SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                 --------------
                                    FORM 10-K

(Mark One)
                           X  Annual Report Pursuant to Section 13 or 15(d) of
                          ---      the Securities Exchange Act of 1934
                               for the fiscal year ended December 31, 1997
                                                   or
                          ___ Transition Report Pursuant to Section 13 or 15(d)
                               of the Securities and Exchange Act of 1934


Commission File No.  0-28322


                               Asahi/America, Inc.
             (Exact name of registrant as specified in its charter)

    Massachusetts                                   04-2621836
(State or other Jurisdiction of                    (I.R.S. Employer
Incorporation or Organization)                     Identification No.)

   35 Green Street                                     02148-0005
   Malden, Massachusetts                               (Zip Code)
(Address of principal executive offices)

                                 (781) 321-5409
              (Registrant's telephone number, including area code)

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

                                      None

Securities registered pursuant to Section 12(g) of the Act:
                        Common Stock (without par value)
                        --------------------------------
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports 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 requirement for
the past 90 days. Yes X             No ___
                     ---

Indicate by check mark if the disclosure of delinquent filers pursuant to Item
405 of Registration S-K is not contained herein and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated in Part III of this Form 10K or any amendments to this
Form 10K. X
         ---

The aggregate market value of the Registrant's voting stock held by
non-affiliates of the Registrant as of March 2, 1998 , was $9,725,981. As of
March 2, 1998, there were issued and outstanding 3,370,169 shares of the
Registrant's Common Stock, without par value.

--------------------------------------------------------------------------------
                       DOCUMENTS INCORPORATED BY REFERENCE

The information required in Part III, Items 10, 11, 12 and 13, hereof is
incorporated by reference to the specified portions of the Registrant's Proxy
statement, to be filed pursuant to Regulation 14A under the Securities Exchange
Act of 1934 with respect to the 1998 annual meeting of stockholders, which will
be filed with the Commission on or before April 30, 1998; and certain exhibits
to the Registrant's Form S-1 Registration Statement (File No. 333-2314), the
Registrant's Form 10K for the year ended December 31, 1996 and the Registrant's
Form 10Q for the quarter ended September 30, 1997 are incorporated by reference
in response to Part IV, Item 14.


<PAGE>




                       Asahi/America, Inc. and Subsidiary

                                TABLE OF CONTENTS

Securities and Exchange Commission
Item Numbers and Description                         PART I                 Page

Item 1.  Business                                                              2

Item 2.  Properties                                                           12

Item 3.  Legal Proceedings                                                    12

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

                                     PART II

Item 5.  Market for the Registrant's Common Equity
         and Related Stockholder Matters                                      13

Item 6.  Selected Financial Data                                              14

Item 7.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                  16

Item 7A. Quantitative and Qualitative Disclosures About
         Market Risk                                                          19

Item 8.  Financial Statements and Supplementary Data                          20

Item 9.  Changes in and Disagreements with Accountants
         on Accounting and Financial Disclosure                               20

                                    PART III

Item 10. Directors and Executive Officers of the Registrant                   20

Item 11. Executive Compensation                                               20

Item 12. Security Ownership of Certain Beneficial Owners
         and Management                                                       20

Item 13. Certain Relationships and Related Transactions                       20

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports
         on Form 8-K                                                          21

<PAGE>

     Statements made or incorporated in this Form 10-K include a number of 
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-
looking statements include, without limitation, statements containing the
words "anticipates," "believes," "expects," "intends," "future," and words of
similar import which express management's belief, expectations or intentions
regarding the Company's future performance. The Company's actual results could
differ materially from those set forth in the forward-looking statements.
Factors that could cause results to differ from those set forth include, without
limitation, those set forth in "Risk Factors" in the Company's Registration 
Statement on Form S-1 (File No. 333-2314) filed with the Securities and Exchange
Commission.


                                     PART I
Item 1. BUSINESS

Introduction

     Asahi/America, Inc. ("the Company") markets and sells thermoplastic valves,
piping systems, flow meter devices, filtration equipment and components
manufactured by the Company and others for use in a variety of environmentally
sensitive and industrial applications, including semiconductor manufacturing,
chemical processing, waste and water treatment processing and pharmaceutical
manufacturing, as well as for use in mining, aquarium and other industries. The
Company, an ISO 9001 quality control certified manufacturer, produces electric
and pneumatic valve actuators and controls, proprietary double containment
thermoplastic piping systems, custom fabricated fittings and other specialty
products including thermoplastic flow meter devices and filtration equipment.
The Company offers a broad selection of industrial thermoplastic valves in, and,
based on a 1995 market study prepared by the unaffiliated firm of Sommers
Marketing, Inc., in conjunction with data supplied by the Valve Manufacturer's
Association, continues to believe it has one of the largest shares of, the
United States industrial thermoplastic valve market.

     In July, 1997, the Company established a wholly owned subsidiary, Quail
Piping Products, Inc. ("Quail") to manufacture and market corrugated
polyethylene piping systems for use in water, sewer and drain applications. The
facility and manufacturing equipment, which are located in Magnolia, Arkansas
are being financed by an Arkansas State Industrial Revenue Bond, through GE
Capital Public Finance, Inc. ("GECPF"). Production of the piping systems
commenced according to plan in March 1998. This new product line increases the
manufacturing component of the Company's business, further diversifies the
Company's product offerings and distribution base and positions the Company to
penetrate new markets providing additional opportunity to increase sales of the
Company's distributed products.

     The Company is the exclusive master distributor in the United States, Latin
America and the Caribbean for Asahi Yukizai Kogyo Co., LTD, official English
translation Asahi Organic Chemicals Industry Co., LTD ("AOC"), a Japanese
company that the Company believes to be one of the largest manufacturers of
thermoplastic valves in the world. The Company is also the exclusive master
distributor in the United States for Alois-Gruber GmbH (together with its United
States subsidiary, "Agru"), an Austrian manufacturer of thermoplastic pipe and
fittings. The Company distributes its products under the brand names Asahi,
DuoPro and PolyFlo, among others.

     AOC, Nichimen Corporation and its affiliate, Nichimen America Inc.
("Nichimen America"), are principal stockholders of the Company. Nichimen
Corporation, one of the largest Japanese trading companies, and Nichimen
America, provide credit and import services to the Company in connection with
its purchases from AOC.

     As a master distributor for AOC since 1974 and for Agru since 1985, the
Company has developed a network of more than 400 United States and approximately
22 foreign distributors, with 11 additional foreign non-employee sales
representatives. Initially developed as the distribution channel for the
products purchased by the Company from AOC and Agru, this extensive distribution
network also supports increasing sales of the higher margin products
manufactured by the Company.

     End users of the Company's products often specify thermoplastic valves and
piping systems instead of metal because thermoplastics resist corrosion and do
not contaminate transported fluids or gases. The Company's products combine the
benefits associated with all plastic valve and piping products, such as light
weight, ease of installation, long life and low installed cost, with the
additional benefits of thermoplastic products, such as resistance to damage from
certain temperatures and corrosion. The Company seeks to identify industrial
applications where the end users' requirements justify the use of industrial
thermoplastics. Examples include double containment corrosion-resistant piping
systems that meet EPA regulations, piping systems for compressed air and gases,
and high purity pipe and valves to assure contaminant free processing of
liquids. The Company sells its products to distributors which sell to end users.
Representative end users include Motorola, WMX Technologies, Micron Technology,
the Corps of Engineers, Browning Ferris Industries, IBM, Schering-Plough, Estee
Lauder, Rhone Poulenc and DuPont, none of which individually represents a
material portion of the Company's sales.

     The Company was originally founded to be the exclusive master distributor
in the United States, Latin America and the Caribbean for AOC. Since the early
1980s, the Company has pursued a program to broaden its product lines and
customer base in order to sell higher margin products that are complementary to
the valves supplied by AOC. Highlights in the implementation of this program
include the following:

                                       2
<PAGE>


The addition of thermoplastic pipe. In 1985, the Company became the exclusive
master distributor in the United States of thermoplastic pipe manufactured by
Agru, which enabled the Company to supply all of the components for complete
thermoplastic piping systems. With the development of its own engineering and
manufacturing capabilities, the Company is able to provide custom designed
piping systems.

The development of new products. The Company has developed a number of new
higher margin products, including the introduction in 1980 of the Company's
first valve actuator and in 1986 of the Company's patented double containment
piping system, called DuoPro. The Company now manufactures several different
types of actuators in a variety of sizes, which permit a valve to be operated
from a remote site or controlled according to a programmed set of instructions.
The Company's DuoPro piping systems are designed to detect and contain an
accidental discharge of hazardous or toxic material, meet EPA requirements for
underground transport of hazardous liquids, and address customer concerns for
worker safety and protection of the environment.

The acquisition of complementary product lines. The Company has sought to expand
its product offerings by acquiring product lines that are not available from its
principal suppliers.

     o In 1994, the Company acquired its PolyFlo product line of double
       containment pipe and fittings that are extruded or molded in a
       proprietary, patented one-step process. The PolyFlo product line is
       available in internal diameters up to 6 inches and complements the
       Company's DuoPro line, which is available in larger diameters.

     o The Company added a line of pressure relief valves in October 1995, when
       it acquired an exclusive perpetual license of the technology to
       manufacture the valves in thermoplastic.

     o In February 1996, the Company added a line of industrial filters, which
       alleviate environmental concerns relating to cartridge disposal.

     o On May 1, 1997, the Company acquired the thermoplastic flow meter
       division and related assets of Universal Flow Monitors, Inc. and The
       Rosaen Company. The acquired product lines include the design,
       development, manufacture, marketing and servicing of a line of
       thermoplastic vortex flow sensor products known as the "Vortex Shedding
       Product Line" and a new line of vortex products using ultrasonic sensing
       technology. The production process for the 3/4 inch ultrasonic shedding
       flow meter has been completed and ultrasonic meters in other sizes are
       currently in the development stage. The new division was integrated into
       the Company's existing facility. The new product lines complement the
       Company's existing business and diversify its total product offerings.

     The formation of new companies. In July, 1997 the Company established a
     wholly owned subsidiary, Quail Piping Products, Inc. to manufacture and
     market corrugated polyethylene piping systems for use in water, sewer and
     drain applications. Production of the piping systems commenced according to
     plan in March 1998. This new product line increases the manufacturing
     component of the Company's business, further diversifies the Company's
     product offerings and distribution base and positions the Company to
     penetrate new markets providing additional opportunity to increase sales of
     the Company's distributed products.

     The expansion of its distribution network. The expansion of the Company's
     product lines enable the Company to increase sales to existing distributors
     and to add distributors serving new markets. In addition, the Company has
     initiated a number of programs to support its distributors, including the
     addition of an in-house engineering department to provide technical
     support, a variety of advertising and promotional programs, and product
     education seminars. See "Business--Distribution and Marketing."

     In February 1996, the Company was awarded ISO 9001 status by the
International Organization for Standardization based in Geneva, Switzerland,
which is the principal international body for establishing guidelines for and
certifying adherence to a stringent set of quality control and assurance
standards. The award is significant in validating the Company's manufacturing
standards and the Company believes that this standard, which is recognized in at
least 80 countries, is of increasing importance in the selection of vendors of
industrial products. The Company's two principal suppliers, AOC and Agru, are
also ISO 9001 certified.

Industry Overview

     According to industry sources, the estimated United States market in 1997
for industrial valves will approximate $3.1 billion, unchanged from 1996.
Industry sources estimate that, in 1998, the market for metal valves will grow
by 3.2%, while the Company estimates its market for thermoplastic industrial
valves is expected to grow by approximately 6% to 8%.

                                       3
<PAGE>


     Traditionally, industrial companies have used metal pipe and valves for the
transportation of fluids and gases. As industrial manufacturing processes have
grown more sophisticated and environmental concerns have increased, the
disadvantages of metal valves and piping systems, including weight,
susceptibility to corrosion, and labor intensive fabrication and installation,
have become more apparent. In many applications, metal pipe and valves will
interact with the surrounding environment or the transported liquid or gas,
which may result in corrosion of the piping system, leakage, or contamination of
the transported liquid or gas.

     Advances in thermoplastic technology have made possible the manufacture of
thermoplastic valves and piping systems with the strength and temperature
resistance required for many industrial applications. Thermoplastic piping
systems can be used in applications involving pressures up to 230 pounds per
square inch and temperatures up to 300 degrees F and can provide superior
performance to metal systems in many applications. These applications include:

     Where the environment is corrosive or corrosive materials are being
     transported. The chemical processing industry was an early adopter of
     thermoplastic valves and pipe because chemical companies frequently
     transport corrosive fluids and gases which can degrade metal systems. In
     certain of these applications, thermoplastic systems require less frequent
     replacement than metal systems, which can result in a lower lifetime cost
     for a thermoplastic system.

     Where the potential for damage to the environment is a consideration.
     Federal, state and local environmental authorities are mandating that
     companies which handle toxic fluids take steps to prevent leakage into the
     environment. All owners of underground storage tanks are required to be in
     compliance with the EPA's requirements regarding leak containment and
     detection by the end of 1998. Owners may comply with these requirements by
     using piping systems which are either made of corrosion resistant material,
     such as plastic, or are treated with corrosion resistant coating.
     Furthermore, the EPA is mandating the use of double containment systems,
     such as a "pipe-within-a-pipe" architecture, to reduce the likelihood of
     leakage and to detect leaks.

     Where the purity of the transported liquid or gas is a concern. In the
     semiconductor industry, manufacturers require thermoplastic piping systems
     for the transport of ultrapure water for washing computer chips. Likewise,
     pharmaceutical and biotechnology manufacturers employ high purity plastic
     piping systems to reduce the risk of contamination.

     Where installation costs are a significant factor in the total system cost.
     Because of the lighter weight of the components and the relatively easier
     installation, thermoplastic piping systems often can be installed more
     quickly than metal systems and without the use of heavy equipment that is
     often required to install comparable metal piping systems. Eliminating the
     need for heavy equipment and extensive labor can result in a lower
     installed cost for plastic systems than for comparable metal systems.

     Management believes that thermoplastic products will continue to increase
their share of the total market for industrial valves and piping systems. In
management's view, a number of factors drive this increase, including continued
improvement in thermoplastics technology, enforcement of environmental
regulations, more widespread recognition of the benefits of thermoplastic, and
increased familiarity with the skills required to install thermoplastic piping
systems.

Company Strategy

     Through its alliances with AOC and Agru and through its additions of high
quality manufactured product offerings, the Company believes it has established
itself as a market leader in thermoplastic industrial valves and piping systems,
as evidenced by the breadth of its product line, industry recognition of its
brand names, and the scope of its distribution network. The Company's strategy
is to:

     Provide a thermoplastic alternative to metal valves and piping systems. The
     Company considers its primary competitors to be the suppliers of
     traditional metal products. The Company believes that a substantial
     opportunity exists for suppliers of thermoplastic products to gain a larger
     share of the total industrial market for valves, pipe and related system
     components.

