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


                                   FORM 10-QSB



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

                For the quarterly period ended March 31, 1997



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

                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 206
                           Miami Beach, Florida 33139
                -------------------------------------------------  
                     (Address of Principal Executive Office)

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


Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act 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  [ ]

      The number of shares  outstanding of the issuer's common stock,  par value
$.01 per share as of May 8, 1997 was 7,653,467. .

      Transitional Small Business Disclosure Format:


                           Yes   [ ]     No  [X]


<PAGE>



                       QPQ CORPORATION AND SUBSIDIARIES
                         INDEX TO FINANCIAL STATEMENTS



                                                                       Page
                                                                       ----
PART I.  FINANCIAL INFORMATION
-------  ---------------------

      ITEM. 1     Financial Statements


                  Consolidated Balance Sheets as of
                  March 31, 1997 and December 31,
                  1996                                                 2 - 3


                  Consolidated Statements of Operations
                  for the Three Months Ended March 31,
                  1997 and 1996                                          4


                  Consolidated Statements of
                  Shareholders' Equity for the Three
                  Months Ended March 31, 1997                            5


                  Consolidated Statements of Cash Flows
                  for the Three Months Ended March 31,
                  1997 and 1996                                        6 - 7


                  Notes to Consolidated Financial
                  Statements                                           8 - 12



      ITEM. 2     Management's Discussion and Analysis
                  or Plan of Operation                                13 - 22



PART II.  OTHER INFORMATION
--------  -----------------



SIGNATURES




                                      1


<PAGE>



                       QPQ CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                                 (Unaudited)

                                    ASSETS
                                    ------

 
                                                       March 31,    December 31,
                                                         1997            1996
                                                      ----------      ----------

CURRENT ASSETS:

   Cash and cash equivalents                          $  584,705      $  138,731
   Restricted Cash                                       300,000         300,000
   Receivables                                           153,138         171,972
   Inventory                                              55,404          57,718
   Accrued interest receivable                            32,588          28,889
   Due from affiliates                                   149,382         149,382
   Prepaid expenses                                       44,649         230,368
                                                      ----------      ----------

      Total Current Assets                             1,319,866       1,077,060
                                                      ----------      ----------

Furniture, equipment & leasehold
  improvements, net                                    1,787,229       1,988,251

Deferred charges, net of accumulated
   amortization  of $16,908 and $11,301
   at 1997 and 1996, respectively                        168,046         124,030

Deferred debenture issuance costs,
   net of accumulated amortization
   of $8,889                                             204,444            --

Domino's development rights, net
  of accumulated  amortization  of
   $113,979 and $106,208 at 1997 and
   1996, respectively                                    196,875         204,646
                                                      ----------      ----------

      Total Assets                                    $3,676,460      $3,393,987
                                                      ==========      ==========


                            See Accompanying Notes

                                      2


<PAGE>

                       QPQ CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS, Continued
                                 (Unaudited)

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

                                                    March 31,      December 31,
                                                      1997              1996
                                                    ----------       ----------

CURRENT LIABILITIES:

   Accounts payable                                $   392,527      $   479,895
   Accrued expenses                                    159,331           92,489
   Due to affiliate                                    269,680          243,983
   Bank credit facilities payable                      328,355           21,718
   8% convertible debentures                         1,280,000             --
   Accrued underwriter warrant
      settlement                                       201,000             --
                                                   -----------      -----------

      Total Current Liabilities                      2,630,893          838,085
                                                   -----------      -----------

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

NOTE PAYABLE                                            40,000             --
                                                   -----------      -----------

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           76,535
   Additional paid-in capital                        9,201,682        9,201,682
   Accumulated Deficit                              (8,379,421)      (7,090,852)
   Accumulated translation adjustment                  106,771           68,537
                                                   -----------      -----------

      Total Shareholders' Equity                     1,005,567        2,255,902
                                                   -----------      -----------


      Total Liabilities and
          Shareholders' Equity                     $ 3,676,460      $ 3,393,987
                                                   ===========      ===========

