<PAGE>

                                    UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549
                                      FORM 10-Q
                                           
(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the quarterly period ended   DECEMBER 28, 1996

                                          OR

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

Commission File Number                33-43621

                        INTERNATIONAL FOOD AND BEVERAGE, INC.
                (Exact name of registrant as specified in its charter)
                                           

         DELAWARE                                     33-0307734
(State or other jurisdiction of         (I.R.S. Employer Identification No.)
 incorporation or organization)

30152 AVENTURA, RANCHO SANTA MARGARITA, CALIFORNIA                 92688
(Address of principal executive offices)                         (Zip Code)


                                    (714) 858-8800
                   (Registrant's telephone number, including area code)

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. 

Yes     X         No 
    ---------         ---------
                                            
     The number of shares of Common Stock outstanding as of January 31, 1997 
was: 156,599,351


<PAGE>

                        INTERNATIONAL FOOD AND BEVERAGE, INC.
                                           
                      FINANCIAL STATEMENTS AND OTHER INFORMATION
                                           
                                        INDEX
                                             
                                               
                                                                    PAGE NUMBER
PART I - FINANCIAL INFORMATION

    Item 1.   Financial Statements

         Statements of Operations for the three months and six months
         ended December 28, 1996 and December 30, 1995                      1 

         Balance Sheets as of December 28, 1996
         and June 29, 1996                                                  2

         Statements of Cash Flows for the six months
         ended December 28, 1996 and December 30, 1995                      3

         Notes to Financial Statements                                      4

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


PART II - OTHER INFORMATION

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


SIGNATURES                                                                  6


<PAGE>
<TABLE>
                        INTERNATIONAL FOOD AND BEVERAGE, INC.

                          PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                             STATEMENTS OF OPERATIONS
<CAPTION>
                                     THREE MONTHS ENDED            SIX MONTHS ENDED
                                        (Unaudited)                   (Unaudited)
                                 DECEMBER 28,   DECEMBER 30,  DECEMBER 28,  DECEMBER 30,
                                    1996           1995           1996         1995
                                ------------  ------------   ------------  ------------
<S>                             <C>           <C>            <C>           <C>
REVENUES                        $ 2,079,000   $ 1,433,000    $ 4,072,000   $ 3,009,000
COST OF SALES                     1,618,000     1,215,000      3,221,000     2,444,000
                                -----------   -----------    -----------   -----------
GROSS PROFIT                        461,000       218,000        851,000       565,000

OPERATING EXPENSES:
     Selling and distribution       379,000       247,000        713,000       506,000
     General and administrative     151,000       139,000        292,000       276,000
     Interest expense                29,000         8,000         60,000        12,000
                                -----------   -----------    -----------   -----------
                                    559,000       394,000      1,065,000       794,000
                                -----------   -----------    -----------   -----------

NET LOSS                        $   (98,000)  $  (176,000)   $  (214,000)  $  (229,000)
                                ===========   ===========    ===========   ===========


NET LOSS PER COMMON SHARE       $      (.00)  $      (.00)   $      (.00)  $      (.00)
                                ===========   ===========    ===========   ===========

WEIGHTED AVERAGE NUMBER OF 
  COMMON SHARES OUTSTANDING     156,591,878   154,023,569    156,129,120   154,023,569
                                ===========   ===========    ===========   ===========
</TABLE>

                               See accompanying notes.
                                        -1-


<PAGE>
                        INTERNATIONAL FOOD AND BEVERAGE, INC.

                                BALANCE SHEETS

                                                      DECEMBER 28,    JUNE 29,
                                                          1996          1996
                                                      -----------    ---------
                                                      (Unaudited)

                                     ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                        $   22,000   $   20,000
     Accounts receivable                                 571,000      505,000
     Inventories                                         532,000      643,000
     Prepaid expenses                                      5,000        7,000
                                                      ----------   ----------

         Total current assets                          1,130,000    1,175,000

FIXED ASSETS                                             837,000      905,000
                                                      ----------   ----------

                                                      $1,967,000   $2,080,000
                                                      ==========   ==========


             LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
     Notes payable and current maturities
       of long-term debt                              $  462,000   $  429,000
     Accounts payable                                    883,000      840,000
     Accrued wages and benefits                          379,000      373,000
     Accrued commissions and marketing                   236,000      181,000
     Other accrued expenses                              110,000      118,000
                                                      ----------   ----------

          Total current liabilities                    2,070,000    1,941,000

LONG-TERM DEBT                                           710,000      756,000

SHAREHOLDERS' EQUITY (DEFICIENCY)                       (813,000)    (617,000)
                                                      ----------   ----------
                                                      $1,967,000   $2,080,000
                                                      ==========   ==========

                             See accompanying notes.
                                      -2-


<PAGE>

                     INTERNATIONAL FOOD AND BEVERAGE, INC.

