<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                     ---------------------------------------

                                    FORM 10-Q

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

For the quarterly period ended            September 30, 1996
                                --------------------------------------

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

For the transition from                     to
                        -------------------    ------------------------

                  Commission file number        0-4979
                                            --------------


                             SQUARE INDUSTRIES, INC.
-------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its Charter)

         NEW YORK                                             13-2610905
-------------------------------                             -------------------
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                             Identification No.)

 921 Bergen Avenue, Jersey City, New Jersey                       07306
-------------------------------------------                   --------------
 (Address of principal executive offices)                       (Zip Code)

Registrant's telephone number, including area code  (201) 798-0090
                                                    -------------------------

                                 Not Applicable
-------------------------------------------------------------------------------
               Former name, former address and former fiscal year,
                          if changed since last report

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the issuer was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
Yes   X   No
   ------   ------

Shares of Common Stock outstanding at September 30, 1996: 1,183,156

<PAGE>

                    SQUARE INDUSTRIES, INC. AND SUBSIDIARIES

                                      INDEX

                                    PART I.
                                                                    Page No.
                                                                    --------

Consolidated Balance Sheets -
September 30, 1996 (unaudited) and December 31,
1995 (audited)                                                         2-3

Consolidated Statements of Operations - for
the nine and three months ended September 30, 1996
and 1995 (unaudited)                                                   4

Consolidated Statements of Cash Flows for
the nine months ended September 30, 1996 and 1995
(unaudited)                                                            5-6

Notes to Consolidated Financial Statements                             7-12

Management's Discussion and Analysis of Results of
Operations and Financial Condition                                     13-17


PART II.

Other Information                                                      18

SIGNATURES                                                             19


<PAGE>


SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                             September 30, 1996           December 31, 1995
                                                                                (Unaudited)                   (Audited)
                                                                                -----------                   ---------
<S>                                                                              <C>                          <C>
ASSETS
Current Assets:
     Cash                                                                         $   940,000                 $ 1,533,000
     Trade and other receivables                                                    1,470,000                   1,346,000
     Prepaid expenses                                                               2,110,000                   2,804,000
     Other current assets                                                             472,000                     479,000
     Prepaid and refundable income tax                                                478,000                     135,000
                                                                                     --------                    --------
         Total current assets                                                       5,470,000                   6,297,000
                                                                                   ----------                  ----------

Property, Equipment and Improvements,  Net                                         30,158,000                  24,633,000
                                                                                  -----------                 -----------

Other Assets:
     Deferred tax asset                                                             2,001,000                   1,401,000
     Deferred expenses (net of amortization)                                        2,729,000                   2,571,000
     Security deposits and other assets                                             2,279,000                   2,320,000
                                                                                   ----------                  ----------
                                                                                    7,009,000                   6,292,000
                                                                                   ----------                  ----------


                                                                                  $42,637,000                 $37,222,000
                                                                                  ===========                 ===========
</TABLE>



           See accompanying notes to consolidated financial statements


<PAGE>



SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>


                                                                             September 30, 1996            December 31, 1995
                                                                                 (Unaudited)                   (Audited)
                                                                                 -----------                   ---------
<S>                                                                              <C>                        <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Accounts payable                                                             $1,015,000                 $1,449,000
     Accrued expenses                                                              5,552,000                  4,347,000
     Accrued local rent tax (Note 4)                                               1,296,000                  1,252,000
     Current portion of long-term debt (Note 2)                                    3,763,000                    785,000
     Deferred tax liability                                                          333,000                    333,000
     Other liabilities                                                               232,000                    465,000
                                                                                    --------                   --------
         Total current liabilities                                                12,191,000                  8,631,000
                                                                                  ----------                 ----------

Deferred Rent                                                                      3,558,000                  3,247,000
                                                                                  ----------                 ----------

Long-Term Debt-less current portion (Note 2)                                      18,564,000                 18,474,000
                                                                                 -----------                -----------

Security Deposits - Customers                                                        342,000                    292,000
                                                                                    --------                   --------

Commitments and Contingencies (Note 7)

Stockholders' Equity:
     Common stock, $.01 par value;
       authorized 2,000,000 shares;
       issued 1,235,189 shares and 1,218,389 shares                                   12,000                     12,000
     Additional paid-in capital                                                    3,335,000                  3,278,000
     Retained earnings                                                             5,083,000                  3,768,000