     Develop and market products manufactured by the Company. As a master
     distributor for AOC and Agru, the Company believes it offers a broader line
     of thermoplastic valves and pipe than any of its competitors. The Company
     seeks to leverage its valve and pipe sales by offering complementary higher
     margin products manufactured by the Company. These products include valve
     actuators and controls, double containment piping systems, custom fittings
     and other 

                                       4
<PAGE>


     specialty products including thermoplastic flow meter devices and
     filtration equipment. Additionally, with the start up of the Company's new
     wholly owned subsidiary, Quail Piping Products, Inc., the Company has
     positioned itself to enter new markets with its manufactured corrugated
     polyethylene piping systems while providing additional opportunity to
     increase sales of the Company's distributed products. Quail commenced
     production of its corrugated piping systems according to schedule in March,
     1998. Although sales of products manufactured by the Company increased by
     6.7% from 1996 to 1997, sales of manufactured products have increased by
     60% from 1993 to 1997, from approximately $7.6 million (29.7% of total
     sales) to $12.1 million (32.0% of total sales). Total sales for 1997 were
     adversely affected by both the decrease in and the deferral of the
     construction of new plants within the semi-conductor industry, one of the
     Company's largest vertical markets, resulting in lower demand for the
     Company's high purity and manufactured dual containment piping systems.
     While sales of certain of the Company's manufactured products declined in
     1997 as a result of the general downturn in the semiconductor market, the
     Company has repositioned itself to achieve growth in other key vertical
     markets and has worked aggressively to expand into new markets and into new
     areas of opportunity. See "Management's Discussion and Analysis of
     Financial Condition and Results of Operations".

     Identify and serve markets in diverse industries. The Company seeks to
     continue to expand the market for its products and diversify its end user
     base by identifying new applications where the benefits of thermoplastics
     are superior to metal piping systems. In the early 1980s, virtually all of
     the Company's products were sold through distributors to end users in the
     chemical processing industry. The Company estimates that in 1997 sales to
     the semiconductor and chemical processing industries accounted for 16% and
     28% of total sales, respectively, in comparison to 31% and 20%,
     respectively, in 1996; sales to federal and local governmental agencies (in
     connection with environmental clean up of government-owned sites and water
     treatment facilities) accounted for 15% and 12% in 1997 and 1996,
     respectively; sales to the waste management industry accounted for 9% and
     8% in 1997 and 1996, respectively; while sales to the mining and aquarium
     industries, two targeted and growing industries for the Company, accounted
     for 16% and 7% in 1997 and 1996, respectively. The Company's estimates of
     sales to the respective industries are based on the Company's survey of its
     distributors and on the Company's records of shipments made directly to end
     users at the request of distributors. By expanding the applications for its
     products, the Company seeks to increase revenues, to reduce its
     vulnerability to economic downturns specific to the industries in which its
     customers operate, and to benefit from diverse market developments,
     including the anticipated returned growth of the semiconductor
     manufacturing industry, the approaching deadline for compliance with the
     EPA's underground storage tank regulations, and continued business concern
     for the protection of the environment.

     Acquire complementary product lines. The thermoplastic valve and pipe
     industry is fragmented, and the Company believes there are opportunities to
     expand its product base through acquisitions of complementary businesses
     and product lines. The Company believes that its current network of more
     than 400 United States and approximately 20 foreign distributors can serve
     as a marketing channel for complementary products. In the last four years,
     the Company expanded its product offerings with the acquisition of the
     PolyFlo product line, the acquisition of a line of industrial filtration
     equipment, a license of the technology for the manufacture of pressure
     relief valves and the May 1997 acquisition of the vortex flow meter
     division. Additionally, in July, 1997, the Company established the wholly
     owned subsidiary, Quail Piping Products, Inc. to manufacture and market
     corrugated polyethylene piping systems. Management continues to actively
     seek potential opportunities, including mergers and acquisitions, joint
     ventures, licensing, and start-up ventures that would benefit from exposure
     to the Company's broad and established distribution network or widen the
     Company's existing distribution channels.

Products

     The Company manufactures and sells thermoplastic valve actuators and
controls, custom fabricated valves, proprietary double containment piping
systems, industrial filtration equipment and thermoplastic flow meter devices.
Products marketed and sold by the Company include thermoplastic valves and pipe
supplied by AOC and Agru, respectively. In addition, the Company rents and sells
specialized welding equipment for use in the installation of its piping systems.
With its broad product base, the Company is able to offer its end users "one
stop shopping" to meet substantially all of their requirements for thermoplastic
industrial valves, pipe and piping systems.

                                       5
<PAGE>


     The following table sets forth information concerning the contribution to
total sales from the Company's principal classes of products (excluding sale and
rental of welding equipment):

<TABLE>
<CAPTION>

                                                                Year ended December 31,
                                                             -----------------------------
                                                       1997                    1996                  1997
                                                       -----                   ----                  -----
                                                                        ($ in thousands)
<S>                                                  <C>           <C>        <C>                  <C>        <C>
Distributed products, including valves, pipe
  and fittings..................................     $ 21,212      60.6%      $24,579    64.9%     $24,518    64.6%
Manufactured products, including actuators and
  controls, fabricated valves and piping systems,
  filtration equipment and plastic flow meters..     $ 12,414      35.5%      $11,374    30.0%     $12,141    32.0%
</TABLE>


     Valves. The valves supplied by the Company are injection molded from one of
four primary resins: Polyvinyl Chloride (PVC); Chlorinated Polyvinyl Chloride
(CPVC); Polypropylene (PP); and Polyvinylidene Flouride (PVDF). Product
selection is based on such criteria as chemical and temperature resistance,
pressure tolerance levels, purity, abrasion resistance and cost. Valves made
from PVC are the lowest in cost. They typically have good chemical resistance,
can withstand temperatures up to 140 degrees F, and are used extensively in
applications for chlorinated water, salt water, and relatively mild chemicals.
CPVC and PP valves can withstand more severe chemicals and tolerate temperatures
up to 200 degrees F and 180 degrees F, respectively. PVDF can be used in
applications with temperatures up to 250 degrees F. It is ideally suited for
halogens, strong acids, mild caustics and is the most commonly specified
material for the transport of distilled water and high purity chemicals in the
semiconductor industry.

     The Company markets seven basic valve designs: ball, butterfly, swing
check, gate, globe, ball check and diaphragm. Most valves are available in all
four of the primary resins with a variety of elastomeric sealing materials as
options. With the size range of each valve style and the various seat, seal and
stem materials available, there are a tremendous number of variations for each
valve style. For example, the Company offers over 2,000 butterfly valve
configurations. Each valve style addresses specific fluid flow requirements.
Criteria for selecting one model over another include time to open, the presence
of suspended solids in the transported fluid, the potential for bacterial
growth, and line size.

     Manual valves range in price from $5.50 for a sampling valve to over
$25,000 for a 24 inch PVDF butterfly valve. A typical valve will sell for $50 to
$100. The Company processes approximately 3,000 invoices per month, indicating a
broad-based demand.

     Actuators and controls. To meet the growing demands of industry for plant
automation, reduced labor costs and increased productivity, the Company has
developed electric and pneumatic actuators and controls for remote and
programmable operation and control of valves. The Company's actuators and
controls enable the end user to program or remotely adjust valves in response
to, or in order to achieve, specified temperature, pressure, and flow rate of
the transported substance, whether a liquid or gas. These products enable the
end user to actuate and control precisely the valves in a system in response to
process variables. Additionally, valve modifications are custom designed and
fabricated by the Company to meet customer requirements, including special
stems, locking devices, stem extensions, lugs, etc. The Company currently offers
six basic types of actuators and controls in a variety of sizes that are
adaptable to a broad spectrum of the valves that it distributes for AOC.
Actuation and special valve modifications can add from $150 to $1,000 to the
price of a manual valve, with a positive effect on the Company's gross margins.

     Pipe and piping systems. As the exclusive United States distributor for
Agru, the Company supplies a line of thermoplastic pipe and fittings. In
addition, the Company fabricates two types of double containment piping systems,
which are sold under the brand names DuoPro and PolyFlo. These double
containment "pipe-within-a-pipe" systems are designed to contain accidental
ruptures and leaks and may be equipped with detection systems that signal and
locate a leak in the system. These systems are designed to meet environmental
regulatory requirements for the transport of certain toxic and corrosive
materials.

     The Company supplies thermoplastic piping systems made of PP, PVDF, HDPE
(high density Polyethylene) and Halar. PP systems are offered in sizes from 3/8
inch to 24 inches, with PVDF and Halar offered in sizes from 1/2 inch through 12
inches. HDPE pipe and fittings are specifically used for compressed air lines,
and are sold under the Company's trade name "Air-Pro". Typically, piping is sold
as a system with the end user purchasing all the pipe, fittings and valves from
one
                                       6
<PAGE>

source. Piping system orders average $10,000 to $15,000, with several each year
exceeding $100,000.

     In 1986, the Company developed and patented its DuoPro double containment
piping system to meet requirements set forth by the EPA's Underground Storage
Tank Regulations. Pipe and fittings primarily supplied by Agru are fabricated
into systems as large as 18 inch diameter inner pipe by 24 inch diameter
containment pipe. An average DuoPro system sells for $25,000 to $50,000.

     With the acquisition of the PolyFlo product line in 1994, the Company's
double containment pipe line was expanded to include inner pipe sizes from 1
inch to 6 inches. The PolyFlo line is extruded using a patented manufacturing
process.

     Filters. Many fluid flow processes include the need for filtration of the
transported liquids, including chemical solutions, electroplating fluids and
water, both in process and waste. The Company's AF Series Filters include a
patented back-washing system that reduces waste and improves filtering
efficiency. The AF Series Filters are back-washed directly to waste or recycling
tanks, without operator contact, reducing the often costly waste disposal
process and the potential for dangerous contamination.

     Flow meters. With increased concern from the semiconductor industry over
fluid contamination in the transport of both high purity chemicals and
ultra-pure deionized water for the cleaning of computer chips, in May, 1997, the
Company expanded its product offerings with two new thermoplastic flow meter
devices. Traditional flow meters use moving paddle wheels to measure fluid flow.
These wheels are located in the fluid flow path and are a potential source of
contamination. Their replacement also means that the entire line must be shut
down, an expensive process for semiconductor chip manufacturers. The Company's
flow meter line uses vortex shedding technology. As fluid moves past fixed
structures within the flow path, vortices are formed and measured by
peizoelectric crystals located within those fixed structures. The deletion of
any moving parts within the flow path reduces the risk for contamination. The
Company's FloSonex vortex flow meter uses ultrasonic technology for measurement,
removing all electronics from the pipe's interior. This is an important feature
as it removes the electronics from influence of the heat of the measured fluids
and because flow meter sensor replacement can be accomplished without shutting
down the line.

     Other sources of sales. The Company also rents and sells specialized
welding equipment for use in the installation of its piping systems. In 1997,
revenues from the rental and sale of such equipment totaled approximately $1.3
million.

     During the past three years, the Company has invested in additional
manufacturing equipment and plant expansion for its operations in Malden,
Massachusetts and in Magnolia, Arkansas, and in new product development, with
the goal of increasing its production capability and building a broader base of
manufactured products. Products that will enhance the sale of existing pipe and
valve items are targeted for development. Recent products have included two
electric actuators, a mini pneumatic actuator, printed circuit boards for more
precise control of actuators, a fail safe battery pack, and a patented stem
support assembly for landfill applications. While the Company will continue to
develop new products and accessories and introduce new product lines, the
Company has not incurred a material amount of expense for research and
development during the past three fiscal years. In May 1997, the Company
acquired the vortex division of Universal Flow Monitors, Inc. The acquired
product lines include the design, development, manufacture, marketing and
servicing of a line of thermoplastic vortex flow sensor products known as the
"Vortex Shedding Product Line" and a new line of vortex products using
ultrasonic sensing technology. The production process for the 3/4 inch
ultrasonic shedding flow meter has been completed and ultrasonic meters in other
sizes are currently in the development stage. In connection with this
acquisition, the Company established a dedicated Research and Development
department. This department is initially focusing its efforts on finalizing the
development of a full range of sizes for ultrasonic flow meter, developing
continued product and purity enhancements of the vortex shedding product line
and working to develop digital communications between the Company's flow meters
and actuators with the customers computer systems.

Distribution and Marketing

     Domestic. Substantially all of the Company's sales in the United States are
made through an established network of more than 400 independent distributors,
many of whom have been distributors of the Company's products for 20 years.
Approximately 125 are stocking distributors, which carry an inventory of the
Company's products. One distributor accounted for 26%, 23% and 32% of the
Company's sales in 1995, 1996 and 1997, respectively, and 40 distributors
accounted for 82%, 82% and 78%, respectively, of sales during the same period.
The Company's principal distributor estimates that it sold the Company's
products to not fewer than 5,000 end users in both 1996 and 1997.

                                       7
<PAGE>


     The Company supports its distributors with thirteen Company-employed sales
representatives, one national sales manager of specialty products and one
director of Latin American sales. The Company also has an internal group of nine
employees who provide customer service and support to the Company's customer
base. The Company sales force works jointly with the Company's distributors and
independently to develop sales leads, which are referred to the distributors.
Additional sales and marketing support is provided by the Company's staff of
seven engineers and two field technicians, who are available to provide
technical information on the Company's products, suggest solutions to customers'
requirements and assist in the design and installation of full piping systems.
The Company also promotes its products through trade shows, customer product
seminars, and the use of promotional materials, including full color product
brochures, advertising in trade journals, and other public relations activities.

     The Company has developed an extensive educational program for its
distributors to train them in the use and benefits of its products. This program
includes a series of in-house and regional multi-day seminars, as well as
one-on-one presentations by the Company's sales representatives to individual
distributors and their sales forces. The Company provides its distributors with
extensive written materials relating to its products and their applications.

     The Company does not have contracts with its distributors. None of the
Company's distributors carries the Company's products exclusively. The Company
believes that the use of distributors, which generally specialize in pipe and
valve products and focus on specific industry or geographic markets and,
accordingly, have specific knowledge of and contacts in particular markets,
enhances the scope of the Company's marketing efforts and permits the Company to
penetrate a broader market without the significant costs associated with a large
direct sales force that would otherwise be required.

     Foreign. The Company has an established network of approximately 22 foreign
distributors, with 11 additional foreign non-employee sales representatives. For
fiscal years 1995, 1996 and 1997, the Company had export sales of approximately
$1.8 million, $1.6 million and $2.7million, respectively, primarily to Latin
America. All of the Company's export sales are denominated in United States
dollars.

