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 March 31, 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: May 15, 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

                                                     March 31,      December 31,
                                                       1997             1996
                                                    -----------     ------------
                                                    (unaudited)
             ASSETS
                                                                 

CURRENT ASSETS:
    Cash and cash equivalents                    $    732,345      $ 1,331,582
    Inventories                                        10,457           15,065
    Retail loans receivable                            89,489           42,691
    Notes receivable, current portion                     -             10,000
    Prepaid expenses and other current assets         115,370           84,049
                                                 ------------      -----------
          Total Current Assets                        947,661        1,483,387
                                                 ------------      -----------


PROPERTY AND EQUIPMENT                                453,538          432,289
                                                 ------------      -----------

OTHER ASSETS:
   Restricted cash                                    162,500          162,500
   Notes receivable, less current portion             150,155          150,155
   Intangible assets                                   34,880           39,299
   Deposits and other assets                           22,415           19,923
                                                 ------------      -----------
                                                      369,950          371,877
                                                 ------------      -----------

                                                   $1,771,149      $ 2,287,553
                                                 ============      ===========
         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Long term debt, current portion                $   41,966      $     51,926
    Accounts payable and accrued expenses             225,196           295,119
    Accrued payroll and payroll taxes                  23,991             5,969
    Sales tax payable                                   4,493             4,866
    Deferred franchise fees                           160,000            85,000
                                                 ------------      ------------
          Total Current Liabilities                   455,646           442,880
                                                 ------------      ------------


LONG TERM LIABILITIES:
   Long term debt, less current portion                   170             2,709
   Deferred rent                                       42,009            42,519
                                                 ------------      ------------
                                                       42,179            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                           (6,826,479)       (6,300,358)
                                                  -----------      ------------
          Total Stockholders' Equity                1,273,324         1,799,445

                                                  $ 1,771,149      $  2,287,553
                                                  ============     ============

See accompanying notes to consolidated financial statements.

                                      - 2 -

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

                                                       Three Months Ended
                                                            March 31,
                                                -------------------------------
                                                     1997              1996
                                                --------------  ---------------

REVENUES:
   Restaurant sales, net                             $ 221,517         $291,360
   Initial franchise fees                               25,000              -
   Franchise royalties                                  12,758            4,642
   Contract fee income                                  10,841              -
   Loan origination fees                                   680              -
   Loan participation premiums                           3,095              -
                                                     ---------         --------
                                                       273,891          296,002
                                                     ---------         --------

COSTS AND EXPENSES:
     Restaurant Operations:
          Food and paper costs                          89,713          121,987
          Restaurant labor and related expenses         73,566          119,592
          Operating expenses                            1O,146           20,764
          Occupancy expenses                            43,046           74,336
          Depreciation and amortization                 28,517           31,577
     Loan Operations:
          Payroll and related expenses                 182,610           58,493
          Media and advertising costs                   53,693              -
          Operating expenses                            94,975           22,076
     Corporate and Franchising:
          General and administrative                   205,641          241,986
                                                     ---------         --------

                                                       781,907          690,811
                                                     ---------         --------

LOSS FROM OPERATIONS                                  (508,016)        (394,809)

   OTHER INCOME (EXPENSE):
     Interest and other income                          10,146           13,984
     Interest expense                                   (2,251)          (4,318)
                                                     ----------       ---------
                                                         7,895            9,666
                                                     ----------       ---------

NET LOSS                                              (500,121)        (385,143)

PREFERRED STOCK DIVIDENDS                               21,000              - 
                                                     ----------       ---------
                                                       
NET LOSS APPLICABLE TO COMMON STOCK                 $ (521,121)     $ (385,143)
                                                      =========      ==========

NET LOSS PER COMMON SHARE                           $    (0.22)     $    (0.24)
                                                      =========      ==========

WEIGHTED AVERAGE NUMBER OF
     COMMON SHARES OUTSTANDING                        2,415,000       1,615,000
                                                     ==========      ==========

See accompanying notes to consolidated financial statements.


                                      - 3 -

<PAGE>

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

                                                       Three Months Ended
                                                            March 31,
                                                -------------------------------
                                                     1997              1996
                                                --------------  ---------------


CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                             $ (500,121)  $(385,143)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
    Depreciation and amortization                         28,517      31,577
    Changes in operating assets and liabilities:
      Decrease in inventories                              4,608       3,983
      (Increase) in prepaid expenses and other assets    (31,321)    (88,493)
      (Increase) in deposits and other assets             (2,492)    (16,373)
      Increase (decrease) in accounts payable and
        accrued expenses                                 (69,923)     17,852
      Increase (decrease) in accrued payroll and
        payroll taxes                                     18,022     (21,624)
      Decrease in sales tax payable                         (373)     (1,442)
      Increase in deferred franchise fees                 75,000      25,000
      Increase (decrease) in deferred rent                  (510)      4,131
                                                       ---------    --------
             Net cash used in operating activities      (478,593)   (430,532)
                                                       ---------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Proceeds from redemption of cash investments           -        571,000
     Acquisition of cash investments                        -        (88,000)
     Funds advanced under notes receivable                  -       (198,228)
     Proceeds from notes receivable                       10,000       1,737
     Disbursements for retail loans receivable          (145,035)        -
     Proceeds from sale of retail loans receivable        98,237         -
     Acquisition of property and equipment               (45,347)    (55,513)
     Acquisition of intangible assets                       -         (3,580)
                                                       ---------   ---------
           Net cash provided by (used in)                        
             investing activities                        (82,145)    227,416
                                                       ---------   ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
       Payments of preferred dividends                   (21,000)        -
       Payments of long-term debt                        (12,499)    (10,935)
                                                        --------    --------
           Net cash used in financing activities         (33,499)    (10,935)
                                                       ---------   ---------

NET CHANGE IN CASH AND CASH EQUIVALENTS                 (594,237)   (214,051)

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

CASH AND CASH EQUIVALENTS, End of period               $ 732,345   $ 343,962
                                                       =========   =========

SUPPLEMENTAL INFORMATION:
   Interest paid                                       $   2,251   $   4,318
                                                       =========   =========
   Income taxes paid                                   $    -      $    -
                                                       =========   =========
 

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)  In  March  1997,  the  Company  signed a master  license  agreement  with a
     licensee and received a $120,000  license fee.  Under this  agreement,  the
     licensee  has  acquired  territory  rights  to  develop  a  minimum  of  20
     restaurants in the Philippines over a ten year term. These restaurants will
     operate under the proprietary trademark, trade names and standard operating
     procedures of the Company,  and will utilize the Company's former operating
     name,  Linda's Flame Roasted Chicken.  The Company will receive  additional
     fees upon the opening of each restaurant,  and monthly royalties based upon
     a percentage of each restaurant's net sales.


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.
 
In March 1996, the Company signed a multi-unit franchise  development  agreement
under  which the  franchisee  will open up to 18  Linda's  Rotisserie  & Kitchen
restaurants,  the first of which opened in  Flemington,  New Jersey on September
28, 1996. Under this agreement, the Company receives initial franchise fees with
respect to each individual  store, and recognizes such income as each such store
commences  operations.  

Cash Equivalents -  
----------------- 

The Company  considers  highly liquid debt  instruments with maturities of three
months or less to be cash  equivalents.  

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 March 31, 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 seven restaurants,  two of which are
Company-owned and operated, and five of which are franchised.  Additionally, the
Company has sold an additional two franchises,  one in New Jersey and one in New
York,  which  are  expected  to open  later in 1997.  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 homeowners and lead-generation  services for
contractors  with respect to  home-improvement  services in the  low-to-moderate
income  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 the NHG are  currently  providing in
those states.

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  will be  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
---------------------

Gross  restaurant  sales for the quarter ended March 31, 1997 decreased  $74,000
(24%) as compared to the quarter  ended March 31, 1996.  Comparable  store gross
sales (for locations opened at least one year) decreased $14,000 (6%). The total
sales decreases were due to the Company having three Company-owned  locations in
the first quarter of 1996 compared with two such  locations in 1997. The Company
closed a  restaurant  in 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.

Food and paper costs  collectively  decreased as a percentage of gross sales for
the three months ended March 31, 1997  compared to 1996 to $90,000 (39% of gross
sales) from $122,000 (40% of gross  sales),  respectively,  due to lower poultry
costs in 1997. These costs were at a ten-year high throughout  1996.  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.
 
Restaurant  labor and related  expenses  decreased to $74,000 (32% of gross
sales) for the quarter  ended  March 31,  1997 as  compared to $122,000  (39% 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.

 
                                      - 6 -
<PAGE>

Operating  expenses,  including  such  items as  local  promotion,  repairs  and
maintenance  and store  supplies,  totalled  $10,000 (4% of gross sales) for the
first  three  months of 1997  compared  to $21,000  (7% 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  $43,000 (19% of gross sales) and
$74,000  (25% of gross  sales) for the  quarters  ended March 31, 1997 and 1996,
respectively. This decrease as a percentage of gross sales is due to the closing
of the Company' Livingston, New Jersey location which had its highest occupancy
costs.

