U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

                QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1996

                         Commission File Number 1-13984

                 WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC.
        (Exact name of small business issuer as specified in its charter)

                    New York                           13-3832215
                    --------                           ----------
        (State of other jurisdiction                (I.R.S. Employer
            of incorporation)                      Identification No.)

                               533 W. 47th Street
                               New York, NY 10036
                    (Address of principal executive offices)

                                 (212) 586-7600
                           (Issuer's telephone number)

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or 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 number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: As of November 13, 1996, there were
2,596,500 shares of common stock, par value $.001 per share, outstanding.


<PAGE>

                  WILLIAM GREENBERG JR. DESSERT AND CAFES, INC.

                      SECOND QUARTER REPORT ON FORM 10Q-QSB


                                TABLE OF CONTENTS

                                                                        Page No.



PART I. FINANCIAL INFORMATION



           Item 1.  Financial Statements (Unaudited) ....................      3



           Item 2.  Management's Discussion and Analysis of
                      Financial Condition or Plan of Operation ..........     11


                                     2 of 19

<PAGE>

                 WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC.

                                 BALANCE SHEETS
                                   (Unaudited)


                                   A S S E T S
                                   -----------

                                                   September 30,    December 31,
                                                       1996             1995
                                                   -------------    ------------

Current assets:
  Cash and cash equivalents                         $  365,494       $2,169,999
  Accounts receivable, net of allowance
    for doubtful accounts of $18,500                   138,269          222,623
  Inventory                                            157,275           91,631
  Prepaid expenses and other current assets            143,122          100,532
                                                    ----------       ----------
        Total current assets                           804,160        2,584,785
                                                    ----------       ----------

Property and equipment, at cost, less
  accumulated depreciation and amortization
  of $158,727 and $37,702, respectively              1,733,035        1,477,062
                                                    ----------       ----------

Other assets:
  Deferred charges                                     137,305             -
  Covenant not to compete                               93,750          112,500
  Goodwill                                             856,350          903,060
  Security deposits                                    113,080           77,772
                                                    ----------       ----------
        Total other assets                           1,200,485        1,093,332
                                                    ----------       ----------

                                                    $3,737,680       $5,155,179
                                                    ==========       ==========


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

Current liabilities:
  Accounts payable                                  $  672,522       $  387,630
  Accrued expenses and other current liabilities       130,178           64,240
                                                    ----------       ----------
        Total current liabilities                      802,700          451,870
                                                    ----------       ----------

Deferred rent                                           60,253           23,207
                                                    ----------       ----------

Commitments and contingencies                             -                -

Stockholders' equity:
  Preferred stock - $.001 par value
    Authorized - 2,000,000 shares
    Issued     - none
  Common stock - $.001 par value
    Authorized - 10,000,000 shares
    Issued and outstanding - 2,560,000 shares            2,560            2,560
  Additional paid-in capital                         6,597,342        6,597,342
  Accumulated deficit                              ( 3,725,175)     ( 1,919,800)
                                                    ----------       ----------
        Total stockholders' equity                   2,874,727        4,680,102
                                                    ----------       ----------

                                                    $3,737,680       $5,155,179
                                                    ==========       ==========


                                     3 of 19


<PAGE>

                 WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC.

                STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
                                   (Unaudited)


<TABLE>
<CAPTION>
                                       For the Nine              For the Three
                                       Months Ended              Months Ended
                                       September 30,             September 30,
                                    1996         1995          1996         1995
                                 -----------------------    -----------------------
<S>                              <C>          <C>           <C>          <C>       
Net sales                        $2,688,886   $  595,488    $  916,320   $  595,488
                                 ----------   ----------    ----------   ----------

Cost and expenses:
  Cost of sales                   1,969,906      358,474       691,454      358,474
  Selling and administrative
    expenses                      2,560,867      502,115       896,528      460,582
                                 ----------   ----------    ----------   ----------
Total cost and expenses           4,530,773      860,589     1,587,982      819,056
                                 ----------   ----------    ----------   ----------

Loss from operations            ( 1,841,887) (   265,101)  (   671,662) (   223,568)

Other income (expense):
  Interest income (expense)          36,512  (    65,226)           88  (    65,226)
                                 ----------   ----------    ----------   ----------

Net loss                        ( 1,805,375) (   330,327)  (   671,574) (   288,794)

Accumulated deficit at
  beginning of period           ( 1,919,800) (    58,579)  ( 3,053,601) (   100,112)
                                 ----------   ----------    ----------   ----------

Accumulated deficit at
  end of period                 ($3,725,175) ($  388,906)  ($3,725,175) ($  388,906)
                                 ==========   ==========    ==========   ==========


Net loss per common share          ($.66)       ($.21)        ($.25)       ($.18)
                                 ==========   ==========    ==========   ==========


Weighted average number of
  common shares outstanding       2,723,404    1,573,404     2,723,404    1,573,404
                                 ==========   ==========    ==========   ==========
</TABLE>


