SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-KSB


         [X]      Annual Report Under Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                   For the fiscal year ended December 31, 1996



         [ ]     Transition Report Under Section 13 or 15(d) of
                     the Securities Exchange Act of 1934

         For the transition period from ____________ to ____________.

                         Commission file number 1-12350

                                 QPQ CORPORATION
   --------------------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

                Florida                                    65-0611607
  --------------------------------                   ----------------------
    (State or Other Jurisdiction of                      (I.R.S. Employer
    Incorporation or Organization)                       Identification No.)


     1000 Lincoln Road, Suite 210
         Miami Beach, Florida                                33139
    -------------------------------                  ----------------------
(Address of Principal Executive Offices)               (Zip Code)

                                 (305) 674-8115
                      -------------------------------------
                (Issuer's Telephone Number, Including Area Code)


                   Securities registered under Section 12(b)
                     of the Securities Exchange Actof 1934:
 
                                                  Name of Each Exchange
          Title of Each Class                      on Which Registered
          -------------------                      -------------------

Common Stock, par value $.01 per share,           Boston Stock Exchange
            non-cumulative

    Common Stock Purchase Warrants                Boston Stock Exchange


                 Securities registered pursuant to Section 12(g)
                     of the Securities Exchange Act of 1934:

                         -------------------------------
                                (Title of Class)

<PAGE>



      Check whether the registrant:  (1) 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 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 [ ] 

      Check if  disclosure  of  delinquent  filers  in  response  to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.  [X]

      State registrant's revenues for its most recent fiscal year:  $2,093,145.

      State  the   aggregate   market   value  of  the  voting   stock  held  by
non-affiliates of the registrant on March 21, 1997, computed by reference to the
closing  bid price  ($1.1563)  of the QPQ Common  Stock as  reported by the Wall
Street Journal on that date: $8,849,321.


                     APPLICABLE ONLY TO CORPORATE ISSUERS
                     ------------------------------------

      The number of shares  outstanding of the  registrant's  Common Stock,  par
value  $.01 per share  (the "QPQ  Common  Stock"),  as of March  21,  1997,  was
7,653,467.



























                                       2



<PAGE>
                                     PART I

Item 1.  Description of Business.
         -----------------------

         A.     QPQ CORPORATION'S BUSINESSES

GENERAL

         QPQ  Corporation  ("QPQ")  develops and operates  Domino's Pizza Stores
("Dominos Stores") and until October,  1996 operated a cafe-style  restaurant in
the Republic of Poland.  QPQ has the  exclusive  right to develop,  operate and,
with the exception of Domino's Stores developed in Warsaw, Poland,  franchise to
unrelated third parties ("Non-Affiliated Franchisees") Domino's Stores in Poland
pursuant to the Domino's Development Agreement, as amended to date (the "Dominos
Development  Agreement"),  with a wholly owned subsidiary of Dominos Pizza, Inc.
("Dominos").  QPQ has also entered into the  Commissary  Agreement with a wholly
owned  subsidiary  of  Domino's  pursuant  to  which  QPQ has been  granted  the
exclusive  right to open and operate a  Commissary  for all  Domino's  Stores in
Poland for the  ten-year  term of the  Domino's  Development  Agreement  and any
renewal term.  QPQ opened a Domino's  Store in each of March 1994,  May 1994 and
August  1994.  Since  August  1995  QPQ  Medical  has  been in the  business  of
developing and/or operating  centers which offer primary care,  medical services
and medically  supervised  weight loss programs.  The weight loss programs use a
protocol which integrates systems and routines of nutrition management, exercise
and  prescribed  medication  and certain other  medical  services to address the
weight loss and non-weight  loss related  medical  problems of its patients.  In
January,  April,  July and  September  of 1996,  QPQ  opened  its first four (4)
medical centers.  In February 1997, QPQ Medical acquired the medical practice of
Dr. Jack B. Drimmer,  P.A. and relocated  such practice to its Aventura  center.
QPQ's medical centers are located in Kendall, Aventura, Fort Lauderdale and Boca
Raton,  Florida.  QPQ Medical intends to contain its operations to South Florida
for the immediate future.

PROPOSED VENTURE ACTIVITIES

         QPQ,  through its direct or indirect subsidiaries, continues  to search
for, investigate and attempt to secure and develop business  opportunites on its
own behalf and for its subsidiaries. However, there can be no assurance that QPQ
will be successful in its search for new business opportunities.

         QPQ is searching for and  investigating  business  opportunities on its
own behalf and for its subsidiaries. QPQ presently intends to investigate and/or
engage in one or more of the following activities  ("Venture  Activities") : (1)
acquisition  of at ]east a majority  interest  in and  operational  control  of,
business enterprises;  (2) development and marketing of commercial  enterprises,
products  and/or  services;  and (3}  participation  in business  ventures  with
existing or newly formed  business  entities on a joint  venture or other active
business  relationship  basis.  QPQ may also take  equity  positions  in certain
business  enterprises through the direct purchase of securities or through other
financing  methods  including  the  utilization  of debt  financing and may also
purchase  franchises  and/or  license  products or  services.  In any case,  QPQ
intends to,  directly  and/or through  subsidiaries  or affiliates,  acquire and
maintain a  controlling  interest in the  entities  it acquires or  establishes.
Management  anticipates that the selection of business enterprises,  products or
services for  acquisition  will be complex and risky.  Because of QPQ's  limited
financial  capabilities at this time, it is anticipated that QPQ may not be able
to diversify its acquisitions and will essentially be limited to a few ventures.

         QPQ  will  consider  the  quality  of the  management  of any  business
acquisition  candidate and the operating records of the entity, the soundness of
the service or product to be developed or being developed,  the effect of market
and  economic  conditions  and  governmental  policies on the  business  and its
products,  the  nature  of its  competition,  and the total  projected  required
capital.  At this time,  QPQ cannot  predict  the manner in which it may acquire
and/or  participate  in  the  establishment   and/or  financing  of  a  business
enterprise.



                                                       
                                       3

<PAGE>

THE DOMINO'S STORE SYSTEM

         QPQ believes that its prospects  should be enhanced by the  recognition
and reputation of the Domino's Store system as well as the support, supervision,
and assistance  that QPQ  anticipates  will be made  available by Domino's.  The
Domino's  Store system is one of the world's  largest  franchisors  of fast food
outlets,  with more than 5,000 stores in over 35 foreign  countries.  QPQ has no
affiliation  or  relationship  with  Domino's  other than as provided for in the
Domino's  Development  Agreement  and the  Commissary  Agreement.  QPQ  does not
believe that the success or lack thereof of Domino's Stores in the United States
or Europe should be taken as indicative of QPQ's performance in Poland.

         Domino's  has  developed a store  format and  operating  system,  which
system includes a recognized design, decor and color scheme for store buildings;
kitchen  and dining  room  equipment  and layout;  service  format;  quality and
uniformity  of products and  services  offered;  procedures  for  inventory  and
management  control;  a delivery  system;  and the  Domino's  Trademarks,  which
include such trademarks, service marks and other marks as Domino's may authorize
from time to time for use in  connection  with  Domino's  Stores (the  "Domino's
System").  All Domino's  Stores are required to be operated in  accordance  with
Domino's  standards.  Domino's  Stores feature  carry-out  services and delivery
services to all customers located within prescribed service areas. Some Domino's
Stores also provide customer seating and dine-in services. Domino's Stores offer
a  substantially  similar core menu  including  various  types of pizza and soft
drinks.  Other menu items include  salads,  sandwiches  and  breadsticks.  Pizza
accounts  for the most  significant  amount  of  systemwide  sales.  Prices  for
Domino's menu items are determined by the various  operators of Domino's  Stores
and,  accordingly,  may vary throughout the Domino's Store system.  QPQ believes
that the store format and operating  system of Domino's  Stores in Poland may be
adapted to local requirements and to perceived customer preferences.

RELATIONSHIP WITH DOMINO'S

         DOMINO'S  DEVELOPMENT  AGREEMENT.  The  relationship  between  QPQ  and
Domino's is governed principally by the Domino's Development Agreement. Pursuant
to the Domino's Development Agreement,  as amended, QPQ is granted the exclusive
right until  December 31, 2003 to develop,  operate and,  with the  exception of
Domino's Stores to be developed in Warsaw, Poland,  franchise Domino's Stores in
Poland.  During the Initial Term of the Domino's  Development  Agreement,  which
expires on  December  31,  2003,  QPQ is required  to open and  operate,  either
through affiliates of QPQ ("Affiliated  Franchisees") or unrelated third parties
("Non-Affiliated Franchisees"), at least 50 Domino's Stores in accordance with a
schedule that  obligates  QPQ or its  Non-Affiliated  Franchisees  to open eight
Domino's  Stores in 1996 and five, six or seven Domino's  Stores for each of the
following  seven  years.  QPQ did not  satisfy  the  requirements  to open eight
Domino's stores during 1996 and in March 1997, Domino's granted QPQ an extension
until July 1, 1997 to satisfy such requirement.  In addition, Domino's indicated
it  would  be  agreeable  to a  further  six  month  extension  if QPQ  provided
satisfactory  evidence of  recapitalization  at a level which,  in Domino's sole
discretion,  will enable QPQ to satisfy  its  obligations  under the  agreement.
Domino's  Stores  developed  and/or operated by  Non-Affiliated  Franchisees are
counted  towards QPQ's  obligation to open a minimum number of Domino's  Stores.
During 1996 QPQ did not open any Domino's  stores.  In March 1997,  construction
began on a Domino's Store consisting of  approximately  100 square meters with a
completion  date set for June 1997.  If QPQ is in  compliance  with the Domino's
Development  Agreement at the  expiration of its Initial Term, QPQ will have the
option to extend the Domino's  Development  Agreement for an additional  10-year
period.  In  addition  to its rights to develop  Domino's  Stores,  QPQ has been
granted  the  exclusive  right to  establish  a  Commissary  for the  purpose of
supplying  food  products  and supplies to the  Domino's  Stores in Poland.  QPQ
intends to conduct  all of its  purchasing,  distribution  and major food supply
preparation   operations   at  or  from  the   Commissary.   See   "--Commissary
Development."

         With respect to each operating  Domino's Store,  QPQ is required to pay
Domino's a monthly  royalty fee of a percentage of each  Domino's  Store's gross
sales net of taxes,  irrespective of  profitability.  QPQ's royalty  payments to
Domino's are payable in United States currency.  Although  Domino's may elect to
                               
                                        4

<PAGE>

accept payment in alternative currencies if payment in United States currency is
prohibited by applicable  law,  Domino's may terminate the Domino's  Development
Agreement  if QPQ is unable to pay  Domino's  in United  States  currency  for a
period of one year.

         Under the terms of the  Domino's  Development  Agreement,  Domino's  is
required  to  provide,  on an  ongoing  basis,  all  information  and  materials
necessary to make QPQ familiar with the Domino's  System and the methods used to
operate  and  manage  Domino's  Stores  and the  Commissary,  including  without
limitation, plans and specifications for Domino's Stores and commissaries,  site
selection criteria,  advertising and marketing plans, methods and procedures for
the  preparation,  serving and  delivery of food and  beverages  and  management
control  systems.  Such  information is to be provided by Domino's to QPQ in the
form of the Domino's Operations Manual,  memoranda or through consultations with
Domino's experienced staff members.

         The  Domino's  Development   Agreement  requires  QPQ  to  designate  a
full-time  general  manager  to be  responsible  for the  Domino's  Stores to be
developed pursuant to the Domino's Development  Agreement.  Such general manager
must be  acceptable  to  Domino's.  Since  March 9,  1995,  QPQ's  wholly  owned
subsidiary, Pizza King Polska ("PKP"), designated Leon Blumenthal as its general
manager.  Domino's has verbally  confirmed its approval of Mr. Blumenthal as the
General Manager.

         The Domino's  Development  Agreement is not  assignable  by QPQ without
Domino's consent.  In addition,  the Domino's  Development  Agreement  prohibits
Mitchell  Rubinson  from  transferring  control  of QPQ,  respectively,  without
Domino's  prior written  consent.  Domino's  consented to QPQ's  initial  public
offering  and agreed  that the control  requirement  would be  satisfied  by the
agreement  of Mitchell  Rubinson  to serve as an officer and  director of QPQ if
elected.  QPQ agreed to use its best  efforts to elect  Mitchell  Rubinson as an
officer and director. For the term of the Domino's Development  Agreement,  QPQ,
and Mitchell  Rubinson are restricted from having an interest in, being employed
by, advising or assisting  another  business that is the same as or similar to a
Domino's Store. The Domino's Development  Agreement also sets forth restrictions
on  transfer  of  the  various  rights  of  QPQ,   Affiliated   Franchisees  and
Non-Affiliated Franchisees.

         Domino's has  reserved  the right to review and audit  certain of QPQ's
operations,  financial  and tax  accounting  reports,  statements  and  returns.
Domino's may  terminate  rights  granted to QPQ under the  Domino's  Development
Agreement,  including  franchise  approvals  for  stores not yet  opened,  for a
variety of possible defaults by QPQ,  including,  among others,  failure to open
Domino's  Stores in  accordance  with the  schedule  set  forth in the  Domino's
Development  Agreement;  failure to obtain  Domino's site approval  prior to the
commencement of each Domino's Store's  construction;  failure to obtain Domino's
approval  of  any  Non-Affiliated   Franchisee;  and  failure  to  meet  various
operational,  financial,  and  legal  requirements  set  forth  in the  Domino's
Development  Agreement.  Upon termination of the Domino's Development Agreement,
whether  resulting  from default or  expiration  of its terms,  Domino's has the
right to license others to develop and operate Domino's Stores in Poland,  or to
do so itself.  If QPQ fails to meet its development  schedule during the Initial
Term or any successor development term, QPQ would lose its rights to develop and
franchise  additional  Domino's Stores, but would be entitled to continue to act
as a master franchisor and a franchisee with respect to all franchise agreements
theretofore granted.  Under certain  circumstances of default,  Domino's has the
right to terminate the Domino's Development  Agreement and force the sale of, at
the then current  market  value,  all of QPQ's rights and  interests as a master
franchisor  of  Domino's  Stores  and all of the assets of each  Domino's  Store
controlled  by QPQ.  Termination  of the Domino's  Development  Agreement  could
materially adversely affect QPQ.

         To purchase QPQ's rights and interests as a master  franchisor,  within
ten days of  termination  of the  Domino's  Development  Agreement,  Domino's is
required  to request an  appraisal  of all of QPQ's  rights and  interests  as a
master  franchisor  and is  entitled  to full  access to all of QPQ's  books and
records.  If QPQ and  Domino's  are unable to agree upon a fair market value for
QPQ's  rights and  interests as a master  franchisor  within 30 days of Domino's

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<PAGE>

request for  appraisal,  the fair market value is  determined  by an  appraiser,
which appraiser is selected  according to a prescribed method and within 20 days
after the  expiration  of the 30 days.  The  appraiser  is required to submit an
appraisal report within 60 days of his/her appointment and Domino's then has the
option  within 30 days of such  submission  to purchase  all of QPQ's rights and
interests  as a  master  franchisor  at the  fair  market  value  stated  in the
appraisal report.

         If Domino's exercises its option to purchase QPQ's rights and interests
as a master franchisor,  Domino's will also have the option for 30 days from the
date of the  Domino's  Development  Agreement's  termination  to give  notice of
appraisal,  review QPQ's books and records, and purchase,  at fair market value,
all of the assets of each Domino's Store controlled by QPQ. Fair market value of
the assets of each  Domino's  Store is determined  through a process  similar to
that described above.

         FRANCHISE AGREEMENTS.  Prior to the opening of each Domino's Store, QPQ
is  required  to pay  Domino's a franchise  fee and,  as master  franchisor,  is
required to enter into a Standard Franchise  Agreement (the "Standard  Franchise
Agreement")  with  each  Affiliated  Franchisee  or  Non-Affiliated   Franchisee
(collectively,  a "Franchise")  which will be operating a Domino's  Store.  Each
Franchisee  and each  Domino's  Store  location  is subject to the  approval  of
Domino's,  which  approval  may  not  be  unreasonably  withheld.  The  Standard
Franchise  Agreement  for a Domino's  Store has a ten-year  term with a ten-year
renewal  option.  During such  periods the  franchisee  is  permitted to use the
Domino's  System  in  an  exclusive   area,  free  of  competition   from  other
franchisees. With respect to each of its operating Domino's Stores, a Franchisee
is  required  to pay QPQ an  initial  franchise  fee and a monthly  royalty  and
advertising  fee of a percentage  of each  Domino's  Store's  gross sales net of
taxes,  irrespective  of  profitability.  The  financial  terms of the  Standard
Franchise  Agreement  may be  renewed  at the  expiration  of  the  term  if the
Franchisee  executes  Domino's  then current  standard  franchise  agreement.  A
Franchisee's  rights under a Standard Franchise Agreement may not be transferred
without the consent of QPQ and Domino's.

         Each Franchisee must comply strictly with the Domino's  System,  as the
standards,  specifications and procedures  comprising such System may be changed
from time to time. Each Domino's Store must be constructed,  equipped, furnished
and  operated  at the cost and  expense of the  Franchisee  in  accordance  with
Domino's specifications.  Each Domino's Store is required to offer for sale only
those pizza and beverage  products  authorized  by Domino's.  In addition,  each
Domino's Store is obligated to offer delivery services to all customers within a
prescribed  delivery area, which delivery area is restricted to allow a delivery
order to be  satisfied  within 30 minutes.  All of the food  products  and other
supplies used in Domino's  Stores must be of a quality that conforms to Domino's
specifications.  Compliance with  requirements as to signage,  equipment,  menu,
service, hygiene, hours of operation, data and voice communications and the like
is  similarly  prescribed.  Domino's  and QPQ  reserve  the right to enter  each
Domino's Store, conduct inspection activities,  and require prompt correction of
any  features  that  deviate  from the  requirements  of the  relevant  Standard
Franchise  Agreement.  Similarly,  QPQ has the  right to review  and audit  each
Franchisee's  operations,  financial and tax accounting statements,  reports and
returns.  QPQ is  obligated  to  use  its  best  efforts  to  ensure  that  each
Non-Affiliated  Franchisee  complies with its franchise agreement and local laws
and regulations.

         Under the terms of the Standard Franchise Agreement, each Franchisee is
entitled to receive from QPQ, on an ongoing basis, all information and materials
necessary  to make the  Franchisee  familiar  with the  Domino's  System and the
methods  used to operate and manage  Domino's  Stores.  Domino's and QPQ require
extensive  training of  Domino's  Store  personnel.  All  Franchisees,  or their
designees,  must  successfully  complete QPQ's  Domino's Store manager  training
program and any additional  training  programs required by Domino's or QPQ. Each
Franchisee  must implement a training  program for store employees in accordance
with training  standards and procedures  prescribed by Domino's and QPQ and must
staff  each  Domino's  Store at all times  with a  sufficient  number of trained
employees.

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<PAGE>

      The Standard  Franchise  Agreement provides that a Franchisee may not have
any interest in, be employed by, advise or assist any other business that is the
same as or similar to a Domino's Store during the term of the agreement and, for
a period of one year after termination or expiration of the franchise agreement,
may not have any  interest  in, be  employed  by,  advise  or  assist  any other
business that is the same as or similar to a Domino's  Store within ten miles of
the Domino's Store it had operated.

         QPQ may terminate the franchise  agreement for any Domino's  Store for,
among other  things,  failure to pay amounts due with  respect to that  Domino's
Store,  failure to operate the  Domino's  Store in  accordance  with  prescribed
operating standards, and persistent breaches. Upon termination, the Franchisee's
rights to use the Domino's  Trademarks and Domino's Store System terminate,  and
QPQ becomes entitled to assume the Franchisee's  leasehold interest and purchase
the Domino's Store at the fair market value thereof.

         QPQ and its  wholly-owned  subsidiary,  Pizza King  Polska  ("PKP"),  a
Polish  limited  liability  corporation,  have entered into  standard  franchise
agreements  with  respect  to QPQ's  three  opened  Domino's  Stores and QPQ and
Domino's have entered into Domino's Store Certification  Agreements with respect
to QPQ's three opened Domino's Stores.

CONSULTING AGREEMENT

         On July 25, 1993,  QPQ entered into a three year  consulting  agreement
(the "Consulting  Agreement") with International Fast Food Corporation ("IFFC"),
an affiliate of Capital Brands.  Under the terms of such  agreement,  IFFC is to
assist QPQ generally with operational and  administrative  matters.  Pursuant to
the Consulting Agreement,  as amended on July 27, 1994 and January 1, 1995, IFFC
provided to QPQ: (1) the services of IFFC's Chief Financial Officer for not more
than 30% of his business time;  (2) the  services  of IFFC's  Controller for not
more than 30% of each of her business  time; and (3) the services of managerial,
general office and staff  personnel of IFFC. In exchange for such services,  QPQ
is required to pay IFFC: (1) 30% of all  compensation  and benefits  provided by
IFFC to its Chief Financial Officer;  (2) 27.5% of all compensation and benefits
provided by IFFC to its Controller;  and (3) all costs and expenses  incurred by
IFFC in  connection  with  the  services  rendered  pursuant  to the  Consulting
Agreement.  For the fiscal years ended  December 31, 1996 and December 31, 1995,
QPQ's  incurred  obligations  to IFFC  pursuant  to the terms of the  Consulting
Agreement aggregated  to $4,225 and $218,742,  respectively.  QPQ terminated the
agreement  with  IFFC in June  1996.  In  connection  with  the  signing  of the
Consulting  Agreement,  QPQ  granted  IFFC an option to  purchase  up to 250,000
shares of QPQ's  common  stock at an  exercise  price of $6.00 per  share.  This
option was also terminated in June 1996 for a $10,000 cash payment.

      In April 1995, IFFC's majority-owned subsidiary,  (85%) IFFP, entered into
a  consulting  agreement  (the  "Subsidiary  Consulting  Agreement")  with QPQ's
wholly-owned subsidiary, Pizza King Polska, pursuant to which IFFP has agreed to
provide  Pizza King  Polska with all general  staff and  administrative  support
required  by Pizza King  Polska to operate  its  Domino's  Store  business.  The
services of Leon  Blumenthal  have been made  available to Pizza King Polska and
QPQ  pursuant to the  Subsidiary  Consulting  Agreement.  In  exchange  for such
services,  IFFP receives from Pizza King Polska a sum equivalent to 10% of Pizza
King Polska's sales and a reimbursement of expenses. In the years ended December
31, 1996 and 1995, Pizza King Polska's obligations to IFFP pursuant to the terms
of the  Subsidiary  Consulting  Agreement  aggregated  to $64,999 and  $116,723,
respectively. In June 1996 this agreement was terminated.

