SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------
                                       
                                    FORM 10-K
                                       
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended:  December 31, 1996      Commission File No.:  0-12392

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

             Texas                                               74-1957377
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

       2301 Central Parkway
          Houston, Texas                                            77092
(Address of principal executive offices)                          (Zip Code)

       Registrant's telephone number, including area code:  (713) 688-4414

           Securities registered pursuant to Section 12(b) of the Act:
                                                           Name of each Exchange
       Title of Each Class                                  on which registered
            None                                              Not Applicable

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

                      Common Stock, No Par Value Per Share
                   Preferred Stock, $10.00 Par Value Per Share

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

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

     State the aggregate market value of the voting stock held by non-affiliates
of the registrant.  The aggregate market value shall be computed by reference
to the price at which the stock was sold, or the average bid and asked prices of
of such stock, as of a specified date within 60 days prior to the date of filing
                     January 31, 1997                  $2,093,355
     Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
     Common Stock outstanding as of:  February 21, 1997 -- 3,901,190 shares

                      Documents Incorporated by Reference

     List hereunder the following documents if incorporated by reference and the
part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated:  (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933.  The listed documents should be clearly
described for identification purposes.  None

                                       -1-
<PAGE>
                               RAWSON-KOENIG, INC.
                                       
                                    FORM 10-K
                                       
                                     PART I
                                        

ITEM 1.  BUSINESS

(a)  The Registrant designs, manufactures and markets certain equipment for
     light trucks, principally under the "Rawson-Koenig" name.  As used in this
     report, the term "the Registrant" refers to Rawson-Koenig, Inc. unless a
     contrary or more limited meaning is indicated by the context.  The
     Registrant was incorporated in Texas on November 18, 1977.

     The demand for the products manufactured by the Registrant is cyclical, and
     tied to the general economic conditions of the geographic market for the
     Registrant's products.  In particular, demand for the Registrant's products
     is related to certain service industries, including construction and public
     utilities.  The primary market for the Registrant's products is the United
     States.

     The ability of the Registrant to improve its results of operations and
     recover the cost of its assets through operations is dependent on
     improvements in manufacturing efficiency and increased sales volume through
     the expansion of its distribution base and the introduction of new and
     improved product lines.  See paragraph (c)(xi) below for a discussion of
     the Registrant's research and development activities.

(b)  The Registrant operates in the truck equipment industry segment, which
     accounted for approximately 100% of its business in 1996.  See the
     Financial Statements of Registrant included in this report for data
     relating to the amounts of sales for the last three years.

(c)  The following paragraphs provide information as to specific aspects of the
     Registrant's business.

     (i)    Substantially all of the Registrant's products are truck equipment,
            which includes truck service bodies, truck tool boxes, winches and
            truck-mounted cranes.  Service bodies are structures mounted on a
            truck chassis in order to provide cover, storage space or working
            space, while tool boxes are simpler and usually smaller structures,
            which are also truck-mounted, but are designed solely for storage of
            tools or other property.

            The Registrant's service bodies offer a wide selection of standard
            and optional features.  Like the Registrant's tool boxes, they can
            be installed on trucks of all major United States and foreign
            producers and are used for general, industrial and recreational
            purposes.  In general, the Registrant believes that its service
            bodies and tool boxes compete in the upper portions of their
            respective markets in terms of quality and price.  The Registrant
            also believes that it offers the largest line of tool boxes
            available from any single manufacturer.

                                       -2-
<PAGE>
            The Registrant's standard winches have pulling capacities of 2,000
            to 30,000 pounds, are designed to be truck-mounted and also are sold
            for general and industrial purposes.  All these winches are
            available with or without automatic safety brakes and may be used
            with mechanical, hydraulic or electrical power sources.  In addition
            to these standard products, the Registrant manufactures winches for
            special applications such as mining, logging and well drilling.

            The Registrant's crane models may be mounted on the Registrant's
            service bodies specially designed to withstand additional stress
            when the crane is in use.  Lifting capacity of the cranes ranges up
            to 6,000 pounds depending on the model.

            The Registrant sells its products primarily through a nationwide
            network of distributors, although certain sales are also made
            directly to end-user customers and to truck dealers.  The Registrant
            currently deals with approximately 350 active distributors of its
            service bodies, tool boxes, winches and cranes.

            The Registrant's only agreements with each distributor are contained
            in an authorization letter and a credit application.  The Registrant
            believes that its relations with its distributors are good and that,
            in any event, the loss of any single distributor would have no
            material impact on its operations.

            The Registrant believes that its most effective sales promotion and
            advertising method is a combination of product demonstration and the
            use of a strong diverse distributor network.  The Registrant's
            distributors are strategically located to provide coverage of key
            marketing areas.  The distributor network is also supported by the
            Registrant through product line literature, trade shows, cooperative
            advertising and seminars by the Registrant's sales personnel.

     (ii)   The Registrant continually monitors and updates its product lines.
            In 1994, 1995 and 1996, the Registrant concentrated on keeping up
            with increasing demand while continuing to make product improvements
            on an ongoing basis.

     (iii)  The Registrant purchases steel, welding supplies, castings, paint
            and other materials from independent suppliers.  Virtually all
            purchases are made on the basis of competitive bids.  The Registrant
            utilizes a combination of foreign, national and regional suppliers.
            All purchases are made in U.S. dollars.

                                       -3-
<PAGE>
            All classes of supplies purchased by the Registrant are presently
            available from a number of sources.  The Registrant deals with a
            large number of suppliers.  Accordingly, the Registrant believes
            that its business is not dependent upon any single supplier or upon
            any group of suppliers.  It is possible that shortages of a
            particular type of supply could occur at any time in the future.
            However, the Registrant has no reason to anticipate any such
            shortage.

     (iv)   The Registrant owns no patents that are material to its business.

     (v)    Sales are seasonal in nature and in most years tend to be highest
            around May and lowest around October.  This seasonality is believed
            to reflect, among other factors, model changes of truck
            manufacturers in September and October and low levels of activity in
            the construction industries in the fall and winter months.  In 1994
            and 1995, seasonality was less of a factor due to truck
            manufacturers being overloaded with incoming orders throughout the
            entire year.  In 1996, sales declined in December.

     (vi)   Most of the Registrant's inventory is comprised of standard
            products.  Reference is made to Note 4 to the Financial Statements
            for information as to a line of credit which is available to finance
            inventory as required.

     (vii)  Since a significant portion of sales are made through distributors,
            the Registrant does not necessarily know the identity of any
            particular purchaser of its products.  All statements made in the
            following paragraph are subject to this qualification.

            The Registrant sells to a large number of customers, and to the best
            of its knowledge, no customer accounted for as much as 10% of sales
            during the years ended December 31, 1994, 1995 and 1996.  The
            Registrant also believes that foreign or export sales, sales to
            governmental agencies and sales to the military are insignificant.
            The Registrant's products are marketed on a nationwide basis.  The
            Registrant's products are used in a variety of industries, and the
            relative importance of these industries may vary from year to year.
            The service and public utility industries were the most significant
            industries during the years ended December 31, 1994, 1995 and 1996.

     (viii) The Registrant's backlogs at the respective dates indicated were
            approximately as follows:  $1,399,000 at December 31, 1994,
            $1,004,000 at December 31, 1995 and $835,000 at December 31, 1996.
            All backlog at December 31, 1996 is believed to be firm and is
            expected to be shipped during the fiscal year ending December 31,
            1997.

