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 DECEMBER 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 DECEMBER 31, 1997: $1,473,958.
                                     ----------

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

             CLASS                 OUTSTANDING AT DECEMBER 31, 1997
-----------------------------      --------------------------------
Common Stock,   Class "A"                     9,645,282
                Class "B"                     1,280,000






<PAGE>


                          PACKAGING PLUS SERVICES, INC.
                          -----------------------------


                                      INDEX
                                      -----


                                                                  PAGE
                                                                  NUMBER
                                                                  ------

PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements

  Balance Sheet - December 31, 1997                                   1

  Combined Statement of Operations -- Three and six
           months ended December 31, 1997.                            2

  Combined  Statement of Cash Flows -- Three and six                  3 
           months ended  December 31, 997.

  Notes to Combined Financial Statements                              4

Item 2.  Management's Discussion and Analysis of
Financial Condition and Results of Operations                       5-15

PART II -- OTHER INFORMATION                                         16

SIGNATURE                                                            17









<PAGE>








PACKAGING PLUS SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS AT DECEMBER 31, 1997

                        ASSETS
                        ------
CURRENT ASSETS:
  Cash                                                  $       96,102
  Restricted Cash                                              102,000
  Accounts receivable, net of allowance
    for doubtful accounts of $190,000 & $67,500 resp.          334,483
  Inventory                                                     94,836
  Loans & Notes receivable, net of allowance of $161,000        67,743
  Loan to Officer                                              310,653
  Other, primarily prepaid expenses                            366,484
                                                             ---------
                 TOTAL CURRENT ASSETS                        1,372,301
FURNITURE, EQUIPMENT AND LEASEHOLD
  IMPROVEMENTS, net                                            372,914
REORGANIZATION VALUE, net of amortization                      494,513
GOODWILL, Net                                                1,098,011
Deferred Financing costs & Other                             1,331,946
                                                             ---------

TOTAL ASSETS                                            $    4,669,685
                                                             =========

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

CURRENT LIABILITIES
  Accounts payable and accrued expenses                 $      854,357
  Payroll taxes payable                                         47,289
  Other                                                         29,622
  Loans / Notes Payable                                        423,349
  Convertible Debentures                                     1,652,440
  Current maturities of long-term liabilities                   62,128
                                                             ---------
               TOTAL CURRENT LIABILITIES                     3,069,185
LONG-TERM LIABILITIES                                        1,617,213
                                                             ---------

TOTAL LIABILITIES                                            4,686,398

STOCKHOLDERS' EQUITY
  Common stock, Class "A", $0.06 par value; authorized
    47,000,000 shares; 9,645,282 issued and outstanding        578,716
  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                                12,546,320
  Deferred compensation related to stock issued for services(1,249,820)
  Accumulated deficit                                      (11,898,329)
                                                           ----------- 
              TOTAL STOCKHOLDER'S EQUITY                       (16,713)
                                                           ----------- 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              $    4,669,685
                                                           ===========

    See notes to consolidated financial statements




                                                                            1

<PAGE>





<TABLE>
<CAPTION>

PACKAGING PLUS SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATION (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996



                                                      THREE MONTHS ENDED                     SIX MONTHS ENDED
                                                         DECEMBER 31,                           DECEMBER 31,
                                               --------------------------------      --------------------------------
                                                   1997                1996                 1997             1996
                                                   ----                ----                 ----             ----
INCOME:
<S>                                          <C>               <C>                   <C>              <C>          
  Merchandise and service income             $      195,328    $       21,950        $     255,839    $      43,905
  Royalty income                                          0               285                    0            5,627
  Ticket Sales                                      457,918                                872,190
  Delivery Services                                  77,251                                293,739
  Other income                                                        119,745                               179,745
                                                   -------------   -----------           ----------        --------

                     TOTAL INCOME                   730,497           141,980            1,421,768          229,277
                                                    --------       -----------           ----------         -------