                            See Accompanying Notes

                                      3

<PAGE>
                       QPQ CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (Unaudited)

                                                  Three Months Ended March 31,
                                                 ------------------------------
                                                      1997              1996
                                                 -----------        -----------
REVENUES:
   Restaurant                                    $   285,996        $   282,679
   Medical Centers                                   250,834             47,003
                                                 -----------        -----------

      Total Revenue                              $   536,830        $   329,682
                                                 -----------        -----------

RESTAURANT OPERATING:
   Food and packaging                                101,379            109,638
   Payroll and related costs                          69,688             79,818
   Occupancy and other operating
      expenses                                        98,335            110,090
   Depreciation and amortization                      45,609             53,651
                                                 -----------        -----------

      Total restaurant operating
      expenses                                       315,011            353,197
                                                 -----------        -----------

MEDICAL CENTERS:
   Payroll and related costs                         302,075             99,771
   Occupancy and other operating
      expenses                                       176,305             39,213
   Advertising expense                               151,016             51,611
   Depreciation and amortization                      28,150             11,828
                                                 -----------        -----------

      Total Medical Centers                          657,546            202,423
                                                 -----------        -----------

GENERAL & ADMINISTRATIVE
   EXPENSES                                          640,795            436,706

OPERATING LOSS                                    (1,076,522)          (662,644)
                                                 -----------        -----------

OTHER INCOME (EXPENSES):
   Interest and other income                           4,160              6,087
   Interest expense                                  (15,207)            (9,185)
   Provision for  underwriter
      warrant settlement                             201,000               --
                                                 -----------        -----------

      Total other expense,
          net                                       (212,047)            (3,098)
                                                 -----------        -----------

NET LOSS                                         $(1,288,569)       $  (665,742)
                                                 ===========        ===========

NET LOSS PER COMMON
   SHARE                                         $      (.17)       $      (.11)
                                                 ===========        ===========

WEIGHTED AVERAGE
   COMMON SHARES
   OUTSTANDING                                     7,653,467          6,025,000
                                                 ===========        ===========

                            See Accompanying Notes

                                      4

<PAGE>




                                     QPQ CORPORATION AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 For the Three Months Ended March 31, 1997
                                                (Unaudited)
<TABLE>
<CAPTION>


                         Common Stock             Additional    Accumulated
                    ------------------------       Paid In      Translation      Accumulated
                      Shares          Amount       Capital       Adjustment        Deficit          Total
                    ---------    -----------    -----------     -----------    -------------   ------------       
<S>                 <C>          <C>             <C>                 <C>       <C>             <C>         
Balances,
   December 31,
   1996             7,653,467    $    76,535     $9,201,682          68,537    $( 7,090,852)   $  2,255,902


Translation
   adjustments           -              -              -             38,234            -             38,234


Net loss for
   the period            -              -              -               -         ( 1,288,569)    ( 1,288,569)

                    ---------    -----------     -----------     -----------    ------------    ------------
Balances,
   March 31, 1997   7,653,467    $    76,535     $9,201,682      $   106,771    $( 8,379,421)   $  1,005,567
                   ==========    ===========     ==========      ===========    ============    ============

</TABLE>








































                                  See Accompanying Notes

                                           F-5



<PAGE>



                        QPQ CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                   Three Months Ended March 31,
                                                 ------------------------------
                                                      1997              1996
                                                 ------------      ------------
CASH FLOWS FROM OPERATING
   ACTIVITIES:

   Net Loss                                      $( 1,288,569)     $(   665,742)
   Adjustment to reconcile net               
      loss to net cash used in               
      operating activities:                  
          Depreciation and amortization               102,135           163,572
          Write-down of assets to net        
             estimated realizable value               131,375              -
          Provision for  underwriter         
             warrant settlement                       201,000              -
Changes in operating assets and              
      liabilities:                           
          Receivables                                  18,834       (    12,118)
          Inventory                                     2,314       (    42,690)
          Accrued interest receivable             (     3,699)             -
          Prepaid expenses                            185,719       (    56,743)
          Other assets                                 55,761
          Accounts payable and               
             accrued expenses                     (    20,526)          228,853
                                                 ------------      ------------
   Net cash used in operating                
      activities                                  (   615,656)      (   384,868)
                                                 ------------      ------------
                                             