     (ix)   The Registrant does not do a material amount of business with the
            federal government.

                                       -4-
<PAGE>
     (x)    The market for all the Registrant's products is very competitive.
            Although the Registrant's products are marketed on a nationwide
            basis, each manufacturer of otherwise competitive service bodies may
            have certain advantages in its own region because of transportation
            costs.  In addition to this factor, competition in selling service
            bodies is believed to involve such factors as product quality,
            delivery capability, product price and quality of distributors.  In
            selling tool boxes, the more important competitive factors are
            believed to be product quality, delivery capability, product prices,
            range of product line and number of distributors or other outlets.

            The Registrant competes in selling service bodies with a number of
            manufacturers, some of which are larger in terms of assets and
            sales.  However, the Registrant believes that no single manufacturer
            dominates the market for these products and that it can continue to
            compete successfully for its market share, particularly in its
            primary sales region.

            Because of lower transportation costs, competition for sales of tool
            boxes, winches and cranes is generally on a national rather than a
            regional basis.  Competition is based primarily on quality and
            price.  As stated elsewhere, the Registrant offers a standard
            product line but stresses its ability to construct specialized
            products.  While several competitive manufacturers of tool boxes,
            winches and cranes are larger in terms of sales and assets, and some
            offer related equipment not produced by the Registrant, the
            Registrant believes that no single manufacturer dominates the market
            and that it can continue to compete successfully for its market
            share.

     (xi)   The Registrant does not carry on research and development activities
            except in connection with product testing, development and design.
            Six employees were involved on a part-time basis in product testing,
            development and design during the years ended December 31, 1994 and
            1995.  Eight employees were involved on a part-time basis in product
            testing, development and design during the year ended December 31,
            1996.  The amount spent on such activities was less than $100,000 in
            each of these years.

     (xii)  The Registrant does not believe that compliance with federal, state
            and local environmental laws will adversely affect its business,
            earnings or competitive position in the long run when regulations
            are enforced uniformly across the nation.  In 1994, 1995 and 1996,
            compliance with federal, state and local environmental laws did not
            have a material effect on the Registrant's earnings and competitive
            position in the market.  In 1994, 1995 and 1996, no material capital
            expenditures for environmental control facilities were incurred and
            none are anticipated for 1997.

                                       -5-
<PAGE>
     (xiii) At December 31, 1996, the Registrant employed 301 persons.  No
            employee is represented by any union, and the Registrant believes
            that its employee relations are good.

(d)  The Registrant's products are marketed primarily in the United States.
     Direct export sales are immaterial to the Registrant's operations.


ITEM 2.  PROPERTIES

     The Registrant owns its manufacturing and office facilities in Houston,
     Texas and Fort Worth, Texas.  The Registrant's Houston service body and
     tool box manufacturing facility occupies approximately 163,000 square feet
     of space in a metal and brick building located in an office and industrial
     park, while its executive and administrative offices occupy approximately
     12,000 square feet in the same building.  The Registrant's winch and crane
     manufacturing facility occupies approximately 24,000 square feet of space
     in an adjacent metal and concrete building constructed on the same tract of
     approximately 13 acres.  The Fort Worth facility is on approximately 3.7
     acres of land with metal and block buildings totaling approximately 73,000
     square feet.  The Houston facilities are subject to mortgage liens of
     approximately $1,300,000.  The Registrant owns almost all of the machinery
     and equipment used in its operations.


ITEM 3.  LEGAL PROCEEDINGS

     The Registrant is not a party to and its property is not subject to any
     material pending legal proceedings other than ordinary routine litigation
     incidental to its business.


ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

     None.


                                     PART II


ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
         MATTERS

(a)  The Registrant's common stock, no par value per share (Common Stock), is
     traded on the National Association of Securities Dealers  Automated
     Quotation System (NASDAQ) Small Cap Market under the symbol "RAKO".  The
     following table shows the high and low bid and ask prices of the Common
     Stock during the periods indicated:

                                       -6-
<PAGE>
<TABLE>
<CAPTION>
                                         Bid                  Ask
                                    High       Low       High       Low
<S>                              <C>       <C>         <C>      <C>
Year Ended December 31, 1995:
     First Quarter                2-1/16     1-5/8     2-5/16     1-3/4
     Second Quarter              1-13/16   1-13/16          2   1-15/16
     Third Quarter                 1-7/8     1-1/2          2     1-5/8
     Fourth Quarter                1-3/4     1-1/8          2     1-3/8

Year Ended December 31, 1996:
     First Quarter               1-17/32     1-1/4      1-5/8     1-1/2
     Second Quarter              1-15/16     1-1/8      2-1/8     1-3/8
     Third Quarter               1-21/32    1-5/16          2    1-9/16
     Fourth Quarter                1-7/8     1-1/4          2   1-13/32

Year Ending December 31, 1997:
     January 1997                1-11/16    1-9/16     2-1/16     1-3/4
</TABLE>
The foregoing figures, which were obtained from NASDAQ monthly statistical
reports, do not reflect retail markups or markdowns and may not represent actual
trades.

(b)  As of February 21, 1997, the Common Stock was held by approximately 1,400
     stockholders of record.

(c)  The Registrant has not paid any dividends since it became a publicly held
     company.


ITEM 6.  SELECTED FINANCIAL DATA

     The following selected financial information for the Registrant for the
periods indicated must be read in conjunction with the Financial Statements in
this report and the notes thereto, which are an integral part of the Financial
Statements.

                                       -7-
<PAGE>
<TABLE>
<CAPTION>
                      (In Thousands Except Per Share Data)

                                       Years Ended December 31,
                               1996     1995     1994     1993     1992
<S>                         <C>      <C>      <C>      <C>      <C>
Sales                       $19,522  $18,682  $17,185  $14,450  $12,678
Total assets                 10,489    9,824    9,089    8,377    7,932
Long-term debt (less
  current portion)            1,435    2,095    1,856    1,964    2,249
Net income                    1,100      825    1,142      480      209
Net income per share            .28      .21      .29      .12      .05
</TABLE>


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

     Summary.

     The following table sets forth for the years indicated (1) percentages
which certain items reflected in the accompanying statements of income and in
the accompanying selected financial data bear to total sales of the Registrant
and (2) the percentage increase (decrease) of such items as compared to the
indicated prior year.

<TABLE>
<CAPTION>
                                                             Percentage
                                                              Increase
                                                             <Decrease>
                                Percentage of Sales          from Prior
                              Years Ended December 31:          Year:
                               1996     1995     1994       1996     1995
<S>                           <C>      <C>      <C>        <C>      <C>
Sales                         100.0    100.0    100.0        4.5      8.7
Cost of sales                  76.8     79.8     77.4         .7     12.1
Selling, general, and
  admin. expenses              14.1     13.8     13.3        6.3     13.3
Interest expense                 .8      1.0      1.2      (24.3)    (7.8)
Other (income) expense, net     -       (1.0)    (0.5)     (95.3)   111.0
Income before income taxes      8.3      6.4      8.6       36.9    (19.6)
Income taxes                    2.7      2.0      2.0       45.2      7.3
Net income                      5.6      4.4      6.6       33.2    (27.7)
</TABLE>

                                       -8-
<PAGE>
     Results of Operations.

