<PAGE>


                   U. S. SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D. C.  20549

                                  FORM 10-QSB

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

                    FOR THE PERIOD ENDED SEPTEMBER 30, 1996

        / /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
                             SECURITIES EXCHANGE ACT

          FOR THE TRANSITION PERIOD FROM              TO             
                                         ------------    ------------
Commission file number   0-25366
                      -------------

                         AUSTINS STEAKS & SALOON, INC.
       (Exact name of small business issuer as specified in its charter)

          DELAWARE                                              86-0723400
-------------------------------                             -------------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              identification No.)

                          6940 "O" Street, Suite 334
                           Lincoln, Nebraska  68510
                   (Address of principal executive offices)
                                       
                                (402) 466-2333
                          (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  
   -----    -----

As of October 31, 1996, there were 2,331,052 shares of the issuer's common 
stock outstanding.

<PAGE>


                         Part I:  Financial Statements

Item 1 - FINANCIAL STATEMENTS

                         AUSTINS STEAKS & SALOON, INC.
                          Consolidated Balance Sheets
                as of September 30, 1996 and December 31, 1995

<TABLE>
<CAPTION>
                                                                     September 30,
                                                                         1996       December 31,
                                                                     (Unaudited)      1995
                                                                     ------------   -----------
<S>                                                                  <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents                                          $         -   $        -
  Inventories                                                            123,285      111,913
  Prepaid expenses & other current assets                                175,627      310,938
  Preopening costs                                                             -      255,512
                                                                     -----------   ----------
Total current assets                                                     298,912      678,363
                                                                     -----------   ----------

Equipment                                                              1,783,981    1,761,768
Leasehold improvements                                                 2,931,658    2,852,730
                                                                     -----------   ----------
                                                                       4,715,639    4,614,498
Accumulated depreciation & amortization                               (1,025,769)    (763,093)
                                                                     -----------   ----------
     Equipment & leasehold improvements, net                           3,689,870    3,851,405
                                                                     -----------   ----------
Intangibles, net                                                         666,015      701,797
Note receivable from officer                                                   -       50,000
Other assets                                                           1,021,006    1,092,058
                                                                     -----------   ----------
                                                                     $ 5,675,803   $6,373,623
                                                                     -----------   ----------
                                                                     -----------   ----------
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
  Cash overdraft                                                     $    78,693   $  305,850
  Accounts payable                                                       628,526      419,180
  Interest payable                                                         7,280            -
  Unredeemed gift certificates                                            23,980      125,777
  Other notes payable-shareholders                                       155,261            -
  Notes payable to bank                                                  659,522      550,000
  Real estate mortgage note payable                                      395,679      400,049
                                                                     -----------   ----------
Total current liabilities                                              1,948,941    1,800,856
                                                                     -----------   ----------
STOCKHOLDERS' EQUITY
  Common stock ($0.01 par value; 7,500,000 and 20,000,000 shares
  authorized; 2,331,052 and 1,910,000 shares issued and outstanding)      23,311       19,100
  Additional paid-in capital                                           5,487,511    4,991,722
  Accumulated deficit                                                 (1,783,960)    (438,055)
                                                                     -----------   ----------
Total stockholders' equity                                             3,726,862    4,572,767
                                                                     -----------   ----------
                                                                     $ 5,675,803   $6,373,623
                                                                     -----------   ----------
                                                                     -----------   ----------
</TABLE>

               The accompanying notes are an integral part of the
                      consolidated financial statements.

