<PAGE>

                                 United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-QSB

                                   (Mark One)

(x) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Period Ended September 30, 1996.

                                             or

( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Transition Period From              to
                                           ------------    ---------------
Commission file number 33-82468

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

            Delaware                                      13-3773537
--------------------------------                --------------------------------
 (State or other jurisdiction of                       (I.R.S. Employer
  incorporation or organization)                      Identification No.)

2001 W. Sample Road, Suite 300
   Pompano Beach, Florida                                    33064
--------------------------------                --------------------------------
(Address of principal executive offices)                   (Zip Code)

                                  (954)972-9339
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                 Not applicable
--------------------------------------------------------------------------------
      (Former name, former address and former fiscal year, if changed since
                                  last report)

   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  periods that the
   registrant  was required to file such  reports),  and (2) has been subject to
   such filing requirement for the past 90 days. Yes X No

                     Applicable only to Issuers Involved in Bankruptcy
                        Proceedings During the Preceding Five Years

   Indicate by check mark whether the  registrant  has filed all documents and
   reports  required to be filed by Sections 12, 13, or 15(d) of the Securities
   Exchange Act of 1934  subsequent to the  distribution  of securities under a
   plan confirmed by the court. Yes      No
                                    ----    ----

                      Applicable Only to Corporate Issuers

   Indicate the number of shares  outstanding of each of the issuer's classes of
   common stock, as of the latest practical date.

      Common Stock, $.01 Par Value 3,980,053 shares as of October 30, 1996.


<PAGE>


                                      Index

                        AIM Group, Inc. and Subsidiaries


Part I.  Financial Information


Item 1.  Financial Statements (Unaudited)

      Condensed consolidated balance sheets - September 30, 1996 and 1995,  and
      December 31, 1995

      Condensed consolidated statements of income - Three months ended September
      30, 1996 and 1995; Nine months ended September 30, 1996 and 1995

      Condensed  consolidated  statements  of  cash  flows - Nine  months  ended
      September 30, 1996 and 1995

      Notes to condensed consolidated financial statements - September 30, 1996


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


Part II.  Other Information


Item 1.  Legal Proceedings

Item 2.  Changes in Securities

Item 3.  Defaults upon Senior Securities

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

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8-K


Signatures


<PAGE>


Part 1. Financial Information
                        AIM Group, Inc. and Subsidiaries

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                      September 30,   September 30,   December 31,
                                                                                         1996            1995             1995
                                                                                       --------         -------         -------
<S>                                                                              <C>               <C>               <C>   
                                                                                                                  
ASSETS                                                                                 (Unaudited)      (Unaudited)      (Note)

CURRENT ASSETS
  Cash                                                                            $        98,844   $      30,061    $    260,280
  Accounts receivable
    Trade                                                                                 533,470         145,088         691,457
    Other                                                                                  10,511               0           9,760
  Inventories                                                                             185,141         112,214         153,029
  Prepaid expenses                                                                         31,374          27,869          24,576
                                                                                     -------------   -------------    ------------

             Total current assets                                                         859,339         315,232       1,139,102

PROPERTY, PLANT AND EQUIPMENT                                                             718,499         475,255         598,579
Less allowances for depreciation                                                         (151,421)        (83,664)        (98,163)
                                                                                     -------------   -------------    ------------

                                                                                          567,079         391,591         500,416

RESOURCE PROPERTY                                                                       3,999,567       3,985,325       3,994,868

OTHER ASSETS                                                                              145,809          94,489          68,228
                                                                                     -------------   -------------    ------------

                                                                                  $     5,571,794   $   4,786,637    $  5,702,614
                                                                                     =============   =============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                                                $       334,930 $       526,421  $      369,924
  Receivable financing liability                                                          210,638               0         475,215
  Current portion of long-term debt                                                        21,543         310,090          12,201
  Accrued expenses                                                                         50,381          72,530          94,532
                                                                                     -------------   -------------    ------------