                          STATEMENTS OF CASH FLOWS


                                                          SIX MONTHS ENDED
                                                     ---------------------------
                                                             (Unaudited)
                                                    DECEMBER 28,   DECEMBER 30,
                                                        1996            1995
                                                    ------------   ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net Loss                                        $  (214,000)  $  (229,000)
     Adjustments to reconcile net loss to 
       net cash provided by operating activities
         Depreciation and amortization                    80,000        84,000
         Issuance of Common Stock under 
           distribution agreement                         18,000
         Changes in assets and liabilities:           
            Accounts receivable                          (66,000)     (138,000)
            Inventories                                  111,000        60,000
            Prepaid expenses                               2,000        24,000
            Accounts payable                              43,000       343,000
            Accrued wages and benefits                     6,000       (48,000)
            Accrued commissions and marketing             55,000      (343,000)
            Accrued expenses                              (8,000)       (9,000)
                                                     -----------    -----------
                Net cash provided by (used in)
                  operating activities                    27,000      (256,000)
                                                     -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Additions to fixed assets                           (12,000)      (25,000)
                                                     -----------   -----------
                Net cash used by investing
                  activities                             (12,000)      (25,000)
                                                     -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of notes payable              39,000       190,000
     Principal payments on notes payable                 (52,000)      (49,000)
                                                     -----------   -----------
                Net cash provided by (used in)
                  financing activities                   (13,000)      141,000
                                                     -----------   -----------
NET INCREASE (DECREASE) IN CASH                            2,000      (140,000)

CASH AND CASH EQUIVALENTS, beginning of year              20,000       192,000
                                                     -----------   -----------
CASH AND CASH EQUIVALENTS, end of period             $    22,000   $    52,000
                                                     ===========   ===========


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
     Interest                                        $    57,000   $    12,000
     Income taxes                                              0             0


                             See accompanying notes.
                                      -3-


<PAGE>

                        INTERNATIONAL FOOD AND BEVERAGE, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1 - FINANCIAL STATEMENTS

In the opinion of management, the accompanying financial statements, which 
have not been audited by independent public accountants, reflect all 
adjustments necessary to present fairly the data for the periods presented 
therein.  The results of operations for the six month period ended December 
28, 1996 are not necessarily indicative of the results that may be expected 
for the entire fiscal year ending June 28, 1997.

NOTE 2 - CHANGE IN CONTROL

A change in control transaction occurred December 31, 1994 and was recorded 
in conformity with Accounting Principles Board Opinion No. 16.  Accordingly, 
assets and liabilities as of January 1, 1995 were restated and the results of 
operations since that time reflect the "push-down" of the new controlling 
shareholder's basis, minority interest at its historical basis, and the 
consideration received from the former controlling shareholder.  The 
historical acquisition cost of the company's fixed assets was approximately 
$4,000,000, however, as a result of "push-down" accounting these assets are 
reported currently on the Company's financial statements with a cost after 
accumulated depreciation of $837,000.   See footnotes to the audited 
financial statements for a more detailed description of the transaction.

                                         -4-


<PAGE>

                        INTERNATIONAL FOOD AND BEVERAGE, INC.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Revenues for the six month period ended December 28, 1996 of $4,072,000 
increased 35% when compared with revenues of $3,009,000 in the prior year 
comparable period.  Revenues for the most recent quarter increased 45% when 
compared with revenues in the comparable three month period of the prior 
year. The Company's business expanded with sales increases from retail 
grocery, foodservice and contract manufacturing customers.  In May 1996, the 
Company introduced a line of pizzas which are sold under a private label 
brand in the frozen food section of a major national grocery retailer.  The 
Company expects private label frozen pizza sales to continue to grow and 
recently added a second major grocery retailer private label program with 
initial shipments in February 1997.  The Company does, however, expect a 
decrease in its contract manufacturing sales due to product changes and 
inherent uncertainties surrounding several of the contract manufacturer's 
customers.