CASH FLOWS FROM INVESTING ACTIVITIES:        
                                             
   Payments for organization and             
      prepaid advertising costs                          -          (   144,786)
   Payments for other assets                      (    65,374)             -
   Payments for furniture, equipment         
      and leasehold improvements                  (    10,231)      (   223,913)
                                                 ------------      ------------
                                             
   Net cash (used in) provided by            
      investing activities                        (    75,605)      (   368,699)
                                                 ------------      ------------
                                           
                                            
                                            



                            See Accompanying Notes

                                      6

<PAGE>



                       QPQ CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
                                 (Unaudited)


                                                   Three Months Ended March 31,
                                                 ------------------------------ 
                                                     1997              1996
                                                 ------------      ------------
                                         
CASH FLOWS FROM FINANCING                  
   ACTIVITIES:                             
                                           
   Net proceeds from issuance of           
      8% Convertible debentures                     1,066,667              -
   Borrowings under bank credit            
     facilities, net                                    6,637            42,621
   Payments from(to) affiliates, net                   25,697       (     1,104)
                                                 ------------      ------------
                                           
   Net cash provided by (used in)          
    financing activities                            1,099,001            41,517
                                                 ------------      ------------
                                           
                                           
FOREIGN CURRENCY TRANSLATION               
   ADJUSTMENT                                          38,234       (    47,469)
                                           
INCREASE IN CASH AND CASH                  
   EQUIVALENTS                                        445,974       (   759,519)
                                           
BEGINNING CASH AND CASH EQUIVALENTS                   138,731         1,052,831
                                                 ------------      ------------
                                           
ENDING CASH AND CASH EQUIVALENTS                 $    584,705      $    293,312
                                                 ============      ============
                                           
SUPPLEMENTAL DISCLOSURE OF                 
   CASH FLOW INFORMATION:                  
                                           
   Cash paid during the period for:        
      Interest                                   $     12,601      $      9,185
                                                 ============      ============
                                           
                                           
                                           
                                        




                            See Accompanying Notes

                                      7


<PAGE>



                        QPQ CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


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.

      Since August 1995, QPQ Medical  Centers,  Inc. has been in the business of
developing and/or operating  centers which offer primary care,  medical services
and medically supervised weight loss programs.


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
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 accompanying unaudited  consolidated  financial statements,  which are
for  interim  periods,  do not include  all  disclosures  provided in the annual
consolidated  financial  statements.   These  unaudited  consolidated  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements  and the  footnotes  thereto  contained in the Annual  Report on Form
10-KSB for the year ended December 31, 1996 of QPQ Corporation and  Subsidiaries
(the  "Company"),  as filed with the  Securities  and Exchange  Commission.  The
December  31,  1996   consolidated   balance  sheet  was  derived  from  audited
consolidated financial statements, but does not include all disclosures required
by generally accepted accounting principles.

      In the opinion of the Company,  the  accompanying  unaudited  consolidated
financial  statements  contain all adjustments  (which are of a normal recurring
                                      8

<PAGE>

nature)  necessary  for a fair  presentation  of the financial  statements.  The
results  of  operations  for the  three  months  ended  March  31,  1997 are not
necessarily indicative of the results to be expected for the full year.

      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 remained
legal  tender  until  December  31,  1996,   after  which  date  they  are  only
exchangeable at certain banks.  All references in this document to zlotys are to
new zlotys.  At March 31, 1997 and 1996, the exchange rate was 3.0760 and 2.5875
new  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
PK Polska.  Due to the reduction in Polands  inflation  rate,  effective for the
year ended December 31, 1996, QPQ was no longer  required  pursuant to generally
accepted accounting principles to recognize currency translation gains or losses
in its statement of operations.  As a result of this change the net loss and net
loss per common share for the three months ended March 31, 1996,  were decreased
by $47,469 and $.01, respectively.

