SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C.  20549

                                    FORM 10-K

             [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
                    For the fiscal year ended December 31, 2000
                                        OR
           [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

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

Commission file number     1-7190
                       ----------------------

                             IMPERIALINDUSTRIES,INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Delaware                                    65-0854631
--------------------------------------------------------------------------------
    (State or other jurisdiction of                  (I.R.S. Employer
    incorporation or organization)                  Identification No.)

1259 Northwest21stStreet,PompanoBeach,Florida                  33069-1417
--------------------------------------------------------------------------------
 (Address of principal executive offices)                      (Zip Code)

     Registrant's telephone number, including area code:   (954) 917-4114
                                                           --------------

     Securities registered pursuant to Section 12(b) of the Act:

     Title of each class             Name of each exchange on which registered
     -------------------             -----------------------------------------
            None                                            None

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

                          Common Stock, $.01 par value
                          ----------------------------
                                (Title of Class)

                           8% Subordinated Debentures
                           --------------------------
                                (Title of Class)

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

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (S229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

      The aggregate market value of the voting stock of the Registrant held by
non-affiliates computed by reference to the average bid and asked price of the
registrant's Common Stock ($.01 par value) on March 16, 2001 is: $2,016,044

      Number of shares of Imperial Industries, Inc. Common Stock ($.01 par
value) outstanding on March 16, 2001:  9,205,434
<PAGE>

                                     PART I

Item 1.     Business
            --------

                 Imperial Industries, Inc., is a Delaware corporation which
            through its predecessor corporation has been in existence since
            1968. The Company's executive offices are located at 1259 Northwest
            21st Street, Pompano Beach, Florida 33069 and the telephone number
            at such offices is (954) 917-4114.

            Merger
            ------

                 On October 12, 1998, the Board of Directors approved a plan
            merging Imperial Industries, Inc. into Imperial Merger Corp., a
            newly- formed, wholly-owned subsidiary of the Company, (the
            "Merger"). The Merger was approved at a special meeting of the
            Company's Stockholders on December 17, 1998, with the Merger
            becoming effective December 31, 1998. On the effective date of the
            Merger, Imperial Merger Corp. changed its name to Imperial
            Industries, Inc. (hereinafter referred to as (the "Company").

                 Upon consummation of the Merger, each share of common stock
            outstanding prior to the Merger was automatically converted to one
            share of common stock of the Company. Each share of preferred stock
            outstanding prior to the Merger was converted, at the holder's
            option, into either (a) $4.75 in cash and ten shares of the
            Company's common stock, or (b) $2.25 in cash, an 8% subordinated
            debenture, face value $8.00, and five shares of the Company's common
            stock. Holders representing 81,100 preferred shares have elected
            dissenters' rights, which, if perfected under Delaware law, would
            require the Company to pay to the holders the fair value of their
            stock in cash to be determined by the Delaware Chancery Court.
            Pursuant to Delaware law, the dissenting shareholders petitioned the
            Delaware Chancery Court to determine the fair value of their shares
            at the effective date of the Merger, exclusive of any element of
            value attributable to the Merger.

                 In accordance with the Merger, the Company issued $984,960 of
            8% Subordinated Debentures, 1,574,610 shares of common stock and
            paid $732,550 in cash to the former preferred shareholders who did
            not elect dissenters' rights. The Company does not know the amount
            which would be payable to dissenting holders who ultimately perfect
            their dissenters rights. Those dissenting stockholders who fail to
            perfect their dissenters' rights under Delaware law would ultimately
            receive the consideration in option (b) above. For a more complete
            description of the Merger, see Note (1) of Notes to Consolidated
            Financial statements.

                                       1
<PAGE>
Item 1.     Business (continued)
            --------

            General
            -------

                 The Company, through its subsidiaries, is engaged in the
            manufacture and distribution of building materials to building
            materials dealers and others located primarily in Florida,
            Mississippi, Georgia, and Alabama and to a lesser extent, other
            states in the Southeastern part of the United States as well as
            foreign countries. The Company presently has fourteen distribution
            outlets through which it markets certain of its manufactured
            products and other purchased products directly to end users. The
            Company's products are used in the construction industry by
            developers, builders, contractors, and sub-contractors.

                 The Company's business is directly related to the level of
            activity in the new and renovation construction market in these
            states and to a lesser extent other states in the Southeastern part
            of the United States. The Company's products are used by developers,
            general contractors and subcontractors in the construction or
            renovation of residential, multi-family and commercial buildings and
            swimming pools. Demand for new construction is related to, among
            other things, population growth. Population growth, in turn, is
            principally a function of migration of new residents to these
            states. When economic conditions reduce migration, demand for new
            construction decreases. Construction activity is also affected by
            the size of the inventory of available housing units, mortgage
            interest rates, availability of funds and local government growth
            management policies. The Company's operations are directly related
            to the general economic conditions existing in the Southeastern part
            of the United States.

                 The Company's manufacturing operations are conducted by its
            wholly owned subsidiaries, Premix-Marbletite Manufacturing Co.
            ("Premix") and Acrocrete, Inc. ("Acrocrete"). The Company's
            distribution operations are conducted through its other wholly owned
            subsidiary, Just-Rite Supply, Inc. ("Just-Rite"). The manufacturing
            operations primarily produce and distribute stucco, roof tile mortar
            and plaster products. The distribution operations distribute gypsum,
            roofing and insulation products, as well as products manufactured by
            the Company's manufacturing subsidiaries.


                                       2
<PAGE>
Item 1.     Business (continued)
            --------

            General (continued)
            -------

                 Stucco products are applied as a finishing coat to exterior
            surfaces and to swimming pools. Roof tile mortar is used to adhere
            cement roof tiles to the roof. Plaster customarily is used to finish
            interiors of structures.

            Premix
            ------

                 Premix, together with its predecessors, has been in business
            for approximately 40 years. The names "Premix" and
            "Premix-Marbletite" are among the registered trademarks of Premix.
            The Company believes the trade names of its manufactured products
            represent a substantial benefit to the Company because of industry
            recognition and brand preference. Premix manufactures stucco, roof
            tile mortar, plaster and swimming pool finishes. The products
            manufactured by Premix basically are a combination of portland (or
            masonry) cement, sand, lime, marble and a plasticizing agent and
            other chemicals, including color- impregnating materials.

                 Premix accounted for approximately 23%, 39% and 42% of the
            Company's consolidated annual revenues in the fiscal years ended
            December 31, 2000, 1999 and 1998, respectively.

                 The Company is a party to a licensing agreement with an
            unaffiliated company to exclusively manufacture and sell a roof tile
            mortar product throughout the State of Florida and certain foreign
            countries. Premix has also entered into agreements to manufacture
            this product on behalf of selected wholesalers who distribute this
            product under the wholesalers names through their existing
            established dealer networks to service the roofing contractor
            industry. To date, a majority of all roof tile mortar sales have
            been derived from South Florida. Until 1996, the Company's licensed
            roof tile mortar product was the only mortar product approved by
            Miami Dade County, Florida, building authorities for use to adhere
            all types of cement roof tiles to roofs. In 1997, the Company's roof
            tile mortar was approved by the Broward and Palm Beach County
            building authorities along with other competitive products. Other
            adhesive products used for similar purposes are also used by the
            industry. The Company has expanded its marketing efforts for this
            product to other areas of Florida based on product performance
            rather than only as required by building code requirements.


                                       3
<PAGE>
Item 1.     Business (continued)
            --------

            Acrocrete
            ---------

                 Acrocrete manufactures synthetic acrylic stucco products. The
            Company's trade name "Acrocrete" and certain of its manufactured
            products are described by trade names protected by registered
            trademarks. Acrocrete's products, used principally for exterior wall
            coatings, broaden and complement the range of products produced and
            sold by Premix. Management believes acrylic stucco products have
            certain advantages over traditional cementitious stucco products for
            certain types of construction applications because synthetic acrylic
            products provide a hard durable finish with stronger color retention
            properties. Further, acrylic stucco products have improved
            flexibility characteristics, which minimizes the problems of
            cracking of cement coating. Acrocrete's product system provides for
            energy efficiency for both residential and commercial buildings.

                 For the fiscal years ended December 31, 2000, 1999 and 1998,
            Acrocrete's sales accounted for approximately 21%, 61% and 58%,
            respectively, of the Company's consolidated annual revenues. Prior
            to January 1, 2000, the Company's distribution operations were
            operated through Acrocrete.

            Just-Rite
            ---------

                 In January 2000, the Company established Just-Rite Supply, a
            wholly owned subsidiary to own and operate its five wholesale
            distribution outlets formerly owned and operated by Acrocrete. The
            Company's Board of Directors determined to establish the Company's
            distribution operations as a separate business unit to maximize
            business efficiencies. In addition, during the first five months of
            2000, Just-Rite acquired nine building material distribution outlets
            to diversify its product offering to the construction market to
            include gypsum, roofing, masonry, insulation products, as well as
            installation services beyond those supported by the Company's
            manufacturing operation. Management believes the acquired
            distribution outlets position the Company to gain a greater market
            share for its manufactured products through more direct sales to the
            end-user and to expand operations by distributing a wider range of

                                       4
<PAGE>
Item 1.     Business (continued)
            --------

            Just-Rite (continued)
            ---------


            building materials to the construction industry that are
            complementary to its existing product lines.

                 For the fiscal year ended December 31, 2000, Just-Rite's sales,
            excluding the sale of Premix and Acrocrete products, accounted for
            approximately 56% of the Company's consolidated annual revenues.


            Acquisition Opportunities and Present Status
            --------------------------------------------

                 The Company believes the gypsum, roofing and stucco building
            products distribution industries are fragmented and have the
            potential for consolidation in response to the competitive
            disadvantages faced by smaller distributors. Management believes
            that these industries are characterized by a significant number of
            relatively small privately-owned, local, relationship-based
            companies that emphasize service, delivery and reliability as well
            as competitive pricing and breadth of product line to their
            customers. The competitive environment for these distributors, in
            combination with the desire for owners of certain of these
            distributors to gain liquidity, provides an opportunity for
            expansion through acquisition. The Company believes that
            opportunities exist for a company which has the ability to source
            and distribute products effectively to serve the building materials
            industry and to effect cost savings through economies of scale which
            can be applied to companies that may be acquired in these
            industries.

                 The Company's primary focus in 2001 is to complete the
            integration of the distribution outlets acquired in 2000 with its
            existing operations and to attempt to effect cost savings in the
            consolidation of the acquired operations. While it currently will
            emphasize internal growth through gains in productivity of
            operations, the Company believes there exists a number of possible
            acquisition candidates. The Company presently is not seeking any
            acquisitions, but may do so in the future and does not have any
            binding understanding, agreement or commitment regarding any
            potential acquisition.

            Suppliers
            ---------

                 Premix's raw materials and products are purchased from
            approximately 26 suppliers. While four suppliers account for
            approximately 57% of Premix's purchases, Premix is not dependent on
            any one supplier for its requirements. Equivalent materials are
            readily available from other sources at similar prices.

                                       5
<PAGE>
Item 1.     Business (continued)
            --------

            Suppliers (continued)
            ---------

                 Acrocrete's raw materials are purchased from approximately 17
            other suppliers, of which five account for approximately 66% of
            Acrocrete's raw material purchases. However, equivalent materials
            are available from several other sources at similar prices and
            Acrocrete is not dependent on any one supplier for its requirements.

                 The Company's Just-Rite distribution outlets sell products of
            many suppliers. Just-Rite purchases a significant amount of its
            products through buying group organizations, companies which
            consolidate product purchase orders from many independent
            distributors and order product from various vendors on the
            distributors behalf to gain consolidated purchasing efficiencies for
            each distributor. One such buying organization accounted for
            approximately 26% of Just-Rite purchases in 2000. However, there are
            other buying organizations in which the Company can obtain product
            at the same or similar prices.

            Marketing and Sales
            -------------------

                 The Company's marketing and sales strategy is to create a
            profit center for the products it manufactures, as well as enlarging
            its product offering to include certain complementary products and
            other building materials manufactured by other companies. The
            complementary items are purchased by the Company and held in
            inventory, together with manufactured products, for sale to
            customers. Generally, sales orders are filled out of existing
            inventory within several days of receipt of the order. The total
            package sales approach to the new and renovation construction
            markets is targeted at both the end user of the Company's products,
            being primarily the contractor or subcontractor, and the
            distributor, principally building materials dealers who purchase
            products from the Company and sell to the end user, and in some
            instances, to retail customers.

                 While the Company's manufactured sales historically have been
            typically to distributors, the Company focuses marketing efforts on
            the contractor/subcontractor end user to create a brand preference
            for the Company's manufactured products. No one distributor has
            accounted for 10% or more of total sales during the past three
            years. The Company believes the loss of any one distributor would
            not cause a material loss in sales because the brand preference
            contractors and subcontractors have developed for the Company's
            manufactured products generally cause the user to seek a distributor
            who carries the Company's products. Although the Company markets its
            products to distributors through Company salesmen located in the
            Southeastern

                                       6
<PAGE>



Item 1.     Business (continued)
            --------

            Marketing and Sales (continued)
            -------------------

            United States who promote both Premix and Acrocrete products, direct
            sales of manufactured products and other building materials to end
            users through Just-Rite now account for approximately 70% of total
            revenues in 2000.

                 Beginning in 1994, the Company opened a distribution outlet in
            Savannah, Georgia to sell its Acrocrete products directly to the end
            user. The Company's products and certain complementary products
            manufactured by other companies were inventoried and sold from a
            leased warehouse distribution facility. Since 1994, the Company has
            closed the Savannah outlet and opened or acquired an additional
            fourteen outlets in Florida, Georgia, Mississippi and Alabama.

                 In February 1998, the Company acquired a facility in Tampa,
            Florida that was engaged primarily in the distribution of landscape
            stone products. The Company utilized this distribution facility to
            gain market share for the sale of its products on the West Coast of
            Florida. The Company subsequently opened a fourth distribution
            facility in the third quarter of 1998 in Dallas, Georgia, and a
            fifth in Gadsden, Alabama in April 1999, which was subsequently
            moved to Rainbow City, Alabama in 2000. In January 2000, the Company
            acquired three additional outlets, one in Foley, Alabama, one in
            Pensacola, Florida and one in Destin, Florida. In March 2000 and
            April 2000, the Company acquired additional distribution outlets in
            Panama City Beach and Tallahassee, Florida. Effective May 1, 2000
            the Company acquired three distribution outlets located in Gulfport,
            Pascagoula and Hattiesburg, Mississippi. In October, 2000, the
            Company opened a new distribution outlet in Picayune, Mississippi
            and subsequently closed the Hattiesburg outlet in February, 2001.

