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




                                    FORM 10-Q

(Mark One)

(X)   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1997

                                       OR

( )   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934.



                         Commission File Number: 0-24416


                             ADFLEX SOLUTIONS, INC.
             (Exact name of registrant as specified in its charter)

           DELAWARE                                              04-3186513
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                   2001 W. CHANDLER BLVD., CHANDLER, AZ 85224
                                 (602) 963-4584
               (Address, including zip code, and telephone number,
                      including area code, of registrant's
                          principal executive offices)

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 the filing requirements for the past 90 days.

Yes X  No ___

The number of shares outstanding of the issuer's common stock, as of June 30,
1997:

                 COMMON STOCK, $.01 PAR VALUE: 8,683,647 SHARES
<PAGE>   2
                             ADFLEX SOLUTIONS, INC.
                                      INDEX



                                                                            Page
                                                                            ----

PART I   FINANCIAL INFORMATION

         Item 1. Condensed Consolidated Financial Statements

            Condensed Consolidated Balance Sheets -
               June 30, 1997 and December 31, 1996 .......................     3

            Condensed Consolidated Statements of Operations -
               Three and Six Months Ended June 30, 1997 and 1996 .........     4

            Condensed Consolidated Statements of Cash Flows -
               Six Months Ended June 30, 1997 and 1996 ...................     5

            Notes to Condensed Consolidated Financial Statements .........     6

         Item 2. Management's Discussion and Analysis of
                 Financial Condition and Results of Operations ...........     8

PART II  OTHER INFORMATION

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

         Item 6. Exhibits and Reports on Form 8-K ........................    13

SIGNATURES ...............................................................    14


EXHIBITS

         (10.49)  Credit Agreement dated June 5, 1997 among the Registrant,
                  BankBoston, N.A. and BankBoston, N.A. as agent for Lenders

         (11.1)   Computation of Net Income per Share


                                        2
<PAGE>   3
                          PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

                             ADFlex Solutions, Inc.
                      Condensed Consolidated Balance Sheets
                                 (In thousands)


<TABLE>
<CAPTION>
                                                        June 30,    December 31,
                                                          1997          1996
                                                        --------      --------
ASSETS                                                (Unaudited)
<S>                                                   <C>           <C>
Current assets:
     Cash & cash equivalents                            $  5,593      $  6,097
     Accounts receivable, net                             33,214        25,149
     Other receivables                                     1,022         1,475
     Inventories                                          18,807        14,990
     Deferred tax assets                                   2,984         2,505
     Prepaid taxes                                           900           795
     Prepaid expenses                                        829           229
     Other current assets                                    448            74
                                                        --------      --------
Total current assets                                      63,797        51,314
Property, plant & equipment, net                          35,528        34,297
Deferred tax assets                                        7,509         7,546
Other assets                                                  25            24
                                                        --------      --------
                                                        $106,859      $ 93,181
                                                        ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Line of credit                                     $     --      $ 10,000
     Accounts payable                                     20,839        19,882
     Accrued liabilities                                  15,999         9,679
     Current portion of long-term debt and
          capitalized leases                                 162         2,651
                                                        --------      --------
Total current liabilities                                 37,000        42,212
Accrued restructuring charges, non-current                   255         2,500
Deferred tax liabilities                                     418            --
Long-term debt and capitalized leases                     25,106         7,689
Minority interest in consolidated joint venture              540           491
Stockholders' equity                                      43,540        40,289
                                                        --------      --------
                                                        $106,859      $ 93,181
                                                        ========      ========
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                        3
<PAGE>   4
                             ADFlex Solutions, Inc.
                 Condensed Consolidated Statements of Operations
                    (In thousands, except per share amounts)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                             Three Months Ended           Six Months Ended
                                                   June 30,                    June 30,
                                           -----------------------     -----------------------
                                             1997          1996          1997          1996
                                           ---------     ---------     ---------     ---------
<S>                                        <C>           <C>           <C>           <C>      
Net sales                                  $  56,244     $  35,031     $ 104,465     $  73,113
Cost of sales                                 47,154        29,787        87,944        60,671
                                           ---------     ---------     ---------     ---------
    Gross profit                               9,090         5,244        16,521        12,442
Operating expenses:
    Engineering, research & development        1,971         1,727         4,189         3,393
    Selling, general & administrative          4,062         3,521         7,429         6,635
    Amortization of intangible assets             --           795            --         1,591
                                           ---------     ---------     ---------     ---------