COSTS AND EXPENSES:
  Cost of goods and services                        408,139            10,500              782,004           25,239
  Selling, General and administrative             1,262,777           326,540            2,630,790          655,983
  Depreciation and amortization                      79,655            54,411              150,369          108,823
                                                  ----------      ------------           ----------         -------
                                                  1,750,571           391,451            3,563,163          790,045
                                                  ----------      ------------           ----------         -------
LOSS BEFORE INTEREST AND
  REORGANIZATION EXPENSE                         (1,020,074)         (249,471)          (2,141,395)        (560,768)
                                                 -----------      ------------          -----------        ---------

INTEREST INCOME                                                           216                                 1,218
INTEREST EXPENSE                                     10,423             1,702               94,459           11,560
                                                 -----------      ------------           ----------        --------

PROFIT (LOSS) FROM CONTINUING OPERATIONS     $   (1,030,497)   $     (250,957)       $  (2,235,854)   $    (571,110)
PROFIT (LOSS) FROM DISCONTINUED OPERATIONS                            350,557                               342,937
                                                                  ------------                              -------

NET PROFIT (LOSS)                            $   (1,030,497)   $       99,600        $  (2,235,854)   $    (228,173)
                                                 ===========      ============          ===========        =========

PROFIT (LOSS) PER COMMON SHARE
 Profit (Loss) from continuing operations            ($0.12)            (0.08)              ($0.29)          ($0.19)
 Profit (Loss) from discontinued operations                             $0.11                                 $0.11
                                                ------------      ------------         -----------        ---------- 
                                               

 Net Profit (Loss) Per Common Share                  ($0.12)            $0.03               ($0.29)          ($0.08)
                                                ------------      ------------         -----------        ----------

Weighted average number of
  shares used in calculation                      8,425,803         3,097,790            7,712,906        3,041,395
                                               =============      ============         ============       ==========



</TABLE>

               See notes to consolidated
                 financial statements


                                                                               2


<PAGE>





PACKAGING PLUS SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996

                                                        1997              1996
                                                        ----              ----
CASH FLOWS PROVIDED BY OPERATIONS
  * Net Loss                                      $   (2,235,854)   $ (228,173)
  Adjustment to reconcile net loss to net
   cash used by operating activities:
  Common stock issued as compensation                    694,695       297,500
  Common Stock issued in lieu of cash                    248,350             0
  Depreciation & amortization                            150,369       108,823
                                                      ----------     ----------
                                                      (1,142,440)      178,150
Change in assets and liabilities:
  (Increase)/Decrease in restricted cash                (102,000)       54,000
  (Increase)/Decrease in accounts receivable             (27,254)      (31,663)
  (Increase)/Decrease in inventory                       (64,096)            0
  (Increase)/Decrease in loan to officer                  18,077       (74,500)
  (Increase)/Decrease in notes receivable                      0             0
  (Increase)/Decrease in deferred expenses and
    other assets                                      (1,374,055)     (145,940)
  Increase/(Decrease) in accounts payable and
    accrued expenses                                    (496,106)      (72,186)
  Increase/(Decrease) in payroll taxes payable            35,399       (20,299)
  Increase/(Decrease) in other liabilities                 3,227      (349,746)
                                                      -----------     ---------

Cash provided (used) by operations                    (3,149,248)     (462,184)
                                                      -----------     ---------

CASH USED IN INVESTING ACTIVITIES
  Investment in holding company                                0             0
  Acquisition of furniture, equipment, and
   leasehold improvements                                (64,580)       (8,197)
                                                      -----------     ---------

CASH PROVIDED BY FINANCING ACTIVITIES
  Sale of common stock from treasury                           0        59,320
  Proceeds from notes and loans payable                        0       278,000
  Proceeds from issuance of convertible debt           3,714,097             0
  Repayment of notes and other liabilities              (501,905)     (386,201)
                                                      -----------     ---------

NET INCREASE (DECREASE) IN CASH                           (1,636)     (519,262)

CASH - Beginning of period                                97,738       538,942
                                                      -----------     --------

CASH - End of period                                 $    96,102    $   19,680
                                                      ===========     ========


* - 1996 figure includes Discontinued Operations write-down of $350,588



               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,  1997 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 December  31,  1997,  and results of
operations for the three months then ended.




















