UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                    Form 10-Q

              (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                    For quarterly period ended March 31, 1997
                                              ----------------
                                       OR

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


               For the transition period from _______ to ________

                    Commission File Number __________________


                  PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
                  ---------------------------------------------
             (Exact name of registrant as specified in its charter)

         Ohio                                                34-1334199
-------------------------------                     ----------------------------
(State or other jurisdiction of                     (IRS Employer Identification
incorporation or organization)                      No.)

2425 E. Camelback Road, Suite 620
Phoenix, Arizona                                               85016
----------------------------                                -----------
(Address of principal executive offices)                     (Zip Code)

       Registrant's telephone number including area code: (602) 912-0100
                                                         ---------------

Indicate by checkmark 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  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  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be  filed  by  Sections  12,  13 or 15d of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.
YES X   NO 
   ---    ---

Number of shares  outstanding of each of the issuer's classes of common stock as
of May 12, 1997, is 2,481,264 shares.
                                                                               1
<PAGE>
                  PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES

                                      INDEX


PART 1   FINANCIAL INFORMATION (Unaudited)                                  Page
         ---------------------------------                                  ----

Consolidated Balance Sheets -
         March 31, 1997 and December 31, 1996                                 3

Consolidated Statements of Operations (Unaudited) -
         Three Month Period Ended March 31, 1997 and 1996                     4

Consolidated Statements of Cash Flows (Unaudited) -
         Three month Period Ended March 31, 1997 and 1996                     5

Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                  6


PART II  OTHER INFORMATION                                                    9
         -----------------

Item 1    Legal Proceedings
---------------------------

Item 2    Changes in Securities
-------------------------------

Item 3    Defaults upon Senior Securities
-----------------------------------------

Item 4    Submission of Matters to a Vote of Security Holders
-------------------------------------------------------------

Item 5    Other Information
---------------------------

Item 6    Exhibits and Reports on Form 8-K
------------------------------------------

Signatures                                                                   10
                                                                               2
<PAGE>
                  PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                               March 31, 1997     December 31,1996
                                                                               --------------     ----------------
<S>                                                                               <C>                   <C>      
                                 ASSETS
Current assets:
---------------
  Cash and equivalents, unrestricted                                              $  1,146              $  1,136 
  Cash, restricted                                                                     156                   409 
  Securities available for sale                                                        703                   727 
  Accounts and other receivables,                                                                                
    less allowance for doubtful accounts                                               632                   503 
  Current Portion of Receivables from sale of businesses,                                                        
    net of allowance                                                                 1,269                 1,356 
  Factored accounts receivable, net of allowance for doubtful accounts               1,254                 1,139 
  Inventories                                                                          330                   328 
  Prepaid expenses and other current assets                                            202                   192 
  Other assets held for sale                                                           206                   206 
                                                                                  --------              -------- 
    Total current assets                                                             5,898                 5,996 
                                                                                                                 
  Receivables from sales of businesses, less current portion,                                                    
    net of allowance                                                                     0                   119 
  Investment in real estate                                                          9,391                 9,481 
  Deferred income taxes                                                              1,464                 1,460 
  Property and equipment, net                                                        3,116                 3,084 
  Other assets                                                                       1,811                 1,831 
                                                                                  --------              -------- 
                                                                                                                 
TOTAL ASSETS                                                                      $ 21,680              $ 21,971 
                                                                                  ========              ======== 
                  LIABILITIES AND SHAREHOLDERS' EQUITY                                                           
                                                                                                                 
Current liabilities:                                                                                             
--------------------                                                                                             
  Current portion of long-term debt                                               $    548              $    547 
  Accounts payable                                                                     937                 1,000 
  Accrued employment costs                                                             624                   491 
  Accrued expenses and other current liabilities                                     1,125                 1,339 
  Factored receivables reserve                                                         327                   286 
  Liabilities subject to compromise                                                    749                   754 
  Foreign tax liability                                                                250                   250 
                                                                                  --------              -------- 
    Total current liabilities                                                        4,560                 4,667 
                                                                                                                 
  Long-term debt, less current portion                                               8,280                 8,403 
                                                                                                                 
  Minority interest                                                                    352                   371 
                                                                                                                 
Shareholders' equity:                                                                                            
---------------------                                                                                            
  Preferred Stock, par value $1.00 per share; authorized                                                         
    100,000 shares; none issued                                                          0                     0 
  Common stock, no par value; authorized 5,000,000 shares;                                                         
    3,157,332 issued; outstanding 2,481,264 and 2,489,530, respectively             31,202                31,202 
  Accumulated deficit                                                              (20,159)              (20,139)
  Unrealized appreciation  on securities available for sale                                                      
    net of income taxes                                                                421                   443 
                                                                                  --------              -------- 
                                                                                    11,464                11,506 
  Treasury stock at cost (670,784 and 667,802 shares, respectively)                 (2,976)               (2,976)
                                                                                  --------              -------- 
    Total shareholders' equity                                                       8,488                 8,530 
                                                                                  --------              -------- 
                                                                                                                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                        $ 21,680              $ 21,971 
                                                                                  ========              ======== 
</TABLE>
                                                                               3
<PAGE>
                          PERFORMANCE INDUSTRIES, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            Three Months Ended March 31
                                                            ---------------------------