Total operating expenses                       6,033         6,043        11,618        11,619
    Operating income (loss)                    3,057          (799)        4,903           823
Interest income                                   49            84            77           159
Interest expense                                (511)         (453)         (945)         (688)
Other income (expense), net                       48           136          (164)           24
Minority interest in earnings of
  consolidated joint venture                     (32)           --           (49)           --
                                           ---------     ---------     ---------     ---------

Income (loss) before income taxes              2,611        (1,032)        3,822           318
Income taxes                                     731          (372)        1,070           139
                                           ---------     ---------     ---------     ---------

Net income (loss)                          $   1,880     $    (660)    $   2,752     $     179
                                           =========     =========     =========     =========

Net income (loss) per share                $    0.21     $   (0.08)    $    0.31     $    0.02
                                           =========     =========     =========     =========

Number of shares used in computing net
  income (loss) per share                      8,800         8,579         8,784         8,619
                                           =========     =========     =========     =========
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                        4
<PAGE>   5
                             ADFlex Solutions, Inc.
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                              Six Months Ended
                                                                   June 30,
                                                            ---------------------
                                                              1997         1996
                                                            --------     --------
<S>                                                         <C>          <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income                                                  $  2,752     $    179
Adjustments to reconcile net income to net cash provided
  by operating activities:
     Depreciation and amortization                             3,191        4,353
     Deferred taxes                                              (24)         212
     Changes in operating assets and liabilities:
        Accounts receivable                                   (8,065)      (5,351)
        Duties/VAT receivable                                    452       (1,598)
        Inventories                                           (3,817)      (1,664)
        Other current assets                                  (1,079)        (661)
        Accounts payable and accrued liabilities               5,033        5,520
                                                            --------     --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES           (1,557)         990

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
Capital expenditures                                          (4,423)      (8,925)
Increase in other assets                                           1          (19)
Investment in joint venture                                       50           --
Decrease in acquisition payable                                   --      (12,375)
                                                            --------     --------
NET CASH (USED IN) INVESTING ACTIVITIES                       (4,372)     (21,319)

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
Net activity on line of credit                               (10,000)       6,900
Proceeds from issuance of long-term debt                      25,000           --
Payments on long-term debt                                   (10,000)          --
Payments on capitalized lease obligations                        (73)         (74)
Issuance of common stock, net of expenses                        498        1,359
                                                            --------     --------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES                5,425        8,185
                                                            --------     --------

NET DECREASE IN CASH AND CASH EQUIVALENTS                       (504)     (12,144)
Cash and cash equivalents at beginning of period               6,097       15,699
                                                            --------     --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                  $  5,593     $  3,555
                                                            ========     ========
</TABLE>


                                        5
<PAGE>   6
                             ADFLEX SOLUTIONS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(1)      BASIS OF PRESENTATION

         The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring items) considered necessary for a fair
presentation have been included. Preparing financial statements requires the use
of estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses. Actual results may differ from these
estimates. Operating results for the six month period ended June 30, 1997 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1996.

         The accompanying unaudited condensed consolidated financial statements
include the accounts of the Company and its subsidiaries. All intercompany
accounts and transactions have been eliminated in consolidation.

         In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings per Share (SFAS
No. 128), which is required to be adopted on December 31, 1997. At that time,
the Company will be required to change the method currently used to compute
earnings per share and to restate all prior periods. Under the new requirements
for calculating primary earnings per share, the dilutive effect of stock options
will be excluded. The impact is expected to result in an immaterial increase in
primary earnings per share for the three and six months ended June 30, 1997 and
1996. The impact of SFAS No. 128 on the calculation of fully diluted earnings
per share for these quarters also is not expected to be material.