                                                                             4




<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 on May 14, 1994.

      Management  has developed  new ancillary  businesses to support its former
core business of franchising.

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

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

      PKGP's  principal  subsidiaries  and divisions  include the Association of
Packagers and Carriers,  Inc.,  Packaging Plus Services Logistics,  Inc., Images
Design and Marketing, UniqueNet, Manhattan Concierge and Office Quick.

      During September of 1997 PKGP agreed to acquire Office Quick, a postal and
service center including copying,  access to computers,  printing,  the Internet
and other related  communications.  Office Quick  President  Nick  Deleone,  was
formerly Mail Box Etc.'s  number one  franchisee in sales for seven of ten years
from 1984 to 1993, and in 1988 received the "Individual  Franchisee of the Year"
award. Mr. Deleone has become APAC's new President and CEO, and will assist APAC
store owners to increase their sales volume and APAC profitability.

In January of 1997,  the Company  purchased the  Entertainment  division of U.S.
Transportation  Systems, Inc. The division consisted mainly of: Downtown Theatre
Ticket  Agency,  Inc.,  or  Advance   Entertainment  (now  known  as  "Manhattan
Concierge"),  which  provide  theater,  sports and  special  events  tickets and
concierge  services.  The Company intends to incorporate  this division into its
expanding  list of services to the members of APAC.  These services are marketed
through    toll-free   phone   numbers    (1-888-NYSHOWS,    1-800-NYSHOWS   AND
1-800-THE-SHOW).

These  concierge  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

                                                                              5


<PAGE>

menu of offerings to its members stores while  attempting to increase  Manhattan
Concierge's own business presence in the entertainment industry. Its most recent
two (2) year contract with MBNA credit card holders supports that direction.

In 1994, the Company acquired an advertising  agency,  Images Design & Marketing
(Images).  This agency is the in-house  marketing and promotional  department of
the Company while  simultaneously  serving third party  clients.  The service of
Images will be primarily  utilized to maximize the Packaging Plus and APAC names
and  trademarks.  Images is also expected to reduce  advertising  costs for APAC
members by eliminating the "agency commissions" paid to an advertising agency by
printers and other sources of media.

Also,  the  Company  announced  the  signing  of a letter of intent to  purchase
Vallerie's  Transportation Services, Inc., a $28,000,000 regional transportation
company with 300  employees  and in excess of  $3,000,000  in assets,  including
equipment. This acquisition is pending.


      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.

               SERVICES OFFERED TO APAC MEMBERS & STRATEGIC GOALS

      APAC has been formed to create a value added  association  among packaging
and shipping centers as well as the actual carriers of freight worldwide.




                                                                               6

<PAGE>


      In  return  for a  low  monthly  membership  fee,  APAC  offers  a  unique
combination of value-added services. A list of immediate and future benefits for
association members will include:



IMMEDIATE BENEFITS:
           Savings on shipping  prices through  quantity  discounts
           Centralized billing  to  lower  certain  costs  
           Pre-paid  discounts  on  shipping
           Professional  theme  coordinated  advertising  programs 
           APAC Web Site linking all members  with outside  customers  
           E-mail customer leads
           Scholarship  Programs for  members' children  
           Packaging  education programs  
           Organized  conventions  
           APAC health/ dental  insurance 
           APAC shipping insurance 
           Computer software/ hardware,  Sales and consulting
           Shipping hot line and tracking for customers 
           Continual development of new profit centers 
           Quality  control for member and customer  benefits
           Affordable legal representation
           National customer service satisfaction department 
           Political lobbying 
           Stock option plan 
           Vacation of the month program 
           Discounted air cargo/ next day worldwide rates
           Discounted copier and/or fax, postal meter leasing programs
           Discounted long distance rates
           Discounted printing programs
           Discounted van and equipment leasing program 
           Prepaid  phone card
           Centralized purchasing
           Monthly Newsletter 
           Brand recognition of APAC Logo 
           APAC advisory council 
           Store (design/modernization) program


