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 September 30, 1996

                                       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 No.)
incorporation or organization)


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 the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.
YES   X   NO
    ----     ---- 

Indicate  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 November 4, 1996, 2,481,263 shares.
<PAGE>
                  PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES

                                      INDEX


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

Consolidated Balance Sheets -
     September 30, 1996 and December 31, 1995                           3

Consolidated Statements of Operations (Unaudited) -
     Three Month Period Ended September 30, 1996 and 1995               4

Consolidated Statements of Operations (Unaudited) -
     Nine month Period Ended September 30, 1996 and 1995                5

Consolidated Statements of Cash Flow (Unaudited) -
     Nine month Period Ended September 30, 1996 and 1995                6

Notes to Consolidated Financial Statements (Unaudited)                 7-8

Management's Discussion and Analysis of Financial
     Condition and Results of Operations                               9-10


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

Item 1.   Legal Proceedings                                             11
---------------------------                                             

Item 2.   Changes in Securities                                         11
-------------------------------                                         

Item 3.   Defaults upon Senior Securities                               11
-----------------------------------------                               

Item 4.   Submission of Matters to a Vote of Security Holders           11
-------------------------------------------------------------

Item 5.   Other Information                                             11
---------------------------                                             

Item 6.   Exhibits and Reports on Form 8-K                              11
------------------------------------------

Signatures                                                              12
                                       2
<PAGE>
                          PERFORMANCE INDUSTRIES, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                             September 30, 1996   December 31,1995
                                                                             ------------------   ----------------
                                 ASSETS
<S>                                                                               <C>                    <C>       
Current assets:
  Cash and cash equivalents
     Cash and equivalents, unrestricted                                           $      73              $      411
     Cash, restricted                                                                   688                   1,267
  Securities available for sale                                                         913                   1,783
  Accounts and other receivables,
    less allowance for doubtful                                                         496                     416
  Receivable from sale of businesses,
    net of allowance current portion                                                  1,440                     480
  Factored receivables, net of allowance for doubtful                                 1,474                   1,868
  Inventories                                                                           312                     293
  Prepaid expenses and other current assets                                             765                     322
  Other assets held for sale                                                            212                     212
  Deferred income taxes                                                                  81                       0
                                                                                  ---------              ----------

    Total current assets                                                              6,454                   7,052

  Receivables from sales of businesses, less current portion
    net of allowance                                                                    373                     520
  Investment in real estate                                                           9,298                  11,073
  Deferred income taxes                                                               1,734                   1,734
  Property and equipment, net                                                         4,485                   3,578
  Other assets, net                                                                     989                     921
                                                                                  ---------              ----------


                                                                                  $  23,333              $   24,878
                                                                                  =========              ==========
                   LIABILITIES AND SHAREHOLDER' EQUITY Current liabilities:
  Current portion of long-term debt                                                   1,514                     594
  Accounts payable                                                                    1,080                   1,260
  Accrued employment costs                                                              541                     288
  Accrued product liability costs                                                       333                     350
  Accrued expenses and other current liabilities                                        831                  `1,016
  Factored receivables reserve                                                          346                     390
  Liabilities subject to compromise                                                     764                     754
                                                                                  ---------              ----------

    Total current liabilities                                                         5,409                   4,652

  Long-term debt, less current portion                                                6,518                   6,751

  Minority interest                                                                     394                     414

Shareholders' equity:
  Common stock, no par value; authorized
    5,000,000 shares; 3,232,332 issued; 2,481,263 outstanding                        31,202                  31,202
  Accumulated deficit                                                              (17,641)                (16,416)
  Unrealized appreciation  on securities available for sale
    net of income taxes                                                                 427                   1,226
                                                                                  ---------              ----------

                                                                                     13,988                  16,012
  Treasury stock at cost 679,050 shares                                             (2,976)                 (2,951)
                                                                                  ---------              ----------

    Total shareholders' equity                                                       11,012                  13,061

                                                                                  $  23,333               $  24,878
                                                                                  =========               =========
</TABLE>
                                       3
<PAGE>
                          PERFORMANCE INDUSTRIES, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
          FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 1996 AND 1995
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                  Three Months Ended September 30
                                                                  -------------------------------
                                                                           1996          1995
                                                                           ----          ----
<S>                                                                  <C>            <C>        
Net revenue                                                          $     5,169    $     4,779