 (2)     ACCOUNTS RECEIVABLE, NET

         Accounts receivable consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                        June 30,   December 31,
                                                          1997         1996
                                                        --------     --------
<S>                                                     <C>          <C>     
         Accounts receivable trade                      $ 34,140     $ 25,760
         Allowance for doubtful accounts and returns        (926)        (611)
                                                        --------     --------
                                                        $ 33,214     $ 25,149
                                                        ========     ========
</TABLE>

(4)      INVENTORIES

         Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                        June 30,   December 31,
                                                         1997         1996
                                                        -------      -------
<S>                                                     <C>          <C>    
         Raw materials                                  $10,068      $ 8,152
         Work-in-process                                  7,730        6,690
         Finished goods                                   1,009          148
                                                        -------      -------
                                                        $18,807      $14,990
                                                        =======      =======
</TABLE>


                                        6
<PAGE>   7
(5)      ACCRUED LIABILITIES

         Accrued liabilities consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                   June 30,  December 31,
                                                    1997        1996
                                                   -------     -------
<S>                                                <C>         <C>    
         Salaries and benefits                     $ 3,906     $ 2,830
         Income taxes payable                        2,459         170
         Accrued interest                              145         864
         Accrued restructuring charges, current      6,432       4,187
         Other                                       3,057       1,628
                                                   -------     -------
                                                   $15,999     $ 9,679
                                                   =======     =======
</TABLE>
                                                            

(6)      LINE OF CREDIT  AND LONG-TERM DEBT

         Prior to June 5, 1997, the Company had a $20 million revolving line of
credit with The First National Bank of Boston and First Interstate Bank of
Arizona (the FNBB line). On June 5, 1997, the Company entered into a new credit
agreement (the credit facility) arranged by BancBoston Securities, Inc., which
includes a number of banks as lenders. The credit facility consists of a $20
million three-year revolving line of credit and a $25 million five-year term
loan with equal principal payments due each quarter beginning with the quarter
ending December 31, 1998 and continuing through the quarter ending March 31,
2002. Borrowing under the line of credit is limited to 80% of the aggregate
value of all eligible domestic accounts receivable plus 70% of the aggregate
value of all eligible foreign accounts receivable. Under the terms of the
agreement, any outstanding balance bears interest at BankBoston, N.A.'s prime
interest rate or LIBOR plus an applicable margin ranging from 1.5% to 2.25%
based on the Company achieving certain financial objectives at the end of each
quarter. The credit facility is secured by all assets of the Company and a
pledge by the Company of 66 2/3% of the stock of its subsidiaries. The Company
is required, under the credit agreement, to maintain certain financial ratios
and meet certain net worth and indebtedness tests for which the Company is in
compliance at June 30, 1997. At June 30, 1997, $25.0 million was outstanding
under the term loan and there were no amounts outstanding under the revolving
line of credit. Of the proceeds from the $25.0 million term loan discussed
above, approximately $7.5 million in principal plus $2.0 million in accrued
interest was used to retire, ahead of schedule, the subordinated debenture
issued in the acquisition of the Company's U.K. operation. In addition, the
Company remitted $2.5 million in principal plus $0.8 million in accrued interest
in January 1997 in payment of the subordinated debenture.

(7)      RESTRUCTURING CHARGES

         At the close of the third quarter of 1996, the Company's Board of
Directors approved a plan to restructure its assembly operation in the U.K. and
transfer production from the U.K. to the Company's manufacturing facility in
Lamphun, Thailand. As part of this restructuring, the Company recorded the
following charges: $13.5 million write-off in intangible assets, $8.8 million
write-down of property, plant and equipment and $6.9 million in employee and
lease termination charges. As of June 30, 1997, the Company has paid out $0.3
million in employee termination costs. The Company expects to pay out $5.5
million of the employee and lease termination costs in 1997 and an additional
$1.1 million in 1998.