Less:
     Treasury stock at cost, 52,033 shares                                           236,000                    236,000
     Cumulative translation adjustment                                               212,000                    244,000
                                                                                    --------                   --------
                                                                                   7,982,000                  6,578,000
                                                                                  ----------                 ----------

                                                                                 $42,637,000                $37,222,000
                                                                                 ===========                ===========
</TABLE>

           See accompanying notes to consolidated financial statements


<PAGE>



SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>



                                                         For The Nine Months Ended             For The Three Months Ended
                                                               September 30,                          September 30,
                                                       -----------------------------        ------------------------------
                                                          1996                1995            1996                 1995
                                                         ------              -------         ------               -----
<S>                                                    <C>                <C>                <C>                <C>
Parking service revenue                                $45,668,000        $45,328,000        $15,403,000        $14,624,000
Service station revenue                                  3,280,000          3,071,000          1,135,000          1,100,000
                                                        ----------         ----------         ----------         ----------

     Total revenues                                     48,948,000         48,399,000         16,538,000         15,724,000
                                                        ----------         ----------        -----------        -----------

Costs and expenses:
     Cost of parking services                           37,602,000         37,103,000         12,872,000         11,799,000
     Operating costs - service station                   3,245,000          3,112,000          1,103,000          1,086,000
     General and administrative expenses                 6,481,000          5,455,000          2,150,000          1,894,000
     Provision for local rent tax (Note 4)                  45,000             45,000             15,000             15,000
     Interest                                            1,528,000          1,518,000            551,000            498,000
     Write-off of assets                                      -0-             316,000               -0-             316,000
     Reimbursement of previously
       incurred fixed costs (Note 7)                    (1,049,000 )           -0-                  -0-              -0-
                                                        ----------            -----                -----            ----

     Total costs and expenses                           47,852,000         47,549,000         16,691,000         15,608,000
                                                       -----------        -----------        -----------        -----------

Earnings (Loss) from Parking and
     Service Station Operations                          1,096,000            850,000           (153,000)           116,000

Gain from litigation settlement (Note 7)                   651,000             -0-                  -0-              -0-
                                                        ----------          ---------          ---------            ----

Earnings (Loss) before provision for
   income taxes                                          1,747,000            850,000           (153,000)           116,000

Provision (Benefit) For Income Taxes
       (Note 6)                                            432,000            554,000            (86,000)           174,000
                                                          --------          ---------          ---------           --------


Net Earnings (Loss)                                     $1,315,000          $ 296,000          $ (67,000)         $ (58,000)
                                                        ==========          =========          =========          ========= 

Earnings (Loss) Per Common and
  Common Equivalent Share:
  Primary                                                   $ 0.89             $ 0.23            $ (0.04)         $   (0.05)
                                                            ======             ======            =======          ========= 
  Assuming full dilution                                    $ 0.84             $ 0.23            $ (0.04)         $   (0.04)
                                                            ======             ======            =======         ==========

Shares Used in Computing Earnings (Loss)
 Per Common and Common Equivalent Share:
  Primary                                                1,493,078          1,262,474          1,499,648          1,287,963
                                                         =========          =========          =========          =========
  Assuming full dilution                                 1,559,124          1,334,179          1,564,958          1,326,985
                                                         =========          =========          =========          =========

</TABLE>



           See accompanying notes to consolidated financial statements
<PAGE>

SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>

                                                                                          For The Nine Months Ended
                                                                                                  September 30,
                                                                                        -----------------------------
                                                                                            1996               1995
                                                                                        ------------       -----------
<S>                                                                                       <C>                 <C>   
Cash Flows From Operating Activities:
         Net earnings                                                                      $1,315,000          $296,000

         Adjustments to reconcile net earnings  to
          net cash provided by operating activities:
           Amortization of:
               Refinancing costs                                                              239,000             -0-
               Deferred expenses                                                               30,000            31,000
               Lease acquisition costs                                                         13,000            13,000
           Interest accrual                                                                   666,000             -0-
           Depreciation and amortization                                                    1,025,000         1,159,000
           Deferred tax asset                                                                (600,000)            -0-
           Write-off of assets                                                                   -0-            316,000
           Equity adjustment for foreign currency translations                                 32,000           (10,000)
           Increase (decrease) in cash from
                changes in assets and liabilities:
                 Trade and other receivables                                                 (124,000)           (5,000)
                 Prepaid expenses and other current assets                                    701,000            20,000
                 Prepaid and refundable income taxes                                         (343,000)           61,000
                 Deferred expenses, net                                                      (440,000)       (1,439,000)
                 Security deposits and other assets                                            41,000          (491,000)
                 Accounts payable, accrued expenses,
                  accrued local rent tax, deferred
                  tax liability and other liabilities                                         (84,000)          247,000
                 Deferred rent                                                                311,000           423,000
                 Security deposits - customers                                                 50,000            35,000
                                                                                             --------           -------