     Year Ended December 31, 1994.  Sales for the year ended December 31, 1994
increased 18.9% from the year ending December 31, 1993 due primarily to the
Registrant's intensified marketing efforts and continued improvement in the
national economy, particularly improvement in light truck sales.  Cost of sales
as a percentage of sales decreased from 81.5% in 1993 to 77.4% in 1994 due
to volume efficiencies and the Registrant's continued program of upgrading
manufacturing equipment and refining production methods.  Selling, general and
administrative expenses as a percentage of sales increased from 12.9% in 1993 to
13.3% in 1994 primarily due to increases in insurance costs and payroll-related
expenses.

     Year Ended December 31, 1995.  Sales for the year ended December 31, 1995
increased 8.7% from the year ending December 31, 1994 due primarily to the
Registrant's continued marketing efforts and strong national light truck sales.
Cost of sales increased from 77.4% in 1994 to 79.8% in 1995 due to sharp
increases in material costs during the third and fourth quarters of 1995.
Selling, general and administrative expenses as a percentage of sales increased
from 13.3% in 1994 to 13.8% in 1995 primarily due to increases in insurance
costs and payroll-related expenses.  Additionally, during 1995, approximately
$240,000 of office improvements and repairs were incurred of which $105,000 was
expensed.  Income tax expense increased 7.3% from 1994 to 1995 due to
alternative minimum tax credits which were fully utilized during 1994.

     Year Ended December 31, 1996.  Sales for the year ended December 31, 1996
increased 4.5% from the year ending December 31, 1995 due primarily to the
Registrant's increased marketing efforts and, to a lessor degree, due to an
increase in nationwide sales of light trucks.  Over the last three years the
Registrant has concentrated on improving its marketing efforts by increasing the
number and quality of its sales staff and by increasing advertising, trade show
attendance, and personal demonstrations of its products.  Cost of sales as a
percentage of sales decreased from 79.8% in 1995 to 76.8% in 1996 primarily due
to lower material costs during the third and fourth quarters of 1996 compared to
the same period of 1995.  During the third and fourth quarters of 1995 the
Registrant experienced sharp increases in material costs.  In 1996 material
costs declined to previous levels.  Selling, general and administrative expenses
as a percentage of sales increased from 13.8% in 1995 to 14.1% in 1996 primarily
due to increases in insurance costs and payroll-related expenses.  Interest
expense decreased 24.3% from 1995 to 1996 primarily due to lower average
borrowings during 1996.  Income tax expense increased 45.2% from 1995 to 1996
primarily due to the increase in income before income taxes and due to the
decreased effect of net operating loss carryforwards.

     Liquidity and Capital Resources.

     The Registrant plans to fund future operations from cash on hand, cash from
operations and by use of its credit facility, which currently has an available
line of credit of approximately $2,000,000 based upon the applicable borrowing
base calculation.  The Registrant's line of credit expires in April 1998.  The
Registrant also has an agreement with a bank to borrow up to $1,000,000 to
finance equipment purchases under which no borrowings have occurred.

                                       -9-
<PAGE>
     Net cash provided from operating activities was $1,099,973, $664,636 and
$2,035,197 for 1994, 1995 and 1996, respectively.  Accounts receivable are
usually collected within 30 days.  Accounts payable are paid within 30 days.
During 1994, 1995 and 1996, the Registrant increased inventory levels to be more
responsive to customer needs.  In 1996 inventory increased $325,924.

     In 1994, 1995 and 1996, the Registrant used $234,960, $790,470 and
$1,342,460, respectively, for investing activities.  The purchase of property,
plant and equipment accounted for the majority of investing activities in these
three years.

     In 1996 the Registrant used $673,950 for financing activities.  In 1994,
1995 and 1996 financing activities consisted of scheduled payments of long-term
debt and borrowings and payments under the Registrant's line of credit
agreement.  In 1996, the Registrant reduced the outstanding balance on the line
of credit by $431,605.  The outstanding balance on the line of credit was
$200,000 at December 31, 1996.

     The line of credit agreement and other bank debt contain various
restrictive covenants which include, among other things, maintenance of a
minimum tangible net worth and minimum working capital, restrictions on
property, plant and equipment additions and additional indebtedness, and
requirements to maintain certain financial ratios.  All loans from the bank are
collateralized by accounts receivable, inventories, equipment and the Houston
facility.

     The Registrant intends to renew and extend the line of credit prior to the
April 1998 expiration date.  Although management believes that the combination
of cash from operations and the bank credit facilities will be sufficient to
meet the Registrant's long-term liquidity and capital resource needs, there can
be no assurance that such bank financing will be available on terms acceptable
to the Registrant.

     Inflation.

     The Registrant's business is relatively labor intensive, and the Registrant
purchases supplies and components from third parties.  Nevertheless, the
Registrant has generally been able to raise its prices sufficiently to offset
any adverse effects of inflation.  During the year ended December 31, 1994, the
Registrant increased prices on its cranes.  During the year ended December 31,
1995, the Registrant increased prices on its service bodies, tool boxes and
winches.  During January 1996 and January 1997, the Registrant increased prices
on the majority of its products.  In January 1997, the Registrant also decreased
prices on a few of its products.  The Registrant cannot predict any possible
future effects of inflation on its operations.

                                      -10-
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The response to this item is submitted in a separate section of this
report.  Reference is made to the index on page 16 preceding the Financial
Statements.


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

     None.


                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The following table sets forth certain information concerning the directors
and executive officers of the Registrant.

                                                        Served As A
     Name              Age        Position            Director Since

Thomas C. Rawson        44   Chairman of the Board,  September 18, 1987
                             Director and Chief
                             Executive Officer

Catherine A. Rawson     72   Director, President     September 18, 1987
                             and Principal
                             Financial Officer

Pamela Y. Rawson        40   Director                September 18, 1987 (1)

Farrell G. Huber, Jr.   64   Director                July, 1983 (2)

George W. Fazakerly     55   Director                September 21, 1987

Allen F. Rhodes         72   Director                September 21, 1987

Joseph M. Scheer        70   Director                April 10, 1991

Fredrick C. Wamhoff     39   Vice President-General
                             Counsel and Secretary

Richard F. Koenig       53   Vice President-
                             Information Systems

     (1) Except for the period from September 21, 1987 to October 17, 1989.
     (2) Except for the period from September 18, 1987 to September 21, 1987.

                                      -11-
<PAGE>
     Thomas C. Rawson co-founded Rawson Industries, Inc.  ("Rawson") in 1978
with his father, the late Clare J. Rawson, his mother, Catherine A. Rawson, and
his wife, Pamela Y. Rawson.  He holds a law degree from Thomas M. Cooley School
of Law in Michigan and a Bachelor of Science Degree from Michigan State
University.  Mr. Rawson was admitted to the State Bar of Texas in 1979.  Mr.
Rawson served as a Director and President of the Registrant from September 18,
1987 to October 17, 1989, when he was elected Chairman of the Board and Chief
Executive Officer.

     Catherine A. Rawson co-founded Rawson in 1978. Prior to joining Rawson, she
was employed as a Test Administrator for the Michigan Civil Service Commission
and prepared and administered bookkeeping records for various family-owned
businesses.  Mrs. Rawson received an Associate Arts Degree from Pierce College
in 1965.  Mrs. Rawson served as Treasurer and a Director of Rawson from 1978 to
1987 and Treasurer and Vice President of Administration of the Registrant from
September 18, 1987 to October 17, 1989.  She is currently President, Principal
Financial Officer and a Director of the Registrant.

     Pamela Y. Rawson co-founded Rawson in 1978 after earning a Bachelor of
Science degree in Social Studies from Michigan State University.  She served as
Secretary and a Director of Rawson and a Director of the Registrant from
September 18, 1987 to September 21, 1987.  She was re-elected to the Board of
Directors of the Registrant on October 17, 1989.