Depreciation and  amortization  decreased to $29,000 for the quarter ended March
31, 1997 from $32,000 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
----------------------

The Company's  franchising  operations are administered  through its subsidiary,
Linda's  Chicken  International.  As of March 31,  1997,  five  franchises  were
opened. The first in Colonia, New Jersey, began operations in December 1995. The
second, a free-standing prototype in Westwood, New Jersey, opened in April 1996.
The third  location  opened in  Flemington,  New Jersey in September  1996.  The
fourth  location  opened in  Oakland,  New Jersey in  November  1996.  The fifth
location  opened in South Orange,  New Jersey in March 1997.  Franchise  royalty
income,  amounted to $13,000 for the three months ended March 31, 1997  compared
with  $5,000 for the  comparable  period in 1996.  This  increase  is due to the
Company  having five  franchises  opened at March 31, 1997  compared with one at
March 31, 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 three months ended
March 31, 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
$30,000  and  $42,000  for  the   quarters   ended  March  31,  1997  and  1996,
respectively.


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

The Company's loan operations are conducted  through its subsidiary,  NHG. These
operations  include  providing  low-to-moderate  income homeowners with a single
source for both home improvement loans  (conventional and  federally-guaranteed)
and  qualified  contractors.  Initially,  NHG  intended  to provide  essentially
federally-guaranteed   loans,   but   has   expanded   to   now   include   both
federally-guaranteed   and  convential   loans.  NHG  derives  its  revenue from
administrative  fees  received from  participating  contractors  representing  a
percentage  of each  completed  contract.  The Company  additionally  can derive
revenue  from  loan  participation  by  means  of  receiving  a  premium  from a
third-party buyer of such loans, or loan origination fees from a borrower.

NHG first began receiving  revenue in May 1996 which resulted from the Company's
test  marketing  efforts.  Gross  revenue for the  quarter  ended March 31, 1997
totalled $15,000 including $11,000 in completed  contract fee income,  $1,000 in
loan origination  fees and $3,000 in loan  participation  premiums.  The Company
recognizes  contract  fee income when the related  contract is  completed by the
contractor.

                                      - 7 -
<PAGE>


NHG  experienced  charges of $331,000 for the quarter  ended March 31, 1997,  as
described below, relating to the continued test marketing of its operations.

Payroll  and  related   expenses,   consisting  of   management,   telemarketing
representatives, credit analysts and processors, totalled $183,000 (55% of total
expenses) for the three months ended March 31, 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,  as
well as the production and distribution of direct mail, totalled $54,000 (16% of
total  expenses)  for  the  quarter  ended  March  31,  1997.  Due to  initially
disappointing results from its test advertising campaign,  NHG worked with media
consultants on redesigning  and refocusing its commercials to better attract its
target  markets.  These new  commercials  continue  to be  tested in NHG's  core
markets.   Additionally,  the  Company  has  begun  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 or debt consolidation.  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.
Television  advertising  costs were  significantly  reduced for the three months
ended March 31, 1997 due to the seasonal decreases of potential home-improvement
loan business  during the winter in the northeast.  The Company  expects overall
media costs to be one of the largest  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  $95,000 (29% of total  expenses) for the quarter ended March
31, 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 $206,000 for the first three
months  of 1997  from  $242,000  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.

Interest  income  decreased to $10,000 from $14,000 for the quarters ended March
31, 1997 and 1996,  respectively.  Investment  earnings are 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.  Additionally,  the Company
receives  interest  income  from  loans  that NHG  sells to  third-party  buyers
representing  the  period  from  when NHG  disburses  funds to the time that the
related loan is sold.


                                      - 8 -

<PAGE>


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

Current  assets at March 31,  1997  were  $953,000  compared  to  $1,483,000  at
December  31,  1996 and  current  liabilities  were  $481,000  at March 31, 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 March 31, 1997,  consisted of obligations
owed  under  capitalized  leases  for  point-of-sale  terminals  at  each of the
restaurants totalling $28,000.  Additionally, the Company issued a note payable,
with a remaining  balance of $14,000 at March 31, 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
currently  intend to open additional  Company-owned  restaurants.  Funds 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.  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 seven franchisees,  five of
which have stores  which are  currently  open,  and two of which are expected to
open later in 1997.  Additionally,  in March 1997,  the Company  signed 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.

The  Company  has been  exploring  the  possibility  of selling  its  restaurant
business 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 three months ended March 31, 1997, NHG closed loans totalling  $145,000,
of which  $56,000 had been sold to a  third-party  lender.  Thus,  retail  loans
receivable  amounted to $89,000 at March 31,  1997.  The  Company  sold all such
retail loans in April 1997.
 
The Company  anticipates  that its current trend of losses will  continue.  NHG,
whose  business  is based  upon the home  improvement  industry,  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 is attempting to initiate lending activities
in southeastern states to improve its ability to generate loan volume during the
winter.  License  application  processes are lengthy,  however,  and there is no
assurace as to when the Company will actually  obtain the requisite  licenses in
any state.  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 will be 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.

                                      - 9 -
<PAGE>


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
           None.

Item 6.  Exhibits and Reports on Form 8-K

     a) Exhibits: Exhibit 27 (Financial Data Schedule for First 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.


                                   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)



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


                                     - 10 -