<PAGE>


                         AUSTINS STEAKS & SALOON, INC.
                     Consolidated Statements of Operations
                                  (unaudited)

<TABLE>
<CAPTION>
                                                       For the three months    For the nine months
                                                        ended September 30      ended September 30
                                                         1996        1995         1996        1995
                                                      ----------  ----------  -----------  ----------
<S>                                                   <C>         <C>         <C>          <C>
Net sales                                             $2,609,705  $2,320,711  $ 8,060,855  $7,370,862

Costs and expenses:
  Cost of sales                                        1,853,407   1,596,992    5,701,710   4,952,205
  Restaurant operating expenses                          711,689     635,465    2,228,298   1,798,866
  Amortization of preopening costs                             -      84,278            -     202,469
                                                      ----------  ----------  -----------  ----------
          Restaurant costs and expenses                2,565,096   2,316,735    7,930,008   6,953,540
                                                      ----------  ----------  -----------  ----------
Restaurant operating income                               44,609       3,976      130,847     417,322
  General and administrative                             112,290     212,742      908,028     691,251
  Loss (gain) on restaurant closing                      (56,002)          -      193,998           -
                                                      ----------  ----------  -----------  ----------
Loss from operations                                     (11,679)   (208,766)    (971,179)   (273,929)

Other expenses (income):
  Interest (income) expense, net                          33,591      (6,764)     119,214     (54,048)
                                                      ----------  ----------  -----------  ----------
Loss before income taxes and cumulative
 effect on change in accounting principle                (45,270)   (202,002)  (1,090,393)   (219,881)

Income tax benefit                                             -      34,000            -      40,000
                                                      ----------  ----------  -----------  ----------
Loss before cumulative
 effect on change in accounting principle                (45,270)   (168,002)  (1,090,393)   (179,881)

Cumulative effect on prior years
  of change in accounting principle (see Note 1b)              -           -     (255,512)          - 
                                                      ----------  ----------  -----------  ----------
Net loss                                              $  (45,270) $ (168,002) $(1,345,905) $ (179,881)
                                                      ----------  ----------  -----------  ----------
                                                      ----------  ----------  -----------  ----------
Net loss per share                                        $(0.02)     $(0.09)      $(0.65)     $(0.10)
                                                      ----------  ----------  -----------  ----------
                                                      ----------  ----------  -----------  ----------
Weighted average number of common 
  shares outstanding                                   2,331,052   1,910,000    2,065,962   1,814,444
                                                      ----------  ----------  -----------  ----------
                                                      ----------  ----------  -----------  ----------
</TABLE>

               The accompanying notes are an integral part of the 
                      consolidated financial statements.

<PAGE>


                         AUSTINS STEAKS & SALOON, INC.
           Consolidated Statement Of Changes In Stockholders' Equity
                 for the nine months ended September 30, 1996
                                  (unaudited)

<TABLE>
<CAPTION>
                                   Common Stock         Additional
                                 -----------------        Paid-In     (Accumulated
                                 Shares    Dollars        Capital        Deficit)       Total
                                 ------    -------      ----------    ------------      -----
<S>                            <C>         <C>          <C>            <C>           <C>
Balances, December 31, 1995    1,910,000   $19,100      $4,991,722     $  (438,055)  $ 4,572,767
Issuance of shares               421,052     4,211         495,789               -       500,000
Net loss                               -         -               -      (1,345,905)   (1,345,905)
                               ---------   -------      ----------     ----------    -----------
Balances, September 30, 1996   2,331,052   $23,311      $5,487,511     $(1,783,960)  $ 3,726,862
                               ---------   -------      ----------     ----------    -----------
                               ---------   -------      ----------     ----------    -----------
</TABLE>

               The accompanying notes are an integral part of the 
                      consolidated financial statements.

