<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K

               Annual Report Pursuant to Section 13 or 15 (d) of
                      The Securities Exchange Act of 1934

                  For the fiscal year ended December 31, 1996

                         Commission file number 0-15464

                               RADVA CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             Virginia                                   54-0715892
 -------------------------------                     -------------------
 (State or other jurisdiction of                     (I.R.S. Employer
  incorporation or organization)                     Identification No.)

                        Drawer 2900 First Street Station
                            Radford, Virginia 24143
                                 (540) 639-2458
         -------------------------------------------------------------
         (Address, including zip code, and telephone number, including
            area code, of registrant's principal executive offices)

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

                     Common Stock, par value $.01 per share
                     --------------------------------------
                                (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.

                                 Yes   X    No
                                     -----     -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (par. 229.405 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. [  ]

Aggregate market value of voting stock held by non-affiliates of the registrant
as of March 19, 1997 (see ITEM 5 for explanation of calculation): $ 755,103

Number of shares of common stock outstanding as of March 19, 1997: 4,104,727

                                       1


<PAGE>   2




                       DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates information by reference to the registrant's proxy
statement for its annual meeting of stockholders scheduled for April 16, 1997.

DESCRIPTION OF BUSINESS

General Development of Business

RADVA Corporation (the "Company") was organized in 1962 as a Virginia
corporation to engage in the production of molded and fabricated products from
expandable polystyrene. Historically, the Company has specialized in the
production of customized expanded polystyrene packaging materials used to
protect products during shipment; however, the Company has developed a
composite building panel produced from expanded polystyrene and steel which it
sells under the trademark THERMASTRUCTURE. In November, 1995, The Company sold
80% interest in its subsidiary, THERMASTRUCTURE Ltd., which manufactures the
building panels and has rights to market licensing rights to territories in the
United States not previously licensed. The Company continues to market
manufacturing rights to its patented building panel system in territories
outside of the United States.  The Company also operates a Custom Mold Division
which produces aluminum molds to supply the tools and dies used in its
protective packaging business and manufactures specialized machinery used in
the production of THERMASTRUCTURE building panels.

Industry Segments

The Company's continuing operations includes three principal industry segments:
the manufacture of protective packaging and similar materials, the manufacture
of THERMASTRUCTURE building panels, and licensing and related machinery sales.
Each of these segments is discussed in note 16 to the financial statements.

Principal Classes of Products

The following table sets forth the approximate relative percentages of total
net revenues (after intersegment eliminations) generated by the principal
classes of products produced by the Company in each of its principal industry
segments for each of the past three fiscal years.

<TABLE>
<CAPTION>
      Class of Product                                              1996                1995               1994
      ----------------                                              ----                ----               ----
<S>                                                               <C>                 <C>                <C>
PROTECTIVE PACKAGING AND
SIMILAR MATERIALS
   Protective Packaging                                            92.9%               73.6%              68.9%

THERMASTRUCTURE Building Panels
   License fees & machinery sales                                   2.9%               14.0%              10.5%
   Panel sales & related revenue                                    4.2%               12.4%              20.6%
                                                                  -----               -----              -----
                                                                  100.0%              100.0%             100.0%
</TABLE>


Protective Packaging Products

The Company's protective packaging products include inserts and containers used
in shipping products such as electronic equipment and medical supplies. The
products are designed to reduce vibration, absorb shock, and provide insulation
against temperature extremes in accordance with customer specifications. The
products are manufactured at plants in Portsmouth and Radford, Virginia.

                                        2


<PAGE>   3



In general, the Company's protective packaging products are molded or
fabricated from expandable polystyrene - a thermoplastic which can be expanded
to a pre-selected density and, when injected into a mold and subjected to
controlled heat and pressure, can be formed to practically any shape. The
Company also has the capability to produce protective packaging products from
other cellular plastic materials such as polyethylene and polypropylene and in
July 1985, entered into an agreement with the Atlantic Richfield Company
("ARCO") to purchase a copolymer resin marketed by ARCO under the trademark
ARCEL. The copolymer resin is substantially more expensive than polystyrene
resin but produces a product which can meet customer requirements for reusable
handling units and higher customer specifications for durability. In addition
to custom molded protective packaging products, the Company produces
proprietary packaging products for which the Company owns the molds.

The Company generally sells its protective packaging products to customers
located within 200 miles of its manufacturing plants. The products are shipped
to customers in trucks owned by the Company or by common carrier.

THERMASTRUCTURE  Building Panels

The Company's THERMASTRUCTURE building panels are designed for use in the
construction of residential housing and commercial products. The panels are
manufactured from a composite of expanded polystyrene and steel and offer a
lightweight and durable alternative to traditional building materials such as
timber or metal. The panels can be used in the construction of load bearing
walls or interior partitions and in the manufacture of structural systems for
floors or roofs. The panels also offer substantial design flexibility as they
can be molded into conventional configurations or nonconventional shapes. In
order to promote acceptance of the panels and to demonstrate the reliability of
the panels in various climatic conditions, the Company has constructed
buildings using the THERMASTRUCTURE system in various locations throughout the
United States. The Company operated panel manufacturing facilities in Radford,
Virginia and Agat, Guam. The Guam subsidiary was sold in October 1990. The
Company sold 80% interest in its division which manufactures the panels in
November, 1995.

During 1992, the Company began shipping equipment to RADOSLAV, a Joint Venture
in which the Company owns a 31% interest, located at Pereslavl-Zalessky,
Russia, approximately 75 miles north of Moscow. RADOSLAV produces
THERMASTRUCTURE panels for sale in Russia and other European countries. The
Company and three Russian entities, Pereslavlstroy Trust, Slavich Corporation
and Argamak Corporation are the primary joint venture participants. The Joint
Venture agreement called for the Company to contribute technology, the right
for RADOSLAV to produce THERMASTRUCTURE panels under the Company's trademarks
and U.S. currency that is included in the investment account. The Russian
principals contributed a manufacturing facility of approximately 24,000 square
feet, and a sum of Russian currency.

Raw Materials and Suppliers

The principal raw material used by the Company in the production of protective
packaging products is expandable polystyrene resin. This material may be
obtained from several major suppliers. In addition, the Company uses several
copolymer resins in the manufacture of engineered expanded foam protective
packaging. Although the copolymer resins currently used by the Company are only
available under an agreement with ARCO, similar copolymer resins may be
obtained from other suppliers.

The principal raw materials used by the Company in the production of
THERMASTRUCTURE building panels are expandable polystyrene resin, adhesives,
and coil steel. These materials are available from numerous suppliers in the
United States and elsewhere.

Patents and Trademarks

The Company holds three United States patents relating to the THERMASTRUCTURE
system and certain corresponding patents in Canada, Mexico, and Great Britain.
These patents cover the THERMASTRUCTURE building panels, the manufacture of
THERMASTRUCTURE building panels and a method of combining THERMASTRUCTURE
building panels to construct a house. The Company pursues a policy of filing
for patents on any product development that it considers to be significant. The
Company has registered the trademark THERMASTRUCTURE and WALLFRAMETM in the
United States and has applied for registration in Great Britain.

                                       3


<PAGE>   4




Seasonality

The Company ordinarily experiences a reduction in the manufacture and sale of
protective packaging products during the winter months after filling holiday
season orders. The demand for THERMASTRUCTURE building panels is affected by
the level of activity in the construction industry and housing market and can
be expected to decrease during the fall and winter seasons when there has
historically been a decrease in construction activity and housing sales.

Customers

The Company's protective packaging business has a broad base of customers;
however, one customer accounted for approximately 10.5% of protective packaging
revenues in 1997.

Backlog

The Company had approximately $828,000 in backlog orders for protective
packaging products as of December 31, 1996, compared to backlog orders of
approximately $713,000 as of December 31, 1995. Although the Company believes
that such backlog orders are firm, the purchase orders for protective packaging
products generally may be cancelled without cause by the customer. The Company
expects to fill all of these orders during 1997.

Competition

The protective packaging business is highly competitive, and some of the
Company's competitors are large and have greater financial and other resources
than the Company. The Company's competition in protective packaging products is
primarily from four local and regional manufacturers with plants within or
close to the Company's market area. The principal elements of competition in
the sale of protective packaging products are price and the ability to service
customers.  Because of shipping costs and other factors, the Company has found
it difficult to compete for protective packaging business beyond a 200 mile
radius of the point of manufacture. The Company believes that its custom mold
division and technical design facility give it an advantage over competitors
within its market area who do not have the capacity to design and produce their
own molds for their protective packaging customers.

Research and Development

The Company maintains two laboratory and testing facilities within its
manufacturing plant in Radford, Virginia. The laboratory and testing
facilities, which consist of 2,000 square feet and 1,800 square feet,
respectively, are used for product testing, development of new products, and
quality control evaluations.

Regulation

The Company is subject to state and federal laws and regulations affecting its
business, including those promulgated under the Occupational Safety and Health
Act ("OSHA") and by the Environmental Protection Agency. The Company's
manufacturing facilities are subject to compliance with comprehensive OSHA
standards. The Company believes that its manufacturing facilities and processes
are currently in compliance with OSHA and does not anticipate capital
expenditures for environmental control facilities or for compliance with OSHA
standards during 1997. The Company does not believe that its compliance with
federal and state environmental regulations has had or will have a material
effect on its capital expenditures, earnings, or competitive position.

Employees

The Company employs approximately 150 persons. None of the Company's employees
is represented by a labor union, and the Company believes that its employee
relations are good.

                                       4


<PAGE>   5



Executive Officers

The following table identifies and sets forth certain information about the
executive officers of the Company.

<TABLE>
<CAPTION>
Name                          Age              Position and Year of Election
----                          ---              -----------------------------
<S>                            <C>             <C>
Luther I. Dickens              64              President (1965)

James M. Hylton                63              Secretary and Treasurer (1969)
</TABLE>


ITEM 2. PROPERTIES

Real Estate

         The real estate owned or leased by the Company and used in the
Company's primary business operations is described below.

