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 September 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

<TABLE>
<CAPTION>

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

<S>                                                                                <C>                 <C>
                CURRENT ASSETS:
                     Cash and cash equivalents                                          $0     $     1,331,582
                     Inventories                                                     6,790              15,065
                     Retail loans receivable                                       114,566              42,691
                     Notes receivable, current portion                              50,000              10,000
                                                                                                        
                     Prepaid expenses and other current assets                      68,233              84,049
                                                                           ----------------    ---------------
                               Total Current Assets                                239,589           1,483,387
                                                                           ----------------    ---------------


                PROPERTY AND EQUIPMENT                                             330,077             432,289
                                                                           ----------------    ---------------
                OTHER ASSETS:
                     Restricted cash                                               100,000             162,500
                     Notes receivable, less current portion                           -                150,155
                     Intangible assets                                              28,853              39,299
                     Deposits and other assets                                      14,792              19,923
                                                                           ----------------    ---------------
                                                                                   143,645             371,877
                                                                           ----------------    ---------------

                                                                                  $713,311     $     2,287,553
                                                                           ================    =============== 

               LIABILITIES AND STOCKHOLDERS' EQUITY

               OTHER LIABILITIES:
                    Long term debt, current portion                                $28,224     $        51,926
                    Accounts payable and accrued expenses                          530,755             295,119
                    Accrued payroll and payroll taxes                               15,591               5,969
                    Sales tax payable                                                3,379               4,866
                    Deferred franchise fees                                        160,000              85,000
                                                                           ----------------    ---------------
                         Total Current Liabilities                                 737,949             442,880
                                                                           ----------------    ---------------
               LONG TERM LIABILITIES:
                    Long term debt, less current position                            -                   2,709
                    Deferred rent                                                   41,854              42,519
                                                                           ---------------     ---------------
                                                                                    41,854              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                                         (8,166,295)         (6,300,358)
                                                                           ---------------     ---------------
                                                                                   (66,492)          1,799,445

                                                                                $  713,311     $     2,287,553
                                                                           ---------------     ---------------
        
</TABLE>
          See accompanying notes to consolidated financial statements.

                                      -2-
<PAGE>

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

                                                                Nine Months Ended                    Three Months Ended
                                                                  September 30,                         September 30,
                                                     ------------------------------------------------------------------------
                                                          1997            1996                    1997             1996
                                                     ---------------  --------------         ---------------  ---------------

<S>                                                             <C>           <C>                      <C>            <C>
      REVENUES:
           Restaurant sales, net                           $599,767        $886,308                $163,360         $275,271
           Initial franchise fees                            75,000          40,000                  50,000           15,000
           Franchise royalties                               23,386          21,411                   1,765            8,953
           Contract fee income                               41,152          13,841                   5,800           10,680
           Contractor lead fees                               9,466          17,250                   2,440            1,750
           Loan originations fees                            37,498           7,500                  14,900                0
                                                     ---------------  --------------         ---------------  ---------------
                                                            786,269         986,310                 238,265          311,654
                                                     ---------------  --------------         ---------------  ---------------

      COSTS AND EXPENSES:
         Restaurant Operations:
              Food and paper costs                          228,516         364,554                  53,081          114,001
              Restaurant labor and related expenses         158,992         307,155                  16,936           80,158
              Operating expenses                             24,545          87,293                   3,897           16,106
              Occupancy expenses                            109,777         185,560                  22,390           40,097
              Depreciation and amortization                  61,659          98,439                   9,008           31,749
         Loan Operations:
              Payroll and related expenses                  479,161         344,748                  41,326          129,202
              Media and advertising costs                   329,773         338,512                  40,768           81,906
              Operating expenses                            397,566         219,209                 200,235           74,618
         Corporate and Franchising:
              General and administrative                    625,589         743,773                 216,167          231,077
              Bad debt expense                              153,446            -                      3,291            -
              Restructuring charge                           46,513         246,967                   1,601                0

                                                     ---------------  --------------         ---------------  ---------------
                                                          2,615,537       2,936,210                 608,700          798,914
                                                     ---------------  --------------         ---------------  ---------------

      LOSS FROM OPERATIONS                               (1,829,268)     (1,949,900)               (370,435)        (487,260)