      Going Concern - The report of the  Company's  independent  accountants  on
their audit of the Company's December 31, 1996 consolidated financial statements
contained uncertainties relating to the Company's ability to continue as a going
concern.  The Company has incurred a substantial  loss in the three months ended
March 31, 1997 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.

      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.


3.    RESTRICTED CASH:

      At March 31, 1997, the Company had $300,000 of restricted cash, classified
as a current asset,  which  represents  collateral for the  outstanding  line of
credit.
                                       9

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

4.    BANK CREDIT FACILITIES:

      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.

      On March 18,  1996,  PK Polska  obtained  a $150,000  line of credit  from
American  Bank.  Borrowings  under the facility  bear interest at 10% per annum,
payable every three months  commencing April 30, 1996, may be used to finance up
to 50% of the cost of developing Domino's Stores. The credit facility is secured
by a promissory note of PK Polska,  a guarantee of QPQ and title to the fixtures
and  equipment  of the  Domino's  Stores  developed  with  the  credit  facility
borrowings. No draws have been made on the credit facility. The facility expires
on January 30, 1998.

5.    NOTE PAYABLE:

      The $40,000  note  payable is payable in full in  February  2000 and bears
interest at the prevailing prime rate as published by the Wall Street Journal.

6.    8 % CONVERTIBLE DEBENTURES:

      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 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.

      The $213,333 of costs  associated with issuance of the debentures is being
amortized over a period of one year commencing on March 15, 1997.

7.    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.

                                     10

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


      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 1,000,000 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.


      The  following  table  reflects  the option  activity for the three months
ended March 31, 1997:


Outstanding at beginning of period                502,500
Granted                                            27,500
Exercised                                            -
Expired                                           (30,000)
                                                 --------
Outstanding at end of period                      500,000
                                               ==========
Exercisable at end of period                      314,500
                                               ==========
Price range of options
  outstanding at end of period             $ .69 - $2.875
                                           ==============
Available for grant at end of period              550,000
                                               ==========

      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.

      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 March 31,  1997,  the Company has reserved  4,683,416  shares of Common
Stock for  issuance  pursuant to  outstanding  options and  warrants  and the 8%
Convertible Debentures.


                                      11

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

8.    COMMITMENTS AND CONTINGENCIES:

      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  alleged that the number of shares for which the Warrants are  exercisable
increased to an aggregate of 1,377,000 shares. Additionally, the warrant holders
demanded  registration of such shares. On May 14, 1997,  the Company repurchased
the warrants for a total purchase price of $201,000.  The accompanying March 31,
1997  consolidated   financial  statements  include  a  provision  for  loss  on
underwriter warrant settlement in the amount of $201,000.


9.    SUBSEQUENT EVENT:

      On May 8,  1997  the  Company  filed  a Form  S-8  Registration  Statement
registering 300,000 shares of Common Stock, which were issued in connection with
a  management   consulting  agreement  between  the  company  and  an  unrelated
individual.




























                                      12


<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 an explanatory  paragraph in
their  report for the three  months  ended March 31, 1997 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.

THREE MONTHS ENDED MARCH 31, 1997 VS THREE MONTHS ENDED MARCH 31, 1996:

RESULTS OF OPERATIONS

      During the three months  ended March 31, 1997,  QPQ incurred a net loss of
$1,288,569  ($.17 per share) compared to a net loss of $665,742 ($.11 per share)
for the three  months nded March 31, 1996.  The $421,827  increase in QPQ's loss
for the three  months  ended March 31,  1997  compared to its loss for the three
months ended March 31, 1996 is primarily attributable to an approximate $246,000
increase in QPQ's loss for the three months ended March 31, 1997, resulting from
a $106,375 non recurring writedown of certain assets to estimated net realizable
value   coupled  with   increases  in  various   general   corporate   expenses.
Approximately  $266,000 of the  increase is  attributable  to an increase in the
losses incurred by QPQ Medical,  which includes a $25,000 nonrecurring writedown
of certain assets to estimated net realizable  value.  The increased  losses for
QPQ and QPQ Medical  in the three  months  ended March 31, 1997  compared to the


                                      13

<PAGE>

three months  ended March 31, 1996,  aggregating  approximately  $512,000,  were
partially  offset by a decrease  of  approximately  $90,000 in PKP's loss in the
three months  ended March 31, 1997  compared to the three months ended March 31,
1996.