                                     4 of 19

<PAGE>

                 WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                 For the Nine
                                                                 Months Ended
                                                                 September 30,
                                                           ------------------------
                                                              1996          1995
                                                           ----------    ----------
<S>                                                       <C>           <C>         
Cash flows from operating activities:
  Net loss                                                ($1,805,375)  ($  330,327)
                                                          -----------   ----------- 
  Adjustments to reconcile net loss to net
      cash used in operating activities:
    Depreciation and amortization                             186,485        39,229
    Deferred rent                                              37,046          -
    Increase (decrease) in cash flows as
        a result of changes in asset and
        liability account balances:
      Accounts receivable                                      84,354   (   111,192)
      Inventory                                           (    65,644)  (    40,000)
      Prepaid expenses and other current assets           (    42,590)  (    78,498)
      Security deposits                                   (    35,308)         -
      Deferred charges                                    (   137,305)  (    22,799)
      Accounts payable and other current liabilities          350,830       297,904
                                                          -----------   ----------- 
  Total adjustments                                           377,868        84,644
                                                          -----------   ----------- 

Net cash used in operating activities                     ( 1,427,507)  (   245,683)
                                                          -----------   ----------- 

Cash flows from investing activities:
  Proceeds from sale of common stock                             -          800,000
  Capital expenditures                                    (   376,998)  (   126,443)
  Deposit on purchase of Greenberg's
    Desserts Associates, L.P.                                    -      ( 2,229,200)
                                                          -----------   ----------- 
Net cash used in investing activities                     (   376,998)  ( 1,555,643)
                                                          -----------   ----------- 

Cash flows from financing activities:
  Payment of deferred offering costs                             -      (   136,847)
  Payment of deferred finance costs                              -      (    54,200)
  Increase in amounts due to officer/stockholder                 -           54,933
  Proceeds from loans payable                                    -        2,000,000
                                                          -----------   ----------- 
Net cash provided by financing activities                        -        1,863,886
                                                          -----------   ----------- 

Net increase (decrease) in cash and cash equivalents      ( 1,804,505)       62,560

Cash and cash equivalents at beginning of period            2,169,999          -
                                                          -----------   ----------- 

Cash and cash equivalents at end of period                $   365,494   $    62,560
                                                          ===========   =========== 


Supplemental Information:

  Cash payments for the period:

    Interest expense                                      $      -      $      -
                                                          ===========   =========== 

    Income taxes                                          $    10,079   $      -
                                                          ===========   =========== 
</TABLE>


                                     5 of 19

<PAGE>

                 WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

             NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
                                   (Unaudited)

NOTE 1 -  PREPARATION OF UNAUDITED FINANCIAL STATEMENTS.

               William Greenberg Jr. Desserts and Cafes, Inc. (the "Company")
          was incorporated in the State of New York on November 12, 1993 as CIP,
          Inc. On August 23, 1994, its name was changed to Desserts and Cafes,
          Inc. and in August 1995, its name was changed to William Greenberg Jr.
          Desserts and Cafes, Inc. From November 1993 through July 1995, the
          Company was a development stage company and did not generate any
          revenues and did not carry on any significant operations. Management's
          efforts were directed toward the development and implementation of a
          plan to generate sufficient revenues in the bakery industry to cover
          all of its present and future costs and expenses. On July 10, 1995,
          the Company acquired the net operating assets of Greenberg Dessert
          Associates Limited Partnership ("Greenberg's-L.P.") at which time the
          Company commenced operations and ceased being a development stage
          enterprise. The deficit accumulated by the Company during the
          development stage aggregated $100,112.

               In the opinion of the Company, the accompanying unaudited
          condensed financial statements contain all adjustments (consisting of
          only normal recurring accruals) necessary to present fairly the
          financial position as of September 30, 1996 and the results of
          operations for the nine and three month periods ended September 30,
          1996 and 1995 and the cash flows for the nine months ended September
          30, 1996 and 1995. The results of operations for the nine months ended
          September 30, 1996 are not necessarily indicative of the results of
          operations of the Company which may be expected for any other interim
          period or for the full year.

               These financial statements should be read in conjunction with the
          Company's financial statements and notes thereto for the year ended
          December 31, 1995 appearing in its Annual Report on Form 10-KSB for
          the year then ended.


                                     6 of 19

<PAGE>

NOTE 2 -  ACQUISITION OF GREENBERG DESSERT ASSOCIATES LIMITED PARTNERSHIP.