     Farrell G. Huber, Jr. is a personal investor.  Mr. Huber has been a
Director of Keystone International, Inc., an industrial valve and operator
manufacturer, since 1980 and plans on retiring from the Keystone International,
Inc. Board on May 5, 1997.

     George W. Fazakerly is a partner in the Dallas law firm of Vial, Hamilton,
Koch & Knox.  He specializes in corporate and securities matters and received
his Juris Doctor Degree from Southern Methodist University in 1969.  He has been
a partner with Vial, Hamilton, Koch & Knox since 1974.

     Allen F. Rhodes is currently Chairman of the Silver Fox Advisors, a
business consulting firm.  He has been a member of the Silver Fox Advisors since
1993.  He was President of Arnco Technology, a metallurgical research company,
from 1991 to 1993, and President and Chief Executive Officer of Gripper, Inc.,
an undersea pipeline fittings manufacturer, from 1986 to 1991.  Mr. Rhodes has
been a Director of Keystone International, Inc., an industrial valve and
operator manufacturer, since 1980.

     Joseph M. Scheer is currently a management consultant and personal
investor.  He has been a Director of Microsemi Corporation, an electronics
component manufacturer, since 1994 and a member of the Advisory Board of Soligen
Corporation, an innovative manufacturer of cast parts and tools, since 1996.  He
was a Director of Laserform Inc., a prototype parts manufacturer in Auburn
Hills, Michigan from 1989 to 1994.

     Fredrick C. Wamhoff joined Rawson in 1984 and has served the Registrant in
various functions including Vice President - Manufacturing Operations.  He
currently serves as Vice President - General Counsel and Secretary of the
Registrant.  Prior to joining Rawson, Mr. Wamhoff was in the private practice of
law in Lansing, Michigan.  He attended Michigan State University and was
graduated in 1979 with a Bachelor of Arts Degree.  He received his Juris Doctor
Degree from Marquette University in 1982.  Mr. Wamhoff has been a member of the
Michigan and Wisconsin Bars since 1982 and the Texas Bar since 1986.

                                      -12-
<PAGE>
     Richard F. Koenig began his career with the Registrant in 1967 and has
served the Registrant in many and various functions including Manager of
Engineering and Data Processing, and General Manager of the Registrant's winch
and crane manufacturing facilities.  Mr. Koenig has been a key member of the
Registrant's upper management team since September 17, 1987 and was elected Vice
President - Information Systems on January 18, 1994.

     Each Director holds office until the next annual meeting of Shareholders of
the Registrant and until his successor is duly elected and qualified.  Officers
of the Registrant are elected by, and serve at, the discretion of the Board of
Directors.


ITEM 11.  EXECUTIVE COMPENSATION

     The following table sets forth, in summary fashion, the compensation paid
or accrued for the last three fiscal years to each of the most highly
compensated executive officers of the Registrant whose annual rate of
remuneration exceeded $100,000.

<TABLE>
<CAPTION>
                      SUMMARY COMPENSATION TABLE

                                              Long Term Compensation
                      Annual Compensation         Awards      Payouts
  (a)        (b)      (c)     (d)     (e)      (f)      (g)     (h)      (i)
  Name                               Other
  and                               Annual  Restricted                All Other
Principal                           Compen-   Stock   Options/ LTIP    Compen-
Position            Salary   Bonus  sation    Awards    SARs  Payouts  sation
  <F1>      Year      ($)     ($)     ($)      ($)      (#)     ($)      ($)
<S>         <C>    <C>       <C>     <C>      <C>      <C>     <C>      <C>
Thomas C.   1996   163,703   2,000     0        0        0       0        0
Rawson,     1995   151,200   2,000     0        0        0       0        0
C.E.O.      1994   148,533   2,000     0        0        0       0        0

Catherine   1996   157,691   2,000     0        0        0       0        0
A.          1995   151,500   2,000     0        0        0       0        0
Rawson,     1994   142,913   2,000     0        0        0       0        0
President
<FN>
<F1>
No other officers received compensation in excess of $100,000 during the last
three fiscal years.
</FN>
</TABLE>

     The Registrant currently has no stock option plans.  During the last three
fiscal years the Registrant granted no stock options or stock appreciation
rights ("SAR") to any of its employees or directors; further, during the last
three fiscal years no SAR or stock options were exercised by any of the
Registrant's employees or directors.  The Registrant made no awards of long term
incentive plans to any employee or director of the Registrant in the last three
fiscal years.  The Registrant has no written employment contracts with any
executive officer of the Registrant and has no compensatory plan or arrangement
with any executive officer which provides for compensation as a result of the
resignation, retirement or termination of employment of an executive officer, or
as a result of change in control of the Registrant.

                                      -13-
<PAGE>
Compensation of Directors

     Of the seven directors of the Registrant, four are "outside" directors or
non-employees of the Registrant.  Each outside director receives a fee of $1,000
for attendance at meetings of the Board of Directors.  Prior to October 1996,
each of the four outside directors received a fee of $500 for each meeting
attended.  The three "inside" directors receive no fee for attendance at
meetings of the Board of Directors.  In addition, of the four outside directors,
two live outside of the Houston area and receive reimbursement for travel
expenses incurred in connection with attendance of meetings of the Board of
Directors.  The Board of Directors of the Registrant has not formed any
committees.  The following table sets forth the amounts received by each of the
four outside directors during the last fiscal year, including travel expense
reimbursement.

     Name                       Directors' Fees       Travel Reimbursement
Farrell G. Huber, Jr.                $2,500              Not Applicable
George W. Fazakerly                  $2,500                    $840
Allen F. Rhodes                      $2,500              Not Applicable
Joseph M. Scheer                     $2,500                  $1,399

     During 1996, the Registrant paid Joseph M. Scheer $6,400 for management,
marketing and financial services rendered by him for the Registrant.  Under the
terms of such arrangement Mr. Scheer bills the Registrant $100 per hour for his
services and is reimbursed for out-of-pocket expenses incurred by him in
connection with the services provided under the arrangement.  During 1996, the
out-of-pocket reimbursement paid to Mr. Scheer was $328.

     Prior to 1994, Pamela Y. Rawson was a non-employee director of the
Registrant.  During 1994, Ms. Rawson became a part-time employee of the
Registrant and serves as a payroll administrator.  During 1996, the Registrant's
compensation paid to Ms. Rawson consisted of hourly wages totaling $23,405.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF THE
          REGISTRANT

     The following table shows the number and percentage of shares of Common
Stock of the Registrant that may be deemed to be beneficially owned as of
February 21, 1997, by (i) each person known by the Registrant to be the
beneficial owner of more than five percent of the outstanding shares of Common
Stock of the Registrant, (ii) each director and nominee for director of the
Registrant who owns shares of Common Stock of the Registrant and (iii) all
directors, nominees, and officers as a group.  The persons listed below have the
sole power to vote and to dispose of the shares beneficially owned by them
except as otherwise indicated below.