Cost of revenues                                                          (4,911)        (4,508)

Selling general and administrative expense                                (1,223)          (793)
Interest income (expense)                                                   (224)           289
Other income                                                                  50             17
Gain on sale of assets                                                     1,568             (2)
                                                                     -----------    ----------- 


Gain or (Loss) from continuing operations before
income taxes and minority interest                                           429           (218)

Provision for income taxes                                                  (247)            (4)
                                                                     -----------    ----------- 
Gain or (Loss) from continuing operations before minority interest           182           (222)
Minority interest in earnings                                                  2            (14)
                                                                     -----------    ----------- 

Gain or (Loss) from continuing operations                                    184           (236)

Income from discontinued operations                                          -0-            -0-
                                                                     -----------    ----------- 

Net gain (loss)                                                      $       184    $      (236)
                                                                     ===========    =========== 

Income (loss) per common share:
Continuing operations                                                $       .07    $      (.10)
Discontinued operations                                                      .00           (.00)
                                                                     -----------    ----------- 

Net income (loss) per common share                                   $       .07    $      (.10)
                                                                     ===========    =========== 


Average number of shares outstanding                                   2,481,263      2,481,263
                                                                     ===========    =========== 
</TABLE>
See accompanying notes to consolidated financial statements.
                                       4
<PAGE>
                          PERFORMANCE INDUSTRIES, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
           FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1996 AND 1995
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                         Nine Months Ended September 30
                                                                         ------------------------------
                                                                                1996            1995
                                                                                ----            ----
<S>                                                                        <C>            <C>         
Net Revenues                                                                    15,557    $    14,607

Cost of revenues                                                               (14,570)       (13,257)
Selling general and administrative expenses                                     (2,732)        (2,421)
Interest (expense) income                                                         (563)           285
Other income                                                                       548            509
Gain on sale or disposition of assets                                              993             (2)
                                                                           -----------    ----------- 


Loss from continuing operations before income
  taxes and minority interest                                                     (767)          (279)

Provision for income taxes                                                        (241)            (9)
                                                                           -----------    ----------- 


Gain or (Loss) from continuum operation before minority interest                (1,008)          (288)
Minority interest in earnings                                                       20            (48)
                                                                           -----------    ----------- 


Earnings (losses) before income tax                                               (988)          (336)

Income (loss) from discontinued operations                                         (99)           -0-
                                                                           -----------    ----------- 

Net losses                                                                      (1,087)          (336)
                                                                           ===========    =========== 


Loss per common share:
Continuing operations                                                      $      (.40)   $      (.14)
Discontinued operations                                                           (.04)          (.00)
                                                                           -----------    ----------- 

Net loss per common share                                                  $      (.44)   $      (.14)
                                                                           ===========    =========== 


Average number of shares outstanding                                         2,481,263      2,481,263
                                                                           ===========    =========== 
</TABLE>
See accompanying notes to consolidated financial statements.
                                       5
<PAGE>
                          PERFORMANCE INDUSTRIES, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                             (DOLLARS IN THOUSANDS)
           FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1996 AND 1995
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                             Nine months Ended September 30
                                                             ------------------------------

                                                                  1996       1995
                                                                  ----       ----
<S>                                                             <C>        <C>     
Net cash (used in) operating activities                         $  (918)   $(1,682)

Cash Flow from Investing Activities:
     Decrease in restricted cash                                    579      1,110
     Increase in receivables from sale of businesses, net          (661)       539
     (Increase) decrease in investment of factored
     receivables, net                                              (232)     1,830
     Decrease (increase) assets held for sale                       -0-         19
     Additions to property and equipment                         (1,181)    (1,166)
    (Increase) decrease in real estate under development          1,413     (2,711)
                                                                -------    ------- 

          Net cash provided by (used in) investing activities       (82)      (379)

Cash Flow from Financing Activities:
     Repayment of debt                                             (384)      (140)
     Proceeds from borrowings                                     1,071       1250
     (Increase) decrease in treasury stock                          (25)        47
                                                                -------    ------- 

          Net cash provided by (used in) financing activities       662       1157

Net (decrease) in cash and cash equivalents                        (338)      (904)
Cash and cash equivalents at beginning of period                    411      1,142
                                                                -------    ------- 