                                                                1997           1996
                                                                ----           ----
<S>                                                         <C>            <C>          
Revenues                                                    $     5,821    $     5,226  
                                                                                        
Cost of revenues                                                 (5,332)        (4,709) 
Selling, general and administrative expenses                       (506)          (737) 
Interest income (expense)                                          (161)          (148) 
Other income (expenses), net                                        120            268  
Income (loss) on sale of assets                                      20             (4) 
                                                            -----------    -----------  
                                                                                        
Gain (loss) from continuing operations before                                           
     income taxes and minority interest                             (38)          (104) 
                                                                                        
Provision for income taxes                                           (1)             7  
Minority interest in loss from subsidiary                            19              3  
                                                            -----------    -----------  
                                                                                        
Net Income (loss)                                           $       (20)   $       (94) 
                                                            ===========    ===========  
Net income (loss) per common share                          $      (.01)   $      (.04) 
                                                            ===========    ===========  
                                                                                        
Average number of shares outstanding                          2,481,264      2,489,530  
</TABLE>
                                                                               4
<PAGE>
                          PERFORMANCE INDUSTRIES, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
            FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                           Three Months Ended March 31
                                                                           ---------------------------
                                                                                 1997       1996
                                                                                 ----       ----
<S>                                                                            <C>        <C>     
Net cash provided by (used in) operating activities                            $  (151)   $  (765)

Cash flows from investing activities:
     Decrease (increase) in restricted cash                                        253        497
     Decrease (increase) in receivables from sale of businesses,                   206        (13)
          net
     Purchase of property and equipment                                           (196)      (253)
     Proceeds from the sale of property and equipment                               20          0
     Increase in real estate under development                                       0       (175)
                                                                               -------    -------
          Net cash provided by (used in) investing activities                      283         56

Cash flows from financing activities:
     Proceeds from borrowings                                                        0        614
     Repayments of borrowings                                                     (122)      (296)
                                                                               -------    -------
          Net cash provided by (used in) financing activities                     (122)       318

Net increase (decrease) in cash and cash equivalents                                10       (391)
Cash and cash equivalents at beginning of period                                 1,136        411
                                                                               -------    -------
Cash and cash equivalents at end of period                                     $ 1,146    $    20
                                                                               =======    =======
</TABLE>
Certain reclassifications have been made to the consolidated 
statements of cash flows for the three-month periods ended 
March, 1996 to conform to the consolidated financial statement 
classifications for 1997.
                                                                               5
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
---------------------

PERFORMANCE INDUSTRIES, INC. - CONSOLIDATED
-------------------------------------------

Revenues  increased 11% to $5,821,000 in 1997 from $5,226,000 in 1996.  Revenues
reflect the operation of the company's Restaurant and Funding subsidiaries only.
Rental  income from the  companies  investment  in real  property is reported as
"Other income (expenses), net."

Cost of revenue increased by 13% from $4,709,000 in the first quarter of 1996 to
$5,332,000 for the first quarter of 1997.  Cost of revenue as reported  includes
only  expenses  related  to the  operation  of  restaurants  and is  more  fully
discussed below.

Selling,  general and administrative expenses decreased by 31% from $737,000 for
the first  quarter  of 1996 to  $506,000  for the same  period in 1997.  This is
attributable  to  the  reduction  of  management   staffing  in  the  Restaurant
subsidiary,  a reduction in travel  related  expenses and a general  decrease in
expenses throughout the company.

Interest  expense  increased  by $25,000 for the first  three  months of 1997 as
compared to the same period the previous  year.  The increase is a result of the
arranging  of third  party  financing  for the LLC  managed  by the  Development
subsidiary.  The amount of the third  party  financing  has  increased  from the
previous year resulting in higher interest costs. This was partially offset by a
decrease  in the  Company's  borrowing  and lower  interest  expense  associated
therewith.

Other income (expenses),  net decreased by 38% from the first quarter of 1996 to
the comparable  period of 1997.  This is attributed to the sale of the Company's
Mexicali  property in the summer of 1996 and the subsequent  reduction of rental
income.

The  Company  had on a  consolidated  basis a net loss of $20,000  for the first
quarter of 1997 as  compared  to a net loss of $94,000  for the same period last
year. The entire loss is attributable to the Company's Development subsidiary as
more fully discussed below.

For accounting  purposes on a consolidated  basis all of the loss or income from
the  Company's  Development  subsidiary  and the  Limited  Liability  Company it
manages are reported on the  statement of earnings.  There are other  members of
the Limited Liability Company owning  approximately 28% of the Limited Liability
Company. Their share of the loss or income from the Limited Liability Company is
reflected on the statement of operations as minority interest.
                                                                               6
<PAGE>
Performance Restaurants Group, Inc. (Restaurants)

The total  revenue for the  Restaurant  Group for the first  quarter of 1997 was
$5,730,000  as compared to total revenue of $5,044,000  for the same period last
year. The increase is  attributable  to the net addition of one restaurant  unit
for the period as well as a 3%  increase  in sales for stores  open for at least
one year.