<PAGE>

                         AUSTINS STEAKS & SALOON, INC.
                     Consolidated Statements Of Cash Flows
             for the nine months ended September 30, 1996 and 1995
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                September 30, 1996   September 30, 1995
                                                                ------------------   ------------------
<S>                                                             <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                              $(1,345,905)          $ (179,881)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
  Cumulative effect of change in accounting principle                     255,512                    -
  Depreciation and amortization                                           434,007              262,720
  Loss on sale of equipment                                                 7,911                    -
  Deferred income taxes                                                         -              (40,000)
  Loss on restaurant closing                                              193,998                    -
  Write-off of note receivable from officer                                50,000                    -
  Write-off of other assets                                               169,914                    -
  Write-off of equipment                                                  132,726                    -
  Changes in assets and liabilities:
    Inventories                                                           (11,372)              18,825
    Prepaid expenses and other current assets                             135,311              (48,747)
    Preopening costs                                                            -               93,449
    Other assets                                                                -             (693,685)
    Accounts payable                                                      209,346              (35,160)
    Interest payable                                                        7,280                    -
    Unredeemed gift certificates                                         (101,797)            (103,404)
    Due to stockholder and related parties                                      -              (10,506)
                                                                      -----------           ----------
Net cash provided by (used in) operating activities                       136,931             (736,389)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from the maturity of  certificates of deposit                        -              290,000
  Proceeds from sale of equipment                                           9,550                    -
  Purchase of equipment and leasehold improvements                       (580,875)            (825,015)
  Increase in other assets                                                (98,862)                   -
                                                                      -----------           ----------
          Net cash used in investing activities                          (670,187)            (535,015)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Reduction of cash overdraft                                            (227,157)                   -
  Payments on debt                                                       (200,762)            (990,000)
  Proceeds from debt                                                      961,175              535,925
  Proceeds from the issuance  of common stock                                   -            3,407,500
                                                                      -----------           ----------
          Net cash provided by financing activities                       533,256            2,953,425
                                                                      -----------           ----------
Net increase in cash and cash equivalents                                       -            1,682,021
Cash and cash equivalents, beginning of period                                  -              117,912
                                                                      -----------           ----------
Cash and cash equivalents, end of period                              $         -           $1,799,933
                                                                      -----------           ----------
                                                                      -----------           ----------
</TABLE>

               The accompanying notes are an integral part of the 
                      consolidated financial statements.

<PAGE>


                          AUSTINS STEAKS & SALOON, INC.
                   Notes To Consolidated Financial Statements
                                   (unaudited)
                                        

1.   Summary of Significant Accounting Policies

     a)   Basis of Presentation
     
     In the opinion of management, the accompanying unaudited financial
     statements contain all normal recurring adjustments necessary for a fair
     presentation of financial position and results of operations and cash flows
     for the periods presented.
     
     A summary of the significant accounting policies followed by Austins Steaks
     & Saloon, Inc. ("Austins" or the "Company") are set forth in the Notes To
     Financial Statements in the company's 1995 Annual Report on Form 10-KSB
     filed with the Securities and Exchange Commission.  These financial
     statements should be read in conjunction with the financial statements
     included in the 1995 Annual Report on Form 10-KSB.

     b)   Change in Method of Accounting

     As of January 1, 1996, the Company changed the method of accounting for
     pre-opening costs.  Labor costs and certain other costs relating to opening
     of new restaurants will be expensed as incurred.  Previously, such costs
     were capitalized and amortized over a 12 month period on a straight-line
     basis.  Although some retailers capitalize pre-opening costs, the Company
     believes expensing such costs as incurred is preferable and results in a
     more meaningful presentation of the Company's working capital.  The
     cumulative effect of the change of $255,512 represents the reversal of the
     capitalized pre-opening costs as of December 31, 1995.  The effect of this
     change for the nine month period ending September 30, 1996, was to 
     decrease the loss before cumulative effect of the change in accounting
     principle by $183,278 ($0.09 per average common share).  On a pro forma
     basis, had this change occurred effective January 1, 1995, net loss would
     decrease by $93,449 ($0.05 per average common share) for the nine month
     period ending September 30, 1995.

2.   Loss on Closing of Restaurant

     On March 21, 1996 the Company closed its Columbia, Missouri restaurant. 
     This restaurant was closed due to its operating performance not meeting the
     Company's expectations.  Rock Bottom, Inc. signed an agreement with the
     Company on July 16, 1996 to purchase the equipment in the store and
     transfer the Columbia lease.  The actual loss on closing was $193,998
     consisting of  the non-realizable value of the equipment and leasehold
     improvements, expected loss on lease, and the related costs to dispose of
     the unit.  The Company had estimated closing costs of $250,000.