Cash and cash equivalents at end of period                      $    73    $   238
                                                                =======    =======
</TABLE>
See accompanying notes to consolidated financial statements.
                                       6
<PAGE>
                  PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (Unaudited)

(1)      Basis of Presentation:
         ----------------------

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information and with the  instructions to Form 10-Q and Rule 10-01 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnote  disclosure  required by generally accepted  accounting  principles for
complete financial statements.  These interim consolidated  financial statements
should be read in conjunction  with the  consolidated  financial  statements and
notes  included  in the  Company's  1995 Form 10-K  filing.  In the  opinion  of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  Operating results for the
Nine month period ended September 30, 1996 are not necessarily indicative of the
results that may be expected for the year ended  December 31, 1996.  For further
information,  refer  to the  consolidated  financial  statements  and  footnotes
thereto contained herein.

(2)      Inventories:
         ------------

The components of inventories were as follows (in thousands):

                                 September 30, 1996      December 31, 1995
                                 ------------------      -----------------
Restaurant Inventory                    312                      293

(3)      Restricted Cash:
         ----------------

Cash which has been restricted as collateral and for use in tenant  improvements
for the  Camelback  Plaza  Development  was  reduced by  $579,000  for the final
payments of Hard Rock  improvements and the payment of commitments to one of the
other tenants.

(4)      Securities Available for Sale:
         ------------------------------

The company owns  103,087  shares of common  stock of Western  Pacific  Airlines
(WPAC on NASDAQ) with a cost basis of $2 per share.  At December  31, 1995,  the
company  elected to record the stock at market  value which was $17 1/4 a share.
At September 30, 1996 the value was dropped to $ 8 7/8 per share.  Increases and
decreases in value are recorded as an  adjustment to  shareholders  equity under
"Unrealized Appreciation on Securities Available for Sale".

(5)      Receivable from Sale of Businesses:
         -----------------------------------

The Company has notes from the sale of prior businesses.  During the nine months
ended September 30, 1996, the Company  discounted one note for an immediate cash
payment of $700,000.  The discount is reported on the statement of operations as
a loss from discontinued operations. On July 15, 1996, the Company sold its land
and buildings in Mexicali,  Mexico for $3,000,000,  receiving $1,000,000 in cash
and a note providing 18 monthly payments of $120,000 each.
                                       7
<PAGE>
(6)      Prepaid Expenses:
         -----------------

Prepaid   expenses   increasing  by  $443,000  is  the  result  of  opening  two
restaurants,  and  commissions and other expenses  associated  with  negotiating
leases with tenants of the Company's real estate properties.

(7)      Investment in Real Estate:
         --------------------------

The Company's  investment in real estate was reduced by $1,775.000.  This is the
net  result  of the sale of the  Mexicali  facilities  (footnote  5) and  tenant
improvements to the Camelback Plaza development.

(8)      Property and Equipment:
         -----------------------

Property and equipment  increased $907,000 net of depreciation.  The increase is
due to  opening  and  remodeling  of two  restaurants,  plus  continued  capital
improvements at existing restaurants.

(9)      Long Term Debt:
         ---------------

Long term  debt has  increased  $687,000  during  the nine  month  period  ended
September  30,  1996.  On  April 1,  1996,  the  Company  obtained  a six  month
$1,000,000 line of credit. The line is secured by securities available for sale.
The note which  matures on October 1, 1996,  has an option to extend for another
six months.
                                       8
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


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

Results of Operations - Consolidated
------------------------------------

The Company's  results of operations for the three month period ended  September
30, 1996, were a profit of $184,000  compared to a loss of $236,000 for the same
period last year.  Several  significant  events  occurred during the period with
mixed results offsetting each other.

On July 15, 1996,  the Company sold its  investment in a foreign  subsidiary for
$3,000,000  in  cash  and  future  consideration.  The  gain on  this  sale  was
approximately $1,600,000 before foreign income taxes of approximately $250,000.

Early in  July,  1996,  the  Company  took  action  to  reduce  overhead  at its
administrative  level.  The  downsizing of staff is expected to result in annual
savings of over $500,000.

