US 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 quarterly period ended June 30, 1997

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

                                    33-76422
                            (Commission file number)

                        Linda's Diversified Holdings Inc.
        (Exact name of small business issuer as specified in its charter)

                                    Delaware
         (State or other jurisdiction of incorporation or organization)

                                   22-3280395
              (Incorporation or organization identification number)

                      11 Commerce Drive, Cranford, NJ 07016
                    (Address of principal executive offices)

                                 (908) 276-2080
                           (Issuer's telephone number)

                                 Not Applicable
              (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 Securities and 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 ( )


                      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: August 8, 1997

             Class A Common Stock, $.001 par value: 2,065,000 shares
             Class B Common Stock, $.001 par value: 800,000 shares


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



<PAGE>
               LINDA'S DIVERSIFIED HOLDINGS INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


                                                       June 30,    December 31,
             ASSETS                                      1997         1996
                                                     -----------   ------------
                                                     (unaudited)

CURRENT ASSETS:
     Cash and cash equivalents                       $    78,075    $ 1,331,582
     Inventories                                           8,103         15,065
     Retail loans receivable                             117,714         42,691
     Notes receivable, current portion                      --           10,000
     Net assets held for sale                             79,000           --
     Prepaid expenses and other current assets           170,863         84,049
                                                     -----------    -----------
               Total Current Assets                      453,755      1,483,387
                                                     -----------    -----------


PROPERTY AND EQUIPMENT                                   317,153        432,289
                                                     -----------    -----------

OTHER ASSETS:
     Restricted cash                                     212,500        162,500
     Notes receivable, less current portion                 --          150,155
     Intangible assets                                    30,345         39,299
     Deposits and other assets                            15,292         19,923
                                                     -----------    -----------
                                                         258,137        371,877
                                                     -----------    -----------

                                                     $ 1,029,045    $ 2,287,553
                                                     ===========    ===========

     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Long term debt, current portion                 $    29,074    $    51,926
     Accounts payable and accrued expenses               407,985        295,119
     Accrued payroll and payroll taxes                    62,498          5,969
     Sales tax payable                                     3,392          4,866
     Deferred franchise fees                             160,000         85,000
                                                     -----------    -----------
               Total Current Liabilities                 662,949        442,880
                                                     -----------    -----------

LONG TERM LIABILITIES:
     Long term debt, less current portion                   --            2,709
     Deferred rent                                        41,949         42,519
                                                     -----------    -----------
                                                          41,949         45,228
                                                     -----------    -----------

COMMITMENTS

STOCKHOLDERS' EQUITY:
     Preferred stock, Series A, $.001 par value;
        2,500,000 shares authorized; 120,000
        shares issued and outstanding                        120            120
     Common stock, Class A, $.001 par value;
        15,000,000 shares authorized; 2,065,000
        shares issued and outstanding                      2,065          2,065
     Common stock, Class B, $.001 par value;
        800,000 shares authorized; 800,000
        shares issued and outstanding                        800            800
     Capital in excess of par value                    8,096,818      8,096,818
     Accumulated deficit                              (7,775,656)    (6,300,358)
                                                     -----------   ------------
               Total Stockholders' Equity                324,147      1,799,445
                                                     -----------   ------------

                                                     $ 1,029,045    $ 2,287,553
                                                     ===========    ===========

          See accompanying notes to consolidated financial statements.

                                      - 2 -
<PAGE>

               LINDA'S DIVERSIFIED HOLDINGS INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                           Six Months Ended             Three Months Ended
                                                                June 30,                     June 30,
                                                      ---------------------------  --------------------------
                                                           1997           1996          1997          1996  
                                                      ------------- -------------  --------------------------

<S>                                                  <C>            <C>            <C>            <C>
REVENUES:

     Restaurant sales, net                           $   436,407    $   611,037    $   214,890    $   319,677
     Initial franchise fees                               25,000         25,000           --           25,000
     Franchise royalties                                  21,621         14,458          8,863          9,816
     Contract fee income                                  35,352         15,944         24,511         15,944
     Loan origination fees                                 7,026          7,500          6,346          7,500
     Loan participation premiums                          22,598            712         19,503            712
                                                     -----------    -----------    -----------    -----------
                                                         548,004        674,651        274,113        378,649
                                                     -----------    -----------    -----------    -----------

