SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                      FOR THE QUARTER ENDED MARCH 31, 1997

                         Commission File Number 0-18094

                          PACKAGING PLUS SERVICES, INC.
             (Exact name of Registrant as specified in its charter)

               NEVADA                          11-2781803
     (State or other jurisdiction of    (I.R.S. Employer Ident Number)
     incorporation or organization)

               20 South Terminal Drive, Plainview, New York 11803
              (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (516) 349-1300

Securities registered pursuant to Section 12 (g) of the Act:

                                  Common Stock
                                (Title of Class)

Indicate by check mark whether the registrant (1) has 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  [ ]

State the aggregate market value of the voting stock held by non-affiliates of
the registrant on MARCH 31, 1997: $8,307,862.

Indicate the number of shares  outstanding  of each of the  issuers'  classes of
common stock, as of the latest practicable date.

             Class                 Outstanding at MARCH 31, 1997
-----------------------            -----------------------------
Common Stock, Class "A"                         4,505,959  
              Class "B"                         1,280,000


<PAGE>




                          PACKAGING PLUS SERVICES, INC.


                                      INDEX
                                      -----

                                                                        Page
                                                                       Number
                                                                       ------
PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements

  Balance Sheet -- March 31, 1997 .....................................   1
 
  Combined Statement of Operations -- Three and nine
      months ended March 31, 1997. ....................................   2
  Combined Statement of Cash Flows -- Three and nine
      months ended March 31, 1997. ....................................   3

  Notes to Combined Financial Statements .............................. 4-5

Item 2.  Management's Discussion and Analysis of
Financial Condition and Results of Operations .........................6-13

PART II -- OTHER INFORMATION ..........................................  14

SIGNATURE .............................................................  15




<PAGE>

<TABLE>
PACKAGING PLUS SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS AT MARCH 31, 1997



                         ASSETS
                         ------
<S>                                                  <C>
CURRENT ASSETS:
  Cash                                               $     29,649
  Accounts receivable, net of allowance                   292,704
    for doubtful accounts of $29,001
  Inventory                                                22,700
  Notes receivable, net of allowance of $107,527           59,743
  Other, primarily prepaid expenses                     1,267,072
                                                        ---------
                                                  
          TOTAL CURRENT ASSETS                          1,671,868
FURNITURE, EQUIPMENT AND LEASEHOLD                        315,337
  IMPROVEMENTS, net
REORGANIZATION VALUE, net of amortization                 596,298
GOODWILL                                                  688,333
                                                          -------

TOTAL ASSETS                                        $   3,271,836
                                                    =============

             LIABILITIES AND STOCKHOLDERS' EQUITY
             ------------------------------------

CURRENT LIABILITIES
  Accounts payable and accrued expenses             $     516,489
  Payroll taxes payable                                    10,403
  Other                                                     6,131
  Current maturities of long-term liabilities             524,863
                                                          -------
          TOTAL CURRENT LIABILITIES                     1,057,886
LONG-TERM LIABILITIES                                      47,708

TOTAL LIABILITIES                                       1,105,594

STOCKHOLDERS' EQUITY
  Common stock, Class A, $0.06 par value; authorized
  47,000,000 shares; 4,505,959 issued and outstanding     270,358

  Common stock, Class B, $0.005 par value; authorized
    3,000,000 shares; 1,280,000 issued and outstanding      6,400

  Additional paid-in capital                            9,785,220
  Deferred compensation                                  (225,000)
  Valuation allowance                                    (425,000)
  Accumulated deficit                                  (7,245,736)
                                                       ---------- 
          TOTAL STOCKHOLDER'S EQUITY                    2,166,242
                                                       ----------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $   3,271,836
</TABLE>
                                                    =============


                 See notes to consolidated financial statements.