(8)      INCOME TAXES

         The Internal Revenue Service (IRS) has concluded a field audit of the
Company's income tax returns for the tax year 1993. In connection with this
audit, the IRS has proposed adjustments to the Company's income and tax credits
for that year, which would result in additional tax of approximately $1.6
million plus interest. The major proposed adjustment, which relates to the
allocation of the purchase price of assets obtained from Rogers Corporation
(Rogers) pursuant to acquisition agreements between the Company and Rogers,
would extend the period over which the tax benefit for the purchase price would
be recovered. The Company disagrees with the proposed adjustments and is
contesting them. The Company does not believe based on currently available
information that the final disposition of these matters will have a material
adverse effect on the overall financial condition of the Company.


                                        7
<PAGE>   8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations


RESULTS OF OPERATIONS

         Net Sales

         Net sales for the three and six month periods ended June 30, 1997
increased 60.6% and 42.9%, respectively, over the same periods in 1996. For the
three and six month periods ending June 30, 1997, the Company experienced a
strong demand for its products, especially in flex circuits provided to the
communications and storage array markets. In addition, the Company furthered its
plan for its Thailand facility to reach volume production during the second half
of 1997 with shipments of $6.9 million from Thailand for the six months ended
June 30, 1997. Net sales for the three and six months ended June 30, 1996 were
negatively impacted by program delays among customers in the hard disk segment
involving new magneto-resistive (MR) recording technology, a slow down for
mature products and order cancellations from certain major customers.

         Gross Profit

         Gross profit as a percentage of net sales (gross margin) for the three
and six months ended June 30, 1997 was 16.2% and 15.8% as compared to 15.0% and
17.0%, respectively, for the same periods in 1996. The Company's gross margin
for 1997 was impacted by several factors including overhead and capacity
utilization, process yields and product mix.

         During 1996, the U.K. operations experienced a reduction in sales
levels of nearly 40% under levels experienced in the later part of 1995. The
severe reduction in revenues resulted in decreased capacity utilization. As a
result of lower revenues and decreased utilization and the resulting negative
impact on the Company's financial position, the Company announced in the third
quarter of 1996 its intention to transfer assembly operations from the U.K. to
Thailand. The transfer is currently in process and is expected to be complete by
the end of 1997.

         For the three month period ended June 30, 1997, the Company's gross
profit was positively impacted by the benefits associated with the lower cost
structure related to Thailand operations. Additionally, as more production is
transferred to the Thailand facility and volume productions levels are achieved,
the Company is anticipating process yields to improve; therefore, the Company
anticipates gross margins should continue to improve.

         For the six month period ended June 30, 1997, the Company's assembly
operations contributed very low gross margin due, in large part, to the
decreased overhead and capacity utilization discussed previously.

         The Company's flex fabrication operations experienced a decline in
gross margins for the three and six months ended June 30, 1997 as compared to
the same periods in 1996. As a result of the Company's product diversification
and growth strategies, the product mix between Hard Disk Drive (HDD) and non-HDD
products, as well as individual products within these groups, is constantly
shifting. The material content of products varies significantly due to the
complexity of the design, plating requirements, component content and a variety
of other factors. Whereas the Company competes in the HDD market based on design
expertise and technological advantages, the market for non-HDD products tends to
be subject to intense price competition, particularly for communications
products, an area where the Company experienced significant growth for the three
and six month periods ended June 30, 1997 as compared with the same periods in
1996. As such, the material and labor content for non-HDD products relative to
the selling price tends to run higher than that of the Company's HDD products.
For the quarter ended June 30, 1997, sales to the Company's non-HDD customers
were 50% of sales, compared with 38% for the same period in 1996.