COSTS AND EXPENSES:
   Restaurant Operations:
        Food and paper costs                             175,435        250,553         85,722        128,566
        Restaurant labor and related expenses            142,056        226,997         68,490        107,405
        Operating expenses                                20,648         51,187         10,502         25,240
        Occupancy expenses                                87,387        145,463         44,341         71,127
        Depreciation and amortization                     52,651         66,690         24,134         35,113
   Loan Operations:
        Payroll and related expenses                     437,835        215,546        255,225        157,053
        Media and advertising costs                      289,105        256,606        235,412        256,606
        Operating expenses                               197,331        144,591        102,356        122,515
   Corporate and Franchising:
        General and administrative                       409,422        512,696        203,781        275,893
        Bad debt expense                                 150,155           --          150,155           --
        Restructuring charge                              44,812        266,987         44,812        266,987

                                                     -----------    -----------      ---------   ------------
                                                       2,006,837      2,137,316      1,224,930      1,446,505
                                                     -----------    -----------      ---------   ------------

LOSS FROM OPERATIONS                                  (1,458,833)    (1,462,665)      (950,817)    (1,067,856)

OTHER INCOME (EXPENSE):
     Interest and other income                            29,395         35,307         19,249         21,323
     Interest expense                                     (3,860)        (8,107)        (1,609)        (3,789)
                                                     -----------    -----------      ---------   ------------
                                                          25,535         27,200         17,640         17,534
                                                     -----------    -----------      ---------   ------------


NET LOSS                                              (1,433,298)    (1,435,465)      (933,177)    (1,050,322)
PREFERRED STOCK DIVIDENDS                                 42,000           --           21,000           --

                                                     -----------    -----------    -----------   ------------
NET LOSS APPLICABLE TO COMMON STOCK                  $(1,475,298)   $(1,435,465)   $  (954,177)   $(1,050,322)
                                                     ===========    ===========    ===========   ============


NET LOSS PER COMMON SHARE                            $     (0.61)   $     (0.75)   $     (0.40)   $     (0.48)
                                                     ===========    ===========    ===========    ===========


WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING                            2,415,000      1,907,000      2,415,000      1,615,000
                                                     ===========    ===========    ===========   ============
</TABLE>



          See accompanying notes to consolidated financial statements.

                                      - 3 -

<PAGE>
               LINDA'S DIVERSIFIED HOLDINGS INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                                                 Six Months Ended
                                                                                     June 30,
                                                                       -----------------------------------
                                                                             1997               1996
                                                                       ---------------    ----------------


<S>                                                                  <C>                 <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                          $ (1,433,298)       $ (1,435,465)
     Adjustments to reconcile net loss to net cash
       used in operating activities:
          Depreciation and amortization                                      52,651              66,690
          Restructuring charge                                               44,812             266,987
          Bad debt expense                                                  150,155               -
          Changes in operating assets and liabilities:
             Decrease in inventories                                          6,962               2,912
             (Increase) in prepaid expenses and other assets                (86,814)             13,083
             (Increase) in restricted cash                                  (50,000)           (162,500)
             (Increase) decrease in deposits and other assets                 4,631             (41,149)
             Increase in accounts payable and accrued expenses              112,866             116,029
             Increase in accrued payroll and payroll taxes                   56,529              14,487
             Decrease in sales tax payable                                   (1,474)             (1,453)
             Increase in deferred franchise fees                             75,000              25,000
             Increase (decrease) in deferred rent                              (570)              8,262
                                                                     ---------------    ----------------
                Net cash used in operating activities                    (1,068,550)         (1,127,117)
                                                                     ---------------    ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Proceeds from redemption of cash investments                              -                809,000
     Acquisition of cash investments                                           -                (88,000)
     Funds advanced under notes receivable                                     -               (216,591)
     Proceeds from notes receivable                                          10,000               5,009
     Disbursements for retail loans receivable                             (896,140)           (397,404)
     Proceeds from sale of retail loans receivable                          821,117              14,244
     Acquisition of property and equipment                                  (52,373)           (124,618)
                                                                     ---------------    ----------------
                Net cash provided by (used in) investing activities        (117,396)              1,640
                                                                     ---------------    ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from sale of common stock, net of expenses                       -              1,654,311
     Payments of preferred stock dividends                                  (42,000)             -
     Payments of long-term debt                                             (25,561)            (21,941)
                                                                     ---------------    ----------------
                Net cash used in financing activities                       (67,561)          1,632,370
                                                                     ---------------    ----------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                  (1,253,507)            506,893