               On June 2, 1995, the Company entered into an agreement to
          purchase the operating assets (net of $155,700 in assumed
          liabilities), properties and rights of Greenberg's-L.P. for
          $2,000,000, consisting of $1,967,300 in cash and a promissory note in
          the amount of $32,700 ("the Acquisition"). The Acquisition, which was
          consummated on July 10, 1995, was accounted for as a purchase. The
          excess of the purchase price over the value of the net assets acquired
          was recorded as goodwill. In addition, the Company incurred legal fees
          of $26,000, which related to the Acquisition. Assuming the operating
          assets of Greenberg's-L.P. been acquired at January 1, 1995, the
          results of operations on a proforma basis for the nine months ended
          September 30, 1995 would have been as follows:

                                               For the Nine     For the Three
                                               Months Ended      Months Ended
                                               September 30,    September 30,
                                                   1996             1995
                                               -------------    -------------

          Net sales                             $2,080,312         $653,488
                                                ----------         --------

          Cost of sales                          1,291,552          395,474
          Selling, general and
            administrative expenses              1,089,991          455,575
          Depreciation and
            amortization expenses                   65,174           39,007
                                                ----------         --------
                                                 2,446,717          890,056
                                                ----------         --------

          Loss from operations                 (   366,405)       ( 236,568)

          Interest expense                     (    73,365)       (  65,226)
                                                ----------         --------

          Net loss                             ($  439,770)       ($301,794)
                                                ==========         ========



NOTE 3 -  PROPERTY AND EQUIPMENT.

                 Property and equipment at September 30, 1996 consist of:

                   Furniture and fixtures                 $  105,550
                   Equipment                                 615,581
                   Leasehold improvements                  1,109,703
                   Construction in progress                   60,928
                                                          ----------
                                                           1,891,762
                   Less:  Accumulated depreciation
                            and amortization                 158,727
                                                          ----------

                                                          $1,733,035
                                                          ==========


                                     7 of 19

<PAGE>

NOTE 4 -  SEGMENT INFORMATION.

               The Company's operations are classified into two segments, retail
          and wholesale. The following is a summary of segmented information as
          of September 30, 1996 and for the nine and three month periods then
          ended (actual) and 1995 (proforma basis which reflects the purchase of
          the business of Greenberg's-L.P. as if it had occurred on January 1,
          1994):


                                    For the Nine             For the Three
                                    Months Ended             Months Ended
                                    September 30,            September 30,
                              -----------------------    -------------------
                                 1996         1995         1996       1995
                              ----------   ----------    --------   --------
                               (Actual)    (Proforma)    (Actual)  (Proforma)

Operating data:
  Net sales:
    Retail                    $1,855,000   $1,433,000    $636,000   $426,000
    Wholesale                    834,000      647,000     280,000    227,000
                              ----------   ----------    --------   --------
Total operating data           2,689,000    2,080,000     916,000    653,000
                              ----------   ----------    --------   --------

Loss from operations:
  Retail                     ( 1,156,000) (   509,000)  ( 453,000) ( 163,000)
  Wholesale                  (   686,000) (   154,000)  ( 219,000) (  74,000)
                              ----------   ----------    --------   --------
Total loss from operations   ( 1,842,000) (   663,000)  ( 672,000) ( 237,000)
                              ----------   ----------    --------   --------

Less:  General corporate
         income (expense)         37,000  (   250,000)       -     ( 105,000)
                              ----------   ----------    --------   --------

Net loss                     ($1,805,000) ($  913,000)  ($672,000) ($342,000)
                              ==========   ==========    ========   ========


                 Balance sheet data:

                                                           As of
                                                       September 30,
                                                           1996
                                                       -------------

                   Identifiable assets:
                     Retail                             $1,101,000
                     Wholesale                           1,177,000
                                                        ----------
                                                         2,278,000
                     General corporate assets            1,460,000
                                                        ----------

                   Total assets                         $3,738,000
                                                        ==========


                                     8 of 19

<PAGE>

NOTE 5 -  STOCKHOLDERS' EQUITY.

          (a) Per Share Data:

               Net loss per share for the nine and three months ended September
          30, 1996 was computed by the weighted average number of shares
          outstanding during the period and the assumed conversion of a warrant
          issued in connection with the financing for the Acquisition into
          163,404 shares of common stock.

               Net loss per share for the nine and three months ended September
          30, 1995 was computed by the weighted average number of shares
          outstanding during the period.

          (b) Stock Options:

            (i) On January 13, 1996, stock options to purchase up to 20,000
          shares of the Company's common stock were issued to a consultant and
          are exercisable at $5.50 per share for a two year period as follows:

               (a)  Options to purchase 5,000 shares of the Company's common
                    stock are immediately exercisable.

               (b)  Options to purchase the additional 15,000 shares of the
                    Company's common stock are exercisable in increments of
                    5,000 shares at such time as the closing price of the
                    Company's common stock as reported by Nasdaq is $7.50, $9.00
                    and $10.50 per share, respectively.

           (ii) In July 1996, the Company issued a option to a consultant to
          purchase 50,000 shares of its common stock in exchange for, among
          other things, services rendered by the consultant. The exercise price
          of the option ($2.00 per share) was in excess of the fair market value
          of the common stock at the date of grant. The option expires on
          January 5, 1998; and, as of September 30, 1996, the consultant is
          entitled to exercise the option with respect to 25,000 shares.