         (1) The Company owns approximately 10 acres of land in Radford,
Virginia, and a 71,000 square foot building located on the Radford property.
The building includes approximately 5,000 square feet of office space and
approximately 66,000 square feet of manufacturing space. The Radford property
is subject to deeds of trust which had outstanding balances as of December 31,
1996, aggregating approximately $2,774,567.

         (2) The Company owns approximately 7 acres of land in Portsmouth,
Virginia, and a 44,000 square foot building located on the Portsmouth property.
The building includes approximately 2,000 square feet of office space and
approximately 42,000 square feet of manufacturing space. The Portsmouth
property is subject to a deed of trust which had an outstanding balance as of
December 31, 1996 of approximately $2,774,567.

         (3) The Company leases approximately 12,000 square feet of
manufacturing space in Radford, Virginia, under a month-to-month lease which
requires monthly rental payments of $1,000. The property is used by the
Company's Custom Mold Division and is leased to the Company by a partnership in
which Mr. Dickens and Dr. Hylton are general partners.

         (4) The Company rents approximately 6,000 square feet of office space
in Radford, Virginia, under a lease which requires monthly rental payments of
$3,700. The property is rented to the Company by a partnership in which Mr.
Dickens and Dr. Hylton have an interest.

Personal Property and Equipment

The personal property and equipment at the main Radford plant and the
Portsmouth plant consist principally of machinery and equipment used to produce
expanded polystyrene products. The personal property and equipment at the
Custom Mold Division in Radford consists of machine shop tools and pattern shop
tools and related aluminum foundry equipment. The personal property and
equipment at the THERMASTRUCTURE Machine Division in Radford consist of machine
shop tools and welding and electronic test equipment used primarily in the
construction of THERMASTRUCTURE panel molding machines.

                                        5


<PAGE>   6



The Company owns 3 trucks and 12 trailers and leases 2 tractors which it uses
to ship products to customers. The Company owns 2 vans and 6 cars which it uses
principally for sales and sales service functions. The Company believes that
its present equipment is adequate, well maintained, and in good operating
condition.

ITEM 3. LEGAL PROCEEDINGS

         None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

                                     PART II

                                STOCK INFORMATION

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market and Price Information

The Company's common stock, par value $.01 per share (the "Common Stock"), has
been traded in the over-the-counter market since June 1986. The following table
provides the high and low bid quotations with respect to shares of the Common
Stock for the periods indicated as reported by the Dow Jones Historical Stock
Quote Reporter Service.

<TABLE>
<CAPTION>
                                    1996                         1995                        1994
                                    ----                         ----                        ----
                             High          Low            High           Low           High           Low
<S>                          <C>           <C>            <C>            <C>           <C>            <C>
First
Quarter                      3/4           7/16           9/16           7/16          1 1/8            1

Second
Quarter                      9/16          7/16            7/8           3/4             5/8          9/16

Third
Quarter                      5/8           9/16           1 1/8          3/4            13/16          3/4

Fourth
Quarter                      7/16          7/16           1 1/8           1            1 1/4           7/8
</TABLE>

The foregoing quotations of high and low bid prices represent prices between
dealers and do not include retail mark-up, mark-down, or commissions. They do
not necessarily represent actual transactions. There was no established public
trading market for the Common Stock before June 1986.

The aggregate market value of the voting stock held by non-affiliates of the
Company as of March 19, 1997 shown on the facing page of this report was
calculated as follows: the number of shares beneficially owned by the officers
and directors of the Company as a group as of March 19, 1997 was subtracted
from 4,104,727, the total number of shares outstanding on that date, and the
resulting figure was multiplied by $.4375, the average of the bid and asked
prices of the Company's stock in the over-the-counter market on March 19, 1997.
The foregoing calculation should not be deemed an admission that any of the
officers or directors of the Company is an "affiliate" of the Company.

                                        6


<PAGE>   7




Number of Stockholders

As of March 19, 1997, there were 317 record holders of the Common Stock.

Dividends

The Company has not declared cash dividends on the Common Stock during its
three most recent fiscal years. The declaration and payment of dividends is
entirely within the discretion of the Board of Directors of the Company and
will depend upon the earnings, capital requirements, and financial condition of
the Company.  The Company anticipates that it will retain earnings for the next
several years to finance the development of its business.

                                       7


<PAGE>   8



ITEM 6. SELECTED FINANCIAL DATA


SELECTED STATEMENTS OF
INCOME (LOSS) DATA:
<TABLE>
<CAPTION>
                                                                     Years Ended December 31,
                                         --------------------------------------------------------------------------------
                                         1996               1995                1994               1993              1992
                                         ----               ----                ----               ----              ----
                                                        (Dollar amounts in thousands except per share data)
<S>                                  <C>                <C>                 <C>                <C>                <C>
Net Revenues                         $9,720             $10,777             $11,641            $10,405            $10,958

Income (loss) from
  continuing operations
  before income taxes
  and extraordinary
  items                                  --                 492                 534                 93                514

Income (loss) before
  extraordinary items                    --                 482                 524                 93                339

Net income (loss)                        --                 482                 524                 93                514

Income (loss) per
  common share before
  extraordinary items                    --                 .13                 .14                .02                .09

Net income (loss) per
  common share                           --                 .13                 .14                .02                .14
</TABLE>


<TABLE>
<CAPTION>
SELECTED BALANCE                                                 Years Ended December 31,
SHEET DATA:                             ---------------------------------------------------------------------------
                                        1996             1995              1994             1993               1992
                                        ----             ----              ----             ----               ----
                                                              (Dollar amounts in thousands)
<S>                                   <C>              <C>               <C>              <C>                <C>
Working capital                       $1,871           $2,151            $ (865)         $(1,805)           $(1,390)

Net property, plant
  and equipment                        2,497            2,308             3,567            2,900              2,847

Total assets                           7,774            7,998             8,318            7,206              7,503

Long-term debt
  (including current
  maturities)                          2,971            3,075             2,383            1,515              1,600


Stockholders' equity                   3,180            3,179             2,357            1,833              1,741
</TABLE>


                                        8


<PAGE>   9



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Results of Operations

The following table sets forth the percentage relationship that certain items
in the statements of operations bear to the net revenues of the Company for
each year during the five-year period ended December 31, 1996. Additional
financial information as to the Company's three industry segments is set forth
in note 16 to the financial statements.

<TABLE>
<CAPTION>
                                                                    Years Ended December 31
                                                 ---------------------------------------------------------------
                                                 1996         1995             1994          1993           1992
                                                 ----         ----             ----          ----           ----
<S>                                             <C>            <C>           <C>            <C>            <C>
Manufacturing net revenues                       97.1%          86.0%         89.5%          91.7%          86.6%
Licensing & related
   machinery sales                                2.9           14.0          10.5            8.3           13.4
                                                -----          -----         -----          -----          -----
   Net revenues                                 100.0%         100.0%        100.0%         100.0%         100.0%
                                                -----          -----         -----          -----          -----
Cost and expense:
Cost of sales                                    75.1           69.4          70.2           74.1           70.2
Shipping and sales                                8.2            9.0           9.9           12.7           11.9
General and administrative                       12.9           13.5          13.2           10.2           10.7
Research and development                           .5            0.3           0.0            0.0             .2
                                                -----          -----         -----          -----          -----
                                                 96.7           92.2          93.3           97.0           93.0
                                                -----          -----         -----          -----          -----

    Operating income (loss)                       3.3            7.8           6.7            3.0            7.0
                                                -----          -----         -----          -----          -----
Other income (deductions)
   Interest expense                              (3.3)          (2.7)         (2.5)          (2.5)          (2.6)
   Interest income                                 --             .1            .1             .3             .2
   Other                                           --           ( .0)           .3             .1             .1
                                                -----          -----         -----          -----          -----

                                                 (3.3)          (2.6)         (2.1)          (2.1)          (2.3)
                                                -----          -----         -----          -----          -----

Income (loss) from continuing
   operations before income taxes
   and extraordinary item                          --            4.6            4.6            .9            4.7
Income tax expense                                 --           ( .1)            .1           (.0)          (1.6)
                                                -----          -----         -----          -----          -----

Income (loss) before
   extraordinary item                              --            4.5           4.5             .9            3.1

Extraordinary items                                --             .0            .0             .0            1.6
                                                -----          -----         -----          -----          -----

Net income (loss)                                   0%           4.5%          4.5%            .9%           4.7%
                                                =====          =====         =====          =====          =====
</TABLE>


                                        9


<PAGE>   10



1996 Compared to 1995

The Company's 1996 revenues of $9,720,000 were less than 1995 revenues by
$1,057,000. The major component of this reduction was the result of a
$1,062,000 net gain on the sale of 80% interest in the Company's
THERMASTRUCTURE Panel Division included in 1995 revenues and, of course, not
repeated in 1996. Revenue reductions from the panel and door core operations
which were sold in the last quarter of 1995 were $420,000 and $315,000,
respectively. However the Shape Molding Division had increased revenues of
$901,000, representing an 11.4% increase over 1995. Both the Shape Molding and
Thermastructure Licensing and Machine Divisions are expected to report
significant revenue increases in 1997.

After eliminating the cost of license and machinery sales of $234,000 and
$60,000 in 1996 and 1995, respectively, cost of sales as a percentage of
manufacturing revenues decreased 5.1%, to 74.9% in 1996 from 80.0% in 1995. A
large factor in this reduction was the 1995 sale of the panel and door core
manufacturing divisions, which carried higher than Company average cost of
sales percentages.

Shipping and selling expenses, as a percentage of manufacturing net revenues,
decreased 2.0%, to 8.5% in 1996 from 10.5% in 1995. The primary factor in this
reduction occurred within shipping expenses at the Radford, Virginia plant
where costs were down $95,000. Even though sales were down at the Radford plant
by 5.5%, shipping costs were down 23.6%. Driver wages and warehouse labor were
both down $28,000 and $30,000, respectively, accounting for a large portion of
the reduced costs.

