<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   Form 10-QSB

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended November 30, 1996

                       Commission file number 33-67658-NY

                           ROYAL CANADIAN FOODS CORP.
        (Exact name of small business issuer as specified in its charter)

         Delaware                                          13-3729739
(State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                        Identification No.)

                     1004 Second Avenue, New York, NY 10022
                    (Address of principal executive offices)

                                 (212) 980-4131
                           (Issuer's telephone number)

         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
             ---                ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
                        2,679,101 shares of Common Stock

            Transitional Small Business Disclosure Format (check one)

Yes       No  X
   ---      ---


<PAGE>

                   ROYAL CANADIAN FOODS CORP. AND SUBSIDIARIES

                         FORM 10-QSB SECOND QUARTER 1996

                                      INDEX

PART I

                                                      Page No.

Financial Information:

Condensed Consolidated Balance Sheets-
  November 30, 1996 and May 31, 1996                      2

Condensed Consolidated Statements of Operations-for
  the Three and Six Months Ended November 30, 1996
  and 1995                                               3-4

Condensed Consolidated Statements of Cash Flows-for
  the Six Months Ended November 30, 1996 and 1995         5

Notes to Condensed Consolidated Financial Statements     6-8

Management's Discussion and Analysis of Financial
  Condition and Results of Operations                    9-12

Part II

Item 1. Legal Proceedings                                 12

Item 2. Changes in Securities                             12

Item 3. Defaults upon Senior Securities                   12

Item 4. Submission of Matters to a Vote of Security
        Holders                                           12

Item 5. Other Information                                 12

Item 6. Exhibits and Reports on Form 8-K                  12

Signatures


<PAGE>

                 ROYAL CANADIAN FOODS CORP. AND SUBSIDIARIES
                    Condensed Consolidated Balance Sheets

                           ASSETS

                                      November 30,        May 31,
                                          1996             1996
                                          ----             ----
                                      Unaudited             *

Current Assets:
  Cash                                 $   27,000      $   23,811
  Accounts receivable                       1,526             453
  Inventory                                13,246          13,381
  Prepaid expenses                         10,427          25,277
                                       ----------       ---------

Total Current Assets                       52,199          62,922

Property and Equipment, Net               862,125         746,210
Investments in Corporate Joint
  Ventures, at Equity                     205,341         180,763
Cash Restricted for Restaurant
  Development Expenditures                   -             62,503
Security Deposits                          82,019          82,019
                                       ----------       ---------

Total Assets                           $1,201,684      $1,134,417
                                       ==========      ==========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable                     $  183,487      $  131,704
  Taxes payable, other than on income     466,888         407,374
  Accrued officers' salaries              367,186         270,826
  Accrued expenses, other                 315,807         154,655
  Loan payable, stockholder                13,250          59,439
  Deferred income                           4,358          39,181
  Deferred rent expense                     2,278             422
                                       ----------      ----------

Total Current Liabilities               1,353,254       1,063,601

Loan Payable, Stockholder                 300,000         300,000
Note Payable, Other Related Party         208,000            -
Deferred Rent Expense                     176,742         168,251
                                       ----------      ----------

Total Liabilities                       2,037,996       1,531,852

                                       ----------      ----------

Stockholders' Deficit:
  Common stock, $ .005 par value;
   10,000,000 shares authorized            13,396          12,750
  Additional paid-in capital            1,665,516       1,391,460
  Accumulated deficit                  (2,515,224)     (1,801,645)
                                        ---------       ---------
Total Stockholders' Deficit            (  836,312)     (  397,435)
                                        ---------       ---------

Total Liabilities and Stockholders'
  Deficit                              $1,201,684      $1,134,417
                                       ==========      ==========

See accompanying notes to condensed consolidated financial statements.
* Condensed from audited financial statements.

                                                                              2.


<PAGE>

                   ROYAL CANADIAN FOODS CORP. AND SUBSIDIARIES
                 Condensed Consolidated Statement of Operations

                                                 Three Months Ended
                                                    November 30,
                                             ------------------------
                                                 1996         1995
                                                 ----         ----
Sales                                        $  733,988   $  599,120
Cost of sales                                   238,299      195,224
                                             ----------   ----------

Gross profit                                    495,689      403,896
                                             ----------   ----------

Restaurant labor                                140,884      134,523
Rent                                             70,426       70,113
Other occupancy and operating
  expenses                                      136,256      140,476
Selling, general and
  administrative expenses                       202,642      169,924
Research and development                        192,812         -
Share of losses of corporate
  joint-venture                                  19,968         -
Interest expense                                 25,119       16,455
                                             ----------   ----------

Total expenses                                  788,107      531,491
                                             ----------   ----------

Net loss                                     $ (292,418)  $ (127,595)
                                             ----------   ----------

Net loss per share                           $   (.11)    $   (.05)
                                             ==========   ==========

Weighted average number of
  shares outstanding                          2,679,101    2,500,000
                                             ==========   ==========

See accompanying notes to condensed consolidated financial statements. 