                 Each facility contains between approximately 6,400 to 29,000
            square feet. The distribution facilities are designed to promote
            product brand preference to the contractor and sub-contractor, and
            also to improve service capabilities, increase market share, and to
            increase profit margins from the sale of the Company's products and
            to expand operations by distributing a wide range of products to the
            construction industry. The Company sells Acrocrete, Premix and
            complementary products of other manufacturers at such distribution
            facilities.



                                       7
<PAGE>
Item 1.     Business (continued)
            --------

            Seasonality
            -----------

                 The sale of the Company's products in the construction market
            for the Southeastern United States is somewhat seasonal due in part
            to periods of adverse weather, with a lower rate of sales
            historically occurring in the period December through February
            compared to the rest of the year. As a result of acquisitions
            consummated in 2000 located in Northwest Florida, Alabama and
            Mississippi, management believes the Company's sales are more
            subject to seasonal fluctuation than in prior years.

            Competition
            -----------

                 The Company's business is highly competitive. Premix and
            Acrocrete encounter significant competition from local, independent
            firms, as well as regional and national manufacturers of acrylic,
            cement and plaster products, most of whom manufacture products
            similar to those of Premix and Acrocrete. The Company's distribution
            outlets encounter significant competition from local independent
            distributors as well as regional and national distributors who sell
            similar products. Many of these competitors are larger, more
            established and better financed than the Company. The Company
            believes it can compete with the other companies based upon product
            performance and quality, customer service and prices through
            maintaining lower overhead costs than larger national companies.

            Environmental Matters
            ---------------------

                 The Company is subject to various federal, state and local
            environmental laws and regulations in the normal course of its
            business. Although the Company believes that its manufacture,
            handling, use, sale and disposal of its raw materials and products
            are in accord with current environmental regulations, future
            developments could require the Company to make unforeseen
            expenditures relating to environmental matters. Increasingly strict
            environmental laws, standards and environmental policies may
            increase the risk of liability and compliance costs associated with
            the Company's operations. Capital expenditures for this purpose have
            not been material in past years, and expenditures for 2001 to comply
            with existing laws and regulations are also not expected to have a
            material effect on the Company's financial position, results of
            operations or liquidity.

            Employees
            ---------

                 The Company and its subsidiaries had 210 full time employees as
            of December 31, 2000.  The Company considers its employee relations
            to be satisfactory.  The Company's employees are not subject to any
            collective bargaining agreement.

                                       8
<PAGE>

Item 2.     Properties
            ----------

                 The Company and its subsidiaries maintain a total of 17
            facilities in Florida, Georgia, Mississippi and Alabama. The
            location and size of the Company's facilities and the nature of the
            operations in which such facilities are used, are as follows:

                               Approximate  Owned/
               Location        Sq.Footage   Leased    CompanyProducts

            Pompano Beach, Fl.    19,600    Leased    Premix (Manufacturing)
            Winter Springs, Fl.   26,000    Owned     Premix (Manufacturing)
            Kennesaw, Ga.         20,400    Leased    Acrocrete (Manufacturing)
            Tampa, Fl.             8,470    Owned     Just-Rite (Distribution)
            Jacksonville, Fl.     11,400    Leased    Just-Rite (Distribution)
            Norcross, Ga.         12,200    Leased    Just-Rite (Distribution)
            Dallas, Ga.            6,400    Leased    Just-Rite (Distribution)
            Rainbow City, Al.     10,000    Leased    Just-Rite (Distribution)
            Pensacola, Fl.        15,250    Owned     Just-Rite (Distribution)
            Ft. Walton Beach, Fl.  8,000    Leased    Just-Rite (Distribution)
            Destin, Fl.            7,680    Leased    Just-Rite (Distribution)
            Foley, Al.             9,000    Leased    Just-Rite (Distribution)
            Panama City Beach, Fl. 9,540    Leased    Just-Rite (Distribution)
            Tallahassee, Fl       17,500    Leased    Just-Rite (Distribution)
            Gulfport, Ms.         28,800    Leased    Just-Rite (Distribution)
            Pascagoula, Ms.        9,000    Leased    Just-Rite (Distribution)
            Picayune, Ms.         10,000    Leased    Just-Rite (Distribution)

                 The Just-Rite distribution outlets typically consist of a
            warehouse building and supply yard for the inventory and sale of
            products directly to the end user.

                 Except for the Destin, Tallahassee, Panama City Beach,
            Gulfport, and Pascagoula locations, all leased properties are leased
            from unaffiliated third parties. The Destin facility is leased from
            an entity in which the former owner of A&R Supply, Inc. owns a
            minority interest. The former owner sold his business interest to
            the Company in January 2000 and is currently a Vice President and
            general manager of Just-Rite. The Tallahassee and Panama City Beach
            facilities are leased from the former owners of Tallahassee Gypsum
            Dealers, Inc, and

                                       9
<PAGE>
Item 2.     Properties (continued)
            ----------

            Panhandle Drywall Supply, Inc., who sold their business interest to
            Just-Rite in March 2000 and April 2000 and are currently employees
            of the Company. The Gulfport locations are leased from an entity
            owned by the former owners of A&R Supply, Inc. and A&R Supply of
            Mississippi, Inc., who sold their businesses to Just-Rite and are
            currently Vice Presidents and General Managers of Just-Rite. The
            Pascagoula facility is leased from an entity solely-owned by the
            former owner of A&R Supply of Mississippi, Inc.

                 Management believes that the Company's facilities and equipment
            are well-maintained, in good operating condition and sufficient for
            its present operating needs.

Item 3.     Legal Proceedings
            -----------------

                 As of March 23, 2001, the Company's subsidiary Acrocrete and
            other parties are defendants in 30 lawsuits pending in various
            Southeastern states, by homeowners, contractors and subcontractors,
            or their insurance companies, claiming moisture intrusion damages on
            single family residences. The Company's insurance carriers have
            accepted coverage under a reservation of rights for 28 of these
            claims and are providing a defense. The Company expects its
            insurance carriers to accept coverage for the other two recently
            filed lawsuits. Acrocrete is vigorously defending all of these cases
            and believes it has meritorious defenses, counter-claims and claims
            against third parties. Acrocrete is unable to determine the exact
            extent of its exposure or outcome of this litigation.

                 The allegations of defects in synthetic stucco wall systems are
            not restricted to Acrocrete products but rather are an industry-wide
            issue. There has never been any defect proven against Acrocrete. The
            alleged failure of these products to perform has generally been
            linked to improper application and the failure of adjacent building
            materials such as windows, roof flashing, decking and the lack of
            caulking.

                 On June 15, 1999, Premix was served with a complaint captioned
            Mirage Condominium  Association, Inc. v. Premix Marbletite
            Manufacturing Co., et al., in Miami-Dade County Florida.  The
            lawsuit raises a number of allegations against 12 separate
            defendants involving alleged construction defects.  Plaintiff has
            alleged only one count against Premix, which claims that certain
            materials,

                                       10
<PAGE>
Item 3.     Legal Proceedings (continued)
            -----------------

            purportedly provided by Premix to the Developer/ Contractor and used
            to anchor balcony railings to the structure were defective. The
            Company's insurance carrier has not made a decision regarding
            coverage to date. In the interim, the insurance carrier has retained
            defense counsel on behalf of Premix and is paying defense costs.
            Premix expects the insurance carriers to eventually accept coverage.
            Premix is unable to determine the exact extent of its exposure or
            the outcome of this litigation.

                 Premix and Acrocrete are engaged in other legal actions and
            claims arising in the ordinary course of its business, none of which
            is believed to be material to the Company.

                 On April 23, 1999, certain Dissenting Shareholders owning
            shares of the Company's preferred stock filed a petition for
            appraisal in the Delaware Chancery Court to determine the fair value
            of the shares at December 31, 1998, the effective date of the
            Company's Merger. (See Note 1 of Notes to Consolidated Financial
            Statements).


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

                 None.
                                       11
<PAGE>

                                     PART II


Item 5.      Market for the Registrant's Common Equity and Related
             -----------------------------------------------------
             Stockholder Matters
             -------------------

                  The Company's Common Stock is traded in the over-the-counter
             market. The following table sets forth the high and low bid
             quotations of the Common Stock for the quarters indicated, as
             reported by the National Quotation Bureau, Inc. Such quotations
             represent prices between dealers and do not include retail mark-up,
             mark-down, or commission, and may not necessarily represent actual
             transactions.

                            Fiscal,1999        High          Low
                            -----------        ----          ---

                            First Quarter      $.41          $.28
                            Second Quarter      .44           .31
                            Third Quarter       .63           .44
                            Fourth Quarter      .72           .45

                            Fiscal,2000        High          Low
                            -----------        ----          ---

                            First Quarter      $.86          $.54
                            Second Quarter      .70           .58
                            Third Quarter       .71           .51
                            Fourth Quarter      .55           .35


                  The Company has not paid any cash dividends on its Common
             Stock since 1980.

                  On March 16, 2001, the Common Stock was held by 1,897
             stockholders of record.

                  As of March 16, 2001, the closing bid and asked prices of the
             Common Stock was $.29 and $.31, respectively.





                                       12


<PAGE>


Item 6.  Selected Financial Data
         -----------------------

            The following is a summary of selected financial data (in thousands
         except as to per share amounts) for the five years ended December 31,
         2000:

<TABLE>
<CAPTION>


Statements of Operations Data                                  Year Ended December 31,
-----------------------------                -----------------------------------------------------------
                                             2000          1999          1998         1997          1996
                                             ----          ----          ----         ----          ----
<S>                                       <C>           <C>           <C>           <C>           <C>
Net sales                                 $ 40,730      $ 22,604      $ 18,739      $ 15,774      $ 13,742
Cost of sales                               28,218        15,198        12,823        10,867         9,881
Selling, general and administrative
 expenses                                   10,985         5,932         4,645         3,740         3,313
Interest expense                              (806)         (475)         (272)         (329)         (317)
Merger costs                                  --            --            (456)         --            --
Miscellaneous income, net                      199            34         1,218            54            43
Income before income taxes                     920         1,033         1,761           892           274
Income tax (expense) benefit, net             (386)          187           296           753          --
Net income                                     534         1,220         2,057         1,645           274
Less:  dividends on redeemable
  preferred stock                             --            --            (248)         (330)         (330)
Less:  net charge for elimination
  of preferred stock                          --            --            (975)         --            --
Net income (loss) applicable to
  common stockholders                     $    534      $  1,220      $    834      $  1,315      $    (56)
Net income (loss) per share
  applicable to common stockholders
     Basic                                $    .06      $    .15      $    .13      $    .22      $   (.01)
     Diluted                              $    .06      $    .15      $    .12      $    .21      $   (.01)
Number of shares used in computation
 of income (loss) per share:  Basic          8,936         8,199         6,566         6,009         5,471
                              Diluted        9,070         8,390         6,715         6,267         5,471
</TABLE>

                                       13
<PAGE>
<TABLE>
<CAPTION>

Balance Sheets Data
-------------------                                       As of December 31,
                                        -----------------------------------------------------
                                        2000        1999        1998        1997         1996
                                        ----        ----        ----        ----         ----

<S>                                   <C>         <C>         <C>         <C>          <C>
Working capital                       $ 1,607     $ 3,447     $ 2,439     $ 1,995      $   872
Total assets                          $16,792     $ 8,768     $ 7,561     $ 5,128      $ 4,116
Long-term debt,
 less current maturities              $ 1,402     $ 1,328     $ 1,316     $   819      $   895
Obligation for appraisal rights       $   877     $   877     $   877          $-           $-
Redeemable preferred stock                 $-          $-          $-     $ 3,001      $ 3,001
Preferred dividends in arrears(1)          $-          $-          $-     $ 4,044      $ 3,714
Common stock and other
  stockholders' equity (deficit)      $ 4,559     $ 3,514     $ 2,281     $(4,441)     $(5,879)

Current ratio                         1.2 to 1    2.1 to 1    1.8 to 1    2.2 to 1     1.4 to 1
</TABLE>

     (1)    No cash dividends were paid on the cumulative redeemable
            preferred stock since 1985. The preferred stock and all accumulated
            accrued unpaid dividends were eliminated at December 31, 1998, upon
            the effective date of the Merger.

Item 7.     Management's Discussion and Analysis of Financial Condition
            -----------------------------------------------------------
            and Results of Operations
            -------------------------

            General
            -------

                 The Company's business is related primarily to the level of
            construction activity in the Southeastern United States,
            particularly the states of Florida, Georgia, Mississippi and
            Alabama. The majority of the Company's products are sold to building
            materials dealers located principally in these states who provide
            materials to contractors and subcontractors engaged in the
            construction of residential, commercial and industrial buildings and
            swimming pools. One indicator of the level and trend of construction
            activity is the amount of construction permits issued for the
            construction of buildings. The level of construction activity is
            subject to population growth, inventory of available housing units,
            government growth policies and construction funding, among other
            things. Although general construction activity has increased in the
            Southeastern United States during the past five years, the duration
            of recent economic conditions and the magnitude of its effect on the
            construction industry are uncertain and cannot be predicted.

                  This Form 10-K contains certain forward looking statements
             within the meaning of the Private Securities Litigation Reform Act
             of 1995 with respect to the financial condition, results of
             operations and business of the Company, and its subsidiaries,
             including statements made under Management's Discussion and
             Analysis of Financial Condition and Results of Operations. These
             forward

                                       14
<PAGE>



             looking statements involve certain risks and uncertainties. No
             assurance can be given that any of such matters will be realized.
             Factors that may cause actual results to differ materially from
             those contemplated by such forward looking statements include,
             among others, the following: the competitive pressure in the
             industry; general economic and business conditions; the ability to
             implement and the effectiveness of business strategy and
             development plans; quality of management; business abilities and
             judgement of personnel; and availability of qualified personnel;
             labor and employee benefit costs.

            Results of Operations
            ---------------------

            Year Ended December 31, 2000 Compared to 1999
            ---------------------------------------------

                 Net sales in 2000 increased $18,126,000, or approximately 80.2%
            compared to 1999. The increase in sales was derived from the sale of
            building materials generated by distributors acquired at various
            dates during the first five months of 2000. These sales primarily
            consisted of building materials purchased from other manufacturers,
            principally gypsum, roofing, insulation, metal studs, masonry and
            stucco products.