General and administrative expenses, as a percentage of manufacturing net
revenues, decreased 2.4%, to 13.3% in 1996 from 15.7% in 1995. Within corporate
services, wages were down $22,000, primarily as a result of the retirement of
one individual. Also within corporate services, travel and bank charges were
down $32,000 and $39,000, respectively. The almost elimination of bank charges,
other than interest, was a result of bank refinancing achieved in December of
1995.

1995 Compared to 1994

The Company experienced some very positive developments in 1995. The long
sought bank refinancing was achieved in December. The new financing, along with
profits and some additional equity investment, was responsible for a shift in
working capital from a negative $865,000 at December 31, 1994 to a positive
$2,151,000 at December 31, 1995. This is a dramatic swing in working capital
and is expected to enable the Company to operate more efficiently in 1996.

Another development, although not substantially reflected in 1995 operations,
was the signing of a supply contract with one of the Company's largest shape
molding/packaging customers. As a result, sales are expected to increase
significantly in 1996.

Our Portsmouth, Virginia plant had an outstanding year in product improvement
in 1995. As evidence of this good work, we were recently notified by Canon of
Virginia that RADVA was the winner of one of their Outstanding Supplier awards
for which the Company is justly proud. RADVA Corporation was one of only 15
organizations of 110 major suppliers so selected!

The last major development that needs to be discussed before comparing 1995
revenues and expenses to 1994 revenues and expenses is the sale of 80% interest
in the previously wholly owned subsidiary, THERMASTRUCTURE Ltd. The Company has
been somewhat over extended in the past, making it difficult to effectively
promote and market its THERMASTRUCTURE panel. Therefore, in November, 1995, the
Company negotiated the sale of a license for all areas in the United States not
previously licensed to an organization with a strong marketing background and
the financial strength and commitment to effectively market the panel. The sale
also included THERMASTRUCTURE molding equipment and a plant, net of the
mortgage liability. What was not included was the Company's machine

                                       10


<PAGE>   11



1995 Compared to 1994, continued

manufacturing division and international rights. Since management felt that it
was important for RADVA Corporation to maintain an equity position in the newly
organized company, the sale was accomplished through the sale of 80% of the
stock of THERMASTRUCTURE, Ltd., after taking steps to include only the agreed
upon assets and license rights.

The Company's 1995 revenues of $10,777,000 were lower than 1994 revenues by
$864,000 representing a 7% decrease. This decrease consisted of the following
increases or (decreases) in 1995 as compared to 1994:

<TABLE>
               <S>                                             <C>
               Shape Molding Division                          $   207,000
               Miscellaneous:
                    Gain on discounted note payoff                (229,000)
                    Other miscellaneous                             (4,000)
               THERMASTRUCTURE Division:
                    Panel sales                                 (1,252,000)
                    Door Core sales                               (438,000)
                    RADVA RU supply sales                          566,000
                    License and machinery sales                    286,000
                                                               -----------
                                                               $  (864,000)
</TABLE>

Increased sales by the Shape Molding Division were primarily a result of price
increases however more dramatic increases in sales are expected in 1996. An
unusual decrease resulted from a Company negotiated discount payoff of a note
in 1994. This payoff resulted in a $229,000 gain not repeated in 1995. The
reduction in panel sales was primarily due to unusually large sales of panels
shipped to Mexico in 1994, not matched by similar sales in 1995. The reduction
of these sales was partly a result of the licensee to whom the sales were made
having purchased panel manufacturing equipment from the Company in 1995. The
reduced door core sales reflects the Company's decision to discontinue that
product line. The Company began a new project in 1995, identified above as
RADVA RU supply sales. These are building materials purchased in the United
States and shipped to Russia to contractors using THERMASTRUCTURE panels
manufactured by the Company's Russian joint venture.

After eliminating the cost of license and machinery sales from cost of sales of
$60,000 and $152,000 in 1995 and 1994, respectively, and after eliminating
miscellaneous revenues of $8,000 and $239,000 in 1995 and 1994, respectively,
cost of sales, as a percentage of manufacturing revenues increased to 80.1% in
1995 from 78.8% in 1994. The $239,000 miscellaneous revenues in 1994,
eliminated above, consisted primarily of $229,000 from a discounted payoff of a
note payable. This increase in the cost of sales percentage was primarily
caused by increases in cost of sales percentages in panels and door cores. The
cost of sales percentage for the largest component of manufacturing net
revenues, shape molding/packaging, went down to 73.4% in 1995 from 76.0% in
1994. The components of manufacturing net revenues largely responsible for the
overall increase will not be a factor in 1996. Panel manufacturing has been
transferred to the purchasers of THERMASTRUCTURE, Ltd. and the door core
manufacturing operation has been discontinued. The cost of panel manufacturing
had increased primarily due to the non repeat of the large sales to Mexico in
1994. It is expected that the new marketing efforts of THERMASTRUCTURE, Ltd.
will result in increased sales and, therefore, a reduced cost of sales
percentage in 1996.

Shipping and selling expenses decreased, as a percentage of adjusted
manufacturing net revenues, to 10.5% in 1995 from 11.3% in 1994. This reduction
was primarily due to reduced expenses in the Shape Molding Division. General
and administrative expenses decreased $76,000, to $1,456,000 in 1995 from
$1,532,000 in 1994. This favorable shift was largely a result of reductions in
travel, wages, and phone expenses.

                                       11


<PAGE>   12



1994 Compared to 1993

The Company's 1994 revenues of $11,641,000 were greater than 1993 revenues by
$1,236,000, representing an approximate 12% increase. This increase consists of
the following changes among divisions or profit centers:

<TABLE>
         <S>                                               <C>
         Shape Molding Division                              $ (859,000)
         THERMASTRUCTURE Division:
            Panel sales                                       1,267,000
            Door core sales                                     279,000
            License and machinery sales                         549,000
                                                             ----------
                                                             $1,236,000
                                                             ==========
</TABLE>

Within the Shape Molding Division, reduced sales to several large customers
resulted in reduced total revenues. However, this loss of revenue is expected
to be reversed in 1996 due to the implementation of a new and significant sales
contract with the Company's largest customer.

The increase in THERMASTRUCTURE panel sales was almost entirely the result of
one large project with one of the Company's licensees. Increases in license and
machinery sales resulted from the booking of a $1,000,000 license in December,
1994. The agreement originally called for a much larger fee for all unsold
rights (see note 3), however the areas covered by the agreement are being
reduced commensurate with reduced payments.

After eliminating the cost of license and machinery sales of $152,000 and
$433,000 in 1994 and 1993, respectively, cost of sales, as a percentage of
manufacturing revenues increased .8%, to 77.0% in 1994 from 76.2% in 1993.
Although the percentage change was small, there were two significant
differences. The cost of sales percentage for THERMASTRUCTURE panels was
dramatically reduced in 1994, primarily as a result of an approximate
$1,200,000 sales contract with a licensee, and cost of sales in 1993 were
reduced by a $230,000 discounted payoff of amounts owing to a raw material
supplier.

As a percentage of manufacturing revenues, shipping and selling expenses
decreased 2.9% and general and administrative expenses increased 3.6%. A
portion of these changes were caused by a shifting of cost from shipping and
selling to general and administrative expenses in such areas as phone expenses
and wages.  In addition to these allocation shifts, general and administrative
travel increased $65,000, from $32,000 in 1993 to $97,000 in 1994, representing
 .6% of 1994 manufacturing revenues.

Impact of Inflation

The Company's standard purchase order form allows it to increase the price of
its protective packaging products on 30 days' notice and, therefore, to pass on
increases in the cost of raw materials. A significant increase in the rate of
inflation and a concomitant increase in interest rates could adversely affect
the Company since a large portion of the Company's indebtedness is linked to
the prime interest rate.

Liquidity and Capital Resources

Even though the Company was only marginally profitable in 1996, more
significant earnings were achieved in each of the five previous years. The
Company obtained a major refinancing package in December, 1995 which
significantly improved its working capital position from a negative $865,000 in
December, 1994 to a positive balance of $2,151,000 in December, 1995. The
working capital position remained high at $1,871,000 at December, 1996. This
financing package consisted of a $3,000,000 term loan and a $500,000 line of
credit, of which $200,000 remained available at December, 1996.

                                       12


<PAGE>   13



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
Index to Financial Statements
-----------------------------
                                                                                Page
                                                                                ----
<S>                                                                             <C>
Independent Auditors' Reports............................................        14

Balance Sheets as of December 31, 1996 and 1995..........................     15-16

Statements of Operations for the Years Ended
   December 31, 1996, 1995, and 1994.....................................        17

Statements of Stockholders' Equity for the Years
   Ended December 31, 1996, 1995, and 1994...............................        18

Statements of Cash Flows for the Years
   Ended December 31, 1996, 1995, and 1994...............................     19-20

Notes to Financial Statements as of December 31,
   1996, 1995, and 1994..................................................     21-30



Index to Financial Statement Schedules
--------------------------------------

Schedule V  - Property, Plant and Equipment..............................        31

Schedule VI - Accumulated Depreciation and
   Amortization of Property, Plant, and Equipment........................        32

Schedule VIII - Valuation and Qualifying Accounts........................        33
</TABLE>





                                       13


<PAGE>   14


                          PERSINGER & COMPANY, L.L.C.
                          Certified Public Accountants
                          ----------------------------

203 W. Grayson Street                                   Telephone (540) 236-8135
P.O. Box 797                                                  FAX (540) 236-0797
Galax, Virginia 24333


                          INDEPENDENT AUDITOR'S REPORT


The Board of Directors and Stockholders
RADVA Corporation

We have audited the consolidated financial statements and the consolidated 
financial statement schedules of RADVA Corporation and subsidiary as of and for 
the years ended December 31, 1996 and 1995 as listed in the accompanying index. 
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 and financial statement schedules based 
on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of RADVA Corporation
and subsidiary as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles. In addition, in our opinion, the 1996
and 1995 financial statement schedules referred to above, when considered in
relation to the basic financial statements taken as a whole, present fairly, in
all material respects, the information required to be included therein.