      During the three  months  ended March 31,  1997,  QPQ  generated  Sales of
$285,996  from its three  Domino's  Stores  which were opened in April,  May and
August 1994,  respectively,  versus Sales of $282,679 for the three months ended
March 31, 1996 from its three Domino's  Stores and the Cafe  Renaissance,  which
was sold in October  1996.  For the three  months  ended March 31, 1996 the Cafe
Renaissance  generated  sales of $25,823.  For the three  months ended March 31,
1997,  versus the three months ended March 31, 1996, the three  Domino's  Stores
experienced an increase in (average monthly) same store sales of $29,140.

      During the three  months ended March 31,  1997,  QPQ incurred  $101,379 of
Food and Packaging  Expenses,  $69,688 of Payroll and Related Costs,  $98,335 of
Occupancy  and  Other  Operating  Expenses  and $  45,609  of  Depreciation  and
Amortization Expense.

      Food and Packaging  Expenses for the three months ended March 31, 1997 and
the three months ended March 31, 1996 were  approximately  35% and 39% of Sales,
respectively.  The  decrease is  primarily  attributable  to the  improved  cost
control and the elimination of the 3% import duty on imported cheese.

      Payroll and Related  Costs as a  percentage  of Sales for the three months
ended  March  31,  1997 and  March  31,  1996  were  approximately  24% and 28%,
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.  During the three months ended
March 31,  1996 the  Payroll and  Related  Costs for the Cafe  Renaissance  were
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
three months ended March 31, 1997 and March 31, 1996 were  approximately 34% and
39%,  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 three months ended March 31, 1997 coupled with
the elimination of the Cafe Renaissance.

      Depreciation  and Amortization as a percentage of Restaurant Sales for the
three months ended March 31, 1996 and March 31, 1996 were  approximately 16% and
19%,  respectively.  The 3%  decrease as a  percentage  of  Restaurant  Sales is
primarily  attributable to an increase in the average level of same store sales,
coupled with a reduction in  depreciation  and  amortization  as a result of the
sale of the Cafe Renaissance in October 1996.

      General and  Administrative  Expenses for the three months ended March 31,
1997 and March 31, 1996, totalled $640,795 and $436,706,  respectively.  For the
three months  ended March 31, 1997 , General and  Administrative  Expenses  were
comprised of executive and office staff salaries and benefits of $108,769, legal
and  professional  fees,  office rent,  travel,  telephone  and other  corporate
expenses of $467,314,  and  depreciation  and  amortization of $64,712.  For the
three months  ended March 31, 1996,  General and  Administrative  Expenses  were
comprised  of  executive  and  office  staff  salaries  of  $71,782,  legal  and
professional  fees, office rent,  travel,  telephone and other general corporate
expenses of $345,920 which figure includes  $83,041 of preopening costs incurred
by QPQ Medical, and depreciation and amortization of $19,004.
                                       14

<PAGE>

      QPQ's General and Administrative Expenses for the three months ended March
31, 1997 were  $204,089  higher than such  expenses  for the three  months ended
March 31,  1996,  as a result of, among other  things,  an increase in executive
salaries and other general corporate expenses, a non-recurring charge of 131,375
to writedown  certain assets to estimated net realizable  value. and an increase
in General and Administrative expenses applicable to QPQ Medical which commenced
operations in January 1996.

      Interest  and Other  Income for the three  months ended March 31, 1997 and
March 31, 1996 were $4,160 and $6,087,  respectively.  The decrease is primarily
attributable to a reduction in the funds held for investment by QPQ.

      During the three months ended March 31, 1997 and March 31, 1996,  Interest
Expense was $15,207 and $9,185,  respectively.  The increase in Interest Expense
is primarily  attributable  to the issuance of the 8% Convertible  Debentures in
March 1997.