                   Net cash provided by operating activities                                2,832,000           656,000
                                                                                            ---------           -------
</TABLE>

           See accompanying notes to consolidated financial statements


<PAGE>


SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
                                                                                        For The Nine Months Ended
                                                                                                 September 30,
                                                                                        -------------------------------
                                                                                             1996              1995
                                                                                        -------------      ------------
<S>                                                                                     <C>                 <C>
Cash Flows From Investing Activities:
         Additions to land, buildings, equipment
           and improvements                                                              $ (6,550,000)      $(1,165,000)
                                                                                         ------------       ----------- 

            Net cash used in investing activities                                          (6,550,000)       (1,165,000)
                                                                                         ------------       -----------
Cash Flows From Financing Activities:
         Proceeds from borrowings                                                           3,675,000         2,223,000
         Payments and current maturities on long-term debt                                   (607,000)       (1,148,000)
         Proceeds from exercise of stock options and warrants                                  57,000             1,000
                                                                                         ------------       -----------

                 Net cash provided by financing activities                                  3,125,000         1,076,000
                                                                                         ------------       -----------

Net (Decrease) Increase in Cash                                                              (593,000)          567,000

Cash, Beginning of Period                                                                   1,533,000         1,226,000
                                                                                         ------------       -----------

Cash, End of Period                                                                         $ 940,000        $1,793,000
                                                                                          ===========        ==========

Supplemental Disclosures of Cash Flow Information:
         Cash paid during the period for:
          Interest                                                                          1,403,000         1,181,000
          Income taxes, net of refunds received                                             1,642,000           819,000
</TABLE>

Supplemental Schedule of Noncash Financing Activities:

In March 1995, an officer/stockholder agreed to satisfy the balance of his note
receivable to the Company including accrued interest of $57,637 by transferring
as of March 16, 1995, 39,196 shares of common stock to the Company. The market
value of the stock at the date of the transfer was $176,382. As a result of this
payment, the Company issued to the officer/stockholder 12,500 shares of common
stock.



           See accompanying notes to consolidated financial statements




<PAGE>


SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996


NOTE 1 -       Summary of Significant Accounting Policies

               The accompanying consolidated balance sheet as of September 30,
               1996 and the consolidated statements of operations for the nine
               and three months ended September 30, 1996 and 1995 and the
               consolidated statements of cash flows for the nine months ended
               September 30, 1996 and 1995, respectively, are unaudited, but in
               the opinion of the Company, all adjustments (consisting of normal
               recurring adjustments) necessary to present fairly the results of
               operations for such periods have been made. The financial
               statements should be read in conjunction with the Annual Report
               on Form 10-K of the Company, for the year ended December 31,
               1995.

               The accompanying consolidated financial statements include the
               accounts of a foreign subsidiary and all domestic subsidiaries.
               All significant intercompany accounts and transactions have been
               eliminated.

               The results of operations for the nine and three months ended
               September 30, 1996 and 1995 are not necessarily indicative of the
               results to be expected for the full year.

NOTE 2  -       Long-Term Debt

               Long-term debt consisted of the following:
<TABLE>
<CAPTION>

                                                           Interest Rate                        September 30, 1996
                                                          ---------------                       ------------------
<S>                                                       <C>                                        <C>
              Credit Agreement:
                Facility I                                Prime + 2%                                 $11,730,000
                Facility II                               Prime + 2%                                   1,188,000
                Other                                     Prime + 2%                                   1,600,000
              Notes payable                               8.5% - 12.8%                                 1,624,000
              Notes payable to officers                   Prime + 2%                                     500,000
              Mortgages payable                           7% - 11%                                     5,685,000
                                                                                                     -----------

                                                                                                      22,327,000

               Less current portion                                                                    3,763,000
                                                                                                     -----------
                                                                                                     $18,564,000
                                                                                                     ===========
</TABLE>


<PAGE>


NOTE 2 -       (continued)