End Users

     The Company sells substantially all of its products through distributors to
a diversified end user base. A common characteristic of end users is the need
for pipe, valves and related components to control, transport and contain
corrosive fluids, ultrapure liquids, environmentally harmful fluids or gases. No
single end user is responsible for a material portion of the Company's sales.
Principal industries, representative applications and representative end users
for the Company's products include:


<TABLE>
<CAPTION>
                                    Representative
       Industry                      Applications                 Representative End Users
       --------                      ------------                 ------------------------
<S>                           <C>                               <C>
Chemical processing           Transfer of corrosive and         Dow Chemical, DuPont, Rohm
                              environmentally hazardous         & Haas, P.P.G., Clorox, B.F. Goodrich,
                              chemicals                         and Kerr McGee

Semiconductor                 Transfer of deionized water,      IBM, Motorola, Texas Instruments,
manufacturing                 ultra pure chemicals and          Micron Technology, Advanced Micro
                              chemical waste                    Devices, National Semiconductor, IBM,
                                                                Samsung Semiconductor, and Matsushita

Landfill                      Collection of methane gas         WMX Technologies, Laidlaw Waste
                              and  leachate                     Systems, Inc. and Browning Ferris Industries

Aquariums                     Automated circulation of salt     New Orleans, Monterey Bay, Tampa Bay,
                              water and life support systems    Albuquerque BioPark, Omaha, Long Beach
                                                                National Aquarium, China Aquarium and
                                                                Colorado Ocean Journey
</TABLE>

                                       8
<PAGE>

<TABLE>
<S>                           <C>                               <C>
Federal Facilities            Soil remediation and transfer of  Aberdeen Proving Grounds, Tinker
                              hazardous waste                   Air Force Base, Hill Air Force
                                                                Base, Tooele Army Base, Fort
                                                                Belvoir Defense Laboratory, Nevada
                                                                Test Site and China Lake

Mining                        Transfer of sulfuric acid and     Kennecott Utah Copper, Corporacion
                              cyanide                           Nacional de Cobre de Chile
                                                                (Codelco), Sociedad Contractual
                                                                Minera El Abra, and Cypress Mines

Pharmaceutical                Transfer of chemical waste        Schering-Plough, Eli Lilly, Abbott
                                                                Labs, Merck and Bristol-Myers
                                                                Squibb
</TABLE>


Suppliers

     The Company has exclusive distribution agreements in defined territories
for substantially all of the valves and fittings and certain of the pipe sold by
the Company. The Company has been the exclusive master distributor of a broad
line of valves and related accessories for AOC in the United States, Latin
America and the Caribbean since 1977, and is currently in the ninth year of a
ten year agreement with AOC, Nichimen Corporation and Nichimen America which
runs through December 31, 1999. While the agreement is in force, the Company may
not purchase competing products from any other manufacturer. Under the
agreement, the Company must use its best efforts to market AOC's valves in its
territory and has agreed to purchase at least $140 million of products from AOC
over the term of the agreement. There are no minimum annual purchase
requirements, but there are annual guidelines attached to the contract. Through
December 31, 1997, the Company had purchased approximately $71.4 million of
product from AOC, with the purchases in the years ended December 31, 1995, 1996
and 1997 totaling approximately $10.0 million, $10.4 million and $9.7million
respectively. Total purchases through December 31, 1997, were approximately
$29.0 million behind the annual guidelines on a cumulative basis. The Company's
prior contracts with AOC included similar cumulative and annual purchase
provisions, and AOC has always agreed to extend or enter into a new contract
with the Company regardless of its compliance with such terms. However, no
assurances can be given that AOC will agree to renew its contract with the
Company at the end of the current term. The Company is currently negotiating an
extension of its distribution agreement beyond the year 1999. AOC is a principal
stockholder of the Company.

     AOC, which manufactures the valves it supplies to the Company at its plant
in Japan, warrants that its products are merchantable and free from defects in
material and workmanship, and indemnifies the Company against losses or claims
arising from the sale of the products. In the case of defective products, AOC
agrees to repair or replace the products. In addition, AOC must maintain a
minimum of $3.0 million of product liability insurance that includes the Company
as a named insured. The Company may not distribute products produced by third
parties that compete with the products it purchases from AOC. Purchases by the
Company are made under written purchase orders. Once an order is accepted, it
may not be canceled except by agreement of the parties; AOC may not reject an
order unreasonably or in bad faith. Either party may terminate the agreement if
the other party defaults and the default continues for 30 days after notice or
if the other party becomes subject to a bankruptcy or insolvency proceeding.

     A large percentage of the pipe and fittings sold by the Company is supplied
by Agru under a five-year distribution agreement, which was amended and restated
effective as of January 1, 1995. Under the agreement, the Company has exclusive
distribution rights in the United States for certain products (PP, PVDF, and
Halar fittings and pipe, and PVDF welding equipment) and non-exclusive rights
for other products. The Company may not purchase products that compete with the
exclusive products unless Agru is unable to deliver products within four weeks
of order. Agru is obligated to repair or replace any defective product it
supplies. The Company is obligated to make minimum purchases from Agru each
year, using 1994 total purchases of $3.1 million as a base. If purchases in any
year decline by 20% or more from the base, Agru may terminate the contract at
the end of the following year unless purchases in that year equal or exceed $3.1
million in which case the contract continues in force. During the year ended
December 31, 1997, the Company's purchases from Agru totaled approximately $4.4
million. The agreement is terminable in the event of serious breach which is not
cured within three months of notice, and in the event of the bankruptcy or
insolvency of either party. Unless either party gives notice of termination not
less than 12 months prior to the end of the terms, the contract automatically
extends for five years.

                                       9
<PAGE>


     While there are other sources of supply for the products which the Company
purchases from AOC and Agru, the Company is not aware of other single sources of
supply that offer the variety and quality of products they produce. In addition,
several sources of supply have existing exclusive arrangements with other
companies that would preclude dealing with the Company. The Company's supply
arrangements with AOC and Agru are also subject to all of the usual risks of
foreign trade. The loss of either AOC or Agru as a supplier or the imposition of
restrictions on foreign trade could have a material adverse effect on the
Company. The Company believes its relationships with these two suppliers are
excellent.

Manufacturing and Distribution

     The Company has a technical support and engineering department of seven
professionals with an additional two professionals serving as field technicians,
who support the Company's sales and marketing activities and provide solutions
to special end user customer requirements, such as modifications of valves and
special piping system designs. The department has designed a number of actuators
and accessories that are sold in conjunction with the Company's valves. In
addition, the department assists end user customers in the design, engineering
and installation of complete piping systems.

     At its Malden, Massachusetts facility, the Company manufactures and
assembles a variety of valve actuators, valve/actuator assemblies and
accessories, including, among others, industrial filtration equipment and
thermoplastic flow meter devices. The Company also operates a "clean room" for
the fabrication and cleaning of ultrapure water piping systems for the
semiconductor industry. In addition, the Company fabricates double containment
piping systems and assists the end user customer (or its mechanical contractor)
with on-site installation and testing. The Company rents and sells specialized
welding equipment to customers and contractors for this purpose. Additionally,
in conjunction with the Company's May 1, 1997 acquisition of the plastic flow
meter division of Universal Flow Monitors, Inc., the Company has expanded its
manufacturing capabilities to include the full manufacturing, machining and
testing of both the flow sensing and ultrasonic flow meters. The Company's newly
established wholly owned subsidiary, Quail Piping Products, Inc. commenced
production of corrugated polyethylene piping systems according to schedule in
March 1998. The full extrusion and corrugating process takes place at Quail's
Magnolia, Arkansas facility.

     On February 24, 1996, the Company was awarded ISO 9001 certification
following a fourteen month review process. The certification indicates that the
Company's operations meet the stringent standards for quality control and
assurance established by the International Organization for Standardization. ISO
9001 has been adopted to date in more than 80 countries. It is anticipated that
ISO certification will increasingly become a prerequisite for doing business
with many customers and in many markets.

     The Company purchases and maintains an inventory of valves, pipe, fittings
and related fluid flow components and products, in anticipation of customer
orders. The Company has warehouse facilities at its principal offices in Malden,
Massachusetts. Because lead times for delivery from its principal suppliers are
long, the Company carries significant inventory in relation to sales in order to
be able to meet delivery requirements of its distributors and end user
customers. Approximately 125 of the Company's distributors also stock inventory,
principally valves and valve accessories. Quail, which will maintain inventory
of pipe, also has adequate warehousing capacity at its Magnolia, Arkansas
facility.

Competition

     The industrial valve, pipe and fittings market is very fragmented, with
many manufacturers and suppliers. The Company estimates that there are more than
100 suppliers of metal valves and at least a dozen suppliers of thermoplastic
valves. There are also many suppliers of both metal and plastic pipe and
fittings. There is no single company that dominates the market for either
thermoplastic industrial valves or pipe. The Company believes that there are two
companies which have significant shares of both markets, and one additional
significant competitor in the valve market and three additional significant
competitors in the pipe market. Of its competitors, the Company is aware of only
one competitor that offers a comparable variety of thermoplastic valve and pipe
products as the Company. Many of the Company's competitors, especially
manufacturers of metal valves and pipe, have substantially greater financial,
marketing, personnel and other resources than the Company. A 1995 market study,
commissioned by the Company, indicated that the Company had one of the largest
shares of the United States market for industrial thermoplastic valves. With its
ability to provide complete fluid flow solutions to customers, the Company
believes that it continues to hold this market share.

     Suppliers of industrial valves, pipe and piping systems, whether metal or
plastic, compete primarily on the basis of price, performance and service to the
customer or end user. In applications requiring high performance of the valves
and pipe in

                                       10
<PAGE>

terms of temperature, pressure and durability, the Company believes that its
products compete favorably in terms of performance, price and lifetime cost with
metal products available for the same applications. In certain applications,
alternative plastic products may be available at lower prices than the Company's
products. The Company believes, however, that many end users are willing to pay
higher prices for the Company's products in exchange for the higher quality and
service that the Company offers. The Company believes that its competitive
advantages include the breadth of its valve, actuator and pipe product lines and
its ability to supply complete piping systems, including custom fabricated
components, flow meter devices and industrial filtration equipment. The Company
believes that it has an advantage over other manufacturers of valve actuation
and piping products because of its ability to offer "one stop shopping" to the
end user.

Joint Venture

     In February 1990, the Company established a joint venture with Watts
Industries, Inc. ("Watts"), a United States manufacturer of metal valves, for
the development of an electric actuator to supply the partners' respective
needs. The two companies co-funded the tooling of the product, and the Company
manufactures the product for sale by the Company through its regular
distribution network and for sale to Watts, as OEM products, at a discounted
price. The employees of both companies executed confidentiality agreements to
protect the confidential and proprietary information possessed by each company
and utilized in the development of the actuator. All technology, information,
material and data developed pursuant to the joint venture as well as any
trademarks, patents, copyrights or other property interest that may result from
the joint venture, is the joint and several property of the Company and Watts.
Development of the product was completed in August 1992, and all manufacturing
of the product line is done in the Company's plant.

Patents and Trademarks

     The Company exclusively owns six United States patents relating to its
double containment pipe assemblies, seven United States patents relating to
actuators and accessories used in conjunction with plastic valves, as well as
two corresponding Canadian patents and two corresponding Canadian patent
applications, and one United States patent relating to the filter backwashing
system. Additionally, in conjunction with the May 1997 acquisition of the vortex
flow meter division of Universal Flow Monitors, Inc., the Company acquired a
United States patent and two United States patent applications relating to
ultrasonic vortex flow meters. Subsequently, the Company filed eleven patent
applications, in Europe, Japan, China, Taiwan and Korea. All of the United
States patents have been issued since December 1985, and extend at least until
2002. In addition, the Company owns 29 United States trademark registrations and
five pending trademark registrations. The trademark registrations, which are
renewable by their terms in the ordinary course of business, cover various
products offered for sale by the Company. The Company also owns copyright
registration for its catalogs and design guides, as well as for the printed
circuit boards it has developed for use in its valve actuators.

     All of the Company's intellectual property is owned or is held under a
perpetual license, is free and clear of restrictions of any nature and is not
subject to any license, sublicense, agreement or commitment with any third
party, other than a security interest to the Company's bank lender. The
Company's intellectual property rights are important to its business, and the
Company intends to enforce its intellectual property rights. However, the
Company believes that product quality and service are more important to the
success of the Company. Except as discussed below, the Company has not been
engaged in any litigation during the last six years in regard to its
intellectual property rights.

     In July 1997, the United States Patent and Trademark Office reconfirmed the
validity of a patent owned by the Company (the "544 Patent"). In August 1997,
the Company instituted a patent infringement suit in the United States District
Court in New York (the "District Court") against MFRI, Inc. of Niles, Illinois,
and its associated companies, Perma-Pipe, Inc., Midwesco, Simtech, Inc. and Mr.
I. Wayne James, President of Simtech (and former employee of the Company). At
the September 10, 1997 Hearing, the District Court ordered an expedited trial to
commence December 8, 1997. The trial was conducted during the period December
8-11, 1997, and the final post-trial briefs were filed on January 13, 1998. The
Court has yet to render a decision with respect to this trial. In the fourth
quarter of 1997, the Company incurred approximately $400,000 in legal expenses
related to this patent issue. These expenses reduced net income by approximately
$226,000 or $.07 diluted earnings per share. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Financial
Statements and Schedules".

Employees

     As of December 31, 1997, the Company had a work force of 138 people, of
which 22 are executive and administrative personnel, 30 are engaged in sales and
marketing, 10 are engineering staff, 2 are research and development personnel
and 74

                                       11
<PAGE>

are engaged in manufacturing, fabricating and warehouse operations. At December
31, 1997, the Company's wholly owned subsidiary, Quail Piping Products, Inc.,
had a work force of 6 people, of which 4 are engaged in the construction and
build out of the company's Arkansas facility and 2 are administrative personnel.
None of the Company's, or its subsidiary's, employees are covered by a
collective bargaining agreement. The Company believes its labor relations to be
good.

Item 2. PROPERTIES

     The Company's executive offices and manufacturing/warehouse facility,
comprised of approximately 94,000 square feet, is located in a modern facility
in Malden, Massachusetts. The Company considers its facility to be in good
operating condition and suitable for the purposes for which it is used.

     The Company's wholly owned subsidiary Quail Piping Products, Inc. conducts
its manufacturing at a 18,400 square foot, 7.6 acre facility in Magnolia,
Arkansas. The facility was purchased in October, 1997 and required certain
improvements to accommodate Quail's manufacturing process. The facility is now
in good operating condition and suitable for the purpose for which it is to be
used. Quail commenced manufacturing activities in March, 1998.

Item 3. LEGAL PROCEEDINGS

     The Company is a plaintiff in a patent infringement lawsuit. See "Business
-Patents and Trademarks".

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

     The Company submitted no matter to a vote of security holders during
the fourth quarter of the fiscal year ended December 31, 1997.

                                       12
<PAGE>


                                     PART II

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

The Common Stock of Asahi/America, Inc. is traded on the Nasdaq National Market
System under the symbol ASAM. The following table sets forth the range of high
and low selling prices for the Common Stock of the Company for the fiscal
periods indicated, as reported on the Nasdaq National Market System. This
information reflects inter-dealer prices, without retail mark-up, mark-down, or
commission and may not necessarily reflect actual transactions.