                                      -14-
<PAGE>
<TABLE>
<CAPTION>

                               Shares of Common
                              Stock Beneficially
                                 Owned As Of              Percentage of
     Name                      February 21, 1997           Class Owned
<S>                             <C>                          <C>
Floyd A. Cailloux
P.O. Box 1952
Kerrville, TX 78028               282,214 <F1>                7.2

Farrell G. Huber, Jr.
2301 Central Parkway
Houston, TX 77092                   1,562                     0 <F2>

Catherine A. Rawson
2301 Central Parkway
Houston, TX 77092               1,161,261 <F3>               60.0 <F4>

Thomas C. Rawson
2301 Central Parkway
Houston, TX 77092               1,180,841                    60.0 <F4>

Pamela Y. Rawson
2301 Central Parkway
Houston, TX 77092               1,180,841                    60.0 <F4>

Allen F. Rhodes
2301 Central Parkway
Houston, TX 77092                  12,197                     0 <F2>

Joseph M. Scheer
2301 Central Parkway
Houston, TX  77092                 85,000                     2.2

All directors and officers
as a group                      2,443,924                    62.6

<FN>
<F1>
Includes 273,415 shares held by entities controlled by Mr. Cailloux and includes
8,799 shares held by a charitable reminder trust of which Mr. Cailloux is a
lifetime beneficiary.
<F2>
Represents less than 1% of the issued and outstanding shares.
<F3>
Shares are held by the Rawson Family Limited Partnership that is controlled
by Catherine A. Rawson.
<F4>
Catherine A. Rawson, Thomas C. Rawson and Pamela Y. Rawson constitute a "group"
as such term is defined under regulations of the Security and Exchange
Commission.  Therefore, the share ownership percentage of the entire group is
listed by each individual's name.  In the case of Thomas C. Rawson and Pamela Y.
Rawson ownership of shares held or to be held by either such person are assumed
to be beneficially owned by such other person due to their marital relationship.
</FN>
</TABLE>

                                      -15-
<PAGE>
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None.


                                     PART IV


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

(a) 1.  Index to Financial Statements:
                                                                   Page
                                                                 Reference

        Report of Independent Accountants                           F-1
        Balance Sheets as of December 31, 1996 and 1995             F-2
        For the years ended December 31, 1996, 1995 and 1994, the
          Statements of Income                                      F-3
          Statements of Shareholders' Equity                        F-4
          Statements of Cash Flows                                  F-5
          Notes to Financial Statements                             F-6
          Schedule II - Valuation and Qualifying Accounts           F-11

    2.  All schedules for which provision is made in the applicable accounting
        regulations of the Securities and Exchange Commission, which are not
        presented, are not required under the related instructions or are
        inapplicable, and therefore have been omitted.

    3.  The following exhibits are filed with this report:

                                                        Page Number
                                                        In This Filing
                                                        or Incorporation
        Exhibit Number and Description                  By Reference to

        (2) Plan of Acquisition, Reorganization,
            Arrangement, Liquidation or Succession*

        (3) Articles of Incorporation and Bylaws
            3.1  Restated Articles of Incorporation     Exhibit 3.1***
            3.2  Amended and Restated Bylaws            Exhibit 3.2***

        (4) Instruments defining the rights of          Exhibit 4 to Koenig's
            security holders, including indentures      Registration on Form
                                                        10, as amended, under
                                                        the Securities Exchange
                                                        Act of 1934.

        (9) Voting trust agreement*

                                      -16-
<PAGE>
       (10) Material Contracts
            10.1  Koenig, Inc. Profit-Sharing
                  Plan and Trust                        Exhibit 10.1**
            10.2  Koenig, Inc. 1983 Stock
                  Option Plan                           Exhibit 10.2**
            10.3  Koenig, Inc. Restricted Stock Plan    Exhibit 10.3**
            10.4  Loan Agreement dated
                  September 22, 1987                    Exhibit 10.4***
            10.5  Agreement of Sale and Purchase
                  of Houston Plant Facility with
                  conformed exhibits                    Exhibit 10.5****
            10.6  Loan Agreement dated
                  January 29, 1990                      Exhibit 10.6*****
            10.7  First Amendment to Letter Loan
                  Agreement dated March 31, 1991        Exhibit 10.7******
            10.8  Second Amendment to Letter Loan
                  Agreement dated May 21, 1991          Exhibit 10.8******
            10.9  Third Amendment to Letter Loan
                  Agreement dated March 24, 1992        Exhibit 10.9*******
            10.10 Fourth Amendment to Letter Loan
                  Agreement dated April 30, 1993        Exhibit 10.10********
            10.11 Fifth Amendment to Letter Loan
                  Agreement dated May 21, 1993          Exhibit 10.11********
            10.12 Sixth Amendment to Letter Loan
                  Agreement dated April 30, 1994        Exhibit 10.12*********
            10.13 Amended and Restated Letter Loan
                  Agreement dated April 21, 1995        Exhibit 10.13**********
            10.14 First Amendment to Amended and
                  Restated Letter Loan Agreement,
                  Promissory Note (Advancing Term)
                  and Amended and Restated Security
                  Agreement dated September 21, 1995    Exhibit 10.14**********
            10.15 Second Amendment to Amended and
                  Restated Letter Loan Agreement
                  and Amended and Restated Security
                  Agreement, and First Amendment to
                  Revolving Note dated May 28, 1996     Exhibit 10.15
       (11) Statement re: computation of
            per share earnings*
       (12) Statement re: computation of ratios*
       (13) Annual report to security holders*
       (16) Letter re: change in certifying accountant*
       (18) Letter re: change in accounting principles*
       (21) Subsidiaries of the registrant*
       (22) Published report regarding
            matters submitted to vote
            of security holders*

                                      -17-
<PAGE>
       (23) Consents of experts and counsel*
       (24) Power of attorney*
       (27) Financial Data Schedule                     Exhibit 27
       (99) Additional Exhibits*

*           Inapplicable.
**          Included in the Registrant's Form 10-K for the year ended September
              30, 1983.
***         Included in the Registrant's Form 10-K for the year ended September
              30, 1987.
****        Included in the Registrant's Form 10-K for the year ended September
              30, 1988.
*****       Included in the Registrant's Form 10-K for the year ended December
              31, 1990.
******      Included in the Registrant's Form 10-K for the year ended December
              31, 1991.
*******     Included in the Registrant's Form 10-K for the year ended December
              31, 1992.
********    Included in the Registrant's Form 10-K for the year ended December
              31, 1993.
*********   Included in the Registrant's Form 10-K for the year ended December
              31, 1994.
**********  Included in the Registrant's Form 10-K for the year ended December
              31, 1995.


(b)  Reports on Form 8-K.

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

                                      -18-
<PAGE>
                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in
Houston, Texas, on the 19th day of March 1997.

                                        Rawson-Koenig, Inc.


                                        By:/s/ Thomas C. Rawson
                                           ---------------------
                                           Chairman of the Board

     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons on behalf of the
Registrant and in the capacities indicated and on the date indicated:

      Signature                       Title                    Date

/s/ Thomas C. Rawson           Chairman of the            March 19, 1997
-------------------------      Board, Director and
Thomas C. Rawson               Chief Executive Officer

/s/ Catherine A. Rawson        Director, President        March 19, 1997
-------------------------      and Principal Financial
Catherine A. Rawson            Officer

/s/ Leslie T. Horvath          Controller                 March 19, 1997
-------------------------
Leslie T. Horvath

/s/ George W. Fazakerly        Director                   March 19, 1997
-------------------------
George W. Fazakerly

/s/ Farrell G. Huber, Jr.      Director                   March 19, 1997
-------------------------
Farrell G. Huber, Jr.