DOMINO'S STORE DEVELOPMENT

         QPQ opened a Domino's Store in Warsaw,  Poland,  in each of March 1994,
May 1994 and August 1994. In March 1997,  construction began on a Domino's Store
in Warsaw,  Poland,  consisting of approximately 100 square meters. The Domino's
Store  is  expected  to be  completed  in June  1997.  Although  to date QPQ has
concentrated  its  efforts  on the  development  of  Domino's  Stores in Warsaw,
Poland,  QPQ intends to focus its future Domino's Store  development  efforts on
other Polish cities. QPQ's decision to refocus its development efforts are based
on a number of factors, including, but not limited to, QPQ's ability to conserve

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<PAGE>

its capital resources by developing additional Domino's Stores outside of Warsaw
through Non-Affiliated  Franchisees,  QPQ's belief that the level of competition
faced by a Domino's  Store in a major  Polish city other than Warsaw may be less
than the level of competition  faced in Warsaw and Domino's recent  agreement to
allow QPQ to immediately  begin to franchise  Domino's Stores to  Non-Affiliated
Franchisees.   QPQ  has  not  yet  identified  nor  engaged  any  Non-Affiliated
Franchisees  which may develop and operate future Domino's Stores.  In addition,
QPQ has not yet identified nor secured any additional Domino's Store sites.

         QPQ intends to focus its efforts on the  development of Domino's Stores
which  provide  only  delivery  and pick-up  services  (collectively,  "Take-out
Services") or Take-out  Services  coupled with counter  service  and/or  limited
seating for customers. QPQ considers a Domino's Store location to be critical to
its prospects and has devoted and intends to devote  significant  efforts to the
investigation  and  evaluation  of  potential  leases and sites.  QPQ intends to
provide  Non-Affiliated  Franchisees  support  with  respect  to lease  and site
selection.  QPQ believes that the Domino's  Store concept may be successful in a
wide variety of areas within a city.  Accordingly,  the site  selection  process
involves an evaluation of a variety of factors,  including demographics (such as
population  density);   specific  site  characteristics   (such  as  visibility,
accessibility and traffic volume); proximity to activity centers (such as office
or  retail  shopping  districts  and  apartment,  hotel and  office  complexes);
potential  competition in the area;  construction or renovation costs; and lease
terms and  conditions.  QPQ has  sought  and seeks to place  Domino's  Stores in
metropolitan areas with adequate levels of residential and/or business telephone
ownership.  QPQ's  personnel  will inspect and approve a proposed  site for each
Domino's  Store prior to the  execution  of a Standard  Franchise  Agreement  or
lease. All sites are subject to the approval of Domino's.  To date, Domino's has
and QPQ  anticipates  that  Domino's  will  continue to  initially  indicate its
approval of  franchisees  and Domino's  Stores  designs and locations  verbally,
which verbal  consents are confirmed by Domino's  execution of a Domino's  Store
Certification  Agreement.  Delays by  Domino's  in  granting,  or the failure by
Domino's to grant such approvals on a timely basis could have a material adverse
effect on QPQ's operations.  The opening of  Domino's Stores is contingent upon,
among other things,  locating satisfactory sites,  negotiating acceptable leases
or  similar  rights  to  a  site,  completing  any  necessary   construction  or
renovations, and securing required government permits and approvals.

         Domino's Stores  typically  consist of a  kitchen/preparation  area and
ordering counter.  Some Domino's Stores provide an area for customer seating and
sit-down  services.  The design for a Domino's  Store,  which must  comply  with
specified  Domino's  standards  and  specifications,   is  relatively  flexible.
Domino's Stores may incorporate  varying floor plans and  configurations  and be
located  in  a  specially  constructed  freestanding  building  or  in  existing
buildings.

         QPQ's initial Domino's Stores are in existing  buildings and range from
1,000 square feet to 2,500 square feet,  depending  primarily  upon whether only
Take-out  Services or Takeout  Services and counter service with limited seating
for customers is offered.  QPQ estimates that once the space has been leased and
made available to QPQ, approximately 90 days is required to renovate,  equip and
furnish the store,  obtain necessary  licenses and approvals and open a Domino's
Store. QPQ estimates the cost of opening a Domino's Store to be between $125,000
and $500,000, including leasehold improvements,  furniture, fixtures, equipment,
the initial franchise fee and opening inventories. Such estimates vary depending
on the size and condition of a proposed  Domino's Store,  the amount of customer
seating provided, and the extent of leasehold improvements required.

COMMISSARY DEVELOPMENT

         In  conjunction  with its  exclusive  right to  develop  and  franchise
Domino's Stores in Poland,  the Domino's  Development  Agreement  grants QPQ the
exclusive  right to develop and operate a commissary  from which all  Affiliated
Franchisees and Non-Affiliated  Franchisees will purchase food and supplies. QPQ
conducts all of its purchasing,  distribution and major food supply  preparation
operations  at or from the  Commissary.  Domino's has provided and has agreed to
provide QPQ, on an ongoing basis,  all  information  and materials  necessary to
make QPQ  familiar  with the  methods  used to  operate  and  manage a  Domino's
commissary.

                                  8

<PAGE>


         In  January  1995,  QPQ  commenced  its  own  full-service   commissary
operations.  QPQ has developed approximately 1,500 square feet of the Jana Pawla
Domino's Store as its  commissary.  QPQ believes that it will be able to service
any Domino's Stores  contemplated to be opened in Poland in the next three years
from the  Commissary.  QPQ has the right to develop  additional  Commissaries if
needed. See "--Properties--Jana Pawla Domino's Store/Commissary."

SOURCES OF SUPPLY

         QPQ is  substantially  dependent  upon  third  parties  for  all of its
capital equipment (including furniture,  fixtures and equipment), food products,
and other  supplies.  Pursuant to the  Domino's  Development  Agreement  and the
Standard  Franchise  Agreement,  all of these  supplies must be of a quality and
conform to  specifications  acceptable  to  Domino's.  QPQ  currently  obtains a
majority of its supplies and food products,  including cheese,  soft drinks, and
cold cuts from Polish sources.  The balance of QPQ's supplies and food products,
including wheat flour, tomato sauce, corn oil and peppers,  come from sources in
Western Europe and the United States.  QPQ currently obtains its store furniture
and fixtures  from sources in Poland and obtains its  restaurant  equipment  and
paper products primarily from Domino's approved sources in the United States and
Western Europe.  QPQ currently has no written,  long-term  supply  agreements or
arrangements.  Shipments of food and supplies  are  delivered  directly to QPQ's
Commissary or Domino's Stores. QPQ maintains  approximately a 7-30 day inventory
of food products and supplies.

STORE OPERATIONS AND PERSONNEL

      QPQ operates its Domino's  Stores  under  uniform  standards  set forth in
Domino's confidential  Operations Manual,  including  specifications relating to
food quality and preparation,  design and decor and day-to-day  operations.  QPQ
operations are similar to those of other Domino's Stores.

         QPQ's  Domino's  offer  various  types of pizza,  soft drinks,  salads,
sandwiches,  breadsticks  and ice  cream,  and QPQ  anticipates  that its future
Domino's Stores will offer other food items. QPQ typically offers pizzas for the
zloty equivalent of approximately $1.30 - $8.00,  depending upon the size of the
pizza and the number of toppings selected. Soft drinks are typically offered for
the zloty  equivalent of $.50-$.85,  depending  upon the size of the soft drink.
QPQ believes, to the extent a comparison is possible, that the prices it charges
for meals is comparable to the prices charged by QPQ's  American-style fast food
competitors in Poland.

         QPQ hires Domino's  Stores managers who are responsible for supervising
the day-to-day  operations of the Domino's Stores,  including food  preparation,
customer relations, store maintenance,  cost control and personnel relations. In
addition, Domino's Store managers are responsible for selecting and training new
employees, who undergo on-the-job training.

         To date,  QPQ believes that it has  successfully  attracted and trained
local  managers  and other  employees.  QPQ  expects to open and operate its own
training  facility in Poland,  with  assistance  from  Domino's.  QPQ expects to
utilize Domino's  training  techniques and manuals and to solicit the assistance
and counsel of Domino's personnel. QPQ will be responsible,  at its expense, for
the translation of Domino's  manuals into Polish and expects to pay Domino's for
certain support services related to employee training.

         QPQ maintains  financial,  accounting and  management  controls for its
Domino's  Stores through the use of  centralized  accounting  systems,  detailed
budgets and computerized management information systems.

ADVERTISING AND PROMOTION

         The Standard  Franchise  Agreement  provides that each  Franchisee will
contribute a monthly  advertising and promotion fee equal to a percentage of its
gross  sales to a fund  administered  by QPQ to be used for  advertising,  sales
promotion and public relations. QPQ is responsible for using the proceeds of the
advertising  fund to develop and implement  advertising and  promotional  plans,

                                                     
                                       9

<PAGE>

materials  and  activities  on behalf of the  Domino's  Stores in Poland,  which
plans, materials and activities are subject to Domino's approval. Non-Affiliated
Franchisees are permitted to conduct their own advertising and promotion subject
to QPQ's  and  Domino's  approval.  Domino's  is  required  to  provide  certain
advertising  and  promotional  assistance  to QPQ.  QPQ  believes  that  certain
marketing  methods that have proven successful for Domino's are adaptable to the
Polish market.  Most marketing efforts by currently operating Domino's Stores in
continental  Europe  have  been  carried  out on a local  store  basis,  through
newspaper coupons, flyers and similar media.

COMPETITION

         QPQ faces competition from a number of American  fast-food  franchisors
and/or their licensees,  including Pizza Hut, McDonald,  Kentucky Fried Chicken,
Taco Bell and Burger King. QPQ also encounters competition from a broad range of
existing  Polish  restaurants and food service  establishments,  including local
fast food  restaurants  offering  products that are familiar to Polish consumers
and have  achieved  broad  market  acceptance,  as well as existing  restaurants
offering  American-style  fast food,  including pizza.  Additionally,  it can be
expected  that,  in  the  event  of  perceived   initial  market  acceptance  of
American-style  fast food, there will be a rapidly  increasing  number of market
entrants offering such products,  including  additional American franchisors and
Polish or other  companies  seeking  to  imitate  the  American-style  fast food
concept. Many of QPQ's competitors and potential  competitors,  particularly the
major American fast-food  franchisors,  possess significantly greater financial,
marketing,  personnel  and other  resources  than QPQ.  QPQ expects that it will
compete on the basis of price,  service and food quality.  Since the  disposable
income of Polish  consumers is limited,  certain of QPQ's products may be viewed
as luxury items, which may adversely affect market acceptance.


TRADEMARKS

         QPQ is authorized to use such trademarks,  service marks and such other
marks as Domino's may  authorize  from time to time for use in  connection  with
Domino's Stores (collectively,  the "Domino's Trademarks"). QPQ has acquired the
exclusive  rights to an existing  registration  of the  trademark  "Domino's" in
Poland, which QPQ transferred to Domino's.  Domino's has trademark  applications
pending  in  Poland  for  certain  Domino's  Trademarks  and  intends  to submit
trademark  applications for the trademark rights recently acquired by QPQ. There
can be no  assurance,  however,  that  such  Trademarks  will  be  approved  for
registration in Poland.  Under the terms of the Domino's  Development  Agreement
and the Standard Franchise Agreement, QPQ and each Non-Affiliated Franchisee are
required to assist in the defense of any action  relating to the right to use or
the validity of the Domino's  Trademarks and to cooperate in the  prosecution of
any action to prevent the infringement,  imitation, illegal use or misuse of the
Domino's  Trademarks or the Domino's  System.  Domino's is obligated to bear the
legal   expenses  and  costs   incidental  to  QPQ's  and  each   Non-Affiliated
Franchisee's  participation  in any such action.  However,  Domino's has made no
warranty or representation that the Domino's Trademarks will be available to QPQ
on an exclusive basis or at all. Any events or conditions that negatively affect
such Trademarks could have a material adverse effect on QPQ.

THE CAFE RENAISSANCE

         In  January  1995,  QPQ  opened  a  cafe-style  restaurant  (the  "Cafe
Renaissance") in a historic,  downtown city square in Krakow,  Poland.  The Cafe
Renaissance,  was not  operated as a  franchised  Domino's  Store,  offered,  at
moderate  prices by local  standards ($4 - $10 meal),  sit-down lunch and dinner
service.  October 1, 1996 PKP sold its Cafe Renaissance restaurant for $250,000,
consisting of cash of $180,000 and a promissory note in the principal  amount of
$70,000,  payable on or before  December  31,  1996.  As of March 21, 1997 their
remains a principal  balance of $30,000.  The Company  anticipates  such balance
being paid on or before May 30, 1997.



                                                      
                                       10


<PAGE>

FOREIGN CURRENCY AND EXCHANGE

QPQ intends to maintain  substantially  all of its  currents  assets in
dollar or other hard  currency-denominated  accounts,  to protect such  proceeds
against declines in value of the Polish zloty and to acquire foreign goods to be
imported  into Poland.  Revenues  from  operations  in Poland,  if any,  must be
maintained in zloty- denominated accounts, although they may be freely converted
into foreign  currencies,  at then current official exchange rates, for purposes
of paying for foreign goods and for repatriation of profits. There are presently
no  limitations  on QPQ's  ability to  repatriate  profits.  The exact amount of
profits,  if any,  that QPQ  repatriates  at a given time will depend on,  among
other  factors,  QPQ's  financial  condition,  results of operations and capital
requirements.  Unless and until QPQ is able to obtain its supplies  locally,  it
will be dependent on foreign sources of supply and will be subject to risks from
exchange rate fluctuations.  Although QPQ has no present intention to do so, QPQ
may seek to limit its exposure to the risk of currency  fluctuations by engaging
in  hedging  or other  transactions,  which  transactions  could  expose  QPQ to
substantial  risk of loss.  QPQ has no  experience  in  hedging  or in  managing
international  transactions and has not yet formulated a strategy to protect QPQ
against currency fluctuations.

UNITED STATES INCOME TAXES

         Pursuant to United  States tax laws,  if QPQ's  subsidiaries  organized
under the laws of Poland are not engaged in business in the United States,  such
subsidiaries  will not be subject to United  States  taxation.  Any  earnings of
these Polish subsidiaries,  when paid to QPQ (or, in certain cases, deemed paid,
even though not distributed,  under certain technical provisions of the Internal
Revenue  Code),  would be included by QPQ for United States  Federal  income tax
purposes.  However,  QPQ  would  receive a credit  against  Federal  income  tax
liability  that otherwise  would result from any deemed or actual  distributions
from its Polish subsidiaries, for any Polish corporate taxes paid by such Polish
subsidiaries  on these  distributions,  as well as for any Polish  dividend  and
royalty  withholding taxes imposed directly on QPQ. Because the Polish corporate
tax rate  (presently  40 percent of  taxable  income) is higher  than the United
States  corporate tax rate, QPQ does not anticipate being subject to significant
United States Federal income tax on either distributed or undistributed earnings
of its Polish subsidiaries.

EMPLOYEES

         As of March 21, 1997,  QPQ had 36 full-time  employees and 72 part-time
employees.  Mr. Mitchell Rubinson,  QPQ's Chairman of the Board, Chief Executive
Officer  and  President  has entered  into an  employment  agreement  with QPQ,,
pursuant to which he is required to devote such portion of his business  time to
QPQ as may be reasonably  required by QPQ's Board of  Directors.  The success of
QPQ will be dependent,  in part, upon its ability to hire and retain  additional
qualified  personnel.  QPQ utilizes local employees to staff its Domino's Stores
and  the  Commissary.  Such  employees  are not  represented  by  labor  unions.
Substantially  all of QPQ's  management  and employees  resident in Poland speak
Polish and QPQ's senior management team in Poland is also able to communicate in
English.  QPQ  anticipates  hiring and  training  employees  as required for the
operation and development of Domino's Stores.

PROPERTIES

         QPQ's proposed business  operations will be located almost  exclusively
in  Poland,  with  the  exception  of  certain  strategic  planning,  financial,
accounting and administrative services which may be provided from offices in the
United States.

         OFFICES. QPQ currently maintains its executive offices in approximately
1,600 square feet of office space at 1000 Lincoln Road, Suite 210 and Suite 206,
Miami  Beach,  Florida  33139.  Rental  payments  for  the  space  aggregate  to
approximately $18,000 plus tax.

         PKP and IFFP share  equally the cost and use of office space in Poland.
In November  1993,  PKP entered into a ten-year  lease (the "Cogik  Lease") with
Cogik, a Polish limited liability  corporation  ("Cogik"),  and on September 30,

                                       11

<PAGE>

1994, the Cogik Lease was amended. The Cogik Lease pertains to 325 square meters
of office space. Annual lease payments,  excluding utility charges, aggregate to
approximately  $73,200.  The Cogik  Lease  will be  automatically  extended  for
another  ten-year  term  unless  PKP or  Cogik  gives  the  other  party  notice
otherwise.  PKP and Cogik can each  terminate the lease upon six months  written
notice.  Renovation costs,  including leasehold  improvements,  were $61,100. In
November 1996 Cogik  exercised its option to terminate the lease upon six months
notice. Accordingly,  PKP must vacate such premises in May 1997. PKP anticipates
being able to find available office space in Poland.

         PARNAS  DOMINO'S  STORE.  In January  1994,  IFFC and QPQ entered  into
agreements  with each of PTTK,  the Warsaw  district  Department of Tourism (the
"Lessor"),  and its lessees,  Mr. Tadeusz Hofmokl  ("Hofmokl") and  Polish-Greek
Production  and  Trading  Enterprises  ("Ambrozja")  (collectively,  Hofmokl and
Ambrozja  are  referred  to as the  "Lessees"),  in order to secure  until  2009
approximately 480 square meters of space for use as a Burger King restaurant and
a Domino's  Store.  Pursuant to the agreement  between IFFC, QPQ and the Lessor,
the Lessor has consented to IFFC's and QPQ's sublease of space from the Lessees.
In addition,  the Lessor has agreed,  upon the termination of each lease between
the Lessor and the individual  Lessees,  to enter into a lease with IFFC and QPQ
on  comparable   terms,  with  the  exception  of  certain  lease  expenses  and
termination dates.

         With respect to the 450 square meters of space subleased from Ambrozja,
IFFC and QPQ have each paid  Ambrozja  an initial fee of $37,500 as of April 13,
1994,  and  have  jointly  agreed  to pay  Ambrozja  annual  sublease  payments,
excluding  utility fees, of the zloty  equivalent  of $135,000,  which  sublease
payments increase  annually by three percent.  The sublease is for a term of ten
years and may be extended for five years upon IFFC's and QPQ's election.  In the
event that IFFC and QPQ are  required  to vacate the  restaurant  site due to no
fault of their own, IFFC and QPQ will be entitled to compensation  from Ambrozja
for their subleasehold improvements to the restaurant site.

         With respect to the 40 square meters of space  subleased  from Hofmokl,
IFFC and QPQ have  jointly  agreed  to pay  Hofmokl  annual  sublease  payments,
excluding  utility fees,  of the zloty  equivalent  of $15,000,  which  sublease
payments increase annually by three percent.  The sublease is for a term of five
years.  Neither Hofmokl nor IFFC and QPQ have the right to  unilaterally  extend
the term of the  sublease.  In addition  to the  occurrence  of other  events of
default by Hofmokl,  IFFC and QPQ have the right to  terminate  the  sublease if
IFFC and QPQ lose their permits or licenses to operate  Burger King  restaurants
and Domino's Stores, at the site.

         Renovation  costs,  including  leasehold  improvements  and  furniture,
fixtures and equipment were  approximately  $399,000,  which figure includes the
cost of converting a portion of the Domino's Store into a commissary.

         GROJECKA DOMINO'S STORE. In February 1994, QPQ entered into a lease for
an unlimited period with the Municipality of Ochota, Warsaw for a Domino's Store
site consisting of approximately 130 square meters.  The lease may be terminated
by QPQ at any time upon three months' notice. The Municipality of Ochota, Warsaw
may terminate the lease at any time upon three months' notice. Renovation costs,
including  leasehold  improvements  and  furniture,  fixtures and equipment were
approximately  $251,000.  Annual lease payments,  excluding utility charges, are
181,350,000 zlotys, approximately $7,348 at year end exchange rates.

         JANA PAWLA DOMINO'S STORE/COMMISSARY.  In March, 1994, QPQ entered into
a ten-year  lease with the Iron Gate  Housing  Cooperative  ("Iron  Gate") for a
Domino's  Store and  Commissary  site  consisting  of  approximately  482 square
meters. Annual lease payments, excluding utility charges, are $34,797. The lease
may be terminated by QPQ at any time upon three  months'  notice.  Iron Gate may
terminate  the lease at any time upon  three  months'  notice  provided  that it
reimburses  QPQ  for  all of its  capital  expenditures  for  the  site,  net of
depreciation.  Renovation costs, including leasehold improvements and furniture,
fixtures and equipment were approximately  $453,000.  The lease does not provide
either party a means of unilaterally extending the term of the lease.


                                                       
                                       12

<PAGE>

         BONA DOMINO'S  STORE.  In September  1996, QPQ entered into a lease for
unlimited  period of time with  Municipality  of Warsaw,  Centrum for a Domino's
Store consisting of approximately 100 square meters. The lease may be terminated
by QPQ at any time upon three months' notice. The lease may be terminated by the
Municipality of Warsaw,  Centrum at any time upon three months' notice. In March
1997,  construction  was started on the site.  The  renovation  costs  including
leasehold  improvements,  furniture,  fixture and  equipment  is estimated to be
$110,000.Annual  lease  payments,   excluding  electricity,   are  approximately
$4,560.00.

INSURANCE

         In the opinion of the management of QPQ, QPQ's  leasehold  improvements
are  adequately  covered by  insurance.  QPQ maintains  liability,  casualty and
business interruption insurance in amounts which it believes to be adequate.

         B.     QPQ Medical Centers, Inc.'s Business

         Since  August 1995 QPQ Medical has been in the  business of  developing
and/or  operating  centers  which  offer  primary  care,  medical  services  and
medically  supervised  weight  loss  programs.  The weight loss  programs  use a
protocol which integrates systems and routines of nutrition management, exercise
and  prescribed  medication  and certain other  medical  services to address the
weight loss and non-weight  loss related  medical  problems of its patients.  In
January,  April,  July and  September  of 1996,  QPQ  opened  its first four (4)
medical centers.  In February 1997, QPQ Medical acquired the medical practice of
Dr. Jack B. Drimmer,  P.A. and relocated  such practice to its Aventura  center.
QPQ's medical centers are located in Kendall, Aventura, Fort Lauderdale and Boca
Raton,  Florida.  QPQ Medical intends to contain its operations to South Florida
for the immediate future.