CASH AND CASH EQUIVALENTS, Beginning of period                            1,331,582             558,013
                                                                     ---------------    ----------------

CASH AND CASH EQUIVALENTS, End of period                            $        78,075    $      1,064,906
                                                                    ================   =================

SUPPLEMENTAL INFORMATION:
     Interest paid                                                  $         3,860    $         8,107
                                                                    ================   ================

          See accompanying notes to consolidated financial statements.

                                      -4-
</TABLE>
<PAGE>
         
                                    
               LINDA'S DIVERSIFIED HOLDINGS INC. AND SUBSIDIARIES
                   Notes to consolidated financial statements
                                   (Unaudited)


(1)  The consolidated  balance sheet of Linda's  Diversified  Holdings Inc. (the
     "Company")  as of  December  31,  1996 has been  derived  from the  audited
     consolidated  balance sheet  contained in the Company's  Form 10-KSB  as of
     December  31, 1996 and is presented  for  comparative  purposes.  All other
     financial  statements are unaudited.  All adjustments which are of a normal
     and recurring nature and in the opinion of management  necessary for a fair
     presentation,  have been  included.  The results of operations  for interim
     periods are not  necessarily  indicative of the  operating  results for the
     full year. Footnote  disclosures  normally included in financial statements
     prepared in accordance with generally accepted  accounting  principles have
     been omitted in accordance  with the published rules and regulations of the
     Securities and Exchange Commission. These consolidated financial statements
     should  be read in  conjunction  with the  financial  statements  and notes
     thereto  included in the  Company's  Form 10-KSB for the most recent fiscal
     year.

(2)  On June 5, 1997, the Company  closed its  restaurant in Summit,  New Jersey
     and subsequetly  sold its leasehold  interest for $70,000,  of which $1,000
     was received as a deposit in June and an additional  $6,000 was received in
     July.  The  Company  additionally  sold  its  remaining  equipment  at this
     location for approximately $10,000, payments of which were received in July
     and  August.  The $79,000 of  receivables  due from these sales at June 30,
     1997 are reported as net assets held for sale on the balance  sheet at June
     30, 1997. Losses from this store closing,  consisting  substantially of the
     writeoff of equipment  and excess  inventory  and  totalling  approximately
     $45,000,  are  reported  as a  restructuring  charge  in the June 30,  1997
     financial statements.

(3)  On June 2, 1997, the Company closed a franchised restaurant in Colonia, New
     Jersey  and  subsequently  recorded  a  charge  of  approximately  $130,000
     relating to the writeoff of a note receivable from the franchisee which was
     deemed  uncollectible.  Additionally,  the  Company  recorded  a charge  of
     $20,000 relating to the writeoff of a note receivable deemed  uncollectible
     from its  Westwood  franchisee.  These  charges  are  reported  as bad debt
     expense in the June 30, 1997 financial statements.

     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation - The consolidated financial statements include
     the accounts of Linda's  Diversified  Holdings,  Inc. and its  wholly-owned
     subsidiaries.  All significant intercompany  transactions and balances have
     been eliminated in consolidation.

     Franchise  Related Income and Deferred  Franchise Fees - In connection with
     its franchising  operations,  the Company receives initial  franchise fees,
     royalties  and  advertising  fees from its  franchisees.  Initial  fees are
     recognized  when  the  franchisee  commences   operations.   Royalties  and
     advertising fees, as defined in the underlying  franchise  agreements,  are
     recognized  in the  period  that the  related  franchise  store  revenue is
     generated.

     Restricted  Cash - In connection with  regulatory  banking  requirements in
     certain  states,  National Home Guaranty,a  wholly-owned  subsidiary of the
     Company, is required to post mortgage surety bonds which are collateralized
     by irrevocable  letters of credit. The  collateralization  underlying these
     letters  of  credit  is shown  as  restricted  cash in the  June  30,  1997
     financial statements.


