SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

              [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

                                       OR

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


               Commission File Number: 33-18099-NY and 33-23169-NY

                            PHASEOUT OF AMERICA, INC.
        (Exact Name of small business issuer as specified in its charter)

         DELAWARE                                              11-2873662
State or other jurisdiction of                           (IRS Employer I.D. No.)
Incorporation or organization)

                 6900 Jericho Turnpike, Syosset, New York 11791
                    (Address of principal executive offices)

Issuer's telephone number, including area code: (516) 364 - 3500

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) filed all reports  required to
be filed by Section 13 or 15 (d) of the Securities  Exchange Act of 1934, during
the  preceding 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___

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
Common Stock, as of the last practicable date.

         Class                                     Outstanding at March 31, 1997
Common Stock, par value                                    108,869,929
$.00003 per share


<PAGE>


PART 1 FINANCIAL INFORMATION
Item 1, financial statements


PHASEOUT OF AMERICA, INC.
FINANCIAL STATEMENTS (Unaudited)
March 31, 1997


Financial Statements                                                    Page
                                                                        ----


Balance Sheet                                                          3 - 4


Statements of Operations                                                   5


Statement of Shareholders' (Deficit)                                       6


Statements of Cash Flows                                               7 - 8


Notes to Financial Statements                                         9 - 10


Management's Discussion and Analysis                                 11 - 13


Other Information                                                         14


Signatures                                                                15


                                       2
<PAGE>


PHASEOUT OF AMERICA, INC.
Balance Sheet
March 31, 1997
(Unaudited)


Assets
     Current Assets
       Cash                                                             $172,576
       Accounts receivable-net of allowance for doubtful
       accounts of $1,000                                                  1,767

       Inventory                                                          92,683

       Advances for clinical study                                        25,000

       Advances to Automotive Marketing, Inc.                              3,280

       Prepaid expenses                                                    5,414
                                                                        --------

                                                                         300,720

     Furniture and Equipment - at cost - net of accumulated
       depreciation of $17,309                                            25,606

     Patents - at cost - net of accumulated amortization of
     $7,468                                                               40,967

     Deferred preoperating and developmental costs                         7,779

     Security  Deposits                                                    4,137
                                                                        --------

                                                                        $379,209
                                                                        ========

See notes to financial statements.


                                       3
<PAGE>


PHASEOUT OF AMERICA, INC.
Balance Sheet
March 31, 1997
(Unaudited)

<TABLE>
<S>                                                                           <C>    
Liabilities and Shareholders' (Deficit)
     Current Liabilities

       1992 convertible debentures - including accrued interest
         of $6,150                                                        $    16,150

       Shareholder's loan - current portion                                    37,064

       Taxes payable                                                            2,399

       Accounts payable                                                       604,457

       Accrued officer and director's compensation                            102,500

       Loans from directors                                                    33,792

       Accrued expenses                                                        60,334
                                                                          -----------

                                                                              856,696
                                                                          -----------

     Shareholder's Loan - net of current portion                              130,000
                                                                          -----------

     Shareholders' (Deficit)
       Series A Convertible Preferred Stock - par value $.001 -
         authorized 600,000 - shares - no shares issued and
         outstanding
     Series  B  Convertible  Preferred  Stock - par  value $.001 -
         authorized 5,000,000 shares - no shares issued and
         outstanding
     Common  Stock - par  value $.00003 -
         authorized  130,000,000 shares - 108,869,929 shares issued and
         outstanding                                                            3,266
     Capital in excess of par                                               3,088,786
     Accumulated (deficit)                                                 (3,699,539)
                                                                          -----------

                                                                             (607,487)

                                                                          $   379,209
                                                                          ===========
</TABLE>

See notes to financial statements.

                                       4
<PAGE>



PHASEOUT OF AMERICA, INC.
Statements of Operations
(Unaudited)



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

Sales - net                                      $    102,960      $    627,844

Cost of Sales                                          41,147           108,203
                                                 ------------      ------------

                                                       61,813           519,641
                                                 ------------      ------------

Selling Expenses                                       21,615           539,748

General and Administrative Expenses                   140,763           210,305
                                                 ------------      ------------

                                                      162,378           750,053
                                                 ------------      ------------

(Loss) Before Other Income (Expenses)                (100,565)         (230,412)
                                                 ------------      ------------

Other Income (Expenses)
   Interest income                                      2,233                11
   Interest (expense)                                 (14,620)          (21,801)
                                                 ------------      ------------

                                                      (12,387)          (21,790)
                                                 ------------      ------------

Net (Loss)                                       $   (112,952)     $   (252,202)
                                                 ============      ============

(Loss) Per Share                                 $    NIL          $    NIL
                                                 ============      ============


Weighted Average Number of Shares
   Outstanding (to nearest 1,000,000)              90,000,000        75,000,000
                                                 ============      ============


See notes to financial statements.