LICENSE AGREEMENT

         As of November 9, 1995,  QPQ Medical  entered into a license  agreement
(the  "License  Agreement")  with Weight Loss  Associates,  Inc.  ("Weight  Loss
Associates"),  a corporation owned by Dr. Rabinowitz, a director of QPQ, and Mr.
Rubinson,  QPQ's Chairman of the Board,  Chief Executive  Officer and President,
pursuant to which QPQ Medical  has  acquired  the  exclusive  rights  subject to
certain  restrictions,  to use and  sublicense  a weight loss system and certain
proprietary  marks developed by Weight Loss  Associates.  The weight loss system
(the  "Program")  integrates  systems  and  routines  of  nutrition  management,
exercise and prescribed medication.

         Under the  License  Agreement,  Weight Loss  Associates  is required to
assist QPQ Medical in developing and operating the Weight Loss Centers and other
businesses (collectively,  the "Weight Loss Business") that utilize the Program,
which assistance  includes,  but is not limited to, the following:  providing to
QPQ Medical the Program;  providing to QPQ Medical the information  necessary to
prepare operations and marketing materials which describe how the Program should
be  implemented;  providing  to QPQ Medical  information  necessary to prepare a
comprehensive  business  plan with  respect  to the  Program;  providing  to QPQ
Medical any assistance or information  reasonably  deemed necessary or desirable
by QPQ Medical in connection with any of its efforts to secure financing for the
Business; providing any assistance or information reasonably deemed necessary or
desirable by QPQ Medical in  connection  with any of his efforts to  sub-license
the Program and/or Marks; providing to QPQ Medical in connection with any of its
efforts to (i) obtain any governmental license, authorization,  permits, consent
or approval with respect to use of the Program and/or Marks, and (ii) respond to
any governmental authority inquiries with respect to the Business;  providing to
QPQ Medical  technical  advice  regarding the  development  and marketing of the
Business;  and  continuing to use its best efforts to develop and/or enhance the
value of the Business and Program.

         Weight Loss Associates is also responsible for the establishment of all
protocols to be followed in connection with the implementation of the Program by
QPQ Medical.  Subject to Weight Loss Associates' consent otherwise,  QPQ Medical
is prohibited from  overriding,  modifying or otherwise  causing  non-conformity
with such protocols established by Weight Loss Associates in connection with the
implementation of the Program.
                                  13

<PAGE>

      QPQ Medical shall pay Weight Loss  Associates,  Inc., as royalties for the
license of the Program,  (i) a percentage  of QPQ Medical's  "Operating  Profit"
from each of its product lines associated  weight loss, and (ii) a percentage of
QPQ Medical's  "Extraordinary Gain" from certain events.  Payments shall be made
in arrears not later that the twentieth  day of each month.  For purposes of the
License  Agreement,  Operating  Profit is generally  defined in accordance  with
Statement  of  Financial  Accounting  Standards  No. 14 but  excludes  royalties
payable to Weight Loss  Associates and certain other items.  For purposes of the
License  Agreement,   "Extraordinary  Gain"  is  defined  to  include  the  gain
associated with the events described in APB Opinion No. 30,  including:  (a) the
disposal of a business  segment,  (b)  extraordinary  items,  and (c) unusual or
infrequent items. The calculation of an Extraordinary Gain is made in accordance
with APB Opinion No. 30 and generally accepted accounting  principles,  with the
following modifications: (a) Extraordinary Gain is computed without reduction or
allowance  for  events  which give rise to a negative  Extraordinary  Gain,  (b)
Extraordinary  Gain is computed  without  reduction or allowance  for federal or
state income taxes, and (c) in computing Extraordinary Gain, estimated Operating
Profit or negative Operating Profit between "measurement date" and the "disposal
date" (as such terms are  defined in APB  Opinion  No. 30) do not enter into the
computation  of  Extraordinary  Gain.  The License  Agreement also provides that
Weight Loss Associates and its employees,  officers or directors are entitled to
reimbursement from QPQ Medical for ordinary and necessary out-of-pocket expenses
incurred  by them in the course of  performing  their  duties  under the License
Agreement.  QPQ  Medical  will be  required  to make  payments  to  Weight  Loss
Associates  even if QPQ medical  fails to develop  the system into a  profitable
business concept.

         Under the License  Agreement,  QPQ Medical is also required to expend a
percentage of its annual gross receipts for promotion and marketing the Program.

MEDICAL CENTER DEVELOPMENT

         In January,  April,  July and September  1996,  QPQ Medical  opened its
medical centers in Kendall,  Aventura,  Fort Lauderdale and Boca Raton, Florida.
QPQ Medical initially intends to focus its medical center development efforts in
South Florida.  QPQ Medical's strategy is to lease sites for its medical centers
in existing  structures  and to develop  medical  facilities  in upper to middle
class areas.

         In February  1997,  the Company  purchased  the practice of Dr. Jack B.
Drimmer,  P.A. for a cash consideration of $60,000, and a promissory note in the
principal  amount of $40,000 due in February  2000.  The  promissory  note bears
interest at the prevailing  prime rate as published by the Wall Street  Journal.
Payments of principal and interest are due at maturity.

         QPQ Medical has  acquired and is  utilizing a  computerized  management
information   system  at  its  medical  centers  for  practice   management  and
accounting.  Through  computer  terminals linked by modems to the main computer,
QPQ Medical  believes  that the main computer is capable of servicing all of QPQ
Medical's existing and proposed medical centers.

         QPQ Medical has a limited  history of operations  and is subject to all
the risk attendant with launching a new business.  QPQ Medical has not performed
formal market studies of the South Florida market.

MEDICAL CENTER OPERATIONS AND PERSONNEL

         QPQ Medical employs 1-3 licensed doctors,  and 2-8 support personnel at
each of its Medical Centers.  As of March 21, 1997, QPQ Medical had 24 full-time
employees.  QPQ Medical has  entered into  employment  agreements  with its five
doctors.

         In addition,  those QPQ doctors that practice  bariatric medicine do so
in accordance with protocols  established by Weight Loss Associates.  To date, a
principal of Weight Loss Associates,  Dr. Rabinowitz,  has trained QPQ Medical's
doctors in the use of the Program.  QPQ Medical believes that it and Weight Loss
Associates have each satisfactorily performed their respective obligations under
the License Agreement.

  
                                       14

<PAGE>

ADVERTISING AND PROMOTION

         QPQ  Medical  intends to, in  accordance  with the terms of the License
Agreement, expend a percentage of its revenue for promotion and marketing of the
Program.  QPQ Medical believes that it may have to spend a considerable  portion
of its revenue  marketing the Program to a public which is currently  relatively
unfamiliar  with the  Program.  Although  QPQ Medical is still in the process of
developing and refining  techniques to effectively  and  efficiently  market the
Program,  QPQ  Medical  believes  its  marketing  message  will be  disseminated
primarily through local television, radio and newspaper advertisements.

COMPETITION

         QPQ Medical  believes that its closest  competitors are medical doctors
which specialize in practicing bariatric medicine, certain of which have already
adopted  strategies  similar to QPQ Medical's of providing  medical  weight loss
services as cost  efficiently  as  possible  through the maximum use of licensed
nutritionists,   dieticians,   technicians  and  support   personnel  under  the
supervision  of a  licensed  doctor.  QPQ  Medical  recognizes  that many of its
closest  competitors  have  established  track  records and may adopt  marketing
strategies  which are comparable to its proposed  strategy.  QPQ Medical is also
aware that certain individuals may prefer their medically supervised weight loss
program to be designed,  supervised and  administered  exclusively by a licensed
doctor.  Although QPQ Medical's medically supervised weight loss programs are to
be designed and supervised by licensed  doctors,  certain  aspects of the weight
loss program  will be  monitored  and  administered  by licensed  nutritionists,
licensed  dieticians,  technicians and/or other support  personnel.  QPQ Medical
also  anticipates  that it will  encounter  competition  from a wide  variety of
non-medically  supervised weight loss services and/or their  franchisees,  which
services  include the commonly  known  national  systems of the Cambridge  Diet,
Herbalife, Jenny Craig, Nutri System and Weight Watchers. QPQ Medical recognizes
that many of its  competitors  have  significantly  greater  financial and other
resources  than QPQ Medical.  There can be no assurance that QPQ Medical will be
perceived as a superior  alternative  to these other  weight loss  services by a
sufficient number of people QPQ Medical anticipates that less than a majority of
its  services  will be covered by its  clients'  medical  insurance  and/or care
policies.

PROPERTIES

         KENDALL MEDICAL  CENTER.  In September 1995, QPQ Medical entered into a
five-year lease, which commenced on November 1, 1995, for an approximately 3,157
square  foot  medical  office  space  located in a medical  office  building  in
Kendall, Florida. For the term of the lease, annual lease payments are a minimum
of $61,561 per year,  subject to annual upward adjustments to reflect changes in
the  Consumer  Price Index as  published by the U.S.  Department  of Labor.  QPQ
Medical is also  responsible for a pro rata share of the office  building's real
estate taxes and the costs of managing,  operating  and  maintaining  the office
building,  including utilities and insurance.  Upon the lease's expiration,  QPQ
Medical has an option to renew the lease for an additional  five years.  QPQ has
guaranteed the performance of QPQ Medical's obligations under the lease.

         AVENTURA MEDICAL CENTER.  On November 1, 1995, QPQ Medical entered into
a sixty-seven month lease for an approximately  3,788 square foot medical office
space located in an office building in Aventura, Florida. Pursuant to the lease,
QPQ  Medical's  annual  lease  payments  are $60,608 per year,  subject to three
percent annual  increases  commencing on the nineteenth  month of the lease. QPQ
Medical  is also  responsible  for a pro  rata  share of the  office  building's
operating  expenses  which are  defined as the total cost and expense of owning,
operating,  maintaining,  managing and repairing the office building,  including
taxes, insurance and utilities. Upon the lease's expiration,  QPQ Medical has an
option to renew the lease for an additional  five years,  QPQ has guaranteed the
performance of QPQ Medical's obligations under the lease.

         BOCA RATON MEDICAL  CENTER.  In March 1996, QPQ Medical  entered into a
five year lease,  which  commences on May 1, 1996,  for an  approximately  3,658
square foot medical  office space located in a medical  office  building in Boca
Raton, Florida. From September 1, 1996 to March 1997, QPQ Medical is required to
               
                                   15

<PAGE>

make monthly lease payments of $5,412. For the balance of the lease, QPQ Medical
is required to make lease payments which aggregate to  approximately  $63,100 in
the  second  year of the lease  and which  increase  by three  percent  per year
thereafter.  QPQ Medical is also  responsible for its own utility expenses and a
pro rata share of the office  building's  real estate taxes,  insurance,  common
area  maintenance  and  operating  expenses.  Upon the lease's  expiration,  QPQ
Medical has an option to renew the lease for an additional  five years.  QPQ has
guaranteed the performance of QPQ Medical's obligations under the lease.

         FORT LAUDERDALE  MEDICAL CENTER. In April 1996 QPQ Medical entered into
a five year  lease,  which  commenced  on June 1, 1996 for  approximately  2,500
square feet of medical office space located in a medical office building in Fort
Lauderdale,  Florida.  Pursuant to the lease,  QPQ Medical  makes  monthly lease
payments of $3,125, subject to 3% increases of the previous year's minimum rent.
QPQ  Medical  is also  responsible  for its pro  rata  share  of the  facilities
operating  expenses.  Upon the lease's  expiration  QPQ Medical has an option to
renew the lease for an additional five years.

INSURANCE

         In  the  opinion  of  the  management  of QPQ  Medical,  QPQ  Medical's
leasehold   improvements  and  computer  equipment  are  adequately  covered  by
insurance. QPQ Medical maintains liability,  casualty, business interruption and
medical malpractice insurance which it believes to be adequate.

         Although QPQ  Medical's  weight loss system  incorporates  a variety of
weight loss techniques,  each of which QPQ Medical believes is safe, QPQ Medical
recognizes  that it may be subject to lawsuits if individuals  using the Program
coincidentally  experience medical problems.  QPQ Medical is subject to the risk
that new medical  discoveries  may question the safety or  effectiveness  of QPQ
Medical's  Program,  it may be required to devote all or an inordinate amount of
its available  cash and  managerial  resources  defending  itself against and/or
settling  claims,  even if frivolous  or not  meritorious,  and that,  it may be
subject to liability  for claims in which the offered  proof that QPQ  Medical's
services  were the cause of the  claimant's  injuries  are  accepted  by a court
regardless  whether,  in QPQ  Medical's  opinion,  they are  unsubstantiated  by
medical or scientific knowledge.

                  ECONOMIC AND BUSINESS CONDITIONS IN POLAND

         The Republic of Poland is situated  between the  southern  coast of the
Baltic  Sea and the  Carpathian  Mountains.  Its  geographic  neighbors  are the
Republic of Belarus,  the Czech Republic,  the Federal  Republic of German,  the
Republic of  Lithuania  and the  Ukraine.  It has a total area of  approximately
120,700 square miles and a population of approximately 38.6 million.  Poland has
an extensive network of roads,  railways and canals, and has four major ports on
the Baltic sea.  Poland's major cities and their  approximate  populations  are:
Warsaw (1.9 million)' Lodz  (950,000);  Katowice  (950,000);  Krakow  (750,000);
Wroclaw  (650,000);  Poznan  (600,000);  and Gdansk  (500,000).  Poland today is
ethnically almost homogeneous (98% Polish).

         Since the fall of the Communist government in 1989, Poland has embarked
on a program of economic reforms,  based on a transition to a market economy and
private  ownership.  Four years into its transition to a market economy,  Poland
has become the first  former  centrally  planned  economy in Central and Eastern
Europe to end its  recession and return to growth.  Poland's  transition-induced
recession  bottomed  out in the second  quarter  of 1991,  and for the last four
years the Polish economy has enjoyed an accelerated recovery.

         The sweeping economic reforms introduced in 1989 removed price control,
eliminated  subsidies  to industry,  opened  Poland's  markets to  international
competition, and imposed strict budgetary and monetary discipline. These reforms
have achieved impressive results in reducing inflation--from almost 600% in 1990
to 32%, 21.6% and 19.5% in 1994, 1995 and 1996.

         Since 1989, the Polish government has sought to attract foreign capital
by, among other actions,  executing investment  protection agreements with major
industrialized  countries,  and adopting a law the express intent of which is to

                                       16

<PAGE>

encourage  foreign  investment  in Poland.  Poland  has  further  evidenced  its
commitment  to a market  system  by  opening  a stock  exchange  in  Warsaw  and
introducing a system  designed to result in the  development of a Western system
of banking.  The tax system was reformed to provide  equal tax  treatment of all
economic entities.

               FOREIGN INVESTMENT LAW AND GOVERNMENT REGULATION

General

         The Polish Law of June 14, 1991 on companies with foreign participation
(the  "Foreign  Investment  Law")  sets forth the legal  requirements  governing
foreign  investment in Poland.  The Foreign  Investment Law states that,  unless
provided  otherwise,  the Polish Commercial Code of 1934 (the "Commercial Code")
is the commercial law generally applicable to domestic business.  The Commercial
Code governs corporate and partnership  formation,  governance and activity, and
is generally similar to corresponding regulations of countries in the EEC.

         Under the relevant  portions of the Foreign  Investment  Law, a foreign
investor  may  establish a limited  liability  company  (roughly  analogous to a
closely held  corporation in the United  States),  in which it will hold 100% of
the  shares;  establish a limited  liability  company,  with the equity  jointly
contributed by it and other foreign and/or Polish parties;  or enter business in
Poland  through  acquisition of stock of an existing  Polish  limited  liability
company.

      The Foreign Investment Law also governs foreign investment in "joint stock
companies,"  which are roughly  analogous to publicly held  corporations  in the
United States.  Since IFFC and QPQ anticipate that their business in Poland will
be conducted  solely  through one or more of its wholly owned limited  liability
companies for the foreseeable  future, the following  discussion  addresses only
limited liability companies.

         The Foreign Investment Law defines the range of economic  activities in
which a limited  liability  company  with  foreign  participation  (a "CFP") may
engage to include  "participation  in revenues from the operation of enterprises
in the territory of the Republic of Poland." The Foreign Investment Law does not
restrict the scope of economic  activities of a CFP,  which is thus permitted to
engage in any  business in which a domestic  Polish  limited  liability  company
without foreign participation may engage. No special permits are required unless
the CFP  will  conduct  business  activities  in one of the  enumerated  sectors
considered  to  be  of  critical  importance  for  the  Polish  economy.  IFFC's
development  and  operation  of  restaurants  is not  included  in one of  those
enumerated sectors,  and do not require special licensing.  Moreover,  access to
raw  materials  and  supplies  in  the  domestic  market  is  afforded   without
distinction  as to  cooperatives  and state  enterprises  on the one  hand,  and
private business  entities,  including a CFP, on the other. All private business
entities have equal access to raw  materials  and labor and are treated  equally
for tax purposes. A CFP is free to set prices for its products and services.

         A CFP must  comply  with  certain  formal  requirements  preceding  the
commencement of revenue  producing  activities,  which formal  requirements have
been complied with by QPQ's  subsidiary.  The Founding Act of a CFP (essentially
equivalent to articles of incorporation  and bylaws in the case of a CFP that is
a 100% owned  subsidiary)  must be prepared and executed  before a notary public
(who is a lawyer and who  reviews the  Founding  Act as to its  compliance  with
applicable  law) in the form of a Notarial Deed. The CFP must then be registered
by the District Court  responsible  for the conduct of the Commercial  Register.
The  registration  process for a newly  formed CFP  generally  takes from one to
three months. The CFP commences its legal existence upon  registration.  The CFP
must then  register  with the  Local  Statistical  Office  to obtain a  National
Economy Code Number  ("REGON") and register with the Treasury Office to obtain a
Tax  Indemnification  Number  ("NIP").  Without a REGON and a NIP, a CFP may not
complete mandatory registration with the local Fiscal Office and Social Security
Office, and may not open bank accounts or proceed with customs clearance.  These
formal  requirements  are  identical  to those  required  for a domestic  Polish
limited liability company without foreign participation.

                                   17

<PAGE>
Contribution to Capital

         Other than  pursuant to  provisions of the  Commercial  Code  generally
applicable  to all limited  liability  companies,  there is no minimum  level of
investment  required of a CFP. The minimum capital required for establishment of
any limited liability company is 40,000,000 zlotys (about $1,301 as published by
the  National  Bank of Poland on March 21,  1997),  which must be made in Polish
currency obtained from the sale of convertible currency (including United States
or West European funds) to a foreign exchange bank, or, to the extent designated
in the CFP's Founding Act, through in-kind,  nonmonetary  contributions that are
transferred from abroad or purchased with Polish currency obtained from the sale
of convertible  currency to a foreign exchange bank. To the extent designated in
the CFP's  Founding  Act,  fixed  assets may  constitute  in-kind,  non-monetary
contributions to equity.

Taxation

         A CFP is subject to the same  taxes,  and general  tax  reductions,  as
domestic  Polish  companies  without  foreign   participation.   Tax  exemptions
specifically   reserved  for  foreign   investors  or  companies   with  foreign
participation  are no  longer  available  after  January  1,  1994  and such tax
exemptions  can only be utilized if the right to such  exemptions  was  acquired
prior to January 1, 1994. A CFP is subject to corporate  income tax, VAT,  which
is known in Poland  as the "Tax on Goods  and  Services,"  and  excise  tax and,
depending on the nature of its business activities,  may also be subject to real
estate tax,  local tax,  and stamp  duty.  The  corporate  income tax rate is 40
percent of taxable income,  which is generally calculated by the extent to which
revenues  exceed  expenses,  including  operating  losses,  which may be carried
forward for three  years.  The  shareholder  of a limited  liability  company is
liable for any income taxes not paid by the company.

         All goods and services,  including  imported  goods and  services,  are
subject to a VAT and excise tax, based on the value of such items.  With respect
to  imports,  the value of such  items is equal to the  customs'  value plus any
customs' duties. The VAT basic rate is 22%, but in the case of certain products,
it is reduced to 7% or entirely.  Under the VAT system,  credit is given for VAT
paid against VAT collected.

         A CFP's  employees  are subject to a personal  income tax, and a CFP is
required to make  contributions  for  employees'  health and pension  insurance,
commonly  referred to as the social security fund.  Currently,  an employer must
remit  to the  social  security  fund,  the  unemployment  fund  and the Fund of
Guaranteed Employees' Payments 45%, 3% and .2%,  respectively,  of the amount of
wages paid to an employee  before  withholding  for  personal  income tax.  Both
Polish and foreign  employees are governed by the same social security,  health,
pension, and unemployment insurance provisions.

         Currently,  dividends are taxed at the rate of 20%. However, Poland has
executed a bilateral tax agreement with the United States, pursuant to which the
tax on  dividends of  corporations  in which at least 10% of the voting stock is
held by a United  States  corporation  may not exceed 5%. Thus,  though  current
regulations  would  otherwise  provide  for a 20%  tax on  dividends,  taxes  on
dividends paid by a CFP which is a subsidiary of IFFC or QPQ will be at the rate
of 5%.

Customs Duties and Import Restrictions

         Customs  duties on imported  goods are  regulated by the Customs Law of
1989 (as amended).  The tariff is coordinated and integrated with  international
regulations  and the  provisions of the General  Agreement on Tariffs and Trade.
IFFC's and QPQ's operations are subject to significant  levels of customs duties
on goods  imported  into Poland.  Customs  duties on goods  imported into Poland
currently range from 15% to 20% for furniture,  fixtures and equipment,  and 30%
for meat.  Customs  duties and other  similar fees,  however,  are not levied on
non-monetary, in-kind contributions to capital, provided that such contributions
constitute  "fixed assets" and are not disposed of during the three-year  period
following  customs  clearance.  Although  IFFC and QPQ intend to  contribute  as
capital substantially all of their respective subsidiaries' furniture,  fixtures
and equipment,  there can be no assurance  that such  equipment will  ultimately
qualify as "fixed  assets" for purposes of this  exclusion.  In connection  with
Poland's  application to the European  Economic  Union,  it has imposed  customs
                                       18

<PAGE>

duties on certain foods and other products, which aggregate to 25% on cheese and
40% on milk imported from European  Economic Union countries,  and 35% on cheese
and 40% on milk,  imported from other countries.  As of July 5, 1993,  temporary
restrictions,  including  import license  requirements  and import quotas,  were
placed on the importation into Poland of certain categories of food products.

         From  January  1995 goods  imported  to Poland  were  subject to a five
percent (5%) import tax (the "Import  Tax").  Since January 1, 1996, the rate of
Import Tax has been three percent (3%). The Import Tax is structured as a surtax
and is imposed on the customs value of imported goods increased by the regularly
applicable customs duty.