                                                                              7

<PAGE>



FUTURE  BENEFITS  should include but not be limited to: mail order contracts for
individual stores, national moving preparation program, direct access to packing
supplies,  audio- visual training,  electronic car/ truck rental,  package x-ray
machines,  national  television  advertising,  auto  club,  video  conferencing,
advertising revenues directly from suppliers.

This  value-added  Association  is expected  to  revitalize  the private  postal
industry   and  position   itself  for   additional   acquisitions   within  the
transportation industry that benefit its members' collective strength.


             ADDITIONAL SUPPORT AND SERVICES OFFERED TO APAC MEMBERS

      The Company provides  valuable  services to the APAC member to help ensure
its success. These include:

BUSINESS  DEVELOPMENT  SEMINARS:  The  Company  organizes  business  development
seminars for its members. These seminars cover the latest trends and products in
the  industry  and to assist  members in the  development  of new  products  and
services.  Through  the  APAC Web  Site,  members  are able to take  educational
courses during down time or after store hours.  Initial courses are Running Your
APAC Store,  APAC Customer  Relations,  How To Get Customers and Maximizing Your
Profit Center.  Complete  training  manuals are also available on their APAC Web
Site.

MARKETING  SUPPORT:  The members benefit from a multifaceted  marketing program.
Starting  with the  training  program,  Service  Center  owners are  continually
educated in a variety of ways to aggressively  promote their  business.  Ongoing
support programs take many forms.  Professionally designed advertising materials
are produced by the in-house  advertising  agency,  IMAGES DESIGN AND MARKETING,
and are supplied to the Service  Centers.  Additionally,  members may have their
own advertising  material  prepared by the Agency at considerably less cost than
would otherwise be available to them. The  advertising  agency is also available
to advise individual  Service Centers regarding their choice of media.  Periodic
company-wide  and regional  marketing  seminars are held to facilitate  the free
flow of marketing  ideas from one center to another as well as advancing new and
different  marketing  techniques.  Through the use of a public  relations  firm,
Centers are aided in achieving  local unpaid media coverage.  Periodic  matching
advertising  programs  are  employed to assist the Service  Center's  ability to
secure advertising, particularly during off peak periods.

 
                                                                             8


<PAGE>

TECHNICAL ASSISTANCE: The Company maintains a toll-free "Help Line" that members
can utilize to solve operational  problems.  Most Corporate  information will be
sent via E-Mail and  members can use this as a primary  means of  communication,
although traditional means are available.  The APAC Web Site will be cost saving
and time efficient.

PACKAGE  INSURANCE:  Management is in negotiation  with a major industry insurer
and expects to begin  offering  members the ability to insure  packages  sent by
common carrier rather than utilize the common carrier's  insurance  exclusively.
Currently,  shipping charges include  insurance for the first $100 in value of a
shipped  item.  Insurance  over this value is  purchased at the rate of $.30 per
$100 of value. The Company intends to create a self insurance  reserve and offer
package insurance to the members at a discount to common carrier rates.

HEALTH  INSURANCE:  The Company is in continued  discussions  with several major
insurance  companies  regarding the initiation of group policy  coverage for the
health insurance needs of members and their employees.  The Company is currently
waiting for formal  proposals from these carriers.  The Company expects to offer
this coverage  industry  wide.  Management  believes that this will be the first
inclusive program of its type offered in its industry.

GENERATION OF BUSINESS:  Management  is in the process of developing  businesses
that will  channel  packaging  and  distribution  business  to the  members.  If
successful  in this  effort,  the  Company  will have the ability to provide the
member with a minimum level of new business each month.