         Total current liabilities                                                        617,492         909,041         951,872

LONG-TERM DEBT, less current portion                                                       79,475               0          72,232

CONVERTIBLE NOTES PAYABLE                                                               1,050,000               0         750,000

STOCKHOLDERS' EQUITY
  Preferred Stock; 1,000,000 shares authorized; $1 par value;
    no shares issued or outstanding.                                                            0               0               0
  Common stock; 6,000,000 shares authorized; $.01 par value;
    4,193,465 shares issued and 3,980,053 shares outstanding
    September 30, 1996, 3,898,929  shares  issued and 3,685,516
    outstanding  September 30, 1995 and 4,113,465 shares issued
    and 3,900,053 outstanding December 31, 1995.                                           41,935          38,989          41,135
  Additional paid in capital                                                            4,232,250       4,022,185       4,150,259
  Common stock held in treasury - 213,413 shares                                          (11,575)        (11,575)        (11,575)
  Common stock subscription received - 80,000 shares                                            0               0          82,792
  Accumulated  deficit                                                                   (437,783)       (172,003)       (334,101)
                                                                                     -------------   -------------    ------------

                                                                                        3,824,827       3,877,596       3,928,510
                                                                                     -------------   -------------    ------------

                                                                                  $     5,571,794 $     4,786,637  $    5,702,614
                                                                                     =============   =============    ============

</TABLE>

Note:  The balance  sheet at December 31, 1995 has been derived from the audited
financial  statements at that date but does not include all the  information and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.

See notes to condensed consolidated financial statements.



<PAGE>

                        AIM Group, Inc. and Subsidiaries

                             STATEMENT OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                               Three Months
                                                             Ended September 30,        Nine Months Ended September 30,
                                                       -------------------------------------------------------------------------

                                                           1996          1995           1996           1995          1995
                                                       ------------  -------------  -------------  ------------  -------------
<S>                                                   <C>           <C>            <C>            <C>           <C>    
                                                          (Actual)       (Actual)       (Actual)      (Actual)    (Pro forma)

Net sales                                             $    645,871  $     531,687  $   2,500,001  $  1,319,170  $   1,740,635
Costs and expense
  Cost of products sold                                    437,888        382,556      1,685,408       907,745      1,190,482
  Selling and administrative expenses                      271,020        193,089        747,289       484,193        608,257
  Interest                                                  13,050         15,207        112,143        42,923         55,474
  Depreciation and amortization                             20,488         15,178         58,843        31,052         44,842
                                                       ------------  -------------  -------------  ------------  -------------

                                                           742,446        606,030      2,603,683     1,465,913      1,899,055
                                                       ------------  -------------  -------------  ------------  -------------

Earnings (loss) before taxes                               (96,575)       (74,343)      (103,682)     (146,743)      (158,420)

Income taxes                                                     0              0              0             0              0
                                                       ------------  -------------  -------------  ------------  -------------

Net earnings (loss)                                  $     (96,575) $     (74,343) $    (103,682) $   (146,743) $    (158,420)
                                                       ============  =============  =============  ============  =============


Net earnings per share                               $      (0.024) $      (0.020) $      (0.026) $     (0.059) $      (0.064)
                                                       ============  =============  =============  ============  =============


Weighted average shares outstanding                      3,980,053      3,685,516      3,971,262     2,470,840      2,470,840
                                                       ============  =============  =============  ============  =============
</TABLE>












See notes to condensed consolidated financial statements.