         On February 4, 1994 the Parliament passed a law imposing countervailing
duties on certain agricultural and food products imported from abroad, which law
became  effective  as of April 14,  1994.  The law is intended to protect  local
producers by increasing the cost of importation of certain agricultural and food
products,  such as meat, milk, wheat flour,  processed tomatoes,  vegetable oil,
pork,  poultry and dairy  products,  through the  imposition  of  countervailing
duties  up to a  level  comparable  to the  local  prices  of such  products  as
determined by the Minister of Agriculture.

Polish Currency and Foreign Exchange

         The only currency that may be used in Poland is the zloty. The value of
the zloty is pegged  pursuant to a system  based on a basket of  currencies,  as
well as all other  economic  and  political  factors  that  effect  the value of
currencies  generally.  As of  January  1,  1995,  the  National  Bank of Poland
introduced a new  currency  unit which is named a "zloty" (a "new  zloty").  New
zlotys are  equivalent  to 10,000 old zlotys  ("old  zlotys").  Old zlotys  will
remain legal tender until December 31, 1996,  after which date they will only be
exchangeable at certain banks.  All references in this document to zlotys are to
old zlotys.  Domestic  persons and CFPs are  entitled to hold  foreign  currency
acquired  through  the conduct of an  economic  activity in their own  accounts.
Foreign  currency  may only be  converted  into  zlotys,  by selling the foreign
currency to a foreign exchange bank. Proceeds from economic activities in Poland
must be maintained in zloty denominated accounts, but may be converted into hard
currencies for certain purposes as discussed below.  Typically,  the transfer of
foreign  currency abroad requires a foreign  exchange  permit,  but no permit is
required for the  repatriation  to foreign  investors in hard  currency of up to
100% of the profits of a CFP.  Similarly,  foreign  investors may  repatriate in
foreign  currency all proceeds of the sale or liquidation of equity interests in
the CFP, all proceeds of the  liquidation of a CFP, and  compensation  resulting
from  expropriation or similar  government acts. The zloty is also tradeable and
exchangeable  into  foreign  currency  for the purpose of  purchasing  goods and
services  abroad.  On March 21, 1997,  the exchange  rate was 30,745  zlotys per
dollar as  published  by National  Bank of Poland.  Foreign  exchange  banks are
required to sell foreign  currency to domestic  persons,  including a CFP,  when
such  currency is needed for  repatriation  as set forth  above,  and to satisfy
foreign currency  obligations to foreign persons  resulting from the purchase of
goods and certain  services.  Foreign  employees may repatriate  their after-tax
earnings  in hard  currencies  without  having to obtain an  individual  foreign
exchange permit.

Foreign Exchange Law

         Effective  January 1, 1995,  a new Polish  Foreign  Exchange Law became
effective.  The  expressed  objectives  of the new law are (i) to apply  uniform
standards to all Foreign  Exchange Banks  operating in Poland,  (ii) to create a
legal framework for market valuation of the Polish  currency,  and (iii) to move
toward full  convertibility of the zloty. The new law is also designed to permit
greater  freedom  (less  restrictions)  on certain  foreign  trade  transactions
accounted for in Polish currency.

Reporting and Audit

         The  balance  sheet and  profit  and loss  statements  of a CFP must be
prepared in accordance with Polish accounting  principles and in compliance with
the  requirements of the Commercial Code. As Poland becomes more integrated with

                                       19

<PAGE>

the EEC, it is anticipated that its financial reporting requirements will become
substantially  similar to generally  accepted  accounting  principles in the EEC
which  are  generally  similar  to those in the  United  States.  For  financial
reporting  purposes in the United States,  IFFC and QPQ prepare their  financial
statements in accordance with generally accepted accounting principles.

Leases and Purchase of Land

         A CFP may lease real property from private parties without  substantial
restrictions.  The  acquisition of real property is regulated by the Acquisition
of Real  Property  Estate by  Foreign  Persons  Act of 24 March 1920 and The Act
Amending the Land Economy and  Expropriation  Act of 29  September  1990.  Since
neither IFFC nor QPQ presently intends to acquire real property in Poland, these
statutes are not described herein.

Employees and Wages

         All  employees,  Polish and  foreign,  must be paid in zlotys.  Foreign
employees require work permits from local  authorities,  which are typically not
difficult to obtain for executive or managerial employees,  and can be typically
obtained in due  course.  As set forth  above,  all wages are subject to payroll
taxes payable by the employer, and income tax payable by the employee. Employers
are required to pay a minimum wage.

Governmental Regulation of Restaurant Operations

         Restaurant  operations  are subject to a number of  national  and local
laws and  regulations,  primarily  related to sanitation.  All imported meat and
other food products are subject to specific sanitary  requirements.  Restaurants
are subject to national regulations relating to health and sanitation standards,
generally  implemented,  administered  and  enforced  at the  local  level.  All
properties are subject to local zoning,  building code and land-use regulations.
In  general,  necessary  approvals  and permits for  restaurant  operations  are
granted  without  undue  delay,  and are  typically  granted  within  14 days of
application therefor.

Trademark Protection

         Under Polish law, the registrant of a trademark in Poland  acquires the
exclusive right to use the trademark in commerce for goods and services  covered
by the registration.  If the trademark is infringed,  the registrant is entitled
to demand injunctive relief,  monetary damages, and seizure of infringing items.
In general,  the first applicant is entitled to the  registration of a trademark
from the date the application is filed with the Patent Office. Foreign nationals
generally have the same rights as Polish citizens with regard to trademarks.

United States-Poland Treaty

         On March 21, 1990,  the  President  of the United  States and the Prime
Minister of Poland signed a treaty concerning  business and economic  relations,
which  was  ratified  by  both  countries.  The  ratification  instruments  were
exchanged in Warsaw on July 7, 1994 and the treaty became effective as of August
6, 1994.  The aim of the treaty is to encourage  and  facilitate  United  States
investments in Poland by providing  internationally  recognized  protections and
standards.  The treaty sets certain  minimum  standards;  in some cases,  Polish
legislation more favorable than that required by the treaty has been enacted.

         Some of the key elements of the treaty include the following:

         o      Poland  agreed to treat  United  States  investors in Poland the
                same as Polish  nationals  or  investors  from other  countries,
                whichever is more favorable.

         o      The  United   States  and  Poland   agreed  to   internationally
                recognized  standards for  expropriation;  expropriation will be
                permitted  only for a public  purpose,  and must include  prompt
                payment at fair market value.


                                       20

<PAGE>

         o      The United States and Poland agreed to abide by  internationally
                recognized   standards  for  arbitration  that  ensure  that  an
                investor has the right to resort to international arbitration.

         o      Poland  guaranteed  that United States firms will have the right
                to market goods and services  both at the  wholesale  and retail
                level;   obtain   access  to  public   utilities  and  financial
                institutions;  obtain  commercial rental space and raw materials
                on  a  non-discriminatory  basis;  conduct  market  studies  and
                distribute  commercial  information  of all  kinds;  and  obtain
                registrations,  licenses,  permits  and  other  approvals  on an
                expeditious basis.

         o      Poland   agreed  to  adopt  major  new   intellectual   property
                standards,  including  adherence  to the  Paris Act of the Berne
                Convention;  copyright  protection  for computer  software;  and
                protection of proprietary information.

         o      Poland  agreed  to permit immediate and complete repatriation of
                export earnings and capital from Poland to the United States. In
                addition,  Poland agreed to progressively eliminate restrictions
                on  repatriation  of United States  investor zloty profits.  All
                such  restrictions  on the  repatriation  of  profits  have been
                eliminated. See "Polish Currency and Foreign Exchange."

Item 2.  Description of Property.
         -----------------------

See Item 1. Description of Business - A. QPQ Corporation's Business - Properties
" - and "B. QPQ Medical Centers, Inc.'s Business - Properties."


Item 3.  Legal Proceedings.
         -----------------
  
         Except as  described  below,  QPQ is not a party to any  litigation  or
governmental  proceedings that management believes would result in any judgments
or fines that would have a material adverse effect on QPQ.

         On November 20,  1996,  the Company was notified by holders of Warrants
for the  purchase of an  aggregate  of 38,250  shares of Common  Stock issued on
September  22,  1993,  pursuant  to  the  Underwriter's  Common  Stock  Purchase
Agreement,  between  the  Company and Reich & Co.,  Inc.,  that  pursuant to the
anti-dilution  provisions  contained in such Warrants,  the Warrant exercise per
share of Common Stock underlying the Warrant was reduced to $0.25 per share. The
claim  also  alleges  that the  number of shares  for  which  the  Warrants  are
exercisable  increased to an aggregate of 1,377,000 shares.  The warrant holders
have  requested  demand  registration  of  such  shares.  The  Company  has  not
registered  such  shares and the  warrant  holders  have  requested  the Company
repurchase  all of such warrants for an aggregate of  $3,442,500  based upon the
failure to register provisions  contained in the Warrant Agreement.  The Company
is contesting the claim.

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

         None.



                                   21 



<PAGE>
                                 PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.
         --------------------------------------------------------

         QPQ's Common Stock is quoted on the National  Association of Securities
Dealers Automated  Quotation System ("NASDAQ"),  and listed, on the Boston Stock
Exchange, under the symbols QPQ and IPZ, respectively.  The following table sets
forth,  for the  period  since  January 1, 1994,  the high and low  closing  bid
quotations  for the Common  Stock as reported by NASDAQ.  The NASDAQ  quotations
represent  quotations  between dealers  without  adjustments for retail markups,
markdowns or commissions and may not necessarily represent actual transactions.

                                                              High       Low
                                                              ----       ---
1994
First Quarter............................................     3 5/8      2 21/32
Second Quarter...........................................     3          2 3/4
Third Quarter............................................     2 1/4      1 1/2
Fourth Quarter...........................................     2          1 1/4

1995
First Quarter............................................     1 5/16       5/8
Second Quarter...........................................     2 1/8        21/32
Third Quarter............................................     1 7/16       5/8
Fourth Quarter...........................................     2 1/2        5/8

1996
First Quarter............................................     2 3/8      1 5/8
Second Quarter...........................................     2          2
Third Quarter............................................     4          3 1/2
Fourth Quarter...........................................     2 3/4      2 3/8

         As of March 21,  1997,  there were 95 record  holders  of QPQ's  Common
Stock.  QPQ believes that there were in excess of 300 beneficial  holders of the
QPQ Common Stock.

         QPQ has not paid any cash  dividends  on the QPQ Common  Stock and does
not currently intend to declare or pay cash dividends in the foreseeable future.
QPQ intends to retain any earnings  that may be  generated to provide  funds for
the operation and expansion of QPQ's business.



























                                       22



<PAGE>

Item 6.     Management's Discussion and Analysis or Plan of Operation.
            ----------------------------------------------------------    
      A.    QPQ Corporation

GENERAL

      QPQ commenced its planned  principal  operations  through its wholly owned
subsidiary,  Pizza  King  Polska  Sp.  zo.o  ("PKP"),  in  April  1,  1994.  PKP
anticipates  that it will incur losses until, at the earliest,  it establishes a
number of Domino's Stores generating sufficient revenues to offset its operating
costs  and the  costs of its  proposed  continuing  expansion.  There  can be no
assurance that PKP will be able to successfully establish a sufficient number of
Domino's Stores to achieve profitable operations. PKP cannot reasonably estimate
the length of time before any Domino's Store may generate sufficient revenues to
offset its operating costs or the length of time before PKP may generate income,
if ever. QPQ's  independent  auditors have included as explanatory  paragraph in
their  report for the year ended  December  31, 1995 and 1996 stating that QPQ's
financial  statements  have been prepared  assuming QPQ will continue as a going
concern  although QPQ's  recurring  losses raise  substantial  doubt about QPQ's
ability to do so.

      On August 25, 1995, QPQ Medical Centers,  Inc. ("QPQ  Medical"),  a wholly
owned subsidiary of QPQ, was organized.  QPQ Medical offers medically supervised
weight loss programs using a protocol which  integrates  systems and routines of
nutrition   management,   exercise  and  prescribed   medication.   QPQ  Medical
anticipates  that it will incur losses until at the earliest,  it  establishes a
number of weight  loss  centers  generating  sufficient  revenue  to offset  its
operating  costs  and the  costs  of its  proposed  expansion.  There  can be no
assurance that QPQ Medical will be able to  successfully  establish a sufficient
number of medical centers to achieve profitable  operations.  QPQ Medical cannot
reasonably  estimate  the  length  of time  before it will  generate  sufficient
revenues to offset its operating costs, if ever.

      Subject  to market  conditions  and its need for funds,  QPQ may  generate
additional  capital  through the public or private sale of equity in QPQ and may
seek to borrow funds, if available, on commercially reasonable terms.

YEAR ENDED DECEMBER 31, 1996 VS YEAR ENDED DECEMBER 31, 1995

RESULTS OF OPERATIONS

      During  the year  ended  December  31,  1996,  QPQ  incurred a net loss of
$2,866,982  ($.42 per  share)  compared  to a net loss of  $1,971,398  ($.38 per
share) for the year ended  December 31, 1995. The increase in QPQ's loss for the
year ended  December 31, 1996  compared to its loss for the year ended  December
31, 1995 is  primarily  attributable  to losses  generated by QPQ Medical in its
first year of operations which were partially offset by reductions in the losses
incurred by QPQ and PKP.
















                                       23



<PAGE>

      On October 1, 1996, the Cafe Renaissance restaurant was sold for $250,000,
consisting of cash of $180,000 and a promissory  note of $70,000,  payable on or
before December 31, 1996. As of March 21, 1997 their remains a principal balance
of $30,000. The Company anticipates such balance being paid on or before May 30,
1997.  The  sale  resulted  in a  loss  of  $65,485  which  is  included  in the
accompanying Consolidated Statements Of Operations under Loss on Sale of Assets

      During the year ended December 31, 1996, QPQ generated Sales of $1,264,850
from its three  Domino's  Stores and the Cafe  Renaissance  which were opened in
April,  May and August  1994 and January  1995,  respectively,  versus  Sales of
$1,167,231 for the year ended  December 31, 1995 from its three Domino's  Stores
and the Cafe Renaissance.  For the year ended December 31, 1996, versus the year
ended December 31, 1995, the three  Domino's  Stores  experienced an increase in
(average monthly) same store sales.

      During the year ended December 31, 1996, QPQ incurred $451,471,  $338,816,
$470,599 and $191,612 of Food and Packaging Expenses, Payroll and Related Costs,
Occupancy  and  Other  Operating  Expenses  and  Depreciation  and  Amortization
Expense, respectively.

         Food and  Packaging  Expenses for the year ended  December 31, 1996 and
the year  ended  December  31,  1995  were  approximately  36% and 38% of Sales,
respectively.  The  decrease is  primarily  attributable  to the  improved  cost
control  and a lower level of  promotional  and  giveaway  programs at the three
Domino's  Stores.  Food and Packaging  Expenses as a percentage of Sales for the
year ended December 31, 1995 were adversely  affected by special  promotions and
giveaways conducted in connection with the Cafe Renaissance grand opening.

      Payroll  and  Related  Costs as a  percentage  of Sales for the year ended
December  31,  1996  and  December  31,  1995  were  approximately  27% and 31%,
respectively. The decrease in Payroll and Related Costs as a percentage of Sales
is  attributable  to an increase  in the  average  level of same store sales and
continued  improvement in labor force scheduling for the year ended December 31,
1996.  The Payroll and Related  Costs for the Cafe  Renaissance  was higher than
average  Payroll and Related Costs as a percentage  of Sales for QPQ's  Domino's
Stores.

      Occupancy  and Other  Operating  Expenses as a percentage of Sales for the
year ended  December 31, 1996 and December 31, 1995 were  approximately  37% and
44%,  respectively.  The decrease in Occupancy and Other Operating Expenses as a
percentage  of Sales is  primarily  attributable  to an  increase in the average
level of same  store  sales  for the  year  ended  December  31,  1996,  and the
implementation  of tighter  cost  controls.  Approximately  $32,800 of  expenses
associated  with the Commissary  were included in Occupancy and Other  Operating
Expenses.

      General and  Administrative  Expenses for the year ended December 31, 1996
and December 31, 1995, totalled $1,337,678 and $1,302,962, respectively. For the
year ended December 31, 1996, General and Administrative Expenses were comprised
of  executive  and office staff  salaries  and  benefits of $301,959,  legal and
professional fees, office rent,  travel,  telephone and other corporate expenses
of $924,842,  and depreciation and amortization of $110,877.  For the year ended
December  31,  1995,  General and  Administrative  Expenses  were  comprised  of
executive and office staff salaries of $377,169,  legal and  professional  fees,
office rent, travel, telephone and other general corporate expenses of $796,231,
and depreciation and amortization of $129,562.









                                       24



<PAGE>

      QPQ's General and Administrative  Expenses for the year ended December 31,
1996 were  $34,716  higher than such  expenses  for the year ended  December 31,
1995, as a result of, among other things, a reduction in executive  salaries,  a
reduction  in QPQ's  allocation  of  certain  expenses  it shares  with IFFC and
improved corporate  overhead control systems,  offset by $308,340 of General and
Administrative  expenses applicable to QPQ Medical which commenced operations in
January 1996.

      Interest  and  Other  Income  for the year  ended  December  31,  1996 and
December  31, 1995 were  $12,315 and  $217,995,  respectively.  The  decrease is
primarily  attributable  to a reduction in the funds held for investment by QPQ.
As a result of the  liquidation of financial  investments in June 1995 to retire
debt, QPQ's level of interest income declined.

      During the year ended  December 31, 1996 and  December 31, 1995,  Interest
Expense was $36,844 and $200,109, respectively. The decrease in Interest Expense
is primarily  attributable  to the  retirement of debt in June of 1995 resulting
from the sale of QPQ's financial investments.

LIQUIDITY AND CAPITAL RESOURCES

      A.    QPQ Corporation/Pizza King Polska

      Pursuant to the Domino's  Development  Agreement,  as amended November 13,
1995 and March 21, 1997,  QPQ is granted the exclusive  right until December 31,
2003 to develop,  operate and franchise  Domino's  Stores in Poland.  During the
Initial Term of the Domino's  Development  Agreement,  which expires on December
31, 2003, QPQ is required to open and operate,  either through affiliates of QPQ
("Affiliated   Franchisees")   or  unrelated   third  parties   ("Non-Affiliated
Franchisees"),  at least 50 Domino's  Stores in accordance  with a schedule that
obligates QPQ or its Non-Affiliated Franchisees to open three Domino's Stores in
1994, no Domino's Stores in 1995,  eight Domino's Stores in 1996 and five, eight
or seven Domino's Stores for each of the following seven years.  Domino's Stores
developed  and/or  operated by  Non-Affiliated  Franchisees  are counted towards
QPQ's  obligation  to open a minimum  number  of  Domino's  Stores.  QPQ did not
satisfy the  requirements to open eight Domino's stores during 1996 and in March
1997,  Domino's  granted QPQ and  extension  until July 1, 1997 to satisfy  such
requirement.  In addition, Domino's indicated it would be agreeable to a further
six month extension if QPQ provided satisfactory evidence of recapitalization at
a level  which in  Domino's  sole  discretion,  will  enable QPQ to satisfy  its
obligations under the agreement.

      In compliance with the Domino's  Development  Agreement,  QPQ opened three
Domino's Stores in 1994. QPQ is required and,  subject to the factors  discussed
below, may open or cause to be opened at least eight additional  Domino's Stores
prior to December 1997. Subject to the modifications of the Domino's  Agreement,
if QPQ in fact  fails  to meet  the  development  schedule  described  above  as
amended,  QPQ will lose its rights to develop and franchise  additional Domino's
Stores but will be entitled to act as a master  franchisor and  franchisee  with
respect to the franchise agreements granted prior thereto.


















                                       25


<PAGE>




      As of December  31,  1996,  QPQ had  working  capital of  $238,975.  QPQ's
material commitments for capital expenditures relate to the Domino's Stores that
QPQ must open to comply with the  Domino's  Development  Agreement.  Although to
date QPQ has  concentrated  its efforts on the development of Domino's Stores in
Warsaw,  Poland,  subject to the  re-evaluation  described below, QPQ intends to
focus its future  Domino's  Store  development  efforts on other Polish  cities.
QPQ's  decision  to  expand  its  development  efforts  is based on a number  of
factors,  including,  but not limited to, QPQ's  ability to conserve its capital
resources by developing  additional  Domino's  Stores  outside of Warsaw through
Non-Affiliated Franchisees.

      QPQ  estimates  the cost of opening a Domino's  Store to be  approximately
$125,000 to $500,000, including leasehold improvements,  furniture, fixtures and
equipment,  and opening  inventories,  but  excluding up front  payments,  lease
payments and  franchise  fees.  Such  estimates  vary  depending on the size and
condition of a Domino's Store,  the amount of customer  seating provided and the
extent of leasehold  improvements  required. QPQ estimates that once a space has
been leased and made available,  approximately  90 days is required to renovate,
equip and furnish the store,  obtain necessary licenses and approvals and open a
Domino's Store.

      QPQ  intends  to,  to the  extent  possible,  finance  the  operation  and
expansion of its restaurant system and medical center system with the unutilized
proceeds of its Private  Offering and Public  Offering  (defined  below)  credit
facilities and cash from operations.

      Any implementation of QPQ's business plan with respect to the operation of
its three Domino's Stores (the "QPQ  Operations  Plan") beyond May 31, 1997, may
require  resources  greater than those  currently  available  to QPQ.  Except as
discussed below, QPQ has no current arrangements with respect to, or sources of,
additional   financing,   and  it  is  not  contemplated  that  QPQ's  principal
shareholders,  will provide any portion of QPQ's future financing  requirements.
Implementation  of the QPQ  Operations  Plan is  contingent  upon,  among  other
things,  QPQ's ability to utilize  significantly  less of its capital  resources
financing its restaurants'  operations and General and  Administrative  Expenses
than it has to date.  There can be no assurance  that QPQ will generate any cash
flow  from  operations  in the  future,  or that  additional  financing  will be
available on acceptable terms, or at all, to fund QPQ's operations.

      Any implementation of QPQ's business plan with respect to the expansion of
its  Domino's  Store system by  franchising  Domino's  Stores to  Non-Affiliated
Franchisees  (the  "QPQ  Development  Plan")  beyond  May 31,  1997 may  require
resources  greater than those allocated for such purpose or otherwise  currently
available  to  QPQ.  Successful  implementation  of  QPQ's  Development  Plan is
contingent upon QPQ identifying and engaging Non-Affiliated Franchisees with the
financial and other resources  capable of developing and opening Domino's Stores
in accordance with the development  schedule or QPQ securing  additional debt or
equity financing to permit QPQ to develop the Domino's Stores in accordance with
the development schedule.  Successful implementation of the QPQ Development Plan
is also  contingent  upon  QPQ's  ability  to  economically  supervise,  provide
technical  support  and  distribute  food  products  from  QPQ's  Commissary  to
Non-Affiliated  Franchisees.  QPQ has no  experience in  identifying,  engaging,
supervising or providing  technical  assistance to  Non-Affiliated  Franchisees.
Further,  QPQ has not yet identified nor engaged any Non-Affiliated  Franchisees
which may develop and operate future Domino's Stores.