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,
QPQ will fail to meet the development  schedule described above as amended,  and
QPQ may 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.

      As of March 31, 1997, QPQ had negative  working  capital of $1,311,027 and
cash and cash  equivalents of $584,705.  QPQ's material  commitments for capital

                                      15


<PAGE>

expenditures relate to the Domino's Stores that QPQ must open to comply with the
Domino's Development Agreement. 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,  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, 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.

      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.
                                      16

<PAGE>

      QPQ's  Operations  Plans  and  Development  Plans  beyond  May,  1997  are
contingent  upon  its  operating  and  development  experiences  prior  thereto.
Accordingly,  QPQ cannot accurately predict its Operations Plans and Development
Plans beyond May, 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; selling the PKP subsidiary 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 including PKP, 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.

      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

                                      17


<PAGE>


$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 March 31, 1997 and
May 8, 1997,  $28,355 and $25,412,  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 March 31, 1997 and May 8, 1997,  $300,000 of the credit facility was
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.

      From January 13, 1997 through March 12, 1997,  the  Company's  Chairman of
the Board,  Chief  Executive  Officer and President along with his mother loaned
the Company an aggregate of $397,000,  repayable on demand,  with interest at 8%
per annum. The loans were made for working capital purposes.  On March 17, 1997,
the loans were  repaid in full  together  with $3,022 of accrued  interest  from
proceeds received in connection with issuance of the 8% Convertible Debentures.

      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
share  equal to the  lower of (a) 75% of the  average  closing  bid price of the

                                      18


<PAGE>


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

THREE MONTHS ENDED MARCH 31, 1997 VS THREE MONTHS ENDED MARCH 31, 1996:

      QPQ Medical  commenced  operations  in January  1996.  Due to the start up
nature of QPQ  Medical's  operations  and  based  upon the  differing  number of
Medical  Centers open for the three months ended March 31, 1997 when compared to
the three months ended March 31, 1996, a comparison  of QPQ Medicals  operations
for the two periods is not meaningful.

      During the three  months  ended  March 31,  1997,  QPQ  Medical  generated
Medical Center  Revenues of $250,834 from its four Medical  Centers.  During the
three months ended March 31, 1996, QPQ Medical generated Medical Center Revenues
of $47,003 from the opening of its first Medical Center in January 1996.

      During  the three  months  ended  March 31,  1997,  QPQ  Medical  incurred
$302,075 of Payroll and Related  Costs,  $176,305 of Occupancy  and other costs,
$151,016  of   Advertising   Expense,   which  includes  the   amortization   of
approximately  $146,000 of prepaid advertising incurred during 1996, and $28,150
of Depreciation and Amortization.

      Payroll and Related Costs as a percentage of Medical  Center  Revenues for
the three  months  ended March 31, 1997 and 1996,  were  approximately  120% and
212%, respectively.  Due to the start up nature of QPQ Medicals operations these
costs are  disproportionate  in relation to the Medical  Center  Revenues,  as a
result of the  necessity  to fully  staff  the  Medical  Centers  at the time of
opening  prior to their ability to generate  Medical  Center  Revenues.  The 92%

                                      19


<PAGE>


decrease as a percentage of sales is primarily  attributable to the operation of
all four  Medical  Centers  during  the three  months  ended  March 31,  1997 as
compared  to the  operation  of one  Medical  Center  for a portion of the three
months ended March 31, 1996.

      Occupancy and Other  Operating  Expenses as a percentage of Medical Center
Revenues  for the three  months  ended  March 31,  1997 and March 31,  1996 were
approximately  70% and 83%,  respectively.  The 13% decrease as a percentage  of
Medical Center  Revenues is primarily  attributable to the operation of all four
Medical Centers during the three months ended March 31, 1997, as compared to the
operation  of one Medical  Center for a portion of the three  months ended March
31, 1996.

      Advertising  Expense as a percentage  of Medical  Center  Revenues for the
three months ended March 31, 1997 and March 31, 1996 were  approximately 60% and
110%, respectively.  The 50% decrease as a percentage of Medical Center Revenues
is primarily  attributable  to the operation of all four Medical  Centers during
the three  months  ended  March 31, 1997 as  compared  to the  operation  of one
Medical Center for a portion of the three months ended March 31, 1996.