<PAGE>


                               AIM Group, Inc. and Subsidiaries

                                    STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                          Three Months               Nine Months
                                                                       Ended September 30,       Ended September 30,
                                                                    --------------------------------------------------
                                                                       1996          1995        1996          1995
                                                                    ----------   ----------   ----------    ----------
<S>                                                               <C>          <C>          <C>           <C>   

                                                                     (Actual)     (Actual)     (Actual)      (Actual)


CASH FLOWS FROM OPERATIONS                                        $    79,341  $    84,792  $  (275,822)  $   (39,809)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Cash balances of merged entities                                          0            0            0        92,759
  Purchases of property and equipment                                 (34,012)     (10,696)    (119,920)      (20,486)
  (Increases) decreases in other assets and resource property          (4,159)     (23,662)     (82,280)      (46,687)
                                                                    ----------   ----------   ----------    ----------

       Net cash provided by investing activities                      (38,171)     (34,358)    (202,200)       25,586
                                                                    ----------   ----------   ----------    ----------


CASH FLOWS FROM FINANCING ACTIVITIES:
  Receipt of proceeds from convertible note payable                         0            0      300,000             0
  Net change in debt                                                   10,355            0       16,586             0
  Repayment of advances by affiliated company                               0            0            0        19,750
                                                                    ----------   ----------   ----------    ----------
                                                                   
       Net cash provided by financing activities                       10,355            0      316,586        19,750
                                                                    ----------   ----------   ----------    ----------


     NET INCREASE (DECREASE) IN CASH                             $     51,525 $     50,434 $   (161,436) $      5,527
                                                                    ==========   ==========   ==========    ==========

<CAPTION>
<S>                                                                                                      <C>    
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Non cash effects of merger as of March 31, 1995
    Increases in assets and liabilities
      Trade accounts receivable                                                                          $    129,723
      Inventories                                                                                              74,022
      Prepaid expenses                                                                                         19,417
      Property and equipment                                                                                  398,914
      Resource property                                                                                     3,947,792
      Other assets                                                                                             45,666
      Accounts payable                                                                                       (368,500)
      Loans payable                                                                                           (77,500)
      Accrued expenses                                                                                         (2,764)
                                                                                                            ----------

Subtotal                                                                                                    4,166,770

    Add cash assumed with merger (see above)                                                                        0
    Receivables from affiliates - eliminated upon merger                                                     (210,030)
                                                                                                            ----------

                                                                                                         $  3,956,740
                                                                                                            ==========


    Issuance of common stock                                                                             $  4,061,074
    Cost of treasury stock                                                                                    (11,575)
                                                                                                            ----------

                                                                                                         $  4,049,499
                                                                                                            ==========


</TABLE>


See notes to condensed consolidated financial statements.




<PAGE>


                        AIM Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements
(Unaudited)

September 30, 1996


NOTE A - BASIS OF PRESENTATION

The accompanying  unaudited condensed 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  accruals)  considered  necessary  for a fair  presentation  have been
included. Operating results for the nine months ended September 30, 1996 are not
necessarily  indicative  of the results  that may be expected for the year ended
December 31, 1996. For further  information,  refer to the financial  statements
and  footnotes  thereto  included in the AIM Group,  Inc.  annual report on FORM
10-KSB for the period ended December 31, 1995.


NOTE B - MERGER AND PRO FORMA FINANCIAL INFORMATION

On March 23, 1995, the shareholders of Advanced Industrial Minerals, Inc. (AIM),
HeatShield  Technologies,  Inc. (HTI), and HeatShield Funding Group, L.P. (HFG),
approved the merger of the entities into AIM Group, Inc. (the Company) effective
March 31, 1995.

Pursuant to the merger agreement,  AIM was merged with the Company, which became
the surviving Company. HTI became a wholly-owned  subsidiary of the Company. The
combination  of these  companies  was  treated  as a  purchase.  For  accounting
purposes the Company and HTI were  treated as  acquirers  and AIM was treated as
the target  company.  The purchase price of AIM, based on its appraised value by
independent appraisal was $3,710,000.

The merger  resulted in the  issuance  of  3,898,930  shares of AIM Group,  Inc.
common stock in exchange for all of the  outstanding  common stock of AIM,  HTI,
and the $1,000,000 of preferred stock controlled by HFG.