                 Gross profit as a percentage of net sales for 2000 was
            approximately 30.7% compared to 32.8% in 1999. The decrease in gross
            profit margins was principally due to a greater proportion of
            consolidated sales represented by products manufactured by other
            companies sold through the Company's acquired distribution
            facilities, as compared to the proportionate amount of sale of
            products manufactured by the Company with higher gross profit
            margins. Products manufactured by the Company accounted for
            approximately 43.4% of consolidated sales in 2000, compared to
            approximately 74.0% in 1999. The distribution facilities typically
            generate lower gross profit margins than the direct sale of the
            Company's manufactured products.

                 In 2000, gross profits derived by the Company's acquired
            distribution facilities were adversely affected by competitive
            conditions in the Company's distribution markets for sales of gypsum
            products manufactured by other companies. Gypsum products,

                                       15
<PAGE>
Item 7.     Management's Discussion and Analysis of Financial Condition
            -----------------------------------------------------------
            and Results of Operations (continued)
            -------------------------

            Year Ended December 31, 2000 Compared to 1999 (continued)
            ---------------------------------------------------------


            principally wallboard, a major product line of the acquired
            distributors, suffered price deflation of approximately 40% in 2000,
            due to industry conditions.

                 The results of operations of the acquired distributors had a
            material impact on the Company's consolidated results in 2000 and
            will continue to impact results in 2001. The acquisitions were
            accounted for under the purchase method of accounting. Accordingly,
            results of operations of the acquired distributors have been
            consolidated since their respective acquisition dates in 2000.

                 Efforts are being made to increase sales and gross profits by
            focusing primarily on attaining increased sales of the Company's
            manufactured products through the Company's acquired distribution
            facilities, expanding the sale of installed products and broadening
            the product line of the Company's existing distribution facilities
            where suitable in selected markets.

                 Selling, general and administrative expenses as a percentage of
            net sales for 2000 was approximately 27.0% compared to 26.2% in
            1999. Selling, general and administrative expenses increased
            $5,053,000 or approximately 85.2% in 2000, compared to 1999. The
            increase in expenses was primarily due to additional operating costs
            related to the acquired distributors acquired in 2000 and costs
            incurred to integrate the acquisitions. Certain growth initiatives
            in the Company's distribution operations resulted in increased
            expenses in 2000. Start-up costs were incurred to develop the sale
            of certain installed products at selected distribution locations and
            for the opening of a new distribution location in Picayune,
            Mississippi in October 2000. In addition, the Company incurred
            additional costs to up-grade the delivery capabilities of its
            distribution facilities through the purchase and leasing of
            additional vehicles and added sales personnel in selected markets in
            an attempt to increase sales.

                 Efforts have been made to improve operating efficiency in the
            Company's distribution operations through: (i) a reduction in
            personnel in certain locations; (ii) closure of an acquired under-
            performing distribution location in Hattiesburg, Mississippi; (iii)
            the recent consolidation of the Company's distribution locations in

                                       16
<PAGE>
Item 7.     Management's Discussion and Analysis of Financial Condition
            -----------------------------------------------------------
            and Results of Operations (continued)
           --------------------------

            Year Ended December 31, 2000 Compared to 1999 (continued)
            ---------------------------------------------------------


            Pensacola, Florida and Foley, Alabama, through a reduction and
            realignment of personnel; and (iv) an attempt to realize greater
            savings from the purchase and resale of products through a
            consolidated purchasing program.

                 Interest expense increased $331,000, or approximately 69.7%
            compared to 1999. The increase in interest expense was primarily due
            to additional borrowings related to the purchase and operations of
            the acquired distributors. Miscellaneous income for 2000 included a
            $75,000 settlement of a prior year product liability claim against a
            former vendor.

                 In 2000, the Company incurred $367,000 of deferred income tax
            expense. In 1999, the Company recognized a $574,000 tax benefit as a
            result of releasing a portion of the valuation allowance on the
            Company's deferred tax asset. The Company's Consolidated Statement
            of Operations for the year ended December 31, 1999, reflected a
            deferred income tax benefit of $213,000, comprised of taxes at the
            statutory rate of 35% less the tax benefit described above.

                 As a result of the above factors, the Company generated net
            income of $534,000, or $.06 per fully diluted share for 2000,
            compared to net income of $1,220,000, or $.15 per share for 1999.


            Year Ended December 31,1999 Compared to 1998
            --------------------------------------------

                 Net sales in 1999 increased $3,865,000, or approximately 21%
            compared to 1998. The increase in sales was derived primarily from
            increased sales of Acrocrete products, together with certain
            complementary products manufactured by other companies, sold through
            the Company's distribution outlets. The sales of Acrocrete products
            derived from the Company's new distribution outlets in Tampa,
            Florida, (acquired February 1, 1998), Dallas, Georgia, (opened July
            1, 1998), and Gadsden, Alabama, (opened April 1, 1999) accounted for
            approximately $4,145,000 of sales in 1999, compared to $2,137,000 of
            sales in 1998.

                                       17
<PAGE>
Item 7.     Management's Discussion and Analysis of Financial Condition
            -----------------------------------------------------------
            and Results of Operations (continued)
            -------------------------

            Year Ended December 31, 1999 Compared to 1998 (continued)
            ---------------------------------------------------------

                 Gross profit as a percentage of net sales for 1999 was
            approximately 33%, compared to 32% in 1998. The increase in gross
            profit margins was principally due to a price increase for certain
            products instituted in the third quarter of 1999.

                 Selling, general and administrative expenses as a percentage of
            net sales for 1999 was approximately 26%, compared to 25% in 1998.
            Selling, general and administrative expenses increased $1,287,000,
            or approximately 28%, in 1999 compared to 1998. The increase in
            expenses was primarily due to additional sales expenses associated
            with servicing the increased volume of business, including a new
            senior marketing and sales manager, and operating costs related to
            the Company's new distribution facilities.

                 Interest expense increased from $272,000 in 1998 to $475,000 in
            1999. The increase in interest expense was due to the amount of
            $290,000 associated with the issuance of Subordinated Debentures and
            obligations incurred in connection with the Company's merger at
            December 31, 1998. Miscellaneous income for 1998 includes a gain of
            $1,066,000 derived from the sale of its former manufacturing
            facility in Miami, Florida and $62,000 of reimbursements the Company
            received from the State of Florida environmental authorities
            insurance program for costs the Company incurred in prior years
            related to the removal of underground fuel tanks located at its
            facilities. Miscellaneous expenses includes approximately $456,000
            in fees and expenses associated with the Merger and elimination of
            the preferred stock in 1998.

                 In 1999, the Company recognized a $574,000 tax benefit as a
            result of the release of a portion of the valuation allowance on
            the Company's deferred tax assets. For the fiscal year ended
            December 31, 1999, the Company recognized a net income tax benefit
            of $213,000 representing income before taxes at the statutory rate
            of 35% less the tax benefit described above. Based on the Company's
            net operating loss carryforwards, the Company is not expected to pay
            such federal income taxes for 1999.

                 As a result of the above factors, the Company derived net
            income applicable to common stockholders of $1,220,000 or $.15 per
            share for 1999, compared to net income of $834,000 or $.13 per share
            in 1998. Net income applicable to common stockholders includes a
            charge of $248,000 in 1998 for unpaid cumulative dividends on
            preferred stock, which was retired in 1998. In addition, in
            connection with the Merger, 1998 net income applicable to common
            stockholders was reduced by $975,000.

                                       18

<PAGE>


Item 7.     Management's Discussion and Analysis of Financial Condition
            -----------------------------------------------------------
            and Results of Operations (continued)
            -------------------------

            Liquidity and Capital Resources
            -------------------------------

                 At December 31, 2000, the Company had working capital of
            approximately $1,607,000 compared to working capital of $3,447,000
            at December 31, 1999. The reduction in working capital was a result
            of the reclassification of $926,000 8% subordinated debentures due
            December 31, 2001 from a long-term obligation at December 31, 1999,
            to a short-term obligation at December 31, 2000, and working capital
            utilized for the purchase and operation of seven building materials
            distributors in 2000. As of December 31, 2000, the Company had cash
            and cash equivalents of $1,853,000.

                 The Company's principal source of short-term liquidity is
            existing cash on hand and the utilization of a $6,000,000 line of
            credit with a commercial lender. The maturity date of the line of
            credit is June 19, 2001, subject to annual renewal. Premix,
            Acrocrete and Just-Rite borrow on the line of credit, based upon and
            collateralized by, their eligible accounts receivable and inventory.
            Generally, accounts not collected within 120 days are not eligible
            accounts receivable under the Company's borrowing agreement with its
            commercial lender. At December 31, 2000, $5,103,000 had been
            borrowed against the line of credit. Based on eligible receivables
            and inventory, the Company had, under its line of credit, total
            available borrowing, (including the amount outstanding of
            $5,103,000) of approximately $5,516,000 at December 31, 2000.

                 Trade accounts receivable represent amounts due from sub-
            contractors, contractors and building materials dealers located
            principally in Florida, Mississippi and Georgia who have purchased
            products on an unsecured open account basis and through Company
            owned warehouse distribution outlets. As of December 31, 2000, the
            Company owned and operated fourteen distribution outlets. Accounts
            receivable, net of allowance, at December 31, 2000 was $4,866,000
            compared to $2,677,000 at December 31, 1999. The increase in
            receivables of $2,189,000, or approximately 81.8% was primarily
            related to higher sales levels prevalent in 2000 compared to 1999,
            as a result of the acquisition of seven building materials
            distribution facilities in 2000.



                                       19
<PAGE>
Item 7.     Management's Discussion and Analysis of Financial Condition
            -----------------------------------------------------------
            and Results of Operations (continued)
            -------------------------

            Liquidity and Capital Resources (continued)

                 As a result of the consummation of a merger with a wholly-owned
            subsidiary in 1998, the Company issued an aggregate of $984,960 face
            amount, 8% subordinated debentures, 1,574,610 shares of common stock
            and agreed to pay $732,550 in cash to the former preferred
            shareholders. At December 31, 2000, the Company had paid $684,375 of
            such cash amount. Amounts payable to such shareholders at December
            31, 2000 results from their non-compliance with the conditions for
            payments. Holders representing 81,100 preferred shares have elected
            dissenters' rights, which, under Delaware law, would require cash
            payments equal to the fair value of their stock, as of the date of
            the merger, to be determined in accordance with Section 262 of the
            Delaware General Corporation Law. The Company has recorded a
            liability for each share based on the fair value of $2.25 in cash,
            an $8.00 Subordinated Debenture and five shares of the Company's
            common stock since that is the consideration the dissenting holders
            would receive if they did not perfect their dissenters' rights under
            the law. Dissenting stockholders filed a petition for appraisal
            rights in the Delaware Chancery Court on April 23, 1999.

                 Effective January 1, 2000, the Company acquired certain assets
            and assumed certain liabilities of three building materials
            distributors held under common ownership in a single transaction
            accounted for as a purchase acquisition. The total consideration,
            was $1,580,000 consisting of $798,000 in cash, uncollateralized
            promissory notes of $150,000 due 90 days from closing and $100,000
            due one year from closing. The Company also assumed $388,000 of the
            acquired companies' collateralized debt and issued 225,000 shares of
            the Company's unregistered common stock valued at $.64 per share.

                 Effective March 1, 2000, the Company acquired certain assets of
            another unrelated building materials distributor accounted for as a
            purchase. The total consideration was $386,000, which included
            50,000 shares of the Company's unregistered common stock valued at
            $42,000, ($.84 per share). The Company paid cash of $219,000 and
            issued an uncollateralized promissory note of $125,000 payable over
            two years from closing.

                 Effective April 1, 2000, the Company acquired certain assets
            and assumed certain liabilities of another unrelated building
            materials distributor accounting for it under the purchase method of

                                       20
<PAGE>
Item 7.     Management's Discussion and Analysis of Financial Condition
            -----------------------------------------------------------
            and Results of Operations (continued)
            -------------------------

            Liquidity and Capital Resources (continued)
            -------------------------------

            accounting. Total consideration for the purchase price was $564,000
            consisting of $286,000 in cash, an uncollateralized promissory note
            of $125,000, with $62,500 due and payable April 10, 2001 and 2002,
            and assumed approximately $153,000 of the acquired company's
            collateralized debt.

                 Effective May 1, 2000, the Company acquired certain assets and
            assumed certain liabilities of two additional building materials
            distributors held under common ownership in a single transaction
            accounted for as a purchase transaction. The total consideration for
            the purchase was $2,331,000, which included 400,000 shares of the
            Company's unregistered common stock valued at $244,000 ($.61 per
            share). The Company paid cash of $614,000 at closing and $441,000 30
            days after closing, transferred $122,000 of assets, issued an
            uncollateralized promissory note of $600,000 payable over three
            years from date of closing, and assumed approximately $310,000 of
            the acquired companies' collateralized debt.

                 The consummation of these acquisitions and working capital
            required to fund operations at the acquired locations are the
            primary contributions to the $3,577,000 increase in the amount
            outstanding under the Company's line of credit.

                 The Company presently is focusing its efforts on the completion
            of integration and consolidation of the acquired distributors'
            operations into the Company. The Company expects to incur various
            capital expenditures during the next twelve months to upgrade and
            maintain its equipment and delivery fleet to support operations. In
            addition, the Company is evaluating the implementation of a new
            centralized management information system. Capital needs associated
            with these capital projects cannot be estimated at this time, but
            management does not expect the cash investment portion of the
            expenditures for these projects to be material.

                 The Company believes its cash on hand and the maintenance of
            its borrowing arrangement with its commercial lender will provide
            sufficient cash to supplement cash shortfalls, if any, from
            operations and provide adequate liquidity for the next twelve months
            to satisfy the obligations arising from the merger and support the
            cash requirements of its capital expenditure programs.

                                       21
<PAGE>

Item 8.     Financial Statement and Supplementary Data
            ------------------------------------------

                 See Item 14.  Exhibits, Financial Statement Schedules and
            Reports on Form 8-K for the Index to Financial Statements contained
            herein.


                                       22
<PAGE>



               Report of Independent Certified Public Accountants



To the Board of Directors and Shareholders of
Imperial Industries, Inc.


In our opinion, the consolidated financial statements listed in the index

appearing under Item 14(a)(1) on page 54 present fairly, in all material

respects, the financial position of Imperial Industries, Inc. and its

subsidiaries at December 31, 2000 and 1999, and the results of their operations

and their cash flows for each of the three years in the period ended December

31, 2000  in conformity with accounting principles generally accepted in the

United States of America. In addition, in our opinion, the financial statement

schedules  listed in  the accompanying  index under  Item 14(a)(2)  on page  56

present fairly, in all material respects, the information set forth therein

when read in conjunction with the related consolidated financial statements.