      OTHER INCOME (EXPENSE):
           Interest and other income                         31,062          54,360                   1,667           19,048
           Interest expense                                  (4,733)        (11,364)                   (873)          (3,277)
                                                     ---------------  --------------         ---------------  ---------------
                                                             26,329          42,996                     794           15,771
                                                     ---------------  --------------         ---------------  ---------------

      NET LOSS                                           (1,802,939)     (1,906,904)               (369,641)        (471,489)

      PREFERRED STOCK DIVIDENDS                              63,000            -                     21,000            -

                                                     ---------------  --------------         ---------------  ---------------
      NET LOSS APPLICABLE TO COMMON STOCK                (1,865,939)  $ (1,906,904)                (390,641)        (471,489)
                                                     ===============  ======================================  ===============

      NET LOSS PER COMMON SHARE                      $        (0.77)  $      (0.92)      $          (0.17)$     $    (0.20)
                                                     ==========================================================================
                                                                     
      WEIGHTED AVERAGE NUMBER OF
        COMMON SHARES OUTSTANDING                         2,415,000       2,078,383               2,415,000        2,415,000
                                                     ===============  ==============         ===============  ===============

</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>


                                                                                                 Nine Months Ended
                                                                                                      September 30,
                                                                                    ----------------------------------
                                                                                         1997               1996
                                                                                    ---------------     --------------

<S>                                                                                        <C>                   <C>          

         CASH FLOWS FROM OPERATING ACTIVITIES:
              Net loss                                                                  (1,865,939)        (1,906,954)
              Adjustments to reconcile net loss to net cash
                used in operating activities:
                   Depreciation and amortization                                            61,659             98,439
                   Restructuring charge                                                     46,513            266,987
                   Bad debt expense                                                        153,446               -
                   Changes in operating assets and liabilities:
                      Decrease in inventories                                                8,275              9,358
                      (Increase) decrease in prepaid expenses and other assets              15,816           (170,492)
                      (Increase) decrease in restricted cash                                62,500           (162,500)
                      (Increase) decrease in deposits and other assets                       5,131            (53,089)
                      Increase in accounts payable and accrued expenses                    214,969             67,062
                      Increase in accrued payroll and payroll taxes                          9,622            (14,336)
                      Decrease in sales tax payable                                         (1,487)            (2,042)
                      Increase in deferred franchise fees                                   75,000             15,000
                      Increase (decrease) in deferred rent                                    (665)           (20,090)
                                                                                    ---------------     --------------
                         Net cash used in operating activities                          (1,215,160)        (1,872,657)
                                                                                    ---------------     --------------


         CASH FLOWS FROM INVESTING ACTIVITIES:
              Proceeds from redemption of cash investments                                    -               721,000
              Acquisition of cash investments                                                 -                     0
              Funds advanced under notes receivable                                           -              (240,525)
              Proceeds from notes receivable                                                10,000           (506,459)
              Disbursements for retail loans receivable                                 (1,506,471)           383,277
              Proceeds from sale of retail loans receivable                              1,500,833            471,110
              Acquisition of property and equipment                                        (52,373)          (118,940)
                                                                                    ---------------     --------------
                         Net cash provided by (used in) investing activities               (48,011)           709,463
                                                                                    ---------------     --------------


         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                                                   (26,411)           (33,417)
                                                                                    ---------------     --------------
                         Net cash used in financing activities                             (68,411)         1,620,894
                                                                                    ---------------     --------------

         NET CHANGE IN CASH AND CASH EQUIVALENTS                                        (1,331,582)           457,700

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

         CASH AND CASH EQUIVALENTS, End of period                                   $          0            1,015,713
                                                                                    ==================================


         SUPPLEMENTAL INFORMATION:
              Interest paid                                                         $          3,860           11,384
                                                                                    ==================================


</TABLE>




          See accompanying notes to consolidated financial statements.

                                      - 4 -


<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 September 15, 1997, the Company sold its Master License Agreement to the
     Licensee  for  $50,000  payable in five  equal  monthly  payments.  It also
     terminated its franchise in Flemington,  for a return of a security deposit
     held for a second restaurant which did not open.


     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 inter- company 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  September  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   formerly  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 four restaurants,  one of
which is Company-owned and operated, three of which are franchised, and a master
license  for the  Philippines  which  has  subsequently  been  sold  back to the
licensor.  The loan  operations  were conducted  through  National Home Guaranty
("NHG"),  a wholly-owned  subsidiary,  which ceased operations in September 1997
due to lack of capital  necessary to fund  advertising to generate leads for its
loans.