               Facility I provides for a line of credit of $12,800,000, and is
               subject to the aggregate face amount of outstanding letters of
               credit plus unpaid drawings not exceeding $1,500,000. Borrowings
               under the letter of credit facility reduce amounts available for
               borrowings under the line of credit. Facility II is a term loan
               which was payable in consecutive quarterly payments of $225,425.
               On October 31, 1995, Amendment No. 10 to the Company's bank loan
               agreement was executed. The amendment provides for an extension
               of the maturity dates of the Facility I principal to June 30,
               1998 with respect to $61,900, to September 30, 1998 with respect
               to $150,000 and to December 31, 1998 with respect to $11,518,208
               and extends the quarterly installment payment dates for Facility
               II to calendar quarters ending in the period June 30, 1996 to
               June 30, 1998. The amendment provides for prepayment of principal
               to the extent of 50% of the Company's cash flow above designated
               levels. The amendment also provides that commencing November 1,
               1995 interest is to be paid at the rate of 4% per annum with the
               balance of the interest rate (the Bank's prime plus 2% per annum)
               to be accrued and deferred. The portion deferred will be paid or
               forgiven depending on the Company achieving reductions in its
               operating expenses from those for the year ended December 31,
               1994 as follows: if the amount of the reduction as of December
               31, 1995 is at least $500,000, the amounts deferred during
               November and December 1995 will be forgiven; if the amount of the
               reduction as of December 31, 1996 is at least $600,000, the
               amounts deferred during 1996 will be forgiven; and if the amount
               of the reduction as of December 31, 1997 is at least $700,000,
               the amounts deferred during 1997 and 1998 will be forgiven. The
               failure to achieve the designated level of reduction for any
               period will result in the obligation to pay the amount deferred
               during the applicable period. The Company achieved the targeted
               reduction as of December 31, 1995 resulting in forgiveness of
               interest of $145,000 for the two months ended December 31, 1995.
               The amount of the deferral for the nine months ended September
               30, 1996 was $633,000.

               In July 1995, the Company entered into a one-year agreement with
               another bank providing for a $1,000,000 line of credit, which was
               increased to $1,750,000 in June, 1996, of which $1,600,000 was
               borrowed as of September 30, 1996.

               On June 28, 1995 two officers loaned the Company $500,000 with
               interest payable at the same rate as the Facility I loan. As a
               condition of Amendment No. 10, the officers agreed to a revision
               of their loans, changing the terms from demand loans to loans to
               be repaid following the payment of the credit agreement loans,
               with provisions for prepayment to the extent of 50% of the
               principal payments paid to the Bank under the credit agreement
               after the Bank has received post - October 31, 1995 principal
               payments of at
<PAGE>

               least $1,000,000 and for the deferral of the interest in excess
               of 3.99% per annum (the loan interest rate is 10.25% to December
               31, 1995 and prime plus 2% thereafter) until the Facility loans
               have been paid in full. Under their amended loan agreement, the
               officers surrendered their rights to collateral which was to be
               provided under the original loan agreement and subordinated their
               loans to the Company's obligations under the Credit Agreement. In
               consideration of the original extension of the loans and the
               foregoing amendment, the Company issued to each of the officers a
               five year non-transferable Warrant to purchase 75,000 shares of
               the Company's Common Stock at a price of $6.40 per share, the
               average of the closing sales prices of the Common Stock on NASDAQ
               for June 28, 1995, and the two immediately prior days in which
               trades were effected in the stock.

               Certain subsidiaries of the Company periodically acquire land/or
               buildings with a view to their future use in whole or in part as
               parking facilities. The properties are generally purchased
               subject to long-term mortgages. The mortgages vary in their
               payment terms and interest rates, some requiring only the payment
               of interest during the first five years.

               The mortgages payable are collateralized by the underlying assets
               which have a book value of $9,971,000. The two facility loans are
               collateralized by the stock of subsidiaries of the Company,
               except those whose stock may not be pledged because of
               prohibitions in leases and mortgages.

               Debt covenants under the Credit Agreement as amended, include a
               limitation on indebtedness under mortgage obligations and
               financial covenants as to maintenance of minimum net worth, total
               liabilities to net worth and operating cash flow ratios. The
               Company is in compliance with its debt covenants.