                                      - 5 -
<PAGE>

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

Results of Operations
---------------------

OVERVIEW
--------

The  Company  is a holding  corporation  consisting  of  restaurant  operations,
restaurant  franchising,   and  home-equity  loan  operations.   The  restaurant
entities,  operating  under the name  Linda's  Rotisserie  &  Kitchen  (formerly
Linda's Flame Roasted  Chicken),  consist of five  restaurants,  one of which is
Company-owned and operated,  four of which are franchised,  and a master license
for the  Philippines . The loan operations are conducted  through  National Home
Guaranty ("NHG"), a wholly-owned subsidiary, which commenced operations in April
1996,  providing  both  conventional  and  federally-guaranteed   financing  for
single-family  homeowners  and  lead-generation  services for  contractors  with
respect to  home-improvement  services in the subprime housing  markets.  NHG is
approved by the US  Department  of Housing and Urban  Development  to  originate
federally-guaranteed  Title I loans, and is currently a licensed lender in seven
states including New Jersey,  Massachusetts,  Rhode Island, Delaware,  Maryland,
New  Hampshire  and  Connecticut.  NHG  also  operates  on  a  limited-basis  in
Pennsylvania  and New York  which  do not  require  a  special  license  for the
services in which NHG are currently providing in those states. NHG currently has
an application for a second mortgage license pending in New York.

In order to improve its liquidity and provide  additional working capital during
the  start-up  phase of NHG's  business,  the Company  requires  and is actively
seeking additional financing through a private placement of debt or equity, or a
joint  venture.  However,  there can be no  assurance  of  success.  The Company
believes  that  additional   funding  is  required  for  it  to  meet  its  cash
requirements for the next twelve months.  If such financing is not secured,  the
Company will be required to further  curtail its  activities  (which the Company
does not  believe  will  provide a  solution  to the  problem),  sell NHG or its
lending  business,  or in  the  absence  of a  viable  alternative,  discontinue
operations.


RESTAURANT OPERATIONS
---------------------

In order to focus future resources on its loan operations,  the Company has been
exploring the possibility of selling its restaurant  business or terminating its
existing  franchisees.  There can be no  assurance  that these  efforts  will be
successful.

Gross restaurant sales for the six months ended June 30, 1997 decreased $179,000
(28%) as compared to the six months ended June 30, 1996.  Comparable store gross
sales (for locations opened at least one year) decreased $36,000 (9%). The total
sales decreases were due to the Company having three Company-owned  locations in
the six months of 1996 compared with two such locations in 1997 (one at June 30,
1997).  The Company closed  restaurants in June 1997 and June 1996 to reduce its
losses and preserve its working capital. The same store sales decreases were due
to the increased saturation of, and intense competition from, similar restaurant
concepts throughout New Jersey.  Gross sales for the quarter ended June 30, 1997
decreased $105,000 (32%) as compared to the quarter ended June 30, 1996.
Comparable store gross sales for this period decreased $26,000 (12%).

Food and paper costs  collectively  decreased as a percentage of gross sales for
the six months  ended June 30, 1997  compared to 1996 to $175,000  (38% of gross
sales) from $251,000 (40% of gross  sales),  respectively,  due to lower poultry
costs  in 1997.  Additional  cost  reductions  were a  result  of the  continued
shifting of the restaurants'  menu mix to gourmet  sandwiches,  which have lower
food costs than other meals.

                                      - 6 -
<PAGE>

Restaurant labor and related expenses decreased to $142,000 (31% of gross sales)
for the six months  ended June 30, 1997 as  compared  to $227,000  (36% of gross
sales) for 1996.  This decrease,  as a percentage of gross sales,  is due to the
closing,  in June 1996, of the Company's  Livingston,  New Jersey location which
had its  highest  labor  costs,  as well as the  Company's  continued  focus  on
correlating hourly labor to projected sales.

Operating  expenses,  including  such  items as  local  promotion,  repairs  and
maintenance  and store  supplies,  totalled  $21,000 (5% of gross sales) for the
first  six  months of 1997  compared  to  $51,000  (8% of gross  sales)  for the
comparable period in 1996.