         Operating Expenses

         Engineering, research & development expenses and selling, general &
administrative expenses as a percentage of net sales for the three month period
ended June 30, 1997 were 3.5% and 7.2% compared with 4.9% and 10.1% for the same
period in 1996, respectively. The decrease in engineering, research &
development 


                                        8
<PAGE>   9
expenses and selling, general & administrative expenses for the same period
reflects the Company's ability to obtain increased leverage of such expenses in
periods of increasing sales. Amortization of intangible assets purchased in the
acquisition of ADFlex U.K. was $0.8 million, or 2% of net sales, for the three
month period ended June 30, 1996. The intangible assets were written off in 1996
as part of the U.K. restructuring.

         For the six month period ended June 30, 1997, engineering, research &
development expenses and selling, general & administrative expenses as a
percentage of net sales were 4.0% and 7.1% compared with 4.6% and 9.1% for the
same period in 1996, respectively.

         Interest and Other Income (Expense)

         For the three month period ended June 30, 1997, interest expense
includes $0.2 million of interest expense on the subordinated debenture and $0.4
million of interest expense related to borrowings under the line of credit and
the term loan and capital lease obligations. Interest expense for the same
period in 1996 represents $0.2 million of interest expense on the subordinated
debenture and $0.2 million of interest expense related to borrowing on the line
of credit and capital lease obligations. Other income (expense) for both periods
represents the net impact of bank fees and exchange gains and losses realized on
the settlement of transactions associated with the Company's foreign
subsidiaries.

         For the six month period ended June 30, 1997, interest expense includes
$0.3 million of interest expense on the subordinated debenture and $0.6 million
of interest expense related to borrowings under the line of credit and the term
loan and capital lease obligations. Interest expense for the same period in 1996
represents $0.4 million of interest expense on the subordinated debenture and
$0.3 million of interest expense related to borrowing on the line of credit and
capital lease obligations. Other income (expense) for both periods represents
the net impact of bank fees and exchange gains and losses realized on the
settlement of transactions associated with the Company's foreign subsidiaries.

LIQUIDITY AND CAPITAL RESOURCES

         The Company has financed its growth and operations liquidity needs to
date primarily through cash generated from operations, the use of bank credit
lines and through proceeds from the sale of its Common Stock. The primary uses
of cash have been for increased working capital, funding of capital expenditures
and investment in ADFlex U.K. and ADFlex Thailand.

         In June 1997, the Company replaced its existing $20 million revolving
line of credit with The First National Bank of Boston and First Interstate Bank
of Arizona (the FNBB line) with a new credit agreement (the credit facility)
arranged by BancBoston Securities, Inc., which includes a number of banks as
lenders. The credit facility consists of a $20 million three-year revolving line
of credit and a $25 million five-year term loan with equal principal payments
due each quarter beginning with the quarter ending December 31, 1998 and
continuing through the quarter ending March 31, 2002. Borrowing under the line
of credit is limited to 80% of the aggregate value of all eligible domestic
accounts receivable plus 70% of the aggregate value of all eligible foreign
accounts receivable. Under the terms of the agreement, any outstanding balance
bears interest at BankBoston, N.A.'s prime interest rate or LIBOR plus an
applicable margin ranging from 1.5% to 2.25% based on the Company achieving
certain financial objectives at the end of each quarter. The credit facility is
secured by all assets of the Company and a pledge by the Company of 66 2/3% of
the stock of its subsidiaries. The Company is required, under the credit
agreement, to maintain certain financial ratios and meet certain net worth and
indebtedness tests for which the Company is in compliance at June 30, 1997. At
June 30, 1997, $25.0 million was outstanding under the term loan and there were
no amounts outstanding under the revolving line of credit.

         Net cash used by operating activities for the six month period ended
June 30, 1997 was $1.6 million compared with net cash provided by operations of
$1.0 million for the same period in 1996. During these same periods net income
was $2.8 million and $0.2 million, respectively. Increased sales levels for the
six month period ended June 30, 1997 resulted in the Company maintaining a high
level of working capital, primarily an increased level of accounts receivable
and inventory. During the six month period ended June 30, 1996, the Company
experienced increased working capital requirements of $12.0 million primarily
for funding of accounts receivable associated with its U.K. operations as
receivables were not purchased in the acquisition. These working capital
requirements were funded in part through the generation of accounts payable and
accrued liability balances with the 


                                        9
<PAGE>   10
remainder financed from borrowings under the existing bank line of credit. The
1996 results reflect $1.6 million of amortization expense for intangible assets
related to the ADFlex U.K. acquisition. The intangible assets were written off
in 1996 as part of the U. K. restructuring.