<PAGE>

3.   Other Assets

Other assets consisted of the following:

                                                 September 30,
                                                     1996          December 31,
                                                  (unaudited)          1995
                                                 --------------    ------------

Investment - land                                  $  533,183      $  533,183
Liquor licenses                                       451,239         342,637
Deposits                                                    -          92,466
Organization costs, net                                36,584          55,172
Other                                                       -          68,600
                                                   ----------      ----------
                                                   $1,021,006      $1,092,058
                                                   ----------      ----------
                                                   ----------      ----------

4.   Notes Payable

Notes payable consisted of the following:

<TABLE>
<CAPTION>
                                                                       September 30,
                                                                           1996        December 31,
                                                                        (unaudited)       1995 
                                                                       -------------   ------------
<S>                                                                    <C>             <C>
Note payable to shareholder:

  Paul C. Schorr, III (due on demand, interest rate equal to
   the rate presently being charged by First National Bank of Omaha)       155,261              -
                                                                          --------       --------
                                                                          $155,261       $      -
                                                                          --------       --------
                                                                          --------       --------
Notes payable to bank:

  First National Bank of Omaha (due December 31, 1996,
  interest rate at bank's prime rate)                                      503,608        550,000

  First State Bank Santa Fe (due January 24, 1997, interest at
  Wall Street Journal prime rate plus 2.0%, collateralized by New
  Mexico liquor license #2668)                                              85,139              -

  First State Bank Santa Fe (due October 22, 1996, interest at
  Wall Street Journal prime rate plus 2.0%, collateralized by
   New Mexico liquor license #2532)                                         70,775              -
                                                                          --------       --------
                                                                          $659,522       $550,000
                                                                          --------       --------
                                                                          --------       --------
Real estate mortgage note payable (Amrep Southwest, Inc.,
due January 31, 1997, interest at 11% per annum, collateralized
by Real Estate)                                                           $395,679       $400,049
                                                                          --------       --------
                                                                          --------       --------
</TABLE>


On June 12, 1996, notes payable to shareholders totaling $500,000 were exchanged
for 421,052 shares of common stock.

<PAGE>

5.   Authorized Shares

Pursuant to stockholder approval at the Company's 1995 annual meeting, the
number of shares of common stock authorized was reduced from 20,000,000 to
7,500,000 shares.  This change was filed in the office of the Secretary of State
of Delaware on January 24, 1996, and became effective on that date.


<PAGE>


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW
The Company currently operates eight steakhouse restaurants: Four are located in
Omaha, Nebraska; and one each is located in Lincoln, Nebraska; Scottsdale,
Arizona; Santa Fe, New Mexico; and Albuquerque, New Mexico.  The Omaha
restaurants were opened in September 1989, January 1992, December 1992, and
January 1996; the Santa Fe restaurant was opened in April 1994; the Lincoln
restaurant in December 1994; the Albuquerque restaurant was opened in February
1995; and the Scottsdale restaurant was opened in December 1995.  On March 21,
1996 the company closed its Columbia, Missouri restaurant which opened in
November 1993.

The matters discussed in this form 10-QSB contain forward-looking statements
that involve risks and uncertainties including risk of changing market
conditions regarding the general economy and competition and other risks over
which the Company has little or no control.  Consequently, future results may
differ from management's expectations.

RESULTS OF OPERATIONS
The following table sets forth for the periods presented the percentage
relationship to net sales of certain items included in the Consolidated
Statement of Operations.