Fiscal 1997                     High                 Low
-----------                     ----                 ---

       First Quarter             9.00               6.00

       Second Quarter            8.25               5.75

       Third Quarter             8.00               5.50

       Fourth Quarter            7.50               5.25


On March 2, 1998, there were 150 record holders of the Company's Common Stock.
The Company believes the actual number of beneficial owners of the Common Stock
is greater than the stated number of holders of record because a large number of
shares of the Company's Common Stock is held in custodial or nominee accounts
for the benefit of persons other than the record holder.

The Company has never paid a dividend on its Common Stock and currently intends
to retain immediate future earnings to fund the growth of the business. In
subsequent periods, if the Company has funds legally available for the payment
of dividends, the Board of Directors intends to consider the payment of
dividends. The payment of dividends is within the discretion of the Board of
Directors and will depend upon the Company's earnings, its capital requirements
and financial condition, and other relevant factors.

                                       13
<PAGE>


Item 6.  SELECTED CONSOLIDATED FINANCIAL DATA

     The selected consolidated financial data set forth below has been derived
from the consolidated financial statements of the Company audited by Arthur
Andersen LLP, independent public accountants, and their report is included
elsewhere herein. The selected consolidated financial data set forth below
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto and Management's Discussion and Analysis of Financial Condition
and Results of Operations.


<TABLE>
<CAPTION>

                                                                        Year ended December 31,
                                                         ------------------------------------------------------
                                                         1993       1994          1995       1996          1997
                                                         ----       ----          ----       ----          ----
                                                      (In thousands, except per share data)


<S>                                                     <C>       <C>           <C>        <C>           <C>
Statements of Operations Data:
Net sales.....................................          $25,514   $ 28,518      $ 34,998   $ 37,894      $ 37,934
Cost of goods sold.............................          17,021     18,608        23,409     24,346        24,173
Foreign currency (gains) losses................              48         47          (391)      (378)         (345)
                                                        -------    -------        -------     ------        ------
    Gross profit...............................           8,445      9,863        11,980     13,926        14,106
Operating Expenses:
   Research and development....................               -          -             -          -           186
   Selling, general and administrative
     expenses..................................           7,201      7,613         8,682      9,751        10,647(A)
                                                        -------    -------       -------     ------       ---------

 Total operating expenses......................           7,201      7,613         8,682      9,751        10,833
Income from operations.........................           1,244      2,250         3,298      4,175         3,273
Interest expense, net..........................             391        536           713        196           201
                                                        -------    -------       -------     ------        ------
Income before minority interest and provision
  for income taxes.............................             853      1,714         2,585      3,979         3,072
Minority interest in income of
  consolidated joint venture...................             (66)        --            --         --            --
                                                         -------   -------      --------     ------      --------
Income before provision for income taxes.......             787      1,714         2,585      3,979         3,072
Provision for  income taxes....................             168        596         1,000      1,541         1,290
                                                        -------    -------       -------     ------        ------
    Net income ................................         $   619    $ 1,118      $  1,585   $  2,438       $ 1,782(A)
                                                        =======    =======       =======   ========       =======

    Basic earnings per share...................         $   .30    $   .48      $    .68       $.82       $   .53(A)
                                                        =======    =======      ========   ========       =========   


    Diluted earnings per share.................         $   .30    $   .48      $    .68    $   .82       $   .53(A)
                                                        =======    =======      ========    =======       =======   

Weighted average number of common
    shares outstanding ........................           2,048      2,340         2,340      2,973         3,349

Weighted average number of  shares
     outstanding, assuming dilution .........             2,048      2,340         2,340      2,988         3,349
</TABLE>

(A) Amounts include approximately $400 of legal expenses incurred by the Company
    related to a patent infringement lawsuit whereby the Company is enforcing
    its US patent rights against a major competitor. The final decision from the
    December 8, 1997 bench trial has yet to be rendered. The above mentioned
    expenses reduced net income and both basic and diluted earnings per share by
    approximately $226 or $.07, respectively, for the year ended December 31,
    1997.

                                       14
<PAGE>


<TABLE>
<CAPTION>

                                                                             December 31,
                                                          -------------------------------------------------------
                                                          1993       1994         1995         1996          1997
                                                          ----       ----         ----         ----          ----
                                                                   (In thousands)
<S>                                                     <C>        <C>          <C>         <C>           <C>
Balance Sheet Data:
Working capital.......................                  $ 2,902    $2,116       $ 3,850     $ 9,976       $   7,503
Total assets..........................                   13,023    21,308        22,452      28,443          32,049
Long-term liabilities.................                      490     4,583         5,313       4,992           5,875
Total liabilities.....................                    8,312    15,479        15,018      12,239          13,448
Retained earnings (deficit)...........                   (2,278)   (1,160)          426       2,864           4,646
Stockholders' equity..................                    4,711     5,829         7,434      16,204          18,601
</TABLE>

                                       15
<PAGE>


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

Overview

The Company is a manufacturer and master distributor of thermoplastic valves,
piping systems, flow meter devices, filtration equipment and components
manufactured by the Company and others for use in a variety of environmentally
sensitive and industrial applications including semiconductor manufacturing,
chemical processing, waste and water treatment processing and pharmaceutical
manufacturing, as well as for use in mining, aquarium and other industries.
Manufactured products include valve actuators and controls, specialized valve
assemblies, double containment piping systems, thermoplastic flow meter devices
and filtration equipment. Distributed products consist principally of
thermoplastic valves, pipe and fittings which are purchased from two major
foreign suppliers under long term supply agreements. The Company also realizes
revenue for the rental and sale to contractors and end user customers of
specialized welding equipment that is used in connection with the installation
of the Company's piping systems.

The Company distributes its products through an extensive network of domestic
and foreign distributors which are supported by Company sales, marketing and
engineering personnel. Substantially all of the Company's purchases of valves
are made from its Japanese supplier and are transacted in Japanese yen. As a
result, the Company is exposed to fluctuations in foreign currency exchange
rates. The Company may use hedging procedures including foreign exchange forward
contracts and currency options in managing the fluctuations in foreign currency
exchange rates. The Company also purchases pipe and fittings from an Austrian
supplier. Since August 1995, purchases from the Company's Austrian supplier have
been denominated in United States dollars.

The Company completed its initial public offering on May 15, 1996.


Results of Operations

The following table sets forth, for the periods indicated, the Company's net
sales as well as certain income and expense items, expressed as a percentage of
sales:

<TABLE>
<CAPTION>

                                                            Year Ended December 31,
                                                            -----------------------
                                                          1995          1996         1997
                                                          ----          ----         ----
<S>                                                      <C>           <C>          <C>   
Net sales                                                100.0%        100.0%       100.0%
Cost of goods sold                                        65.8          63.3         62.8
                                                        ------        ------       -------
     Gross Profit                                         34.2          36.7         37.2
Research and development expenses                            -             -          0.5
Selling, general and administrative expenses              24.8          25.7         28.1(A)
                                                        ------         -----        -----
     Income from operations                                9.4          11.0          8.6
Interest expense, net                                      2.0           0.5          0.5
                                                        -------       -------       -----
Income before provision for income taxes                   7.4          10.5          8.1
Provision for income taxes                                 2.9           4.1          3.4
                                                        -------       -------       -----
      Net income                                           4.5           6.4          4.7(A)
</TABLE>

(A)    Amounts include approximately $400, or 1.0% of sales, of legal expenses
       incurred by the Company related to a patent infringement lawsuit whereby
       the Company is enforcing its US patent rights against a major competitor.
       The final decision from the December 8, 1997 bench trial has yet to be
       rendered. The above mentioned expenses reduced net income and both basic
       and diluted earnings per share by approximately $226, (.60% of sales), or
       $.07, respectively, for the year ended December 31, 1997.

                                       16
<PAGE>


Years Ended December 31, 1997 and December 31, 1996

Net sales for the year ended December 31, 1997 were $37.9 million, relatively
unchanged from 1996. The Company experienced increases in sales from its
distributed valve and manufactured actuation products primarily as a result of
increased demand from and direct sales efforts to the chemical processing and
mining industries. Sales of distributed valves benefited from the favorable
movement of the US dollar against the Japanese yen. As a result of the favorable
movement of the US dollar, the Company has been able to be competitive with its
pricing of distributed valves, achieving growth in certain of its key vertical
markets and expanding into new markets as well. Sales for 1997 also benefited
from the May 1997 acquisition of the flow meter division of Universal Flow
Monitors, Inc. The Company integrated the new manufacturing process into its
Malden, Massachusetts facility according to plan and was able to achieve
positive results from its operation. Sales in 1997 were adversely affected by
decreased demand for the Company's high purity and manufactured dual containment
piping systems and the related decline in the sale and rental of welding
equipment, for which sales decreased significantly in 1997 as compared to 1996.
This decrease is directly attributable to the deferral of and the decrease in
the construction of new plants within the semiconductor industry, the Company's
largest vertical market in 1996. Sales to the semiconductor industry represented
approximately 31% of the Company's total sales in 1996 as compared to
approximately 16% in 1997.

Gross profit as a percentage of sales (gross margin) for the year ended December
31, 1997 improved 0.5 percentage points, or 1.4%, to 37.2% from 36.7% in 1996,
due to the overall increase in the Company's sales of manufactured products
coupled with the lower average product costs for certain of the Company's
distributed products, associated with the continued favorable movement of the US
dollar against the Japanese yen and the related impact due to the Company's LIFO
method of costing inventory. Sales generated from the newly acquired flow meter
division coupled with an increase in sales of actuation products and filtration
equipment offset the decline in sales of the Company's dual containment piping
systems, leading to the overall increase in sales of manufactured product and
contributing to the increase in gross margin. Although the Company instituted a
price increase on certain of its distributed products in 1997, aggressive
pricing to promote the sales of these items offset the gross margin effects of
the price increase. The 1997 gross profit included foreign currency gains
aggregating $345,000.

Selling, general and administrative expenses were $10.6 million for the year
ended December 31, 1997 as compared to $9.8 million in 1996. Selling, general
and administrative expenses as a percentage of net sales were 28.1% in 1997 as
compared to 25.7% in 1996. Included in selling, general and administrative
expenses for 1997 are approximately $400,000, or 1.0% of sales, of legal
expenses incurred by the Company related to a patent infringement lawsuit
whereby the Company is enforcing its US patent rights against a major
competitor. The final decision from the December 8, 1997 bench trial has yet to
be rendered. The above mentioned expenses reduced net income and both basic and
diluted earnings per share by approximately $226,000 or $.07, respectively, for
the year ended December 31, 1997. Additionally, selling, general and
administrative expenses increased in 1997 over 1996 due to increased
amortization expense as a result of the Company's May, 1997 acquisition, higher
operating costs to support the approximate 38,000 square foot expansion in
office, plant and warehouse capacity, increased payroll in support of
anticipated 1997 sales volumes and an increase in promotion and advertising
expenses to facilitate sales opportunities in new and existing markets.

In connection with the Company's May, 1997 acquisition of the flow meter
division of Universal Flow Monitors, Inc., the Company established a dedicated
Research and Development department. This department is initially focusing its
efforts on finalizing the development of a full range of sizes for ultrasonic
flow meter, developing continued product and purity enhancements of the vortex
shedding product line and working to develop digital communications between the
Company's flow meters and actuators with the customers computer systems.

Interest expense decreased $39,000, to $300,000, for the year ended December 31,
1997 due to lower average interest rates on borrowings on the Company's line of
credit in 1997 as compared to 1996 and due to decreases in interest on the
Company's Industrial Revenue Bonds and capital lease obligations.

Years Ended December 31, 1996 and December 31, 1995

Net sales for the year ended December 31, 1996 increased by $2.9 million or 8.3%
to $37.9 million from $35.0 million in 1995. The increase was attributed to
higher sales volume of distributed product of $3.4 million and increased
equipment revenues of $500,000 which more than offset decreased sales of
manufactured product of $1.0 million. Sales of distributed product benefited
from strong demand in domestic markets coupled with the Company's ability to be
price competitive due to lower product costs associated with the strengthening
of the United States dollar. The lower product costs enabled the

                                       17
<PAGE>

Company to further penetrate certain markets, strengthening market share, while
deferring general price increases in 1996. After a significant increase in
manufactured product sales in 1995, the Company experienced a decrease in such
sales during 1996. The decrease was attributable to decreased export sales of
manufactured product coupled with a decrease in major piping projects in 1996 as
compared to 1995. While recent market conditions and currency trends have
favored the distributed product sector, the Company is repositioning selected
manufactured products, in key domestic and export markets and is aggressively
pursuing other short and long term marketing strategies to resume growth of its
manufactured product line.

Export sales were 5%, 4% and 7% of net sales for the years ended December 31,
1995, 1996 and 1997, respectively. Sales to the Company's major customer
represented 26%, 23% and 32% of net sales during the same three year period.

Gross profit as a percentage of sales (gross margin) for the year ended December
31, 1996 improved 2.5 percentage points to 36.7% from 34.2% in 1995. The
principal factor impacting gross margin was the Company's lower product costs
associated with distributed product as a result of the favorable movement of the
US dollar against the Japanese yen. Reversing a five year trend, the US dollar
strengthened 15.6% on average against the Japanese yen during 1996. The stronger
US dollar favorably impacted cost of goods sold during 1996 due to the Company's
LIFO method of costing inventory. Goods purchased from Japan represented
approximately 47% of all Company purchases during the year and the lower product
costs enabled the Company to increase gross profit without a general increase to
its selling prices. Although gross margin on manufactured product sales remained
strong in 1996, a less favorable sales mix adversely impacted 1996 gross margin
as compared to 1995 as manufactured product comprised a smaller percentage of
total 1996 sales. The 1996 gross profit included foreign currency gains
aggregating $378,000.

Selling, general and administrative expenses were $9.8 million for the year
ended December 31, 1996 as compared to $8.7 million in 1995. Selling, general
and administrative expenses as a percentage of net sales were 25.7% in 1996 as
compared to 24.8% in 1995. The higher expense level was due to non-capitalizable
costs related to the purchase and continued renovation of an adjacent facility
and the construction of a warehouse connecting the Company's two facilities,
which permitted an over 38,000 square foot expansion in office, plant and
warehouse capacity. General and administrative costs associated with
transitioning a privately held company to a publicly traded company and
additional selling costs as a result of increased advertising, marketing and
consulting, also contributed to the increase in 1996 as compared to a year ago.

Interest expense for the year ended December 31, 1996, consisting principally of
interest on its Industrial Revenue Bonds and capital lease obligations, was
$339,000 as compared to $714,000 in 1995. The decrease is due to the Company
paying down the entire balance of its bank line of credit following the initial
public offering in May 1996. Lower average borrowings and lower interest rates
prior to the initial public offering also contributed to lower expense in 1996
as compared to 1995

The provision for income taxes was $1.3 million for the year ended December 31,
1997, as compared to $1.5 million in 1996 and $1.0 million in 1995. The
Company's effective income tax rate was 42.0% in 1997 versus 38.7% in 1996 and
1995.