These financial statements and financial statement schedules are the

responsibility of the Company's management; our responsibility is to express an

opinion on these financial statements based on our audits.  We conducted our

audits of these statements in accordance with auditing standards generally

accepted in the United States of America, which require that we plan and

perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement.  An audit includes examining, on

a test basis, evidence supporting the amounts and disclosures in the financial

statements, assessing the accounting principles used and significant estimates

made by management, and evaluating the overall financial statement

presentation.  We believe that our audits provide a reasonable basis for our

opinion.

PRICEWATERHOUSECOOPERS LLP
Miami, Florida
April 2, 2001


                                       23
<PAGE>

                   IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets


                                                    December 31,    December 31,
   Assets                                              2000            1999
   ------                                          ------------    ------------
Current assets:
  Cash and cash equivalents                        $  1,853,000    $  1,119,000
  Trade accounts receivable (less
   allowance for doubtful accounts of
   $400,000 and $254,000 at December 31,
   2000 and 1999, respectively)                       4,866,000       2,677,000
  Inventories                                         4,387,000       2,023,000
  Deferred taxes                                        377,000         634,000
  Other current assets                                   78,000          43,000
                                                   ------------    ------------
     Total current assets                            11,561,000       6,496,000
                                                   ------------    ------------

Property, plant and equipment, at cost                4,418,000       2,653,000
 Less accumulated depreciation                       (1,444,000)     (1,164,000)
                                                   ------------    ------------
     Net property, plant and equipment                2,974,000       1,489,000
                                                   ------------    ------------

Deferred taxes                                          589,000         699,000
                                                   ------------    ------------

Excess cost of investment over net
 assets acquired                                      1,551,000              --
                                                   ------------    ------------

Other assets                                            117,000          84,000
                                                   ------------    ------------
                                                   $ 16,792,000    $  8,768,000
                                                   ============    ============


   Liabilities and Stockholders' Equity
   ------------------------------------
Current liabilities:
  Notes payable                                    $  5,203,000    $  1,526,000
  Current portion of long-term debt                   1,636,000         164,000
  Accounts payable                                    2,264,000         902,000
  Payable to stockholders                                48,000          48,000
  Accrued expenses and other liabilities                803,000         409,000
                                                   ------------    ------------
     Total current liabilities                        9,954,000       3,049,000
                                                   ------------    ------------

Long-term debt, less current maturities               1,402,000       1,328,000
                                                   ------------    ------------

Obligation for appraisal rights                         877,000         877,000
                                                   ------------    ------------

Commitments and contingencies                                --              --
                                                   ------------    ------------

Stockholders' equity:
 Common stock, $.01 par value at December 31,
  2000 and 1999; 20,000,000 shares authorized;
  9,205,434 and 8,230,434 issued at
  December 31, 2000 and 1999, respectively               92,000          82,000
 Additional paid-in-capital                          13,915,000      13,414,000
 Accumulated deficit                                 (9,448,000)     (9,982,000)
                                                   ------------    ------------
     Total stockholders' equity                       4,559,000       3,514,000
                                                   ------------    ------------
                                                   $ 16,792,000    $  8,768,000
                                                   ============    ============

          See accompanying notes to consolidated financial statements.


                                       24
<PAGE>

                      IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations



                                              Year Ended December31,
                                   --------------------------------------------
                                       2000            1999            1998
                                   ------------    ------------    ------------

Net sales                          $ 40,730,000    $ 22,604,000    $ 18,739,000

Cost of sales                        28,218,000      15,198,000      12,823,000
                                   ------------    ------------    ------------

     Gross profit                    12,512,000       7,406,000       5,916,000

Selling, general and
 administrative expenses             10,985,000       5,932,000       4,645,000
                                   ------------    ------------    ------------

     Operating income                 1,527,000       1,474,000       1,271,000
                                   ------------    ------------    ------------

Other income (expense):
   Interest expense                    (806,000)       (475,000)       (272,000)
   Merger costs                              --              --        (456,000)
   Miscellaneous income                 199,000          34,000       1,218,000
                                   ------------    ------------    ------------
                                       (607,000)       (441,000)        490,000
                                   ------------    ------------    ------------

    Income before income taxes          920,000       1,033,000       1,761,000
                                   ------------    ------------    ------------

Income tax benefit (expense):
   Current                              (19,000)        (26,000)        (24,000)
   Deferred                            (367,000)        213,000         320,000
                                   ------------    ------------    ------------
                                       (386,000)        187,000         296,000

Net income                              534,000       1,220,000       2,057,000

Less: Net charge for elimination
      of preferred stock                     --              --        (975,000)

Less: Dividends on redeemable
        preferred stock                      --              --        (248,000)
                                   ------------    ------------    ------------
      Net income applicable to
       common stockholders         $    534,000    $  1,220,000    $    834,000
                                   ============    ============    ============

Basic earnings per
  common share                     $        .06    $        .15    $        .13
                                   ============    ============    ============

Diluted earnings per
  common share                     $        .06    $        .15    $        .12
                                   ============    ============    ============


          See accompanying notes to consolidated financial statements.


                                       25
<PAGE>

                   IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Common Stock and Other Stockholders' Equity

                  Years ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                                           Additional
                                                    Common Stock             paid-in     Accumulated      Treasury
                                                Shares       Amount          capital         deficit         stock        Total
                                               ---------   ------------    ------------    ------------    ---------   ------------

<S>                                            <C>         <C>             <C>             <C>             <C>         <C>
Balance at December 31, 1997                   6,484,061   $    663,000    $  7,260,000    $(12,036.000)   $(328,000)  $ (4,441,000)


Issuance of common stock                         124,000          2,000        (187,000)                     222,000         37,000

Accrued dividends in arrears
  on preferred stock                                                                           (248,000)                   (248,000)

Recapitalization of par value of
  common stock from $.10 to
  $.01 per share                                               (599,000)        599,000

Issuance of common stock in
  preferred stock conversion                   1,574,510         16,000       5,835,000        (975,000)
                                                                                                                          4,876,000

Net income                                                                                    2,057,000                   2,057,000
                                               ---------   ------------    ------------    ------------    ---------   ------------
Balance at December 31, 1998                   8,182,571         82,000      13,507,000     (11,202,000)                   (106,000)
                                                                                                                          2,281,000

Issuance of common stock                          47,863                        (93,000)                     106,000         13,000

Net income                                                                                    1,220,000                   1,220,000
                                               ---------   ------------    ------------    ------------    ---------   ------------

Balance at December 31, 1999                   8,230,434         82,000      13,414,000      (9,982,000)          --      3,514,000

Issuance of common stock                         975,000         10,000         501,000                                     511,000

Net income                                                                                      534,000                     534,000
                                               ---------   ------------    ------------    ------------    ---------   ------------

Balance at December 31, 2000                   9,205,434   $     92,000    $ 13,915,000    $ (9,448,000)   $      --   $  4,559,000
                                               =========   ============    ============    ============    =========   ============
</TABLE>




          See accompanying notes to consolidated financial statements.



                                       26
<PAGE>



                        IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
                          Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                             Year Ended December 31,
                                                           -------------------------------------------------------
                                                              2000                   1999                  1998
                                                           -----------           -----------           -----------
<S>                                                        <C>                   <C>                   <C>
Cash flows from operating activities:

    Net income                                             $   534,000           $ 1,220,000           $ 2,057,000
                                                           -----------           -----------           -----------
    Adjustments to reconcile net income
    to net cash provided by:
      Depreciation                                             445,000               225,000               178,000
      Amortization                                              38,000                21,000                31,000
      Debt issue discount                                       59,000                59,000                    --
      Provision for doubtful accounts                          283,000               177,000               154,000
      Provision for income taxes                               367,000                    --                    --
      Deferred taxes, net                                           --              (213,000)             (320,000)
      (Gain) loss on disposal of fixed assets                   (1,000)                5,000            (1,078,000)
      Compensation expense - issuance of stock                  60,000                13,000                68,000

      (Increase) decrease in:
        Accounts receivable                                 (2,921,000)             (319,000)
        Inventory                                             (526,000)             (649,000)             (170,000)
        Prepaid expenses and other assets                      (75,000)              (47,000)                1,000

      Increase (decrease) in:
        Accounts payable                                     1,362,000              (398,000)              720,000
        Payable to stockholders                                     --              (685,000)                   --
        Accrued expenses and other liabilities                 394,000               257,000               (66,000)
                                                           -----------           -----------           -----------
      Total adjustments to net income                         (515,000)           (1,554,000)           (1,637,000)
                                                           -----------           -----------           -----------
        Net cash (used in) provided by
         operating activities                                   19,000              (334,000)              420,000
                                                           -----------           -----------           -----------

Cash flows from investing activities
    Purchase  of property, plant
     and equipment                                            (525,000)             (415,000)             (839,000)
    Acquisition of businesses                               (2,033,000)                   --                    --
    Payment on notes payable A&R acquisitions                 (195,000)                   --                    --
    Proceeds received from sale of property
     and equipment                                              40,000                31,000             1,278,000
    Proceeds from exercise of warrants and
     stock options                                              20,000                    --                 2,000
                                                           -----------           -----------           -----------
    Net cash (used in) provided by investing
     activities                                             (2,693,000)             (384,000)              441,000
                                                           -----------           -----------           -----------

Cash flows from financing activities
    Increase (decrease) in notes payable
     banks - net                                             3,577,000               746,000                 2,000
    Proceeds from issuance of long-term debt                   273,000               459,000               324,000
    Repayment of long-term debt                               (442,000)             (465,000)             (642,000)
                                                           -----------           -----------           -----------
     Net cash provided by (used in)
      financing activities                                   3,408,000               740,000              (316,000)
                                                           -----------           -----------           -----------
</TABLE>


                                       27
<PAGE>

                        IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
                          Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                          Year Ended December 31,
                                                           ----------------------------------------------------
                                                              2000                 1999                 1998
                                                           ----------           ----------           ----------
<S>                                                           <C>                   <C>                 <C>
Net increase in cash and cash
 equivalents                                                  734,000               22,000              545,000
Cash and cash equivalents,
 beginning of year                                          1,119,000            1,097,000              552,000
                                                           ----------           ----------           ----------
Cash and cash equivalents, end of year                     $1,853,000           $1,119,000           $1,097,000
                                                           ==========           ==========           ==========



Supplemental disclosure of cash flow information:

Cash paid during the year for interest                     $  622,000           $  283,000           $  276,000
                                                           ==========           ==========           ==========

Non-cash transactions:
  Issuance of an aggregate of 775,000 shares
   of common stock related to acquisitions
   and to an officer of the Company                        $  490,000           $       --           $       --
                                                           ==========           ==========           ==========

  Issuance of notes related to the
   acquisitions                                            $  950,000           $       --           $       --
                                                           ==========           ==========           ==========
</TABLE>







              See accompanying notes to consolidated financial statements.


                                       28
<PAGE>



                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements

                         December 31, 2000, 1999 and 1998


(1)  Merger
     ------

               On December 17, 1998, the Company's stockholders approved a Plan
          merging Imperial Industries, Inc. into Imperial Merger Corp., a newly-
          formed, wholly-owned subsidiary of the Company, (the "Merger"), with
          the Merger becoming effective December 31, 1998,, (the "Effective
          Date"). On the Effective Date, Imperial Merger Corp. changed its name
          to Imperial Industries, Inc., (the "Company").

               At the Effective Date, each share of the Company's $.10 par value
          common stock outstanding before the Merger was converted into one
          share of $.01 par value common stock resulting in the recapitalization
          of $599,000 from common stock to additional paid-in-capital. Also at
          the Effective Date, 300,121 outstanding shares of preferred stock,
          with a carrying value of $3,001,000 were retired and $4,292,000 of
          accrued dividends on such shares, were eliminated as described in the
          following paragraphs.

               Holders of 219,021 shares of the preferred stock (the "Exchanging
          Shareholders"), with a carrying value of $2,190,000, elected to
          convert their shares into either (a) $4.75 in cash and ten shares of
          the Company's common stock, or (b) $2.25 in cash, an 8% three-year
          $8.00 subordinated debenture ("Debenture") and five shares of the
          Company's common stock. In connection with the Exchanging
          Shareholders' election, the Company was required to pay cash of
          $733,000 which was presented as payable to stockholders in the
          consolidated balance sheet at December 31, 1998. At December 31, 2000
          and 1999 cash payable to stockholders was reduced to $48,000 from
          $733,000 at December 31, 1998, as a result of satisfying the cash
          requirements due to Exchanging Shareholders who had submitted their
          preferred stock to the Company for the merger consideration. The
          Company was also required to issue $985,000 face value of Debentures
          with a fair value of $808,000, and 1,574,610 shares of $.01 par common
          stock with a fair value of $630,000 based on the market price of $.40
          per share of the Company's common stock at the Effective Date. The
          total fair value of the cash, debentures and common stock to be
          exchanged with the Exchanging Shareholders was $2,171,000. Had the
          Exchanging Shareholders elected to convert their shares under the
          provisions of the preferred stock's governing instrument, they would
          have received 251,655 shares of common stock with a fair value of
          $101,000. The excess of the total fair value of cash, Debentures and
          common stock to be exchanged with the Exchanging Shareholders, over
          the fair value which the Exchanging Shareholders would have received
          under the preferred stock's original conversion provisions represented
          a conversion charge of $2,070,000 to accumulated deficit and a
          reduction in net income applicable to common stockholders in the
          accompanying consolidated statement of operations



                                       29
<PAGE>

                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

(1)   Merger (continued)
      ------

          for the year ended December 31, 1998. In addition, conversion of the
          219,021 preferred shares resulted in a credit to additional paid-in
          capital of $5,835,000, for the year ended December 31, 1998.


              Holders of 81,100 shares of preferred stock (the "Dissenting
          Shareholders"), with a carrying value of $811,000, elected to exercise
          their appraisal rights with respect to the stock. Pursuant to Delaware
          law, the Dissenting Shareholders petitioned the Delaware Chancery
          Court on April 23, 1999 to determine the fair value of their shares at
          the Effective Date, exclusive of any element of value attributable to
          the Merger. In the event that a Dissenting Shareholder does not
          perfect his appraisal rights, each share would be entitled to receive
          $2.25 in cash, a Debenture and five shares of common stock described
          under option (b) in the preceding paragraph. Based on these facts, and
          a valuation prepared by an independent financial advisor in connection
          with the Merger, the Company recorded $877,000 in the accompanying
          consolidated balance sheets at December 31, 1999 and 2000, as an
          estimate for the obligation for appraisal rights. The Chancery Court
          may determine fair value is less than, equal to, or greater than an
          aggregate of $877,000. The Company does not expect a final judicial
          determination requiring the Company to make payment to Dissenting
          Shareholders' in the year ended December 31, 2001, the obligation is
          classified as long-term debt. In addition, elimination of the 81,100
          preferred shares and accrued dividends of $1,161,000 on such shares
          resulted in a redemption credit to accumulated deficit of $1,095,000
          for the year ended December 31, 1998 representing the excess of the
          carrying value of the Dissenting Shareholders' preferred stock and
          accrued dividends over the obligation for appraisal rights.