                                              /s/ Persinger & Company, L.L.C.


Galax, Virginia
January 24, 1997


 A Virginia Limited Liability Company * Members American Institute of Certified
                               Public Accountants


                                       14


<PAGE>   15



                        RADVA CORPORATION AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
                                                                                                  1996                   1995
                                                                                                  ----                   ----
<S>                                                                                       <C>                    <C>
                 ASSETS
Current assets:
  Cash and cash equivalents (Notes 2 and 3)                                                     $   23,625             $  349,946
                                                                                                ----------             ----------

  Accounts and notes receivable (Notes 8 and 9)                                                  1,665,234              1,630,776
  Receivable - other (Notes 3 and 16)                                                            1,197,308              1,272,308
  Less allowance for doubtful accounts                                                             172,560                203,251
                                                                                                ----------             ----------
          Net receivables                                                                        2,689,982              2,699,833
                                                                                                ----------             ----------

  Inventories (Notes 8 and 9):
     Finished goods                                                                                397,404                374,595
     Work-in-process                                                                                28,521                 53,490
     Raw materials and supplies                                                                    243,416                252,897
     Machinery inventory                                                                           239,627                282,597
                                                                                                ----------             ----------
          Total inventories                                                                        908,968                963,579
                                                                                                ----------             ----------

  Prepaid expenses                                                                                 133,819                 90,238
  Other current assets                                                                              30,238                 31,843
                                                                                                ----------             ----------

          Total current assets                                                                   3,786,632              4,135,439
                                                                                                ----------             ----------

Property, plant and equipment, at cost (Notes 5, 8 and 9)                                        5,564,578              6,451,212
Less accumulated depreciation and amortization                                                   3,067,206              4,143,433
                                                                                                ----------             ----------
          Net property, plant and equipment                                                      2,497,372              2,307,779
                                                                                                ----------             ----------

Other assets, at cost, less accumulated amortization:
  Investment in Radoslav Joint Venture (Note 6)                                                    336,103                336,103
  Investment in Thermastructure, LTD (Note 16)                                                     210,224                210,224
  Trademark right                                                                                  223,062                295,128
  Note receivable - noncurrent                                                                     414,131                414,131
  Other                                                                                            306,254                298,727
                                                                                                ----------             ----------
                                                                                                 1,489,774              1,554,313
                                                                                                ----------             ----------
                                                                                                $7,773,778             $7,997,531
                                                                                                ==========             ==========
</TABLE>





                                                                     (continued)

                                       15


<PAGE>   16



                        RADVA CORPORATION AND SUBSIDIARY

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                 1996                   1995
                                                                                                 ----                   ----
<S>                                                                                       <C>                         <C>
    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current installments of long-term debt (Notes 3 and 9)                                        $  292,534             $  241,505
  Notes payable (Note 8)                                                                           300,000                     --
  Accounts payable                                                                               1,124,142              1,267,242
  Accrued expenses (Note 7)                                                                        199,215                465,793
  Income taxes payable (Note 10)                                                                        --                 10,385
                                                                                                ----------             ----------

          Total current liabilities                                                              1,915,891              1,984,925
                                                                                                ----------             ----------

Long-term debt, excluding current installments
  (Notes 3 and 9)                                                                                2,678,127              2,833,239
                                                                                                ----------              ---------

          Total liabilities                                                                      4,594,018              4,818,164
                                                                                                ----------              ---------

Commitments, contingencies and other matters
  (Notes 9, 13, 16 and 17)

Stockholders' equity:
  Common stock, par value $.01 per share; authorized
    10,000,000 shares; issued 4,104,727 shares                                                      41,047                 41,047
  Additional paid-in capital                                                                     4,511,939              4,511,939
  Retained deficit                                                                              (1,373,226)            (1,373,619)
                                                                                                ----------             ----------

          Total stockholders' equity                                                             3,179,760              3,179,367


                                                                                                ----------             ----------
                                                                                                $7,773,778             $7,997,531
                                                                                                ==========             ==========
</TABLE>


See notes to consolidated financial statements.

                                       16


<PAGE>   17



                        RADVA CORPORATION AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                           1996                   1995                   1994
                                                                           ----                   ----                   ----
<S>                                                                <C>                    <C>                    <C>
Net revenues:
  Manufacturing net revenues                                             $9,432,869            $ 9,266,527            $10,415,712
  Licensing and related machinery sales (Note 16)                           287,239              1,510,684              1,225,004
                                                                         ----------            -----------            -----------
                                                                          9,720,108             10,777,211             11,640,716
                                                                         ----------            -----------            -----------

Costs and expenses:
  Cost of sales                                                           7,302,820              7,475,498              8,170,258
  Shipping and selling expenses                                             798,641                972,200              1,147,203
  General and administrative expenses                                     1,252,295              1,456,474              1,532,473
  Research and development expenses                                          50,531                 29,834                  8,500
                                                                         ----------            -----------            -----------
                                                                          9,404,287              9,934,006             10,858,434
                                                                         ----------            -----------            -----------

          Operating income                                                  315,821                843,205                782,282
                                                                         ----------            -----------            -----------

Other income (expense):
  Interest expense                                                         (322,275)              (297,833)              (294,981)
  Interest income                                                                --                 11,159                 18,424
  Other                                                                       4,281                  4,635                 19,141
                                                                         ----------            -----------            -----------
                                                                           (317,994)              (282,039)              (257,416)
                                                                         ----------            -----------            -----------

                                                                             (2,173)               561,166                524,866
                                                                         ----------            -----------            -----------

Gain (loss) on sale of assets:
  Equipment                                                                   2,566                  2,794                  9,000
  Real estate                                                                    --                (44,015)                    --
                                                                         ----------            -----------            -----------
                                                                              2,566                (41,221)                 9,000
                                                                         ----------            -----------            -----------

Equity in net income (loss) of
  investee                                                                       --                (27,583)                    --
                                                                         ----------            -----------            -----------

Income before income taxes                                                      393                492,362                533,866

Provision for income taxes (Note 10)                                             --                 10,385                 (9,688)
                                                                         ----------            -----------            -----------

          Net income                                                     $      393            $   481,977            $   524,178
                                                                         ==========            ===========            ===========

Income per common share:
          Net income                                                     $       --            $       .13            $       .14
                                                                         ==========            ===========            ===========
</TABLE>




See notes to consolidated financial statements.

                                       17


<PAGE>   18



                        RADVA CORPORATION AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                        ADDITIONAL               RETAINED              TOTAL
                                                    COMMON                PAID-IN                EARNINGS           STOCKHOLDERS'
                                                    STOCK                 CAPITAL                (DEFICIT)             EQUITY
                                                    ------              -----------              ---------          -------------
<S>                                             <C>                     <C>                   <C>                     <C>
Balance at December 31, 1993                         $37,421             $4,175,565            $(2,379,774)            $1,833,212

Net income                                                --                     --                524,178                524,178
                                                     -------             ----------            -----------             ----------

Balance at December 31, 1994                          37,421              4,175,565             (1,855,596)             2,357,390
Stock issued                                           3,626                336,374                      -                340,000
Net income                                                --                     --                481,977                481,977
                                                     -------             ----------            -----------             ----------

Balance at December 31, 1995                          41,047              4,511,939             (1,373,619)             3,179,367

Net income                                                --                     --                    393                    393
                                                     -------             ----------            -----------             ----------

Balance at December 31, 1996                         $41,047             $4,511,939            $(1,373,226)            $3,179,760
                                                     =======             ==========            ===========             ==========
</TABLE>





See notes to consolidated financial statements.

                                       18


<PAGE>   19




                        RADVA CORPORATION AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                           1996                   1995                   1994
                                                                           ----                   ----                   ----
 <S>                                                                       <C>                    <C>                    <C>
Cash flows from operating activities:
  Net income                                                              $     393            $   481,977            $   524,178

  Adjustments to reconcile net income to net cash provided
    by (used in) operating activities:
      Depreciation                                                          285,830                371,938                416,788
      Amortization                                                          118,601                129,927                 92,858
      Allowance for doubtful accounts                                       (30,691)                (1,419)               105,765
      (Gain) on sale of investment                                               --             (1,061,558)                    --
      Proceeds from sale of investment,
        net of cash and cash equivalents sold                                    --                687,386                     --
      (Gain) loss on sale of assets                                          (2,566)                41,221                 (9,000)
      Equity loss in investee                                                    --                 27,583                     --
      Changes in assets and liabilities:
        Decrease (increase) in accounts and notes
          receivable                                                        (34,458)              (165,231)               (72,425)
        Decrease (increase) in receivable - other                            75,000                500,000               (500,000)
        Decrease (increase) in inventories                                   54,611               (101,046)                57,265
        Decrease (increase) in prepaid expenses                             (43,581)                 2,349                (30,732)
        Decrease (increase) in other current assets                           1,605                 (1,605)                37,323
        Decrease (increase) in note receivable-noncurrent                        --                 73,499                 43,393
        Decrease (increase) in account receivable-noncurrent                     --                 58,267                 58,266
        Increase in other assets                                            (54,062)               (52,422)               (47,372)
        Increase (decrease) in accounts payable                            (143,100)              (522,873)               228,501
        Increase (decrease) in accrued expenses                            (266,578)              (134,212)                (8,932)
        Increase (decrease) in income taxes payable                         (10,385)                   697                  9,688
        Increase (decrease) in other liabilities                                 --                     --               (274,187)
                                                                          ---------            -----------            -----------