The pro forma  financial  information  for the nine months ended  September  30,
1995,  presented  for  information  and  analysis  purposes,  assumes  that  the
Companies were merged effective January 1, 1995 for comparative purposes.


NOTE C  - ACCOUNTS RECEIVABLE

As of September 30, 1996 the Corporation had net accounts  receivable from trade
sales of $320,722.  This results from  outstanding  accounts  receivable  in the
amount of  $533,469  as shown in the  current  asset  section  less  $210,638 in
receivables  factored  as stated  in the  liability  section.  In  addition  the
Corporation has other receivables of $10,510 for rents due from a non affiliated
company (see Note I - Related Parties  Transactions) and a small refund due from
insurance premiums.


NOTE D - INVENTORY

Inventory on hand from all of its subsidiaries was valued at $185,140. Inventory
is stated at cost which is lower than market.

<PAGE>

                        AIM Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements
(Unaudited) - Continued

September 30, 1996


NOTE E - RESOURCE PROPERTY

The Corporation purchased the assets of Advanced Industrial Minerals, Inc. which
mainly  consisted  of a mineral  lease  with New  Mexico  and  Arizona  Land Co.
(lessor) and which calls for the  Corporation  to pay a minimum of $5,000 USD in
March each year for the term of the lease. The Corporation recorded the purchase
of the resource  property at the independent  appraised value and its associated
costs of developing the property.

The carrying value of the resource  properties  including  development costs and
prepaid royalties are as follows:
                                                                 1996
                                                                ------
Resource Property - (Beginning)                              $ 3,939,992
Prepaid Royalties (Beginning)                                     54,575
Minimum Annual Prepaid Royalty - 1996                              5,000
Less 1995 production royalty Paid                                      0
                                                             -----------
Prepaid Royalties (Ending)                                        59,575
                                                             -----------
Resource Property (Ending)                                    $3,999,567


NOTE F - ACCOUNTS PAYABLE

The Corporation has accounts  payable from trade  activities as of September 30,
1996 in the amount of $334,930.  The Corporation factors its receivables;  as of
September  30,  1996  the   Corporation  was  advanced   $210,638   against  its
receivables.


NOTE G - LOANS PAYABLE - LONG TERM DEBT

The Corporation's  subsidiary United Minerals Corporation has a mortgage secured
by the plant and  building in the amount of $62,035  which is payable in monthly
installments  of $900 at 10.25% and loans  secured by vehicles and  equipment of
approximately $17,610 payable in monthly installments of $756 including interest
of 9.5% to 14.2%.


NOTE H - CONVERTIBLE NOTES PAYABLE

In February,  1996 the Corporation  completed a Private Placement in the form of
Convertible Notes having an aggregate value of $1,050,000 USD with three related
party  investors (see Related Parties ). The unsecured notes are due on December
31, 1996 and carry a three year conversion  feature at the option of the holders
to convert the face value of the notes into common shares of the  Corporation at
a price of $1.10 if converted on or before December 31, 1996; $1.35 on or before
December  31,  1997;  $1.60 on or before  December  31,  1998.  In addition  the
Corporation  has the  right  to  convert  the  notes  into  common  shares  upon
completion of an offering of 1,500,000 common shares at a minimum price of $1.50
per share. The Corporation has used the proceeds from these notes to repay other
indebtedness  of the  Corporation  which had become due during the  period.  The
balance of the private placement was used for working capital purposes.