          (c) Common Stock:

            (i) In March 1996, the Company's former Chairman Willa Rose
          Abramson pledged 400,000 common shares of the Company (representing
          15.6% of the Company's then issued and outstanding common shares) to a
          third party as collateral for a loan made to her spouse. The loan
          matures in March 1997. Effective April 15, 1996, Ms. Abramson resigned
          as a member of the Board of Directors and from the offices of Chairman
          of the Board, Chief Financial Officer and Secretary and pursuant to
          the terms of an agreement between the Company and Ms. Abramson, the
          Company has agreed to continue to pay Ms. Abramson her salary and
          benefits at their current levels for a period of up to 16 months.

           (ii) Subsequent to September 30, 1996, the Company issued an
          aggregate of 71,500 shares of its common stock to five entities in
          satisfaction of indebtedness owed to them for consulting, legal and
          employment services rendered.


                                     9 of 19

<PAGE>

NOTE 6 -  CONSULTING AGREEMENT.

               The Company entered into a consulting agreements with unrelated
          parties to provide accounting, financial and public relations
          services. One agreement is for a period of two years at a monthly fee
          of $2,500 and, subject to stockholder approval, an option to purchase
          20,000 shares of the Company's common stock (see Note 5). The
          agreement may be terminated by either party thereto upon thirty days
          notice prior to the expiration of the first six months of the
          agreement.

               The other agreement is for financial services rendered in
          connection with, among other things, the proposed acquisition of a
          bakery (see Note 8). The consultant's compensation is an option to
          acquire 50,000 shares of the Company's common stock at $2.00 per
          share.

NOTE 7 -  CERTAIN TRANSACTIONS.

               In August 1996, the Company's Chairman and President, along with
          three employees and consultants of the Company, each agreed to defer
          receipt of up to 50% of their compensation due to them pursuant to
          their respective employment on consulting agreements through December
          31, 1996. Commencing in January 1997, these individuals will receive
          the compensation due to them pursuant to such agreements and the
          deferred compensation will be fully paid to them during 1997. One of
          these consultants in November 1996 was issued 10,000 shares of the
          Company's common stock as payment for the amount of compensation which
          she had agreed to defer.

NOTE 8 -  SUBSEQUENT EVENTS.

          (a) In October and November 1996, the Company filed two registration
          statements with the Securities and Exchange Commission to register the
          shares issued to certain consultants and employees in satisfaction of
          liabilities owed to them.

          (b) On October 24, 1996, the Company entered into a letter of intent
          with Mr. Philip Grabow in connection with the acquisition of all of
          the outstanding stock of J.M. Specialties, Inc. ("JMS"), for an
          aggregate purchase price of approximately $3.0 million, which is
          expected to consist of $1,000,000 in cash, 450,000 shares of the
          Company's common stock and 300,000 common stock purchase warrants with
          an exercise price of $2.75 per share. JMS, doing business under the
          name of Batter Bake, is engaged in the business of manufacturing,
          selling and distributing a line of batter and frozen finished cakes,
          brownies and muffins from its Parsippany, New Jersey facility. The
          letter of intent will terminate if definitive agreements evidencing
          the proposed transaction have not been executed and delivered by the
          parties on or before November 30, 1996.

          (c) The Company is currently in discussions with third parties to
          finance the construction of three free-standing stores as well as ten
          in-store locations at Macy's department stores. The proposed
          construction and ensuing operations are expected to cost a total of
          approximately $1,240,000 with one half of this amount expected to be
          directed towards the free standing stores and the other half expected
          to be spent on the completion of the Macy's in-store locations. The
          Company has hired Goodfellow Financial Group, Inc. to serve as
          financial consultant (the "Consultant") in obtaining the proposed
          financing. In addition to a retainer of $7,500, the Consultant will
          receive an amount equal to 5% of all funds secured on behalf of the
          Company, and will be entitled to receive 50,000 common stock purchase
          warrants with an exercise price of $2.50 per share upon raising a
          minimum amount of $620,000.


                                    10 of 19

<PAGE>

ITEM 2 -  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION OR PLAN OF OPERATION

          (a)  General:

               The Company was incorporated in November 1993 and was in the
          development stage through July 1995. From April 1994 through June
          1995, the Company assembled its core management, raised approximately
          $600,000 from equity financing, and negotiated a definitive agreement
          to purchase the operating assets and business of Greenberg's-L.P. In
          July 1995, the Company completed the Acquisition for a purchase price
          of $1,967,300 in cash and a promissory note for $32,700. In connection
          with the Acquisition, the Company obtained a $2,000,000 term loan and
          applied a portion of the net proceeds from its initial public
          offering, consummated in October 1995, the pay in full the principal
          and accrued interest under the term loan. The Acquisition was
          accounted for as a purchase and the excess of the purchase price over
          the value of the net assets acquired was recorded as goodwill.