          Net cash provided by (used in) operating activities               (49,381)               334,478                631,377
                                                                          ---------            -----------            -----------

Cash flows from investing activities:
  Investment in Radoslav                                                         --                     --                 (6,360)
  Proceeds from sale of assets                                                6,400                 39,579                  9,000
  Company manufactured equipment and buildings                              (15,699)              (413,804)              (213,870)
  Capital expenditures on equipment                                        (463,558)              (402,851)              (870,538)
                                                                          ---------            -----------            -----------

          Net cash used in investing activities                            (472,857)             (777,076)             (1,081,768)
                                                                          ---------            -----------            -----------

Cash flows from financing activities:
  Cash overdraft                                                                 --                     --               (136,266)
  Net proceeds (payments) on notes payable                                  300,000             (1,293,787)                20,278
  Proceeds from issuance of long-term debt                                  172,433              3,011,287              1,308,206
  Principal payments under long-term debt                                  (276,516)            (1,454,078)              (559,981)
  Proceeds from sale of common stock                                             --                340,000                     --
                                                                          ---------            -----------            -----------
          Net cash provided by financing activities                       $ 195,917            $   603,422            $   632,237
                                                                          ---------            -----------            -----------
</TABLE>


                                       19


<PAGE>   20



                        RADVA CORPORATION AND SUBSIDIARY

               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>
                                                                           1996                   1995                   1994
                                                                           ----                   ----                   ----
<S>                                                                      <C>                     <C>                    <C>
Net increase (decrease) in cash                                           $(326,321)              $160,824               $181,846

Cash and cash equivalents at beginning of year                              349,946                189,122                  7,276
                                                                          ---------               --------               --------

Cash and cash equivalents at end of year                                  $  23,625               $349,946               $189,122
                                                                          =========               ========               ========

Supplemental disclosure of cash flow information:
  Cash paid during the year for interest                                  $ 327,760               $329,700               $274,323
                                                                          =========               ========               ========

  Cash paid during the year for income taxes                              $  10,385               $  9,688               $     --
                                                                          =========               ========               ========


Supplemental disclosure of noncash investing activities:

   During 1994, the Company transferred other assets valued at $9,306 to the
   investment in Radoslav Joint Venture. There were no transfers during 1996 and
   1995.

   The sale of eighty (80) percent of the investment in Thermastructure, Ltd for
   $2,022,308 resulted in the transfer of the following assets and liabilities:

   Assets and liabilities transferred:

     Cash and cash equivalents (escrows)                                                        $   53,092
     Property, plant and equipment                                                               1,657,849
     Prepaid expenses                                                                               26,397
     Inventory                                                                                     122,945
     Other assets                                                                                  109,536
     Debt assumed                                                                                 (780,784)
   Expense of sale                                                                                   9,522
   Investment retained (20%)                                                                      (237,807)
                                                                                                ----------
                                                                                                $  960,750
                                                                                                ==========
</TABLE>

See notes to consolidated financial statements.

                                       20


<PAGE>   21



                        RADVA CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1995 AND 1994

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Operations

RADVA Corporation and subsidiary (the Company) produces and sells molded and
fabricated expanded polystyrene foam products such as packaging materials and
containers. The Company has also developed and patented housing construction
panels utilizing expanded polystyrene foam reinforced with steel. In addition,
they build and sell machinery used to manufacture the panels along with the
licensing rights to market the panels. The Company operates facilities in
Radford and Portsmouth, Virginia.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, RADVA RU, Inc. All significant inter-company
accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of demand deposits. For purposes of
the statements of cash flows, the Company considers all highly liquid
investments with an original maturity of less than three months to be cash
equivalents. The Company includes cash meeting this criteria whose use is
limited by restrictions contained in loan covenants.

Accounts Receivable

Accounts receivable are stated at cost less allowance for doubtful accounts.
The allowance for doubtful accounts is maintained at a level considered
adequate to provide for losses that can be reasonably anticipated.

Inventories

Inventories are stated at the lower of cost or market. Cost of raw materials,
supplies, work-in process and finished goods is determined by the first-in,
first-out method.

Investment in Radoslav Joint Venture

The Company is accounting for its investment in Radoslav, a 31% owned
affiliate, by the equity method of accounting under which the Company's
proportionate results of the affiliate's operations are recognized in the
Company's statement of operations and added to or taken from the investment
account. Distributions received from the affiliate are treated as a reduction
of the investment account.

Other assets

Included in other assets are patents and loan costs, which are amortized over
their respective estimated lives, and trademark rights, which are amortized
over 12 years. Accumulated amortization was $986,734 and $868,133 as of
December 31, 1996 and 1995, respectively.

                                       21


<PAGE>   22




                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property, Plant and Equipment

Depreciation of plant and equipment is provided on the straight-line basis over
the estimated useful lives of the respective assets as follows:

<TABLE>
                        <S>                                           <C>
                        Buildings and improvements                    5 to 30 years
                        Machinery and equipment                       5 to 15 years
                        Automotive equipment                          3 to 5 years
                        Office equipment                              3 to 10 years
</TABLE>

Leasehold improvements are amortized on a straight-line basis over the terms of
the respective leases.

Additions to property, plant and equipment are recorded at cost. All
expenditures for repairs, renewals and replacements which do not materially
extend the useful life of the property are charged to expense. Other
improvements and betterments are capitalized. With respect to dispositions, the
asset and accumulated depreciation accounts are relieved of cost and
accumulated depreciation with any resulting gain or loss credited or charged to
earnings.

Revenue Recognition

Net revenues represent sales of fabricated foam products, machines and fees
from licensing agreements. Revenues from sales and the licensing agreements are
recognized upon completion of the transaction.

Income Taxes

Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.

Investment tax credits are accounted for by the flow-through method whereby
they reduce income taxes currently payable and the provision for income taxes
in the period the assets giving rise to such credits are placed in service. To
the extent such credits are not currently utilized on the Company's tax return,
deferred tax assets, subject to considerations about the need for a valuation
allowance, are recognized for the carryforward amount.

Fair value of financial instruments

Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," requires disclosure about the fair value of
certain instruments. Cash, receivables, accounts payable and accrued
liabilities are reflected in the financial instruments at fair value because of
the short-term maturity of these instruments. The estimated fair values of the
company's financial instruments are disclosed in Note 3.

                                       22


<PAGE>   23



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Receivables and accounting change

On January 1, 1995, the Company adopted Statement of Financial Accounting
Standard 114, Accounting by Creditors for Impairment of a Loan. Statement No.
114 has been amended by Statement of Financial Accounting Standard No. 118,
Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures. Statement 114, as amended, requires that the impairment of
receivables that have been separately identified for evaluation is to be
measured based on the present value of expected future cash flows or,
alternatively, the observable market price of the receivables or the fair value
of the collateral. However, for those receivables that are collateral dependent
(that is, if repayment of those receivables is expected to be provided solely
by the underlying collateral) and for which management has determined
foreclosure is probable, the measure of the impairment of those receivables is
to be based on the fair value of the collateral. Statement 114, as amended,
also requires certain disclosures about investments in impaired receivables and
the allowance for possible bad debts and interest income recognized. The
adoption of Statement 114 had no effect on the consolidated financial
statements.

Use of estimates

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

Per Share Information

Earnings per share are based on the average number of common shares of the
Company outstanding. The number of shares used in computing per share
information was 4,104,727 in 1996, 3,772,282 in 1995 and 3,742,060 in 1994.

Reclassification

Certain reclassifications have been made to prior years' financial statements
to place them on a comparable basis with the current year.

NOTE 2. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of the following:

<TABLE>
<CAPTION>
                                                                             1996                   1995                   1994
                                                                             ----                   ----                   ----
<S>                                                                        <C>                    <C>                    <C>
Petty cash and non-interest bearing accounts                                $23,625               $349,946               $106,512
Restricted by IDA bonds, series 1995                                             --                     --                 82,610
                                                                            -------               --------               --------
          Total cash and cash equivalents                                   $23,625               $349,946               $189,122
                                                                            =======               ========               ========
</TABLE>


                                       23


<PAGE>   24



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:

Cash and cash equivalents:

The carrying amount approximates fair value because of the short maturity of
those instruments.

Receivable - other:

The carrying amount is a reasonable estimate of fair value since entire amount
is due within one year.

Long-term debt:

The fair value of the Company's long-term debt is estimated based on the quoted
market prices for the same or similar issues or on the current rates offered to
the Company for debt of the same remaining maturities with similar collateral
requirements.