Cost of revenues  increased  for the three month period ending March 31, 1997 to
$5,332,000  from  $4,709,000 for the same period last year. Part of the increase
is  attributable  to the increase in sales.  Certain costs are variable with the
amount of sales such as food costs and labor. On a percentage  basis these costs
did not  materially  increase or decrease.  There was also a net increase in the
number of stores  open  during the period  increasing  the rents paid during the
period.

Restaurants  reported  net income of $221,067  for the first  quarter of 1997 as
compared to a loss of $11,000 for the same  period  last year.  The  increase is
attributable  to a rise in sales and better  cost  control  measures  instituted
during the year.

Management  believes that the cost control measures it has instituted as well as
the  addition of new stores will allow the  Restaurant  division to show greater
profit  throughout  the  year,  however,  there  can be no  assurance  that  the
Restaurant  division  will  continue to generate  net profits on a quarterly  or
annual basis.

Performance Funding, Corp. (Funding)

Gross  revenues  and net income for the first  quarter of 1997 were  $95,000 and
$46,000  respectively  as compared  to $168,000  and $78,000 for the same period
last year. A decrease of 43% and 39% respectively.

Gross  revenues  were  down as a result  of a  decrease  in the  amount of funds
invested in the factoring of accounts.  Due to increased  competition from banks
and other factoring  companies,  Funding has a decrease in the number of clients
and accounts receivable financed. Funding has lost a major account after the end
of the first  quarter  which will result in lower gross and net revenues for the
second quarter of 1997. The company is seeking new clients.

Performance Camelback Development, Inc. (Development)

Revenue for Development  decreased 14% for the first quarter of 1997 as compared
to the same period last year.  The  decrease  is  attributable  to a decrease in
percentage rent paid by one tenant based on its gross sales.

Interest expense for the Development  increased by $45,000 for the first quarter
of 1997 as compared  to the same period the  previous  year.  The  increase is a
result  of  increased  borrowing  from a third  party  to  provide  longer  term
financing for the project. The funds were used to repay the parent company loans
made to the subsidiary as well as to pay off previous financing.
                                                                               7
<PAGE>
The  Development  subsidiary  had a net loss of $66,000 for the first quarter of
1997 as compare to a net loss of $10,000 for the same period last year.  Most of
the increase in the loss is attributable to third party financing costs.

LIQUIDITY AND CAPITAL RESOURCES -


The Company has sufficient cash reserves for operations  through the rest of the
year. Management believes, but there can be no assurance,  that Restaurants will
generate  sufficient  cash  flow  for  day  to  day  operations.  If  additional
restaurant  units are to be added,  the  Company  would have to provide any cash
required for the purchase.

Management believes that the Development subsidiary will need additional cash to
meet  expenses  over the  balance of the year.  The short fall is expected to be
approximately $150,000.

The  restriction of sale of the  securities in Western  Pacific  Airlines,  Inc.
owned by the Company, should soon be released. This stock could be sold to raise
additional funds if necessary for continuing operations.

The  Company  has  not  accrued  for  the  cost  of  purchasing  the  dissenting
shareholders'  stock.  The court has appointed  two  appraisers to determine the
fair  market  value of the stock as of  December  2,  1993,  the day  before the
transaction from which they dissented. The court has asked for a report from the
appraisers on or before June 30, 1997.  Assuming the  appraisals are received in
time, the court could issue an order  determining the value of the shares in the
third  quarter of 1997.  The  company  would be  required  to pay for the shares
within 30 days of the  order.  The  dissenting  shareholders  own  approximately
460,000  pre-split  shares.  The company  believes the fair market value of said
shares to be approximately $350,000.
                                                                               8
<PAGE>
Part II           Other Information


Item 1            Legal Proceedings

                  On May 5, 1997,  the Superior Court for the County of Maricopa
                  State of Arizona  appointed two appraisers to prepare a market
                  valuation report for Performance Industries,  Inc. stock as of
                  December 2, 1993,  to  determine  the fair market value of the
                  stock of the  dissenting  shareholders  who are parties in the
                  Action Performance Industries, Inc. v. Ecco Sales, et. al,. as
                  previously reported.

Item 2            Changes in Securities
                           None

Item 3            Defaults upon Senior Securities
                           None

Item 4            Submission of matters to a vote of Security holders.
                           None

Item 5            Other information
                           None

Item 6            Exhibits and Reports on form 8-K
                           None
                                                                               9
<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.

                                   PERFORMANCE INDUSTRIES, INC. and SUBSIDIARIES


Date: May 13, 1997             /s/ Joe Hrudka
                               -----------------------------
                                   Joe Hrudka
                                   Chairman of the Board
                                   (Principal Executive Officer)


                               /s/ Ed Fochtman
                               -----------------------------
                                   Ed Fochtman
                                   Chief Financial Officer
                                   (Principal Accounting Officer)
                                                                              10