In order to improve its liquidity and provide  additional  working capital,  the
Company  has been and is  continuing  to seek  additional  financing  through  a
private placement of debt or equity, joint venture or a sale. 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 three months. Because
the Company has been unsuccessful in accomplishing such financing, it has had to
substantially  curtail its activities  and will continue to do so.  Overhead has
been slashed, salaries reduced, and staff terminated in order to curtail losses.
Because of the Company's limited assets,  the Company will likely be required to
discontinue  operations  entirely unless financing is accomplished  shortly.  If
such financing is not secured,  the Company will be required to further  curtail
its  activities,  sell  remaining  restaurant  assets,  sell NHG or its  lending
business,  or in  the  absence  of a  viable  alternative,  totally  discontinue
operations.


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

In order to find a buyer or  strategic  partner,  the Company has been trying to
sell its restaurant  business and terminate its existing  franchisees.  To date,
the Master License in the  Philippines  and the  Flemington  franchise have been
terminated  under  mutually  acceptable  terms.  Under the agreement with Master
Licensee,  the Company is required to provide  pre-opening  support and training
until the first restaurant is opened in the Philippines, scheduled for November,
1997. The Company has initiated  arbitrations against its Colonia,  South Orange
and Westwood franchises for default under the franchise agreement.  There can be
no assurance that these efforts will be successful.

Gross  restaurant  sales for the nine months ended  September 30, 1997 decreased
$299,000  (32%) as  compared  to the  nine  months  ended  September  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  nine  months  of 1996  compared  with two such
locations in 1997 (one at September 30, 1997). The Company closed restaurants in
July 1997 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  September 30, 1997  decreased  $105,000  (32%) as compared to the
quarter ended September 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 nine months ended  September  30, 1997  compared to 1996 to $136,000 (36% of
gross sales) from  $364,000  (40% of gross  sales),  respectively,  due to lower
poultry costs in 1997. Additional cost reductions were a result of the continued
shifting of the restaurant's  menu mix to gourmet  sandwiches,  which have lower
food costs than other meals.


                                      - 6 -

<PAGE>

Restaurant labor and related expenses decreased to $159,000 (26% of gross sales)
for the nine months  ended  September  30, 1997 as compared to $307,000  (33% 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,  totaled  $24,000 (4% of gross  sales) for the
first  nine  months of 1997  compared  to  $87,000  (9% 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,  totaled  $110,000 (18% of gross sales) and
$186,000  (20% of gross sales) for the nine months ended  September 30, 1997 and
1996,  respectively.  This decrease as a percentage of gross sales is due to the
closing of the Company's Summit, New Jersey location.

Depreciation  and  amortization  decreased  to $62,000 for the nine months ended
September 30, 1997 from $98,000 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 obtain additional funds, the Company has been trying to sell its
restaurant  business and  terminate 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 September 30, 1997, three franchises were
open.  Franchise  royalty income,  amounted to $23,000 for the nine months ended
September 30, 1997 compared with $21,000 for the comparable period in 1996. This
increase is due to the Company having three franchises  opened during the period
ending  September  30, 1997  compared  with two for the same period in the prior
year.

The  Company did  maintain an  advertising  fund used for  regional  advertising
expenditures to benefit all locations,  but since the current  franchises are no
longer  contributing,  it has a zero  balance in this  fund.  The  Company  also
contributes to the fund for promotional rebates received from suppliers. For the
nine months ended  September 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 totaled
$63,000 and  $156,000  for the nine months  ended  September  30, 1997 and 1996,
respectively.  This decrease is due, in part, to the  discontinuation of selling
expenses to sell more franchises.


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

     The Company's loan  operations had been conducted  through its  subsidiary,
NHG,  which ceased  operations  on September  30, 1997 due to lack of capital to
continue   marketing.   These  operations   included   providing   single-family
homeowners, primarily in the subprime market, with a single source for both home
improvement  loans   (conventional  and   federally-guaranteed)   and  qualified
contractors.  NHG derived 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  derived revenue on each type of loan from
loan  participation  premiums paid by third-party end investors which bought its
loans.