               Additionally, to the extent the Company may have taxable income
          in future periods, there is available a net operating loss for federal
          income tax purposes of approximately $3,000,000 which can be used to
          reduce the tax on income up to that amount through the year 2010.

          (b)  Results of Operations:

               Historical:

               The Company from its inception on November 12, 1993 through July
          10, 1995 was in the development stage and did not carry on any
          significant operations nor generate any revenues. Management's efforts
          were directed toward the development and implementation of a plan to
          generate sufficient revenues in the baking industry to cover all of
          its costs and expenses. During the nine and three months ended
          September 30, 1995, the Company incurred costs and expenses of $22,000
          in implementing its plan. $17,500 of these costs were paid to a
          consultant who became the Company's president in 1995. The Company did
          not generate any revenues until July 10, 1995 when it acquired
          operating assets of Greenberg's-L.P. The Company's revenues aggregated
          $2,689,000 for the nine months ended September 30, 1996. The cost of
          goods sold were $1,970,000 for the period and selling, general and
          administrative expenses were $2,561,000.

               For the nine and three months ended September 30, 1996, the
          Company had interest income of $37,000 and $-0-, respectively, which
          arose from investing a portion of the net proceeds it received upon
          the consummation of the initial public offering in highly liquid cash
          equivalents. Interest expenses for the nine months ended September 30,
          1995 was paid on the $2,000,000 term loan which was repaid in October
          1996.

               As a result, the net loss for the nine months ended September 30,
          1996 was $1,805,000.


                                    11 of 19

<PAGE>

          (b)  Results of Operations: (Continued)

               Historical: (Continued)

               Insofar as the Company had no revenues prior to the Acquisition
          in July 1995, management is of the opinion that a discussion of the
          results of operations of the Company (and Greenberg's-L.P.) on a
          pro-forma basis would be more informative than a comparative
          discussion of the Company on a historical basis. Therefore,
          management's discussion of the Company's results of operations for the
          nine months ended September 30, 1996 as compared with the same period
          in 1995 are based on the pro-forma segmental information found below
          and reflects the purchase of Greenberg's-L.P. as if it had occurred as
          of the beginning of the periods presented.

          (c)  Proforma:

               Retail Segment:

               The retail segment presently consists of five retail stores
          located in Manhattan, New York including its cafe located in Macy's
          Herald Square. The Company's fifth retail store opened in Manhattan in
          May 1996. All baking is done at the Company's bakery which is located
          on West 47th Street, New York, New York. From this location, baked
          goods are supplied to retail stores as well as to wholesale customers.

               The results of the retail segment is presented a proforma basis
          and reflects the Acquisition as if it has occurred as of the beginning
          of the periods presented.

<TABLE>
<CAPTION>
                             For the Nine Months Ended 
                                    September 30,                         Percentage
                       --------------------------------------             Change (as
                          1996       %        1995       %      Change   a % of Sales)
                       ----------  ------  ----------  ------  --------  -------------
<S>                    <C>         <C>     <C>         <C>     <C>        <C>     
Net sales              $1,855,000  100.0%  $1,433,000  100.0%  $422,000        - %
Cost of sales           1,206,000   65.0      807,000   56.3    399,000       8.7
                       ----------  -----   ----------  -----   --------      ----

Gross profit              649,000   35.0      626,000   43.7     23,000     ( 8.7)

Selling, general and
  administrative        1,674,000   90.2      790,000   55.1    884,000      35.1

Depreciation and
  amortization            131,000    7.1       48,000    3.3     83,000     ( 3.8)
                       ----------  -----   ----------  -----   --------      ----

Loss from operations  ($1,156,000)( 62.3%)($  212,000)( 14.7%)($944,000)    (47.6%)
                       ==========  ======  ==========  ======  ========      =====
</TABLE>


                                    12 of 19

<PAGE>

          (c)  Proforma: (Continued)

               Retail Segment: (Continued)


<TABLE>
<CAPTION>
                             For the Nine Months Ended 
                                    September 30,                         Percentage
                       --------------------------------------             Change (as
                          1996       %        1995       %      Change   a % of Sales)
                       ----------  ------  ----------  ------  --------  -------------
<S>                    <C>         <C>     <C>         <C>     <C>        <C>     
Net sales               $636,000   100.0%  $426,000    100.0%  $210,000         - %
Cost of sales            405,000    63.7    206,000     48.3    199,000       15.4
                        --------   -----   --------    -----   --------      -----
                                                      
Gross profit             231,000    36.3    220,000     51.7     11,000     ( 15.4)
                                                      
Selling, general and                                  
  administrative         615,000    96.7    107,000     25.1    508,000       71.6
                                                      
Depreciation and                                      
  amortization            69,000    10.8  (  12,000)  (  2.8)    81,000       13.6
                        --------   -----   --------    -----   --------      -----
                                                      
Loss from operations   ($453,000) ( 71.2%) $125,000     29.4% $(578,000)     100.6%
                        ========   ======  ========    ====== ==========     ======
</TABLE>
                                                    

               The 29.4% and 49.3% increases in net sales during the nine and
          three months ended September 30, 1996, respectively, as compared to
          the same periods in 1995 were primarily due to the opening of two
          cafes; one in Macy's Herald Square in November 1995 and another in
          lower Manhattan in May 1996, and a general increase in same store
          sales.