/s/ Pamela Y. Rawson           Director                   March 19, 1997
-------------------------
Pamela Y. Rawson

/s/ Allen F. Rhodes            Director                   March 19, 1997
-------------------------
Allen F. Rhodes

/s/ Joseph M. Scheer           Director                   March 19, 1997
-------------------------
Joseph M. Scheer

                                      -19-
<PAGE>




                              FINANCIAL STATEMENTS




<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
Rawson-Koenig, Inc.:

  We have audited the financial statements and the financial statement
schedule of Rawson-Koenig, Inc. (the "Company") listed in Item 14(a) of this
Form 10-K. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audits 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 financial statements referred to above present fairly,
in all material respects, the financial position of Rawson-Koenig, Inc. as of
December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedule referred to above, when considered
in relation to the basic financial statements taken as a whole, presents
fairly, in all material respects, the information required to be included
therein.

                                          COOPERS & LYBRAND L.L.P.

Houston, Texas
February 12, 1997

                                      F-1
<PAGE>

                              RAWSON-KOENIG, INC.

                                 BALANCE SHEETS
                           DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
                                                            1996        1995
                                                         ----------- ----------
<S>                                                      <C>         <C>
                         ASSETS
Current assets:
  Cash and cash equivalents............................. $   334,199 $  315,412
  Accounts receivable, trade (net of allowance for
   doubtful accounts of $40,000 in 1996 and 1995).......   1,269,006  1,713,511
  Inventories...........................................   3,941,189  3,615,265
  Prepayments and other.................................     106,548    173,960
                                                         ----------- ----------
      Total current assets..............................   5,650,942  5,818,148
Property, plant and equipment, net......................   4,838,109  3,893,266
Other assets............................................                112,412
                                                         ----------- ----------
      Total assets...................................... $10,489,051 $9,823,826
                                                         =========== ==========
          LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt..................... $   228,639 $  215,253
  Current portion of capital lease obligation...........                 27,025
  Accounts payable......................................     685,360    437,681
  Accrued expenses......................................     857,960    884,326
  State income taxes payable............................      79,000     61,000
                                                         ----------- ----------
    Total current liabilities...........................   1,850,959  1,625,285
Long-term debt, less current portion....................   1,434,813  2,095,124
                                                         ----------- ----------
    Total liabilities...................................   3,285,772  3,720,409
                                                         ----------- ----------
Commitments and contingencies
Shareholders' equity:
  Preferred stock, $10 par value, 1,000,000 shares
  authorized, none issued Common stock, no par, $1,000
   stated value, 5,000,000 shares authorized, 3,901,190
   shares issued and outstanding at December 31, 1996
   and 1995.............................................       1,000      1,000
  Additional paid-in capital............................   4,529,120  4,529,120
  Retained earnings.....................................   2,673,159  1,573,297
                                                         ----------- ----------
    Total shareholders' equity..........................   7,203,279  6,103,417
                                                         ----------- ----------
      Total liabilities and shareholders' equity........ $10,489,051 $9,823,826
                                                         =========== ==========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-2
<PAGE>

                              RAWSON-KOENIG, INC.

                              STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                            1996         1995         1994
                                         -----------  -----------  -----------
<S>                                      <C>          <C>          <C>
Sales................................... $19,521,871  $18,682,075  $17,184,557
Cost of sales...........................  15,002,105   14,903,247   13,300,320
                                         -----------  -----------  -----------
    Gross profit........................   4,519,766    3,778,828    3,884,237
Selling, general and administrative
 expenses...............................   2,748,844    2,585,773    2,281,899
                                         -----------  -----------  -----------
    Income from operations..............   1,770,922    1,193,055    1,602,338
Other income (expense):
  Interest expense......................    (147,211)    (194,436)    (210,891)
  Other, net............................       9,151      193,874       92,330
                                         -----------  -----------  -----------
    Income before provision for income
     taxes..............................   1,632,862    1,192,493    1,483,777
                                         -----------  -----------  -----------
Provision for income taxes:
  Federal...............................     454,000      306,000      267,000
  State.................................      79,000       61,000       75,000
                                         -----------  -----------  -----------
                                             533,000      367,000      342,000
                                         -----------  -----------  -----------
    Net income.......................... $ 1,099,862  $   825,493  $ 1,141,777
                                         ===========  ===========  ===========
    Net income per share................ $       .28  $       .21  $       .29
                                         ===========  ===========  ===========
Average shares outstanding..............   3,901,190    3,901,190    3,901,190
                                         ===========  ===========  ===========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-3
<PAGE>

                              RAWSON-KOENIG, INC.

                       STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                       RETAINED
                           COMMON STOCK   ADDITIONAL   EARNINGS       TOTAL
                         ----------------  PAID-IN   (ACCUMULATED SHAREHOLDERS'
                          SHARES   AMOUNT  CAPITAL     DEFICIT)      EQUITY
                         --------- ------ ---------- ------------ -------------
<S>                      <C>       <C>    <C>        <C>          <C>
Balance, December 31,
 1993................... 3,901,190 $1,000 $4,529,120  $ (393,973)  $4,136,147
Net income..............                               1,141,777    1,141,777
                         --------- ------ ----------  ----------   ----------
Balance, December 31,
 1994................... 3,901,190  1,000  4,529,120     747,804    5,277,924
Net income..............                                 825,493      825,493
                         --------- ------ ----------  ----------   ----------
Balance, December 31,
 1995................... 3,901,190  1,000  4,529,120   1,573,297    6,103,417
Net income..............                               1,099,862    1,099,862
                         --------- ------ ----------  ----------   ----------
Balance, December 31,
 1996................... 3,901,190 $1,000 $4,529,120  $2,673,159   $7,203,279
                         ========= ====== ==========  ==========   ==========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-4
<PAGE>

                              RAWSON-KOENIG, INC.

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

<TABLE>
<CAPTION>
                                               1996        1995        1994
                                            ----------  ----------  ----------
<S>                                         <C>         <C>         <C>
Cash flows from operating activities:
 Net income................................ $1,099,862  $  825,493  $1,141,777
                                            ----------  ----------  ----------
 Adjustments to reconcile net income to net
  cash provided by operating activities:
  Depreciation and amortization............    502,706     470,156     454,292
  Loss (gain) on disposal of property,
   plant and equipment.....................      7,323     (15,500)     10,480
  Change in assets and liabilities:
   Decrease (increase) in accounts
    receivable, trade......................    444,505    (104,956)   (363,771)
   Increase in inventories.................   (325,924)    (49,936)   (498,925)
   Decrease (increase) in prepayments and
    other..................................     67,412      (9,728)    (53,083)
   Decrease (increase) in other assets.....    112,412    (112,412)
   Increase (decrease) in accounts payable.    135,267    (213,197)    116,901
   Increase (decrease) in accrued expenses.    (26,366)     47,175     132,528
   Increase (decrease) in state income
    taxes payable..........................     18,000    (172,459)    159,774
                                            ----------  ----------  ----------
    Total adjustments......................    935,335    (160,857)    (41,804)
                                            ----------  ----------  ----------
    Net cash provided by operating
     activities............................  2,035,197     664,636   1,099,973
                                            ----------  ----------  ----------
Cash flows from investing activities:
  Purchase of property, plant, and
   equipment............................... (1,342,460)   (805,970)   (236,915)
  Proceeds from disposal of property,
   plant, and equipment....................                 15,500       1,955
                                            ----------  ----------  ----------
    Net cash used by investing activities.. (1,342,460)   (790,470)   (234,960)
                                            ----------  ----------  ----------
Cash flows from financing activities:
  Proceeds from revolving line of credit...  1,030,000   1,544,605     250,000
  Payments on revolving line of credit..... (1,461,605) (1,063,000)   (800,000)
  Payments on long-term debt...............   (215,320)   (203,713)   (262,007)
  Payments on capital lease obligation.....    (27,025)    (29,672)    (26,926)
                                            ----------  ----------  ----------
    Net cash provided (used) by financing
     activities............................   (673,950)    248,220    (838,933)
                                            ----------  ----------  ----------
Net increase in cash and cash equivalents..     18,787     122,386      26,080
Cash and cash equivalents at beginning of
 year......................................    315,412     193,026     166,946
                                            ----------  ----------  ----------
Cash and cash equivalents at end of year... $  334,199  $  315,412  $  193,026
                                            ==========  ==========  ==========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-5
<PAGE>

                              RAWSON-KOENIG, INC.