                                      - 7 -

<PAGE>

Gross  revenue for the nine months  ended  September  30, 1997  totaled  $65,000
including $41,000 in completed  contract fee income,  $9,000 in loan origination
fees and $37,000 in loan participation premiums. For the quarter ended September
30, 1997, gross revenue totaled $23,000 including $26,000 in completed  contract
fee income,  $2,000 in loan origination  fees and $15,000 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 $1,206,500 for the nine months ended  September 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, totaled $479,000 (40%
of  total  expenses)  for the  nine  months  ended  September  30,  1997.  While
management labor is a fixed expense,  NHG's operations personnel,  telemarketing
representatives   and  field  marketing  employees  have  been  laid  off  until
additional financing or a purchaser is found.

Media and  advertising  costs,  consisting  of media time bought on  television,
production  and  distribution  of direct  mail and mall kiosk  operating  costs,
totaled $330,000 (27% of total expenses) for the nine months ended September 30,
1997. The Company  discontinued  its field  marketing  program in Woodbridge and
Cherry  Hill at the end of the third  quarter  due to lack of capital and closed
its Staten Island kiosk on October 30, 1997.  Advertising has been  discontinued
until additional financing is secured.

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,  totaled  $397,000  (32% of total  expenses)  for the nine months ended
September 30, 1997.

CORPORATE
---------

General and  administrative  expenses  decreased  to $626,000 for the first nine
months  of 1997  from  $744,000  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 have
been greatly diminished due to the cessation in NHG's operations.

Interest  income  decreased  to $31,000  from  $54,000 for the nine months ended
September  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 has sold to  third-party  end  investors
representing  the  period  from  when NHG  disbursed  funds to the time that the
related loans were sold.


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

Current  assets at September  30, 1997 were  $240,000  compared to $1,483,000 at
December 31, 1996 and current  liabilities  were  $738,000 at September 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  September  30,  1997,  consisted  of
obligations owed under capitalized leases for point-of-sale terminals at each of



                                      - 8 -
<PAGE>

the restaurants  totaling $28,000 and accounts payable of $531,000.  The Company
has no bank borrowings.  The Company is obligated to pay quarterly  dividends on
its  Series A  preferred  stock  totaling  $21,000  per  quarter  and missed its
September 15, 1997  payment.  The next payment is due December 15, 1997. If four
consecutive payments are missed, the bondholder has the right to take control of
the Board of Directors.  Because of the Company's  limited  assets,  the Company
will likely be required to continue to sell assets,  reduce  overhead  expenses,
and/or discontinue operations entirely unless financing is accomplished shortly.

The Company requires capital  principally to continue 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.  Due to the  shortage of
working  capital,  the Company has been  required  to curtail  NHG's  operations
including  returning  state mortgage  licenses,  until  additional  financing is
secured.

The   Company's   franchising   operation   currently   has  four   franchisees.
Additionally, the Company sold its Master License Agreement back to its licensee
for  $50,000.  The  Licensee is no longer  obligated  to open  restaurants  on a
development  schedule or pay any future royalties on restaurants it may open. In
order to minimize  losses and provide some capital,  the Company has been trying
to sell its restaurant business and terminate its existing franchise agreements.
There can be no assurance that these efforts will be successful.

For the nine months ended  September  30, 1997,  NHG  disbursed  loans  totaling
$1,506,000,  of which  $1,392,000  had been sold to  third-party  end investors.
Thus,  retail loans  receivable  amounted to $114,000 at September 30, 1997. The
Company sold all such retail loans in July 1997.

In order to improve its liquidity and provide  additional  working capital,  the
Company requires, and is actively seeking additional financing through a private
placement  of debt or equity or sale of the  Company.  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  three  months.  Since  such
financing has not been secured, the Company will likely cease 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  

The Company has missed its September  15, 1997 Dividend  payment on its Series A
Convertible Preferred Stock oustanding.


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 and has been delisted and
has its securities traded on the OTC Bulletin Board.

Item 6.  Exhibits and Reports on Form 8-K

     a)   Exhibits: Exhibit 27   (Financial  Data  Schedule  for the nine months
          ended September 30, 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.

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)




November 15, 1997                    /s/ Peter Weissbrod, President
                                     -------------------------------------------
                                     (Principal Executive and Financial Officer)


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