<PAGE>

                        AIM Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements
(Unaudited) - Continued

September 30, 1996


NOTE H - CONVERTIBLE NOTES PAYABLE  - Continued

The Corporation's  convertible notes having an outstanding  principal balance of
$1,050,000 (the "Notes") will mature on December 31, 1996.  Management  believes
that projected cash flow from  operations  will not be sufficient to pay off the
Notes,  upon maturity.  The  Corporation  and the holders of the Notes,  each of
which are  related  parties  (including  three  officers  and  directors  of the
Corporation),  are  currently  engaged  in  negotiations  to either  extend  the
maturity of the existing Notes for one year in consideration  for an increase in
the stated interest rate on the Notes or some other modification of the terms of
the  Notes.  The  Corporation  is also  actively  seeking  financing  to provide
necessary  capital  to pay off the  Notes.  There can be no  assurance  that the
Corporation  will be successful in its current  efforts to restructure the terms
of the Notes to extend the maturity date or to obtain sufficient  financing from
third  parties  to pay the  Notes.  In the  event the  Corporation  is unable to
restructure  the Notes or to secure such additional  financing,  the Corporation
would be unable to pay the Notes upon maturity and would be in default under the
terms of the Notes.

NOTE I - RELATED PARTY TRANSACTIONS

The following  transactions  of the  Corporation  are identified as transactions
with related parties.

Private Placement of Convertible 3 1/2 % Promissory Notes

In February, 1996 the Corporation completed the private placement in the form of
3 year  Convertible 3 1/2 % Promissory  Notes having a face value of $1,050,000.
(See previous Note H -CONVERTIBLE NOTES PAYABLE for description).  The following
are  related  individuals  and  affiliated  concerns  that  have  purchased  the
Convertible Notes:

Northern Federal Minerals LLC: Paul R. Arena, an officer and former director and
Joseph L. Ranzini a newly appointed  director of the Corporation are a principal
and an affiliate  respectively,  of this Michigan limited liability corporation.
During  December,  1995 Northern Federal Minerals LLC subscribed for $450,000 of
the private placement of $1,050,000  convertible  promissory notes issued by the
Corporation.

LDD Capital LLC: Shawn P. Durand, an officer of the Corporation,  is a principal
in LDD Capital LLC, a Minnesota limited liability corporation, which corporation
subscribed  for  $300,000 of the private  placement  of  $1,050,000  convertible
promissory notes issued by the Corporation.

Bernard R. Kossar:  Mr. Kossar,  a director of the  Corporation,  subscribed for
$300,000 of the private  placement of $1,050,000  convertible  promissory  notes
issued by the Corporation.

Accounts Receivable - Affiliate

A director,  a former  director,  and an advisory  board member of AIM Group are
principals in Gulfstream Capital Advisors, Inc. ("Gulfstream"), a non affiliated
concern.  During 1995 the  Corporation  entered an arrangement to provide office
space and communication  services and other office facilities to Gulfstream at a
rental  pro-rated for the space used through  November 1995. As at September 30,
1996 Gulfstream was indebted to the Corporation in the amount of $9,760.


<PAGE>


Management's Discussion and Analysis of Financial Condition and Results of 
Operations

The  Corporation  had no revenues from  operations  for the first quarter of the
prior year before the mergers took place hence the  comparison  with 1995 (prior
year period) including first quarter results is not meaningful.  The 1995 Actual
results reflect the fact that the mergers were not  consummated  until March 31,
1995. The Pro-forma  basis for the results for the  Corporation  are shown as if
the mergers had occurred effective January 1, 1995.

Results of Operations - Actual

Net sales for the third quarter 1996 increased 21% to $645,871 from $531,687 for
the corresponding period in 1995. Net sales for the nine months to September 30,
1996 increased 89% to $2,500,001  compared with $1,319,170  Actual sales for the
comparable  period in 1995 (see  pro-forma  results for nine month  comparison).
Management  attributes the increased growth during the third quarter to sales to
new customers.  All of the Corporation's products were sold to customers for use
as fillers in plastic compounds.  The majority of sales were of surface modified
minerals sold to the plastics  compounding  industry. A nominal portion of sales
were  production size samples to customers  still  evaluating the  Corporation's
products.

The  Corporation  continues to concentrate on expansion of the customer base for
its products by providing  technical  solutions and samples to prospective sales
leads to reduce its dependence on its major  customer.  Management  continues to
investigate  possibilities  for integration with mineral suppliers and to expand
the range of surface modified products offered.