                                     - 1 -


<PAGE>


<TABLE>
PACKAGING PLUS SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATION (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1997 AND 1996

<CAPTION>
                                        THREE MONTHS ENDED            NINE MONTHS ENDED
                                            MARCH 31,                     MARCH 31,       
                                            ---------                     --------      
                                     1997              1996          1997         1996
                                     ----              ----          ----         ----

<S>                                <C>            <C>             <C>          <C>
INCOME:
  Merchandise and service income    $ 478,216       $ 12,952      $ 522,121     $  83,610 
  Royalty income                          350          1,388          5,977        12,447 
  Advertising income                        0            250              0         1,450
  Other income                              0      1,000,576        179,745     1,001,726 
                                      -------      ---------        -------     --------- 
          TOTAL INCOME                478,566      1,015,166        707,843     1,099,233 
                                      -------      ---------        -------     --------- 

COSTS AND EXPENSES:

  Cost of goods and services          323,601         16,100        348,840        65,582 
  Selling, General and administrative 588,183        289,826      1,244,166     1,107,341 
  Depreciation and amortization        69,193         53,369        178,016       159,552 
                                       ------         ------        -------       ------- 
                                      980,977        359,295      1,771,022     1,332,475 
                                      -------        -------      ---------     --------- 

OPERATING INCOME (LOSS)              (502,411)       655,871     (1,063,179)     (233,242)
                                     ---------       -------     -----------     ---------

INTEREST INCOME                             0              0          1,218         1,573 
INTEREST EXPENSE                        4,534         25,482         16,094        47,052 
                                        -----         ------         ------        ------ 

INCOME (LOSS) FROM CONTINUING 
   OPERATIONS                       $(506,945)     $ 630,389    $(1,078,055)    $(278,721)
INCOME (LOSS) FROM DISCONTINUED
   OPERATIONS                               0         95,111        342,938       164,173 
                                    ---------         ------        -------       ------- 

NET INCOME (LOSS)                   $(506,945)     $ 725,500    $  (735,117)    $(114,548)
                                    =========      =========    ===========     ========= 

PROFIT (LOSS) PER COMMON SHARE

 Profit (Loss) from continuing 
   operations                          ($0.10)         $0.09          (0.30)       ($0.03)
 Profit (Loss) from discontinued
   operations                               0          $0.03           0.09         $0.02

 Net Profit (Loss) Per
   Common Share                        ($0.10)         $0.12          (0.20)       ($0.01)

Weighted average number of
   shares used in calculation       5,028,433     11,804,011      3,643,348    10,535,407 
                                                      **                           **

<FN>
 ** Reflects number of shares prior to 1:12 stock split Nov. 1996.
</FN>
</TABLE>


                 See notes to consolidated financial statements


                                     - 2 -



<PAGE>



<TABLE>
PACKAGING PLUS SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND 1996
 
<CAPTION> 
                                                 1997                  1996
                                                 ----                  ----
<S>                                          <C>                   <C>
CASH FLOWS PROVIDED BY OPERATIONS
  Net Loss                                   $ (735,117)           $ (114,548)
  Write-down of Accounts Payable                                      298,042 
  Common stock issued as compensation           700,000 
  Common Stock issued in lieu of cash           709,000                31,818

  Depreciation & amortization                   178,016               325,880 
                                                -------               ------- 
                                                851,899               541,192 
                                                -------               ------- 

Change in assets and liabilities:
  (Increase)/Decrease in restricted cash         54,000                (3,651)
  (Increase)/Decrease in accounts receivable    (31,662)              263,685
  (Increase)/Decrease in inventory                    0               (10,200)
  (Increase)/Decrease in loan to officer        (96,000)              (85,800)
  (Increase)/Decrease in notes receivable             0                12,278 
  (Increase)/Decrease in deferred expenses
     and other assets                          (787,014)           (1,287,120)
  (Increase)/Decrease in intangible assets     (688,333)
 
  Increase/(Decrease) in accounts payable
     and accrued expenses                         1,934              (647,713)
  Increase/(Decrease) in payroll
     taxes payable                              (21,885)             (152,805)
  Increase/(Decrease) in other liabilities      (35,824)              135,336 
                                                -------               ------- 
 
Cash provided (used) by operations             (752,885)           (1,234,798)
                                               --------            ---------- 
 
CASH USED IN INVESTING ACTIVITIES
  Investment in holding company                       0               (10,000)
  Acquisition of furniture, equipment, and
   leasehold improvements                       (44,715)              (18,086)
                                                -------               ------- 
 
CASH PROVIDED BY FINANCING ACTIVITIES
  Sale of common stock from treasury            144,020               692,500
  Proceeds from notes and loans payable         559,613               810,030
  Repayment of notes and other liabilities     (415,326)             (168,246)
                                               --------              -------- 
 
NET INCREASE (DECREASE) IN CASH                (509,293)               71,400
 
CASH - Beginning of period                      538,942                 2,574 
                                                -------                 ----- 
 
CASH - End of period                           $ 29,649              $ 73,974 
                                               ========              ======== 
</TABLE>


 
                 See notes to consolidated financial statements
 
 
                                     - 3 -


<PAGE>




                 PACKAGING PLUS SERVICES, INC. AND SUBSIDIARIES

                          Notes To Financial Statements
                                   (Unaudited)

1.    Basis of Presentation

Reference is made to the Company's  Consolidated financial statements as of June
30,  1996 and for the fiscal  year then  ended,  filed  with the  United  States
Securities and Exchange  Commission  for a complete  discussion of the Company's
significant accounting policies and other matters.