               Aggregate maturities on long-term debt are as follows:

               Year Ending September 30,
               -------------------------
               1997                             $3,763,000
               1998                              1,091,000
               1999                             12,802,000
               2000                              4,011,000
               2001                                132,000
               Remainder                           528,000
                                               -----------
                                               $22,327,000
                                               ===========
<PAGE>

NOTE 3 -       Foreign Operations (Canada)

               Summarized information relating to the Canadian operation is as
follows:
<TABLE>
<CAPTION>

                                                   September 30, 1996                  December 31, 1995
                                                   ------------------                  -----------------
<S>                                                   <C>                                   <C>
              Total assets                              $1,290,000                          $ 769,000
              Total liabilities                          2,199,000                          1,672,000
              Deficiency in assets                        (909,000)                          (903,000)
</TABLE>

               For the nine month periods ended September 30, 1996 and 1995, net
               loss for the Canadian operation was $41,000 and $178,000,
               respectively.

NOTE 4 -       Local Rent Tax

               The Company received notices of determination from a municipal
               local authority assessing the Company an aggregate of
               approximately $480,000 of local taxes for the periods of June 1,
               1981 through May 31, 1987 plus interest. The Supreme Court of the
               State of New York in one proceeding upheld in February, 1996
               assessments of $207,000 for commercial rent tax by the Finance
               Department of the City of New York for the period of June 1, 1981
               through May 31, 1984. No determination of the amount of the
               interest payable on the claim, other than it will materially
               exceed, possibly to the extent of being a multiple of the
               principal amount, has been made. The Company believes that the
               accrued amount of $1,247,000 which covers these assessments,
               possible future assessments, and related expenses through
               September 30, 1996 is adequate.

NOTE 5 -       Earnings Per Share

               For the nine and three month periods ended September 30, 1996 and
               1995, earnings per share has been computed using the weighted
               average number of shares of common stock outstanding and the
               dilutive effect of common stock equivalents.

NOTE 6 -       Income Taxes

               The provision for income taxes of $432,000 for the nine month
               period ended September 30, 1996 is based on the effective tax
               rate expected for the year and includes (i) the partial
               realization of deferred tax assets ($600,000 for the nine months
               ended September 30, 1996), (ii) federal income taxes, (iii)
               income taxes of state and local jurisdictions for which the
               Company's operations were profitable and for which no net
               operating loss benefit is available and (iv) minimum corporate
<PAGE>

               taxes for certain subsidiaries. The realization of the deferred
               tax assets relates directly to the Company's ability to generate
               taxable income for Federal, state, and foreign tax purposes.
               Management has concluded that partial realization of these
               deferred tax assets is more likely than not as a result of the
               Company's earnings history for the past two years, and has thus
               reduced the valuation allowance accordingly. Additional
               reductions to the valuation allowance will be recorded when, in
               the opinion of management, the utilization of the deferred tax
               asset is more likely than not.

               The income tax provision of $554,000 for the nine month period
               ended September 30, 1995 is based on the effective tax rate for
               the year and includes (i) federal income taxes, (ii) income taxes
               of state and local jurisdictions for which the Company's
               operations were profitable and for which no net operating loss
               benefit is available and (iii) minimum corporate taxes for
               certain subsidiaries.

NOTE 7 -       Contingencies

               Litigation:
               Various lawsuits against the Company have arisen in the course of
               the Company's business. In certain of these matters, large and/or
               indeterminate amounts are sought. In the opinion of the Company,
               any uninsured ultimate liability which could result from such
               litigation would not have a material adverse effect on the
               Company's financial position or the results of its operations.

               On March 29, 1996, the United States District Court for the
               Eastern District of Pennsylvania approved a net cash settlement
               of $1,700,000 plus interest payable to the Company as one of
               several plaintiffs in a class action brought against the owner,
               manager, and tenant of a building in midtown Philadelphia which
               suffered a fire in February 1991 causing substantial disruption
               of the operations of the plaintiffs. The settlement was received
               by the Company in May, 1996. The portion of the proceeds
               representing recovery of costs previously charged ($1,049,000)
               has been recorded as a reduction of total costs and expenses. The
               remainder of the settlement ($651,000) has been recorded as a
               gain from litigation settlement.

               Letters of Credit:

               As of September 30, 1996, the Company's contingent debt amounted
               to approximately $1,025,500 under standby Letters of Credit
               issued pursuant to terms of its line of credit (Facility I).