Occupancy costs,  including such fixed and recurring items as rent,  common area
maintenance  charges and  utilities,  totalled  $87,000 (19% of gross sales) and
$145,000  (23% of gross  sales) for the six months ended June 30, 1997 and 1996,
respectively. This decrease as a percentage of gross sales is due to the closing
of the Company's Livingston, New Jersey location which had the Company's highest
occupancy costs.

Depreciation and amortization decreased to $53,000 for the six months ended June
30, 1997 from $67,000 for 1996.  This decrease is  attributable to the fact that
the Company had equipment and leasehold  improvements at one additional location
in 1996 which was closed in June 1996.

RESTAURANT FRANCHISING
----------------------

In order to focus future resources on its loan operations,  the Company has been
exploring the possibility of selling its restaurant  business or terminating its
franchise  agreements.  There can be no  assurance  that these  efforts  will be
successful.

The Company's  franchising  operations are administered  through its subsidiary,
Linda's Chicken  International.  As of June 30, 1997, four franchises were open.
Franchise royalty income,  amounted to $22,000 for the six months ended June 30,
1997 compared with $14,000 for the comparable  period in 1996.  This increase is
due to the Company having four franchises  opened at June 30, 1997 compared with
two at June 30, 1996.

The Company  maintains an advertising  fund to be used for regional  advertising
expenditures which benefit all locations. Franchisees are required to contribute
a percentage of their net sales to this fund.  The Company also  contributes  to
the fund promotional  rebates received from suppliers.  For the six months ended
June 30, 1997, this fund had an equal amount of revenues and expenditures.

Expenses  related  to the  franchising  operation,  consisting  of such items as
franchise support personnel, legal fees and advertising, are included in general
and administrative expenses in the Company's financial statements,  and totalled
$59,000  and  $110,000  for the  six  months  ended  June  30,  1997  and  1996,
respectively. This decrease is due, in part, to the elimination of the franchise
director position which existed in 1996.

LOAN OPERATIONS
---------------

The Company's loan operations are conducted  through its subsidiary,  NHG. These
operations include providing single-family homeowners,  primarily in the suprime
market,  with a single source for both home improvement loans  (conventional and
federally-guaranteed)  and  qualified  contractors.  NHG  derives its revenue on
contractor  loans from  marketing fees received from  participating  contractors
representing a percentage of each completed  contract,  and on direct loans from
loan origination  fees charged to borrowers.  The Company  additionally  derives
revenue  on  each  type  of  loan  from  loan  participation  premiums  paid  by
third-party end investors which buy its loans.


                                      - 7 -
<PAGE>
NHG first began receiving  revenue in May 1996 which resulted from the Company's
test  marketing  efforts.  Gross  revenue for the six months ended June 30, 1997
totalled $65,000 including $35,000 in completed  contract fee income,  $7,000 in
loan  origination  fees and  $23,000  in loan  participation  premiums.  For the
quarter ended June 30, 1997, gross revenue totalled $50,000 including $25,000 in
completed  contract fee income,  $6,000 in loan  origination fees and $19,000 in
loan participation premiums. The Company recognizes contract fee income when the
related contract is completed by the contractor.  Loan origination fees and loan
participation premiums are recognized when the related loan is disbursed.

NHG had  expenses  of  $925,000  for the six  months  ended  June 30,  1997,  as
described below, relating to its operations.

Payroll and related expenses, consisting of management,  telemarketing and field
marketing  representatives,  credit analysts and processors,  totalled  $438,000
(48% of total expenses) for the six months ended June 30, 1997. While management
labor is a fixed  expense,  NHG has the ability to  correlate  the amount of its
other  operations  personnel  to  the  loan  request  volume  it  receives.  All
telemarketing representatives and field marketing employees are paid hourly, and
most are part-time employees.