The estimated fair values of the Company's financial instruments as of December
31, 1996 are as follows:

<TABLE>
<CAPTION>
                                                                                       1996
                                                                    --------------------------------------
                                                                    Carrying Amount             Fair Value
                                                                    ---------------             ----------
<S>                                                                     <C>                    <C>
Cash and cash equivalents                                                $   23,625             $   23,625
Receivable - other                                                        1,197,308              1,197,308
Long-term debt                                                            2,970,661              2,970,661
</TABLE>


NOTE 4. RECEIVABLES

Information about impaired receivables as of and for the years ended December
31, 1996 and 1995 is as follows:

<TABLE>
<CAPTION>
                                                                                                  1996                   1995
                                                                                                  ----                   ----
    <S>                                                                                          <C>                  <C>
    Receivables for which there is a related
      allowance for bad debts                                                                    $451,005              $389,944
    Receivables for which there is no related
      allowance for bad debts                                                                     438,131               488,131
                                                                                                 --------              --------
          Total impaired receivables                                                             $889,136              $878,075
                                                                                                 ========              ========
    Related allowance for possible bad debts                                                     $168,210              $153,349
                                                                                                 ========              ========
    Average balance (based on beginning and
      ending of year)                                                                            $883,606              $847,686
                                                                                                 ========              ========
</TABLE>




                                       24


<PAGE>   25



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5. PROPERTY, PLANT AND EQUIPMENT

A summary of property, plant and equipment follows:

<TABLE>
<CAPTION>
                                                                       1996                   1995
                                                                       ----                   ----
          <S>                                                       <C>                    <C>
          Land and improvements                                      $  225,984             $  204,150
          Buildings and improvements                                  2,102,263              2,029,944
          Machinery and equipment                                     2,702,842              3,379,584
          Transportation equipment                                      333,289                410,140
          Office equipment                                              200,200                427,394
                                                                     ----------              ---------
                                                                     $5,564,578             $6,451,212
                                                                     ==========             ==========
</TABLE>


NOTE 6. INVESTMENT IN RADOSLAV JOINT VENTURE

The Company owns a 31% interest in Radoslav, a Joint Venture located at
Pereslavl - Zalessky, approximately 75 miles north of Moscow. Radoslav produces
THERMASTRUCTURE panels for sale in Russia and other European countries. The
Company and three Russian entities, Pereslavlstroy Trust, Slavich Corporation
and Argamak Corporation are the primary joint venture participants. The Joint
Venture agreement called for the Company to contribute technology, the right
for Radoslav to produce THERMASTRUCTURE panels under the Company's trademarks
and U.S. currency that is included in the investment account. The Russian
principals contributed a manufacturing facility of approximately 24,000 square
feet and a sum of Russian currency. The results of operations of Radoslav for
the years ended December 31, 1996, 1995 and 1994 are not material to the
financial statements of RADVA Corporation and are not included in the statement
of operations or the investment account.

NOTE 7. ACCRUED EXPENSES

Accrued expenses are composed of the following:

<TABLE>
<CAPTION>
                                                                      1996                   1995
                                                                      ----                   ----
          <S>                                                       <C>                   <C>
          Payroll and employee benefits                             $ 97,829               $228,107
          Interest                                                    11,266                 16,751
          Customer deposits                                            4,382                 66,158
          Other                                                       85,738                154,777
                                                                    --------               --------
                                                                    $199,215               $465,793
                                                                    ========               ========
</TABLE>

NOTE 8. NOTES PAYABLE

A summary of notes payable follows:

<TABLE>
<CAPTION>
                                                                         1996                 1995
                                                                         ----                 ----
          <S>                                                         <C>                  <C>
          Line of credit with commercial bank, $500,000
          limit, interest at prime plus 2%                             $300,000             $     --
                                                                       ========             ========
</TABLE>


                                       25


<PAGE>   26



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. LONG-TERM DEBT

     A summary of long-term debt follows:

<TABLE>
<CAPTION>
                                                                                                  1996                   1995
                                                                                                  ----                   ----
     <S>                                                                                        <C>                   <C>
     Installment notes payable due in aggregate monthly installments of $1,741,
     including interest, with various maturities until February, 2001;
     collateralized by equipment.  Interest rates ranging from 7.5% to 12.5%.                   $   50,304             $   36,604

     Financing obligation recorded under capital lease, due in monthly installments
     of $2,685, including interest at 8.3%; collateralized by equipment.                           113,169                     --

     Installment note payable to bank, due in monthly installments of $43,467,
     including interest at prime plus 2% with a final balloon payment in
     December 2000.                                                                              2,774,567              3,000,000

     Installment note payable to bank, due in monthly installments of
     31,225 Austrian shillings, including interest at 12%.                                              --                  6,834

     Installment note payable, due in monthly installments of $279, including
     interest at 8.125% with a final balloon payment in August 1998,
     collateralized by a deed of trust on certain real estate.                                      32,621                 31,306


                                                                                                ----------             ----------
          Total long-term debt                                                                   2,970,661              3,074,744

     Less current installments of long-term debt                                                   292,534                241,505
                                                                                                ----------             ----------

          Long-term debt, excluding current installments                                        $2,678,127             $2,833,239
                                                                                                ==========             ==========
</TABLE>

Substantially all real property, equipment, accounts receivable and inventory
are pledged as collateral on various debt instruments.

The aggregate principal maturities of long-term debt during each of the five
years subsequent to December 31, 1996 follows:

<TABLE>
<CAPTION>
          Years Ended December 31,
          ------------------------
                    <S>                                                                   <C>
                    1997                                                                        $  292,534
                    1998                                                                           319,578
                    1999                                                                           347,817
                    2000                                                                           377,965
                    2001                                                                           383,523
                    Thereafter                                                                   1,249,244
                                                                                                ----------
                                                                                                $2,970,661
                                                                                                ==========
</TABLE>

                                       26


<PAGE>   27



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. INCOME TAX MATTERS

Net deferred tax assets and liabilities consist of the following components as
of December 31, 1996 and 1995:

<TABLE>
<CAPTION>
                                                                                             1996             1995
                                                                                             ----             ----
          <S>                                                                            <C>              <C>
          Deferred tax assets:
               Bad debt allowance                                                         $   92,209       $  114,892
               Accrued expenses                                                               25,835           56,025
               Inventory allowance                                                             8,648            8,799
               Contributions carryover                                                           977                -
               Loss carryforward                                                             724,231          729,001
               Investment tax credit carryforward                                            177,659          213,017
               Minimum tax credit carryforward                                                20,073            9,688
                                                                                          ----------       ----------
                                                                                           1,049,632        1,131,422
               Less valuation allowance                                                      889,366          998,645
                                                                                          ----------       ----------
                                                                                          $  160,266       $  132,777
                                                                                          ==========       ==========
          Deferred tax liabilities:
               Property and equipment                                                     $  160,266       $  132,777
                                                                                          ==========       ==========
                                                                                                  --               --
                                                                                          ==========       ==========
</TABLE>

As noted, the deferred tax assets equal the deferred tax liabilities resulting
in no effect on the income statement or stockholders' equity for the year.

Loss carryforwards for tax purposes as of December 31, 1996 have the following
expiration dates:

<TABLE>
<CAPTION>
          Expiration Date                        Amount
          ---------------                        ------
                 <S>                           <C>
                 2005                          $1,905,872
                                               ==========
</TABLE>

Investment tax credit carryforwards for tax purposes as of December 31, 1996
have the following expiration dates:

<TABLE>
<CAPTION>
          Expiration Date                       Amount
          ---------------                       ------
                 <S>                          <C>
                 1998                          $ 88,599
                 1999                            40,976
                 2000                            48,084
                                               --------
                                               $177,659
                                               ========
</TABLE>

The income tax provision differs from the amount of income tax determined by
applying the U.S. Federal income tax rate to pretax income for the years ended
December 31, 1996, 1995 and 1994 due to the following:

<TABLE>
<CAPTION>
                                                                    1996                  1995               1994
                                                                    ----                  ----               ----
     <S>                                                          <C>                   <C>                <C>
     Computed "expected" tax benefit                                $    59             $ 167,403          $ 181,514
     Non-deductible expenses                                          2,179               171,808             81,722
     State income taxes, net of federal income tax benefit              761                39,508             30,660
     Benefit of operating loss carryforward                          (2,999)             (378,719)          (293,896)
     Other                                                               --                10,385             (9,688)
                                                                    -------             ---------          ---------
                                                                    $    --             $  10,385          $  (9,688)
                                                                    =======             =========          =========
</TABLE>


                                       27


<PAGE>   28



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. RETIREMENT PLANS

The Company has a profit sharing plan (the Plan) which covers all full-time
officers and employees who have at least one year of service and attained the
age of 21. For the years ended December 31, 1995 and 1994, contributions to the
Plan were made at the rate of 5% of earnings before profit sharing and income
taxes, or the maximum deduction allowed for federal income tax purposes,
whichever is lower and was funded as incurred. During 1996, the Company
modified its profit sharing plan to make contributions at Company's discretion.
The Plan is a qualified plan under applicable sections of the Internal Revenue
Code.  Profit sharing expense for the period ended December 31, 1996, 1995 and
1994 was $ -0-, $25,914, and $28,098, respectively.

The Company adopted a 401K retirement plan which covers all full-time officers
and employees who have at least one year of service and attained the age of 21.
Contributions to the plan are made at a rate of 25% of each employees
contribution up to a maximum of 4% of each employees earnings for the year. The
plan is a qualified plan under applicable sections of the Internal Revenue
Code.  Company contributions for the year ended December 31, 1996 was $4,039.

NOTE 12. RELATED PARTY TRANSACTIONS

The Company has a month-to-month lease on certain operating and warehouse space
with Jalu, a partnership in which the Company's president is a partner. The
space is currently rented for $1,000 per month. The Company also rents on a
month-to-month basis certain office space from Chuckatuck, a partnership in
which the Company's president is a partner. The present rental payment is
$3,700 per month.

NOTE 13. OPERATING LEASES

The Company leases certain of its manufacturing and office facilities and
equipment. Rental expense for the years ended December 31, 1996, 1995 and 1994
was $136,850, $123,481, and $112,980, respectively. All leases have expired;
however, the Company continues to lease these facilities under the previous
lease schedules for $4,685 per month.

NOTE 14. MAJOR CUSTOMER

The percentage of net revenue attributable to the Company's major customers
(exceeding 10% of total revenues) is 23.4% for 1996, 10.5% for 1995 and 24.6%
for 1994.