The gross margin for the third quarter  increased from 28% for the corresponding
quarter in 1995 to 32% in the  second  quarter  1996.  This is  attributed  to a
higher operating  volume.  For the year to date, gross margin is 33% compared to
31% for the same period in the prior year.

Selling and  administrative  expenses for the third quarter were $277,301 or 43%
of sales,  compared to $193,089 or 36% of sales in 1995;  this  represents an 8%
increase over the  comparable  period in 1995 which is due to increased  cost of
expanding  technical sales and marketing efforts.  For the year to date, selling
and administration  expenses of $753,570  represented 30% of sales compared with
$484,193 or 37% of sales for the prior year period.  Management  attributes this
improvement to the fact that continuing operations,  post merger, do not include
many of the one time, merger related, expenses of the prior year.

Interest  expenses  were $13,050 and $15,207  respectively  for the three months
ended September 30, 1996 and 1995. This represents for 1996 an decrease to 2% of
sales,  from  3%  of  sales  the  prior  year,  which  is a  reflection  of  the
Corporation's  decreased  use of factoring  of  receivables  to provide  working
capital.  For the nine months, year to date,  comparing 1995 with 1996, Interest
expenses  increased from 3% of sales to 4% of sales.  Depreciation for the third
quarter  increased  nominally  from  $15,178  to  $20,488  reflecting  equipment
additions. For the nine months year to date, depreciation continues to represent
2% of sales.

The Net Loss of $96,575 for the three months ended September 30, 1996 represents
a loss of two and four tenths  cents  ($0.024)  per share based on the  weighted
average  number of shares  outstanding  during the  period.  For the  comparable
period in the prior year the Net Loss was $74,343 and  represented a loss of two
cents ($0.020) per share.

For the nine months ended September 30, 1996 the Net Loss was $103,682,  two and
six tenths of a cent  ($0.026)  per share,  compared  with  $146,743,  six cents
($0.059)  per share for the nine months  ended  September  30, 1995 based on the
weighted average number of shares outstanding during the respective periods.


<PAGE>


Results of Operations - Pro-Forma

On a Pro-Forma  basis Sales for the nine months to September 30, 1996  increased
43% from $1.74  million to $2.5 million.  Gross margin  increased 1%, to 33% for
the period.  Management  attributes  the increase to a strong first  quarter and
increased marketing effort.

Selling and  administrative  expenses  were  $753,570  and $608,257 for the nine
months  ended  September  30,  1996 and 1995  respectively.  This  represents  a
decrease, as measured as a percentage of sales, to 30% from 35%.

Interest  charges for the first nine months of 1996, at $112,193 or 4% of sales,
showed an  increase  from  $55,474  or 3% of sales for the  prior  year  period.
Depreciation  was  $57,973  for the  period or 2% of sales;  for the  comparable
period in 1995 depreciation was $44,842.

The  Corporation  showed a loss before tax of $109,143,  or (as below) two point
six cents ($0.026) per share outstanding.  The loss per share for the comparable
period in 1995 was $158,420 or six point four cents ($0.064) per share, based on
the average number of shares outstanding during the period.

Liquidity and Sources of Capital

Cash flow from  operations was $56,985 for the three months ended  September 30,
1996 and a negative  $155,976 for the nine month period ended September 30, 1996
compared  with  $50,434 for the third  quarter and $5,527 for the  corresponding
three month period in the previous year.  The operations of the United  Minerals
Corporation (UMC) subsidiary are profitable and have produced sufficient pre tax
income to absorb the  expenses of the  Corporation's  head office over the first
nine  months of 1996.  As of  September  30,  1996 the  Corporation  had working
capital of $241,847 compared with working capital of $187,230 as at December 31,
1995.  During the period the Corporation paid down a substantial  portion of the
factored receivables. The balance factored at the end of the period was $200,958
compared with $475,215 as at December 31, 1995. Working capital is considered by
management to be sufficient to meet the Corporation's  operational needs for the
balance of the year, excluding the repayment of the Notes described below.