                                       26

<PAGE>

      In September 1996, QPQ entered into a lease for  approximately  100 square
meters of space in Warsaw  Poland to be used as the site of its fourth  Domino's
store.  The lease is for an  unlimited  period of time but can be  cancelled  by
either party upon three months notice. Annual lease payments approximate $4,560.
In March 1997,  QPQ commenced  construction  on the site and estimates  that its
total costs of  renovation of the site,  including  leasehold  improvements  and
furniture fixtures and equipment will approximate $110,000.

      QPQ's  Operations  Plans and  Development  Plans  beyond May 31,  1997 are
contingent  upon  its  operating  and  development  experiences  prior  thereto.
Accordingly,  QPQ cannot accurately predict its Operations Plans and Development
Plans beyond May 31, 1997.

      QPQ  continues  to  review  the  performance  and  prospects  of its pizza
operations  and is  evaluating  its current  business plan to determine the best
possible means of effecting a profitable  operation.  The alternatives now under
consideration  include,  among others,  focusing future  development  efforts on
Domino's  traditional  takeout and delivery  service;  selling certain or all of
QPQ's existing  Domino's Stores to unrelated third parties and/or  affiliates of
QPQ; closing certain of QPQ's Stores; or entering into management  agreements or
joint venture agreements with unrelated third parties or affiliates with respect
to the operation of certain or all of QPQ'S Stores.

      Subject  to market  conditions  and its need for funds,  QPQ may  generate
additional capital through the public or private sale of equity in QPQ.

      The  deployment  of  QPQ's  financial,  personnel,  capital  and/or  other
resources in other businesses or investment opportunities, including QPQ Medical
Centers,  may result in a diminution  in resources  available to execute the QPQ
Operations Plan and/or the QPQ Development  Plan. See "-B. QPQ Medical  Centers,
Inc."  for more  information  regarding  QPQ  Medical's  liquidity  and  capital
resources.

      Subject to, among other  things,  QPQ's future  operating  results,  QPQ's
capital  resources,  QPQ's ability to locate a ready,  willing and able buyer (a
"Qualified  Buyer") for certain or all of the Stores,  QPQ's ability to locate a
joint venture  partner or  Non-Affiliated  Franchisee  (a "Qualified  Partner"),
willing and able to develop and operate its existing or additional  Stores,  and
the Board of Directors  believes that it may be in the best  interests of QPQ to
close certain of its Stores. The Board of Directors' belief is based upon, among
other things,  certain of the Stores operating  results to date, QPQ's projected
operating results with all of the Stores open, QPQ's projected operating results
with certain of the Stores closed, QPQ's cash position,  QPQ's ability to secure
additional  sources of capital,  QPQ's perceived risk adjusted rate of return on
additional  cash  investments in the Domino's Stores versus QPQ's perceived risk
adjusted rate of return in alternative  investments,  QPQ's inability to date to
locate  a  Qualified   Buyer  for  the  Store(s)  and/or  QPQ's  Domino's  Store
development  rights on  acceptable  terms,  QPQ's  inability to date to locate a
Qualified Partner to develop and operate  additional  Domino's Stores, and QPQ's
relationship with Domino's.

      To date,  QPQ's  business has been  principally  financed by proceeds from
QPQ's  public  offering of QPQ Common  Stock and  Warrants,  proceeds  from bank
credit  facilities,  proceeds from two private offerings of QPQ Common Stock and
proceeds from two Regulation S Offerings of QPQ Common Stock.











                                       27



<PAGE>


      In September 1993, QPQ consummated an underwritten initial public offering
(the "Public  Offering")  of 1,250,000  shares of its common stock and 1,405,660
redeemable  Common  Stock  Purchase  Warrants  (the  "Warrants"),  each  Warrant
entitling  the holder  thereof to purchase  one share of QPQ's  Common Stock for
$6.60, for aggregate proceeds of approximately  $6,012,000,  net of underwriting
discounts and commissions, expense allowances and other registration costs.

      As of  March  30,  1995,  QPQ  sold  (the  "Private  Offering")  3,400,000
restricted  shares of QPQ Common Stock for aggregate  proceeds of $850,000.  The
proceeds  of the  Private  Offering  have been  utilized  by QPQ to  finance  it
operations and expansion.

      In January  1994,  QPQ's wholly owned  subsidiary,  PK Polska,  obtained a
$28,000 line of credit from American Bank, with interest  payable on outstanding
principal  amounts at a rate  equivalent to the American  Bank's  overdraft rate
minus 4%, payable  monthly on the first day of the month. In September 1994, QPQ
guaranteed PK Polska's  payment of any and all amounts,  not exceeding  $28,000,
owed to American Bank pursuant to the credit  facility.  As of December 31, 1996
and March 21, 1997,  $21,718 and $32,526,  respectively,  of the credit facility
were outstanding.

      In  January  1995,  PK Polska  obtained  a  $300,000  line of credit  from
American Bank with interest payable on outstanding principal amount at a rate of
7.75%.  PK  Polska  is  also  obligated  to pay  American  Bank  a 1% per  annum
commission  on the daily  average  unutilized  principal  balance  of the credit
facility.  Interest and commission expenses are payable once every three months.
The credit  facility are secured by PK Polska  deposits with American Bank and a
guarantee  of QPQ.  Borrowings  are required to be repaid in full on January 28,
1998.  As of  December  31,  1996 and March 21,  1997,  $300,000  and  $300,000,
respectively, of the credit facility were outstanding.

      During the year ended December 31, 1996, QPQ completed a private  offering
(the  "Private  Offering")  of  1,195,000  shares of Common Stock at an offering
price  of $1 per  share.  The  Private  Offering  was  made  only to  accredited
investors in accordance  with the  provisions of Regulation D promulgated  under
the Securities Act of 1933, as amended. Mr. Rubinson, the Chairman of the Board,
Chief Executive Officer, President and a principal shareholder of QPQ, and Nigel
Norton, a principal  shareholder of QPQ, purchased 200,000 and 100,000 shares of
common stock, respectively.

      In July 1996 and  November  1996 QPQ sold  337,012  and  96,455  shares of
Common  Stock in two  Regulation  S  offerings  and  received  cash  proceeds of
$959,923, net of offering expenses.

      In March 1997, the Company entered into Securities Subscription Agreements
(the  "Agreements") for the sale of $1,280,000 of 8% Convertible Debentures (the
"Debentures")  with a maturity  date of March 31,  1998,  for which the  Company
received   net  proceeds  of  $1,066,667.  Interest  is  payable quarterly.  The
Debentures are convertible into shares of common stock at a conversion price per
 


















                                       28

<PAGE>

share equal to the lower of  (a) 75%  of the  average  closing  bid price of the
common stock for five business days  immediately  preceding the conversion  date
or (b) 75% of the average of the closing  bid price of  the common stock for the
business day  immediately  preceding  the  date of  the individual  Subscription
Agreement.

      The   Debentures   were  issued  in  reliance  upon  the  exemption   from
registration  afforded by  Regulation S as  promulgated  by the  Securities  and
Exchange Commission under the Securities Act of 1933, as amended.

      The Company has authorized a maximum of $6,000,000 principal amount of the
Debentures.


      B.    QPQ Medical Centers, Inc.

GENERAL

      In August 1995,  QPQ entered into the business of developing and operating
medical centers  ("Medical  Centers") which offer primary care medical  services
and medically  supervised  weight loss  programs.  In January,  April,  July and
September 1996, QPQ Medical opened its first four Medical  Centers.  In February
1997,  QPQ  purchased a medical  practice  and  relocated  such  practice to its
Aventura Medical Center. QPQ Medical has incurred losses and anticipates that it
will continue to incur losses until it  establishes a number of Medical  Centers
generating  sufficient  resources to offset its operating costs and the costs of
its proposed continuing  expansion.  In light of the uncertainties in connection
with the  commencement  of a new business,  QPQ cannot  reasonably  estimate the
length of time before QPQ Medical may achieve profitable operations, if ever.

RESULTS OF OPERATIONS OF QPQ MEDICAL

YEAR ENDED DECEMBER 31, 1996

      QPQ  Medical  commenced  operations  in  January  1996.   Accordingly,   a
comparison of QPQ Medical's  results of operations  for the year ended  December
31, 1996 with any other time period are not meaningful.

      During the year ended  December 31, 1996,  QPQ Medical  generated  Medical
Center Revenues of $828,295 from its four Medical Centers.

      During the year ended  December 31, 1996, QPQ Medical  incurred  $993,888,
$471,438,  $541,422 and $72,919 of Payroll and Related  Expense,  Occupancy  and
Other Expense, Advertising and Depreciation and Amortization,  respectively. QPQ
Medical  believes that the foregoing  expenses as a percentage of Medical Center
Revenues should decline as Medical Center Revenues  increase and Medical Centers
currently under lease and renovation develop into revenue production centers.

      See "A. QPQ  Corporation-Results  of  Operations"  for a discussion of QPQ
Medical's general corporate and overhead expenses.
















                                       29



<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

      Subject to QPQ's other  business  commitments,  QPQ Medical is required to
use its best efforts to develop the Medical Center business concept, the License
Agreement  does not  require QPQ  Medical to develop  and open  Medical  Centers
pursuant to an established  schedule.  QPQ Medical's  material  commitments  for
capital  expenditures  relate to the weight loss centers it is in the process of
developing and operating. In addition,  under the License Agreement, QPQ Medical
is required to expend a minimum of $100,000 in start-up funding and a percentage
of its annual gross  receipts  for  promotion  and  marketing  the Program.  QPQ
Medical  has  expanded  the  required  amounts in  accordance  with the  License
Agreement.

      QPQ  Medical  estimates  the  cost  of  opening  a  Medical  Center  to be
approximately $50,000 to $300,000, including leasehold improvements,  furniture,
fixtures and  equipment,  but excluding  lease  payments and license fees.  Such
estimates  vary  depending  on the size and  style of a Medical  Center  and the
extent of leasehold  improvements  required.  QPQ Medical  estimates that once a
space has been leased and made available,  approximately  90 days is required to
renovate,  equip and furnish the Medical Center,  obtain necessary  licenses and
approvals and open a Medical Center.

      In February  1997, the Company  purchased a medical  practice for $100,000
consisting  of cash of $60,000,  and a promissory  note in the amount of $40,000
due in February 2000. The promissory notes bear interest at the prevailing prime
rate as published in the Wall Street Journal.

      QPQ intends to finance the  development  and operations of Medical Centers
with the unutilized  proceeds of QPQ's Private  Offering and Public Offering and
cash,  if  any,  from  Medical  Center  operations.  Any  implementation  of QPQ
Medical's  business  plan with respect to the  operation of its Medical  Centers
(the "QPQ  Medical  Operations  Plan")  beyond  May 1997 may  require  resources
greater than those  currently  available  to QPQ  Medical.  Although QPQ Medical
desires  to  develop  additional  Medical  Centers,  any  implementation  of QPQ
Medical's  business  plan with respect to the  expansion  of its Medical  Center
System  (the  "QPQ  Medical  Development  Plan")  beyond  May 1997  may  require
resources greater than those currently available to QPQ Medical. QPQ Medical has
no current  arrangements  with  respect  to, or  sources  of,  financing.  QPQ's
Medical's  Operation Plans and QPQ Medical's  Development  Plans beyond May 1997
are contingent  upon its operating and  development  experiences  prior thereto.
Accordingly,   QPQ  Medical  cannot   accurately   predict  its  operations  and
development plans beyond May 1997.

      QPQ  continues  to review the  performance  and  prospects  of its Medical
Centers  and is  evaluating  its current  business  plan to  determine  the best
possible means of effecting a profitable  operation.  The alternatives now under
consideration include, among others,  focusing future development efforts on the
development  of  additional  centers,  purchase of existing  medical  practices,
selling  certain or all of QPQ's  existing  Medical  Centers to unrelated  third
parties  and/or  affiliates of QPQ;  closing  certain of the Medical  Centers or
entering into management  agreements or joint venture  agreements with unrelated
third parties or  affiliates  with respect to the operation of certain or all of
the Medical Centers.












                                       30



<PAGE>

      The  deployment  of  QPQ's  financial,  personnel,  capital  and/or  other
resources in other businesses or investment  opportunities,  including  Domino's
Stores,  may result in a diminution  in  resources  available to execute the QPQ
Operations Plan and/or the QPQ Development  Plan. See "-B. QPQ Medical  Centers,
Inc."  for more  information  regarding  QPQ  Medical's  liquidity  and  capital
resources.

      Subject to, among other  things,  QPQ's future  operating  results,  QPQ's
capital  resources,  QPQ's ability to locate a ready,  willing and able buyer (a
"Qualified  Buyer") for certain or all of the Medical Centers,  QPQ's ability to
locate a joint  venture  partner (a  "Qualified  Partner"),  willing and able to
develop and operate its existing or  additional  Medical  Centers,  the Board of
Directors  believes that it may be in the best interests of QPQ to close certain
of its Medical  Centers.  The Board of  Directors'  belief is based upon,  among
other things,  certain of the Medical Centers  operating  results to date, QPQ's
projected   operating  results  with  additional  Medical  Centers  open,  QPQ's
projected  operating  results with certain of the Medical Centers closed,  QPQ's
cash  position,  QPQ's ability to secure  additional  sources of capital,  QPQ's
perceived  risk adjusted rate of return on additional  cash  investments  in the
Medical  Centers  versus  QPQ's  perceived  risk  adjusted  rate  of  return  in
alternative investments, QPQ's inability to date to locate a Qualified Buyer for
the Medical Centers on acceptable  terms and QPQ's inability to date to locate a
Qualified Partner to develop and operate additional Medical Centers.


IMPACT OF INFLATION AND CURRENCY FLUCTUATIONS

      Domino's Store operations are conducted in Poland.  The Polish economy has
historically  been  characterized  by high rates of inflation and devaluation of
the Polish  zloty  against the United  States  dollar and  European  currencies.
However,  in the year  ended  December  31,  1996,  the rates of  inflation  and
devaluation  improved.  For the years ended  December 31, 1993,  1994,  1995 and
1996,  the  annual  inflation  rate in  Poland  was 35%,  32% , 21.6%  and 19.5%
respectively, and as of December 31, 1993, 1994, 1995 and 1996 the exchange rate
was 21,344, 24,372, 24,680 and 28,725 zlotys per dollar, respectively. Franchise
fees  for  each  Domino's  Store  opened  are paid in  United  States  currency.
Additionally,  QPQ is dependent on foreign sources of supply  (equipment,  paper
goods and certain food  products)  which  require  payment in European or United
States  currencies.  Since QPQ's revenues from operations are in zlotys,  QPQ is
subject to the risk of  currency  fluctuations.  QPQ has and intends to maintain
substantially all of its unutilized funds in dollar denominated  accounts and/or
securities.  There can be no  assurance  that QPQ will  successfully  manage its
exposure  to currency  fluctuations  or that such  fluctuations  will not have a
material adverse effect on QPQ.

      Thus far, QPQ's revenues have been used to fund restaurant  operations and
QPQ's expansion.  As a result, such revenues have been relatively insulated from
inflationary  conditions in Poland.  There can be no assurance that inflationary
conditions in Poland will not have an adverse effect on QPQ.

















                                       31



<PAGE>

      The  accounts of PK Polska are  measured  using the Polish  zloty.  Due to
Poland's highly inflationary  environment  through December 31, 1995,  generally
accepted  accounting  principles  required QPQ to calculate and recognize on its
statement of operations its currency translation gains or losses associated with
PK Polska.  For the year ended  December  31, 1995 , QPQ had a foreign  currency
translation  gain of $55,700.  Due to the reduction in Polands  inflation  rate,
effective  for the year  ended  December  31,  1996,  QPQ is no longer  required
pursuant to generally  accepted  accounting  principles  to  recognize  currency
translation gains or losses in its statement of operations. Accordingly, for the
year ended  December 31, 1996,  QPQ  recognized a currency  translation  gain of
$68,537 which is included in shareholders'  equity under the caption Accumulated
Translation Adjustment.

      The only  currency  that may be used in Poland is the zloty.  The value of
the zloty is pegged  pursuant to a system  based on a basket of  currencies,  as
well as all other  economic  and  political  factors  that  affect  the value of
currencies  generally.  As of  January  1,  1995,  the  National  Bank of Poland
introduced a new  currency  unit which is named a "zloty" (a "new  zloty").  New
zlotys are  equivalent  to 10,000 old zlotys  ("old  zlotys").  Old zlotys  will
remain legal tender until December 31, 1996,  after which date they will only be
exchangeable at certain banks.  All references in this document to zlotys are to
old zlotys.  At December  31,  1996,  the  exchange  rate was 28,725  zlotys per
dollar.








































                                       32



<PAGE>

Item 7.  Financial Statements.
         --------------------

         See "Index to Financial  Statements" for a description of the financial
statements included in this Form 10-KSB.

Item 8.  Changes and Disagreements  with Accountants on Accounting and Financial
         -----------------------------------------------------------------------
         Disclosures.
         -----------

         On  February  3,  1997,  Coopers & Lybrand  resigned  as the  Company's
auditors.  During the two most recent fiscal years and interim period subsequent
to December 31, 1996, there have been no disagreements with Coopers & Lybrand on
any  matter  of  accounting   principles  or  practices,   financial   statement
disclosure,  or auditing scope or procedure or any reportable events. The report
of Coopers & Lybrand for the fiscal  years ended  December 31, 1995 and December
31,  1994  did  not  contain  an  adverse   opinion,   disclaimer   of  opinion,
qualification,  or  modification  as to  uncertainty,  audit scope or accounting
principles,  except  the  Company's  financial  statements  for the  year  ended
December 31, 1995,  contain a going  concern  opinion.  The Company has received
from  Coopers & Lybrand LLP a letter  addressed to the  Securities  and Exchange
Commission  stating that it agrees with the statements  made by the Company.  On
February  5,  1997,  the  Board of  Directors  of the  Company  appointed  Moore
Stephens-  Lovelace,  Roby, P.L. as independent  auditors of the Company for the
fiscal year ended December 31, 1996.

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        ------------------------------------------------------------------------
        with Section 16(a) of the Exchange Act.
        ---------------------------------------

         The  Company's  Bylaws  provide that the number of  directors  shall be
fixed  from time to time by  resolution  of the Board of  Directors  within  the
limits  specified  by the  Company's  Articles  of  Incorporation.  The Board of
Directors has fixed at three the number of directors  that will  constitute  the

























                                
                                       33



<PAGE>


Board for the ensuing  year.  Each director  elected at the Annual  Meeting will
serve for a term expiring at the Company's 1997 Annual  Meeting of  Shareholders
(the  "Annual  Meeting")  or when  his  successor  has  been  duly  elected  and
qualified.

         The directors and executive officers of the Company are as follows:

    Name                     Age                   Position
------------------       -----------    ----------------------------------------

Mitchell Rubinson            49         Chairman of the Board, Chief Executive
                                        Officer, Chief Operating Officer and
                                        President

James Martin                 36         Chief Financial Officer

Dr. Mark Rabinowitz          49         Director

      MITCHELL RUBINSON has served as the Chairman of the Board, Chief Executive
Officer and  President of the Company  since its  inception in July 1993 and has
served as the Chief  Operating  Officer of the Company since  October 1995.  Mr.
Rubinson  served as the  Chairman  of the Board,  Chief  Executive  Officer  and
President of Capital Brands, Inc. ("Capital Brands") from March 1988 until April
26, 1996 and was Capital  Brands'  Treasurer  from March 1992 to April 1993. Mr.
Rubinson  has been the  Chairman  of the  Board,  Chief  Executive  Officer  and
President of IFFC, a publicly traded  corporation,  since its  incorporation  in
December  1991,  and was the  Treasurer of IFFC from  December  1991 to February
1993.  IFFC  is  the  exclusive  developer  and  operator,  subject  to  certain
restrictions  and site  exceptions,  of Burger King  restaurants in Poland.  Mr.
Rubinson has served as the Chairman of the Board,  Chief  Executive  Officer and
President of QPQ Medical  since  September  1995.  QPQ  Medical,  a wholly owned
subsidiary  of QPQ,  develops  and  operates  centers  which  provide  medically
supervised  weight  loss  programs  in South  Florida.  Since  October  1995 Mr.
Rubinson  has been a principal  shareholder  of and has served as a director and
the secretary of Weight Loss  Associates,  Inc.  ("WLA").  WLA has developed and
licenses to QPQ Medical a weight loss system.

         JAMES F.  MARTIN,  CPA has  served  as the  Vice  President  and  Chief
Financial  Officer of QPQ since October 1996.  Mr. Martin served as the Director
of Finance for Pizza King Polska,  Sp.zoo,  the wholly owned  subsidiary  of QPQ
Corporation  located in the  Republic  of Poland,  from  November  1993  through
February 1995. From May 1995 through  September 1996, Mr. Martin was a 50% owner
in an  information  systems and  software  consulting  company  located in South
Florida.   Additionally,  Mr.  Martin  has  nine  years  of  commercial  banking
experience.

         DR.  MARK  RABINOWITZ  has served as a director  of the  Company  since
January  1996.  Dr.  Rabinowitz  has also  served as a  director  of IFFC  since
January,  1996.  Since  1983 Dr.  Rabinowitz'  principal  occupations  have been
serving as a medical  doctor for and the Vice  President  of Jose E. Gilbert and
Mark  Rabinowitz  M.D.S.,  P.A.  and  serving  as a medical  doctor  for and the
President of Women's Centre for Health,  Inc. Since October 1995 Dr.  Rabinowitz
has been a principal  shareholder  of and served as a director and the president
of WLA.

      The Company's  officers are elected annually by the Board of Directors and
serve at the discretion of the Board.  The Company  reimburses all directors for
their expenses in connection with their  activities as directors of the Company.
The  directors  make   themselves   available  to  consult  with  the  Company's
management.  Directors  of the Company who are also  employees of the Company do
not receive additional compensation for their services as directors.

         Under the terms of the Domino's Development  Agreement,  dated June 11,
1993,  between QPQ and Domino's,  Inc.,  the Company has agreed with Domino's to
use its best  efforts to elect Mr.  Rubinson as an officer  and  director of the
Company until 2003.