                                       28


<PAGE>   29



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15. INDUSTRY SEGMENTS

The Company considers its operations to include principally three industry
segments; (1) manufacture of protective packaging and similar materials, (2)
manufacture of THERMASTRUCTURE building products, and (3) licensing and related
machinery sales. Summary data for 1996, 1995, and 1994 is as follows:

<TABLE>
<CAPTION>
                                                                             1996                 1995                   1994
                                                                             ----                 ----                   ----     
<S>                                                                       <C>                 <C>                    <C>
Net revenues:

  Protective packaging and similar material                                $9,026,547          $ 7,937,220            $ 8,015,461
  THERMASTRUCTURE products and similar materials                              406,322            1,329,307              2,400,251
  Licensing and related machinery sales                                       287,239            1,510,684              1,225,004
                                                                           ----------          -----------            -----------

  Revenue                                                                  $9,720,108          $10,777,211            $11,640,716
                                                                           ==========          ===========            ===========

Operating income (loss):
  Protective packaging and similar materials                               $2,259,699          $ 2,179,442            $ 2,066,357
  THERMASTRUCTURE products and similar materials                               68,943             (339,936)               342,345
  Licensing and related machinery sales                                        88,646            1,462,207              1,061,756
                                                                           ----------          -----------            -----------
          Segment operating income                                          2,417,288            3,301,713              3,470,458

          General corporate expense                                         2,101,467            2,458,508              2,688,176
                                                                           ----------          -----------            -----------
          Operating profit                                                 $  315,821          $   843,205            $   782,282
                                                                           ==========          ===========            ===========

Capital expenditures:
   Protective packaging and similar materials                              $  440,631          $   792,338            $   198,262
   THERMASTRUCTURE products - U.S. operations                                      --               10,187                867,010
   General corporate                                                           38,626               14,130                 19,136
                                                                           ----------          -----------            -----------

          Capital expenditures                                             $  479,257          $   816,655            $ 1,084,408
                                                                           ==========          ===========            ===========

Depreciation and amortization:
   Protective packaging and similar materials                              $  380,585          $   278,395            $   284,804
   THERMASTRUCTURE products                                                         -              191,117                170,706
   General corporate                                                           23,846               32,353                 54,136
                                                                           ----------          -----------            -----------

          Depreciation and amortization                                    $  404,431          $   501,865            $   509,646
                                                                           ==========          ===========            ===========

Identifiable assets at December 31:

   Protective packaging and similar materials                              $3,023,930          $ 2,726,629            $ 3,399,324
   THERMASTRUCTURE products                                                   433,286              505,352              1,069,503
   Licensing and related machinery sales                                    1,058,447            1,057,322              1,603,117
   General corporate                                                        3,258,115            3,708,228              2,245,669
                                                                           ----------          -----------            -----------
          Assets                                                           $7,773,778          $ 7,997,531            $ 8,317,613
                                                                           ==========          ===========            ===========
</TABLE>


                                       29


<PAGE>   30




                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16. OTHER MATTERS

The Company reached an agreement on February 15, 1994 whereby the Company was
to promptly spin off the THERMASTRUCTURE division into a new wholly owned
corporation. The party to the agreement immediately loaned $500,000 to the
Company with interest payable quarterly at 8% per annum. The terms of the
agreement granted the option to convert the loan into one-sixth (16.67%) of the
common stock of the new corporation and also the right and option to acquire up
to an additional one-third (33.33%) of the new corporation for $1,000,000 or
any portion thereof on a prorata basis. This option was terminated and the note
was repaid in November, 1995.

Company entered into an agreement dated November 3, 1995 for sale of 80% of
common stock of THERMASTRUCTURE, Ltd. Company received $750,000 down with the
balance to be paid on or before expiration of six months with a minimum of
$750,000 cash. This transaction resulted in a gain of $1,061,558 and is
reflected in net revenues from licensing and related machinery sales. Balance
due from sale at December 31, 1996 and 1995 amounted to $1,197,308 and
$1,272,308, respectively.

NOTE 17. CONTINGENCIES

Debt assumption:

As part of the agreement dated November 3, 1995 in which Radva sold 80% of
common stock of THERMASTRUCTURE, Ltd., the acquiring company assumed
obligations owed to the Industrial Development Authority (IDA) amounting to
$780,784. Radva remains liable on these obligations as of December 31, 1996
amounting to $748,378.

Legal matters:

In the normal course of business, the Company is involved in various legal
proceedings. In the opinion of management, any liability resulting from such
proceedings would not have a material adverse effect on the Company's
consolidated financial statements.

                                       30


<PAGE>   31




                        RADVA CORPORATION AND SUBSIDIARY

                   SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                                                        OTHER
                                            BALANCE                                                    CHANGES
                                               AT                                                        ADD              BALANCE
                                           BEGINNING           ADDITIONS                              (DEDUCT)            AT END
     CLASSIFICATION                        OF YEAR             AT COST          RETIREMENTS              (A)              OF YEAR
     --------------                        ----------          ---------        -----------           --------            -------
<S>                                    <C>                <C>                <C>                <C>                <C>
Year ended December 31, 1994:

  Land and improvements                    $  209,151           $ 86,753         $       --           $     --         $  295,904
  Buildings and improvements                2,167,388            609,077                 --                 --          2,776,465
  Machinery and equipment                   3,908,912            118,565              1,348            213,870          4,239,999
  Transportation equipment                    391,115             51,236             16,800                 --            425,551
  Office equipment                            417,209              4,907                 --                 --            422,116
                                           ----------           --------         ----------           --------         ----------

                                           $7,093,775           $870,538         $   18,148           $213,870         $8,160,035
                                           ==========           ========         ==========           ========         ==========


Year ended December 31, 1995:

  Land and improvements                    $  295,904           $      -         $   91,754           $     --         $  204,150
  Buildings and improvements                2,776,465            101,015          1,211,264            363,728          2,029,944
  Machinery and equipment                   4,239,999            272,419          1,182,910             50,076          3,379,584
  Transportation equipment                    425,551             15,287             30,698                 --            410,140
  Office equipment                            422,116             14,130              8,852                 --            427,394
                                           ----------           --------         ----------           --------         ----------

                                           $8,160,035           $402,851         $2,525,478           $413,804         $6,451,212
                                           ==========           ========         ==========           ========         ==========


Year ended December 31, 1996:

  Land and improvements                    $  204,150           $ 21,834         $       --           $     --         $  225,984
  Buildings and improvements                2,029,944             87,747             15,428                 --          2,102,263
  Machinery and equipment                   3,379,584            264,133            956,574             15,699          2,702,842
  Transportation equipment                    410,140             53,368            130,219                 --            333,289
  Office equipment                            427,394             36,476            263,670                 --            200,200
                                           ----------           --------         ----------           --------         ----------

                                           $6,451,212           $463,558         $1,365,891           $ 15,699         $5,564,578
                                           ==========           ========         ==========           ========         ==========
</TABLE>

(A) During 1996, 1995 and 1994, the Company placed in service certain property
    which has previously been classified as inventory.

                                       31


<PAGE>   32





                        RADVA CORPORATION AND SUBSIDIARY

                   SCHEDULE VI - ACCUMULATED DEPRECIATION AND
                  AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                ADDITIONS                             OTHER
                                             BALANCE             CHARGED                              CHANGES
                                               AT                TO COST                                ADD               BALANCE
                                            BEGINNING             AND                                 (DEDUCT)            AT END
     CLASSIFICATION                          OF YEAR            EXPENSES        RETIREMENTS             (A)               OF YEAR
     --------------                         ---------           --------        -----------           --------            -------
<S>                                       <C>                  <C>              <C>                  <C>              <C>
Year ended December 31, 1994:

  Land and improvements                    $   24,331           $     --         $       --           $     --         $   24,331
  Buildings and improvements                  882,731             95,429                 --                 --            978,160
  Machinery and equipment                   2,680,562            248,670              1,348                 --          2,927,884
  Transportation equipment                    270,936             37,153             16,800                 --            291,289
  Office equipment                            335,526             35,536                 --                 --            371,062
                                           ----------           --------         ----------           --------         ----------

                                           $4,194,086           $416,788         $   18,148           $     --         $4,592,726
                                           ==========           ========         ==========           ========         ==========

Year ended December 31, 1995:

  Land and improvements                    $   24,331           $     --         $       --           $     --         $   24,331
  Buildings and improvements                  978,160             88,847             57,653                 --          1,009,354
  Machinery and equipment                   2,927,884            235,656            725,166                 --          2,438,374
  Transportation equipment                    291,289             32,136             30,698                 --            292,727
  Office equipment                            371,062             15,299              7,714                 --            378,647
                                           ----------           --------         ----------           --------         ----------

                                           $4,592,726           $371,938         $  821,231           $     --         $4,143,433
                                           ==========           ========         ==========           ========         ==========


Year ended December 31, 1996:

  Land and improvements                    $   24,331           $     --         $       --           $     --         $   24,331
  Buildings and improvements                1,009,354             81,689             15,428                 --          1,075,615
  Machinery and equipment                   2,438,374            160,616            956,573                 --          1,642,417
  Transportation equipment                    292,727             27,476            126,386                 --            193,817
  Office equipment                            378,647             16,049            263,670                 --            131,026
                                           ----------           --------         ----------           --------         ----------

                                           $4,143,433           $285,830         $1,362,057           $     --         $3,067,206
                                           ==========           ========         ==========           ========         ==========
</TABLE>

(A) During 1996, 1995 and 1994, the Company placed in service certain property
    which has previously been classified as inventory.

                                       32


<PAGE>   33



                        RADVA CORPORATION AND SUBSIDIARY

               SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                       ADDITIONS
                                                                       ---------
                                            BALANCE            CHARGED             CHARGED
                                               AT                TO                   TO                                BALANCE
                                           BEGINNING          COST AND               OTHER                              AT END
   DESCRIPTION                              OF YEAR           EXPENSES             ACCOUNTS       DEDUCTIONS (A)        OF YEAR
   -----------                             ---------          --------             --------       --------------        -------
<S>                                         <C>               <C>                <C>                 <C>               <C>
Year ended December 31, 1994:
  Allowance for doubtful
   accounts                                  $ 98,905           $105,765            $    --           $    --           $204,670
                                             ========           ========            =======           =======           ========

Year ended December 31, 1995:
  Allowance for doubtful
   accounts                                  $204,670           $ (1,419)           $    --           $    --           $203,251
                                             ========           ========            =======           =======           ========

Year ended December 31, 1996:
  Allowance for doubtful
   accounts                                  $203,251           $(30,691)           $    --           $    --           $172,560
                                             ========           ========            =======           =======           ========
</TABLE>


(A) Represents uncollectible amounts written off, net of recoveries.