<PAGE>



NOTE 8 -       Employees' Share Option Plan
               In October 1995, the Financial Accounting Standards Board issued
               Statement of Financial Accounting Standards No. 123 "Accounting
               for Stock-Based Compensation" (SFAS No. 123), which was effective
               for the Company as of January 1, 1996. SFAS No. 123 required
               expanded disclosures of stock-based compensation arrangements
               with employees and encourages, but does not require compensation
               cost to be measured based on the fair value of the equity
               instrument awarded. Companies are permitted, however, to continue
               to apply Accounting Principles Board ("APB") Opinion No. 25,
               which recognizes compensation cost based on the intrinsic value
               of the equity instrument awarded. The Company will continue to
               apply APB Opinion No. 25 to its stock based compensation awards
               to employees and will disclose the required pro forma effect on
               net earnings and earnings per share in its annual financial
               statements.


<PAGE>

                    SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                            OF RESULTS OF OPERATIONS
                             AND FINANCIAL CONDITION


Results of Operations


         Parking service revenues for the three months ended September 30, 1996
(the "1996 Third Quarter") were $779,000 (5.3%) greater than those for the three
months ended September 30, 1995 (the "1995 Third Quarter"). The improvement was
primarily due to the commencement of operations at four leased locations,
principally locations in Indianapolis and the Trade Center in New York in
October 1995 and the Rockefeller Center 750 car garage in New York City in July
1996 as well as the move in January 1996 of the Company's management operations
of a 1,930 car capacity facility servicing the Civic Center in Ottawa to the
6,600 car capacity lot at the Corel Centre, the new home of the Ottawa Senators
Hockey Club, partially offset by the termination of operations at three leased
locations during the period. Parking service revenues for the nine months ended
September 30, 1996 (the "1996 Nine Month Period") were only $340,000 (0.8%) more
than those for the nine months ended September 30, 1995 (the "1995 Nine Month
Period"); the smaller increase was the result of the record snowfalls in the
Company's area of operations during the first quarter of 1996. The Company
instituted rate increases in October 1996 at many of its locations. Based on
operations through October 31, 1996, the Company expects the increases will
generate higher parking service revenues for the last quarter of 1996.

         Cost of parking services increased by $1,073,000 (9.1%) for the
comparative Third Quarter periods but only by $499,000 (1.3%) for the
comparative Nine Month Periods. As a percentage of parking service revenues,
such costs increased from 80.7% to 83.6% for the comparative Third Quarter
periods and from 81.9% to 82.3% for the comparative Nine Month Periods. The
increases are primarily due to the materially higher rents under the leases
related to the four new locations as compared with those under the three leases
which expired or terminated in 1996.

         The Company's gasoline station operations continued to improve
slightly, recording increases of $35,000 (3.2%) and $209,000 (6.8%) in revenues
due principally to increased patronage and higher retail gas prices while the
operating costs increased by only $17,000 (1.6%) and $133,000 (4.3%) for the
comparative Third Quarter periods and the comparative Nine Months Periods,
respectively. As a result, the station, which continues to be marginal due to
intense competition, produced operating profits of $32,000 and $35,000,
respectively, for the 1996 Third Quarter and the 1996 Nine Month Period as
compared to an operating profit of $14,000 and an operating loss of ($41,000)
for the 1995 Third Quarter and 1995 Nine Month Periods, respectively.

         General and administrative expenses were $256,000 (13.5%) greater for
the 1996 Third Quarter than for the 1995 Third Quarter and $1,026,000 (18.8%)
greater for the 1996 Nine Month Period than those for the 1995 Nine Month


<PAGE>



Period. As a percentage of parking service revenues (gasoline station operations
require an insignificant amount of such expenses) the expenses increased from
13.0% to 14.0% for the comparative Third Quarters periods and from 12.0% to
14.2% for the comparative Nine Month Periods. The increases were primarily the
result of greater professional fees, including a fee for the Company's financial
advisor which has been engaged to advise the Company as to financial and other
strategic alternatives to enhance shareholder values, higher health care
payments, the commencement of operations in Atlanta and Indianapolis during the
last six months of 1995, and accruals for officers bonuses and key employee
incentives. While bonuses for executives were accrued as of September 30, 1995,
no accruals had been made during the six months then ended on behalf of other
key employees who received incentive payments with respect to the results for
the full year of 1995. If such accruals had been made during such six month
period, the additional accruals for such purpose would have increased general
and administrative expenses by approximately $154,000 for the 1995 Nine Month
Period.