The accompanying unaudited consolidated interim financial statements reflect all
adjustments  that,  in  the  opinion  of  management  are  necessary  for a fair
presentation  of  financial  position  as of March  31,  1997,  and  results  of
operations for the three and nine months then ended.

In January,  1997, the Company purchased for shares, the Entertainment  Division
of U.S.  Transportation  Systems Inc.  This  Division  includes  the  companies:
Downtown  Theatre  Ticket  Agency,  Inc. (now known as  "Manhattan  Concierge"),
Advance Entertainment  Chicago,  Inc., and Premier Box Office.  Together,  these
units provide theatre, sports and special events tickets and concierge services.
The Company intends to incorporate this  value-added  service into the expanding
menu offerings of its' member stores.

In  consideration  of the sale, the Company paid to USTS,  850,000 of its common
shares with buy-back options at small premiums.  The right to repurchase  shares
by the Company at 1.15 terminates at the end of the twenty fourth month.

This sale was concluded free of receivables and payables. As such, the excess of
share  value over  tangible  assets was booked to  goodwill.  Goodwill  has been
amortized over ten years.

On April 30, 1997, the Company acquired for shares,  Rapid Delivery  Services of
NY, Inc.  (RDS),  and  World-Wide  Logistics  Service,  Inc.  (WWL).  RDS offers
same-day  delivery  service for  critical  shipments  within the eastern  United
States and next-day delivery to the rest of the the country. WWL offers a single
source solution for transportation and logistics management from point of origin
to point of consumption.

                                     - 4 -


<PAGE>



The purchase price was $350,000 worth of the Company's stock (restricted) valued
at the average bid price for 5 days prior to the  closing,  to be  delivered  in
four equal  installments,  the first at the  closing and the other three at four
month intervals thereafter.

The Company also has the right, for eighteen  months,  to repurchase all or part
of the shares at the value expressed above, plus 10%.

The effects of the Rapid / World-Wide  acquisition have not been included in the
financial statements of this period under review.












                                     - 5 -




<PAGE>


                      MANAGEMENT DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview:
The  business  of  Packaging  Plus has  undergone a major  transition  since its
emergence from reorganization as a franchisor only on May 14, 1994.

Management  has  developed  new  ancillary   businesses  to  support  its  trade
association  which is a  development  of the  Company's  former core business of
franchising.

Management  is now  concentrating  on the raising of new capital and focusing on
new ventures,  including  APAC  (Association  of Packagers and  Carriers),  its'
multi-faceted  association of packaging centers nationwide connected through the
World Wide Web.

In January,  1997, the Company purchased for shares, the Entertainment  Division
of U.S.  Transportation  Systems Inc.  This  division is estimated to contribute
revenue of  approximately  $4.3 million to the Company within its first calender
year.

On April 30, 1997, the Company acquired for shares,  Rapid Delivery  Services of
NY, Inc. and World-Wide Logistics Service,  Inc. These divisions are expected to
contribute annual revenue of close to $1 million initially.

Management   views  this  year  as  a  period  of  acquisition   and  synergetic
development,  and  anticipates  growth based upon its decision to concentrate on
core business development through APAC in particular.

      The  Association  of Packagers  and Carriers  (APAC):  Private  postal and
business  service  centers  form a  highly  fragmented  cottage  industry.  This
industry  generates  over $5 billion in sales and  consists  of more than 15,000
independent operators.  PKGP believes that there is a market opportunity for the
development  of  an  association  with  the  goal  of  unifying  and  organizing
independent  and  franchised  postal  stores  nationwide.  APAC  members will be
connected  to  other  members  and  APAC  Headquarters  via the  APAC  Web  Site
(www.useapac.com) or by telephone at "1-888-USE-APAC". The APAC Web Site will be
utilized not only by members but also by the general public. Only one APAC store
per Zip Code will be accepted,  thus creating  competition and internal  quality
control standards.