Media and  advertising  costs,  consisting  of media time bought on  television,
production  and  distribution  of direct  mail and mall kiosk  operating  costs,
totalled  $289,000  (31% of total  expenses)  for the six months  ended June 30,
1997.  In March,  the Company  began a field  marketing  program  consisting  of
information  kiosks placed in high traffic shopping malls. Each kiosk is staffed
by trained  representatives who assist homeowners in getting information about a
home  improvement  loan, debt  consolidation or home equity loan. In March 1997,
NHG opened the first of such  kiosks in  Woodbridge,  New  Jersey.  The  Company
opened an additional kiosk in Staten Island, New York in April 1997, and a third
kiosk in southern New Jersey in May 1997. If successful,  the Company expects to
continue to expand its field  marketing  program to additional  markets since it
provides the Company with prospects at a lower cost than television advertising.
The Company expects overall media costs to be one of the larger expense items in
future  operations and to have a significant  impact on the generation of future
revenues.

Operating  expenses,  consisting of expenses  necessary to operate the Company's
main  office in New Jersey and its branch  office in  Massachusetts,  as well as
legal and  consulting  fees and  expenses  related  to  obtaining  licenses  and
permits, totalled $197,000 (21% of total expenses) for the six months ended June
30, 1997. Typically,  most of these expenses are of a fixed and recurring nature
and will decrease as a percentage of revenue as revenue increases.

CORPORATE
---------

General and  administrative  expenses  decreased  to $409,000  for the first six
months  of 1997  from  $513,000  in  1996.  This  is as a  result  of  continued
reductions  in  overhead  as a result of the  elimination  of several  corporate
positions.  While the Company anticipates that cost containment will continue to
take place in this expense category,  general and  administrative  expenses will
continue  to  represent  a large  percentage  of  revenues  until the  Company's
subsidiaries can develop gross revenue volume sufficient to absorb these costs.

Bad debt  expense  represents  the  writeoff of certain  notes  receivable  from
franchisees as more fully described in Note 3 to the financial statements.

Restructuring  costs  relate to the  closing of a  Company-owned  restaurant  in
Summit,  New  Jersey  as  more  fully  described  in  Note  2 to  the  financial
statements.

                                      - 8 -

<PAGE>
Interest income  decreased to $29,000 from $35,000 for the six months ended June
30, 1997 and 1996,  respectively.  Investment  earnings in 1996 were principally
from the Company's  investments  in short-term  United States  government-backed
obligations.  This source of income has  decreased  as the Company has  expended
funds which were invested in 1996 on the expansion of its  operations.  Interest
income in 1997 is  substantially  from the receipt of interest income from loans
that NHG sells to third-party  end investors  representing  the period from when
NHG disburses funds to the time that the related loan is sold.


Liquidity and Capital Resources
-------------------------------

Current assets at June 30, 1997 were $454,000 compared to $1,483,000 at December
31,  1996 and current  liabilities  were  $662,000 at June 30, 1997  compared to
$443,000 at December 31, 1996.  The Company's  restaurants  sell to consumers in
what are substantially all cash transactions. Any credit and debit card business
transacted is electronically credited to the Company's accounts within 48 hours.
The  Company's  debt at June 30,  1997,  consisted  of  obligations  owed  under
capitalized  leases  for  point-of-sale  terminals  at each  of the  restaurants
totalling  $19,000.  Additionally,  the Company  issued a note  payable,  with a
remaining  balance  of  $10,000  at June  30,  1997,  in  conjunction  with  its
acquisition of the restaurant in Summit,  NJ. The Company  currently has no bank
borrowings.  The Company is obligated to pay quarterly dividends on its Series A
preferred stock totalling $21,000 per quarter.

The Company  requires  capital  principally to expand the operations of NHG. The
Company is not pursuing new franchisees for its restaurant business and does not
intend to open additional Company-owned restaurants.  Funds, which are extremely
limited,  will be used  primarily  for NHG to continue to develop and refine its
marketing  programs,  buy media  time,  and  expand  its  operations  into other
metropolitan areas. Due to the shortage of working capital,  the Company will be
required to curtail NHG's  operations  shortly  unless  additional  financing is
secured.  The Company  expects  that its future  results  will be  predominantly
affected by the success or failure of NHG.

The   Company's   franchising   operation   currently   has  four   franchisees.
Additionally,  the Company has a master  license  agreement  with a licensee for
territory  rights to develop a minimum of 20 restaurants in the Philippines over
a ten year term.