                                       5
<PAGE>


PHASEOUT OF AMERICA, INC.
Statement of Shareholders' (Deficit)
For the Three Months Ended March 31, 1997

(Unaudited)

<TABLE>
<CAPTION>
                                                Number of
                                              Common  Stock     Amount     Capital in
                                                 Shares        $.00003       Excess     Accumulated
                                              (Post-split)    Par Value     Par Value     Deficit
                                             ------------------------------------------------------
<S>                                           <C>           <C>           <C>           <C>         
Balance - December 31, 1996                   108,369,929   $     3,251   $ 3,080,051   $(3,586,587)

Stock issued for accrued services rendered:
 Officers and Directors                           500,000            15         8,735          --

Net (Loss)                                           --            --            --        (112,952)
                                              -----------   -----------   -----------   -----------

Balance- March 31, 1997                       108,869,929   $     3,266   $ 3,088,786   ($3,699,539)
                                              ===========   ===========   ===========   ===========
</TABLE>


See notes to financial statements


                                       6
<PAGE>


PHASEOUT OF AMERICA, INC.
Statements of Cash Flows                                             Page 1 of 2
(Unaudited)


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

Cash Flows from Operating Activities
   Net (loss)                                            $(112,952)   $(252,202)
   Adjustments to reconcile net (loss) to net cash
     (used for) operating activities:
       Depreciation and amortization                         1,405        1,535
       Expenses paid through the issuance of
               restricted common stock                       8,750         --
       (Increase) decrease in:
         Accounts receivable                                 2,520        6,368
         Inventories                                        34,730       65,120
         Advances to Automotive Marketing,Inc               (3,280)        --
         Prepaid expenses                                     --          7,278
         Deferred preoperating and developmental costs      (7,779)        --
       Increase (decrease) in:
         Notes payable-vendor                              (20,940)        --
         Accrued interest on debentures                      5,375         --
         Accounts payable                                   (9,870)     141,531
         Accrued officers' and directors' compensation      42,500         --
         Taxes payable                                      (1,898)       1,816
         Loans from directors                                  623         --
         Accrued expenses                                  (18,045)        --
                                                         ---------    ---------

                                                           (78,861)     (36,953)
                                                         ---------    ---------
Cash Flows from Investing Activities
   Acquisition of equipment                                   --           (168)
   Patent payments                                          (1,435)        --
                                                         ---------    ---------

                                                            (1,435)        (168)
                                                         ---------    ---------
Cash Flows from Financing Activities

   Repayment of advances from officer/stockholder             --         22,250
   Repayments to shareholder                                (7,500)        --
                                                         ---------    ---------
                                                            (7,500)      22,250
                                                         ---------    ---------
Net Decrease in Cash                                     $ (87,796)   $ (14,871)

Cash - beginning                                           260,372      176,818
                                                         ---------    ---------

Cash - end                                               $ 172,576    $ 161,947
                                                         =========    =========


See notes to financial statements.


                                       7
<PAGE>


PHASEOUT OF AMERICA, INC.                                            Page 2 of 2
Statements of Cash Flows
(Unaudited)

                                                          For the Three Months 
                                                             Ended  March 31
                                                          -------------------- 
                                                           1997          1996
                                                           ----          ----

Supplemental Disclosures

       Interest paid                                     $   --         $20,750
                                                         =========      =======


       Temporary media funds received                    $   --         $40,000
                                                         =========      =======


See notes to financial statements.


                                       8
<PAGE>


PHASEOUT OF AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
March 31, 1997


1.   BACKGROUND AND BASIS OF PRESENTATION

     PhaseOut of America,  Inc.  (the  "Company")  was  organized  as a Delaware
     Corporation  on July 17, 1987 and operated as a  development  stage company
     through  1993.  The  Company's  purpose  is to market  and  distribute  its
     patented phase-out system smoking cessation device (the "product").