         The increases of $53,000 (10.6%) and $10,000 (0.7%) in interest expense
for the 1996 Third Quarter and the 1996 Nine Month Period over interest expense
for the 1995 comparative periods were the result of an increase in borrowings
during the 1996 Third Quarter to finance property acquisitions in New York City
and Pittsburgh and leasehold improvements, partially offset by the interest on
proceeds generated from the settlement discussed below.

         There was no change in the provision for local rent tax - an accrual of
$15,000 per quarter for each year.

         The 1996 Nine Month Period benefitted from the receipt in May 1996 of
cash of $1,700,000 plus interest from the settlement of a class action in which
the Company was a plaintiff resulting from the disruption of business operations
in Center City in Philadelphia from a fire in 1991 in a major office building.
$1,049,000 of the settlement represented reimbursement of previously incurred
fixed costs, with the $651,000 balance treated as a gain from the settlement.

         During the 1995 Third Quarter the Company made write offs of $316,000
of certain assets at locations, the operations of which management deemed
unlikely to result in a recovery of such costs. No write-off of assets was
deemed required for the 1996 periods.

         The 1996 Third Quarter tax benefit of ($86,000) (56.2%) and the 1996
Nine Month Period provision for income taxes of $432,000 (24.7%) reflect the
realization of an additional $200,000 of the net deferred tax assets as of each
of March 31, 1996, June 30, 1996 and September 30, 1996 and the ($61,200)
benefit with respect to the loss of ($153,000) for the 1996 Third Quarter from
parking and service station operations, partially offset by additional payments
for taxes related to prior periods.

         The 65.2% provision for income taxes for the 1995 Nine Month Period,
and the provision of $174,000 despite pre-tax earnings of $116,000 for the 1995
Third Quarter are due principally to (i) minimum corporate income taxes imposed
by the state and city of New York and the states of Pennsylvania and New Jersey,
(ii) the non-deductibility for income tax purposes of the loss suffered by the


<PAGE>

Company's Canadian operations ($178,000) and ($70,000), respectively for the
1995 Nine Month Period and Third Quarter and (iii) an adjustment during the 1995
Third Quarter for under-accruals in prior periods for federal and state income
taxes for prior periods.

Liquidity and Capital Resources

         The increase in the Company's working capital deficit from ($2,334,000)
as of December 31, 1995 to ($6,721,000) as of September 30, 1996 is principally
the result of $6,550,000 of capital expenditures during the 1996 Nine Month
Period.

         The Company's Credit Agreement with its principal bank lender has been
amended several times to avoid or cure defaults in the agreement. A June 13,
1994 amendment, effective as of February 28, 1994, extended the maturity to June
30, 1995, increased the interest rate as of July 31, 1994 by 1/2% per annum,
modified the financial covenants as to the maintenance of minimum net worth,
total liabilities to net worth and operating cash flow to be in compliance with
the covenants as of February 28, 1994 and through June 13, 1994. On October 11,
1994, the Company's agreement was further amended to, among other things, extend
the maturity to May 31, 1997, increase the interest rate as of October 11, 1994
to prime plus 2%, modify certain financial covenants retroactive to August 31,
1994, and provide for the payment of an additional $50,000 fee to the lender.
The covenant modifications permitted the Company to comply with the covenants as
of August 31, 1994 and through May 1995. A further amendment was effected on
October 31, 1995 to provide more favorable terms with respect to principal and
interest payments and the financial covenants. The maturity dates of the
Facility I credit loan principal were extended to June 30, 1998 with respect to
$61,900, September 30, 1998 with respect to $150,000 and December 31, 1998 with
respect to the balance, which amounted to $11,518,208, and the quarterly
installment payment dates for the Facility II term loan in the aggregate
principal amount of $1,688,100 were deferred to the calendar quarters ending in
the period June 30, 1996 to June 30, 1998. The amendment provides for prepayment
of principal to the extent of 50% of the Company's cash flow above designated
levels and that commencing November 1, 1995 interest is to be paid at the rate
of 4% per annum, with the balance of the interest rate (the Bank's prime plus 2%
per annum) to be accrued but deferred. The portion deferred is to be paid or
forgiven depending on the Company achieving reductions in its operating expenses
from those for the year ended December 31, 1994 as follows: if the amount of the
reduction as of December 31, 1995 is at least $500,000, the amounts deferred
during November and December 1995 are to be forgiven; and if the amount of the
reduction as of December 31, 1996 is at least $600,000, the amounts deferred
during 1996 are to be forgiven; and if the amount of the reduction as of
December 31, 1997 is at least $700,000, the amounts deferred during 1997 and
1998 are to be forgiven. The failure to achieve the designated level of
reduction for any period will result in the obligation to pay the amount
deferred during the applicable period at the end of such period. The Company
achieved the targeted reduction as of December 31, 1995 resulting in forgiveness
of interest of $145,000 for the two months ended December 31, 1995. The amounts
of the deferral for the Third 1996 Quarter and the 1996 Nine Month Period were
$211,000 and $633,000, respectively.