               The increase in cost of sales as a percentage of sales for the
          nine and three months ended September 30, 1996 as compared to the same
          periods in 1995 is attributable to (i) an increase in baking personnel
          and labor rates, (ii) increased costs in the development of new baked
          products, and (iii) increases in the cost of ingredients and packaging
          materials. The Company was unable to pass most of these increased
          costs on to its customers.

               The retail and wholesale divisions sell similar products which
          are baked at the Company's centralized baking facility. Costs are
          allocated to each division based upon the standard costs of the items
          sold. Such costs consist of ingredients, direct labor and overhead.
          Prior to the Acquisition, the wholesale division was considered an
          outgrowth of the retail business and was therefore not considered a
          separate business segment. Subsequent to the Acquisition, management
          has concentrated their efforts on running the wholesale segment as a
          separate and distinct business.


                                    13 of 19

<PAGE>

          (c)  Proforma: (Continued)

               Retail Segment: (Continued)

               Selling, general and administrative expenses of the retail
          segment consist of (i) expenses incurred in each of the five retail
          stores and (ii) expenses allocated from the Company's centralized
          operating facility which are based primarily on sales volume. The
          increase in selling, general and administrative expenses during the
          nine and three months ended September 30, 1996 as compared to the same
          period in 1995 was primarily the result of (i) salaries paid to sales
          personnel in its Cafe in Macy's Herald Square and its new retail store
          in lower Manhattan, (ii) the allocation to the retail segment of
          salaries of additional management and administrative personnel, and
          (iii) increased compensation paid to prior management personnel
          pursuant to consulting agreements entered into by the Company upon
          consummation of the Acquisition in July 1995.

               The increases in depreciation and amortization for the nine and
          three months ended September 30, 1996 as compared with the same
          periods in 1995 were attributable to depreciation on the Macy's Herald
          Square Cafe and the new retail store in lower Manhattan as well as on
          the write-up of assets purchased from Greenberg's-L.P. to appraised
          values and amortization of goodwill which started on the date of
          Acquisition.

               The increase in the net loss for the nine and three months of
          1996 as compared with the same periods in 1995 is primarily attributed
          to increases in the cost of products sold and additional compensation
          paid to officers and managerial personnel under their respective
          employment and consulting agreements, which were entered into in the
          first six months of 1995.

          (d)  Wholesale Segment:

               The results of the wholesale segment is presented on a pro-forma
          basis and reflects the Acquisition as if it had occurred at the
          beginning of the periods presented:

<TABLE>
<CAPTION>
                             For the Nine Months Ended 
                                    September 30,                         Percentage
                       --------------------------------------             Change (as
                          1996       %        1995       %      Change   a % of Sales)
                       ----------  ------  ----------  ------  --------  -------------
<S>                    <C>          <C>     <C>         <C>     <C>         <C>       
Net sales              $834,000     100.0%   $648,000   100.0%   $186,000       - %     
Cost of sales           710,000      85.1     485,000    74.8     225,000     10.3  
                       --------     -----    --------   -----    --------     ----  
                                                                                    
Gross profit            124,000      14.9     163,000    25.2   (  39,000)  ( 10.3)   
                                                                                    
Selling, general and                                                                
  administrative        754,000      90.4     300,000    46.2     463,000     44.2  
                                                                                    
Depreciation and                                                                    
  amortization           56,000       6.7      17,000     2.7      39,000    ( 4.0)   
                       --------     -----    --------   -----    --------     ----    
                                                                                    
Loss from operations  ($686,000)   ( 82.2%) ($154,000) ( 23.7%)  $463,000    (58.5%)   
                       ========     ======   ========   ======   ========     =====    
</TABLE>

                                                       
                                    14 of 19

<PAGE>

          (c)  Proforma: (Continued)

               Wholesale Segment: (Continued)

<TABLE>
<CAPTION>
                             For the Nine Months Ended 
                                    September 30,                         Percentage
                       --------------------------------------             Change (as
                          1996       %        1995       %      Change   a % of Sales)
                       ----------  ------  ----------  ------  --------  -------------
<S>                    <C>         <C>     <C>         <C>     <C>           <C>       
Net sales              $280,000    100.0%   $228,000    100.0%   $ 53,000       - %     
Cost of sales           258,000     92.2     189,000     82.9      70,000      9.3 
                       --------    -----    --------    -----    --------     ---- 
                                                                                   