                                       33


<PAGE>   34



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

       None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

               Information as to the Company's directors is incorporated by
reference to material contained under the heading "Election of Directors" in
the Company's proxy statement for its annual meeting of stockholders scheduled
for April 16, 1997.

               Information as to the Company's executive officers is set forth
under the heading "Executive Officers" in ITEM 1 of this report.

ITEM 11. EXECUTIVE COMPENSATION

               Information as to executive compensation is incorporated by
reference to material contained under the headings "Cash Compensation" and
"Compensation Plans" in the Company's proxy statement for its annual meeting of
stockholders scheduled for April 16, 1997.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          Information as to the security ownership of certain beneficial owners
and management is incorporated by reference to material contained under the
heading "Principal Stockholders" in the Company's proxy statement for its
annual meeting of stockholders scheduled for April 16, 1997.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

             Information as to certain relationships and related transactions
is incorporated by reference to material contained under the heading "Certain
Relationships and Related Transactions" in the Company's proxy statement for
its annual meeting of stockholders scheduled for April 16, 1997.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  (1)  Financial Statements (Included in PART II)

          See ITEM 8 in PART II

(a)  (2)  Financial Statement Schedules (Included in PART II)

          See ITEM 8 in PART II

(a)  (3)  Exhibits

     The exhibits filed with this report and the documents incorporated by
reference as exhibits to this report are described below.

                  (3)(a) Articles of Incorporation of the Company (Incorporated
by reference to Exhibit B to Registration Statement No. 0-15464 filed with the
Securities and Exchange Commission on March 9, 1987).

                  (3)(b) Bylaws of the Company (Incorporated by reference to
Exhibit C to Registration Statement No. 0- 15464 filed with the Securities and
Exchange Commission on March 9, 1987).

                                       34


<PAGE>   35



                  (4)(a) Bond Purchase Agreement dated as of October 1, 1981
among the Industrial Development Authority of the City of Portsmouth, First &
Merchants National Bank, and the Company; Agreement of Sale dated as of October
1, 1981 between the Industrial Development Authority of the City of Portsmouth
and the Company; Assignment Agreement dated as of October 1, 1981 between the
Industrial Development Authority of the City of Portsmouth and First &
Merchants National Bank; $550,000 promissory note of the Company; Deed of Trust
dated as of October 1, 1981 between the Industrial Development Authority of the
City of Portsmouth and Joseph S. Lovering, Jr. and William H. West, as trustees
(Incorporated by reference to Exhibit 4(a) to Registration Statement No.
33-5319 filed with the Securities and Exchange Commission on June 25, 1986).

                  (4)(b) Letter of Commitment dated October 9, 1984 between the
Company and Sovran Bank, N.A.; $1,000,000 promissory note of the Company; Deed
of Trust dated as of October 10, 1984 between the Company and Joel S. Rhew and
H. Gregory Kilduff, as trustees; Security Agreement dated as of October 10,
1984 between the Company and Sovran Bank, N.A. (Incorporated by reference to
Exhibit 4(b) to Registration Statement No. 33-5319 filed with the Securities
and Exchange Commission on June 25, 1986).

                  (4)(c) Letter of Commitment dated August 25, 1984 between the
Company and Sovran Bank, N.A. and related promissory note of the Company;
Security Agreement dated August 30, 1983 between the Company and First &
Merchants National Bank (*the predecessor to Sovran Bank, N.A.); Accounts
Receivable and Inventory Reporting Service Instructions dated March 18, 1986;
Collateral Services Rate Agreement dated August 17, 1983 between the Company
and First & Merchants National Bank (Incorporated by reference to Exhibit 4(c)
to Registration Statement No. 33-5319 filed with the Securities and Exchange
Commission on June 25, 1986).

                  (4)(d) Letter of Commitment dated September 16, 1987 between
the Company and Sovran Bank, N.A. relating to a $1,000,000 line of credit.
(Incorporated by reference to Exhibit 4(d) of Registrant's 1987 Form 10-K).

                  (4)(e) In addition to the matters reported in Exhibits (4)(a)
through (4)(d) above, the long-term debt as shown on the consolidated balance
sheet of the Company at December 31, 1989 included additional obligations each
of which is less than 10% of the total assets of the Company. The documents
evidencing these obligations are omitted pursuant to Item 601(b)(4)(iii) of
Regulation S-K and will be furnished to the Securities and Exchange Commission
upon request.

                  (4)(f) See Article III, Section 4 of Exhibit 3(a).

                  (4)(g) See Articles II, III, VI, VIII and IX of Exhibit
(3)(b).

                  (4)(h) Form of Stock Purchase Warrant (Incorporated by
reference to Exhibit 4(g) to Registration Statement No. 33-5319 filed with the
Securities and Exchange Commission on June 25, 1986).

                  (10)(a) Lease Amendment #1 dated August 26, 1987 between the
Company and Gil Gillis, Gwenda Gillis, and Gayla Gillis relating to premises
located at 2500 South Main Street, Highway 293, Kennesaw, Georgia (Incorporated
by reference to Exhibit 10(a) of Registrant's 1987 Form 10-K).

                  (10)(b) Lease dated February 20, 1986 between Guam Capital
Investment Corporation and the Company relating to premises located at Lot No.
236, Agat, Guam (Incorporated by reference to Exhibit 10(c) to Registration
Statement No. 33-5319 filed with the Securities and Exchange Commission on June
25, 1986).

                  (10)(c) Lease dated April 29, 1986 between Chuckatuck
Partnership and the Company relating to the Company's principal executive
office space in Radford, Virginia (Incorporated by reference to Exhibit 10(d)
to Registration Statement No. 33-5319 filed with the Securities and Exchange
Commission on June 25, 1986).

                  (10)(d) Lease dated July 1, 1987 between the Atlantic
Richfield Company and James M. Chamberlain and Patsy L. Chamberlain, as
trustees of the Chamberlain Family Trust, relating to premises located at 3802
East Broadway, Phoenix, Arizona.

                                       35


<PAGE>   36



                  (10)(e) Agreement dated March 31, between the Department of
the Army and the Company relating to the construction of U.S. military housing
in Edgewood, Maryland. (Incorporated by reference to Exhibit 10(e) of
Registrant's 1987 Form 10-K).

                  (10)(f) Agreement dated September 1, 1987 between Zublin
Delaware, Inc. and the Company relating to the construction of U.S. military
housing in Vilseck, West Germany. (Incorporated by reference to Exhibit 10(f)
of Registrant's 1987 Form 10-K.)

                  (10)(g) Agreement dated as of July 1, 1985 between ARCO
Chemical Company and the Company relating to the sale of various copolymer
resins (Incorporated by reference to Exhibit 10(g) to Registration Statement
No.  33-5319 filed with the Securities and Exchange Commission on June 25,
1986.)

                  (10)(h) Agreement dated as of April 11, 1986 between ARCO
Technology, Inc. and the Company relating to a license of certain manufacturing
rights (Incorporated by reference to Exhibit 10(h) to Registration Statement
No.  33- 5319 filed with the Securities and Exchange Commission on June 5,
1986.)

                  (10(i) Bank of Virginia Trust Company Prototype Plan and
Trust Agreement and accompanying Joinder Agreement (Incorporated by reference
to Exhibit 10(i) to Registration Statement No. 33-5319 filed with the
Securities and Exchange Commission on June 24, 1986.)

                  (10)(j) 1986 Stock Option Plan for employees of the Company
(Incorporated by reference to Exhibit 10(j) to Registration Statement No.
33-5319 filed with the Securities and Exchange Commission on June 24, 1986.)

                  (10)(k) Settlement Agreement dated June 19, 1986 among the
Company, Luther I. Dickens, and Great Northern Corporation (Incorporated by
reference to Exhibit 10(k) to Registration Statement No. 33-5319 filed with the
Securities and Exchange Commission on June 24, 1986.)

                  (10)(l) Purchase Agreement dated December 31, 1987 between
the Company and the Atlantic Richfield Company (Incorporated by reference to
Exhibit 10 to the Company's current report on Form 8-K filed with the
Securities and Exchange Commission on January 13, 1988.

                  (11) Statement recomputation of per share earnings.

(b)     Reports on Form 8-K

                    None

(c)     Exhibits

        See ITEM 14(a)(3) above.

(d)     Financial Statement Schedules

        See ITEM 14(a)(2) above.

                                       36


<PAGE>   37



                                   SIGNATURES

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

                                             RADVA Corporation

Dated:           March 25, 1997              By /s/ LUTHER I. DICKENS
                                                -------------------------------
                                                    Luther I. Dickens
                                                    President


     Pursuant to the requirements of the Securities 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.

<TABLE>
<S>              <C>                        <C>
Dated:           March 25, 1997              By /s/ LUTHER I. DICKENS
                                                -------------------------------
                                                    Luther I. Dickens
                                                    President and Director


Dated:           March 25, 1997              By /s/ JAMES M. HYLTON
                                                -------------------------------
                                                    James M. Hylton
                                                    Director


Dated:           March 25, 1997              By /s/ RUSH G. ALLEN
                                                -------------------------------
                                                    Rush G. Allen
                                                    Director


Dated:           March 25, 1997              By /s/ J. GRANGER MACFARLANE
                                                -------------------------------
                                                    J. Granger Macfarlane
                                                    Director


Dated:           March 25, 1997              By /s/ WILLIAM C. NORTON
                                                -------------------------------
                                                    William C. Norton
                                                    Director


Dated:           March 25, 1997              By /s/ WILLIAM H. WILSON
                                                -------------------------------
                                                    William H. Wilson
                                                    Director

Dated:           March 25, 1997              By /s/ DAVID B. KINNEY
                                                -------------------------------
                                                    David B. Kinney
                                                    Director
</TABLE>


                                       37