      APAC  is an  association  formed  to  create  a long  overdue  and  needed
profitable  partnership between packaging store owners and carriers,  similar in
theory to FTD. APAC will provide  store owners with a variety of  cost-effective
services and products to increase their profitability, while they still maintain
their local  identities  or franchise  loyalties.  APAC will  provide  consumers
nationwide  with a feeling  of  quality  assurance  when they  frequent  an APAC
location.


                                     - 6 -


<PAGE>



      Images Design and Marketing:  In 1994,  management acquired an advertising
agency,  Images  Design & Marketing.  This agency is the in-house  marketing and
promotional  department of the Company while simultaneously  serving third party
clients.  Images  occupies  space in the same  building the Company  leases.  By
utilizing  this  arrangement,  management  expects to achieve  substantial  cost
savings  on  its  promotional  programs  and  marketing  support  of  its  other
subsidiaries.  Management expects to reduce the cost of development of marketing
and promotional  programs for the Service Centers,  thereby maximizing promotion
of the Packaging Plus and APAC names and trademarks.

      Management  expects to reduce  advertising  expenditures  for APAC Members
through group buying discounts and eliminating the "agency  commissions" paid to
an  ad  agency  by  printers  and  sources  of  media.  Typically,  printers  of
promotional  material and media outlets such as newspapers,  magazines and radio
escalate costs on infrequent users.

      Manhattan Concierge:  The acquired  Entertainment Division consists of six
companies and divisions that provide New York theater, sports and special events
ticket and concierge  services.  Five of the units are licensed theatre agencies
specializing  in the retail sale of theatre,  sports,  and other  tickets in New
York and Chicago. Another unit, New York Concierge,  provides customized package
tours including  tickets,  transportation,  dining,  lodging and other concierge
amenities.   These  services  are  marketed  through   toll-free  phone  numbers
(888-NYSHOWS, 8006TIXNOW, 800-NYSHOWS and 800-THE-SHOW). In addition, PKGP plans
to design and  implement  an  Internet  web site for the  facilitation  of these
services.

      These agencies are nationally  promoted sources for high visibility venues
such as the Olympics, U.S. Open, Super Bowl and the World Series. They have been
serving corporate and individual  clients  throughout the United States for over
fifty three years.  PKGP will incorporate  this value-added  service into APAC's
expanding  menu of offerings to its' member stores while  attempting to increase
its own business presence in the overall industry.


                                     - 7 -


<PAGE>


      Rapid/World-Wide:  The acquired Rapid Delivery  Services (RDS) offers same
day delivery service for critical shipments within the eastern United States and
next day  delivery  to the rest of the  country.  Worldwide  Logistics  Services
offers a single source solution for transportation and logistics management from
point of origin to point of  consumption.  They will both  additionally  provide
these  services  within  the PKGP  family  in  general,  and to APAC  stores  in
particular.  Their  staffing  strengthens  PKGP's team for  additional  shipping
target companies.

      UniqueNet:  In 1996, the Company  launched its venture  called  UniqueNet.
UniqueNet  is an  interactive,  specialty  gifts  Web  Site  on  the  Internet's
WorldWide Web  (UniqueNet.Com).  The Web Site  showcases  the Company's  line of
distinctive  and "trendy"  gifts.  On-line  visitors to the Web Site are able to
view,  select and purchase  products  through their  personal  computer using an
on-line  order form or regular  mail.  The line of  products  will be  expanding
rapidly as new products are introduced. World-Wide Logistics will be supervising
the delivery process of this division worldwide.

UniqueNet  and its products will become will become part of APAC for the benefit
of its members and customers.  Members will be able to order promotional  items,
products  for sale within  their  store,  merchandise  for  customers,  and APAC
garments for themselves.

      With the number of users of the  Internet now  estimated at between  35-40
million, and growing at 1.5 million a month, the Internet is experiencing one of
the most explosive growth rates ever seen for an emerging technology--surpassing
even that of the personal computer industry of the early 1980's.  This UniqueNet
electronic store may be visited by consumers as well as APAC Members.