The gross profit margin for the six months ended December 28, 1996 increased 
to 20.9% versus the prior year comparable period gross margin of 18.8%.  In 
the most recent three month period, gross profit margin increased to 22.2% 
versus 15.2% in the comparable prior year period.  The current year margin 
improvements result from the decrease in cheese prices beginning late in 
October 1996 to more normal historical pricing levels, a more favorable 
customer mix purchasing higher margin products, and the benefit derived from 
a higher level of overhead absorption as a result of increased sales.  
Despite margin improvements, fixed overhead per unit sold remains high at the 
Company's low level of production. The Company would realize an increase in 
its gross profit contribution rate assuming the Company is able to achieve 
increased production volume and ingredient prices remain stable.

Selling, general and administrative expenses for the six months as well as 
the quarter ended December 28, 1996 decreased as a percent of sales versus 
the prior year comparable periods to 24.7% and 25.5% from 26.0% and 26.9%, 
respectively, primarily due to increased revenues.  The Company does not 
anticipate having to add substantially to fixed overhead costs to support 
revenue growth of fifty to one hundred percent of its current revenue level 
assuming a similar mix of products and customers.

As a result of higher borrowings in the current fiscal year, interest expense 
for the six months and quarter ended December 28, 1996 increased to $60,000 
and $29,000 from $12,000 and $8,000 for the comparable prior year periods, 
respectively.  The resulting loss for the six month and three month periods 
ended December 28, 1996 was $214,000 and $98,000 versus reported comparable 
prior year period losses of $229,000 and $176,000, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $27,000 for the six month 
period ended December 28, 1996 versus cash used in operating activities of 
$256,000 in the comparable prior year period.  The cash provided by 
operations  during the current fiscal year was generated primarily from 
additional balance sheet financing.  Such cash together with a small increase 
in the outstanding borrowings were adequate to finance nominal fixed asset 
additions and service the Company's long term debt obligations during the 
period.  Management believes that the Company will experience positive cash 
flow when it achieves a sustained average monthly revenue rate of 
approximately $750,000 at current sales prices and product mix.

In March 1996, the Company entered into a $500,000 revolving line of credit 
agreement collateralized by eligible accounts receivable and inventories. 
Throughout January and into February 1997 the outstanding borrowings under 
this credit facility averaged approximately $450,000. The Company has 
received from its lender a temporary approval for an increase in the line 
limit to $550,000, subject to available collateral, with a request for a 
permanent 

                                         -5-

<PAGE>

                        INTERNATIONAL FOOD AND BEVERAGE, INC.
                                           
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

increase in the limit to $750,000 pending completion of their quarterly audit 
and loan committee approval.  At the Company's current level of operations 
management believes that this credit facility will be adequate to fund the 
Company's short term working capital requirements.  There is no assurance 
that the Company will be successful in obtaining the additional financing.

The Company's primary emphasis remains revenue generation through increased 
sales to existing and new customers.  It is also aggressively evaluating 
opportunities ranging from contract manufacturing for others to the 
acquisition of a synergistic product line or company.

The foregoing Management's Discussion and Analysis contains "forward looking 
statements" within the meaning of Section 27A of the Securities Act of 1933, 
as amended, and Section 21E of the Securities Act of 1934, as amended, 
regarding management's expectations concerning gross profit contribution, 
cheese prices, volume, the adequacy of funds from the existing credit 
facility, the efforts to obtain an increase in the credit facility and the 
level at which the Company's operations become cash positive.  The Company 
cautions that these statements are further qualified by important factors 
that could cause actual results to differ materially from those in the 
forward looking statements, including, among others, the following: reduced 
or lack of increase in demand for the Company's products, competitive pricing 
pressures, changes in the market price of ingredients used in the Company's 
products and unforeseen increases in the level of expenses incurred in the 
Company's operations.

                             PART II - OTHER INFORMATION

ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K

(a) None.

(b) No reports on Form 8-K were filed during the three months ended December
    28, 1996.


                                      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.

Date:    FEBRUARY 10, 1997               INTERNATIONAL FOOD AND BEVERAGE, INC.


                                          /s/ MICHAEL W. HOGARTY
                                          Michael W. Hogarty
                                          President and Chief Executive Officer


                                          /s/ ANN M. GOOCH
                                          Ann M. Gooch
                                          Vice President of Finance
                                          (Principal Financial and 
                                          Accounting Officer)

                                      -6-