Gross profit             22,000      7.8      39,000     17.1   (  17,000)   ( 9.3)  
                                                                                   
Selling, general and                                                               
  administrative        211,000     75.1     120,000     52.6      91,000     22.5 
                                                                                   
Depreciation and                                                                   
  amortization           30,000     10.6   (   8,000)  (  3.5)     38,000     14.1 
                       --------    -----    --------    -----    --------     ---- 
                                                                                   
Loss from operations  ($219,000)  ( 77.9%) ($ 73,000)  ( 32.0%) ($146,000)   (45.9%)  
                       ========    ======   ========    ======   ========     =====   
</TABLE>
                                                       

               The Company, through its institutional/wholesale segment,
          distributes pastries, cakes, pies and other desserts to its customers
          which include hotels, country clubs, gourmet markets, restaurants,
          food shops and its customers which include corporate dining
          facilities. All products are baked at the Company's baking facility
          located in N.Y.C.

               The 28.7% and 23.2% increases in the wholesale segment's net
          sales for the nine and three months ended September 30, 1996 as
          compared to the same periods in 1995 are attributable to the increase
          in shipments to two nationwide restaurant chains.

               Cost of sales as a percentage of sales increased by 10.3% and
          9.3% for the nine and three months ended September 30, 1996,
          respectively, as compared to the same periods in 1995. Such increases
          were attributable to increases in both baking personnel and wage
          rates, an increase in the cost of developing new baked products, and
          increases in the cost of ingredients and packaging materials. Most of
          these cost increases could not be passed on to the Company's
          customers.

               Selling, general and administrative expenses of the wholesale
          segment for the nine and three months ended September 30, 1996
          increased by $463,000 and $91,000, respectively, over the same periods
          in 1995. Such increases were primarily the result of allocations to
          the wholesale segment of the salaries of additional management and
          administrative personnel, as well as increased compensation paid to
          prior management personnel. The additional management personnel and
          the additional compensation paid to prior personnel was the result of
          the various employment and consulting agreements entered into by the
          Company upon or subsequent to the consummation of the Acquisition in
          1995.


                                    15 of 19

<PAGE>

          (d)  Wholesale Segment: (Continued)

               The increases in depreciation and amortization for the nine and
          three months ended September 30, 1996 as compared with the same period
          in 1995 were attributable to depreciation on newly acquired property
          asset additions and the write-up of assets purchased from
          Greenberg's-L.P. to appraised values and amortization of goodwill in
          connection with the Acquisition.

               The increases in the net loss for the nine and three months ended
          September 30, 1996 as compared with the same periods in 1995 were
          primarily attributed to lower margins caused by increases in the cost
          of certain ingredients, baking salaries and new products coupled with
          additional compensation paid to officers and managerial personnel
          under their respective employment and consulting agreements entered
          into by the Company in connection with the Acquisition of the business
          of Greenberg's-L.P. and the Company's initial public offering.


          (e)  Plan of Operation:

               In connection with the Acquisition, the Company in July 1995
          implemented a business strategy designed to increase the retail,
          institutional/wholesale and mail order operations of its business. The
          Company's growth strategy is comprised of the following:

          (1)  Retail:

               The Company intends to open additional retail facilities in the
               North and Southeastern United States. These cafes and kiosks will
               offer a broad selection of what the Company believes are premium
               quality baked goods and desserts as well as sandwiches, soups and
               salads, espresso, cappuccino and specialty coffees and teas.
               Since July 1995, the Company opened its first cafe at Macy's
               Herald Square in November 1995 and a second cafe on Broadway and
               8th Street in New York City in May 1996. A third cafe which is
               expected to open in late 1996 will start to go under construction
               shortly. The Company opened in Macy's Cellar a second store in
               Macy's Herald Square location on October 6, 1996. In addition,
               the Company's completed the manufacture of its first four kiosks
               and it opened the first cart on October 8, 1996 in Macy's
               Huntington, Long Island store. The Company has a agreement to
               open a cart or kiosk in six of Macy's stores located in shopping
               malls in New Jersey.

          (2)  Institutional/Wholesale:

               The Company plans to increase its penetration in the
               institutional/wholesale food market by, among other things,
               increasing its marketing efforts to restaurants, hotels and
               corporate dining facilities and by offering its products to
               supermarkets in New Jersey, New York, Florida and other states
               and through specialty food retailers and mail order catalogue
               businesses. The Company made its first appearance on the Home
               Shopping Network in November 1996. The Company is to make
               additional appearances on HSN in November and December of 1996.

          (3)  Mail Order:

               The Company is expanding its current mail order business by,
               among other things, offering additional catalogues and scheduling
               special mailings to existing and prospective customers for
               specific occasions.


                                    16 of 19

<PAGE>

          (e)  Plan of Operation: (Continued)

               (4) Kosher Foods:

               The Company is also seeking to capitalize on the growth of the
          kosher food industry. The Company has a kosher certification and
          believes it can capitalize on the projected growth of this market.