                         NOTES TO FINANCIAL STATEMENTS

1. NATURE OF ORGANIZATION:

  Rawson-Koenig, Inc. (the "Company"), a Texas corporation, designs,
manufactures, and markets certain equipment for light trucks. Its chief
products are truck tool boxes, truck service bodies, winches and truck-mounted
cranes.

  The Company sells its products to customers in the truck equipment industry
located throughout the United States. The Company performs ongoing credit
evaluations of its customers and generally does not require collateral. The
Company maintains reserves for potential credit losses and such losses have
been within management's expectations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 Net Income Per Share

  Net income per share is computed on the basis of the weighted average number
of shares of common stock outstanding during the year.

 Cash and Cash Equivalents

  For purposes of the statement of cash flows, the Company considers any
highly liquid debt instruments purchased with an original maturity date of
three months or less to be cash equivalents.

  The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts.

 Inventories

  Inventories are valued at the lower of cost or market. Cost, which includes
material, labor and manufacturing overhead, is determined by the first-in,
first-out (FIFO) method and, at December 31, 1996 and 1995, consisted of the
following:

<TABLE>
<CAPTION>
                                                             1996        1995
                                                          ----------- ----------
      <S>                                                 <C>         <C>
      Raw materials......................................  $1,391,135 $1,262,869
      Work in process....................................   1,554,390  1,609,002
      Finished goods.....................................     995,664    743,394
                                                          ----------- ----------
                                                          $ 3,941,189 $3,615,265
                                                          =========== ==========
</TABLE>

 Tooling Costs

  The costs of self-constructing tools and dies for use in manufacturing are
capitalized and depreciated over four years using the straight-line method.
Capitalized costs consist of labor, material and construction overhead.

 Property, Plant and Equipment

  Property, plant and equipment are recorded at cost and include improvements
that significantly add to productive capacity or extend useful lives. Costs of
maintenance and repairs are charged to expense. Upon retirement or disposal of
assets, the cost and related accumulated depreciation are removed from the
accounts and the gain or loss, if any, is reflected in operations.

  Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. Estimated useful lives range from three to thirty
one years. Depreciation expense for the years ended December 31, 1996, 1995
and 1994, amounted to $502,706, $470,156 and $454,292, respectively.

                                      F-6
<PAGE>

                              RAWSON-KOENIG, INC.

                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

  Property, plant and equipment at December 31, 1996 and 1995, consisted of
the following:

<TABLE>
<CAPTION>
                                                           1996         1995
                                                        -----------  ----------
      <S>                                               <C>          <C>
      Land............................................. $   680,000  $  680,000
      Buildings........................................   3,134,856   3,014,778
      Machinery and equipment..........................   5,313,870   4,023,323
      Self-constructed tools and dies..................     865,320     768,917
      Furniture and fixtures...........................     394,737     385,703
      Vehicles.........................................     151,554     110,974
      Machinery and equipment under capital lease......                 130,230
                                                        -----------  ----------
                                                         10,540,337   9,113,925
      Accumulated depreciation and amortization........  (5,702,228) (5,220,659)
                                                        -----------  ----------
                                                        $ 4,838,109  $3,893,266
                                                        ===========  ==========
</TABLE>

  Included in accumulated depreciation and amortization at December 31, 1995,
is $72,102 of accumulated amortization on machinery and equipment acquired
under a capital lease agreement. The lease expired during 1996 and the Company
purchased the equipment for $1 under the terms of the lease.

  Included in accumulated depreciation and amortization at December 31, 1996
and 1995, is $660,514 and $546,081, respectively, of accumulated depreciation
on self-constructed tools and dies.

 Income Taxes

  Income taxes are computed under the provisions of the Financial Accounting
Standards Board Statement No. 109, "Accounting for Income Taxes" ("SFAS 109").
Under SFAS 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to the differences between the financial
statement carrying value of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured by
using enacted tax rates that are applicable to the future years in which
deferred tax assets or liabilities are expected to be realized or settled.
Under SFAS 109, the effect of a change in tax rates on deferred tax assets and
liabilities is recognized in net earnings in the period in which the tax rate
change was enacted. The Company establishes a valuation allowance when it is
more likely than not that a deferred tax asset will not be recovered.

 Management Estimates

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

3. ACCRUED EXPENSES:

  Accrued expenses at December 31, 1996 and 1995, include $400,000 for
potential claims against the Company by its employees arising from injuries
incurred in the normal course of business prior to May 1, 1994. Actual claims
for medical expenses and lost time paid during the years ended December 31,
1996, 1995 and 1994, for injuries incurred prior to May 1, 1994, were $12,000,
$1,085 and $7,570, respectively. In addition, prior to May 1, 1994, the
Company had stop-loss insurance for any individual claim in excess of
$250,000. Effective May 1, 1994, the Company was fully insured under standard
workers' compensation insurance for claims incurred after that date.

                                      F-7
<PAGE>

                              RAWSON-KOENIG, INC.

                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

  Accrued expenses at December 31, 1996 and 1995, include $123,097 and
$124,110, respectively, for accrued payroll.

4. LONG-TERM DEBT:

  Long-term debt at December 31, 1996 and 1995, consisted of the following:

<TABLE>
<CAPTION>
                                                           1996        1995
                                                        ----------  ----------
      <S>                                               <C>         <C>
      Revolving line of credit in the amount of
       $2,200,000 with a bank, which matures April 30,
       1998. Interest is payable monthly at the bank's
       prime rate (8.25% at December 31, 1996).
       Borrowings under the agreement are restricted
       to certain percentages of accounts receivable
       and inventories................................  $  200,000  $  631,605
      Real estate loan payable to a bank, due in
       monthly payments of $22,047, including interest
       at 8.5% per year, with the unpaid balance due
       May 2000.......................................   1,300,258   1,445,618
      Installment loan payable to a bank, due in
       monthly payments of $5,830 plus interest at the
       bank's prime rate with the unpaid balance due
       April 1999.....................................     163,194     233,154
                                                        ----------  ----------
                                                         1,663,452   2,310,377
      Current portion of long-term debt...............    (228,639)   (215,253)
                                                        ----------  ----------
      Long-term portion...............................  $1,434,813  $2,095,124
                                                        ==========  ==========
</TABLE>

  Effective May 28, 1996, the Company amended its loan agreement with its
primary lender. The amended agreement extended the maturity date of the line
of credit to April 30, 1998 and provided the Company with an advancing term
equipment loan under which the Company may borrow up to $1,000,000 to finance
equipment purchases through April 30, 1997. Any borrowings outstanding under
this advancing term equipment loan as of April 30, 1997, will be converted to
a five year term loan that will be due in sixty equal monthly principal
payments beginning May 30, 1997, plus interest at the bank's prime rate. As of
December 31, 1996, there were no amounts outstanding under this advancing term
equipment loan.