INDUSTRY CONSOLIDATION: Management believes that the private postal and business
service  center  industry  is  highly   fragmented  with  an  excess  of  15,000
independent  operators.  Management  believes that there is a significant growth
opportunity in pursuing these independent operators.  The Company's strategy for
attracting these independent or franchise  operators would focus on the national
name recognition and campaign for the APAC organization. The benefits of being a
member and utilizing  discounts on supplies and services  available through APAC
affiliation is critical for the stores' growth.

APAC APPAREL PROGRAM:  Members can choose from a variety of garments embroidered
with the APAC logo.  Individual store owners will be encouraged to wear the APAC
logo.  The  industry  needs a  consistent  symbol  that  customers  perceive  as
trustworthy, honest, and friendly, with excellent service. The Association would
like all members to exceed customer and industry expectations!



                                                                             9

<PAGE>


    CUSTOM CORRUGATED BUSINESS:
An  exciting  opportunity  has  presented  itself  to the  newly  formed  Custom
Corrugated  Business.  This  opportunity  is  the  creation  of a  manufacturing
operation for the production of custom, personalized corrugated boxes. This core
business  will lend  itself to expand  our  customer  base.  Equipment  has been
identified and poised for its conception.

APAC stores use basic  corrugated,  and buy  individually,  paying  above market
prices.  Through the  Association  of Packagers and Carriers and Rapid  Delivery
Service, cost to these stores may be cut by volume purchasing,  and a new market
created for  customized  box making for smaller  orders.  APAC stores provide an
additional benefit to our corporation by each becoming a potential  salesperson.
With minimal  training,  APAC store owners can enhance their earnings by selling
customized  corrugated to their  customers,  creating a huge network sales force
with small sales overhead to Custom Corrugated.

PKGP anticipates  acquisitions in the transportation area. Through this expected
PKGP transportation network,  distribution and allocation of finished goods will
be provided to APAC  members as well as all  qualified  customers.  This network
will  also  enable  member  stores  to  save  on  costs,   through  the  overall
centralization of products and logistics.

      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 that 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  inexpensively
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 more for infrequent users.

      UNIQUENET:  In 1996, the Company  launched its venture  called  UniqueNet.
UniqueNet  is an  interactive,  specialty  gifts  Web  Site  on  the  Internet's
WorldWide Web (UnaiqueNet.Com). The Web Site will showcase the Company's line of
distinctive and "trendy" gifts. On-line visitors to the Web Site will be able to
view,  select and purchase  products  through their  personal  computer using an
on-line  




                                                                            10


<PAGE>


order form or regular  mail.  The line of  products  will be  expanding
rapidly as new  products are  introduced.  A retail  partner is presently  being
examined.

                                   COMPETITION

      The Company, when it only franchised, previously viewed its competition to
be chains of  neighborhood  packaging and business  service  centers,  the U. S.
Postal  Service and even at times,  carriers such as United  Parcel  Service and
Federal Express; however, with the establishment of APAC, it now works to assist
its previous "competitors". Although these "competitors" do not provide the full
breadth of services that APAC Membership provides,  they all offer services that
APAC stores sell to the public.
      The Company  further  believes that the maturation of APAC will strengthen
the  profitable  atmosphere  in the cottage  private  postal  industry.  Lack of
financial   strength  and  market  penetration  have  prevented  some  excellent
franchisors and independents from properly promoting their services.  Individual
store  failures  are far too great in this  industry  without a  cohesive  trade
association.  The ability of APAC to create a nationally accepted private postal
industry  that the  American  public will  embrace and trust  should make this a
viable  industry.  The  Company  feels  it  can  convince  the  independent  and
nationwide  franchisors that they must self-regulate for consumer acceptance and
seize this opportunity to become part of this new cooperative partnership.

                               INDUSTRY BACKGROUND
      The  future  of the  industry  lies  predominately  in  the  international
business  community and domestic  acceptance of a private postal stores.  As the
world moves towards a Global  Economy and trade tariffs begin to break down, new
shipping  markets and  opportunities  will be developed and the key  ingredients
underlying these developments will be transportation and outlets for carriers as
well as fulfillment for direct marketing products.