During this same period a review of the Company's  factoring portfolio indicated
a potential under  provision for bad debts.  Included in Selling,  General,  and
Administrative   expenses   for  this  three  month  period  is  an  accrual  of
approximately  $580,000 to reserve for bad debts. S.G. & A expenses without this
charge would have been $150,000 less than for the same period last year.

At the July 19, 1996 annual  meeting,  the  shareholders of the Company voted to
approve a 1 for 4 reverse stock  split.  As a  component  of the  proposal,  the
Company offered an odd lot tender to all post split  shareholders of less than a
100 shares at a price of $3.00 a share (post split).  Approximately  two hundred
shareholders tendered their shares for a total of approximately 8,300 shares.

PERFORMANCE RESTAURANT GROUP, INC.
----------------------------------

Revenues for the quarter ended  September 30, 1996,  were $411,000 more than the
same period in 1995. Revenues for the nine months ended September 30, 1996, were
$1,161,000  more than the same period in 1995.  The increase is primarily due to
new restaurant additions. Some store sales are up approximately 1% over 1995.

As a percentage  of sales cost of goods sold was 28.3% for the nine months ended
September  24,  1996,  as compared  to 27.7% for the same period last year.  The
increase is  attributed  to an increase in food sales as a  percentage  of total
sales.

General  administrative  expenses as a percentage of sales was 5.9% for the nine
months ended  September  30, 1996,  as compared to 6.5% for the same period last
year.  This positive  reduction  should continue during the last three months of
1996.
                                       9
<PAGE>
PERFORMANCE FUNDING
-------------------

Net revenues and income  (loss) for the nine month period  ending  September 30,
1996, were $545,000 and ($326,000),  respectively.  This compares to revenues of
$716,000 and earnings of $452,000 for the same period in 1995.

Performance  Funding,  which was started in September of 1993, has provided over
$1,250,000  in earnings  to date.  Its bad debt  history  has been good.  It has
purchased  nearly  $100,000,000  in  receivables  and has  written off less than
$50,000.  Recently  non-performing  customers have made it necessary to increase
the reserve for bad debts by approximately $600,000 during 1996.

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

On November 1, 1996, the Company obtained  refinancing of the retail development
Camelback  Plaza. The new note provides a longer term at a reduced interest rate
and in an amount  sufficient to repay the Company over $2,000,000 of its loan to
the subsidiary.  The  transaction  also freed up the restricted cash required as
additional collateral by the previous lender. The Company intends to use some of
these funds to pay down its loans on lines of credit with Capital Factors.

On July 15, 1996,  the Company sold its  investment in a foreign  subsidiary for
$3,000,000.  The sale  provides  for payments of $120,000 a month for 18 months,
beginning in August 1996.

These two events,  coupled with the  downsizing  of  administrative  overhead in
July, should provide the Company with sufficient cash to fund future operations,
but there can be no assurance.
                                       10
<PAGE>
                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings
-------------------------
The arbitration  filed by the minority  members of Camelback Plaza  Development,
L.C. as reported in the June 30, 1996, 10-Q, was dismissed  without prejudice by
stipulation.  The parties  have agreed to the terms of this sale of the interest
of Performance Industries, Inc., to the other members.

The  action  for  determination  of the fair  market  value of the shares of the
Company stock for dissenting shareholders,  Performance Industries, Inc. v. Ecco
Sales, et al, has been remanded to the Superior Court, State of Arizona,  County
of Maricopa,  for further proceeding by the Arizona Court of Appeals. Under Ohio
Statutes,  the Company has  requested  a hearing be  scheduled  by the Court for
purposes of determining if there was a viable market for the Company's shares at
the time of the action  from which the  shareholder's  dissented  and, if so, to
determine the fair market value of the shares.  In the alternative,  the company
is requesting the appointment of an appraiser by the Court to determine the fair
market value of the shares.

Item 2. Changes in Securities
-----------------------------
The  one-for-four  reverse  stock split was  effective  October 17, 1996, in the
electronic bulletin board. The Company's new symbol is PFRI.

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
                                       11
<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: November 13, 1996      /s/ Joe Hrudka
                             -----------------------------
                             Joe Hrudka
                             Chairman of the Board
                             (Principal Executive Officer)


                             /s/ James W. Brown
                             ------------------------------
                             James W. Brown
                             Chief Financial Officer
                             (Principal Accounting Officer)
                                       12