<TABLE>
<CAPTION>
                                                        Three months ended    Nine months ended
                                                           September 30          September 30
                                                        ------------------    -----------------
                                                          1996      1995       1996       1995
                                                        -------    -------    -------    -------
<S>                                                     <C>        <C>        <C>        <C>
Net sales                                                 100%       100%       100%       100%

Costs and expenses:
  Cost of sales                                          71.0       68.8       70.7       67.2
  Restaurant operating expenses                          27.3       27.4       27.7       24.4
  Amortization of pre opening costs                         -        3.6          -        2.7
                                                        -----      -----      -----      -----
     Restaurant costs and expenses                       98.3       99.8       98.4       94.3
                                                        -----      -----      -----      -----
Restaurant operating income                               1.7        0.2        1.6        5.7
                                                        -----      -----      -----      -----
  General and administrative                              4.3        9.2       11.2        9.4
  Loss (gain) on restaurant closing                      (2.2)         -        2.4          -
                                                        -----      -----      -----      -----
Loss from operations                                     (0.4)      (9.0)     (12.0)      (3.7)

Other expenses (income):
  Interest (income) expense, net                          1.3       (0.3)       1.5       (0.7)

Loss before income taxes and cumulative effect
  on change of accounting principle                      (1.7)      (8.7)     (13.5)      (3.0)

Income tax (benefit)                                        -       (1.5)         -       (0.6)
                                                        -----      -----      -----      -----
Loss before cumulative effect
  on change of accounting principle                      (1.7)      (7.2)     (13.5)      (2.4)

Cumulative effect on prior years change in 
  accounting principle                                      -          -       (3.2)         -
                                                        -----      -----      -----      -----
Net loss                                                 (1.7)%     (7.2)%    (16.7)%     (2.4)%
                                                        -----      -----      -----      -----
                                                        -----      -----      -----      -----
Store data:
Number of restaurants open, beginning of period             8          7          8          6
Number of restaurants open, end of period                   8          7          8          7
</TABLE>

<PAGE>


QUARTER AND YEAR-TO-DATE ENDED SEPTEMBER 30, 1996 COMPARED TO QUARTER
ENDED SEPTEMBER 30, 1995

Net sales for the third quarter ended September 30, 1996 were $2.6 million, a
12% increase from the third quarter 1995 revenues of $2.3 million.  For the nine
months ended September 30, 1996, net sales increased 9% to  $8.1 million from
net sales of $7.4 million in the comparable 1995 period.  For the quarter ended
September 30, 1996 net sales include the operations of eight restaurants for the
entire period.  Net sales for the quarter ended September 30, 1995 include the
operations of seven restaurants for the entire period.  For the year-to-date
ended September 30, 1996, net sales include the operations of seven restaurants
for the entire period, an eighth restaurant (Columbia) for approximately three
months and a ninth restaurant (Old Market) for eight months.  For the nine
months ended September 30, 1995, net sales include operation of six restaurants
for the entire period, and a seventh restaurant (Albuquerque) for seven months.
The increase in net sales is due to the additional restaurants in operation
during 1996.  During the third quarter of 1996, same store sales for restaurants
open for more than one year decreased by 8.2% primarily because of decreased
revenues from the Company's three mature Omaha stores. Increased competition,
road construction, and the effect of expanded gambling with two new riverboat
casinos opening within a 10 mile vicinity of the Omaha stores contributed to the
decrease.  Excluding the three mature Omaha units, same store sales increased
13% during the third quarter of 1996 compared to the prior year. The Company has
increased food promotions and added new menu items to help enhance same store
sales.

Cost of sales (consisting primarily of food, beverage, and restaurant labor
costs) increased 16% to $1.9 million (or 71.0% of net sales) during the third
quarter of 1996, compared to $1.6 million (or 68.8% of net sales) in the 1995
third quarter.  For the nine month period ended September 30, 1996, cost of
sales were $5.7 million (or 70.7% of net sales), a 15%  increase from $5.0
million (or 67.2% of net sales) in the comparable 1995 period.  The increase in
cost of sales during the first nine months of 1996 is primarily due to the
additional restaurants in operation during 1996, as noted above.  The Company
expects cost of sales to approximate their current levels in future periods,
when expressed as a percentage of net sales.  The cost of sales increased as a
percentage of net sales from the third quarter of 1995 to the third quarter of
1996 due to an increase of in-store promotions.