<PAGE>



         On June 28, 1995, the Company borrowed $500,000 in the form of demand
loans from the Chairman and Assistant Chairman of the Company. The loans, which
bear interest at the equivalent rate to the Facility loan, were amended at, and
as a condition to, the execution of the October 31, 1995 amendment to the Credit
Agreement, to provide for deferral of the payment of principal and interest in
excess of 3.99% per annum until certain principal and interest payments are made
to the bank lender.

         The Company has borrowed $1,600,000 as of September 30, 1996 under a
line of credit from another bank pursuant to an agreement which was amended in
July 1996 to increase the facility from $1,000,000 to $1,750,000 and to extend
the expiration date to June 1, 1997.

         Net cash provided by operating activities amounted to $2,832,000 for
the 1996 Nine Month Period as compared to $656,000 for the 1995 Nine Month
Period. The principal reasons for the improvement were net earnings of
$1,315,000 adjusted by both the accrual of $666,000 of deferred interest under
the Company's principal Credit Facility agreement and the Company's loan
agreement with Messrs. Lowell and Sanford Harwood and $239,000 of refinancing
costs; the $701,000 increase in cash resulting from the decrease in prepaid
expenses and other current assets in the 1996 period as compared with a $20,000
increase in cash from such accounts during the 1995 period, and the increase in
cash due to the net reduction in security deposits of $41,000 in 1996 as
compared with a decrease of cash for security deposits of $491,000 in 1995, the
result of rent adjustments; partially offset by the realization in 1996 of
$600,000 of the Company's deferred tax asset and the reduction in 1996 of
$84,000 in accounts payable, accrued expenses, accrued local rent tax and other
liabilities as compared with a $247,000 increase in these accounts in 1995.

         The $5,385,000 increase in net cash used in investing activities
($6,550,000 for the 1996 and $1,165,000 for the 1995 Nine Month Periods) was the
result of acquisitions of properties in New York City and Pittsburgh, major
lease acquisitions and improvements including those related to the Rockefeller
Center Garage lease, and lease renewals and equipment costs. The Company
anticipates capital expenditures of approximately $320,000 for the three months
ended December 31, 1996.

         The increase of $2,049,000 in net cash provided by financing activities
for the 1996 Nine Month Period over cash provided for the 1995 Nine Month Period
($3,125,000 vs. $1,076,000) was principally the result of $3,068,000 of net
proceeds of borrowings after payments and current maturities on long term debt
for the 1996 Nine Month Period as compared with a net borrowing increase of
$1,075,000 for the 1995 Nine Month Period.

         As a result of the foregoing, the Company's cash balance decreased by
$593,000 for the 1996 Nine Month Period as compared with an increase of
$1,793,000 for the 1995 Nine Month Period.

         As of November 1, 1996 the Company had borrowed the full amount under
its principal line of credit and all but $150,000 under its smaller ($1,750,000)
but more recent line of credit. It believes that the funds which are available
from time to time under the latter facility, additional mortgage loans with
respect to properties acquired or developed and funds generated


<PAGE>



from its operations will be sufficient to finance its capital and operational
requirements for the twelve months ended September 30, 1997.






<PAGE>



                           PART II - OTHER INFORMATION

Item 6.  Exhibits and Report on Form 8-K

         (a)  Exhibits

                  4.1 Amendment to 1992 Stock Option Plan adopted in July 1996
by the Board of Directors of the Company

                  27.  Financial Data Schedule

         (b) No reports on Form 8-K have been filed during the three months
ended September 30, 1996.

<PAGE>


                                   SIGNATURES




Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                       SQUARE INDUSTRIES, INC.



                                       /s/ Sanford Harwood
                                       ----------------------------------
                                       Sanford Harwood
                                       Assistant Chairman


                                       /s/ John Kowal
                                       -----------------------------------
                                       John Kowal
                                       Chief Financial Officer



Dated:   November 14, 1996