Liquidity and Capital Resources

The Company has financed its operations through cash generated from operations,
the sale of equity securities, borrowings under lines of credit and Industrial
Revenue Bond financings. In addition, the Company has benefited from favorable
payment terms under a $6 million open account arrangement for the purchase of
Japanese valve products, as to which the majority of its purchases are at
payment terms of 180 days after the bill of lading date.

In January, 1997, the Company and its bank executed a loan agreement providing
for up to $10 million of borrowing. The loan agreement consists of two
facilities including a $5 million committed revolving credit line (the Committed
Line) and a $5 million discretionary revolving credit line (the Discretionary
Line). Interest under both facilities is payable monthly and is based on either
LIBOR plus 1.65% or Prime, as elected by the Company at each borrowing date. The
Committed Line includes a 1/4% facility fee on unused borrowings and requires
principal repayment not later than September 30, 1998. Borrowings under the
Discretionary Line are payable upon demand. The Discretionary Line expired
September 30, 1997. As of December 31, 1997, the Company had $1,000,000
outstanding under the Committed Line.

In January, 1998, the Company and its bank agreed on a term sheet for an $11
million secured, committed revolving line of credit, and are currently in the
process of finalizing the loan agreement. The lines of credit are secured by
substantially all

                                       18
<PAGE>

assets of the Company and the $11 million line extends through January 31, 2000.
Interest of this credit line is based on the prime rate or LIBOR plus 1.55% to
2.40%. There is an unused line fee ranging from .15% to .25%. The credit line is
for working capital and merger and acquisition purposes.

On May 1, 1997, the Company acquired the plastic flow meter division and related
assets of Universal Flow Monitors, Inc. and The Rosaen Company including, two
product lines with related inventory, equipment, patents and patent application
rights. The total purchase price of $3.0 million was paid with cash and through
borrowings on the Company's revolving credit line. The Company accounted for the
acquisition as a purchase.

In July, 1997, the Company established a wholly-owned subsidiary, Quail Piping
Products, Inc. to manufacture and market corrugated polyethylene piping systems
for use in water, sewer and drain applications. The facility and manufacturing
equipment, which are located in Magnolia, Arkansas, are being financed by
Arkansas Industrial Revenue Bonds totaling $4.3 million. As of December 31,
1997, the Company had expended approximately $1.5 in connection with the
purchase of the facility and equipment for use in Quail's operations. Quail
commenced production according to schedule in March 1998. Payments on the bonds
begin in January 1998, with equal monthly principal payments and extend until
December 2007. The bonds bear interest at 5.89%.

At December 31, 1997 cash and cash equivalents were $916,000.

The Company generated $2.1 million of cash flow from operations during the year
ended December 31, 1997 as compared to $3.5 million for the same period of 1996.
This decrease is primarily due to a lower net income level coupled with the
operating cash flow impact associated with changes in asset and liability
accounts from December 31, 1997 to December 31, 1996 as compared to December 31,
1996 to December 31, 1995. Receivables at December 31, 1997 decreased $1.1
million, or 20%, from December 31, 1996 due mainly to improved collections
processes with certain of the Company's larger customers.. Inventories were $9.3
million at December 31, 1997, up $663,000 from 1996, reflecting the Company's
increased inventory investment for newer product lines and shortfall from
anticipated sales levels. Accounts payable and accrued expenses were $5.8
million at December 31, 1997 as compared to $7.0 million at December 31, 1996,
reflective in the timing of payments to the Company's principal supplier of
inventory and the reduction of certain of the Company's performance related
accrued expenses.

The Company's industrial revenue bonds funded through the Massachusetts
Industrial Finance Agency (MIFA) are secured by a letter of credit issued by a
bank which is secured by substantially all the assets of the Company. The bonds
consist of six separate series each with differing interest rates and
maturities. Interest rates range from 4.2% to 5.1% and are subject to adjustment
in 1999, 2004 and 2009. The maximum principal payable in any one year is
$320,000, payable in 2014.

The Company believes that its current funds, together with cash generated by
operations will be sufficient to fund the Company's operations, debt service and
capital requirements at least through the next 12 months.

Year 2000 Issues. The Year 2000 issue exists because many computer systems and
applications currently use two-digit date fields to designate a year. As the
century date change occurs, many date sensitive systems will recognize the year
2000 as 1900, or not at all. This inability to recognize or properly treat the
Year 2000 may cause systems to process critical financial and operational
information incorrectly. The Company utilizes software and related technologies
throughout its business that will be affected by the date change in the Year
2000. An internal study is currently under way to determine the full scope and
related costs to insure that the Company's systems continue to meet its internal
needs and those of its customers. The Company began incurring expenses in 1997
to resolve this issue. All expenditures will be expensed as incurred and they
are not expected to have a significant impact on the Company's ongoing results
of operations.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

                                       19
<PAGE>


Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this item is submitted as a separate section of this Report on
page .

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

         Not applicable.

                                    PART III

Information required by Part III (Items 10 through 13) is incorporated by
reference to the Company's definitive proxy statement, for its annual meeting of
stockholders to be held on May 27, 1998, which will be filed with the Securities
and Exchange Commission pursuant to Regulation 14A under the Securities Exchange
Act of 1934, on or before April 30, 1998. If for any reason such a statement is
not filed within such a period, this Report will be appropriately amended.

                                       20
<PAGE>


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

        (a) (1) and (2): The response to this portion of Item 14 is submitted as
            a separate section of this report on page .

        (a) (3) Exhibits:

Exhibit
Number          Description
------          -----------

3.1*            Restated Articles of Organization of the Registrant.

3.2*            Bylaws of the Registrant, as amended to date.

4.1*            1996 Equity Incentive Plan.

4.2*            Independent (Non-Employee and Non-Five Percent Stockholder)
                Directors' Stock Option Plan.

4.3**           Employee Stock Purchase Plan

4.4.1*          Loan Agreement between Registrant and Massachusetts Industrial
                Finance Agency dated as of March 1, 1994 pertaining to
                $4,150,000 Massachusetts Industrial Finance Agency Industrial
                Revenue Bonds, Asahi/America Issue, Series 1994.

4.4.2*          Bond Purchase Agreement by and among Tucker Anthony Incorporated
                and Massachusetts Industrial Finance Agency and the Registrant.

4.4.3*          Reimbursement Agreement between the Registrant and Citizens
                Trust Company dated as of March 1, 1994.

9.1*            Asahi/America, Inc. Voting Trust Agreement dated January 11,
                1993.

10.1*           Distribution Agreement dated April 1, 1993, among Asahi Yukizai
                Kogyo Co., Ltd., Nichimen Corporation, Nichimen America
                Inc. and Registrant.

10.1.1***       Equipment Purchase Agreement, dated August 13, 1997 by and
                between Unicor Plastic Machinery, Inc. and Asahi/America, Inc.

10.2            Employment Agreement (Restated) dated as of January 1, 1996 by
                and between Registrant and Leslie B. Lewis.

10.2.1*         Life insurance policy covering Leslie B. Lewis.

10.2.2*         Employment Agreement dated as of April 22, 1996 by and between
                Registrant and Kozo Terada.

10.3*           Master Equipment Lease No. 9000118 between Registrant (Lessee)
                and Citizens Leasing Corporation (Lessor) dated September 23,
                1993.

10.3.1*         First Amendment to Lease Schedule by and between Citizens
                Leasing Corporation and Registrant dated March 11, 1994.

                                       21
<PAGE>


10.4.1**        Credit Agreement between Registrant and Citizens Bank of
                Massachusetts dated as of January 23, 1997.

10.4.2**        Revolving Credit Note in favor of Citizens Bank of Massachusetts
                dated as of January 23, 1997.

10.4.3**        Discretionary Credit Line Note in favor of Citizens Bank of
                Massachusetts dated as of January 23, 1997.

10.5*           Restated Contract dated as of January 1, 1995 between Registrant
                and Agru-Alois Gruber GmbH.

10.6*           Agreement entered into as of July 26, 1995 by and between
                Registrant and Watts Industries, Inc.

10.8*           Consulting Agreement dated January 8, 1995 by and between
                Registrant and Bloomberg Associates, Inc.

10.9*           Purchase and Sale Agreement dated as of February 2, 1996 by and
                between Manganaro Realty Associates and Registrant.

10.10*          Purchase and Sale Agreement dated as of March 11, 1996 by and
                between Asahi/America Co., Inc. and Creative Filtration Systems,
                Inc.

10.11           Letter Agreement regarding security interest dated December 30,
                1997 by the Registrant and Asahi Engineered Products, Inc. in
                favor of Citizens Bank of Massachusetts, Inc.

10.12           Loan Agreement (Equipment) among GE Capital Public Finance,
                Inc., Lender, Arkansas Development Finance Authority, Issuer,
                and Quail Piping Products, Inc., Borrower, dated as of November
                1, 1997.

10.13           Loan Agreement (Real Estate) among GE Capital Public Finance,
                Inc., Lender, Arkansas Development Finance Authority, Issuer,
                and Quail Piping Products, Inc., Borrower, dated as of November
                1, 1997.

10.14           Guaranty and Negative Pledge Agreement in favor of Registrant
                and GE Capital Public Finance, Inc.

21.1            Subsidiaries of the Registrant

23              Consent of Arthur Andersen LLP

27.1            Financial Data Schedule

27.2            Financial Data Schedule (Restated)
--------------------------------------------------

*   Incorporated by reference to the Registrant's Registration Statement on Form
    S-1 as amended (File No. 333-2314)

**  Incorporated by reference to the Registrant's 1996 Form 10K (File No.
    0-28322)

*** Incorporated by reference to the Registrant's September 30, 1997 Form 10Q
    (File No. 0-28322)



         (b)  Reports on Form 8-K

              No reports on Form 8-K were filed by the Company during the
              last quarter of the period covered by this report.

                                       22
<PAGE>


                                   Signatures


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 24th day of
March 1998.


                                                     ASAHI/AMERICA, INC.



                                                     By: /s/ Leslie B. Lewis
                                                         -------------------
                                                         Leslie B. Lewis
                                                          Principal Executive 
                                                           Officer and
                                                            President



     Pursuant to the requirements of Sections 13 or 15(d) of the Securities and
Exchange Act of 1934, this report has been signed below by the following persons
in their capacities and on the dates indicated.


/s/ Leslie B. Lewis             Principal Executive Officer,     March 24, 1998
-------------------             President and
Leslie B. Lewis                 Director


/s/ Nannette S. Lewis           Director                         March 24, 1998
---------------------
Nannette S. Lewis


/s/ Masashi Uesugi              Director                         March 24, 1998
------------------
Masashi Uesugi


                                Director                                       
------------------
Masahiro Inoue


/s/ Kozo Terada                 Vice President,                  March 24, 1998
---------------                 Treasurer and
Kozo Terada                     Principal Financial
                                and Accounting Officer


/s/ Samuel J. Gerson            Director                         March 24, 1998
--------------------
Samuel J. Gerson


/s/ Jeffrey C. Bloomberg        Director                         March 24, 1998
------------------------
Jeffrey C. Bloomberg

                                       23
<PAGE>


                       ASAHI/AMERICA, INC. AND SUBSIDIARY

                                    FORM 10-K
                         ITEMS 8 AND 14 (a) (1) AND (2)


                   INDEX OF FINANCIAL STATEMENTS AND SCHEDULES

The following financial statements of the registrant and its subsidiary required
to be included in Items 8 and 14 (a) (1) are listed below:

                                                                            Page
Report of Independent Public Accountants                                     F-2
Consolidated balance sheets as of December 31, 1996 and 1997                 F-3
For the years ended December 31, 1995, 1996 and 1997:
         Consolidated statements of operations                               F-4
         Consolidated statements of stockholders' equity                     F-5
         Consolidated statements of cash flows                               F-6
Notes to Consolidated financial statements                                   F-7

The following financial statement schedule of the Registrant and its subsidiary
is included in Item 14(a) (2):

     Consolidated financial statement schedules for the years ended December 31,
1995, 1996 and 1997:

     Not applicable.

                                       24
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                         PAGE

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                                 F-2

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1996 AND 1997             F-3

CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED
DECEMBER 31, 1995, 1996 AND 1997                                         F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997                     F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 1995, 1996 AND 1997                                         F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                               F-7

                                      F-1
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Asahi/America, Inc.:

We have audited the accompanying consolidated balance sheets of Asahi/America,
Inc. (a Massachusetts corporation) and subsidiaries as of December 31, 1996 and
1997, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements 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 Asahi/America, Inc.
and subsidiaries as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.


                                                    /s/ ARTHUR ANDERSEN LLP


Boston, Massachusetts
February 20, 1998

                                      F-2
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

             CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1997

<TABLE>
<CAPTION>

                                                        ASSETS
                                                                                            1996              1997
<S>                                                                                    <C>              <C>
CURRENT ASSETS:
   Cash and cash equivalents                                                           $   3,027,824    $     915,601
   Accounts receivable, less allowance for doubtful accounts of approximately              5,291,324        4,212,867
     $283,000 in 1996 and $263,000 in 1997
   Inventories                                                                             8,672,969        9,335,982
   Prepaid expenses and other current assets                                                 230,366          611,389
                                                                                     ---------------  ---------------

         Total current assets                                                             17,222,483       15,075,839
                                                                                     ---------------  ---------------

PROPERTY AND EQUIPMENT, NET                                                                9,868,483       11,754,268
                                                                                     ---------------  ---------------

OTHER ASSETS:
   Goodwill, net of accumulated amortization of $1,379,647 in 1996 and $1,653,868            778,281        2,470,335
     in 1997
   Other, net                                                                                574,041        2,748,438
                                                                                     ---------------  ---------------

         Total other assets                                                                1,352,322        5,218,773
                                                                                     ---------------  ---------------

                                                                                       $  28,443,288    $  32,048,880
                                                                                       =============    =============

                                          LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Demand note payable to a bank                                                       $           -    $   1,000,000
   Current portion of MIFA obligations                                                       135,000          145,000
   Current portion of GECPF obligations                                                            -          430,000
   Current portion of capital lease obligations                                              107,860          149,326
   Accounts payable                                                                        5,390,198        4,857,107
   Accrued expenses                                                                        1,613,539          991,786
   Deferred income taxes                                                                     933,000          734,000
                                                                                     ---------------  ---------------

         Total current liabilities                                                         8,179,597        8,307,219
                                                                                     ---------------  ---------------

MIFA OBLIGATIONS, LESS CURRENT PORTION                                                     3,760,000        3,615,000
                                                                                     ---------------  ---------------

GECPF OBLIGATIONS, LESS CURRENT PORTION                                                            -        1,047,292
                                                                                     ---------------  ---------------

CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION                                              206,223          301,873
                                                                                     ---------------  ---------------

DEFERRED INCOME TAXES                                                                         93,000          177,000
                                                                                     ---------------  ---------------

COMMITMENTS (Notes 8, 9, 12, 13 and 17)

STOCKHOLDERS' EQUITY:
   Preferred stock, $10.00 par value-
     Authorized--1,000,000 shares
     Issued and outstanding--none                                                                  -                -
   Common stock, no par value-
     Authorized--10,000,000 shares
     Issued and outstanding--3,340,000 and 3,358,669 shares at December 31, 1996          13,504,154       13,603,333
     and 1997, respectively
   Additional paid-in capital                                                                134,130          579,130
   Retained earnings                                                                       2,863,684        4,645,533
                                                                                     ---------------  ---------------
                                                                                          16,501,968       18,827,996

   Less--Note receivable from stockholder/officer                                            297,500          227,500
                                                                                     ---------------  ---------------

         Total stockholders' equity                                                       16,204,468       18,600,496
                                                                                     ---------------  ---------------

                                                                                       $  28,443,288    $  32,048,880
                                                                                       =============    =============
</TABLE>

   The accompanying notes are an integral part of these consolidated financial
                                   statements.