                                       34

<PAGE>



Meetings and Committees of the Board of Directors

      During the fiscal year ended  December 31, 1996,  the  Company's  Board of
Directors took action 17 times by unanimous written consent.  The Board does not
presently have a stock option, audit, nomination or similar committee.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

      Section  16(a)  of the  Securities  Exchange  Act  of  1934  requires  the
Company's  directors and executive  officers,  and persons who own more than ten
percent of the Company's  outstanding  Common Stock, to file with the Securities
and Exchange  Commission (the "SEC") initial reports of ownership and reports of
changes  in  ownership  of  Common  Stock.  Such  persons  are  required  by SEC
regulation  to furnish the Company with copies of all such reports they file. To
the Company's knowledge,  based solely on a review of the copies of such reports
furnished to the Company and written  representations that no other reports were
required,  all Section  16(a) filing  requirements  applicable  to its officers,
directors  and greater  than ten percent  beneficial  owners have been  complied
with,  except  Marilyn  Rubinson,  on two  occasions,  and  Nigel  Norton on one
occasion,  failed  to make  such  filings.  The  appropriate  filings  have been
subsequently made.

Item 10. Executive Compensation
         ----------------------

Summary Compensation Table

      The  following  table sets forth the  aggregate  compensation  paid to Mr.
Mitchell Rubinson (the "Named Executive  Officer").  None of the Company's other
executive  officers  total annual  salary and bonus for the year ended  December
31,1996 was $100,000 or more.

                                                         Long Term
                             Annual Compensation(1)     Compensation
                          --------------------------   --------------        
                                                         Number of
  Name and              Fiscal            Other Annual    Options    All Other
Principal Position       Year    Salary   Compensation   Granted(2) Compensation
----------------------- ------- --------  ------------   ---------- ------------

Mitchell Rubinson,       1996   $155,031       $  0             0         -
Chief Executive Officer  1995   $141,551       $  0      100,000(3)       -
                         1994   $128,365       $  0            0(4)       -

(1)   The columns for "Bonus",  "Restricted  Stock  Awards" and "LTIP  Payments"
      have been omitted because there is no compensation required to be reported
      in such columns.

(2)   See  "Aggregated  Fiscal  Year-end  Option  Value  Table"  for  additional
      information concerning options granted.

(3)   Represents an option granted to purchase 100,000 shares of Common Stock at
      an exercise price of $l.5625.

(4)   As of March 7, 1995 each of the options  held by Mr.  Rubinson was amended
      to reduce the stated  exercise  price  therein to the fair market value of
      the Common Stock on such date ($0.69).




                     
                                       35



<PAGE>

Employment Agreements

      The Company entered into an employment  agreement with Mitchell  Rubinson,
effective  July 23, 1993.  which  provides that he will serve as Chairman of the
Board, Chief Executive Officer and President for an initial term of three years,
commencing  on September  22,  1993,  which the Company may extend for up to two
additional years. His annual salary for the first year was $125,000,  subject to
annual ten percent increases.  Additionally, Mr. Rubinson is entitled to receive
an annual  incentive  bonus in the  amount of 2.5% of the  Company's  net income
after tax.  Pursuant to his employment  agreement,  Mr.  Rubinson is required to
devote such  portion of his  business  time to the Company as may be  reasonably
required by the  Company's  Board of  Directors,  subject to his other  business
interests. Mr. Rubinson's employment agreement with the Company provides that he
is  entitled to six weeks of paid  vacation a year.  As of March 31,  1995,  Mr.
Rubinson's employment agreement with the Company was amended to provide that for
each day of vacation that Mr. Rubinson elects not to take, the Company shall pay
him an amount of money equal to the quotient of his then current  annual  salary
divided by 260.

      Mr. Rubinson's employment agreement requires that he not compete or engage
in a  business  competitive  with  the  Company's  business  for the term of the
agreement  and for one year  thereafter.  Mr.  Rubinson's  employment  agreement
provide;  for a payment of $166,375 in the event his employment is terminated by
reason of his death or disability  and a severance  payment of twice the minimum
annual salary then in effect,  plus the incentive  bonus paid in the prior year,
in the event his  employment  is terminated by the Company  without  cause.  Mr.
Rubinson's  employment agreement does not provide for a severance payment in the
event his employment is terminated  for cause.  On November 7, 1996, the Company
amended  its  employment  agreement  with Mr.  Rubinson,  pursuant  to which the
agreement was extended to December 31, 1999. The amended agreement  provides for
a minimum annual salary of $166,375,  during the first year and subject to a 10%
annual increase for each of the remaining two years.

Aggregated Fiscal Year-End Option Value Table

      The following table sets forth certain information  concerning unexercised
stock  options held by the Named  Executive  Officer as of December 31, 1996. No
stock options were  exercised by the Named  Executive  Officer during the period
ended  December  31,  1996.  No stock  appreciation  rights were  granted or are
outstanding.

<TABLE>
<CAPTION>
                  Number of Unexercised Options Held    Value of Unexercised In-the-Money Options
                           at December 31, 1996                  at December 31, 1996(1)
                  ----------------------------------    -----------------------------------------
    Name              Exercisable    Unexercisable          Exercisable         Unexercisable
--------------    ---------------- -----------------    ------------------   --------------------
<S>                     <C>              <C>                 <C>                    <C>
Mitchell Rubinson       200,000          0                   $321,000               $0
_________________________________

(1)   The  average  of the high  ask and low bid  quotations  for the  Company's  Common  Stock as
      reported by NASDAQ on December 31, 1996  was $2.73 and the  closing  bid  quotation  for the
      Company's  Common  Stock as  reported  by The  Wall  Street  Journal  on March 21 , 1997 was
      $1.15625.
</TABLE>


Item 11. Security Ownership of Certain Beneficial Owners and Management
         --------------------------------------------------------------
 
      The following table sets forth, as of March 21, 1997, the number of shares
of Common Stock of the Company which were owned  beneficially by (i) each person
who is known by the  Company  to own  beneficially  more  than 5% of its  Common
Stock,  (ii) each director and nominee for director,  (iii) the Named  Executive
Officer and (iv) all directors and executive officers of the Company as a group:


                                       36


<PAGE>

                                                               Percentage of
         Name and Address of      Amount and Nature of          Outstanding
         Beneficial Owner(1)     Beneficial Ownership(2)       Shares Owned
   ---------------------------- -------------------------   --------------------

Mitchell Rubinson ..................1,325,000(3)                  16.89%
Dr. Mark Rabinowitz ................  144,000(4)                   1.88%
James Martin........................         -0-                   *
All directors and
  executive officers as
  a group (three persons) ..........1,469,000(5)                  18.65%

_______________________________
*Less than 1 %.

(1)   Unless otherwise  indicated,  the address of each of the beneficial owners
      identified is 1000 Lincoln Road,  Suite 206,  Miami Beach,  Florida 33139.
      Unless otherwise noted, the Company believes that all persons named in the
      table have sole voting and investment  power with respect to all shares of
      Common Stock beneficially owned by them.

(2)   A person is deemed to be the  beneficial  owner of securities  that can be
      acquired  by such  person  within 60 days from the date of this  Amendment
      upon the exercise of options. Each beneficial owner's percentage ownership
      is  determined  by assuming that options that are held by such person (but
      not those held by any other  person)  and that are  exercisable  within 60
      days from the date of this Amendment have been exercised.  As of March 21,
      1997, there were 7,653,467 shares of Common Stock outstanding.

(3)   Such figure  includes  options to purchase  100,000 shares of Common Stock
      pursuant to the  Company's  1993 Stock Option Plan  (Amended)  (the "Stock
      Option Plan") that are  immediately  exercisable  at an exercise  price of
      $0.69 per share.  Such figure includes  options to purchase 100,000 shares
      of Common  Stock  pursuant to the Stock  Option Plan that are  immediately
      exercisable at an exercise price of $1.5625.  Such figure does not include
      shares of the Company's Common Stock  beneficially owned by Mr. Rubinson's
      parents or children.  Mr. Rubinson disclaims  beneficial  ownership of the
      shares owned by such family members.

(4)   Such figure  includes  options to purchase  100,000 shares of Common Stock
      pursuant to the Stock Option Plan that are  immediately  exercisable at an
      exercise  price of  $l.5625.  Such  figure  includes  warrants to purchase
      22,000 shares of Common Stock at an exercise price of $6.60.

(5)   See Notes (2), (3) and (4).

Possible Changes in Control of the Company

      Until April 26, 1996  Mitchell  Rubinson  controlled  Capital  Brands and,
through  Capital Brands and certain direct  shareholdings,  the Company.  Due to
certain transactions, Mitchell Rubinson has ceased to control Capital Brands and
may in the future lose control of the Company.

         In April 1996,  Mr.  Rubinson  acquired  250,000 shares of Common Stock
from Capital  Brands in  satisfaction  of amounts owed to Mr.  Rubinson under an
employment  agreement with Capital Brands. In July 1996, Mr. Rubinson  purchased
from Capital  Brands  1,125,000  shares of QPQ at a purchase  price of $1.00 per
share  pursuant to a promissory  note which matures in July 1997.  The shares of
QPQ are pledged as collateral for repayment of such note. Such shares  represent
14.7% of the outstanding shares of the Company's Common Stock.  Accordingly,  if
Mr.  Rubinson was to default under his  obligations  under such note he may lose
control of the Company.  In addition,  Mr. Rubinson has registered  under a Form
S-3 925,000 of his shares of common stock.



                                       37



<PAGE>



Item 12. Certain Relationships and Related Transactions
         ----------------------------------------------

Shared Facilities

The Company  has  occupied  office  space,  at Suites  200,  206 and 210 at 1000
Lincoln  Road,  Miami,  Florida.  With  respect to Suite 200,  the  Company  was
ultimately  responsible for payments of $10,132 in the year ended 1996 and $0 in
1995.  With respect to Suite 206,  the Company was  ultimately  responsible  for
payments  of $1,380 in the year  ended  1996 and $156 in 1995.  With  respect to
suite 210, the Company was responsible for $3,004 during the year ended December
31, 1996 and $9,585 during the year ended  December 31, 1995. The Company shared
all or a portion of these  facilities with  International  Fast Food Corporation
and Capital Brands, Inc.

      The Company operates a Domino's pizza store ("Domino's Store") adjacent to
a Burger King  restaurant  operated by IFFC in Poland.  They each have their own
counter  service and kitchen area,  but share a seating  space.  The Company and
IFFC are jointly and severally  liable for, and costs are allocated  between the
companies with respect to, the leasehold payments for the site.

Business Opportunities

      Mitchell  Rubinson  serves as the Chairman of the Board,  Chief  Executive
Officer  and  President  of each of the  Company,  and  IFFC.  In order to limit
possible future conflicts of interest, IFFC and the Company have agreed that the
Company  will not engage in  hamburger  fast-food  operations  and IFFC will not
engage in pizza fast-food operations.

Private Offering

      As of March  31,  1996,  the  Company  had  negative  working  capital  of
$169,089. The Company required an infusion of working capital. After considering
various  alternatives  and  factors,  including  the market  price of the Common
Stock, its trading volume and various time  constraints,  the Board of Directors
of the Company authorized a private offering of up to 1,195,000 shares of Common
Stock. As of July 1996, QPQ sold in a private offering (the "Private  Offering")
1,195,000 of restricted  Common Stock,  which  included  200,000  shares sold to
Mitchell  Rubinson,  50,000 shares each to Mr. Rubinson's two children,  100,000
shares to Nigel Norton, Mr. Rubinson's brother-in-law and 100,000 shares to each
of Mr.  Rubinson's two nieces.  Each party has taken the position that they have
not entered into any contracts,  arrangements or understanding with Mr. Rubinson
with respect to control of the Company.


Consulting Agreement

      On  July  25,  1993  the  Company  entered  into a three  year  consulting
agreement  (the  "Consulting  Agreement")  with  IFFC.  Under  the terms of such
agreement,  IFFC  is to  assist  the  Company  generally  with  operational  and
administrative matters. Pursuant to the Consulting Agreement, as amended on July
27, 1994 and January 1, 1995, IFFC will provide to the Company: (1) the services
of IFFC's Chief  Financial  Officer for not more than 30% of his business  time;
(2) the  services  of  IFFC's  Controller  for not more  than 30% of each of his
business  time;  and (3) the services of  managerial,  general  office and staff
personnel of IFFC. In exchange for such services, the Company is required to pay
IFFC:  (1) 30% of all  compensation  and benefits  provided by IFFC to its Chief
Financial  Officer;  (2) 27.5% of all compensation and benefits provided by IFFC
to its Controller; and (3) all costs and expenses incurred by IFFC in connection
with the services rendered pursuant to the Consulting Agreement.  For the fiscal
years ended December 31, 1996 and December 31, 1995,  the Company's  obligations
to IFFC pursuant to the terms of the Consulting  Agreement  aggregated to $4,225
and $218,742, respectively. QPQ terminated the agreement with IFFC in June 1996.
In connection with the signing of the Consulting Agreement,  the Company granted
IFFC an option to purchase up to 250,000 shares of the Company's Common Stock at
an exercise  price of $6.00 per share.  This option was also  terminated in June
1996 for a $10,000 cash payment. 

                                       38

<PAGE>
      In April 1995 IFFC's majority-owned subsidiary (85%), IFFP, entered into a
consulting   agreement  (the   "Subsidiary   Consulting   Agreement")  with  the
wholly-owned  subsidiary of QPQ,  Pizza King Polska,  pursuant to which IFFP has
agreed to provide  Pizza King Polska with all general  staff and  administrative
support  required by Pizza King Polska to operate its Domino's  Store  business.
The services of Leon  Blumenthal  have been made  available to Pizza King Polska
and QPQ pursuant to the Subsidiary  Consulting  Agreement.  ln exchange for such
services,  IFFP receives from Pizza King Polska a sum equivalent to 10% of Pizza
King Polska's sales and a reimbursement of expenses.  In the year ended December
31, 1996,  Pizza King Polska's  obligations to IFFP pursuant to the terms of the
Subsidiary  Consulting  Agreement  aggregated  to  $64,999.  In June  1996,  the
Agreement was terminated.

License Agreement

      As of November 9, 1995, QPQ Medical entered into a license  agreement (the
"License   Agreement"),   with  Weight  Loss  Associates,   Inc.  ("Weight  Loss
Associates"),  a corporation owned by Dr. Rabinowitz, a director of QPQ, and Mr.
Rubinson,  QPQ's Chairman of the Board,  Chief Executive  Officer and President,
pursuant to which QPQ Medical  has  acquired  the  exclusive  rights  subject to
certain  restrictions,  to use and  sublicense  a weight loss system and certain
proprietary  marks developed by Weight Loss  Associates.  The weight loss system
(the  "Program")  integrates  systems  and  routines  of  nutrition  management,
exercise and prescribed medication.

      Under the License Agreement,  Weight Loss Associates is required to assist
QPQ  Medical in  developing  and  operating  the Weight  Loss  Centers and other
businesses (collectively, the "Weight Loss Business"), that utilize the Program,
which assistance  includes,  but is not limited to, the following:  providing to
QPQ Medical the Program;  providing to QPQ Medical the information  necessary to
prepare operations and marketing materials which describe how the Program should
be  implemented;  providing  to QPQ Medical  information  necessary to prepare a
comprehensive  business  plan with  respect  to the  Program;  providing  to QPQ
Medical any assistance or information  reasonably  deemed necessary or desirable
by QPQ Medical in connection with any of its efforts to secure financing for the
Business; providing any assistance or information reasonably deemed necessary or
desirable by QPQ Medical in  connection  with any of his efforts to  sub-license
the Program and/or Marks; providing to QPQ Medical in connection with any of its
efforts to (i) obtain any governmental license, authorization,  permits, consent
or approval with respect to use of the Program and/or Marks, and (ii) respond to
any governmental authority inquiries with respect to the Business;  providing to
QPQ Medical  technical  advice  regarding the  development  and marketing of the
Business;  and  continuing to use its best efforts to develop and/or enhance the
value of the Business and Program.

      Weight Loss Associates is also  responsible for the  establishment  of all
protocols to be followed in connection with the implementation of the Program by
QPQ Medical.  Subject to Weight Loss Associates' consent otherwise,  QPQ Medical
is prohibited from  overriding,  modifying or otherwise  causing  non-conformity
with such protocols established by Weight Loss Associates in connection with the
implementation of the Program.

      QPQ Medical shall pay Weight Loss  Associates,  Inc., as royalties for the
license of the Program,  (i) a percentage  of QPQ Medical's  "Operating  Profit"
from each of its product lines associated  weight loss, and (ii) a percentage of
QPQ Medical's  "Extraordinary Gain" from certain events.  Payments shall be made
in arrears not later that the twentieth  day of each month.  For purposes of the
License  Agreement,  Operating  Profit is generally  defined in accordance  with
Statement  of  Financial  Accounting  Standards  No. 14 but  excludes  royalties
payable to Weight Loss  Associates and certain other items.  For purposes of the
License  Agreement,   "Extraordinary  Gain"  is  defined  to  include  the  gain
associated with the events described in APB Opinion No. 30,  including:  (a) the
disposal of a business  segment,  (b)  extraordinary  items,  and (c) unusual or
infrequent items. The calculation of an Extraordinary Gain is made in accordance
with APB Opinion No. 30 and generally accepted accounting  principles,  with the
following modifications: (a) Extraordinary Gain is computed without reduction or
allowance  for  events  which give rise to a negative  Extraordinary  Gain,  (b)
Extraordinary  Gain is computed  without  reduction or allowance  for federal or
state income taxes, and (c) in computing Extraordinary Gain, estimated Operating
Profit or negative Operating Profit between "measurement date" and the "disposal

                                       39

<PAGE>



date" (as such terms are  defined in APB  Opinion  No. 30) do not enter into the
computation  of  Extraordinary  Gain.  The License  Agreement also provides that
Weight Loss Associates and its employees,  officers or directors are entitled to
reimbursement from QPQ Medical for ordinary and necessary out-of-pocket expenses
incurred  by them in the course of  performing  their  duties  under the License
Agreement.  QPQ  Medical  will be  required  to make  payments  to  Weight  Loss
Associates  even if QPQ medical  fails to develop  the system into a  profitable
business concept.




















































                                       40



<PAGE>

                                     PART IV


Item 13.    Exhibits, Lists and Reports on Form 8-K.
            ---------------------------------------
      (a)   Exhibits:

<TABLE>
<CAPTION>

            Exhibit     Description
            -------     -----------
<S>           <C>        <C>
              1.1        Form of Underwriting Agreement between QPQ and Reich & Co., Inc.(1)
              3.1        QPQ's Articles of Incorporation(1), as amended(14)
              3.2        QPQ's Bylaws(1)
              4.1        Form of QPQ's Common Stock Certificate(1)
              4.2        Form of Warrant Agreement between QPQ and Reich & Co., Inc. (the
                         "Underwriter") (including form of Underwriter's Warrants)(1)
              4.3        Form of Warrant Agreement between QPQ and Continental Stock Transfer &
                         Trust Company (including form of Warrants)(1)
             10.1        Domino's Development Agreement dated as of June 11, 1993, between Capital
                         Brands and Domino's (including form of Standard Franchise Agreement and
                         Know-How and Technical Knowledge, License and Management Agreement)
                         (the "Development Agreement")(1)
             10.2        Assignment and Assumption Agreement, dated as of July 16, 1993, between
                         QPQ and Capital Brands assigning the Development Agreement to QPQ(1)
             10.3        QPQ's Stock Option Plan, as amended(1)*
             10.4        QPQ's Directors Stock Option Plan(1)*
             10.5        Employment Agreement, effective as of July 23, 1993, between QPQ and
                         Mitchell Rubinson(1)*
             10.6        Amendment to Domino's Development Agreement, dated March 7, 1995,
                         between QPQ and Domino's (10.1) (7)
             10.7        Amendment to Employment Agreement, effective March 31, 1995, between QPQ
                         and Mitchell Rubinson (9)*
             10.8        Form of Indemnification Agreement between QPQ and each of QPQ's Directors
                         and Executive Officers(1)*
             10.9        Consulting  Agreement,  effective as of July 25, 1993, between QPQ and IFFC(1)
             10.10       Stock Option Agreement,  effective as of July 25, 1993, between QPQ and
                         IFFC(1)
             10.11       Form of Financial Consulting Agreement between QPQ and the Underwriter(1)
             10.12       Letter Amendment to Master Franchise Agreement, dated November 13, 1995,
                         from Domino's to QPQ (13)
             10.13       Credit Facility, dated October 22, 1993, between Northern Trust Bank of Florida,
                         N.A. and QPQ (10.1)(3)
             10.14       Key Man Life  Insurance  Policy,  dated August 9, 1993,
                         insuring  life of  Mitchell  Rubinson  with  QPQ as the
                         beneficiary (4)
             10.15       Second Amendment to Consulting Agreement, dated January 1, 1995, between
                         QPQ and IFFC (9)
             10.16       Credit  Facility,  dated  January 26, 1995,  and credit
                         facility  amendment dated February 15, 1996, between PK
                         Polska and AmerBank(10.1)(10)
             10.17       Stock Option Agreement, dated as of September 22, 1993, between QPQ and
                         Mitchell Rubinson (4)*

