      The   transportation   industry  has  already   developed   the  necessary
infrastructure  and continues to grow.  The missing  ingredients  needed to make
this industry improve are packaging, logistics and residential locations. United
Parcel Service, Federal Express, American Airlines Cargo and all other carriers,
are primarily in the shipping business, not concentrating on packaging, business
support services, and consumer outlets.

      A nationwide  organized  packaging  network can become a key player in the
Global  Economy.  The Company has positioned  itself to be that public player in
this lucrative market.  Control of the outlets' shipping choices and residential
pick-up capability increases company presence and importance.



                                                                            11

<PAGE>


      From 1980 to 1996,  U.S.  Postal  Service mail volume  increased over 40%.
During the same period,  the U.S.  Postmaster General reports that the number of
U.S. Post Offices,  branches and stations  registered a 4.6% decline from 30,326
to 26,210.  Due to high labor costs of staffing  additional  facilities  and the
continuing pressure on the U.S. Congress to reduce government subsidies, such as
those provided to the U.S. Postal Service,  the Company  believes it is unlikely
that the number of U.S.  Post  Offices,  branches  and  stations  will  increase
substantially  in the  foreseeable  future.  APAC stores  could  contract  their
services to the Post Office or any International  carrier.  The Company believes
that long waiting lines and limited  shipping  options are  commonplace  in most
U.S.  Post  Offices,  and that in many areas  there is a shortage of post office
boxes. Members of APAC provide the public with a complement to U.S. Post Offices
for many retail postal services. In addition,  Service Centers offer individuals
and  business  customers  a variety of  personal,  business  and  communications
services and merchandise.

      FUTURE PROJECTS:
      ----------------

           WAREHOUSE DISTRIBUTION
           APAC stores control their  individual ZIP CODE.  Direct marketers and
product  suppliers  such as Home Shopping  Network  presently  operate their own
fulfillment centers. APAC then offers individual warehouses for EACH ZIP CODE in
United States for catalogue and Internet shoppers.  This futuristic  expectation
is one of APAC's longer term goals.

           SUITCASE MOVEMENT
           APAC stores could  provide  bar-coded  suitcase  movement in the same
manner as we routinely now overnight small packages today.

           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 is scheduled for December of 1998.

           CO-BRANDING with major suppliers, i.e. Kodak, USPS and others.

           NATIONAL TRADE SHOW & CONVENTION



                                                                            12

<PAGE>


RESULTS OF OPERATIONS -- THREE MONTHS
-------------------------------------

Three  months ended  December  31,  1997,  as compared to the three months ended
December 31, 1996:
                                         Three Months Ended
                                             December 31,
REVENUES                                1997             1996
--------                                ----             ----
Royalty                               $   -0-         $     285
Merchandise and services               730,497           21,950
Other                                     -0-           119,745
                                      --------        ---------
                                      $730,497        $ 141,980
                                      ========        =========

COST OF REVENUES
----------------
Merchandise and services              $408,139        $  10,500
                                      ========        =========



RESULTS OF OPERATIONS - SIX MONTHS
----------------------------------

Six months ended December 31, 1997, as compared to the six months ended December
31, 1996:
                                           Six Months Ended
                                             December 31,
REVENUES                                 1997            1996
--------                                 ----            ----
Royalty                              $      -0-       $   5,627
Merchandise and services              1,421,768          43,905
Other                                       -0-         179,745

                                     $1,421,768       $ 229,277
                                     ==========       =========

COST OF REVENUES
----------------
Merchandise and services             $  782,004       $   25,239
                                     ==========       ==========

Packaging  Plus  Services,  Inc.  (PKGP),  is  an  integrated  business  service
conglomerate.  Its' principal subsidiaries and divisions include the Association
of Packagers and Carriers,  Inc., Manhattan Concierge,  Office Quick,  Packaging
Plus Services Logistics, Inc., Images Design and Marketing, and UniqueNet.