      Logistics:  The Company's  logistics  subsidiary,  Packaging Plus Services
Logistics,  Inc., is an integrated  logistics  provider.  Logistics services are
provided  internally by the Company and, as needed, by contracted  vendors.  The
Company's logistic services include home delivery sales, packaging and shipping,
fulfillment,   warehousing,   distribution   and   consolidation.   The  Company
aggressively  pursues  accounts with major  national and regional  retailers and
provides support for APAC Members who need help with a "lead" in their Zip Code.
PKGP  Logistics  will be  combined  with  World-Wide  Logistics  under  the name
World-Wide Logistics.


                                     - 8 -


<PAGE>



      Future Projects:  Three specific projects are being worked on by the
Company.

      1.   Warehouse Distribution
           APAC stores  control  their ZIP CODE.  Direct  marketers  and product
suppliers such as Home Shopping Network  presently operate their own fulfillment
center. APAC offers individual warehouses for each Zip Code in United States for
catalogue  and Internet  users.  This  futuristic  expectation  is one of APAC's
longer term goals.

      2.   Suitcase Movement
           APAC stores could  provide  bar-coded  suitcase  movement in the same
manner as we routinely overnight small packages today.

      3.   APAC Global Express (TM)
           APAC Global Express is an  international  delivery system planned for
the  exclusive  use  of  APAC  members  and  APAC   Internet   customers.   This
international  discounted  service will be, on average,  30% less expensive than
traditional carriers. This program, or its equivalent, is scheduled for 1997.


                                     - 9 -


<PAGE>



<TABLE>
Results of Operations -- Three months

Three months  ended March 31, 1997,  as compared to the three months ended March
31, 1996:

<CAPTION>
                                                       Three Months Ended
                                                            March 31,
Revenues                                              1997             1996
--------                                              ----             ----
<S>                                            <C>               <C>
Royalty                                         $      350        $    1,388
Merchandise and service                            478,216            12,952
Advertising                                            -0-               250
Other                                                  -0-         1,000,576
                                                   -------         ---------
                                                $  478,566        $1,015,166
                                                ==========        ==========

Cost of Revenues
----------------
Merchandise and services                           323,601            39,240
Advertising                                            -0-           (23,140)
Other                                                  -0-               -0-
                                               -----------          --------

                                                $  323,601        $   16,100
                                               ===========        ==========
</TABLE>


<TABLE>
Results of Operations -- Nine months

Nine months ended March 31, 1997, as compared to the nine months ended March 31,
1995:

<CAPTION>
                                                       Nine Months Ended
                                                            March 31,
Revenues                                              1997             1996
--------                                              ----             ----
<S>                                            <C>               <C>
Royalty                                         $    5,977        $   12,447
Merchandise and service                            522,121            83,610
Advertising                                            -0-             1,450
Other                                              179,745         1,001,726
                                                ----------        ----------
                                                $  707,843        $1,099,233
                                                ==========        ==========

Cost of Revenues
----------------
Merchandise and services                           348,840            82,511
Advertising                                            -0-           (22,596)
Franchising                                            -0-             5,667
                                               -----------        ----------
                                               $   348,840        $   65,582
                                               ===========        ==========
</TABLE>


                                     - 10 -


<PAGE>


Packaging  Plus  Services,  Inc.  (PKGP),  is  an  integrated  business  service
conglomerate.  Its' principal subsidiaries and divisions include the Association
of Packagers and Carriers,  Inc., Rapid Delivery Services of NY, Inc., Manhattan
Concierge,   World-Wide  Logistics,  Inc.,  Images  Design  and  Marketing,  and
UniqueNet.  PKGP's existing  franchise network and Company-run  stores presently
consist  of retail  franchise  outlets  located in the  Northeast  region of the
United States. PKGP suspended the sale of new franchises in 1995 to focus on the
development of the Association of Packagers and Carriers.

During this  period,  Images  Design and  Marketing  continues  to operate as an
"in-house"  advertising arm for Packaging Plus Services,  Inc., in preparing for
and setting up advertising related to the Company's new ventures.

During the three months ended March 31, 1997, the Company's operations generated
total  revenues of $478,566  from the  abovementioned  operations.  For the nine
month  period,  $707,843  was  generated,  $179,745  of which was  non-recurring
income. For the similar period in 1996,  non-recurring  income accounted for the
bulk of the revenue  generated.  The influx in the current three month period is
indicative of the income-generating divisions starting to come online.