              In the calculation of earnings per share for the year ended
          December 31, 1998, $975,000 was deducted from net income representing
          the conversion charge of $2,070,000, less the redemption credit of
          $1,095,000.

              In connection with the Merger, all outstanding stock purchase
          warrants also converted into warrants with identical terms
          exerciseable for shares of the Company's common stock.

(2)   Description of Business and Summary of Significant Accounting Policies
      -------------------------------------------------------------------

              The Company and its subsidiaries are primarily involved in the
          manufacturing and sale of exterior and interior finishing wall
          coatings and mortar products for the construction industry, as well as
          the sale of other building materials from other manufacturers. Sales
          of the



                                       30
<PAGE>

                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

(2)   Description of Business and Summary of Significant Accounting Policies
      -----------------------------------------------------------------------
        (continued)

          Company's products are made to customers primarily in Florida and the
          Southeastern United States through distributors and company-owned
          distribution facilities.

      (a) Basis of presentation
          ---------------------
              The consolidated financial statements contain the accounts of the
          Company and its wholly-owned subsidiaries. All material intercompany
          accounts and transactions have been eliminated in consolidation.


      (b) Concentration of Credit Risk
          ----------------------------

              Concentrations of credit risk with respect to trade accounts
          receivable are limited due to the number of entities comprising the
          Company's customer base. Trade accounts receivable represent amounts
          due from building materials dealers, contractors and sub-contractors,
          located principally in the Southeastern United States who have
          purchased products on an unsecured open account basis. At December 31,
          2000, accounts aggregating $273,000, or approximately 5% of total
          gross trade accounts receivable were deemed to be ineligible for
          borrowing purposes under the Company's borrowing agreement with its
          commercial lender. See Note (5). The allowance for doubtful accounts
          at December 31, 2000 of $400,000 is considered sufficient to absorb
          any losses which may arise from uncollectible accounts receivable.

              The Company places its cash with commercial banks. At December 31,
          2000, the Company has cash balances with banks in excess of Federal
          Deposit Insurance Corporation insured limits. Management believes the
          credit risk related to these deposits is minimal.

      (c) Inventories
          -----------

              Inventories are stated at the lower of cost or market (net
          realizable value), on a first-in, first-out basis. Finished goods
          include the cost of raw materials, freight in, direct labor and
          overhead.

      (d) Property,plantandequipment

              Property, plant and equipment is stated at cost, less accumulated
          depreciation. Depreciation is computed on the straight-line basis over
          the estimated useful lives of the depreciable assets. Expenditures for
          maintenance and repairs are charged to expense as incurred, while



                                       31
<PAGE>

                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

(2)  Description of Business and Summary of Significant Accounting Policies
     ----------------------------------------------------------------------
        (continued)

     (d)  Property plant and equipment (continued)
          ----------------------------------------

          expenditures which extend the useful life of assets are capitalized.
          Differences between the proceeds received on the sale of property,
          plant and equipment and the carrying value of the assets on the date
          of sale is credited or charged to net income.

      (e) Intangible Assets
          -----------------

              Licenses, trademarks and deferred financing costs are amortized on
          straight-line basis over the estimated useful lives of the licenses
          and trademarks, or over the term of the related financing.

      (f) Income taxes
          ------------

              The Company has adopted the liability method for determining its
          income taxes. Under this method, the Company records deferred taxes
          based on temporary taxable and deductible differences between the tax
          bases of the Company's assets and liabilities and their financial
          reporting bases. Deferred tax assets and liabilities are measured
          using the enacted tax rates expected to apply to taxable income in the
          years in which temporary differences are expected to be realized or
          settled; valuation allowances are provided against assets that are not
          likely to be realized.

     (g)  Earnings per share of common stock
          ----------------------------------

              Basic earnings per common share is computed by dividing net
          income, after deducting preferred stock dividends accumulated during
          the year ("net income applicable to common stockholders"), by the
          weighted average number of shares of common stock outstanding each
          year. Diluted earnings per common share is computed by dividing net
          income applicable to common stockholders by the weighted-average
          number of shares of common stock and common stock equivalents
          outstanding during each year. The Company has retroactively restated
          earnings per common share, to give effect to the Merger. (See Note
          (11) - Earnings Per Common Share).

     (h)  Cash and cash equivalents
          -------------------------

              The Company has defined cash and cash equivalents as those highly
          liquid investments with a maturity of three months or less, when
          purchased. Included in cash and cash equivalents at December 31, 2000
          and 1999 are short term time deposits of $285,000 and $275,000,
          respectively.



                                       32
<PAGE>

                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

(2)   Description of Business and Summary of Significant Accounting Policies
      ----------------------------------------------------------------------
        (continued)

     (i)  Revenue recognition policy
          --------------------------

              Revenue from sales transactions is recorded upon delivery of
          inventory to the customer, net of discounts and allowances.

     (j)  Stock based compensation
          ------------------------

              The Company measures compensation expense related to the grant of
          stock options and stock-based awards to employees in accordance with
          the provisions of Accounting Principles Board ("APB") Opinion No. 25,
          "Accounting for Stock Issued to Employees," under which compensation
          expense, if any, is generally based on the difference between the
          exercise price of an option, or the amount paid for an award, and the
          market price or fair value of the underlying common stock at the date
          of the award.

      (k)  Accounting estimates
           --------------------

               The preparation of financial statements in conformity with
           accounting principles generally accepted in the United States of
           America, 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 those
           estimates.

      (l)  Fair Value of Financial Instruments
           -----------------------------------

               The carrying amount of the Company's financial instruments
          principally notes payable, debentures and obligation for appraisal
          rights, approximates fair value based on discounted cash flows as well
          as other valuation techniques.

      (m)  Segment Reporting
           -----------------

               The Company has adopted SFAS No. 131, Disclosures about Segments
            of an Enterprise and Related Information. For the years ended
            December 31, 2000 and 1999, the Company has determined that it
            operates in a single operating segment.




                                       33
<PAGE>


                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

(2)   Description of Business and  Summary of Significant Accounting Policies
      -----------------------------------------------------------------------
        (continued)

      (n)   New Accounting Pronouncements
            -----------------------------

               SFAS No. 133, Accounting for Derivatives and Hedging Activities,
            is effective for all fiscal quarters of fiscal years beginning after
            June 15, 2000 (January 1, 2001 for the Company) and requires that
            all derivative instruments be recorded on the balance sheet at their
            fair value. Changes in the fair value of derivatives are recorded
            each period in current earnings or other comprehensive income,
            depending on whether a derivative is designated as part of a hedge
            transaction and, if it is, the type of hedge transaction. The
            Company does not use derivative instruments and therefore
            anticipates that the adoption of SFAS No. 133 in 2001 will not have
            a material effect on the consolidated financial statements.

(3)   Inventories
      -----------

            At December 31, 2000 and 1999, inventories consist of:

                                            2000              1999
                                            ----              ----
            Raw materials               $  562,000        $  525,000
            Finished goods               3,560,000         1,276,000
            Packaging materials            265,000           222,000
                                        ----------        ----------
                                        $4,387,000        $2,023,000
                                        ==========        ==========

(4)   Property,PlantandEquipment
      --------------------------

            A summary of the cost of property, plant and equipment at December
      31, 2000 and 1999 is as follows:
                                                                       Estimated
                                                                     useful life
                                     2000              1999            (years)
                                ----------         ----------        -----------
      Land                      $  191,000         $  151,000           - - -
      Buildings and
       improvements                965,000            585,000          10 - 40
      Machinery and equipment    1,658,000          1,272,000           3 - 10
      Vehicles                   1,253,000            446,000           2 -  8
      Furniture and Fixtures       351,000            199,000           3 - 12
                                ----------         ----------
                                $4,418,000         $2,653,000
                                ==========         ==========


            The net book value of property, plant and equipment pledged as
      collateral under notes payable and various long-term debt agreements
      aggregated $1,898,000 and $621,000 at December 31, 2000 and 1999,
      respectively. See "Note 7."



                                       34
<PAGE>

                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-


(5)   Notes Payable
      -------------

            At December 31, 2000 and 1999, notes payable represent amounts
      outstanding under a $6,000,000 line of credit from a commercial lender to
      the Company's subsidiaries and $100,000 in uncollateralized notes payable
      issued in connection with the January 1, 2000 purchase of three building
      materials distributors. The line of credit is collateralized by the
      subsidiaries' accounts receivable and inventory, bears interest at prime
      rate plus 1/2% (10% at December 31, 2000), expires June 19, 2001, and is
      subject to annual renewal. The weighted average effective interest rate on
      the line of credit was 11.62%, 14.09%, and 17.49% during the years ended
      December 31, 2000, 1999 and 1998, respectively.

            At December 31, 2000, the line of credit limit available for
      borrowing based on eligible receivables and inventory aggregated
      $5,516,000, of which $5,103,000 had been borrowed. The average amounts
      outstanding during 2000 and 1999 were $3,511,000, and $1,312,000,
      respectively. The maximum amounts outstanding at any month-end during 2000
      and 1999 were $5,103,000 and $2,017,000, respectively.


(6)   Accrued Expenses and Other Liabilities
      --------------------------------------

            Accrued expenses and other liabilities at December 31, 2000 and 1999
      are summarized as follows:
                                                        2000              1999
                                                        ----              ----
      Employee compensation related items            $156,000          $ 94,000
      Taxes, other than income taxes                  166,000            55,000
      Interest                                        261,000           137,000
      Other                                           220,000           123,000
                                                     --------          --------
                                                     $803,000          $409,000
                                                     ========          ========

(7)   Long-term Debt
      --------------

      Long-term debt of the Company is as follows:
                                                           2000          1999
                                                           ----          ----
      Uncollateralized notes issued for acquisitions,
       interest at 8% per annum, principal and
       interest payable through September 2003.          $805,000      $     --

      Mortgage note payable, interest at 7 1/2% per
       annum, principal and interest payable monthly
       through January 2002.                               63,000       116,000



                                       35
<PAGE>

                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

(7)   Long-termDebt (continued)

      Subordinated Debentures due December 31, 2001,
       stated interest at 8% payable annually
       commencing July 1, 1999, principal payable
       in the amount of $985,000 at maturity.             926,000       867,000

      Mortgage note payable, interest at 8 3/4%,
       principal and interest payable monthly in
       the amount of approximately $3,760, with a
       balloon payment of approximately $187,000
       due October 4, 2004.                               277,000       297,000

      Mortgage note payable, interest at 8 3/4%,
       principal and interest payable monthly in
       the amount of approximately $2,415, with
       a balloon payment of approximately $198,000
       due June 16, 2003                                  222,000         --

      Equipment notes payable, interest at various
       rates ranging from 8.75% to 15.39%, per annum,
       principal and interest payable monthly
       expiring at various dates through
       January 2004.                                      745,000       212,000
                                                       ----------    ----------
                                                        3,038,000     1,492,000
      Less current maturities                          (1,636,000)     (164,000)
                                                       ----------    ----------
                                                       $1,402,000    $1,328,000
                                                       ==========    ==========


      As of December 31, 2000, long-term debt matures as follows:

                      Year ended
                      December31,            Amount
                      -----------            ------
                        2001              $1,636,000
                        2002                 596,000
                        2003                 524,000
                        2004                 269,000
                        2005                  13,000
                                          ----------
                                          $3,038,000
                                          ==========

      In connection with the Merger, the Company issued 8% Subordinated
      Debentures with a face amount value of $985,000 effective December 31,
      1998. Each Debenture was discounted to a value of $6.56 ($8.00 face value)
      using an effective interest rate of 16%. The aggregate carrying value of
      the Debentures at December 31, 2000 and 1999 is $926,000 and $867,000,
      respectively. The Debentures are general, uncollateralized obligations of
      the Company, subordinated in right of payment to all indebtedness to
      institutional and other lenders of the Company. Interest is payable
      annually on June 30th of each year. The Debentures are subject to



                                       36
<PAGE>

                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-


(7)   Long-term Debt (continued)
      --------------

      redemption, in whole or in part, at the option of the Company, at any time
      at a redemption price of 100% of the principal amount thereof, plus
      accrued and unpaid interest, if any, to the redemption date. The
      outstanding principal balance, plus accrued interest is due and payable on
      December 31, 2001.

(8)   Income Taxes
      ------------

           At December 31, 2000 and 1999, deferred tax assets of $966,000 and
      $1,333,000, respectively, consist of the tax effect of net operating loss
      carryforwards of $966,000 and $2,966,000, respectively, less a valuation
      allowance of $0 and $1,633,000, respectively. Net operating losses of
      $2,761,000 expires in varying amounts through 2009.

           The Company reduced the deferred tax asset and valuation allowance
      for net operating loss carryforwards which expired unused in 2000. During
      1999, the Company recognized a tax benefit of $574,000, based on the
      future utilization of net operating loss carryforwards prior to their
      expiration. The utilization of net operating loss carryforwards prior to
      their expiration. The ultimate realization of the remaining deferred tax
      assets is largely dependent on the Company's ability to generate
      sufficient future taxable income.

           The current income tax expense represents state taxes and alternative
      minimum taxes payable for the years ended December 31, 2000 and 1999.

           A reconciliation of the Federal statutory rate to the effective tax
      is as follows:


                                                Year  Ended December 31,
                                                  2000    1999    1998
                                                  ----    ----    ----
              U.S. statutory rate                  35%     35%     35%
              Valuation allowance                   0%    (56%)   (53%)
              Reversal of 1999 items (benefit)      7%
              Other                                 0%      3%      1%
                                                  ---     ---     ---
                 Effective rate                    42%    (18%)   (17%)
                                                  ===     ===     ===


                                       37
<PAGE>



                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

(9)  Capital Stock
     -------------

     (a)  Common Stock
          ------------

           At December 31, 2000, the Company had outstanding 9,205,434 shares of
      common stock (8,230,434 shares at December 31, 1999) with a $.01 par value
      per share ("Common Stock"). The holders of common stock are entitled to
      one vote per share on all matters, voting together with the holders of
      preferred stock, if any. In the event of liquidation, holders of common
      stock are entitled to share ratably in all the remaining assets of the
      Company, if any, after satisfaction of the liabilities of the Company and
      the preferential rights of the holders of outstanding preferred stock, if
      any.