                                                                              3.


<PAGE>

                   ROYAL CANADIAN FOODS CORP. AND SUBSIDIARIES
                 Condensed Consolidated Statement of Operations

                                                 Six Months Ended
                                                    November 30,
                                              ----------------------
                                                 1996         1995
                                                 ----         ----

Sales                                        $1,351,625   $  915,614
Cost of sales                                   440,646      308,738
                                             ----------   ----------

Gross profit                                    910,979      606,876
                                             ----------   ----------

Restaurant labor                                274,581      187,383
Rent                                            139,611      136,446
Other occupancy and operating
  expenses                                      293,033      314,860
Selling, general and
  administrative expenses                       374,296      294,923
Research and development                        453,850         -
Share of losses of corporate
  joint-venture                                  41,992         -
Interest expense, net of interest income
  of $25 in 1995                                 47,195       25,665
                                             ----------   ----------

Total expenses                                1,624,558      959,277
                                             ----------   ----------

Net loss                                     $ (713,579)  $ (352,401)
                                             ----------   ----------

Net loss per share                           $   (.27)    $   (.14)
                                             ==========   ==========

Weighted average number of
  shares outstanding                          2,657,489    2,500,000
                                             ==========   ==========

See accompanying notes to condensed consolidated financial statements.

                                                                              4.


<PAGE>

                   ROYAL CANADIAN FOODS CORP. AND SUBSIDIARIES
                 Condensed Consolidated Statement of Cash Flows

                                                 Six Months Ended
                                                   November 30,
                                             ----------------------
                                                 1996        1995
                                                 ----        ----

Cash Flows From Operating Activities:

  Net loss                                   $(713,579)   $(224,806)
                                             ---------    ---------
  Adjustments to reconcile net loss to net
   cash required by operating activities:
     Deferred income                           (34,823)     (16,705)
     Deferred rent expense                      10,347        6,963
     Depreciation and amortization              39,810       13,724
     Share of loss in joint venture             41,992         -
     Interest accrued on related party loans    20,811        5,117
     Contingently payable interest              16,500        1,000
     Changes in assets and liabilities:

       Accounts receivable                      (1,073)       4,664
       Inventory                                   135       (5,625)
       Prepaid expenses                         14,850         -
       Accounts payable                         51,783       (3,673)
       Accrued expenses                        257,512      128,451
       Taxes payable, other than on income      59,514       47,455
                                             ---------    ---------

Total adjustments                              477,358      181,371
                                             ---------    ---------

Net cash required by operating activities     (236,221)     (43,435)
                                             ---------    ---------

Cash Flows From Investing Activities:
  Capital expenditures                        (155,725)        (995)
  Expenditure (receipt) of cash restricted
   to property and equipment additions          62,503     (150,000)
  Investment in corporate joint venture        (66,570)        -
                                             ---------    ---------
  Net cash required by investing activities   (159,792)    (150,995)
                                             ---------    ---------
Cash Flows From Financing Activities:
  Proceeds (repayment) of stockholder loans    (59,000)      39,400
  Sales of common stock                        258,202         -
  Addition to paid-in capital                     -         150,000
  Loan proceeds, other related party           200,000         -
                                             ---------    ---------

Net cash provided by financing activities      399,202      189,400
                                             ---------    ---------

Net increase (decrease) in cash                  3,189       (5,030)

Cash, beginning of period                       23,811       12,222
                                             ---------    ---------

Cash, end of period                          $  27,000    $   7,192
                                             =========    =========

Additional Cash Flow Information:
Interest paid during the period              $   9,884    $   3,116
                                             =========    =========

Non-cash investing and financing activities:
Interest contingently payable added to
  additional paid-in capital                 $  16,500    $   1,000
                                             =========    =========

See accompanying notes to condensed consolidated financial statements.

                                                                              5.


<PAGE>

                   ROYAL CANADIAN FOODS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1

In the opinion of the Company, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as of
November 30, 1996, and the results of operations and cash flows for the three
and six-month periods ended November 30, 1996 and 1995.