                                       41



<PAGE>



             10.18       Stock Option Agreement, dated as of September 22, 1993, between QPQ and
                         Stephen R. Groth (4)*
             10.19       Amendment, dated May 25, 1995, to lease, dated July 20,
                         1993,  between  Corporate  Srodmiescie  and Pizza  King
                         Polska (10.1)(11)
             10.20       Office Site Lease, dated February 28, 1984, between QPQ and the Managing
                         Board of Municipality of Ochota (4)
             10.21       Domino's Store Site Lease, dated November 25, 1993, between QPQ and
                         Cogik (4)
             10.22       Domino's Store Site Lease and Lease Option, dated January 17, 1994, between
                         PTTK, IFFC and QPQ (4)
             10.23       Domino's Store Site Sublease, dated January 17, 1994, between Ambrozja, IFFC
                         and QPQ (4)
             10.24       Domino's Store Site Sublease, dated January 17, 1994, between Hofmokl, IFFC
                         and QPQ (4)
             10.25       Amendment to Credit Facility, dated April 22, 1994, between Northern Trust
                         Bank of Florida, N.A. and QPQ (4)
             10.26       Restaurant Site Lease, dated November 10, 1993, between QPQ, Jan Kosmowski,
                         Justine Kosmowski, Irene Kosmowski and Krystof Kosmowski (4)
             10.27       Schedule of Standard  Franchise  Agreements as of March
                         30, 1995 (form Standard Franchise  Agreement filed with
                         Domino's Development Agreement) (9)
             10.28       First Amendment to Consulting Agreement, dated July 27, 1994, between QPQ
                         and IFFC (10.1) (5)
             10.29       Restaurant Site Lease dated July 20, 1994 between Corporate Srodmiescie and
                         multi-business company ABJ-POL, Ltd. (10.2) (5)
             10.30       Assignment Agreement dated May 28, 1994 between Pizza King Polska and
                         Krak-Wien (10.3) (5)
             10.31       Agreement dated May 13, 1994 between QPQ and Beata Najgrodzki (10.4) (5)
             10.32       Credit Agreement No. 11/94 between Pizza King Polska and American Bank in
                         Poland S.A. dated January 31, 1994, amended as of September 26, 1994 (10.1)
                         (6)
             10.33       Guarantee dated September 26, 1994 to American Bank in Poland S.A. from
                         QPQ (10.2) (6)
             10.34       Amendment,  dated  November 2, 1994, to the  Assignment
                         Agreement  entered into on May 28, 1994  between  Pizza
                         King Polska and Krak-Wien (10.3) (6)
             10.35       Amendment,  dated  November 2, 1994,  to the  agreement
                         entered  into on May 13, 1994  between QPQ  Corporation
                         and Beata Najgrodzki (10.4) (6)
             10.36       Domino Store Site Sublease agreement, dated January 17,
                         1994,  between  IFFP and Pizza King Polska and Ambrozja
                         [Parnas] (9)
             10.37       Domino Store Site Sublease agreement, dated January 17,
                         1994,  between  IFFP and Pizza King  Polska and Hofmokl
                         [Parnas] (9)
             10.38       Lease Agreement, dated March 9, 1994, between Pizza King Polska and "Iron
                         Gate" Housing Cooperative [John Paul] (9)
             10.39       Sublease Termination Agreement between Pizza King Polska and AWAL Sp. z
                         o.o. [John Paul] (9)
             10.40       Weight Loss Center Site, dated September 1995, between QPQ Medical and
                         M.C.H. Medical Center, Ltd. (10.1)(12)
             10.41       Weight Loss Center Site, dated November 1, 1995, between QPQ Medical and
                         Aventura Corporate Center (10.2)(12)
             10.42       License Agreement,  dated November 9, 1995, between QPQ
                         Medical and Weight Loss  Associates  (QPQ has requested
                         of the Securities and Exchange  Commission that certain
                         portions of the License Agreement receive  confidential
                         treatment (10.3)(12)
             10.43       Physician Employment Agreement, dated December 27, 1995, between QPQ
                         Medical and Dr. Beth D. Yedwab, M.D. (13)*











                                       42



<PAGE>

             10.44       Physician Employment Agreement, dated December 13, 1995, between QPQ
                         Medical and Dr. Jose David Suarez, M.D. (13)*
             10.45       Amendment dated January 19, 1996, to Credit Facility dated January 31, 1995
                         between PKP and AmerBank (13)
             10.46       Amendment, dated November 24, 1995, to credit facility dated January 26,
                         1995,  between PKP and AmerBank (13)
             10.47       Lease Agreement, dated March 18, 1996, between QPQ Medical Weight Loss
                         Centers, Inc. and Howard B. Goldman and Sue E. Goldman (13)
             10.48       Amendment to Employment between QPQ and Mitchell Rubinson, dated
                         November 7, 1996.(14)
             10.49       Amendment to its Master Franchise Agreements, dated March 21, 1996 between
                         Domino's and QPQ (14)
             10.50       Employment Agreement dated February 21, 1997 between QPQ and Dr. Jack
                         Drimmer.(14)
             12.51       Purchase Agreement dated February 21, 1997 between QPQ and Dr. Jack
                         Drimmer, P.A.(14)
             22.1        Subsidiaries of QPQ (13)

             23.0        Consent of Accountants

             27.0        Financial Data Schedule
_________________
</TABLE>

               *         Executive Compensation Plan or Arrangement
               (1)       Incorporated by reference to the  exhibit of  the  same
                         number filed with QPQ's  Registration Statement on Form
                         S-1 (File No. 33-66862).
               (2)       Incorporated   by   reference  to  the  exhibit  number
                         indicated  filed  with QPQ's  Registration Statement on
                         Form S-1 (File No. 33-66862).
               (3)       Incorporated   by  reference  to  the  exhibit   number
                         indicated   filed  with  QPQ's  Form   10-QSB  for  the
                         quarterly period ended September 30, 1993.
               (4)       Incorporated  by  reference  to the exhibit of the same
                         number  filed with QPQ's Form 10-KSB for the year ended
                         December 31, 1993.
               (5)       Incorporated  by reference to the exhibit of the number
                         indicated   filed  with  QPQ's  Form   10-QSB  for  the
                         quarterly period ended June 30, 1994.
               (6)       Incorporated  by reference to the exhibit of the number
                         indicated   filed  with  QPQ's  Form   10-QSB  for  the
                         quarterly period ended September 30, 1994.
               (7)       Incorporated  by reference to the exhibit of the number
                         indicated  filed  with  QPQ's  Form 8-K dated  March 8,
                         1995.
               (8)       Incorporated  by reference to the exhibit of the number
                         indicated  filed with  QPQ's  Form 8-K dated  March 30,
                         1995.
               (9)       Incorporated  by reference to the exhibit of the number
                         indicated  filed with  QPQ's  Form  10-KSB for the year
                         ended December 31, 1994.
               (10)      Incorporated  by reference to the exhibit of the number
                         indicated  filed with QPQ's Form 10-QSB for the quarter
                         ended March 31, 1995.
               (11)      Incorporated  by reference to the exhibit of the number
                         indicated  filed with QPQ's Form 10-QSB for the quarter
                         ended June 30, 1995.
               (12)      Incorporated  by reference to the exhibit of the number
                         indicated  filed with QPQ's Form 10-QSB for the quarter
                         ended September 30, 1995.
               (13)      Incorporated  by reference to the exhibit of the number
                         indicated filed of QPQ's form 10-KSB for the year ended
                         December 31, 1995.
               (14)      Filed herewith.

               (b)       Reports on Form 8-K:

                         QPQ filed the following  reports on Form 8-K during the
                         quarterly period ended December 31, 1996:
            
                                         43

<PAGE>




                         (1) Form 8-K,  dated  November 22, 1996,  reporting the
                         issuance of 96,455  shares of Common Stock  pursuant to
                         Regulation S.

                         (2) Form 8-K,  dated  Novermber  27, 1996,  reporting a
                         claim  by  holders   of   Warrants   with   respect  to
                         anti-dilution provisions contained in such Warrants.















































                                       44



<PAGE>



                                   SIGNATURES

      In accordance  with Section 13 or 15(d) of the Securities  Exchange Act of
1934, QPQ has caused this report to be signed on its behalf by the  undersigned,
thereunto duly authorized.


                                   QPQ CORPORATION


DATE:  March 28, 1997              By: /s/ Mitchell Rubinson
                                      ------------------------------------------
                                      Mitchell Rubinson,  Chairman of the Board,
                                      Chief Executive Officer and President
                                      [Principal Executive Officer]


DATE:  March 28, 1997              By: /s/ James Martin
                                      ------------------------------------------
                                      James Martin, Chief Financial Officer, 
                                      [Principal Financial and Accounting
                                       Officer]




      In accordance  with the Securities  Exchange Act of 1934,  this report has
been signed below by the  following  persons on behalf of QPQ in the  capacities
and on the dates indicated:


DATE:  March 28, 1997                  /s/ Mitchell Rubinson  
                                      ------------------------------------------
                                      Mitchell Rubinson, Director


DATE:  March 28, 1997                  /s/ Dr. Mark Rabinowitz
                                      ------------------------------------------
                                      Dr. Mark Rabinowitz, Director





















                                       45



<PAGE>



                        QPQ CORPORATION AND SUBSIDIARIES
                          INDEX TO FINANCIAL STATEMENTS




                                                                       Page
                                                                     -------
 
                  Reports of Independent Accountants                F-2 - F-3


                  Consolidated Balance Sheets as of
                  December 31, 1996 and 1995                        F-4 - F-5


                  Consolidated Statements of Operations
                  for the Years Ended December 1996 and
                  1995                                                 F-6


                  Consolidated Statements of
                  Shareholders' Equity for the Years
                  Ended December 31, 1996 and 1995                     F-7


                  Consolidated Statements of Cash Flows
                  for the Years Ended December 31, 1996
                  and 1995                                          F-8 - F-9


                  Notes to Consolidated Financial
                  Statements                                       F-10 - F-18















                                       F-1




<PAGE>

REPORT OF INDEPENDANT ACCOUNTANTS


Board of Directors
QPQ Corporation
Miami Beach, Florida


We have audited the accompanying  consolidated  balance sheet of QPQ Corporation
and  subsidiaries  as  of  December  31,  1996,  and  the  related  consolidated
statements of operations, shareholders' equity, and cash flows for the year then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of QPQ Corporation and
subsidiaries  as of December 31, 1996,  and the results of their  operations and
their cash flows for the year then ended in conformity  with generally  accepted
accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated  financial  statements,  the Company has suffered and  continues to
suffer  significant losses from its operations,  has an accumulated  deficit and
revenue and cash flows from its operations have not developed to the point where
the Company can internally  fund its  operations.  These factors,  among others,
raise  substantial  doubt  about its  ability to  continue  as a going  concern.
Management's  plans with regard to these  matters are  described in Note 11. The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.




                                             Moore Stephens Lovelace, P. L.
                                             Certified Public Accountants


Orlando, Florida
March 27, 1997







                                       F-2


<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Directors
of QPQ Corporation

We have audited the accompanying  consolidated  balance sheet of QPQ Corporation
and  Subsidiaries  as  of  December  31,  1995,  and  the  related  consolidated
statements  of  operations,  shareholders'  equity,  and cash flows for the year
ended December 31, 1995. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurances  about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining on a test basis,  evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our oplnion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial position of QPQ Corporation
and Subsidiaries as of December 31, 1995, and the consolidated  results of their
operations  and their  cash  flows for the year  ended  December  31,  1995,  in
conformity with generally accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  As shown in the accompanying
consolidated  statement of operations  for the year ended December 31, 1995, the
Company incurred a substantial operating loss. In addition,  uncertainties exist
with  regard to the  Company's  ability to generate  sufficient  cash flows from
operations or other  sources to meet its existing  obligations  and  commitments
with regard to the expansion of its operations. Management's plans are discussed
in Note 11. These conditions raise substantial doubt about the Company's ability
to  continue  as  a  going  concern.  The  accompanying  consolidated  financial
statements  do not include any  adjustments  related to the  recoverability  and
classification  of asset carrying  amounts or the amount and  classification  of
liabilities  that might  result  should the  Company be unable to  continue as a
going concern.



COOPERS & LYBRAND L.L.P.

Miami, Florida
March 29, l996





                                      F-3



<PAGE>


                        QPQ CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS
                                     ------

                                                       December 31,
                                              ------------------------------
                                                  1996              1995
                                              ------------       -----------

CURRENT ASSETS:

   Cash and cash equivalents                  $    138,731       $ 1,052,831
   Restricted Cash                                 300,000           300,000
   Receivables                                     171,972               868
   Inventory                                        57,718            63,567
   Accrued interest receivable                      28,889              -
   Due from affiliates                             149,382             1,040
   Prepaid expenses                                230,368             7,952
                                              ------------       -----------

      Total Current Assets                       1,077,060         1,426,258
                                              ------------       -----------

Furniture, equipment & leasehold
  improvements, net                              1,988,251         1,635,195

Deferred charges, net of accumulated
   amortization  of $11,301 and $18,747
   at 1996 and 1995, respectively                  124,030           279,249

Domino's development rights, net
  of accumulated  amortization  of
   $106,208 and $75,123 at 1996 and
   1995, respectively                              204,646           235,731
                                              ------------       -----------

      Total Assets                            $  3,393,987       $ 3,576,433
                                              ============       ===========











                             See Accompanying Notes

                                       F-4



<PAGE>



                        QPQ CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS, Continued


                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------

                                                       December 31,
                                              ------------------------------
                                                  1996              1995
                                              ------------       -----------

CURRENT LIABILITIES:

   Accounts payable                           $    479,895      $    245,164
   Accrued expenses                                 92,489            82,758
   Due to affiliate                                243,983            49,087
   Bank credit facilities payable                   21,718              -
                                              ------------      ------------
      Total Current Liabilities                    838,085           377,009
                                              ------------      ------------

BANK CREDIT FACILITIES PAYABLE                     300,000           300,000
                                              ------------      ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:

   Preferred Stock, $.01 par value,
      1,000,000 shares authorized;
      no shares issued                                -                 -
   Common  Stock,   $.01 par value,
      100,000,000 shares authorized;
      7,653,467 and 6,025,000 shares
      issued  and  outstanding,
      respectively                                  76,535            60,250
   Additional paid-in capital                    9,201,682         7,063,044
   Accumulated Deficit                         ( 7,090,852)      ( 4,223,870)
   Accumulated translation adjustment               68,537              -
                                              ------------      ------------

      Total Shareholders' Equity                 2,255,902         2,899,424
                                              ------------      ------------


      Total Liabilities and
          Shareholders' Equity                $  3,393,987      $  3,576,433
                                              ============      ============




                             See Accompanying Notes

                                       F-5

<PAGE>
                       QPQ CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS

                                                  Year Ended December 31,
                                              ------------------------------
                                                  1996              1995
                                              ------------       -----------
 REVENUES:
   Restaurant                                 $  1,264,850      $  1,167,231
   Medical Centers                                 828,295              -
                                              ------------      ------------

      Total Revenue                           $  2,093,145      $  1,167,231
                                              ------------      ------------
RESTAURANT OPERATING:
   Food and packaging                              451,741           444,889
   Payroll and related costs                       338,816           365,602
   Occupancy and other operating
      expenses                                     470,599           516,533
   Depreciation and amortization                   191,612           249,206
                                              ------------      ------------
      Total restaurant operating
      expenses                                   1,452,768         1,576,230
                                              ------------      ------------
MEDICAL CENTERS:
   Payroll and related                             993,888              -
   Occupancy and other                             471,438              -
   Advertising                                     541,422              -
   Depreciation and amortization                    72,919              -
                                              ------------      ------------

      Total Medical Centers                      2,079,667              -
                                              ------------      ------------
GENERAL & ADMINISTRATIVE
   EXPENSES                                      1,337,678         1,302,962

LOSS ON SALE OF ASSETS                              65,485              -
                                              ------------      ------------

OPERATING LOSS                                 ( 2,842,453)      ( 1,711,961)
                                              ------------      ------------
OTHER INCOME (EXPENSES):
   Interest and other income                        12,315           217,995
   Loss on sale of investment                         -          (   333,023)
   Interest expense                            (    36,844)      (   200,109)
   Gain from foreign currency
      translation                                     -               55,700
                                              ------------      ------------
      Total other expense,
          net                                  (    24,529)      (   259,437)
                                              ------------      ------------

NET LOSS                                      $( 2,866,982)     $( 1,971,398)
                                              ============      ============
NET LOSS PER COMMON
   SHARE                                      $(       .42)     $(       .38)
                                              ============      ============
WEIGHTED AVERAGE
   COMMON SHARES
   OUTSTANDING                                   6,863,099         5,214,440
                                              ============      ============


                             See Accompanying Notes

                                       F-6




<PAGE>
             
                       QPQ CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                for the years ended December 31, 1996 and 1995

<TABLE>
<CAPTION>
                                                              Net Unrealized
                              Common Stock         Additional     Loss On    Accumulated
                          ----------------------     Paid In     Marketable  Translation    Accumulated
                            Shares       Amount      Capital     Securities   Adjustment      Deficit       Total
                          ----------   ---------    ---------   -----------   ----------   -------------  ------------
<S>                      <C>        <C>             <C>         <C>           <C>          <C>           <C> 
Balances,
  December 31,
  1994                    2,625,000   $  26,250    $6,257,044   $(  840,364)          -0-  $( 2,252,472)  $  3,190,458

Issuance of
  shares in
  private
  offering                3,400,000      34,000       816,000                                                  850,000

Repurchase of
  warrants                                          (  10,000)                                             (    
10,000)

Changes in
  unrealized
  loss on marketable
  securities                                                        840,364                                    840,364

Net loss for
  the year                                                                                  ( 1,971,398)   ( 
1,971,398)
                         ----------   ---------    ----------  ------------   -----------  ------------   ------------

Balances,
  December 31,
  1995                    6,025,000      60,250     7,063,044           -0-           -0-   ( 4,223,870)     2,899,424

Issuance of
  shares in
  private offering        1,195,000      11,950     1,183,050                                                1,195,000

Translation
  adjustments                                                                      68,537                       68,537

Issuance of
  shares in
  Regulation S
  offerings,
  net of offering
  expenses                  433,467       4,335       965,588                                                  969,923

Cost of termination
of option                                             (10,000)                                                (10,000) 

Net loss for
  the year                                                                                  ( 2,866,982)   (2,866,982)
                       
                         ----------   ---------    ----------  ------------   -----------  ------------   ------------   
Balances,
  December 31,
  1996                    7,653,467   $  76,535    $9,201,682  $        -0-   $    68,537  $( 7,090,852)  $  2,255,902
                         ==========   =========    ==========  ============   ===========  ============   ============
                         
</TABLE>


























                                                      See Accompanying Notes
                                                                F-7




<PAGE>



                       QPQ CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                  Year Ended December 31,
                                              ------------------------------
                                                  1996              1995
                                              ------------       -----------

CASH FLOWS FROM OPERATING
   ACTIVITIES:

   Net Loss                                   $( 2,866,982)     $( 1,971,398)
   Adjustment to reconcile net
      loss to net cash used in
      operating activities:
          Depreciation and amortization            375,408           378,768
          Loss on the sale of investments             -              333,023
          Loss on sale of assets                    65,485              -
   Changes in operating assets and
      liabilities:
          Receivables                          (   102,528)          120,446
          Inventory                                  5,849       (    11,470)
          Accrued interest receivable          (    28,889)           57,690
          Prepaid expenses                     (   222,416)           96,833
          Other assets                             142,346            11,792
          Accounts payable and
             accrued expenses                      244,462            43,004
                                              ------------      ------------
   Net cash used in operating
      activities                               ( 2,387,265)      (   941,312)
                                              ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES:

   Increase in restricted cash                        -          (   225,853)
   Payments for organization and
      prepaid advertising costs                       -          (   259,152)
   Proceeds from sales of investments                 -            5,727,078
   Payments for furniture, equipment
      and leasehold improvements               (   998,173)      (   176,615)
   Proceeds from sale of assets                    179,606              -
                                              ------------      ------------

   Net cash (used in) provided by
      investing activities                     (   818,567)        5,065,458
                                              ------------      ------------






                            See Accompanying Notes

                                       F-8


<PAGE>



                       QPQ CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued

                                                  Year Ended December 31,
                                              ------------------------------
                                                  1996              1995
                                              ------------       -----------


CASH FLOWS FROM FINANCING
   ACTIVITIES:

   Repurchase of option/warrants               (    10,000)      (    10,000)
   Proceeds from common stock offerings          2,164,923           850,000
   Borrowings under bank credit
     facilities                                     21,718           859,000
   Repayments of bank credit facilities               -          ( 5,196,909)
   Payments from affiliates, net                    46,554             9,628
                                              ------------      ------------

   Net cash provided by (used in)
    financing activities                         2,223,195       ( 3,488,281)
                                              ------------      ------------


FOREIGN CURRENCY TRANSLATION
   ADJUSTMENT                                       68,537              -

(DECREASE)INCREASE IN CASH AND CASH
   EQUIVALENTS                                 (   914,100)          635,865

BEGINNING CASH AND CASH EQUIVALENTS              1,052,831           416,966
                                              ------------      ------------

ENDING CASH AND CASH EQUIVALENTS              $    138,731      $  1,052,831
                                              ============      ============

SUPPLEMENTAL DISCLOSURE OF
   CASH FLOW INFORMATION:

   Cash paid during the period for:
      Interest                                $     36,453      $    200,109
                                              ============      ============







                             See Accompanying Notes

                                       F-9




<PAGE>
                        QPQ CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    ORGANIZATION:

      QPQ Corporation (the "Company/"QPQ") formerly known as International Pizza
Corporation,   was  organized  for  the  purpose  of  developing  and  operating
franchised  Domino's  stores  in the  Republic  of Poland  ("Poland").  A former
majority shareholder of the Company,  Capital Brands, Inc. ("CBI"), entered into
a development  agreement  (the  "Development  Agreement")  with  Domino's  Pizza
International,  Inc.  ("Domino's")  and assigned all its rights and  obligations
under the Development Agreement to the Company. Operations commenced on April 1,
1994.

      In addition to having the exclusive  right to develop  Domino's  Stores in
Poland,  the  Company  has been  granted  the  exclusive  right to  establish  a
commissary  or  commissaries  for the purpose of  supplying  food  products  and
supplies to the Domino's stores in Poland.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

      BASIS OF PRESENTATION - The accompanying consolidated financial statements
include the accounts of the Company and its wholly-owned Polish subsidiary Pizza
King Polska,  Sp.zo.o a limited liability corporation ("PK Polska") and a wholly
owned  subsidiary,  QPQ Medical Centers,  Inc. ("QPQ Medical").  QPQ Medical was
formed in 1995 and as of  December  31,  1995,  had no  operations.  QPQ Medical
commenced operations in January, 1996. All significant intercompany transactions
and balances have been eliminated in consolidation.

      The  preparation  of financial  statements  in conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from these estimates.

      The only  currency  that may be used in Poland is the zloty.  The value of
the zloty is pegged  pursuant to a system  based on a basket of  currencies,  as
well as all other  economic  and  political  factors  that  effect  the value of
currencies  generally.  As of  January  1,  1995,  the  National  Bank of Poland
introduced a new  currency  unit which is named a "zloty" (a "new  zloty").  New
zlotys are  equivalent  to 10,000 old zlotys  ("old  zlotys").  Old zlotys  will
remain legal tender until December 31, 1996,  after which date they will only be
exchangeable at certain banks.  All references in this document to zlotys are to
old zlotys.  At December  31, 1996 and 1995,  the  exchange  rate was 28,725 and
24,680 old zlotys per dollar, respectively.  Monetary assets and liabilities are
translated from the local currency,  the "zloty",  to U.S. dollars at the period
end exchange  rate.  Non-monetary  assets,  liabilities,  and related  expenses,
primarily furniture,  equipment, leasehold improvements and related depreciation
and  amortization,  are translated using historical  exchange rates.  Income and
expense accounts,  excluding depreciation and amortization,  are translated at a
weighted average exchange rate.