     The Company had primarily marketed the product in the United States through
     direct  response   marketing   including   radio,   television   spots  and
     infomercials.  This  domestic  marketing  was  curtailed due to the ongoing
     negotiations  with the Federal Trade Commission  ("FTC").  Once advertising
     claims are  approved,  the Company  intends to reenter the domestic  retail
     market. The Company also distributes the product overseas.

     The financial  statements have been prepared assuming that the Company will
     continue as a going concern. The Company has suffered recurring losses from
     operations  ($112,952  in 1997 and  $252,202 in 1996),  and has had limited
     liquidity  causing  difficulty  in meeting  its current  operating  expense
     obligations  and  debt  service  requirements.   The  Company  is  actively
     marketing  the  product to help  improve  revenues  and is planning to seek
     additional financing through private placement of debt and securities.  The
     financial  statements  do not include  any  adjustments  that might  result
     should  the  continued  existence  of  the  Company  be  threatened  by any
     continued  losses or the  failure  of the above  factors to  influence  the
     financial viability of the Company.

     The interim  statements  were  prepared  pursuant to the  requirements  for
     reporting  on Form 10- QSB.  The  interim  financial  statements  and notes
     thereto  should be read in  conjunction  with the financial  statements and
     notes included in the Company's latest Annual Report on Form 10-KSB for the
     year ended  December 31, 1996.  In the opinion of  management,  the interim
     financial  statements  reflect all adjustments of a normal recurring nature
     necessary  for a fair  statement  of the results for interim  periods.  The
     current period results of operations are not necessarily  indicative of the
     results for the entire year ending December 31, 1997.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Changes  in  significant  accounting  policies  - There  were no changes in
     significant accounting policies during the current period.

3.   STOCKHOLDERS' EQUITY

     Stock Issued to Officers,  Consultants  and  Employees - Through  March 31,
     1997, the Company issued 500,000 shares to officers and directors.


                                       9
<PAGE>


4.   RELATED PARTY TRANSACTIONS

     Loan from Director - A former officer/shareholder,  who is still a director
     of the Company,  is owed  $33,792 by the Company.  The amount is payable on
     demand with a stated interest rate of 11%.

     Accrued  Officer and  Director's  Compensation  - During 1996,  an investor
     group  consisting  of two  individuals,  which  acquired  an 18%  ownership
     interest for $500,000,  was awarded two seats on the Board of Directors and
     two officer positions. The two individuals each receive a consulting fee of
     $60,000 per annum for their management duties.

5.   SHAREHOLDER'S LOAN

     During 1996, the Company received  $200,000 from a shareholder as a loan in
     connection with the Company's media campaign. The loan is to be paid at the
     rate of $2,500 per month.  Interest  accrues at 10% and will be paid with a
     final  balloon  payment.  The  shareholder  agreed to a  moratorium  on the
     monthly $2,500 payments from May 1997 through August 31, 1997.

6.   COMMITMENTS, CONTINGENCIES AND OTHER COMMENTS.

     Dependence  on Major  Customers  and  Suppliers  - Export  sales  represent
     approximately 100% of sales with only one export customer representing more
     than 10% of total sales.

     The  Company  is  currently  purchasing  100% of its  products  from  three
     vendors.

     Regulatory Matters - There have been no changes in the status of regulatory
     inquiries by the Food and Drug  Administration  (FDA) and the Federal Trade
     Commission (FTC).

     Litigation - In July 1997, the Company's former attorney, who is a relative
     of a  Director,  brought an action  against  the  Company in New York State
     Supreme Court,  New York County for unpaid attorney fees and  disbursements
     of approximately  $18,000.  Legal counsel has not rendered an opinion as to
     the ultimate outcome of this matter.


                                       10
<PAGE>


PHASEOUT OF AMERICA, INC.
Management's Discussion and Analysis


                              Results of Operations
                   Three Months Ended March 31, 1997 Compared
                      to Three Months Ended March 31, 1996



     The Company  incurred a net loss of  $112,952  for the three  months  ended
March 31, 1997 as compared to the loss of $252,202  for the three  months  ended
March 31, 1996.  Three-month  sales  decreased  $524,884.  The decrease in sales
resulted from no retail sales in 1997 of the product through  television  direct
response  methods which results in  substantially  higher unit selling prices as
well as increases in unit volume. The Company's  domestic  marketing  activities
were curtailed due to the ongoing  negotiations  with the FTC. Once  advertising
claims are approved, the Company intends to reenter the domestic retail market.