                                      F-3

<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997


<TABLE>
<CAPTION>
                                                                         1995             1996              1997

<S>                                                                <C>               <C>              <C>            
NET SALES                                                          $    34,997,567   $    37,894,238  $    37,934,003

COST OF GOODS SOLD                                                      23,018,043        23,968,230       23,827,618
                                                                   ---------------   ---------------  ---------------

         Gross profit                                                   11,979,524        13,926,008       14,106,385

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (NOTE 17)                   8,681,252         9,751,265       10,647,716

RESEARCH AND DEVELOPMENT                                                         -                 -          185,830
                                                                   ---------------   ---------------  ---------------

         Income from operations                                          3,298,272         4,174,743        3,272,839

INTEREST INCOME                                                              1,140           143,606           98,705

INTEREST EXPENSE                                                          (714,346)         (339,197)        (299,695)
                                                                   ---------------   ---------------  --------------- 

         Income before provision for income taxes                        2,585,066         3,979,152        3,071,849

PROVISION FOR INCOME TAXES                                               1,000,000         1,541,000        1,290,000
                                                                   ---------------   ---------------  ---------------

         Net income                                                $     1,585,066   $     2,438,152  $     1,781,849
                                                                   ===============   ===============  ===============

BASIC EARNINGS PER SHARE (Note 2(i))                                    $  .68            $  .82           $  .53
                                                                        ======            ======           ======

DILUTED EARNINGS PER SHARE (Note 2(i))                                  $  .68            $  .82           $  .53
                                                                        ======            ======           ======

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                          2,340,000         2,972,877        3,349,335
                                                                   =============     =============    =============

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, ASSUMING DILUTION       2,340,000        2,987,932         3,349,335
                                                                   =============        =========     =============
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      F-4
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

<TABLE>
<CAPTION>

                                                                                  Common Stock               Additional    
                                                                                                                           
                                                                                                                           
                                                                       Number of Shares    No Par Value    Paid-in Capital 
                                                                                                                           
<S>                                                                         <C>          <C>               <C>             
BALANCE, DECEMBER 31, 1994                                                  2,340,000    $    7,338,283    $            -  

   Compensation expense related to stockholder's stock repurchase                   -                 -            20,163  
   rights

   Net income                                                                       -                 -                 -  
                                                                       --------------    --------------    --------------  

BALANCE, DECEMBER 31, 1995                                                  2,340,000         7,338,283            20,163  

   Initial public offering of common stock, net of issuance costs of        1,000,000         6,165,871                 -  
   $1,334,129

   Proceeds from note receivable from stockholder/officer                           -                 -                 -  

   Exercise of stockholder's stock repurchase rights                                -                 -           113,967  

   Net income                                                                       -                 -                 -  
                                                                       --------------    --------------    --------------  

BALANCE, DECEMBER 31, 1996                                                  3,340,000        13,504,154           134,130  

   Issuance of stock under Employee Stock Purchase Plan                        18,669            99,179                 -  

   Proceeds from note receivable from stockholder/officer                           -                 -                 -  

   Proceeds from contingent shares (Note 12(d))                                     -                 -           445,000  

   Net income                                                                       -                 -                 -  
                                                                       --------------    --------------    --------------  

BALANCE, DECEMBER 31, 1997                                                  3,358,669    $   13,603,333    $      579,130  
                                                                       ==============    ==============    ==============  



                                                                            Retained           Note             Total
                                                                                            Receivable
                                                                                               from
                                                                            Earnings        Stockholder/     Stockholders'
                                                                           (Deficit)          Officer           Equity

BALANCE, DECEMBER 31, 1994                                              $   (1,159,534)   $     (350,000)  $    5,828,749

   Compensation expense related to stockholder's stock repurchase                    -                 -           20,163
   rights

   Net income                                                                1,585,066                 -        1,585,066
                                                                        --------------    --------------   --------------

BALANCE, DECEMBER 31, 1995                                                     425,532          (350,000)       7,433,978

   Initial public offering of common stock, net of issuance costs of                 -                 -        6,165,871
   $1,334,129

   Proceeds from note receivable from stockholder/officer                            -            52,500           52,500

   Exercise of stockholder's stock repurchase rights                                 -                 -          113,967

   Net income                                                                2,438,152                 -        2,438,152
                                                                        --------------    --------------   --------------

BALANCE, DECEMBER 31, 1996                                                   2,863,684          (297,500)      16,204,468

   Issuance of stock under Employee Stock Purchase Plan                              -                 -           99,179

   Proceeds from note receivable from stockholder/officer                            -            70,000           70,000

   Proceeds from contingent shares (Note 12(d))                                      -                 -          445,000

   Net income                                                                1,781,849                 -        1,781,849
                                                                        --------------    --------------   --------------

BALANCE, DECEMBER 31, 1997                                              $    4,645,533    $     (227,500)  $   18,600,496
                                                                        ==============    ==============   ==============
</TABLE>

   The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-5
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997


<TABLE>
<CAPTION>
                                                                           1995             1996              1997
<S>                                                                <C>               <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                      $     1,585,066   $     2,438,152  $     1,781,849
   Adjustments to reconcile net income to net cash provided by
   operating activities-
     Depreciation and amortization                                       1,115,964         1,284,827        1,461,015
     Compensation expense related to stockholder's stock                    20,163                 -                -
       repurchase rights
     Provision (benefit) for deferred (prepaid) income taxes               524,000          (152,000)        (115,000)
     Changes in assets and liabilities, net of acquisition-
       Accounts receivable                                                 440,121          (845,290)       1,078,457
       Inventories                                                        (570,274)         (466,272)        (507,748)
       Prepaid expenses and other current assets                          (372,421)          447,708         (381,023)
       Accounts payable                                                    761,631           180,921         (533,091)
       Accrued expenses                                                   (140,014)          614,627         (621,753)
                                                                   ---------------   ---------------  ---------------

              Net cash provided by operating activities                  3,364,236         3,502,673        2,162,706
                                                                   ---------------   ---------------  ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                                   (1,058,422)       (3,388,476)      (2,472,977)
   Acquisition of certain assets of Universal Flow Monitors, Inc.                -                 -       (3,000,000)
   (Increase) decrease in other assets                                    (224,955)           20,927       (1,187,013)
                                                                   ---------------   ---------------  ---------------

              Net cash used in investing activities                     (1,283,377)       (3,367,549)      (6,659,990)
                                                                   ---------------   ---------------  ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net (payments) proceeds on demand note payable to a bank             (1,897,856)       (3,377,000)       1,000,000
   Payments on capital lease obligations                                   (60,844)         (104,524)        (126,410)
   Proceeds from issuance of GECPF obligations                                   -                 -        1,477,292
   Payments on MIFA obligations                                            (82,492)          (68,336)        (135,000)
   Proceeds from initial public offering, net of issuance costs                  -         6,165,871                -
   Proceeds from note receivable from stockholder/officer                        -            52,500           70,000
   Proceeds from stock issued under ESPP                                         -                 -           99,179
                                                                   ---------------   ---------------  ---------------

              Net cash (used in) provided by financing activities       (2,041,192)        2,668,511        2,385,061
                                                                   ---------------   ---------------  ---------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                        39,667         2,803,635       (2,112,223)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                               184,522           224,189        3,027,824
                                                                   ---------------   ---------------  ---------------

CASH AND CASH EQUIVALENTS, END OF YEAR                             $       224,189   $     3,027,824  $       915,601
                                                                   ===============   ===============  ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid during the year for-
     Interest                                                      $       713,207   $       290,363  $       230,278
                                                                   ===============   ===============  ===============
     Income taxes                                                  $     1,032,651   $     1,106,196  $     1,731,351
                                                                   ===============   ===============  ===============

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
   Acquisition of equipment under capital lease obligations        $       434,340   $        13,063  $       263,526
                                                                   ===============   ===============  ===============
   Exercise of stockholder's stock repurchase right                $             -   $       113,967  $             -
                                                                   ===============   ===============  ===============
   Purchase of certain assets with contingent restricted stock     $             -   $             -  $       445,000
                                                                   ===============   ===============  ===============
</TABLE>


   The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-6
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997




(1)    ORGANIZATION

       (a)    Historical Background

              Asahi/America, Inc. (the Company) was established on August 18,
              1977 as a Massachusetts corporation and is involved in the
              manufacturing and distribution of thermoplastic valves, actuators
              and controls, piping systems, flow meters, filtration systems and
              related components for environmentally sensitive and industrial
              applications. These include chemical processing, semiconductor and
              pharmaceutical manufacturing, wastewater treatment, aquarium and
              mining. The Company has exclusive distribution agreements with two
              international manufacturers.

       (b)    Quail Piping Products, Inc.

              In July 1997, the Company established a wholly owned subsidiary,
              Quail Piping Products, Inc. (Quail), to manufacture and market
              polyethylene piping systems for use in water, sewer and drain
              applications. The facility and manufacturing equipment, which is
              under construction at December 31, 1997 and located in Magnolia,
              Arkansas, are being financed principally by Arkansas State
              Industrial Revenue Bonds through GE Capital Public Finance, Inc.
              (GECPF). Production of the piping systems is scheduled to begin in
              March 1998 (see Note 10(c) and Note 12(d)). The Company is
              capitalizing as start-up costs, the costs incurred related to
              commencing operations of Quail until manufacturing begins. These
              costs are included in other assets and are to be amortized over 5
              years.

(2)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       The accompanying consolidated financial statements reflect the
       application of certain accounting policies as described below and
       elsewhere in the notes to consolidated financial statements. The
       preparation of these consolidated financial statements in conformity with
       generally accepted accounting principles requires management to make
       estimates and assumptions that affect the reported amounts of assets and
       liabilities and disclosure of contingent assets and liabilities at the
       date of the financial statements and the reported amounts of revenues and
       expenses during the reporting period. Actual results could differ from
       those estimates.

       (a)    Principles of Consolidation

              The accompanying consolidated financial statements include the
              accounts of the Company and its wholly owned subsidiaries, Asahi
              Engineered Products, Inc. and Quail Piping Products, Inc. All
              significant intercompany balances and transactions have been
              eliminated in consolidation.

                                      F-7
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)


       (b)    Revenue Recognition

              The Company recognizes revenue on product sales at the time the
              products are shipped. Rental revenues, which are less than 10% of
              total revenues for all periods presented, are recognized over the
              related rental period.

       (c)    Cash Equivalents

              The Company considers all highly liquid investments with a
              maturity of three months or less to be cash equivalents. Cash
              equivalents at December 31, 1997 consist mainly of treasury notes.

       (d)    Inventories

              The Company accounts for inventories using the lower of last-in,
              first-out (LIFO) cost or market value.

       (e)    Depreciation

              The Company provides for depreciation using the straight-line
              method and charges to operations amounts estimated to allocate the
              cost of the assets over their estimated useful lives as follows:

                  Asset Classification              Estimated
                                                   Useful Life

              Machinery and equipment                  5-7 years
              Molds and dies                             7 years
              Furniture and fixtures                     7 years
              Building and improvements             7.5-40 years

       (f)    Goodwill

              Goodwill was recorded as a result of a change in ownership control
              in 1989, from the acquisition of Poly-Flowlines Company in 1994
              and from the acquisition of the vortex flow meter division of
              Universal Flow Monitors, Inc. in 1997 (see Note 16). Goodwill for
              Poly-Flowlines and the change in ownership is being amortized on a
              straight-line basis over 10 years. Goodwill related to the vortex
              flow meter acquisition is being amortized on a straight-line basis
              over 20 years.

                                      F-8
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)

       (g)    Other Assets

              Other assets primarily consist of costs of obtaining patents and
              costs related to internal use software and start-up costs. The
              Company provides for amortization using the straight-line method
              and charges to operations amounts estimated to allocate the cost
              of the assets over their estimated useful lives as follows:

                   Asset Classification        Estimated Useful
                                                     Life

              Software costs                            5 years
              Patents                                5-20 years
              Start-up costs                            5 years

              The Company assesses the realizability of intangible assets
              including goodwill in accordance with Statement of Financial
              Accounting Standards (SFAS) No. 121, Accounting for the Impairment
              of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of.
              SFAS No. 121 requires, among other things, that an entity review
              its long-lived assets and certain related intangibles for
              impairment whenever changes in circumstances indicate that the
              carrying amount of an asset may not be fully recoverable. As a
              result of its review, the Company does not believe that any
              impairment currently exists related to its long-lived assets.

       (h)    Research and Development Center

              The Company charges research and development costs to operations
              as incurred.

       (i)    Earnings per Share

              In March 1997, the Financial Accounting Standards Board (FASB)
              issued SFAS No. 128, Earnings Per Share. This statement
              established standards for computing and presenting earnings per
              share and applies to all entities with publicly traded common
              stock or potential common stock. This statement is effective for
              fiscal years ending after December 15, 1997. This statement has
              been adopted as of December 31, 1997. Accordingly, the prior
              year's earnings per share have been retroactively restated to
              reflect the adoption of SFAS No. 128.

              Basic net income per share and basic pro forma net income per
              share were computed by dividing net income or pro forma net income
              by the weighted average number of common shares outstanding during
              the period. Diluted net income per share and diluted pro forma net
              income per share were computed by dividing net income or pro forma
              net income by diluted weighted

                                      F-9
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)

              average number of common and common equivalent shares outstanding
              during the period. The weighted average number of common
              equivalent shares outstanding has been determined in accordance
              with the treasury-stock method. Common stock equivalents consist
              of common stock issuable on the exercise of outstanding options.

              Basic and diluted earnings per share were calculated as follows:

<TABLE>
<CAPTION>
                                                                1995             1996              1997


              <S>                                         <C>               <C>              <C>
              Basic-
                Net income                                $    1,585,066    $    2,438,152   $    1,781,849
                                                          ==============    ==============   ==============

                Weighted average common shares                 2,340,000         2,972,877        3,349,335
                   outstanding

              Diluted-
                Effect of dilutive securities                          -                                  -
                Stock options                                                       15,055                 
                                                          --------------    --------------   --------------

                Weighted average common shares                 2,340,000         2,987,932        3,349,335
                                                          --------------    --------------   --------------
                   outstanding, assuming dilution

              Basic earnings per share                        $    .68          $    .82         $    .53
                                                              ========          ========         ========

              Diluted earnings per share                      $    .68          $    .82         $    .53
                                                              ========          ========         ========
</TABLE>


              As of December 31, 1995, 1996 and 1997, 0, 334,945 and 313,167
              options, respectively, were outstanding but not included in the
              diluted weighted average common share
              calculation as the effect would have been antidilutive.