           In 2000, the Company issued an aggregate of 675,000 shares of common
      stock as partial consideration for the purchase of certain assets of seven
      building materials distributors, 100,000 shares were issued to an officer
      as compensation for services rendered, and 200,000 shares were issued in
      connection with the exercise of outstanding stock purchase warrants. In
      1999 and 1998, the Company issued 47,863 and 100,000, respectively,
      treasury shares to directors and an officer as compensation for services
      rendered. The Company recorded compensation expense for shares issued to
      directors and an officer in amounts equal to the fair value of the shares
      when issued.


      (b)  Preferred Stock
           ---------------

           The authorized preferred stock of the Company consists of 5,000,000
      shares, $.01 par value per share. The preferred stock is issuable in
      series, each of which may vary, as determined by the Board of Directors,
      as to the designation and number of shares in such series, the voting
      power of the holders thereof, the dividend rate, redemption terms and
      prices, the voluntary and involuntary liquidation preferences, and the
      conversion rights and sinking fund requirements, if any, of such series.
      At December 31, 2000 and 1999, there were no shares of preferred stock
      outstanding.

             Redeemable Preferred Stock - $1.10 Cumulative Convertible Series
             ----------------------------------------------------------------

           Until December 31, 1998, the Company had issued and outstanding
      300,121 shares of $1.10 cumulative convertible redeemable preferred stock.
      The holders of preferred stock were entitled to one vote per share on all
      matters without regard to class, except that the holders of preferred
      stock were entitled to vote as a separate class with regard to the
      issuance of any equity securities which ranks senior or on parity with the
      preferred stock, or to change or repeal any of the express terms of the
      preferred stock in a manner substantially prejudicial to the holders
      thereof. Each share of the preferred stock was entitled to cumulative
      quarterly dividends




                                       38
<PAGE>

                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

(9)   Capital Stock (continued)
      -------------

      (b)  Preferred Stock (continued)
           ---------------

      Redeemable Preferred Stock - $1.10 Cumulative Convertible Series
      ----------------------------------------------------------------
       (continued)

      at the rate of $1.10 per annum and was convertible into 1.149 shares of
      common stock. The liquidation preference of the preferred stock was $10.00
      per share, plus accrued but unpaid dividends. The preferred stock was
      callable, in whole or in part, by the Company at its option at any time
      upon 30 days prior notice, at $11.00 per share, plus accrued and unpaid
      dividends.

          The Company had omitted dividends on its preferred stock since the
      fourth quarter of 1985 aggregating $4,044,000 through December 31, 1997.
      The omission of preferred stock dividends was a reduction of net income
      applicable to Common Stockholders and was recorded as a non-current
      liability in the Company's consolidated balance sheets. The preferred
      stock was not included in common stock and other stockholders' deficit
      because of its mandatory redemption feature.

            The Company was prohibited from paying any cash dividends on common
      stock and from purchasing or otherwise acquiring for value, any shares of
      either preferred or common stock, at any time that the Company was in
      default in the payment of any dividends on the preferred stock or if the
      sinking fund requirements are in arrears.

            Effective December 31, 1998, all outstanding shares of the preferred
      stock were retired and all accumulated accrued dividends were eliminated
      as a result of the Merger. (See Note (1) - Merger).

      (c)  Warrants
           --------

           At December 31, 2000 and 1999, the Company had warrants outstanding
      to purchase 150,000 and 350,000 shares, respectively, of the Company's
      common stock. The Company issued 150,000 warrants in January 1999 to its
      investment banker for financial advisory services in connection with the
      Merger (the "Investment Banker Warrants"), which entitle the holder to
      purchase one share at $.38 per share until December 31, 2003. The Company
      estimated the fair value of the Investment Banker Warrants at $22,000
      based on a Black-Scholes pricing model and the following assumptions:
      volatility of 45%, risk-free rate of 4.6%, expected life of four years and
      a dividend rate of 0%. Warrants to purchase 200,000 shares of the
      Company's common stock at $.10 per share were exercised in 2000.



                                       39
<PAGE>


                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

(9)   Capital Stock (continued)
      -------------

      (d)  Stock Option Plans
           ------------------

           In December 1999, the Board of Directors adopted the Directors' Stock
      Option Plan and the 1999 Employee Stock Option Plan (collectively, the
      "1999 Plans"), which received shareholder approval on September 27, 2000.
      The 1999 Plans provide for options to be granted at generally no less than
      the fair market value of the Company's stock at the grant date. Options
      granted under the 1999 Plans have a term of up to 10 years and are
      exercisable six months from the grant date. The 1999 Plans are
      administered by the Compensation and Stock Option Committee (the
      "Committee"), which is comprised of three directors. The Committee
      determines who is eligible to participate and the number of shares for
      which options are to be granted. A total of 600,000 and 200,000 shares are
      reserved for issuance under the Employee and Directors' Plans,
      respectively. As of December 31, 2000, options for 555,000 shares were
      available for future grants under the 1999 Plans.

           At December 31, 2000, all of the 245,000 options originally granted
      under the plans (the "options") were outstanding. The options have an
      exercise price of $.57 (the fair market value of the Company's Common
      Stock on September 27, 2000), a weighted average remaining life of 4.3
      years and are fully vested.

           Pursuant to SFAS No. 123, the Company has elected to use the
      intrinsic value method of accounting for employee stock-based compensation
      awards. Accordingly, the Company has not recognized compensation expense
      for its noncompensatory employee stock option awards. The Company's pro
      forma net income for fiscal 2000, had the Company elected to adopt the
      fair value approach (which charges earnings for the estimated fair value
      of stock options) of SFAS No. 123, would have been reduced by $33,000. The
      Company's earnings per share would have remained at $.06 per share.

           The weighted average fair value of the Company's options granted
      during fiscal 2000 was $.44 per share at the date of grant. The fair value
      of the options was estimated using the Black-Scholes option pricing model
      with the following weighted average assumptions for fiscal 2000; no
      expected dividend yield; expected volatility of 111.5%; risk free interest
      rate of 6%; and an expected option life of four years.



                                       40
<PAGE>


                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

(10)  Miscellaneous income
      --------------------

            A summary of miscellaneous income (expense) for the years ended
      December 31, 2000, 1999 and 1998 is as follows:

                                                 2000       1999          1998
                                                 ----       ----          ----
      Interest income                         $ 15,000   $ 12,000       $13,000
      Gain (loss) on disposal of property,
       plant and equipment                       1,000     (5,000)    1,078,000
      Other, net                               183,000     27,000       127,000
                                              --------    -------    ----------
                                              $199,000    $34,000    $1,218,000
                                              --------    -------    ----------

      On October 2, 1998, the Company sold its Miami, Florida manufacturing
      facility for $1,406,000 and received net cash proceeds of $801,000 after
      satisfaction of the mortgage and payment of commissions and closing costs.
      A gain of $1,066,000 was recognized on this transaction.


(11)  Earnings Per Common Share
      -------------------------

            Below is a reconciliation between basic and diluted earnings per
      common share under FAS 128 for the years ended December 31, 2000, 1999 and
      1998 (in thousands except per share amounts):
<TABLE>
<CAPTION>

                                              2000                      1999                          1998
                                  ------------------------       ----------------------      -----------------------
                                                        Per                         Per                         Per
                                  Income     Shares    Share     Income    Shares  Share     Income   Shares   Share
<S>                                 <C>       <C>       <C>      <C>       <C>     <C>        <C>     <C>      <C>
           Net income               $534                         $1,220                       $2,057
            Less net charge
            for elimination of
            preferred stock                                                                     (975)
            Less dividends on
            redeemable
            preferred stock                                                                     (248)
           Basic earnings
            per common share        $534      8,936     $.06     $1,220    8,199   $.15         $834   6,566    $.13
                                    ----      -----     ----     ------    -----   ----         ----   -----    ----
           Effect of dilutive
            securities:
            Warrants                            134                          191                        149
                                    ----      -----     ----     ------    -----   ----         ----   -----    ----
           Diluted earnings
            per common share        $534      9,070     $.06     $1,220    8,390    $15         $834   6,715    $.12
                                    ====      =====     ====     ======    =====    ===         ====   =====    ====
</TABLE>



                                       41
<PAGE>


                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

(12)  Related Party Transactions
      --------------------------

            The Company and its subsidiaries paid legal fees of approximately
      $238,000, $114,000 and $86,000 in 2000, 1999 and 1998, respectively, to
      law firms with which the Company's Chairman of the Board was affiliated.

(13)  Commitments and Contingencies
      -----------------------------

      (a)   Contingencies
            -------------

            As of March 23, 2001, the Company's subsidiary, Acrocrete, Inc., and
      other parties are defendants in 30 lawsuits pending in various
      Southeastern states, by homeowners, contractors and subcontractors, or
      their insurance companies, claiming moisture intrusion damages on single
      family residences. The Company's insurance carriers have accepted coverage
      under a reservation of rights for 28 of these claims and are providing a
      defense. The Company expects its insurance carriers to accept coverage for
      the other two recently filed lawsuits. Acrocrete is vigorously defending
      all of these cases and believes it has meritorious defenses,
      counter-claims and claims against third parties. Acrocrete is unable to
      determine the exact extent of its exposure or outcome of this litigation.

            The allegations of defects in synthetic stucco wall systems are not
      restricted to the Company's products but rather are an industry-wide
      issue. There has never been any defect proven against Acrocrete. The
      alleged failure of these products to perform has generally been linked to
      improper application and the failure of adjacent building materials such
      as windows, roof flashing, decking and the lack of caulking.

           On June 15, 1999, the Company was served with a complaint captioned
      Mirage Condominium Association, Inc. v. Premix Marbletite Manufacturing
      Co., et al., in Miami-Dade County Florida. The lawsuit raises a number of
      allegations against twelve separate defendants involving alleged
      construction defects. Plaintiff has alleged only one count against Premix,
      which claims that certain materials, purportedly provided by Premix to the
      Developer/ Contractor and used to anchor balcony railings to the structure
      were defective. The Company's insurance carrier has not made a decision
      regarding coverage to date. However, in the interim, the insurance carrier
      has retained counsel on behalf of Premix and is paying defense costs. The
      Company expects the insurance carrier to eventually accept coverage. The
      Company is unable to determine the exact extent of its exposure or the
      outcome of this litigation.

           On April 23, 1999, certain Dissenting Shareholders owning shares of
      the Company's formerly issued preferred stock filed a petition for
      appraisal in the Delaware Chancery Court to determine the fair value of
      their shares at the effective date of Merger, exclusive of any element of
      value attributable to the merger. (See Note (1) - Merger).



                                       42
<PAGE>

                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

(13)  Commitments and Contingencies
      -----------------------------

      (a)   Contingencies (continued)
            -------------

            The Company is engaged in other legal actions and claims arising in
      the ordinary course of its business, none of which are believed to be
      material to the Company.

      (b)   Lease Commitments
            -----------------

            At December 31, 2000 certain property, plant and equipment were
      leased by the Company under long-term leases. Certain of these leases
      provided for escalation in rent upon the lease anniversary date. Future
      minimum lease commitments as of December 31, 2000, for all noncancellable
      leases are as follows:

                          December31,
                          -----------
                              2001                  $1,085,000
                              2002                     885,000
                              2003                     728,000
                              2004                     695,000
                              2005 and after           398,000

            Rental expenses incurred for operating leases were approximately
      $957,000, $331,000 and $153,000, for the years ended December 31, 2000,
      1999 and 1998, respectively.

(14)  Recent Acquisitions
      -------------------

           During 2000, the Company consummated four transactions for the
      purchase of seven building material distributors as described below.
      These acquisitions have been accounted for under the purchase method of
      accounting and the results of the acquired distributors have been
      consolidated since the respective acquisition dates.

           Effective January 1, 2000, the Company acquired certain assets and
      assumed certain liabilities of three building materials distributors
      located in Pensacola and Destin, Florida and Foley, Alabama.

           The three distributors ("A&R"), which had been under common
      ownership, were acquired for $1,580,000 in a single transaction that was
      accounted for under the purchase method of accounting.




                                       43
<PAGE>

                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

 (14) Recent Acquisitions (continued)
      -------------------

      The components of the purchase price were as follows (in thousands):

            Cash                                               $  471
            Transfer of other assets                              327
            Common stock issued
             (225,000 shares @ $.64/share)                        144
            Three month uncollateralized note issued              150
            One year uncollateralized note issued                 100
            Collateralized debt assumed                           388
                                                               ------
                                                               $1,580
                                                               ======

           The purchase price was allocated to the acquired assets and
      liabilities based on their fair values on the acquisition date with the
      excess of $401,000 being recorded as excess cost of investment over net
      assets acquired, which is being amortized using the straight line method
      over 40 years.

           Effective March 1, 2000, the Company acquired certain assets of a
      building materials distributor ("Panhandle") located in Panama City Beach,
      Florida, for $386,000.

      The components of the purchase price were as follows (in thousands):

            Cash                                               $  219
            Two year uncollateralized note issued                 125
            Common stock issued
             (50,000 shares @ $.84/share)                          42
                                                               ------
                                                               $  386
                                                               ======

           The purchase price was allocated to the acquired assets and
      liabilities based on their fair values on the acquisition date with the
      excess of $167,000 being recorded as excess cost of investment over net
      assets acquired, which is being amortized using the straight line method
      over 40 years.

           Effective April 1, 2000 the Company acquired certain assets and
      liabilities of a building materials distributor ("Tallahassee") located in
      Tallahassee, Florida for $564,000.




                                       44
<PAGE>

                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

 (14) Recent Acquisitions (continued)
      ------------------

      The components of the purchase price were as follows: (in thousands):

            Cash                                               $286
            Two year uncollateralized note issued               125
            Collateralized debt assumed                         153
                                                               ----
                                                               $564
                                                               ====

           The purchase price was allocated to the acquired assets and
      liabilities based on of their fair values on the acquisition date with the
      excess of $125,000 being recorded as excess cost of investment over net
      assets acquired, which is being amortized using the straight line method
      over 40 years.

           Effective May 1, 2000, the Company acquired certain assets and
      liabilities of two related distributors ("A&R of Mississippi"), with
      locations in Gulfport, Hattiesburg and Pascagoula, Mississippi.

      The components of the purchase price were as follows (in thousands):

            Cash ($614,000 at closing, $441,000
             paid 30 days after closing)                       $1,055
            Transfer of other assets                              122
            Three year uncollateralized note issued               600
            Collateralized debt assumed                           310
            Common stock issued (400,000 shares @ $.61/share)     244
                                                               ------
                                                               $2,331
                                                               ======

            The purchase price was allocated to the acquired assets and
      liabilities based on their fair values on the acquisition date with the
      excess of $886,000 being recorded as excess cost of investment over net
      assets acquired, which is being amortized using the straight line method
      over 40 years.