In order to focus its future resources on its loan  operations,  the Company has
been exploring the possibility of selling its restaurant  business,  terminating
its existing  franchise  agreements or entering  into a strategic  alliance with
respect to its restaurant business. There can be no assurance that these efforts
will be successful.

For the six months ended June 30, 1997, NHG disbursed loans totalling  $896,000,
of which $778,000 had been sold to third-party end investors. Thus, retail loans
receivable  amounted  to $118,000 at June 30,  1997.  The Company  sold all such
retail loans in July 1997.

The Company  anticipates  that its current trend of losses will  continue.  NHG,
whose  business  is  based  upon  the  home  improvement  and  subprime  lending
industries,  experiences  a decrease  in  potential  revenues  during the winter
months due to a significant slowdown in home improvement requests and contractor
ability to complete projects during adverse winter weather in the Northeast, the
primary  area  where  NHG  currently  lends.  In order to  offset  the  seasonal
decreases expected in its business in the future,  the Company will attempt,  if
funds  become  available  for the purpose,  to initiate  lending  activities  in
southeastern  states to improve its ability to generate  loan volume  during the
winter, and expand its direct lending efforts to include more debt consolidation
and home equity loans. License application  processes are lengthy,  however, and
there is no assurance as to when the Company will actually  obtain the requisite
licenses in any state.

                                      - 9 -
<PAGE>

In order to improve its liquidity and provide  additional working capital during
the start-up  phase of NHG's  business,  the Company  requires,  and is actively
seeking  additional  financing  through a private  placement  of debt or equity.
However,  there can be no  assurance  of  success.  The  Company  believes  that
additional funding is required for it to meet its cash requirements for the next
twelve months. If such financing is not secured, the Company will be required to
further curtail its activities  (which the Company does not believe will provide
a solution to the problem),  sell NHG or its lending business, or in the absence
of a viable alternative, discontinue operations.


Forward-Looking Information May Prove Inaccurate
------------------------------------------------

This report contains  forward-looking  statements and information that are based
on  management's  beliefs  as well  as  assumptions  made  by,  and  information
currently  available  to,  management.  When  used in this  document,  the words
"anticipate",  "believe",  "estimate",  "expect"  and  similar  expressions  are
intended to  identify  forward-looking  statements.  Such  statements  involve a
number of risks and  uncertainties.  Among the factors  that could cause  actual
results to differ materially are the following:  business  conditions and growth
in the industry, general economic conditions, product development,  competition,
government  regulations,  rising costs for food and paper supplies,  the risk of
franchising, and all the risks associated with start-up businesses as it relates
to the  activities of NHG, and the risk factors  listed from time to time in the
Company's  SEC  reports,  including,  but not limited to, the  Company's  annual
report on Form 10-KSB for the year fiscal year ended December 31, 1996.


Part II.  OTHER INFORMATION
---------------------------

Item 1.  Legal Proceedings
           None.

Item 2.  Changes in Securities
           None.

Item 3.  Defaults upon Senior Securities
           None.

Item 4.  Submission of Matters to a Vote of Security Holders
           None.

Item 5.  Other Information

          The  Company has been  notified by Nasdaq that it no longer  satisfies
          the requirements for listing on the Nasdaq SmallCap Market.  While the
          Company   is   exploring   opportunities   to  satisfy   the   listing
          requirements,  and is communicating  with Nasdaq with respect to these
          issues,  the Company  believes it likely that it will not maintain the
          SmallCap  listing in which  case,  the  Company  will seek to have its
          securities trade on the OTC Bulletin Board.

Item 6.  Exhibits and Reports on Form 8-K

               a)  Exhibits:  Exhibit 27  (Financial  Data  Schedule  for Second
               Quarter of 1997) 
               b) Reports on Form 8-K


               No  reports on Form 8-K have been filed  during the  quarter  for
               which this report is filed.


                                     - 10 -

<PAGE>

                                   SIGNATURES

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




                                    Linda's Diversified Holdings Inc.
                                             (Registrant)


                                      /s/ Peter Weissbrod
                                    ------------------------------------------
August 13, 1997                     Peter Weissbrod, President
                                    (Principal Executive and Financial Officer)








                                      -11-