       (j)    Concentration of Credit Risk

              SFAS No. 105, Disclosure of Information About Financial Statement
              with Off-Balance-Sheet Risk and Financial Instruments with
              Concentrations of Credit Risk, requires disclosure of any
              significant off-balance-sheet and credit risk concentrations. The
              financial instrument that potentially subjects the Company to
              concentrations of credit risk is accounts receivable. As of
              December 31, 1995, 1996 and 1997, one customer accounted for 25%,
              20% and 36% of total accounts receivable, respectively.

                                      F-10
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)

       (k)    New Accounting Standards

              In June 1997, the FASB issued SFAS No. 130, Reporting
              Comprehensive Income. SFAS No. 130 requires disclosure of all
              components of comprehensive income on an annual and interim basis.
              Comprehensive income is defined as the change in equity of a
              business enterprise during a period from transactions and other
              events and circumstances from nonowner sources. SFAS No. 130 is
              effective for fiscal years beginning after December 15, 1997.

              In July 1997, the FASB issued SFAS No. 131, Disclosures About
              Segments of an Enterprise and Related Information. SFAS No. 131
              requires certain financial and supplementary information to be
              disclosed on an annual and interim basis for each reportable
              segment of an enterprise. SFAS No. 131 is effective for fiscal
              years beginning after December 15, 1997. Unless impracticable,
              companies would be required to restate prior information upon
              adoption.

       (l)    Financial Instruments

              The estimated fair value of the Company's financial instruments,
              which include cash and cash equivalents, accounts receivable and
              debt, approximates their carrying value.

(3)    ALLOWANCE FOR DOUBTFUL ACCOUNTS

       A summary for the allowance for doubtful accounts activity is as follows:


<TABLE>
<CAPTION>

                                               1995             1996              1997

        <S>                               <C>               <C>              <C>          
        Balance, beginning of year        $     310,862     $     244,893    $     283,067

           Amounts charged to expense            38,610            67,382                -

           Amounts written off                 (104,579)          (29,208)         (19,598)
                                         --------------    --------------   --------------

        Balance, end of year              $     244,893     $     283,067    $     263,469
                                          =============     =============    =============
</TABLE>

(4)    INVENTORIES

       Inventories at December 31, 1996 and 1997 consist of the following:

                                                  1996             1997

        Raw materials                      $       606,091   $       514,157
        Finished goods                           8,103,834         8,643,781
        LIFO (reserve) surplus                     (36,956)          178,044
                                           ---------------   ---------------
                                           $     8,672,969   $     9,335,982
                                           ===============   ===============

                                      F-11
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)

       Had the first-in, first-out (FIFO) method of inventory costing been used
       by the Company, inventories at December 31, 1996 and 1997 would have been
       $8,709,925 and $9,157,938, respectively.

(5)    PROPERTY AND EQUIPMENT

       Property and equipment are stated at cost. Interest costs, during the
       construction period, on borrowings used to finance construction of
       facilities are included in the cost of the construction facilities.
       Property and equipment and accumulated depreciation consist of the
       following at December 31, 1996 and 1997:

                                               1996             1997

        Machinery and equipment           $    5,214,979    $    5,816,478
        Molds and dies                           926,199           933,549
        Furniture and fixtures                   451,997           525,887
        Building and improvements              5,339,662         5,654,030
        Land                                   1,220,615         1,255,134
        Construction-in-process                        -         1,831,388
                                          --------------    --------------
                                              13,153,452        16,016,466

        Less--Accumulated depreciation          3,284,969         4,262,198
                                          ---------------   ---------------

                                          $    9,868,483    $   11,754,268
                                          ==============    ==============

(6)    ACCRUED EXPENSES

       Accrued expenses consist of the following at December 31, 1996 and 1997:

                                                      1996             1997

        Accrued payroll/payroll-related         $      821,348     $     416,811
        Other accruals                                 792,191           574,975
                                                --------------    --------------

                                                $    1,613,539     $     991,786
                                                ==============     =============

                                      F-12
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)


(7)    INCOME TAXES

       The Company accounts for income taxes under the liability method in
       accordance with SFAS No. 109, Accounting for Income Taxes. Under SFAS No.
       109, deferred tax assets or liabilities are computed based on the
       differences between the financial statement and income tax bases of
       assets and liabilities as measured by the enacted tax rates. The
       provision for deferred (prepaid) taxes is based on changes in the asset
       or liability from period to period. The provision (benefit) for income
       taxes consists of the following for the years ended December 31, 1995,
       1996 and 1997:



                                      1995             1996          1997
        Current-
           Federal               $   364,000   $   1,436,000  $   1,192,000
           State                     112,000         257,000        213,000
                                 -----------   -------------  -------------

                                     476,000       1,693,000      1,405,000
                                 -----------   -------------  -------------

        Deferred (prepaid)-
           Federal                   495,000        (111,000)       (66,000)
           State                      29,000         (41,000)       (49,000)
                                 -----------   -------------  -------------

                                     524,000        (152,000)      (115,000)
                                 -----------   -------------  -------------

                                 $ 1,000,000   $   1,541,000  $   1,290,000
                                 ===========   =============  =============

       The components of the net deferred tax liability recognized in the
       accompanying consolidated balance sheets with the approximate income tax
       effect of each type of temporary difference are as follows:

                                                      1996             1997

        Temporary differences                    $    462,000    $     490,000
        Net operating loss carryforwards               50,000                -
        Depreciation                                 (143,000)        (177,000)
        LIFO reserve                               (1,295,000)      (1,179,000)
                                                 ------------    -------------
                                                     (926,000)        (866,000)

        Valuation allowance                          (100,000)         (45,000)
                                                 ------------    -------------

                 Net deferred tax liability      $ (1,026,000)   $    (911,000)
                                                 ============    =============

       The Company's policy is to provide for a valuation allowance on deferred
       tax assets for which realization is uncertain. A deferred tax asset is
       recorded when realizability is more likely than not.

                                      F-13
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)

       The provision for income taxes differs from the amount computed by
       applying the statutory federal income tax rate as follows:





                                                      1995      1996      1997
         
       Provision at federal statutory rate            34.0%     34.0%     34.0%
       State income tax, net of federal benefit        5.5       4.2       6.3
       Change in valuation allowance                  (3.5)       -       (1.8)
       Amortization of goodwill                        2.7       1.8       2.1
       Other, net                                       -       (1.3)      1.4
                                                    -------   --------  --------

                Effective tax rate                    38.7%     38.7%     42.0%
                                                     ========  ========  =======

(8)    RELATED PARTY ARRANGEMENTS

       (a)    Distributorship Agreement and Inventory Arrangements

              The Company has a 10-year exclusive distributorship agreement with
              a Japanese value manufacturer, Asahi Yukizai Kogyo Co., LTD.,
              (official English translation, Asahi Organic Chemical Industry
              Company LTD) (AOC) and Nichimen Corporation, a Japanese trading
              company, and Nichimen America, Inc., the Japanese trading
              company's U.S. affiliate (together, Nichimen). Both AOC and
              Nichimen are greater than 10% stockholders of the Company. Under
              the terms of the agreement, the Company is expected to purchase a
              total of $140,000,000 of merchandise over a 10-year period, which
              began January 2, 1990. The agreement provides for annual purchase
              guidelines but does not assess penalties if either the annual
              purchase guidelines or other cumulative totals are not met. The
              Company has made cumulative purchases of approximately $71,447,000
              under this agreement through December 31, 1997. For their
              services, Nichimen is paid by AOC a combined markup of
              approximately 8% of the invoiced price of the Company's purchases
              from AOC.

              The Company purchased approximately $9,971,000, $10,351,000 and
              $9,664,000 of valves from AOC during the years ended December 31,
              1995, 1996 and 1997, respectively. The accompanying consolidated
              balance sheets include accounts payable to Nichimen America, Inc.
              of approximately $3,329,000 and $2,909,000 at December 31, 1996
              and 1997, respectively.

              To facilitate purchases from AOC, the Company has from time to
              time made arrangements with a bank whereby irrevocable letters of
              credit for 180 days are drawn upon shipment. Currently, Nichimen
              America, Inc. allows the Company to purchase on open account and
              to maintain a payable balance of up to $6 million, above which
              letters of credit are required. During 1996, Nichimen America
              charged the Company a fee of approximately $10,000 for this
              arrangement. No such fee was charged in 1997. At December 31, 1996
              and 1997, there were no letters of credit issued by the bank that
              have been drawn under these arrangements.

                                      F-14
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)

       (b)    Related Party Transactions

              The Company sells products to an entity controlled by the chief
              executive officer's father. Sales to this customer were $260,513,
              $306,751 and $312,331 in 1995, 1996 and 1997, respectively.
              Management believes that all transactions were made at terms no
              less favorable than would have been obtained from nonrelated
              parties.

(9)    FOREIGN CURRENCY TRANSACTIONS

       The Company charges foreign currency gains or losses to operations in
       accordance with SFAS No. 52, Foreign Currency Translation. The foreign
       currency gain recorded in cost of goods sold in the accompanying
       consolidated statements of income for the years ended December 31, 1995,
       1996 and 1997 was approximately $391,000, $378,000 and $345,000,
       respectively.

       During 1995, the Company began purchasing products through Nichimen
       America, Inc. denominated in Japanese yen. The Company may enter into
       foreign exchange forward and option contracts to reduce the exposure to
       changes in foreign currencies related to the purchase of inventories.
       Gains and losses on the contracts that are hedges of firm commitments are
       deferred and recognized in the accompanying consolidated statement of
       income in the same period as the related transaction.

       In accordance with SFAS No. 119, Disclosure About Derivative Financial
       Instruments and Fair Value of Financial Instruments, at December 31, 1996
       and 1997, the Company had foreign exchange forward contracts, all having
       maturities of less than one year, to buy Japanese yen in the amount equal
       to $697,824 and $962,106, respectively. The deferred gain related to
       these contracts as of December 31, 1996 and 1997 was $45,852 and $64,793,
       respectively.

(10)   DEBT

       (a)    MIFA Obligations

              In connection with the purchase of its Malden facility, the
              Company issued bonds with the Massachusetts Industrial Finance
              Agency (MIFA) for a total of $4,150,000. The bonds bear interest
              at rates that range from 4.2% to 5.1%. Interest is payable
              semiannually and is subject to adjustment in 1999, 2004 and 2009.
              The bonds are payable in annual installments, which commenced on
              March 1, 1995, of $125,000; the installments increase $5,000 per
              year through 1999. The bonds require payments of $160,000
              (increasing $5,000 to $15,000 each year) to $320,000 per year from
              2000 to 2014. The bonds are secured by an irrevocable letter of
              credit issued by a bank, which expires in March 1999. This letter
              of credit is secured by substantially all assets of the Company
              and does not affect the availability under the Company's revolving
              credit lines (Note 10 (b)). As of December 31, 1997, the Company
              had $3,760,000 outstanding related to the MIFA obligations.

                                      F-15
<PAGE>

                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)


       (b)    Revolving Credit Lines

              In January 1997, the Company and its bank executed a loan
              agreement that provides for a $5,000,000 committed unsecured
              revolving credit line (the Committed Line) and a $5,000,000
              discretionary unsecured revolving credit line (the Discretionary
              Line). Interest on the credit lines is based on the prime rate
              (8.5% at December 31, 1997) or LIBOR plus 1.65%, as elected by the
              Company at each borrowing date. The Company is required to
              maintain certain financial ratios, including, among others,
              minimum working capital and tangible net worth, as defined in the
              agreements. The Discretionary Line expired on September 30, 1997.
              The Committed Line extends through September 30, 1998. As of
              December 31, 1997, the Company had $1,000,000 outstanding under
              the Committed Line.

              In January 1998, the Company and its bank signed a term sheet for
              an $11,000,000 secured, committed revolving line of credit. This
              line of credit is secured by substantially all assets of the
              Company and extends through January 31, 2000. Interest on this
              credit line is based on the prime rate or LIBOR plus 1.55% to
              2.40%. There is an unused fee ranging from .15% to .25%, based on
              borrowing levels. The Company will be required to maintain certain
              financial ratios, including, among others, minimum working capital
              and tangible net worth. The credit line is for working capital and
              merger and acquisition purposes.

       (c)    GECPF Obligations

              In connection with the purchase of the building and manufacturing
              equipment for Quail, in Magnolia, Arkansas, GECPF financed the
              issuance of $4,300,000 of Arkansas State Industrial Revenue Bonds,
              of which $3,600,000 represents bonds related to equipment and
              $700,000 represents bonds related to real estate, building
              improvements and other equipment, (collectively, the Borrowings).
              The Borrowings bear interest at 5.89% with interest beginning on
              January 1, 1998. Payments on the Borrowings are $35,833 per month
              beginning January 1, 1998 and ending December 31, 2007. The
              equipment bonds are secured by the related financed assets and the
              real estate bonds are secured by a self-reducing letter of credit
              equal to the outstanding principal balance plus 90 days interest,
              which reduces the availability under the Company's line of credit.

              As of December 31, 1997, there was $1,477,292 outstanding related
              to the GECPF obligations. The balance of the proceeds remains in
              escrow, to be disbursed as final payments of the equipment and
              real estate.

                                      F-16
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)

       (d)    Capital Leases

              The Company leases certain equipment under capital leases. Future
              minimum lease payments under these leases as of December 31, 1997
              are as follows:

        Year                                                    Capital
                                                                Leases

        1998                                                 $   179,275
        1999                                                     147,413
        2000                                                     132,314
        2001                                                      51,404
                                                            ------------

                 Total minimum lease payments                    510,406

        Less--Amount representing interest                        59,207
                                                            -------------
                 Capital lease obligations                       451,199

        Less--Current portion of capital lease obligations       149,326
                                                            -------------

                                                             $   301,873
                                                            =============

(11)   NOTE RECEIVABLE FROM STOCKHOLDER/OFFICER

       On October 1, 1991, the Company loaned $350,000 to a stockholder/officer
       of the Company. The terms of the loan were amended on March 31, 1993, and
       interest began accruing on April 1, 1996 at the prime rate (8.5% as of
       December 31, 1997) plus 1%. The outstanding principal and interest are
       due in equal quarterly payments, which commenced in April 1996, over a
       five-year period. The proceeds of the loan were used for the purchase of
       Company common stock by the officer from another stockholder.