            Following are the unaudited pro-forma results of operations as if
      the A&R, Panhandle, Tallahassee and A&R of Mississippi purchases had
      occurred on January 1, 1999 (in thousands, except per share and share
      amounts):

                                       Year Ended             Year Ended
                                    December 31,2000       December 31,1999
                                    ----------------       ----------------

      Net sales                        $44,869                 $38,361
      Net income                       $   483                 $ 1,348
      Earnings per common share:
         Basic                         $   .05                 $   .15
         Diluted                       $   .05                 $   .15



                                       45
<PAGE>

                    IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

                    Notes to Consolidated Financial Statements
                                   -continued-

 (14) Recent Acquisitions (continued)
      -------------------

           This unaudited pro-forma financial information is not necessarily
      indicative of the operating results that would have occurred had the
      transactions been consummated as of January 1, 1999, nor is it necessarily
      indicative of future operating results.

           The preliminary impact of the Company's assets and liabilities
      related to the acquisitions as of December 31, 2000, were as follows (in
      thousands):

          Fair value of assets and liabilities acquired:
          Inventories                                           $1,838
          Property plant and equipment                           1,445
          Other assets (Excess cost of investment
           over net assets acquired)                             1,580
          Liabilities (Assumed)                                   (851)
                                                                ------
                                                                 4,012
          Less:
          Debt issued                                           (1,100)
          Common stock issued                                     (430)
          Adjustment for accounts receivable due Company          (449)
                                                                ------
          Net cash paid as reflected in the
           Statement of Cash Flows                              $2,033
                                                                ======


                                       46
<PAGE>



                                    PART III

Item  9.    Changes in and Disagreements with Accountants on Accounting
            -----------------------------------------------------------
            and Financial Disclosure
            ------------------------

            None

Item 10.    Directors and Executive Officers of the Registrant
            --------------------------------------------------

                 The following table sets forth certain information with respect
            to the directors and executive officers of the Company:

            Name                   Age    Position With Company
            ----                   ---    ---------------------

            S. Daniel Ponce         52    Chairman of the Board - Class III
            Lisa M. Brock           42    Director - Class III
            Milton J. Wallace       65    Director - Class II
            Morton L. Weinberger    71    Director - Class II
            Howard L. Ehler, Jr.    57    Director - Class I/Principal Executive
                                           Officer/Executive Vice President/
                                           and Secretary
            Betty J. Murchison      61    Principal Accounting Officer/
                                           Assistant Vice President
            Gary J. Hasbach         56    President, Premix, Acrocrete and
                                           Just-Rite

                 The Company's Board of Directors is divided into three classes.
            In accordance with the Company's Certificate of Incorporation, the
            members of each Class are designated to serve for three (3) year
            staggered terms. The Class I director's term expires at the 2002
            annual meeting, or until his successor is elected. Class II
            directors terms expire at the 2003 annual meeting or until their
            successors are elected, and Class III directors terms expire at the
            2001 annual meeting or until their successors are elected.

                 Subject to certain contractual rights, each officer serves at
            the discretion of the board of directors.

            S. Daniel Ponce.   Mr. Ponce has been Chairman of the Board of the
               Company since 1988. Mr. Ponce has been engaged in the practice of
               law for over twenty five years and is currently a stockholder in
               the law firm of Wallace, Bauman, Legon, Fodiman, Ponce & Shannon,
               P.A. Ponce is a member of the Board of Directors of the
               University of Florida Foundation, Inc. and serves as Chairman of
               its audit committee. He is also a non-practicing certified public
               accountant.


                                       47
<PAGE>

Item 10.    Directors and Executive Officers of the Registrant (continued)
            --------------------------------------------------------------


            Lisa M. Brock.   Mrs. Brock has been a director of the Company since
               1988. Mrs. Brock was employed by the Company and its
               subsidiaries, Premix and Acrocrete, as Vice President for over 5
               years until December, 1994 when she retired. Mrs. Brock continues
               to serve as a consultant to the Company.

            Milton J. Wallace.  Mr. Wallace has been a director of the Company
               since February 1999. Mr. Wallace has been a practicing attorney
               in Miami for over 40 years and is currently a shareholder in the
               law firm of Wallace, Bauman, Legon, Fodiman, Ponce & Shannon,
               P.A. He was a co-founder and Chairman of the Board of Renex Corp,
               a provider of dialysis services, from 1993 through February 2000
               when Renex Corp. was acquired by National Nephrology Associates,
               Inc. Mr. Wallace is Chairman of the Board of Med/Waste, Inc., a
               provider of medical waste management services. He is a director
               of several private companies.

            Morton L. Weinberger, CPA.   Mr. Weinberger has been a director of
               the Company since 1988. Mr. Weinberger, a certified public
               accountant, has been self-employed as a consultant to various
               professional organizations for the past twelve years. He provides
               consulting services for the Company. For the previous twenty-five
               years, he was engaged in the practice of public accounting.
               During such period, he was a partner with Peat Marwick Mitchell &
               Co., now known as KPMG Peat Marwick, and thereafter BDO Seidman,
               both public accounting firms.

            Howard L. Ehler, Jr.   Mr. Ehler has been Principal Executive
               Officer of the Company since March 1990 and Executive Vice
               President, Chief Financial Officer and Secretary of the Company
               since April 1988. Prior thereto he was Vice President, Chief
               Financial Officer and Assistant Secretary of the Company for over
               five years.

            Gary J. Hasbach.  Mr. Hasbach became President of Premix and
               Acrocrete in March 2001, and President of Just-Rite, in February
               2000. Prior thereto, he had been Executive Vice President of
               Sales and Marketing for Premix and Acrocrete since January 1,
               1999. Mr. Hasbach was formerly President of Premix and Acrocrete
               from September 1990 to May 1996. From May 1996 to December 1997,
               Mr. Hasbach served as Executive Vice President of Marketing for
               Florida Tile Industries, Inc, a distributor of tile and flooring
               products. In addition, Mr. Hasbach was a director of the Company
               from 1993 to February 1997.


                                       48
<PAGE>

Item 10.    Directors and Executive Officers of the Registrant (continued)
            --------------------------------------------------------------

            Betty J. Murchison.  Ms. Murchison has been the Company's Principal
               Accounting Officer since June 1995. Prior thereto, from October,
               1991 to June 1995, she was Principal Accounting Officer of Royce
               Laboratories, Inc., a manufacturer of generic pharmaceutical
               products. For over 25 years prior thereto, she was employed by
               the Company, the last three years acting as the Company's
               Principal Accounting Officer.

            Board of Directors Meetings and Attendance
            ------------------------------------------

                 The Board of Directors met four (4) times in fiscal 2000. Each
            director attended all of the Board of Directors meetings in 2000.

            Compensation and Stock Option Committee
            ---------------------------------------

                 The Compensation and Stock Option Committee, composed of Ms.
            Brock, as Chairman and Messrs. Ponce and Weinberger met three (3)
            times during 2000. Every member attended all of such meetings. The
            Compensation Committee reviews the Company's general compensation
            policies and procedures; establishes salaries and benefit programs
            for the Chief Executive Officer and other executive officers of the
            Company and its subsidiaries; reviews, approves and establishes
            performance targets and awards under incentive compensation plans
            for its executive officers; and reviews and approves employment
            agreements. The Compensation and Stock Option Committee also
            administers the Company's Employee Stock Option Plan and has the
            authority to determine, among other things, to whom to grant
            options, the amount of options, the terms of options and the
            exercise prices thereof.

            Audit Committee
            ---------------

                 The Audit Committee is presently composed of Mr. Weinberger, as
            Chairman, and Messrs. Ponce and Wallace. The Audit Committee met two
            (2) times during 2000. Every member attended all of such meetings.
            The principal duties of the Audit Committee are to recommend the
            appointment of independent auditors, meet with the Company's
            independent auditors to review the arrangements for, and scope of
            the audit by the independent auditors and the fees related to such
            work; review the independence of the independent auditors; consider
            the adequacy of the system of internal accounting controls; review
            and monitor the Company's policies regarding conflicts of interest;
            and discuss with management and the independent accountants the
            Company's annual and quarterly financial statements.


            Reports Pursuant to Section 16(a) of the Securities and Exchange
            ----------------------------------------------------------------
            Act of 1934
            -----------

                 The Company's officers and directors are required to file Forms
            3, 4 and 5 with the Securities and Exchange Commission in accordance
            with Section 16(a) of the Securities Exchange Act of 1934, as
            amended, and the rules and regulations promulgated thereunder. Based
            solely on a review of such reports furnished to the Company as
            required by Rule 16a-3(e), in 2000 no officer or director failed to
            file any such report on a timely basis.


                                       49
<PAGE>


Item 11.    Executive Compensation
            ----------------------

            Summary Compensation Table
            --------------------------

                 The following table summarizes the compensation paid or accrued
            for each of the three fiscal years in the period ended December 31,
            2000 for the Company's chief executive officer and each other
            executive officer whose total annual salary and bonus exceeded
            $100,000 for any fiscal year, (the "Named Executive Officers").
<TABLE>
<CAPTION>

                                              AnnualCompensation
                                              ------------------

                                                                                   Long-TermCompensation
                                                                                   ---------------------
                                                                                         Securities
                                                                          Other           Underlying
                                                                          Annual          Options to
                        Name and                                          Compen-         Purchase
                   Principal Position      Year     Salary     Bonus(1)   sation(2)       Shares(3)
                   ------------------      ----     ------     --------   ---------       ---------

<S>                                        <C>     <C>         <C>       <C>               <C>
                   Howard L. Ehler Jr.     2000    $140,000    $  -      $60,000           10,000
                    Principal Executive    1999    $130,000     30,000     2,000           20,000
                    Officer, Executive     1998    $120,000     35,000      -                -
                    Vice President and
                    Secretary

                   Fred H. Hansen(4)       2000    $160,000    $  -      $  -              10,000
                    President, Premix      1999     138,000     40,000      -              20,000
                    and Acrocrete          1998     150,000     75,000      -                -

                   Gary Hasbach
                    President, Just-       2000    $130,000    $  -      $  -              10,000
                    Rite                   1999     110,000     47,000      -              10,000
</TABLE>

            (1) Bonuses shown were earned in the year indicated even though
            actually paid in a subsequent year. Bonuses for year 2000 have not
            yet been determined.

            (2) Except as indicated, none of the named individuals above
            have received personal benefits or perquisites that exceed the
            lesser of $50,000 or 10% of the total annual salary and bonus
            reported for the named executive officer in the above table. Mr.
            Ehler's other Annual Compensation in 2000 and 1999 represents the
            market price at date of grant of 100,000 and 7,863 shares of common
            stock. Although 100,000 such shares were issued in calendar year
            2000, the Compensation Committee awarded such shares as services and
            performance tendered over the previous several years.

            (3) Stock options are granted under the terms and provisions of the
            1999 Employee Stock Option Plan. For a description of the stock
            options see "Executive Compensation-Options Granted in Year Ended
            December 31, 2000".

            (4) Mr. Hansen retired effective December 31, 2000 and is now a
            consultant to the Company.

                                       50
<PAGE>

Item 11.    Executive Compensation (continued)
            ----------------------

            Compensation Agreements
            -----------------------

                 The Company is party to a one year renewable employment
            agreement, (the "Employment Agreement") with Howard L. Ehler, Jr.
            (the "Executive"). Mr. Ehler serves as Executive Vice President,
            Principal Executive Officer and Chief Financial Officer of the
            Company at a current base salary of $140,000. The Employment
            Agreement provides for automatic renewal for additional one year
            periods on July 1st of each year, unless the Company or Executive
            notifies the other party of such party's intent not to renew at
            least 90 days prior to each June 30 of the initial term and any
            extended term thereafter. The Executive receives the use of a
            Company car, as well as certain other benefits, such as health and
            disability insurance. The Executive is also entitled to receive
            incentive compensation based upon targets formulated by the
            Compensation Committee.

                 Prior to a Change in Control (as defined in the Employment
            Agreements), the Company has the right to terminate the Employment
            Agreement, without cause, at any time upon thirty days written
            notice, provided the Company pays to the Executive a severance
            payment equivalent to 50% of his then current annual base salary. As
            part of the Employment Agreement, the Executive has agreed not to
            disclose information and not to compete with the Company during his
            term of employment and, in certain cases, for a two (2) year period
            following his termination.

                 In the event of a Change in Control, the Employment Agreement
            is automatically extended to a three year period. Thereafter, the
            Executive will be entitled to terminate his employment with the
            Company for any reason at any time. In the event the Executive
            so terminates employment, the Executive will be entitled to receive
            the lesser of (i) a lump sum equal to the base salary payments and
            all other compensation and benefits the Executive would have
            received had the Employment Agreement continued for the full term;
            or (ii) three times the Executive's base salary then in effect on
            the effective date of termination. The Executive would also be
            entitled to such severance in the event the Company terminates the
            Executive without cause after a Change of Control.

            Options Granted in Year Ended December 31, 2000
            -----------------------------------------------

                 The following table sets forth certain summary information
            concerning the number of stock options granted and the potential
            realizable value of the stock options granted to the Company's Named
            Executive Officers during the fiscal year ended December 31, 2000.



                                       51
<PAGE>


Item 11.    Executive Compensation (continued)
            ----------------------

            Options Granted in Year Ended December 31, 2000 (continued)

<TABLE>
<CAPTION>

                                        Number of                                                   Realizable Value
                                        Securities      % of Total                                  at Assumed Rates
                                        Underlying      Options                                     of Stock Price
                                        Options         Granted to      Exercise                    Appreciation
                                        Granted in      Employees in    Price         Expiration    forOptionTerm(3)
               Name                     2000 (1)        FiscalYear    ($/Share)(2)       Date        5%($)     10%($)
               ----                     --------        ----------    ------------       ----        -----     ------

<S>                                       <C>              <C>            <C>          <C>          <C>       <C>
       Howard L. Ehler, Jr.               10,000           33.3%          $.57         04/24/05     $1,575    $3,480
        Principal Executive Officer,
        Executive Vice President and
        Secretary

       Fred H. Hansen                     10,000           33.3%          $.57         04/24/05     $1,575    $3,480
        President Premix and Acrocrete

       Gary J. Hasbach                    10,000           33.3%          $.57         04/24/05     $1,575    $3,480
        President Just-Rite
</TABLE>


            (1) Options were granted pursuant to the terms and conditions of the
            Company's 1999 Employee Stock Option Plan adopted December 15, 1999
            for which stockholder approval was obtained on September 27, 2000.