         Net cash used in investing activities was $4.4 million for the six
months ended June 30, 1997 compared with $21.3 million for the same period in
1996. Capital expenditures for the six months ended June 30, 1997 were $4.4
million compared with $8.9 million for the same period in 1996. Late in the
first quarter of 1995, the Company began a capacity expansion plan in response
to increasing sales levels which was complete in 1996. Capital expenditures
during the periods were financed from existing cash balances and from borrowings
under the Company's bank line of credit. The Company presently expects capital
expenditures to total approximately $15.0 million in 1997. In January, 1996 the
Company paid $12.4 million in connection with its acquisition of the ADFlex U.K.
operations. This payment was financed from existing cash and cash equivalent
balances.

         Net cash provided by financing activities for the six months ended June
30, 1997 was $5.4 million compared with $8.2 million for the same period in
1996. Of the proceeds from the $25.0 million term loan discussed above,
approximately $7.5 million in principal plus $2.0 million in accrued interest
was used to retire, ahead of schedule, the subordinated debenture issued in the
acquisition of the Company's U.K. operation, approximately $15.0 million was
used to repay borrowings under the Company's existing line of credit and the
remainder was used to finance working capital of the Company. In addition, the
Company remitted $2.5 million in principal plus $0.8 million in accrued interest
in January 1997 in payment of the subordinated debenture. Funding for this
payment came from the Company's line of credit. The Company generated $0.5
million and $1.4 million in the six months ended June 30, 1997 and 1996,
respectively, through sales of its Common Stock. Net repayments on the Company's
bank line of credit totaled $10.0 million during the six months ended June 30,
1997 compared to net borrowings of $6.9 million for the same period in 1996.
Borrowings on the line were used to finance working capital requirements and
capital expenditures as discussed above.

         The Company believes that its existing cash balances, funds generated
from operations and borrowings under the line of credit will be sufficient to
meet its liquidity requirements for the next twelve months.

OTHER MATTERS

         Mexico Operations

         The Mexican Peso experienced significant devaluation relative to the
U.S. Dollar in December 1994 and early 1995. Peso-based operating costs are
primarily wages and benefits for the Company's Mexican hourly union employees.
The initial devaluation had the effect of reducing Mexican labor cost by nearly
40%. Since that time, however, savings have been partially offset by a series of
four wage increases averaging 7-10% each. The Peso has experienced further
devaluation in the later part of 1996, prompting the Mexican government to
mandate a 17% increase in the minimum wage effective in December 1996. It is
expected that the Company will continue to respond proportionately to minimum
wage increases. The Company does not believe that future wage increases will
exceed the benefit of the devaluation. However, there can be no assurance that
future currency fluctuations and government-mandated wage increases will not
have a material effect on the Company's business, financial condition and
results of operations.

         Thailand Operations

         During 1996, the Company invested $2.4 million in its Thailand joint
venture with Hana Microelectronics. The Company is in the process of
transferring equipment and technical expertise from its existing operations to
Thailand. Initial shipments from Thailand began in the fourth quarter of 1996
and totaled $6.9 million for the first half of 1997; however, the Company does
not expect to reach volume production until the fourth quarter of 1997. No
assurances can be given that volume production will be reached as anticipated or
that the Company will realize the benefits anticipated due to the lower cost
structure of the Thailand operations. The Company invested an additional $1.5
million in the joint venture during the six months ended June 30, 1997 and
anticipates an additional $1.0 million will be invested in 1997, primarily for
the purchase of manufacturing equipment. During the six month period ended June
30, 1997, the Thai Baht experienced significant devaluation in relation to the
U.S. Dollar. As all 


                                       10
<PAGE>   11
sales and the majority of expenses for the Thailand operation are denominated in
United States Dollars, the devaluation is expected to have little or no impact
on the Company's business, financial condition and results of operations.


