comparing  the  quarters  ended  March  31,  1997 and  1996,
respectively.  The number of arenas  purchased did however  increase by 50% as a
result of the lower  sales  prices.  Over the past two  years  the  Company  had
increased selling prices to its customers,  however, with increased competition,
the Company determined it must lower its prices in order to remain  competitive.
This program has been extended into the second quarter of 1997.

Net sales from retail  operations for the quarter ended March 31, 1997 increased
to  $377,244  compared to $71,619 for the  quarter  ended March 31,  1996.  This
increase  is the  result  of  sales  generated  by the  five  new  Company-owned
facilities.  The Company opened its newest  facility in the Denver  metropolitan
area  late in the  first  quarter  of 1997  and is  expecting  to open  six more
facilites by the end of the second quarter.  The Company will require additional
capital to finance the costs of opening these and future facilities.

Gross  profit from laser tag game  systems  and related  revenue for the quarter
ended March 31, 1997  decreased  11% to $491,335 as compared to gross  profit of
$551,462 for the quarter  ended March 31, 1996.  Gross profit as a percentage of
net sales  decreased 9% for the quarter  ended March 31, 1997 to 48% compared to
57% for the quarter  ended March 31,  1996.  The decrease in the gross profit in
1997 is the result of a 15% sales price reduction of the Company's themed arenas
and a 17%  increase in material  costs as a result of  upgrading  certain of the
components  of  the  Company's  laser  tag  games  and  price  increases  on the
electronics portion of the Company's laser tag games.

Gross  profit  from  retail  operations  for the  quarter  ended  March 31, 1997
increased to $92,673  compared to $29,204 for the quarter  ended March 31, 1996.
The increased gross profit is the result of the five  Company-owned and operated
facilities being opened and operating.  The  Company-owned  facilities sales and
operating expense results continue to be in line with management's  expectations
for the facilities.

General and administrative expenses ("GA expenses") increased by less than 1% to
$614,901  for the  quarter  ended March 31,  1997  compared to $580,004  for the
quarter  ended March 31,  1996.  The  increase in GA expenses is  primarily  the
result  of  identifying,   opening  and  operating  Company-owned  and  operated
facilities.  During the fourth quarter of 1996 and the first quarter of 1997 the
Company  implemented  several  cost  reduction  actions in an effort to properly
position the Company for the future.  Subject to obtaining sufficient financing,
of which there is no assurance, the Company's focus during the remainder of 1997
is  to  open  and  operate  up  to  20  additional  Company-owned  and  operated
facilities.  As a  percentage  of net  revenues  (net  sales from laser tag game
systems and related revenues plus net sales from retail operations), GA expenses
decreased  to 45% for the quarter  ended March 31, 1997  compared to 58% for the
quarter ended March 31, 1996.  The decrease in GA expense as a percentage of net
revenues is the result of the increased sales from retail operations.

Selling and marketing expenses ("SM expenses") decreased 21% to $160,113 for the
quarter  ended March 31, 1997  compared to $202,381 for the quarter  ended March
31, 1996. As a percentage  of net revenues SM expenses  decreased to 12% for the
quarter  ended  March 31, 1997  compared to 20% for the quarter  ended March 31,
1996.  The  decrease  in SM expense is  primarily  the result of cost  reduction
efforts made during the fourth quarter of 1996.

                                       8
<PAGE>

Depreciation and amortization increased from $43,920 for the quarter ended March
31, 1996 to $151,035  for the quarter  ended  March 31,  1997.  The  increase is
primarily the result of the capital expenditures made related to the opening and
acquisition of the five  Company-owned  and operated  facilities during the last
nine months.

Product  development  costs  decreased  by 32% to $33,580 for the quarter  ended
March 31, 1997  compared to $49,240 for the quarter  ended March 31,  1996.  The
decrease is primarily the result of the Company's cost  reduction  efforts which
began  in  the  fourth  quarter  of  1996.  The  Company  has  deferred  certain
development  projects until the Company's  liquidity  position improves and will
allow for such discretionary spending.

The Company recognized an operating loss for the quarter ended March 31, 1997 of
$375,070  compared to an operating  loss of $297,485 for the quarter ended March
31,  1996.  The  operating  loss can  primarily  be  attributed  to the non-cash
depreciation  and  amortization  expenses as well as the  increased  GA expenses
associated  with the  Company  staffing  its  organization  to open and  operate
Company-owned and operated facilites.

The Company  recognized income tax benefits of $110,000 during the quarter ended
March 31, 1996,  but was unable to record any income tax benefit for the quarter
ended  March  31,  1997  due to a  valuation  allowance  for the  Company's  net
operating loss carryforward.



                                        9

<PAGE>

                          PART II - OTHER INFORMATION



Item 6 - Exhibits and Reports on Form 8-K

(a)  Exhibits
     27 Financial Data Schedule


(b)  Reports on Form 8-K
     None





                                        10


<PAGE>

                                   SIGNATURES


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



                                              LASER STORM, INC.


DATE:   May 13, 1997                          By:  /s/ William R. Bauerle
                                                  ------------------------------
                                                   William R. Bauerle
                                                   President



DATE:   May 13, 1997                          By:  /s/ John E. McNutt
                                                  ------------------------------
                                                   John E. McNutt
                                                   Chief Financial Officer and
                                                   Principal Accounting Officer




                                       11


<PAGE>


                                 EXHIBIT INDEX



Exhibit 27 Financial Data Schedule



                                       12