The Corporation's  convertible notes having an outstanding  principal balance of
$1,050,000 (the "Notes") will mature on December 31, 1996.  Management  believes
that projected cash flow from  operations  will not be sufficient to pay off the
Notes, upon maturity The Corporation and the holders of the Notes, each of which
are related parties  (including three officers or directors of the Corporation),
are  currently  engaged in  negotiations  to either  extend the  maturity of the
existing  Notes for one year in  consideration  for an  increase  in the  stated
interest rate on the Notes or some other modification of the terms of the Notes.
The Corporation is also actively seeking  financing to provide necessary capital
to pay off the Notes.  There can be no assurance  that the  Corporation  will be
successful  in its  current  efforts  to  restructure  the terms of the Notes to
extend the maturity date or to obtain sufficient financing from third parties to
pay the Notes.  In the event the  Corporation is unable to restructure the Notes
or to secure such additional  financing,  the Corporation would be unable to pay
the Notes upon maturity and would be in default under the terms of the Notes.

The Corporation has continued its factoring  arrangement which provides for cash
advances  against  outstanding  invoices to customers.  Management has worked to
reduce  the  use  of  factoring;  however,  the  recent  seasonal  slowdown  has
necessitated a  re-negotiation  of the factoring  contract  through December 31,
1996.  Management is discussing  with several  lenders a working capital line to
replace the current factoring arrangement.

Due to the seasonal slowdown the Corporation has decided to defer the previously
planned  expenditures to increase process  efficiency.  Additional capacity from
plant upgrades will be considered as order volume returns to previous levels.


<PAGE>


Part II Other Information

Item 1. Legal Proceedings

The Corporation is being sued in the Tennessee Chancery Court for non payment of
invoices relating to supply of materials.  The Corporation contends the material
supplied  was  contaminated  and  not  to  specification.   The  Corporation  is
vigorously defending its action and is counter claiming for damages.  Subsequent
to this claim the  Corporation's  customer and the ultimate  customer have filed
intervenor suits against the Corporation and the material  supplier.  Management
is of the opinion  that the cost of  resolution  of the claims will not have any
material adverse effect on the financial condition of the Corporation.

The  Corporation  has been named as defendant in an action filed on July 8, 1996
in the  Chancery  Court of Hot  Springs  County,  Arkansas  by the former  plant
manager of the UMC  facility.  The  plaintiff  has alleged  breach of employment
contract and wrongful termination.  On August 14, 1996 the Chancery Court of Hot
Springs County,  Arkansas granted the Corporation's  request to present the case
to arbitration in the State of Florida.  The Corporation's  management is of the
opinion  the suit  against  it is  without  merit and that the  Corporation  has
defenses.

Item 2. Changes in Securities

The Corporation  received  shareholder approval to extend the expiration date of
445,586  options and  warrants  which had expired on December 31, 1995 and April
14, 1996 until  December 31, 1996.  The  extension of these options and warrants
was approved by the shareholders at the Annual Meeting of Shareholders which was
adjourned from June 20, 1996 to July 10, 1996.

The total issued  common share  balance as of September  30, 1996 was  4,113,465
common shares,  of which 213,412 shares are held in treasury,  and 3,980,053 are
issued and outstanding.

In addition,  954,000 and 478,495  common shares  respectively  are reserved for
issuance upon conversion of the  Convertible  Notes and upon the exercise of all
warrants and options.

Item 3. Defaults upon Senior Securities

The Corporation is not in default of any senior securities.  (See "Liquidity and
Sources of Capital"  and Note H to the  Unaudited  Financial  Statements  of the
Corporation   for  the  Quarter  Ended  September  30,  1996,  with  respect  to
outstanding convertible notes payable which mature on December 31, 1996.)