(12)   STOCKHOLDERS' EQUITY

       (a)    Initial Public Offering

              In May 1996, the Company sold 1,334,000 shares of common stock to
              the public, at an offering price of $7.50 per share (including
              174,000 shares sold pursuant to an overallotment option exercised
              by the underwriters), of which 1,000,000 shares were sold by the
              Company and 334,000 shares were sold by selling stockholders. Net
              proceeds to the Company were $6,165,871 after deducting offering
              expenses of $1,334,129.

                                      F-17
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)
       (b)    Stock Split

              In March 1996, the Board of Directors approved an 836-to-1 stock
              split of the Company's common stock. All share and per share
              amounts have been retroactively restated as a result of this stock
              split.

       (c)    Preferred Stock

              The Board of Directors has the authority to issue up to 1,000,000
              shares of preferred stock, $10.00 par value, in one or more series
              and to fix the rights, preferences, privileges and restrictions
              thereof, including dividend rights, dividend rates, conversion
              rights, voting rights, terms of redemption, redemption prices,
              liquidation preferences and the number of shares constituting any
              series or the designation of such series, without further vote or
              action of the stockholders.

       (d)    Contingent Shares

              In connection with the establishment of Quail, the Company and the
              individual hired as President of Quail (the Executive) have
              entered into a stock purchase agreement whereby the Company has
              agreed to sell to the Executive 68,461 shares of the Company's
              common stock for $6.50 per share if certain financial performance
              milestones are met in any one of the first three years of Quail's
              operation. The purchase price for the shares was paid to the
              Company in July 1997 and was in the form of certain equipment and
              trademark rights valued at $145,000 and a $300,000 irrevocable
              letter of credit. The total purchase price of $445,000 was
              recorded in stockholders' equity. If the performance milestones
              are not met, the shares will not be sold to the Executive and the
              Executive forfeits to the Company the amounts paid for the shares.

              The Company will recognize as compensation expense the difference
              between the fair market value of the share and the selling price
              per share when the performance milestones are achieved.

       (e)    Equity Incentive Plan

              On March 11, 1996, the Board of Directors and stockholders
              approved the Asahi/America Equity Incentive Plan (the Incentive
              Plan). The aggregate number of shares of common stock that may be
              issued pursuant to the Incentive Plan is 330,000 shares. The
              Company may grant incentive stock options and other stock
              compensation arrangements to eligible employees and consultants.
              The exercise price of each incentive stock option may not be less
              than 100% (110% for greater than 10% stockholders) of the fair
              market value of common stock at the date of grant. Nonqualified
              stock options may be granted to any employee, officer, director or
              consultant of the Company. The terms of each nonqualified stock
              option are determined by the Board of Directors. All options vest
              in three equal annual increments beginning on the first
              anniversary of the date of grant.

                                      F-18
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)

       (f)    Independent Directors' Stock Option Plan

              On March 11, 1996, the Board of Directors and stockholders
              approved the Asahi/America Independent Directors' Stock Option
              Plan (the Directors' Plan). The Directors' Plan authorizes the
              issuance of an option to each Company director who is neither an
              employee of the Company nor a holder of, or affiliated with or
              related to a holder of, five percent or more of the Company's
              common stock, to purchase up to 10,000 shares of the Company's
              common stock on the date of election to the Board of Directors. A
              total of 20,000 shares of common stock is reserved under the
              Directors' Plan.

              The following schedules summarize the activity under the Company's
              stock option plans for the year ended December 31, 1997:

                                                    Shares          Weighted
                                                                     Average
                                                                    Exercise
                                                                      Price

              Granted, Fiscal 1996                   359,500          $ 7.56

                Canceled                              (9,500)           7.50
                                                  ----------          ------

              Outstanding, December 31, 1996         350,000            7.56

                Granted                               16,500            7.83

                Canceled                             (53,333)           7.50
                                                  ----------          ------

              Outstanding, December 31, 1997         313,167          $ 7.58
                                                  ==========          ======

              The range of the options outstanding at December 31, 1997 was
              $7.50 to $9.50.

              There were 110,000 stock options exercisable under both stock
              option plans as of December 31, 1997; no stock options were
              exercisable at December 31, 1996. The weighted average exercise
              price was $7.56 and the range of actual exercise prices was $7.50
              to $9.50 for the shares exercisable at December 31, 1997.

              There were 36,833 total stock options available for future grants
              under the equity incentive plan as of December 31, 1997. There
              were no stock options available for future grant under the
              Directors' Plan.

                                      F-19
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)

       (g)    Employee Stock Purchase Plan

              In July 1996, the Company established the Asahi/America, Inc.
              Employee Stock Purchase Plan (the Purchase Plan), which allows
              substantially all employees to acquire shares of the common stock
              of the Company. The Purchase Plan authorizes the issuance of up to
              a total of 150,000 shares of common stock to participating
              employees.

              The price at which shares may be purchased will be at 85% of the
              fair market value per share of the common stock on either the
              semiannual offering commencement date or the semiannual offering
              termination date. Purchases under the Purchase Plan are subject to
              certain limitations, as defined. During fiscal 1996, there were no
              shares issued under the Purchase Plan. In 1997, 18,669 shares were
              issued under the Purchase Plan.

       (h)    Stock-Based Compensation Plans

              SFAS No. 123 established a fair-value-based method of accounting
              for stock-based compensation plans. The Company has adopted the
              disclosure-only alternative under SFAS No. 123 for stock options
              granted to employees and directors, which requires disclosure of
              the pro forma effects on earnings and earnings per share as if the
              fair value accounting as calculated under SFAS No. 123 had been
              used, as well as certain other information. The Company accounts
              for stock-based compensation in accordance with Accounting
              Principles Board Opinion No. 25, Accounting for Stock Issued to
              Employees, as permitted by SFAS No. 123.

              The Company had no stock option grants prior to 1996; accordingly,
              the Company has computed only the pro forma disclosures required
              under SFAS No. 123 for all stock options granted since 1996 and
              under the Purchase Plan using the Black-Scholes option pricing
              model.

              The assumptions used for the years ended December 31, 1996 and
              1997 are as follows:

<TABLE>
<CAPTION>

                                                                 1996           1997

              <S>                                              <C>           <C>  
              Risk-free interest rates                         6.48%-6.69%   6.20%-6.38%
              Expected dividend yield                               0%            0%
              Expected lives                                     5 years       5 years
              Expected volatility                                  25%           25%
              Weighted average remaining contractual           9.33 years    8.51 years
                 life of options outstanding
              Weighted average fair value of options granted   $     2.70    $     2.77
</TABLE>

                                      F-20
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)

              The pro forma effect of applying SFAS No. 123 would be as follows:

<TABLE>
<CAPTION>
                                                                         1996                1997

              <S>                                                  <C>                <C>              
              Net income as reported                               $       2,438,152  $       1,781,849
                                                                   =================  =================
              Pro forma net income                                 $       2,226,948  $       1,435,489
                                                                   =================  =================
              Basic and diluted earnings per share as reported     $             .82  $             .53
                                                                   =================  =================
              Pro forma basic and diluted earnings per share       $             .77  $             .43
                                                                   =================  =================
</TABLE>

       (i)    Issuance of Stock

              On March 31, 1993, the Company sold a total of 1,287,000 shares of
              stock to AOC and Nichimen. In connection with the sale of stock,
              an officer/stockholder had the right to repurchase from AOC and
              Nichimen a certain number of the Company's shares (at a
              formula-based value) if certain performance milestones were met,
              as defined in the stock purchase agreement. The Company accounted
              for this repurchase right in accordance with Accounting Principles
              Board Opinion No. 25. Accordingly, compensation is measured based
              on the difference between the purchase price and the fair market
              value of the Company's common stock. For the year ended December
              31, 1995, $20,163 of compensation expense was recorded, as the
              fair market value was in excess of the formula-based value. The
              performance milestones were met as of December 31, 1995, and on
              March 11, 1996, the officer/stockholder exercised his right in
              full and repurchased 140,400 shares from AOC.

(13)   COMMITMENTS

       (a)    Lease Commitments

              The Company leases certain office space and certain equipment
              under operating leases through May 2001. The approximate future
              minimum lease payments under these leases are as follows:

        Year                                        Amount

        1998                                     $     283,000
        1999                                           234,000
        2000                                           146,000
        2001                                            24,000
                                                --------------

                 Total minimum lease payments    $     687,000
                                                 =============

              Rental expense incurred under these leases and charged to
              operations was approximately $165,000, $204,000 and $ 344,000 for
              the years ended December 31, 1995, 1996 and 1997, respectively.

                                      F-21
<PAGE>

                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)

(14)   OTHER EMPLOYEE BENEFITS

       (a)    Profit Sharing Plan

              The Asahi/America, Inc. Profit Sharing Plan (the Plan) is a
              combined 401(k) and profit sharing plan.

              Employer contributions for the profit sharing portion of the Plan
              are discretionary and determined by the Board of Directors. The
              Company made contributions to the Plan of $100,000 in 1995 and
              1996. There was no contribution made in 1997.

              Under the terms of the 401(k) portion of the Plan, eligible
              employees may contribute limited percentages of their salaries to
              the Plan, and the Company matches a portion. The Company's
              matching contributions were approximately $27,000, $31,000 and
              $43,000 for the years ended December 31, 1995, 1996 and 1997,
              respectively.

       (b)    Postretirement and Postemployment Benefits

              The Company has no obligations for postretirement or
              postemployment benefits.

(15)   SIGNIFICANT CUSTOMER AND EXPORT SALES

              During 1995, 1996 and 1997, one customer accounted for 26%, 23%
              and 32%, respectively, of net sales. During 1995, 1996 and 1997,
              export sales accounted for 5%, 4% and 7%, respectively, of net
              sales.

                                      F-22
<PAGE>


                      ASAHI/AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

                                   (Continued)

(16)   ACQUISITION

       In May 1997, the Company acquired the vortex flow meter division of
       Universal Flow Monitors, Inc. and the Rosaen Company for $3,000,000. The
       acquisition was accounted for as a purchase. The results of operations of
       the vortex flow meter division have been included in the Company's
       statement of income since the date of acquisition. Pro forma information
       has not been presented due to immateriality. The Company allocated the
       purchase price to the acquired assets as follows:

        Patents                            $    1,100,000
        Goodwill                                1,652,120
        Fixed assets                               71,906
        Inventory                                 155,974
        Noncompete agreement                       20,000
                                           --------------

                                           $    3,000,000
                                           ==============

(17)   PATENT LITIGATION

       In July 1997, the United States Patent and Trademark Office reconfirmed
       the validity of a patent owned by the Company. In August 1997, the
       Company instituted a patent infringement suit in the United States
       District Court in the New York against a competitor. The Court has yet to
       render a decision with respect to the December 1997 bench trial. In the
       fourth quarter of 1997, the Company incurred approximately $400,000 in
       legal expenses related to this patent issue.

                                      F-23

<PAGE>


<TABLE>
<CAPTION>
Exhibit                                                                               Page
Number          Description                                                          Number
-------         -----------                                                          ------
<S>             <C>                                                                  <C>
3.1*            Restated Articles of Organization of the Registrant.

3.2*            Bylaws of the Registrant, as amended to date.

4.1*            1996 Equity Incentive Plan.

4.2*            Independent (Non-Employee and Non-Five Percent Stockholder)
                Directors' Stock Option Plan.

4.3**           Employee Stock Purchase Plan

4.4.1*          Loan Agreement between Registrant and Massachusetts Industrial
                Finance Agency dated as of March 1, 1994 pertaining to
                $4,150,000 Massachusetts Industrial Finance Agency Industrial
                Revenue Bonds, Asahi/America Issue, Series 1994.

4.4.2*          Bond Purchase Agreement by and among Tucker Anthony Incorporated
                and Massachusetts Industrial Finance Agency and the Registrant.

4.4.3*          Reimbursement Agreement between the Registrant and Citizens
                Trust Company dated as of March 1, 1994.

9.1*            Asahi/America, Inc. Voting Trust Agreement dated January 11,
                1993.

10.1*           Distribution Agreement dated April 1, 1993, among Asahi Yukizai
                Kogyo Co., Ltd., Nichimen Corporation, Nichimen America
                Inc. and Registrant.

10.1.1***       Equipment Purchase Agreement, dated August 13, 1997 by and
                between Unicor Plastic Machinery, Inc. and Asahi/America, Inc.

10.2            Employment Agreement (Restated) dated as of January 1, 1996 by
                and between Registrant and Leslie B. Lewis.

10.2.1*         Life insurance policy covering Leslie B. Lewis.

10.2.2*         Employment Agreement dated as of April 22, 1996 by and between
                Registrant and Kozo Terada.

10.3*           Master Equipment Lease No. 9000118 between Registrant (Lessee)
                and Citizens Leasing Corporation (Lessor) dated September 23,
                1993.

10.3.1*         First Amendment to Lease Schedule by and between Citizens
                Leasing Corporation and Registrant dated March 11, 1994.

10.4.1**        Credit Agreement between Registrant and Citizens Bank of
                Massachusetts dated as of January 23, 1997.

10.4.2**        Revolving Credit Note in favor of Citizens Bank of Massachusetts
                dated as of January 23, 1997.

10.4.3**        Discretionary Credit Line Note in favor of Citizens Bank of
                Massachusetts dated as of January 23, 1997.

10.5*           Restated Contract dated as of January 1, 1995 between Registrant
                and Agru-Alois Gruber GmbH.

10.6*           Agreement entered into as of July 26, 1995 by and between
                Registrant and Watts Industries, Inc.

10.8*           Consulting Agreement dated January 8, 1995 by and between
                Registrant and Bloomberg Associates, Inc.

10.9*           Purchase and Sale Agreement dated as of February 2, 1996 by and
                between Manganaro Realty Associates and Registrant.

10.10*          Purchase and Sale Agreement dated as of March 11, 1996 by and
                between Asahi/America Co., Inc. and Creative Filtration Systems,
                Inc.

10.11           Letter Agreement regarding security interest dated December 30,
                1997 by the Registrant and Asahi Engineered Products, Inc. in
                favor of Citizens Bank of Massachusetts, Inc.

10.12           Loan Agreement (Equipment) among GE Capital Public Finance,
                Inc., Lender, Arkansas Development Finance Authority, Issuer,
                and Quail Piping Products, Inc., Borrower, dated as of November
                1, 1997.

10.13           Loan Agreement (Real Estate) among GE Capital Public Finance,
                Inc., Lender, Arkansas Development Finance Authority, Issuer,
                and Quail Piping Products, Inc., Borrower, dated as of November
                1, 1997.

10.14           Guaranty and Negative Pledge Agreement in favor of Registrant
                and GE Capital Public Finance, Inc.

21.1            Subsidiaries of the Registrant

23              Consent of Arthur Andersen LLP

27.1            Financial Data Schedule

27.2            Financial Data Schedule (Restated)
</TABLE>

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

*   Incorporated by reference to the Registrant's Registration Statement on Form
    S-1 as amended (File No. 333-2314)

**  Incorporated by reference to the Registrant's 1996 Form 10K (File No.
    0-28322)

*** Incorporated by reference to the Registrant's September 30, 1997 Form 10Q
    (File No. 0-28322)