Restaurant operating expenses were $712,000 (or 27.3% of net sales) during the
third quarter of 1996, compared to $635,000 (or 27.4% of net sales) in the
comparable 1995 period.  During the first nine months of 1996, the costs rose
24% to $2.2 million (or 27.7% of net sales) from $1.8 million (or 24.4% of net
sales) in the first nine months of 1995.  Restaurant operating expenses
represent primarily the costs of occupancy (including rent, depreciation,
maintenance, and utilities), and various related costs.  The decrease as a
percentage of net sales for the third quarter of 1996 compared to the third
quarter of 1995 is attributed mainly to a decrease in advertising costs and
keeping variable operating costs to a minimum.  The increase, as a percentage of
net sales, during the first nine months of 1996 is due primarily to the
relatively fixed nature of occupancy costs of the Company's locations and lower
same store sales volumes, as noted above.  

Amortization of  pre-opening costs for 1995 was $84,000 (or 3.6% of net sales)
for the third quarter  and $202,000 (or 2.7% of net sales) for the nine months
ended September 30, 1995.  The decrease is due to the $255,512 cumulative effect
of the change in accounting principle during the 


<PAGE>


first quarter of 1996.  There was $63,348 of additional pre-opening costs 
expensed currently in the first quarter of 1996 related to the Company's 
Omaha-Old Market restaurant.  This amount has been included in the restaurant 
operating expenses for the 1996 nine month period. 

General and administrative costs decreased 47% during the third quarter of 1996
to $112,000 (or 4.3% of net sales) from $213,000 (or 9.2% of  net sales) in the
comparable 1995 period.  For the nine months ended September 30, 1996, these
costs rose 31% to 908,000 (or 11.2% of net sales) from $691,000 (or 9.4% of net
sales) in the comparable 1995 period. The first nine month period increase was
primarily due to the write-off of various abandoned assets including restaurant
architectural prototype costs, computer equipment, development costs incurred
for sites not to be developed, and receivables from the Company's former
President and Chief Executive Officer which have been determined to be
noncollectible at this time, including the $50,000 note receivable from officer.
Also included in general and administrative costs during the first nine months
of 1996 was approximately $73,000 in marketing development costs associated with
the introduction of the Sadie Austin's identity.  The decrease in the third
quarter general and administrative costs from 1995 to 1996 was due to the
decrease in corporate management personnel and controlling other overhead costs.

Interest expense approximated $34,000 during the third quarter of 1996 compared
to net interest income of $7,000 in the comparable period. Year-to-date 1996
interest expense was $119,000 compared to net interest income of $54,000 in the
same nine month period of 1995.  The interest expense was due to the Company's
borrowing funds compared to 1995 when the Company was earning interest income
from investments.

As reported in the first quarter, the Company closed its Columbia, Missouri
restaurant on March 21, 1996 due to its operating performance not meeting the
Company's expectations.  The actual closing costs for the nine months ending
September 30, 1996 were $193,998 consisting of the non-realizable value of the
equipment and leasehold improvements, expected loss on lease, and the related
costs to dispose of the unit. Rock Bottom, Inc. signed an agreement with the
Company on July 16, 1996 for $154,000 to purchase the equipment in the store and
assumed the Columbia store lease.  The third quarter of 1996 closing costs
resulted in a $56,002 gain as estimated closing costs for the restaurant were
$250,000.  