         Foreign Operations

         The Company's primary finishing and assembly facilities are located in
Agua Prieta, Mexico; Havant, United Kingdom and Lamphun, Thailand. While the
Company believes that it has established good relationships with its labor force
and the local governments, the spread of the manufacturing process over multiple
countries subjects the Company to risks inherent in international operations.
All of the Company's sales for the six months ended June 30, 1997 were in United
States dollars.

         Future Operations

         The Company conducted environmental studies of its facility in
Chandler, Arizona which discovered a limited amount of soil contamination that
may require remediation. While the investigation of the extent of this
contamination has not been completed, based on the preliminary information
currently available to it, the Company believes that the costs associated with
the investigation and remediation of this situation will not have a material
adverse effect on its operations or financial condition; however, given the
uncertainties associated with environmental contamination, until a full
investigation is completed there can be no assurance that such costs will not
have a material adverse impact on the Company. Pursuant to the acquisition
agreements pertaining to the initial formation of the Company, Rogers
Corporation (Rogers) retained all environmental liabilities existing prior to
the acquisition. While Rogers currently has sufficient assets to fulfill its
obligations under the acquisition agreements, if pre-closing environmental
liabilities requiring remediation are discovered and the Company was unable to
enforce the acquisition agreement against Rogers, the Company could become
subject to costs and damages relating to such environmental liabilities. Any
such costs and damages imposed on the Company could materially adversely affect
the Company's business, financial condition and results of operations.

         In mid 1995, the Company acquired a manufacturing facility located in
Agua Prieta, Mexico. In connection with this acquisition, the Company conducted
an environmental study of the facility which indicated the contamination by
hazardous materials in the soil and groundwater. Pursuant to the purchase
agreement, the sellers submitted a remediation plan to the appropriate Mexican
authorities and the plan was approved in May 1997. Subsequent remediation is
proceeding and expected to be complete by the end of 1997. The sellers'
obligation for the cost of remediation is limited to $2.5 million. A total of
$1.0 million is being held in escrow pending sellers' performance of their
environmental obligations under the agreement. It is expected that the escrow
balance will be adequate to complete the required remediation according to the
approved plan.

         The Company is subject to a variety of environmental laws relating to
the storage, discharge, handling, emission, generation, manufacture, use and
disposal of hazardous material used to manufacture the Company's flex products.
The Company believes that it has been operating its facilities in substantial
compliance in all material respects with existing environmental laws; however,
the Company cannot predict the nature, scope or effect of legislation or
regulatory requirements that could be imposed or how existing or future laws or
regulations will be administered or interpreted with respect to products or
activities to which they have not previously been applied. For this reason, the
Company has decided to implement environmental management systems geared toward
minimizing the negative impacts and reducing potential financial risks arising
from environmental issues. Compliance with more stringent environmental laws, as
well as more vigorous enforcement policies of regulatory agencies, could require
substantial expenditures by the Company and could adversely affect the results
of operations of the Company.

         New Accounting Standards

         In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings per Share (SFAS
No. 128), which is required to be adopted on December 31, 1997. At that time,
the Company will be required to change the method currently used to compute
earnings per share and to restate all prior periods. Under the new requirements
for calculating primary earnings per share, the dilutive effect of stock options
will be excluded. The impact is expected to result in an immaterial increase in
primary 


                                       11
<PAGE>   12
earnings per share for the three and six months ended June 30, 1997 and 1996.
The impact of SFAS No. 128 on the calculation of fully diluted earnings per
share for these quarters is also not expected to be material.


         Income Taxes

         The Company's effective tax rate of 28% for the three and six month
periods ended June 30, 1997 is an estimated annual rate based upon projected
profit levels at each of the Company's entities. As the actual tax rate for each
entity varies in accordance with the taxing authority is whose jurisdiction they
reside, a significant change in operating income at any one location can result
in a change in the overall effective tax rate for the Company. The Company
monitors the effective tax rate on a continuous basis and makes adjustments as
conditions warrant.