Note 2

The condensed consolidated results of operations for the three and six-month
periods ended November 30, 1996 are not necessarily indicative of the results to
be expected for the full fiscal year.

Note 3

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has incurred operating
losses since inception and at November 30, 1996 has an accumulated deficit of
$2,515,224 and a total stockholders' deficit of $836,312. Also at such date, the
Company has negative working capital of $1,301,055. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management is planning another public offering of its equity securities, this
time on a firm commitment basis. If consummated, such offering will result in
sufficient equity and working capital to finance the Company's planned
restaurant expansion as well as its wholesale distribution division. Management
also believes that it will ultimately attain profitable operations although
there is no assurance that such goal will be achieved. The accompanying
financial statements do not include any adjustment relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary if the Company is unable
to continue in existence. (See Notes 4, 6, 7, 8, 9, 10 and 11).

Note 4

The Company's president and principal stockholder had previously extended the
maturity date of $300,000 of his unsecured loan to December 31, 1997. As of
November 30, 1996, such loan totalled $313,250, of which $13,250 is accordingly
classified as a current liability.

Note 5

On July 27, 1996, the Company's joint venture restaurant located at 1216
Washington Avenue in Miami Beach, Florida opened for business. Total development
costs were approximately $375,000. The joint venture lost $44,018 for its
initial five-week period ended August 31, 1996 and $83,984 for the approximately
four-month period ended November 30, 1996. After recording its fifty percent

share of this loss, the Company's investment in the joint venture is $205,341.

                                                                              6.

<PAGE>

                   ROYAL CANADIAN FOODS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 6

The Company's investment in the corporate joint venture together with related
administrative and travel expenses as well as the loss incurred on the
terminated lease of the second joint venture were all funded principally from
the proceeds of a financing commitment from a third party investor. Of the
aggregate $300,000 commitment, $275,000 has been advanced. The agreement
provides that repayment of the principal together with interest thereon at the
rate of 12% is required only in the event of and from the proceeds of a public
offering of the Company's common stock.

On August 30, 1996, certain restrictions regarding the allocation and use of the
funds for development purposes were eliminated. In October 1996, the investor
waived all restrictions on the use of the amounts advanced under the agreement;
as amended, the agreement requires only that the Company use the funds in its
operations.

Note 7

In July and August of 1996, the Company sold a total of 129,101 newly issued
shares of common stock, all at a price of $2.00 per share, for $258,202 in the
aggregate. Such shares were sold under Regulation "S" of the Securities Act of
1933. (See Note 10).

Note 8

The Company's research and development expenditures for its wholesale
distribution division were as follows for the three and six month periods ended
November 30, 1996:

                                               Three        Six
                                              Months      Months
                                              ------      ------
Product development and analysis             $ 41,900    $126,850
Package designing                             110,809     248,889
Shows, marketing and other                     40,103      78,111
                                             --------    --------
Total research and development expenses      $192,812    $453,850
                                             ========    ========

Note 9

On September 16, 1996, the Company borrowed an additional $100,000 from the

affiliate of the third party investor who provided the $300,000 restaurant
financing commitment. This loan also bears interest at 12% and is due December
31, 1997, except that it must be prepaid from the proceeds of a public offering
should one be consummated prior thereto. At November 30, 1996, interest accrued
on the $200,000 of loan principal totals $8,000.

Note 10

On November 19, 1996, the Company's underwriter agreed to amend its letter of
intent for the Company's second public offering of its equity securities to
change from a best-efforts type to a firm commitment type underwriting, which
generally provides that all shares will be sold if one is sold, and also to
reduce the exercise price of the underwriter's stock purchase warrants from 165%
of the public offering price to 120% thereof.

                                                                              7.

<PAGE>

                   ROYAL CANADIAN FOODS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 11

In January 1997, the Company sold, in two transactions, a total of 114,973 newly
issued shares of common stock, all at a price of $2.00 per share, for $229,946
in the aggregate. Such shares were sold under Regulation "S" of the Securities
Act of 1933.

Note 12

Loss per share is based upon the loss for each period divided by the weighted
average number of common shares outstanding during each period. Common stock
purchase warrants, exercisable until October 7, 1998, are required to be
considered when calculating loss per share data. However for the three and
six-month periods ended November 30, 1996 and 1995, the effect of the common
stock purchase warrants is anti-dilutive and is therefore ignored.