            (2) The exercise price of $.57 per share was equal to the fair
            market value of the Company's common stock at September 27, 2000,
            the date the 1999 Employee Stock Option Plan was approved by the
            Company's stockholders.

            (3) The amounts disclosed in the columns which noted appreciation of
            the Company's common stock price at the 5% and 10% rates dictated by
            the Securities and Exchange Commission, are not intended to be a
            forecast of the Company's common stock price and are not necessarily
            indicative of the actual value which my be realized by the named
            Executive Officers or the stockholders. These assumed rates of 5%
            and 10% would result in the Company's common stock price increasing
            from $.57 per share to approximately $.73 per share and $.92 per
            share, respectively. As of December 31, 2000, the market price for
            the common stock was $.38 per share.

            Aggregated Option Exercises in Year Ended December 31, 2000
            -----------------------------------------------------------

                 The following table provides certain summary information
            concerning the value of unexercised stock options held by the
            Company's Named Executive Officers as of December 31, 2000.


                                       52
<PAGE>

Item 11.    Executive Compensation (continued)
            ----------------------

            Aggregated Option Exercises in Year Ended December 31, 2000
            -----------------------------------------------------------
              (continued)

                                                        Value of Unexercised
                             Number of Securities         "In the Money"
                            Underlying Unexercised      Options at Fiscal
                           Options at Fiscal Year End      Year End($)(1)
                           --------------------------  ------------------------
            Name           Exercisable  Unexercisable  Exercisable Unexercisable
            ----           -----------  -------------  -------------------------

      Howard L Ehler, Jr.     30,000         -              -           -
       Principal Executive
       Officer, Executive
       Vice President and
       Secretary

      Fred H. Hansen          30,000         -              -           -
       President, Premix
       and Acrocrete

      Gary J. Hasbach         20,000         -              -           -
       President Just-Rite

                 No options were exercised by the Named Executive Officers
            during the year ended December 31, 2000.

            (1) The options are exercisable at $.57 per share. At December 31,
            2000 the fair market value of the Company's common stock was deemed
            to be $.38 per share, the average of the closing bid and asked price
            of the common stock at such date.

                 The Company has two stock option plans, the Director's Stock
            Option Plan and the 1999 Employee Stock Option Plan (collectively,
            the "1999 Plans"). The 1999 Plans provide for options to be granted
            at generally no less than the fair market value of the Company's
            stock at the grant date. The 1999 Plans are administered by the
            Company's Compensation and Stock Option Committee. Options granted
            under the 1999 Plans have a term of up to 10 years and are
            exercisable six months from the grant date. A total of 600,000 and
            200,000 shares are reserved for issuance under the Employee and
            Director Plans. As of December 31, 2000 there were outstanding
            options to purchase 165,000 and 80,000 shares under the Employee and
            Director Plans, respectively. The exercise price for all options
            currently outstanding is $.57 per share. All options expire five
            years from date of grant and are fully vested.

            Director Compensation
            ---------------------

                 During the year ended December 31, 2000, each director received
            an annual retainer of $6,000, payable in quarterly installments.
            Effective June 1, 1994 and January 1, 1995, the Company entered into
            separate consulting agreements with Mr. Weinberger  and Ms. Brock,


                                       53
<PAGE>


Item 11.    Executive Compensation (continued)
            ----------------------
            Director Compensation (continued)
            ---------------------

            respectively, to provide various management consulting services to
            the Company. Each Agreement initially provided for monthly fees of
            $833 and may be terminated upon 60 days notice by either party.
            During the year ended December 31, 1999 and thereafter, the Company
            initiated an acquisition program. In connection with such
            acquisition program, Mr. Weinberger was requested to expend
            additional time in consulting with the Company's management on
            acquisition possibilities, including performing due diligence,
            administrative, accounting and other services. As a result of the
            increased time and effort spent by Mr. Weinberger, Mr Weinberger's
            consulting fee has been increased to $3,500 per month.

                 On December 15, 1999, each director was granted stock options
            to purchase 20,000 shares of the Company's common stock at an
            exercise price of $.57 per shares until December 14, 2004. Since
            September 1994, Mr. Ponce has been provided the use of a Company car
            at a current cost of approximately $786 per month.

            Compensation Committee Interlocks and Insider Participation
            -----------------------------------------------------------

                 During the year ended December 31, 2000, the Compensation and
            Stock Option Committee consisted of Messrs. Ponce, Weinberger and
            Ms. Brock. None of these directors has been an officer or employee
            of the Company or its subsidiaries during the last ten years, except
            Ms. Brock, who was formerly Vice President of Premix and Acrocrete
            until December 31, 1994. There are no other relationships required
            to be disclosed pursuant to applicable Securities and Exchange
            Commission rules and regulations.

Item 12.    Security Ownership of Certain Beneficial Owners and Management
            --------------------------------------------------------------

                 The following table sets forth certain information as of March
            27, 2001 with respect to the beneficial ownership of the Company's
            common stock by (i) each director of the Company, (ii) each Named
            Executive Officer, (iii) each person known to the Company to own
            more than 5% of such shares, and (iv) all executive officers and
            directors as a group. (Except as otherwise provided herein, the
            information below is supplied by the holder):

                                                     Shares (1)      Percent
                                                Beneficially Owned  of Class (2)
                                                ------------------  ------------
            Maureen P. Ferri                           656,981            7.1%
              120 Simmons Road
              Statesboro, GA. 30458
            Lisa M. Brock                              289,006 (3)        3.1%
            Howard L. Ehler, Jr.                       406,108 (4)        4.4%
            Fred H. Hansen                              67,500 (5)         .7%
            Gary J. Hasbach                            270,400 (6)        2.9%


                                       54
<PAGE>


Item 12.    Security Ownership of Certain Beneficial Owners and Management
            --------------------------------------------------------------
             (continued)

            S. Daniel Ponce                            591,966 (7)        6.4%
            Milton J. Wallace                          128,000 (8)        1.4%
            Morton L. Weinberger                       229,210 (9)        2.5%

            All directors and officers
              as a group (8 persons)                 1,998,308 (10)      21.3%

            (1) Except as set forth herein, all securities are directly
            owned and the sole investment and voting power are held by the
            person named. Unless otherwise indicated, the address for each
            beneficial owner is 1259 N.W. 21st Street, Pompano Beach, Florida
            33069-1428.

            (2) The percent of class for common stockholders is based upon
            9,205,434 shares of common stock outstanding and such shares of
            common stock such individual has the right to acquire within 60 days
            upon exercise of options that are held by such person (but not those
            held by any other person).

            (3) Includes 20,000 shares of common stock issuable upon
            exercise of stock options.

            (4) Includes 30,000 shares of common stock issuable upon
            exercise of stock options.

            (5) Includes 30,000 shares of common stock issuable upon
            exercise of stock options.

            (6) Includes 20,000 shares of common stock issuable upon
            exercise of stock options.

            (7) Includes 20,000 shares of common stock issuable upon
            exercise of stock options.

            (8) Includes 20,000 shares of common stock issuable upon
            exercise of stock options.

            (9) Includes 20,000 shares of common stock issuable upon
            exercise of stock options.

            (10) Includes 170,000 shares of common stock issuable upon the
            exercise of stock options.


Item 13.    Certain Relationships and Related Transactions
            ----------------------------------------------

                 The law firm of Wallace, Bauman, Legon, Fodiman, Ponce and
            Shannon, P.A. of which Mr. Ponce, the Company's Chairman of the
            Board, and Mr. Wallace, a Director, are stockholders, served as
            general counsel to the Company. The law firm received $237,726 in
            2000 for legal services rendered to the Company.


                                       55
<PAGE>


                                     PART IV

Item 14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K
            ---------------------------------------------------------------

            (a)  The following documents are filed as part of this report:

            1.   FinancialStatements:                                      Page
                 --------------------                                      ----
                 Imperial Industries, Inc. and Subsidiaries:

                 Report of Independent Certified Public Accountant           23

                 Consolidated Balance Sheets - December 31, 2000 and 1999    24

                 Consolidated Statements of Operations - Years Ended
                  December 31, 2000, 1999 and 1998.                          25

                 Consolidated Statement of Changes of Common Stock and
                  Other Stockholders' Equity  -  Three Years Ended
                  December 31, 2000.                                         26

                 Consolidated Statements of Cash Flows -
                  Years ended December 31, 2000, 1999 and 1998               27

                 Notes to Consolidated Financial Statements                  29

            2.   FinancialStatementSchedules:
                 ---------------------------

                 II - Valuation and Qualifying Accounts and Reserves         57

            3.   Exhibits
                 --------
                 Incorporated by reference to the Exhibit Index at the
                 end of this Report.                                         58

            (b)  Reports on Form 8-K:

                 No Form 8-K Reports were filed during the last quarter of the
                 period covered by this Report.


                                       56
<PAGE>

                                                     Schedule II


                                IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
                              Valuation and Qualifying Accounts and Reserves
                              Years ended December 31, 2000, 1999 and 1998


<TABLE>
<CAPTION>

                                                                    Charged   Charged
                                                          Balance   to cost   to other                Balance at
                                                         beginning    and     accounts-  Deductions-    end of
       Description                                       of period  expenses  describe    describe      period
       -----------                                       ---------  --------  --------    --------      ------


<S>                                                     <C>          <C>        <C>     <C>             <C>
Year ended December 31, 2000:

  Reserves and allowances deducted from asset accounts:
  Allowance for doubtful accounts:
   Trade                                              $  254,000     $283,000   $ --    $  137,000(A)   $  400,000
                                                      ----------     --------   ----    ----------      ----------
  Valuation allowance for deferred taxes              $1,633,000     $     --   $ --    $1,633,000(B)   $       --
                                                      ----------     --------   ----    ----------      ----------

Year ended December 31, 1999:

  Reserves and allowances deducted from asset accounts:
  Allowance for doubtful accounts:
   Trade                                              $  200,000     $177,000   $ --    $123,000(A)    $  254,000
                                                      ----------     --------   ----    ----------     -----------
  Valuation allowance for deferred taxes              $2,207,000     $     --   $ --    $574,000(C)    $1,633,000
                                                      ----------     --------   ----    ----------      ----------

Year ended December 31, 1998:

  Reserves and allowances deducted from asset accounts:
  Allowance for doubtful accounts:
   Trade                                              $  176,000     $154,000   $ --    $130,000(A)    $  200,000
                                                      ----------     --------   ----    ----------      ----------
  Valuation allowance for deferred taxes              $3,134,000     $     --   $ --    $927,000(C)    $2,207,000
                                                      ----------     --------   ----    ----------      ----------
</TABLE>



(A)  Uncollectible accounts written off, net of recoveries.
(B)  Expiration of related net operating loss carryforwards.
(C)  Deferred tax benefit


                                       57
<PAGE>

                                  EXHIBIT INDEX

     Certain of the following exhibits, designated with an asterisk (*), are
filed herewith. The exhibits not so designated have been filed previously with
the Commission, and are incorporated herein by reference to the documents
indicated in parentheses following the descriptions of such exhibits.


Exhibit No.                         Description
-----------                         -----------

2.1            Agreement and Plan of Merger, by and between Imperial Industries,
               Inc. and Imperial Merger Corp. dated October 12, 1998 (Form S-4
               Registration Statement, Exhibit 2).

2.2            Asset Purchase Agreement entered into as of December 31, 1999
               between Just-Rite Supply, Inc., Imperial Industries, Inc., A&R
               Supply, Inc., A&R Supply of Foley, Inc., A&R of Destin, Inc.,
               Ronald A. Johnson, Rita E. Ward and Jaime E. Granat (Form 8-K
               dated January 19, 2000, File No. 1-7190, Exhibit 2.1).

2.3            Asset Purchase Agreement dated June 5, 2000 between Just-Rite
               Supply, Inc., Imperial Industries, Inc., A&R Supply of
               Mississippi, Inc., A&R Supply of Hattiesburg, Inc., Ronald A.
               Johnson, Dennis L. Robertson and Richard Williamson, (Form 8-K
               dated June 13, 2000, File No. 1-7190, Exhibit 2.1.

3.1            Certificate of Incorporation of the Company, (Form S-4
               Registration Statement, Exhibit 3.1).

3.2            By-Laws of the Company, (Form S-4 Registration Statement, Exhibit
               3.2).

4.1            Form of Common Stock Purchase Warrant issued to Auerbach, Pollak
               & Richardson, Inc., (Form S-4 Registration Statement, Exhibit
               4.1).

4.2            Form of 8% Subordinated Debenture, (Form S-4 Registration
               Statement, Exhibit 4.2).

10.1           Consolidating, Amended and Restated Financing Agreement by and
               between Congress Financial Corporation and Premix-Marbletite
               Manufacturing Co., Acrocrete, Inc. and Just-Rite Supply, Inc.
               dated January 28, 2000.

10.2           Employment Agreement dated July 26, 1993 between Howard L. Ehler,
               Jr. and the Company. (Form 8-K dated July 26, 1993)

10.3           License Agreement between Bermuda Roof Company and Premix
               Marbletite Manufacturing Co., (Form S-4 Registration Statement,
               Exhibit 10.5).

*10.4          Employee Stock Option Plan

*10.5          Directors Stock Option Plan

*11            Statement recomputation of earnings per share.

*21            Subsidiaries of the Company



                                       58
<PAGE>

                                   SIGNATURES
                                   ----------



    Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                            IMPERIAL INDUSTRIES, INC.



April 4, 2001                By: /s/Howard L. Ehler, Jr.
                                 ----------------------------------------------
                                 Howard L. Ehler, Jr., Executive Vice President/
                                 Principal Executive Officer



     Pursuant to the requirements of the Securities and Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



/s/S. Daniel Ponce         Chairman of the Board of      April 4, 2001
------------------------   Directors
S. Daniel Ponce


/s/Lisa M. Brock           Director                      April 4, 2001
------------------------
Lisa M. Brock


/s/Milton J. Wallace       Director                      April 4, 2001
------------------------
Milton J. Wallace


/s/Morton L. Weinberger    Director                      April 4, 2001
------------------------
Morton L. Weinberger


/s/Howard L. Ehler,Jr.     Director, Executive Vice      April 4, 2001
------------------------   President, Principal
Howard L. Ehler, Jr.       Executive Officer, Chief
                           Financial Officer and
                           Secretary

/s/Betty J. Murchison      Assistant Vice President      April 4, 2001
------------------------   and Principal Accounting
Betty J. Murchison         Officer




                                       59