         The Internal Revenue Service (IRS) has concluded a field audit of the
Company's income tax returns for the tax year 1993. In connection with this
audit, the IRS has proposed adjustments to the Company's income and tax credits
for that year, which would result in additional tax of approximately $1.6
million plus interest. The major proposed adjustment, which relates to the
allocation of the purchase price of assets obtained from Rogers Corporation
(Rogers) pursuant to acquisition agreements between the Company and Rogers,
would extend the period over which the tax benefit for the purchase price would
be recovered. The Company disagrees with the proposed adjustments and is
contesting them. The Company does not believe based on currently available
information that the final disposition of these matters will have a material
adverse effect on the overall financial condition of the Company.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

         This report contains forward-looking statements that involve risks and
uncertainties, including but not limited to, fluctuating net sales and margins
and their effect on the Company's profitability; the risk of customer
concentration and dependence on the hard disk drive industry; the risk that the
Company's transition of manufacturing to Thailand will be delayed or disrupted,
or that such transfer will not result in increased efficiencies, cost savings,
or improved margins as anticipated or at the time anticipated; the risk that
margins will continue to be negatively impacted by higher material content of
flex products, especially related to non-HDD products; general risks inherent in
international operations, including currency fluctuations and
government-mandated wage increases; general manufacturing risks, including
environmental risks related to manufacturing operations and the clean-up of the
Mexican manufacturing facility; uncertainty with respect to the Internal Revenue
Service report on the Company's 1993 tax return and the ultimate financial
impact, if any, thereof; the risk that all of the foregoing factors or other
factors could cause fluctuations in the price of the Company's Common Stock; and
other risks detailed herein and in the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 and other Securities and Exchange Commission
filings.


PART II. OTHER INFORMATION

Item 1. Legal Proceedings

                  None

Item 2. Changes in Securities

                  None

Item 3. Defaults upon Senior Securities

                  None

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


                  At the annual meeting of the shareholders of ADFlex Solutions
Inc. held on April 22, 1997, the following matters were submitted to a vote:

         PROPOSAL I - ELECTION OF DIRECTORS


                                       12
<PAGE>   13
<TABLE>
<S>                                                  <C>                    <C>    
                  Rolando C. Esterverena             For - 7,531,584        Withheld -   260,397
                  Richard P. Clark                   For - 7,561,618        Withheld -   230,363
                  Wade Meyercord                     For - 7,561,868        Withheld -   230,113
                  Steve Sanghi                       For - 7,562,676        Withheld -   229,305
                  William Kennedy Wilkie             For - 6,669,639        Withheld - 1,122,342
</TABLE>

         PROPOSAL II - RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS 
         AUDITORS
                  For - 7,533,839       Against - 242,068      Abstain  - 16,074

         PROPOSAL III - APPROVAL OF AN AMENDMENT TO THE 1994 EMPLOYEE STOCK
         PURCHASE PLAN TO INCREASE THE SHARE RESERVE THEREUNDER:
                  For - 7,095,670       Against - 576,629      Abstain  - 37,307

Item 5. Other Information

                  None

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits.

                  (10.49)  Credit Agreement dated June 5, 1997 among the 
                           Registrant, BankBoston, N.A. and BankBoston, N.A. 
                           as agent for Lenders

                  (11.1)   Computation of Net Income Per Share

         (b)      Reports on Form 8-K.

                  The registrant did not file any reports on Form 8-K during the
quarter ended June 30, 1997.


                                       13
<PAGE>   14
                                   SIGNATURES

         Pursuant to the requirements 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.

                                  ADFlex Solutions, Inc.


Date: August 13, 1997             By /s/ Donald E. Frederick
                                    -----------------------------
                                     Donald E. Frederick
                                     Chief Financial Officer
                                     (Duly Authorized Officer and
                                     Principal Financial and Accounting Officer)


                                       14