                                                                              8.


<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Sales for the quarter ended November 30, 1996 increased by $134,868 to $733,988
from $599,120 for the quarter ended November 30, 1995, a 22.5% increase. The
Company operated three restaurants throughout both quarterly and year-to-date
periods. Sales for the 1996 quarter increased at all three restaurants with
percentage sales gains of 47%, 29%, and 5%, for the Third Avenue, Broadway and
Second Avenue locations, respectively. Management attributes the sales gains
generally to continuing improvements in operations arising from using better
qualified, more experienced chefs in each restaurant as well as a full-time
manager for each location. The 47% gain for Third Avenue reflects in part the
smaller, earlier period base amount to which the increase is compared for the
Company's newest restaurant, still the smallest in terms of sales. The 29%
increase at the Broadway location was spurred by significant improvements and
renovations to the physical premises. Sales increases over the first quarter of
fiscal 1996 were 23%, 14% and 21%, reflecting seasonal gains over the slower
Summer months. For the six-months, total sales increased by $436,011, or 47.6%
to $1,351,625 in 1996 from $915,614 in 1995.

Cost of sales increased by $43,075 to $238,299 from $195,224 for the quarter and
by $131,908 to $440,646 from $308,738 for the six months, increases of 22.1% and
42.7%, respectively, paralleling the sales increases. As a percentage of sales,
these costs decreased by 0.1% to 32.5% from 32.6% for the quarter and by 1.1% to
32.6% from 33.7% for the six months. The improvement in gross margins is a
product of the greater efficiency of raw food use associated with higher sales.
On a quarter-to- quarter basis within the current year, cost of sales declined
by 0.3%, reflecting the sales gains.

Restaurant labor expenses increased by $6,361 to $140,884 from $134,523 for the
quarter and by $87,198 to $274,581 from $187,383 for the six months, increases
of 4.7% and 46.5%, respectively, reflecting principally the staffing additions
made during the first quarter of 1996 as well as the actual sales gains. As a
percentage of sales, labor costs decreased by 3.3% to 19.2% from 22.5% for the
quarter and by 0.2% to 20.3% from 20.5% for the six months, reflecting increased
productivity now that a larger sales base has been attained. The quarter to
quarter comparison within the current year shows a 2.4% decrease from 21.6%,
again reflecting productivity gains. Management believes these productivity
gains indicate it now has the proper level of management, culinary and general
staff at each location, and is hopeful of additional sales gains with continued
disproportionately less added labor costs as operations continue to improve and
become more efficient.

Rent expense increased by $313 to $70,426 from $70,113 for the quarter and by
$3,165 to $139,611 from $136,446 for the six months, increases of 0.4% and 2.3%,
respectively. The increases reflect quarterly variations in pass-through items
from landlords. As a percentage of sales, rent declined by 2.1% to 9.6% from
11.7% for the quarter and by 4.6% to 10.3% from 14.9% for the year-to-date.

                                                                              9.



<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations (continued)

The quarter to quarter comparison within the current year shows a 1.6% decrease,
reflecting the increase in sales relative to rent expense.

Other occupancy and operating expenses decreased by $4,220 to $136,256 from
$140,476 for the quarter and by $21,827 to $293,033 from $314,860 for the six
months, decreases of 3.0% and 5.9%, respectively. As a percentage of sales,
these expenses decreased by 4.8% to 18.6% from 23.4% for the quarter and by
12.7% to 21.7% from 34.4% for the six months, reflecting the economies of scale
now being realized by the Company as many of the costs in this category are
fixed or semi-fixed in nature. The quarter-to-quarter improvement within the
current year of 6.8% from 25.4% underscores the effect of the Company's sales
volume leverage on many occupancy expenses in this category as well as certain
operating savings occasioned by the more temperate Fall months. Percentage of
sales savings in both the quarterly and six-month periods occurred in operating
supplies, utilities, repairs and maintenance, cleaning supplies and employee
uniforms and garbage removal.

Selling, general and administrative expenses rose by $32,718 to $202,642 from
$169,924 for the quarter and by $79,373 to $374,296 from $294,923 from $292,100
for the six months, increases of 19.3% and 26.9%, respectively. As a percentage
of sales, these expenses decreased by 0.8% to 27.6% from 28.4% for the quarter
and by 4.5% to 27.1% from 32.2% for the year-to-date period. The 4.5% decrease
as a percentage of sales for the sixth months was principally attributable to
the effect of the sales increase on officers' salaries which, while constant in
dollar amounts, declined by 4.8% of sales. Selling expenses, principally
advertising and credit card dining discounts decreased by 1.4% of sales while
general and administrative expenses, principally travel and professional fees
increased by 1.7% of sales. The quarter-to-quarter comparison within the current
fiscal year reflects an improvement of 0.2% of sales.