     Selling  expenses  decreased  from  $539,748  to $21,615 as a result of the
elimination in 1997 of the  substantial  additional  costs  associated  with the
distribution of the product through television response channels.

     General and administrative  expenses decreased from $210,305 to $140,763 as
a  result  of a  decrease  in  officer  salaries  ($33,322)  and a  decrease  in
professional fees ($56,736).

     The gross profit margin  decreased to 60% from 83%, due to the  elimination
of the high volume of direct response television sales.

     The Company maintains a $500,000 liability insurance policy.


                                       11
<PAGE>


PHASEOUT OF AMERICA, INC.
Management's Discussion and Analysis


                         Liquidity and Capital Resources

Cash of $78,861 was used for operations for the 3 months ended March 31, 1997 as
compared to $36,953 used in the same period of last year. Cash decreased  during
the 3 months ended March 31, 1997 by $87,796.

The Company's  working capital has deteriorated due to the use of current assets
for operations. Working capital and current ratios were:

                                    March 31,       December 31,      March 31,
                                      1997             1996             1996
                                      ----             ----             ----
Working capital
(deficiency)                      $(555,976)        $(436,465)      $(1,156,359)
Current ratios                       0.35:1            0.49:1            0.22:1

In order to meet short-term  marketing  goals, in July 1997 certain officers and
directors  agreed to acquire an aggregate of 10,000,000  shares of the Company's
common  stock  (representing  8% of total shares  outstanding)  for an aggregate
purchase price of $100,000.  The Company is also seeking an additional  $200,000
of financing  under the same terms and conditions as offered to the officers and
directors.  There  is no  assurance  that  the  Company  will be able to  obtain
additional financing.


                           Distribution and Marketing

Marketing (Domestic)

     During the second half of 1996, the Company's domestic marketing activities
were curtailed due to the  negotiations  with the Federal Trade Commission as to
what  advertising  claims could be made to describe the PhaseOut  product.  Once
advertising  claims are approved,  management  intends to aggressively enter the
U.S. retail market under the category of smoke cessation products.

Marketing (International)

     On August 21, 1995,  the Company  entered  into an  agreement  with a South
Korean  trading  company  for the  distribution  and  manufacture  of a modified
(design)  PhaseOut  product in South Korea.  Because of the improved  design and
reduced size of this PhaseOut device, it will be utilized in the Japanese market
as well.  South Korea has 10 million  smokers and Japan has 35 million  smokers.
Distribution in South Korea is expected to begin in the 1st quarter of 1998.

     PhaseOut  has started  distribution  through  television  infomercials  and
commercials in the following countries:  Portugal, Spain, South Africa, Romania,
Hungary, Australia, Italy and Germany.


                                       12
<PAGE>


PHASEOUT OF AMERICA, INC.
Management's Discussion and Analysis


New Products

         In February 1997,  the Company  executed a letter of intent with Andrea
Eyewear,  Inc, (Andrea) whereby the Company agreed to fund the pre-operating and
developmental  costs  of  a  patented  sunglass  product  owned  by  Andrea.  In
consideration for the funding,  the Company will receive an exclusive license to
commercialize the sunglass product worldwide.  As of March 31, 1997, the Company
has incurred $7,779 of pre-operating and developmental costs.

         In May 1997, the Company  entered into a joint venture with  Automotive
Marketing,  Inc. to manufacture and distribute  aftermarket automobile products.
As of March 31,  1997,  the  Company  has made  advances  of $3,280 to the joint
venture with the  understanding  that any such advances will be reimbursed  when
revenue-producing operations commence.

                               Regulatory Matters

     There have been no material changes in the status of matters pending before
the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC).


                                       13
<PAGE>


                           PART II - OTHER INFORMATION


Item 1.   Legal Proceedings

          The Company has been sued by a former attorney for fees it alleges are
          due but unpaid in the amount of approximately  $18,000.  Legal counsel
          has not rendered an opinion as to the ultimate outcome of this matter.

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

               See notes to the financial statements

Item 6.   Exhibits and Reports

   
               Exhibit 27 - being refiled to amend interest expense entry.
    


                                       14
<PAGE>


                                   SIGNATURES


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


                                        PHASEOUT OF AMERICA, INC.

Dated:  September 5, 1997


                                        /s/ Herbert M. Reichlin
                                        ----------------------------------------
                                        Herbert M. Reichlin
                                        Chief Operating Officer and Treasurer


                                       15