As a result of the factors described above, the Company had a net loss during
the 1996 third quarter of  $45,000, and a net loss for the first nine months of
1996 of $1.3 million.  This compares to net loss of $168,000 in the third
quarter of 1995, and $180,000 for the first nine month period of 1995.  The
increase in net loss for the first nine month period is primarily due to the
decrease in restaurant operating income resulting from decreased same-store
sales, the increase in general and administrative costs, interest expense,
restaurant closing costs, and the cumulative effect of the change in accounting.
The decrease in net loss for the third quarter 1996 compared to the third
quarter of 1995 is due to an increase in consumer awareness, market acceptance,
and the Company's focus on making all stores profitable while controlling
overhead costs on the corporate management level.  The Company has also focused
their efforts on customer satisfaction through menu and service improvements as
well as retaining employees whose skill and dedication enable the Company to
execute the "roadhouse" concept successfully.

<PAGE>


Liquidity and Capital Resources

The Company currently has $504,000 borrowed under an agreement with First
National Bank of Omaha, at a variable interest rate which was 10.25% at
September 30, 1996.  Of this amount, $275,000 was used to purchase the leasehold
and other improvements from the former tenant of the real property on which the
Company's Scottsdale, Arizona restaurant is located, and a favorable sublease of
the property.  The total purchase price was $325,000.  Due to the signing of the
closing agreement on July 16, 1996 for the Columbia store, the Company has
decreased the outstanding balance of $700,000 as of June 30, 1996 by $154,000. 
In addition, the Company began paying down the principal $5,000 a week starting
August 1, 1996.  This bank agreement expires on December 31, 1996 at which time
it is expected that the agreement will be renewed, or a new agreement will be
negotiated.

On January 30, 1996, the Company obtained a credit line from Norwest Bank
Nebraska, N.A. of which The Schorr Family Company, Inc., a corporation in which
Paul C. Schorr III, Chairman of the Company's Board of Directors, is President
and Chief Executive Officer guaranteed $300,000 of such indebtedness.  As of
June 12, 1996, The Schorr Family Company, Inc. paid such indebtedness to Norwest
Bank Nebraska, N.A. and the Company acknowledged a direct indebtedness to The
Schorr Family Company, Inc. of $300,000.  On March 18, 1996 the Company borrowed
$200,000 from Roger D. Sack, a Director of the Company, at an interest rate of
1% over Norwest Bank Nebraska, N.A. base rate.  As of  June 12, 1996, The Schorr
Family Company, Inc. and Roger D. Sack agreed to contribute the total $500,000
of indebtedness to the Company in exchange for a total of 421,052 shares of
Common Stock of the Company.  The number of shares was determined by averaging
the average bid and asked prices of the Common Stock of the Company for the 10
trading days preceding June 12, 1996. The Schorr Family Company, Inc. owns
807,631 shares or 34.65% of the outstanding stock of the Company and Roger D.
Sack owns 720,421 shares or 30.91% of the outstanding stock of the Company. 
This transaction was approved by the Board of Directors.

The Company's capital requirements relate principally to the development of new
restaurants during the beginning of 1996, the operation of existing restaurants
and the addition of patios on existing stores. Capital expenditures for the
first nine months of 1996 were $581,000 compared to $825,000 for the comparable
period in 1995.

Currently, the Company is in the process of selling two liquor licenses in New
Mexico and the Rio Rancho real estate which were purchased in anticipation of
opening new stores.  These sales will increase working capital and repay the
related $553,000 debt collateralized by these three assets.

A major shareholder has expressed the ability and intent to fund working capital
and approved capital expenditure requirements through December 31, 1996 to the
extent that the Company is not able to fund such requirements with internal
funds, refinancing of existing debt, and additional financing obtained.

<PAGE>

                          Part II:  Other Information

Item 3. - EXHIBITS


a)   Exhibit 27 - Financial Data Schedule


<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 hereunto duly authorized.


                                       Austins Steaks & Saloon, Inc.


Date:    11-12-96                      By:   /s/  TISH GADE-JONES
     -----------------                    -------------------------------------
                                             Tish Gade-Jones
                                             Chief Financial Officer