               The Company estimates that new construction start-up costs for
          its cafes will range from approximately $150,000 to $175,000 for a
          small cafe (600-800 square feet) and approximately $200,000 to
          $350,000 for a full size cafe (800-1,200 square feet) and estimates
          that the cost of converting existing restaurant space into a cafe will
          be approximately $75,000. In addition, the Company estimates the
          start-up costs for a kiosk to be between approximately $50,000 and
          $65,000.

               The Company believes that the cost of funding new cafes and
          kiosks has and will continue to increase the Company's operating costs
          and expenses primarily due to increased personnel and other corporate
          operating costs required to operate the new cafes and kiosks. Each
          cafe and/or kiosk will incur pre-operating expenses, such as
          advertising and promotional costs, in order to encourage new and
          repetitive consumer traffic. Until consumer traffic at each location
          is sufficient to generate revenues to cover each location's costs and
          a portion of the Company's overall corporate overhead, the Company
          believes that the initial opening of each new location will have a
          positive effect on net revenues but an adverse effect on earnings. For
          the nine months ended September 30, 1996, the Company incurred an
          aggregate of approximately $381,000 in capital expenditures of which
          $128,000 relates to its cafe at Eighth Street and Broadway which
          opened on May 1, 1996 and its cafe at 6th Avenue and 10th Street which
          is about to go under construction, $54,000 was used on its four kiosks
          which were completed during April 1996 and $65,000 was used for
          computer hardware and software.

          (f)  Liquidity and Capital Resources:

               At September 30, 1996, the Company had no working capital as
          compared to working capital of $2,133,000 at December 31, 1995. Since
          its inception, the Company's primary source of working capital has
          been the proceeds received from the issuance of its common stock and
          notes.

               In June 1995, the Company issued 180,000 shares of common stock
          to unrelated parties for $600,000 and in August 1995, the Company
          issued 60,000 shares of its common stock to unrelated parties for
          $200,000. In connection with the Acquisition of Greenberg's-L.P., the
          Company received $2,000,000 from the sale of two notes to InterEquity
          Capital Partners, L.P. ("InterEquity"). During October 1995, the
          Company received net proceeds of $4,919,586 from the sale of 1,150,000
          shares of its common stock in an initial public offering. Of the net
          proceeds received from the initial public offering, $2,125,000 was
          used to repay the InterEquity debt including interest. In addition to
          the repayment of the InterEquity debt, the Company intended to use the
          net proceeds to fund its planned expansion strategy and for general
          corporate purposes, including working capital.


                                    17 of 19

<PAGE>

          (f)  Liquidity and Capital Resources: (Continued)

               In October 1995, InterEquity converted its $1,000 convertible
          note issued in connection with the Acquisition into a six-year warrant
          to purchase 6% of the Company's issued and outstanding capital stock
          on a fully diluted basis at the time of exercise. Pursuant to the
          warrant, the Company granted InterEquity an option to put those shares
          acquired by InterEquity upon exercise of the warrant to the Company at
          any time during the period from July 10, 2000 through July 31, 2005 if
          the shares of common stock have not been listed or admitted to trade
          on a national securities exchange and/or are not quoted on an
          automated quotation system at the time at a price equal to a multiple
          of earnings as defined in the agreement between the parties or a price
          established by independent appraisal. Pursuant to the terms of the
          loan agreement, the Company has granted InterEquity unlimited
          "piggyback" registration rights upon exercise of the warrant.

               During the nine months ended September 30, 1996, working capital
          was used by the Company for the Acquisition of $381,000 in property
          assets and to fund the operating loss incurred during the first nine
          months of 1996.

               The Company's management believes that the proceeds from its
          initial public offering together with the projected cash flows from
          operations, if any, will be sufficient to fund operations, including
          its planned expansion, for at least the next four months. The Company
          anticipates that it will need additional financing in the first half
          of 1997. There can be no assurance, however, that the Company will
          raise additional capital at that time or at any time prior to such
          date if required. Although the Company has previously been successful
          in obtaining sufficient cash and capital funds through issuances of
          common stock and promissory notes, there can be not assurance that the
          Company will be able to do so in the future.

          (g)  Inflation and Seasonality:

               To date, inflation has not had a significant impact on the
          Company's operations. The Company's revenues are affected by
          seasonality with revenues anticipated to increase during holiday
          seasons such as Thanksgiving, Christmas, Jewish New Year, Easter and
          Passover.


                                    18 of 19

<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934 the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized


                              WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC.


Date: November 19, 1996                       /s/ Maria Marfuggi
                                ---------------------------------------------
                                           Chairman of the Board,
                                    Chief Executive Officer and Secretary
                                      (Principal Financial Officer and
                                       Officer duly authorized to sign
                                        on behalf of the Registrant)


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