Selling, general and administrative expenses were approximately $588,000 for the
three  months  ended March 31,  1997 while for the  similar  period in 1996 this
amount  was  approximately   $290,000.  In  1996,  the  company  was  exercising
continuing cost cutting during a transitionary period. For 1997, S.G.&A expenses
were  increased  as a result of i) the build-up of the  Entertainment  Division,
including the  preparation of their moving to new premises;  ii) the takeover of
Rapid / World-Wide and iii) additional  administration  costs related to another
pending takeover.



                                     - 11 -


<PAGE>




Discontinued  Operation -- By the end of June 1995,  the Company  phased out the
business of its subsidiary,  Pinnacle Direct Marketing,  Inc. The results of the
discontinuance  of this operation have been reported  separately as Discontinued
Operation in the Consolidated  Statement of Operations since then. The following
table  reflects the  components of this  discontinued  operation for the periods
ended March 31, 1997,  and 1996.  There was no activity for the current period -
see note below.

<TABLE>
<CAPTION>
                                                       Three Months Ended
                                                            March 31,
                                                      1997             1996
                                                      ----             ----
     <S>                                       <C>               <C>
      Income                                    $      -0-       $  (18,490)
      Cost and Expenses                                -0-         (113,601)
                                                                 -----------

      Earnings (loss) from
        discontinued operation                  $      -0-       $   95,111
                                                ==========       ==========
</TABLE>


<TABLE>
<CAPTION>
                                                       Nine Months Ended
                                                            March 31,
                                                      1997             1996
                                                      ----             ----
     <S>                                       <C>               <C>
      Income                                    $    2,530)      $   (9,489)
      Cost and Expenses                           (345,468)        (173,661)
                                                ----------       ----------

      Earnings (loss) from
        discontinued operation                  $  342,938       $ (164,172)
                                                ==========       ===========
</TABLE>


On  November  18,  1996,  Pinnacle  Direct  Marketing,  Inc.  which  had  been a
discontinued subsidiary operation for 1 1/2 years, filed a Chapter 7 petition.


                                     - 12 -


<PAGE>





Liquidity and Capital Resources

During the nine  months  ended  March 31,  1997,  the  Company's  cash  position
decreased by approximately $510,000.  Approximately $700,000 of common stock was
issued for  compensation  and $709,000  for  acquisition,  largely  offset by an
increase  in   intangibles.   Approximately   $753,000  was  used  in  operating
activities,  approximately  $415,00 was used in the repayment of notes and other
liabilities;  $71,000 of which was used to reduce  payroll  taxes in  accordance
with the payout  schedule  agreed to between the I.R.S.  and the Company,  which
scheduled  amounts  were  substantially  paid  within  the  quarter,   but  were
completely  paid off in  April.  Amounts  of  approximately  $144,000  in equity
capital, and $560,000 in debt capital,  were raised during the period.  $175,000
of debt capital was  collateralized  by 1,325,000 of the Company's shares issued
as restricted stock.

Until APAC is fully operational,  and the Entertainment  Division has been fully
integrated into its' overall  operations,  the Company faces a situation whereby
it needs to raise  additional  cash. On June 4th, a $14 million lending facility
was announced to the public.  Management is continuing  efforts to raise cash by
arranging  lines  of  credit,  and  obtaining  additional  equity  capital.  The
Company's future business operations will require additional capital.

Management is further  continuing  efforts to increase  working  capital through
convertible  subordinated  debt  and  additional  equity  infusions,  as well as
possible acquisitions.






                                     - 13 -



<PAGE>




PART II -- OTHER INFORMATION

Item 1.    LEGAL PROCEEDINGS

                  The  Company  has   commenced   litigation   against   sixteen
                franchisees  for  non-payment  of royalties to the Company.  The
                total amount  sought in the suits  exceeds  $500,000,  including
                interest and attorneys' fees.

               The Company has recently settled a litigation  involving a former
business unit of the Company.  The  settlement  calls for seven  payments by the
Company,  each  payment  to be made at two  month  intervals,  of  approximately
$38,000 for each payment. The first payment has already been made.


Item 2.    CHANGES IN SECURITIES -- NONE

Item 3.    DEFAULTS ON 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 --

                Current report filed on Form 8-K dated January 7, 1997.







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                                   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.

                                            PACKAGING PLUS SERVICES, INC.


                                            /s/ Richard A. Altomare
                                            Richard A. Altomare, President
                                            as Registrant's duly authorized
                                            Chairman of the Board.

Dated: June 10, 1997

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