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  December 31,  1997,  the  Company's  operations
generated  total  revenues  of  $730,497  from  the  abovementioned  operations,
compared to $142,000 for the corresponding  prior year period.  Cost of revenues
were $408,139 and $10,500 respectively.


                                                                              13


<PAGE>

Accordingly, gross operating income for the three months ended December 31, 1997
was $322,358 compared to $141,980 for the corresponding period in 1996.

Selling,  general and administrative expenses were approximately  $1,263,000 for
the three months ended December 31, 1997, compared to approximately $327,000 for
the corresponding period in 1996.

Similarly,  for the six month  period  ended  December  1997,  total  income was
approximately  $1,422,000 compared to approximately  $229,000 for the prior year
period.  Cost of revenues was $782,000  and $25,000  respectively,  resulting in
gross operating income for the periods of $640,000 and $204,000 respectively.

Selling,  general and administrative expenses were approximately  $2,631,000 for
the  six  months  ended  December  31,  1997,   compared  to  $656,000  for  the
corresponding 1996 period.

Generally,  increases  in revenue and expenses of 1997 over 1996 are as a result
of new  businesses  coming  on line and being  integrated.  1997  expenses  also
include in excess of $600,000 of allocated costs directly related to convertible
debt.

In October, 1997 the business of Rapid Delivery Services was discontinued.  This
discontinuance  is the subject of litigation  involving the subsidiary's  former
president and others.

On January 16, 1998, the Company,  in a press release,  announced the suspension
of conversions with respect to its "offshore" convertible debentures,  since the
Company  believes  several  debenture  holders  had  breached  the  terms of the
Subscription  Agreements  relating to the  debentures.  The Company expects this
matter to be resolved on terms favorable to the Company.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

During the six months ended  December 31, 1997,  the Company used cash flow from
operations of $3,149,000  due in part to the net loss of $2,236,000 for the same
period. Investing activities used $65,000. Financing activities in the six month
period  provided a net of $3,212,000,  due to the issuance of convertible  debt.
The net result of the  activity  for the six month period was a decrease in cash
of $2,000.

Until APAC is fully operational,  the Company faces a situation whereby it needs
to raise additional cash in the near future. 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.

                                                                            14

<PAGE>


Management  continues to explore  methods to increase  working  capital  through
convertible  subordinated  debt  and  additional  equity  infusions,  as well as
possible acquisitions.












                                                                            15





<PAGE>




PART II -- OTHER INFORMATION
----------------------------

Item 1.    LEGAL PROCEEDINGS
           -----------------

      The Company has commenced  litigation against seventeen former franchisees
for  non-payment  of  royalties  over a number of years and for  failure to file
monthly  reports  upon which  royalties  were based.  It is  anticipated  that a
portion of the total amount claimed will be eventually recovered.

      Litigation  has been  commenced  against  the  former  president  of Rapid
Delivery  Services  and others for  converting  to their own use the business of
this subsidiary. The amount sought in damages is $6,000,000,  among other claims
and counterclaims.

      The Company settled in April, 1997, a litigation involving the business of
a former  subsidiary.  The settlement  calls for monthly payments by the Company
totaling $270,000,  of which $220,000 has been paid, with three monthly payments
remaining totaling $50,000.

Legal  proceedings were commenced by several  "offshore"  convertible  debenture
holders as a result of the  Company's  suspension  of  conversions.  The Company
expects  these  matters to be resolved on terms  favorable to the Company and an
agreement with the debenture holders has been reached in principle.

      The Company is involved in a few small lawsuits with vendors and suppliers
and claims for fees of certain  professionals.  These claims are all disputed by
the Company. The Company believes that the disposition of these matters will not
have a material adverse effect on the Company's financial position.

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 October 2, 1997.






                                                                            16


<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.

                                          PACKAGING PLUS SERVICES, INC.



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


Dated: March 13, 1998