      Depreciation  and  Amortization as a percentage of Medical Center Revenues
for the three months ended March 31, 1997 and March 31, 1996 were  approximately
11% and 25%,  respectively.  The 14% decrease as a percentage of Medical  Center
Revenues is primarily  attributable to the operation of all four Medical Centers
during the three  months  ended March 31, 1997 as compared to the  operation  of
only one Medical Center for a portion of the three months ended March 31, 1996.

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


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  expended  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

                                      20

<PAGE>

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.

   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.

      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

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<PAGE>


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  old 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 in the future.

      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.  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.

      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 remained
legal  tender  until  December  31,  1996,   after  which  date  they  are  only
exchangeable  at certain banks.  At March 31, 1997, the exchange rate was 3.0760
new zlotys per dollar.













                                      22


<PAGE>

                          PART II. OTHER INFORMATION

ITEM 2.     LEGAL PROCEEDINGS

      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  alleged that the number of shares for which the Warrants are  exercisable
increased to an aggregate of 1,377,000 shares. Additionally, the warrant holders
demanded  registration of such shares. On May 14, 1997, the  Company repurchased
the warrants for a total purchase price of $201,000.  The accompanying March 31,
1997  consolidated   financial  statements  include  a  provision  for  loss  on
underwriter warrant settlement of the litigation in the amount of $201,000.

      On December 19, 1996, Pizza King Polska,  Sp. z o.o. was formally informed
by the Voivodship court in Warsaw that Teresa  Romanska-Ninkowic  had filed suit
alleging  that  PKP  owed  Ms.   Romanska-Ninkowic   approximately  123,422  PLN
(approximately  $40,124.00 based on March 31, 1997 exchange rates) plus interest
from April 6, 1994. PKP asked the court to reject these allegations on the basis
that Ms.  Romanska-Ninkowic  failed to comply with the construction agreement. A
June court date has been set.

ITEM 5.     OTHER INFORMATION

      On May 12, 1997,  C. Lawrence  Rutstein was appointed  President and Chief
Executive Officer of the Company succeeding Mitchell Rubinson. Mr. Rutstein is a
graduate  of  Harvard  Law  School  and has  practiced  corporate,  banking  and
securities law. In addition, Mr. Rutstein has participated in a number of public
and private  investment  banking  activities.  Mr.  Rubinson has  terminated his
employment with the Company and no further financial obligations are owed to him
by the Company.  Mr.  Rubinson  will  continue as Chairman of the Board.  Robert
Hausman  was also  appointed  as a  Director  of the  Company  on May 12,  1997,
succeeding Dr. Mark Rabinowitz.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

      (b)   Reports on Form 8-K

            (i)   On  January  16,  1997,  the  Company  filed  a  Form  8-K  in
connection  with  proposed  acquisition  of  Vitex,  S.A.  de  C.V.,  a  Mexican
corporation.

            (ii)  On Februay 7, 1997, the Company filed a Form 8-K in connection
with the change of accountants to Moore Stephens-Lovelace, Roby, P.L.

            (iii) On March 17, 1997, the Company filed a Form 8-K in connect, on
with the  termination of a Letter of Intent between the Company and Vitex,  S.A.
de C.V., a Mexican Corporation.

            (iv)  On  March  19,  1997,  the  Company  filed  a  Form  8-K/A  in
connection with the change of accountants to Moore Stephens-Lovelace, Roby, P.L.

            (v)   On March 21, 1997,  the Company filed a Form 8-K in connection
with a Regulation S offering.

                                      23

<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:  May 14, 1997                 By: /s/ Mitchell Rubinson
                                       ----------------------
                                    Mitchell Rubinson, Chairman of the Board



DATE:  May 14, 1997                 By: /s/ James Martin
                                       -----------------
                                    James Martin, Chief Financial Officer
                                    (Principal Financial and Accounting Officer)