Research and development expenditures for the new wholesale distribution
division were $192,812 for the quarter and $43,850 for the six months. (See Note
8 to the Condensed Consolidated Financial Statements).

The Company's share of losses incurred by its Florida joint-venture was $19,968
for the quarter and $41,992 for the six months. (See Note 5 to the Condensed
Consolidated Financial Statements).

                                                                             10.

<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Results of Operations (continued)

Interest expense increased by $8,664 to $25,119 from $16,455 in the quarter and
by $21,530 to $47,195 from $25,665 for the six months reflecting (i) interest of
$6,645 for the quarter and $12,811 for the six months on officer loans
outstanding bearing interest at 9% (see Note 4 to the Condensed Consolidated
Financial Statements); (ii) interest of $8,250 for the quarter and $16,500 for
the six months recognized on the $275,000 contingent liability (see Note 6 to
the Condensed Consolidated Financial Statements); (ii) interest of $2,500 for
the quarter and $8,000 for the six months on the other (non-contingent) third
party loan (see Note 9 to the Condensed Consolidated Financial Statements); and
(iv) incidental interest on certain late-paid sales tax and rent payments.

Due to operating losses sustained, no income taxes were incurred in either
quarterly or year-to-date period.

Liquidity

The Company's working capital deficit increased by $300,376 from $1,000,679 at
May 31, 1996 to $1,301,055 at November 30, 1996. The Company's unrestricted cash
balance increased by $3,189 to $27,000 at November 30, 1996.

Operating activities required $236,221. Significant non-cash items included
deferred income applied of $34,823 and deferred rent, depreciation and certain
interest items of $10,347, $39,810 and $37,311, respectively. A further non-cash
item was the $41,992 share of the Florida joint-venture's initial loss. Changes
in applicable assets and liabilities related to operations provided $382,721.

Investing activities required $155,725 for capital expenditures. Additional
investments in the Florida joint-venture required $66,570. Expenditures of cash
of $62,503 restricted by the related financing agreement to property and
equipment additions were recorded as investing inflows. As a result, investing
activities required a net outflow of $159,792.

Financing activities provided $399,202. Sales of stock at $2.00 per share
pursuant to Regulations "S" of the Securities Act of 1933 provided $258,202. The
new (non-contingent) third party loan provided $200,000. A stockholder loan
repayment required $59,000.

At November 30, 1996, the Company's liquidity and financial condition reflected
deficiencies in net working capital and stockholders' equity of $1,301,055 and
$836,312 respectively. In January of 1997, the Company sold 114,973 newly issued
shares of common stock under Regulation "S" of the Securities Act of 1933 and
received aggregate net proceeds of $229,946. The Company is planning a second
public offering for gross proceeds of $6,000,000 on a firm commitment basis.
There is no assurance that such offering will be consummated.

                                                                             11.

<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Results of Operations (continued)

The Company has been proceeding with the development of a new wholesale
distribution division. The Company will need additional funds to complete such
development and commence its wholesale operations; either from the proceeds of
the planned public offering or from interim or alternate debt or equity
financing or a combination thereof.

The Company will also seek to develop up to three new restaurants in Florida,
most likely through wholly owned subsidiaries rather than joint-ventures. The
funds for these new restaurants are expected to come from the public offering.
The Company has identified a suitable site for one such restaurant and is
negotiating a lease therefor.

In addition to consummating its entry into wholesale distribution as well as
developing new restaurants, the Company must find a way to make both its
existing and planned new operations and/or locations profitable. While sales
gains at the New York restaurants are encouraging, profitable operations are
critical to the Company's long-term viability; to reach the long-term goal, the
near-term critical need is to consummate the necessary financing to implement
the Company's expansion plans. The continuation of the Company as a going
concern is dependent thereon.

PART II. OTHER INFORMATION

Item 1-5.         Not Applicable

Item 6.           Exhibits and Reports on Form 8-K

                                                                             12.



<PAGE>


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                          ROYAL CANADIAN FOODS CORP.

Date: April 10, 1997                      By: /s/Sheldon Golumbia
                                              ---------------------------
                                              Sheldon Golumbia, President
                                              and Principal Financial Officer