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

The following  items were submitted to the  shareholders  for vote at the Annual
Meeting of Shareholders adjourned from June 20, 1996 to July 10, 1996.

1. To elect the Directors for the ensuing year.
   Name           Votes FOR           Votes AGAINST          ABSTAIN
--------------------------------------------------------------------
D. M. Hartley   2,812,241               111,926              213,427
J. Johnston     3,014,651               111,926               10,819
B. Kossar       1,590,742             1,535,764               11,017
M. McManus      3,014,651               111,855               10,819

     Note:Two  nominees,  P.  Arena and J.  Austin,  withdrew  their  names from
          nomination as directors  prior to the Annual Meeting of  Shareholders.
          The  Corporation  filed  a Form  8K with  respect  to  such  voluntary
          withdrawal  from  nomination and  resignation as Directors on July 17,
          1996. (See Item 6 "Exhibits and Reports on From 8K")

<PAGE>

2. To appoint Auditors for the ensuing year and to  authorize  the  Directors 
   to fix the remuneration of the Auditors.
3. To approve the amendment to the Certificate of Incorporation to increase the
   maximum  number  of  authorized  shares of common stock  for  issuance from
   6,000,000 to 12,000,000 shares.
4. To consider and approve the  extension from  December 31, 1995 and April 14,
   1996 to December 31, 1996 of the expiry date of 445,586 warrants and options,
   subject to the approval of the Vancouver Stock Exchange.
5. To consider and approve the issuance to a newly appointed director of 25,000 
   incentive options.
6. To consider and approve a private placement or other issuance(s) of an amount
   of shares or other  securities  that is equal to or  greater  than 20% of the
   issued share capital of the Corporation,  at such price or prices and on such
   terms as are acceptable to the Vancouver Stock Exchange.
7. To consider and approve a stock option plan.

Voting on items 2 through 7 was as follows:

Item Number        Vote FOR         Vote AGAINST            ABSTAIN
-------------------------------------------------------------------
     2            3,020,737           116,710                  147
     3            2,663,104           473,886                  604
     4            1,487,022           446,096              318,154
     5            2,238,899           570,956              327,739
     6            2,027,171           775,847              334,576
     7              634,089         1,461,546              318,396

All of the above  items  except for item 7 were  ratified  by the  shareholders.
Prior to the  Annual  Meeting,  two  directors  withdrew  their  names  from the
nomination due to personal  reasons.  The shareholders did not approve the stock
option plan.


Item 5. Other Information

During the third quarter the Company had the  following  changes to its board of
directors.  In July, prior to the Company Annual Shareholders  Meeting, Mr. Paul
Arena and Mr. James Austin tendered their resignations as directors and withdrew
their names for  re-election to the Board of Directors due to personal  reasons.
In September,  Mr. Joseph Ranzini was appointed to the Board of Directors of the
Company.  Effective November 6, 1996, Mr. Michael A. McManus,  Jr. resigned from
the Board of Directors due to other business commitments.

The Corporation's shares trade on the Vancouver Stock Exchange, Vancouver, B.C.,
Canada. The price of the shares is quoted in U.S. dollars and U.S.  shareholders
can locate  the  Corporation's  common  stock  under the  symbol  AGDU.V and for
Canadian shareholders, the symbol is AGD.U.

Item 6. Exhibits and Reports on Form 8-K

The Corporation  filed a Form 8-K on July 17, 1996 with respect to the voluntary
withdrawal from nomination for re-election of two directors.


<PAGE>


Signatures

Pursuant  to  the  requirement 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.



                                                 AIM GROUP, INC.
                                                  (Registrant)


Date       November 11, 1996                 /s/ Iain J. Richmond
      ------------------------      ------------------------------------------
                                                 Iain J. Richmond
                                                   President



Date       November 11, 1996                 /s/ Shawn P. Durand
      ------------------------      ------------------------------------------
                                                 Shawn P. Durand
                                             Principal Financial Officer