  The Company's other advancing term equipment loan agreement, that allowed
for borrowings up to $1,500,000, expired unused on August 31, 1996.

  The line of credit agreement and other bank debt contain various restrictive
covenants which include, among other things, maintenance of a minimum tangible
net worth and minimum working capital, restrictions on property, plant and
equipment additions and additional indebtedness, and requirements to maintain
certain financial ratios. All loans from the bank are collateralized by
accounts receivable, inventories, equipment and Houston real estate.

  Future maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
      YEAR ENDING DECEMBER 31,
      ------------------------
      <S>                                                          <C>
        1997...................................................... $  228,639
        1998......................................................    442,867
        1999......................................................    211,686
        2000......................................................    780,260
                                                                   ----------
                                                                   $1,663,452
                                                                   ==========
</TABLE>

                                      F-8
<PAGE>

                              RAWSON-KOENIG, INC.

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

  Cash paid for interest was $147,572, $194,578 and $211,372 for the years
ended December 31, 1996, 1995 and 1994, respectively.

5. INCOME TAXES:

  The composition of deferred tax assets and liabilities and the related tax
effects at December 31, 1996 and 1995 was as follows:

<TABLE>
<CAPTION>
                                                            1996       1995
                                                          ---------  ---------
      <S>                                                 <C>        <C>
      Deferred tax assets:
        Tax assets which have been expensed for
         book purposes..................................  $  24,570  $  29,703
        Accrued expenses deductible when paid for tax...    148,000    148,000
        Net operating loss carryforwards................    176,955    239,289
        Investment tax credit carryforwards.............     15,000     15,000
                                                          ---------  ---------
          Total deferred tax assets.....................    364,525    431,992
      Deferred tax liabilities:
        Property, plant and equipment basis.............    156,302    146,546
                                                          ---------  ---------
      Net deferred tax assets before valuation
       allowance........................................    208,223    285,446
      Valuation allowance...............................   (208,223)  (285,446)
                                                          ---------  ---------
          Net deferred tax assets.......................  $     -    $     -
                                                          =========  =========
</TABLE>

  The differences between the federal income tax provision and the amount that
would result if the federal statutory rate of 34% were applied to pretax
financial income for 1996, 1995 and 1994 were as follows:

<TABLE>
<CAPTION>
                                1996              1995              1994
                          ----------------- ----------------- -----------------
                           AMOUNT   PERCENT  AMOUNT   PERCENT  AMOUNT   PERCENT
                          --------  ------- --------  ------- --------  -------
<S>                       <C>       <C>     <C>       <C>     <C>       <C>
Federal income tax
 provision at the
 statutory rate.........  $555,173   34.0%  $405,448   34.0%  $504,484   34.0%
Utilization of net
 operating loss
 carryforwards..........   (62,334)  (3.8)   (62,335)  (5.2)   (87,056)  (5.9)
Utilization of
 alternative minimum tax
 credit carryforwards...                      (4,013)  (0.4)  (125,500)  (8.4)
State income tax, net of
 federal benefit........    52,140    3.2     40,260    3.4     49,500    3.3
Change in valuation
 allowance, net of
 alternative minimum tax
 and utilization of net
 operating loss and
 alternative minimum tax
 credit carryforwards...   (14,889)   (.9)   (16,574)  (1.4)     3,092    0.2
Other...................     2,910     .1      4,214    0.4     (2,520)  (0.2)
                          --------   ----   --------   ----   --------   ----
                          $533,000   32.6%  $367,000   30.8%  $342,000   23.0%
                          ========   ====   ========   ====   ========   ====
</TABLE>

                                      F-9
<PAGE>

                              RAWSON-KOENIG, INC.

                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

  At December 31, 1996, the Company had approximate tax net operating loss and
tax credit carryforwards available to offset future taxable income as follows:

<TABLE>
<CAPTION>
                                            NET OPERATING LOSS
                                               CARRYFORWARDS
                                           ---------------------
                                                     ALTERNATIVE
                                            REGULAR    MINIMUM
                                              TAX        TAX      INVESTMENT
                                           REPORTING  REPORTING   TAX CREDIT
   EXPIRATION YEAR ENDING DECEMBER 31,      PURPOSES  PURPOSES   CARRYFORWARDS
   -----------------------------------     --------- ----------- -------------
   <S>                                     <C>       <C>         <C>
   1998...................................                          $ 6,000
   1999...................................                            9,000
   2001................................... $346,000   $346,000
   2002...................................   58,000     58,000
   2003...................................   58,000     58,000
   2004...................................   58,000     58,000
                                           --------   --------      -------
                                           $520,000   $520,000      $15,000
                                           ========   ========      =======
</TABLE>

  Utilization of net operating loss carryforwards is limited under the
alternative minimum tax rules. Additionally, special limitations exist under
the tax law which may restrict the utilization of the regular tax and
alternative minimum tax net operating loss carryforwards.

  Cash paid for income taxes was $503,530, $575,773 and $182,226 for the years
ended December 31, 1996, 1995 and 1994, respectively.

6. RELATED PARTY TRANSACTIONS:

  During 1996 and 1995, the Company paid $8,127 and $7,470, respectively, to
directors for consulting fees. In addition, the Company made payments for
legal services provided by the law firm of a director in the amount of
$90,346, $49,217 and $30,990 for the years ended December 31, 1996, 1995 and
1994, respectively. Accrued amounts payable to this law firm at December 31,
1996 and 1995 were $36,067 and $29,079, respectively.

7. COMMITMENTS AND CONTINGENCIES:

  The Company is engaged in various claims and litigation arising from its
operations. In the opinion of management, uninsured losses, if any, resulting
from these matters will not have a material adverse effect upon the financial
position or results of operations of the Company.

8. SUPPLEMENTAL CASH FLOW INFORMATION:

  During 1996, the Company purchased certain equipment with a cost of
$1,124,120 of which $112,412 was included in accounts payable at December 31,
1996.

                                     F-10
<PAGE>

                              RAWSON-KOENIG, INC.

                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                           COLUMN C
                                           ADDITIONS
                           COLUMN B  ---------------------             COLUMN E
                          BALANCE AT CHARGED TO CHARGED TO            BALANCE AT
        COLUMN A          BEGINNING  COSTS AND    OTHER     COLUMN D     END
      DESCRIPTION         OF PERIOD   EXPENSES   ACCOUNTS  DEDUCTIONS OF PERIOD
      -----------         ---------- ---------- ---------- ---------- ----------
<S>                       <C>        <C>        <C>        <C>        <C>
Valuation and qualifying
 accounts deducted in
 the balance sheet from
 the related assets to
 which they apply:
 (a) Allowance for
  doubtful accounts
  receivable:
   Year ended December
    31, 1994............   $ 40,000   $(9,746)   $10,124    $    378   $ 40,000
   Year ended December
    31, 1995............     40,000       466         63         529     40,000
   Year ended December
    31, 1996............     40,000     6,217        -         6,217     40,000
 (b) Deferred tax asset
  valuation allowance:
   Year ended December
    31, 1994............    655,976       -          -       291,621    364,355
   Year ended December
    31, 1995............    364,355       -          -        78,909    285,446
   Year ended December
    31, 1996............    285,446       -          -        77,223    208,223
</TABLE>


                                      F-11