      The  accounts of PK Polska are  measured  using the Polish  zloty.  Due to
Poland's highly inflationary  environment  through December 31, 1995,  generally
accepted  accounting  principles  required QPQ to calculate and recognize on its
statement of operations its currency translation gains or losses associated with

                                     F-10


<PAGE>



PK Polska.  For the year ended  December  31, 1995 , QPQ had a foreign  currency
translation  gain of $55,700.  Due to the reduction in Polands  inflation  rate,
effective  for the year  ended  December  31,  1996,  QPQ is no longer  required
pursuant to generally  accepted  accounting  principles  to  recognize  currency
translation gains or losses in its statement of operations. Accordingly, for the
year ended  December 31, 1996,  QPQ  recognized a currency  translation  gain of
$68,537 which is included in shareholders'  equity under the caption Accumulated
Translation Adjustment.

      GOING CONCERN - The accompanying  financial  statements have been prepared
on a going  concern  basis,  which  assumes  the  realization  of assets and the
liquidation of liabilities in the ordinary  course of business.  The Company has
incurred  substantial  losses in each of the years ended  December  31, 1996 and
1995 and  uncertainties  exist with regard to the Company's  ability to generate
sufficient  cash  flows  from  operations  or  other  sources  to meet  existing
obligations and fund its commitment with regard to the expansion of its existing
operations which gives rise to doubts about the Company's ability to continue as
a going concern.  These financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

      CASH AND CASH  EQUIVALENTS  - The  Company  considers  all  highly  liquid
investments  purchased  with a maturity  of three  months or less at the time of
acquisition to be cash equivalents. The Company maintains its U.S. cash balances
in bank deposit accounts which, at times,  may exceed federally  insured limits.
The Company has not experienced any losses in any accounts. The Company believes
it is not exposed to any significant credit risk on cash and cash equivalents.

      INVENTORIES  -  Inventories  are  stated at the  lower of cost  (first-in,
first-out) or market and consist primarily of restaurant food items.

      NET LOSS PER COMMON SHARE - The  computation  of net loss per common share
in the accompanying  statements of operations is based upon the weighted average
number of shares  outstanding  during the period.  The net loss per common share
does not include the assumed  exercise of any common  stock  options or warrants
since their inclusion would be anti-dilutive.

      FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS - Furniture, equipment and
leasehold  improvements are stated at cost.  Maintenance and repairs are charged
to  expense  when  incurred.  Additions,  major  renewals  and  betterments  are
capitalized.  Leasehold  improvements,  upon completion,  are amortized over the
shorter  of the  life  of the  respective  lease  or the  expected  life  of the
improvement.  Furniture and equipment are being  depreciated  over lives ranging
from  three to five years on a  straight-line  basis.  When  items are sold,  or
otherwise  disposed  of,  the  related  costs and  accumulated  amortization  or
depreciation are removed from the accounts and any resulting gains or losses are
recognized.

      INCOME  TAXES  -  Deferred   income  taxes  are  recognized  for  the  tax
consequences in future years for differences between the tax basis of assets and
liabilities  and their  financial  reporting  amounts at each year-end  based on
enacted tax laws and statutory tax rates applicable to the time periods in which
the differences are expected to affect taxable income.  Valuation allowances are
established,  when  necessary,  to reduce  deferred  tax  assets  to the  amount
expected to be realized.

                                      F-11


<PAGE>


                       QPQ CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


Income tax expense is the tax  payable for the period and the change  during the
period in the deferred tax asset and liability.

      ACQUISITION  COSTS OF DEVELOPMENT  RIGHTS - All costs  associated with the
acquisition of Domino's  Development  Rights have been capitalized.  The cost of
these rights is being amortized over 10 years.

      DEFERRED  CHARGES - All costs incurred in connection with the organization
of the Company  have been  deferred and are being  amortized on a  straight-line
basis  over 5 years.  During  1996,  certain  of these  costs  were  transferred
primarily to furniture,  equipment and leasehold improvements in connection with
the commencement of operation of QPQ Medical.

      ADVERTISING  AND  PROMOTION  EXPENSE -  Production  costs of future  media
advertising are deferred until the advertising occurs. All other advertising and
promotion  costs are expensed when incurred.  Deferred  advertising  costs as of
December 31, 1996 approximated $146,000.

3.    RESTRICTED CASH:

      At  December  31,  1996,  the Company had  $300,000  of  restricted  cash,
classified as a current asset,  which represents  collateral for the outstanding
line of credit.

4.    FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS:

      Furniture,  equipment and leasehold  improvements at December 31, 1996 and
1995 are as follows:
                                              December 31,       December 31,
                                                  1996               1995
                                             -----------         -----------
      Vehicles                            $         -            $    16,013
      Furniture and Equipment                    318,381             161,049
      Restaurant Equipment                       735,509             749,111
      Medical Equipment                          413,028                -
      Leasehold Improvements                   1,160,673           1,111,184
                                             -----------         -----------
                                               2,627,591           2,037,357
      Less: accumulated depreciation
        and amortization                      (  639,340)         (  402,162)
                                             -----------        ------------
                                             $ 1,988,251         $ 1,635 195
                                             ===========         ===========
      Depreciation and amortization expense  $   331,450        $    334,952
                                             ===========        ============

On  October  1, 1996,  the  Company  sold its Cafe  Renaissance  restaurant  for
$250,000  consisting of cash of $180,000 and a promissory  note of $70,000.  The
Company  recognized  a loss on the  sale of  $65,485  which is  included  in the
accompanying Consolidated Statements of Operations under Loss on Sale of Assets.


5.    ACQUISITION COSTS OF DOMINO'S DEVELOPMENT RIGHTS:

      On June 11, 1993,  the Company's  former parent entered into a Development
Agreement with Domino's which provided for the exclusive right to develop and/or
franchise  Domino's  Stores in Poland,  subject to certain terms and conditions.
The Company paid Domino's $300,000 under the terms of the Development  Agreement

                                     F-12



<PAGE>


                        QPQ CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

and incurred  $10,854 of legal and other costs related to the  negotiations.  In
connection  with the initial  capitalization  of the Company,  the former parent
assigned all of its rights and obligations  under the  Development  Agreement to
the Company.

      Pursuant to the Domino's  Development  Agreement,  as amended November 13,
1995 and March 21, 1997,  QPQ is granted the exclusive  right until December 31,
2003 to develop,  operate and franchise  Domino's  Stores in Poland.  During the
Initial Term of the Domino's  Development  Agreement,  which expires on December
31, 2003, QPQ is required to open and operate,  either through affiliates of QPQ
("Affiliated   Franchisees")   or  unrelated   third  parties   ("Non-Affiliated
Franchisees"),  at least 50 Domino's  Stores in accordance  with a schedule that
obligates QPQ or its Non-Affiliated Franchisees to open three Domino's Stores in
1994, no Domino's  Stores in 1995,  eight Domino's  Stores in 1996 and five, six
or seven Domino's Stores for each of the following seven years.  Domino's Stores
developed  and/or  operated by  Non-Affiliated  Franchisees  are counted towards
QPQ's  obligation  to open a minimum  number  of  Domino's  Stores.  QPQ did not
satisfy the  requirements to open eight Domino's stores during 1996 and in March
1997,  Domino's  granted  QPQ an  extension  until July 1, 1997 to satisfy  such
requirement.  In addition, Domino's indicated it would be agreeable to a further
six month extension if QPQ provided satisfactory evidence of recapitalization at
a level  which,  in  Domino's  sole  discretion,  will enable QPQ to satisfy its
obligations under the agreement.

      The  Company is required  to pay  Domino's a franchise  fee for each store
opened and a monthly royalty fee based upon a percentage of gross sales.

      In March 1997,  QPQ commenced  construction  of its fourth  Domino's Store
which is expected to open by June 30, 1997.

      In compliance with the Domino's  Development  Agreement,  QPQ opened three
Domino's Stores in 1994. QPQ is required and,  subject to the factors  discussed
below, may open or cause to be opened at least eight additional  Domino's Stores
prior to December 1997. Subject to the modifications of the Domino's  Agreement,
if QPQ in fact  fails  to meet  the  development  schedule  described  above  as
amended,  QPQ will lose its rights to develop and franchise  additional Domino's
Stores but will be entitled to act as a master  franchisor and  franchisee  with
respect to the  franchise  agreements  granted  prior  thereto.  However,  under
certain circumstances of default, Domino has the right to terminate the Domino's
Development  Agreement and force the sale of, at the then current  market value,
all of QPQ's rights ant interests as a master  franchisor of Domino's Stores and
all of the assets of each Domino's Store controlled by QPQ.


6.    LINE OF CREDIT:

      In  January  1995,  PK Polska  obtained  a  $300,000  line of credit  from
American Bank in Poland, S.A. with interest payable quarterly at a rate of 7.75%
per annum. The Company has guaranteed the borrowings which are collateralized by
its amounts on deposit. The line expires January 28, 1998.












                                     F-13




<PAGE>
                        QPQ CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

7.    FINANCIAL INSTRUMENTS:

      Fair Value of Financial  Instruments - The carrying  amounts of cash, cash
equivalents, receivables, accounts payable and accrued expenses approximate fair
value  because of the short  maturity of these  items.  The  carrying  amount of
long-term  bank credit  facilities  payable  approximate  fair value because the
interest rate on this instrument changes with market interest rates.

8.    SHAREHOLDERS' EQUITY:

      On September 29, 1993, the Company  completed its initial public  offering
of 1,250,000  shares of its Common Stock and 1,405,660  Redeemable  Common Stock
Purchase  Warrants  including  155,650  Warrants  issued in November 1993,  (the
"Warrants").  Each  Warrant  entitles the holder to purchase one share of Common
Stock for $6.60,  exercisable  through  September 22, 1998. The offering  closed
with net proceeds to the Company aggregating  approximately  $6,012,000,  net of
underwriting   discounts  and   commissions,   expense   allowances   and  other
registration costs.

      In connection  with its initial public  offering,  the Company sold to the
Underwriter for nominal consideration, two Purchase Warrants. The first Purchase
Warrant  allows the holder to purchase for $9.00 per share up to 125,000  shares
of Common Stock.  The second Purchase  Warrant allows the holder to purchase for
$.145 each up to 125,000  Warrants which can be converted to one share of Common
Stock per Warrant at an exercise price of $9.00.

      Pursuant to the terms of the Common Stock  Subscription  Agreements  dated
March 28, 1995,  between the Company and the Company's  Chairman and three other
investors, the Company sold an aggregate 3,400,000 shares of its Common Stock at
a purchase price of $.25 per share in exchange for cash of $850,000.

      The Company's  Stock Option Plan (the "Plan") and  Directors  Stock Option
Plan (the "Directors Plan")  (collectively the "Plans"),  authorize the issuance
of 300,000 and 50,000 shares of common stock  options,  respectively.  The Plans
are  designed to serve as  incentives  for  retaining  qualified  and  competent
employees and directors.

      Effective  October  24,  1995,  shareholders  approved  an increase in the
maximum number of shares available for grant under the Plan to 1,000,000.

      The  following  table  reflects  the option  activity  for the years ended
December 31, 1996 and 1995:

                                                   1996               1995
                                                ----------         -------
Outstanding at beginning of year                  542,000            287,000
Granted                                           142,500            365,000
Exercised                                           -                  -
Expired                                        (  182,000)          (110,000)
                                               ----------           --------
Outstanding at end of year                        502,500            542,000
                                               ==========           ========
Exercisable at end of year                        312,000            137,000
                                               ==========           ========







                                      F-14



<PAGE>
                        QPQ CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


Price range of options
  outstanding at end of year               $ .69 - $2.875        $ .69 -$6.00
                                           ==============        ============
Available for grant at end of year                547,500             457,500
                                               ==========          ==========

      On March 7, 1995,  certain of the stock option  agreements were amended to
reduce the exercise price to $.69, which amount represented the market price per
share on that date.

      SFAS No. 123,  "Accounting for Stock-Based  Compensation" ("SFAS 123") was
issued during 1995 and is effective for the year ended  December 31, 1996.  This
pronouncement  establishes  financial  accounting  and  reporting  standards for
stock-based  employee  compensation plans. It encourages,  but does not require,
companies to recognize  compensation  expense for grants of stock, stock options
and other equity  instruments  to employees  based on new fair value  accounting
rules.  Companies that choose not to adopt the new fair value  accounting  rules
will be required to disclose  proforma  net income and  earnings per share under
the new method.  The Company has adopted the disclosure  provisions of SFAS 123.
Had  compensation  costs for the  Company's  stock option plans been  determined
based  upon the fair  value at the  grant  date for  awards  under  these  plans
consistent with the methodology prescribed under SFAS 123 for options granted in
1996 and 1995,  the  Company's net income and earnings per share for those years
would have been reduced by  approximately  $50,000 and $380,000 or $.01 and $.07
per share  respectively.  The fair value of the options  granted during 1996 and
1995 is estimated as $248,000 and $514,600,  respectively  on the dates of grant
using the  Black-Scholes  option-pricing  model with the following  assumptions:
volatility of 235%,  expected dividends of 0, risk-free interest rate of 5%, and
terms of 8.4 to 10 years.

      As a result of the stock  subscription  and  pursuant to the  Underwriters
Warrant  Agreement,  the exercise price of 125,000  warrants to purchase  common
stock issued to the Underwriter were repriced and became  exercisable at a price
of $.25 per share. In June 1995, pursuant to a Warrant Redemption Agreement, the
Company  repurchased  86,750  Underwriters  Warrants for $10,000.  Upon original
issuance  those  Warrants  entitled the holder to purchase  86,750 shares of the
Company's  Common Stock at an exercise price of $9.00 per share.  The $10,000 is
reflected  in the  accompanying  Consolidated  Balance  Sheet as a reduction  of
additional paid in capital.

      In July  1996,  QPQ sold  1,195,000  shares of  Common  Stock in a private
offering and received cash proceeds of $1,195,000. Principal shareholders of the
Company, including the Company's Chairman, Chief Executive Officer and President
purchased an aggregate of 300,000 shares of the offering.  In September 1996 and
November 1996 QPQ sold 337,012 and 96,455 shares of Common Stock pursuant to two
Regulation S offerings and received aggregate cash proceeds of $969,923,  net of
offering expenses.

      At December 31, 1996, the Company has reserved  2,071,400 shares of Common
Stock for issuance pursuant to outstanding options and warrants.

9.    DEFERRED TAXES:

      As of December  31, 1996 and 1995,  the  Company  had net  operating  loss
carryforwards of approximately $4,197,000 and $1,966,000, respectively, for U.S.
tax purposes, which expire in various years through 2011. Deferred tax assets as
of  December  31,  1996  and  1995 of  approximately  $1,574,000  and  $727,000,
respectively, were subject to and presented net of a 100% valuation allowance.

      The Company's Polish  subsidiary had net operating loss  carryforwards (in
U.S.  dollars) of  approximately  $2,775,000 and $2,249,000 at December 31, 1996
and 1995, respectively, which expire in various years through 1998. Deferred tax
assets  as of  December  31,  1996  and  1995 of  approximately  $1,110,000  and
$900,000,  respectively,  were subject to and presented net of a 100%  valuation
allowance.

                                      F-15


<PAGE>
                         QPQ CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

10.   RELATED PARTY TRANSACTIONS:

      As of  April  1995,  International  Fast  Food  Corporation  ("IFFC"),  an
affiliate of the Company, and its majority-owned subsidiary,  International Fast
Food Polska  ("IFFP"),  entered into a  consulting  agreement  (the  "Subsidiary
Consulting Agreement") with QPQ's wholly-owned  subsidiary,  PK Polska, pursuant
to which  IFFP has  agreed to  provide  PK  Polska  with all  general  staff and
administrative  support  required  by PK Polska to operate  its  Domino's  Store
business. In exchange for such services, IFFP  receives  from  PK  Polska a  sum
equivalent to 10% of PK Polska's sales and a reimbursement  of expenses.  In the
years ended December 31, 1996 and 1995, PK Polska's obligations to IFFP pursuant
to the terms of  the  Subsidiary  Consulting  Agreement  aggregated  $64,999 and
$116,723,  respectively.  QPQ  terminated the agreement with  IFFC in June 1996.
In  connection  with  the  signing  of  the Consulting  Agreement,  QPQ  granted
IFFC an option to purchase 250,000 shares of QPQ's common  stock at an  exercise
price of $6.00 per share.  The option was also terminated in  July  1996  for  a
$10,000 cash payment.

      In June 1996, QPQ  terminated its consulting  agreement with IFFC relating
to QPQ's  reimbursement  of costs  associated  with services  provided by IFFC's
Chief Financial  Officer and  Controller.  For the years ended December 31, 1996
and 1995, QPQ was charged $1,869 and $70,495 for such services.

      In  addition  to the  costs  allocated  from IFFC in  connection  with the
Consulting  Agreement  noted above,  certain common  general and  administrative
expenses were  allocated to QPQ and IFFC.  For the years ended December 31, 1996
and 1995, these costs were $2,386 and $148,247, respectively.

      As of November 9, 1995, QPQ Medical entered into a license agreement ("the
"License   Agreement")   with  Weight  Loss  Associates,   Inc.   ("Weight  Loss
Associates"),  a corporation owned by Dr. Rabinowitz, a director of QPQ, and Mr.
Rubinson,  QPQ's Chairman of the Board,  Chief Executive  Officer and President,
pursuant to which QPQ Medical  has  acquired  the  exclusive  rights  subject to
certain proprietary marks developed by Weight Loss Associates. Under the License
Agreement,  QPQ  Medical is required to expend a minimum of $100,000 in start-up
funding  and a  percentage  of its  annual  gross  receipts  for  promotion  and
marketing.  QPQ Medical has expended the required amounts in accordance with the
License Agreements.  In addition, QPQ Medical is required to pay royalties based
upon a percentage  of its  operating  profit as defined from each of its product
lines associated with weight loss.
  

11.   COMMITMENTS AND CONTINGENCIES:

      On November 7, 1996,  the Company  amended its  employment  agreement with
Mitchell  Rubinson,  its Chairman of the Board,  President  and Chief  Executive
Officer,  pursuant to which the agreement is extended to December 31, 1999.  The
amended  agreement  provides for a minimum annual salary of $166,375  during the
first year subject to a 10% annual increase in each of the remaining two years.

      PK Polska  entered into a ten year lease  agreement with a third party and
in September,  1994, the lease was amended. The lease is for an office in Warsaw
of approximately 325 square meters. PK Polska shares equally the cost and use of
the office with an affiliate.  Annual lease payments  aggregate to approximately
$73,200.  The  lease  provided  for a ten  year  renewal  option,  and  could be
terminated at any time with six months  written  notice.  In November  1996, the
landlord  exercised  its option to terminate  the lease upon six months  notice.
Accordingly, PKP must vacate the premises in May 1997.

      In connection  with the  procurement  of restaurant  sites,  PK Polska has
entered into various  long-term  arrangements for restaurant space. The terms of
the various agreements range from ten years to unlimited,  plus extensions based
upon  agreement  between the  parties.  QPQ Medical has entered  into  long-term
leases for Medical Centers, with terms ranging from five years to five years and
seven months.


                                 F-16

<PAGE>
                       QPQ CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

      In September 1996, QPQ entered into a lease for  approximately  100 square
meters of space in Warsaw  Poland to be used as the site of its fourth  Domino's
store.  The lease is for an  unlimited  period of time but can be  cancelled  by
either party upon three months notice. Annual lease payments approximate $4,560.
In March 1997,  QPQ commenced  construction  on the site and estimates  that its
total costs of  renovation of the site,  including  leasehold  improvements  and
furniture fixtures and equipment will approximate $110,000.

      The  following  is a  schedule  by  years of  minimum  future  rentals  on
non-cancelable  operating  leases  as of  December  31,  1996  based on year end
exchange rates:

            Year Ending December 31:
            ------------------------
                               POLAND               U.S.A.            TOTAL
                               ------               ------            -----

            1997             $140,660             $348,281         $  488,941
            1998              120,906              344,430            465,336
            1999              121,159              331,207            452,366
            2000              121,420              327,714            449,134
            2001              121,689              105,594            227,283

      Rent expense,  including amounts due under non-cancelable operating leases
for the years  ended  December  31,  1996 and 1995 was  $478,369  and  $224,712,
respectively.

      The Company has incurred  substantial  losses for the year ended  December
31, 1996 and 1995 and may not have sufficient  current liquid assets to fund its
current  operating  losses  and  obligations  under  the  Domino's   Development
Agreement  as well as  obligations  that  will  arise  in  connection  with  the
continuing  development of QPQ Medical.  Management  currently  plans to use its
available   resources  to  fund  operations  and  development  of  its  existing
businesses and to seek additional financing in the form of either debt or equity
in order to meet its existing obligations.

      On November 20, 1996,  the Company was notified by holders of Warrants for
the  purchase  of an  aggregate  of  38,250  shares of  Common  Stock  issued on
September  22,  1993,  pursuant  to  the  Underwriter's  Common  Stock  Purchase
Agreement,  between  the  Company and Reich & Co.,  Inc.,  that  pursuant to the
anti-dilution  provisions  contained in such Warrants,  the Warrant exercise per
share of Common Stock underlying the Warrant was reduced to $0.25 per share. The
claim  also  alleges  that the  number of shares  for  which  the  Warrants  are
exercisable  increased to an aggregate of 1,377,000 shares.  The warrant holders
have  requested  demand  registration  of  such  shares.  The  Company  has  not
registered  such  shares and the  warrant  holders  have  requested  the Company
repurchase  all of such warrants for an aggregate of  $3,442,500  based upon the
failure to register provisions  contained in the Warrant Agreement.  The Company
is  contesting  the claim.  While the ultimate  resolution of this matter cannot
presently be determined, management does not expect that it will have a material
adverse effect on the Company's financial position or results of operations.

12.   SUBSEQUENT EVENTS:

      In February  1997, the Company  purchased a medical  practice for $100,000
consisting  of cash of $60,000,  and a promissory  note in the amount of $40,000
due in February 2000. The promissory note bears interest at the prevailing prime
rate as published by the Wall Street Journal.

      In March 1997, the Company entered into Securities Subscription Agreements
(the  "Agreements") for the sale of $1,280,000 of 8% Convertible Debentures (the
"Debentures")  with a maturity  date of March 31,  1998,  for which the  Company
received net proceeds of $1,066,667.
                                     F-17




<PAGE>


                        QPQ CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


Interest is payable  quarterly.  The Debentures are  convertible  into shares of
common  stock at a  conversion  price per share equal to the lower of (a) 75% of
the  average  closing  bid  price of the  common  stock for five  business  days
immediately  preceding  the  conversion  date or (b) 75% of the  average  of the
closing bid price of the common stock for the business day immediately preceding
the date of the individual Subscription Agreement.

      The   Debentures   were  issued  in  reliance  upon  the  exemption   from
registration  afforded by  Regulation S as  promulgated  by the  Securities  and
Exchange Commission under the Securities Act of 1933, as amended.

      The Company has authorized a maximum of $6,000,000 principal amount of the
Debentures.

                     






























                                      F-18