<PAGE>
                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q

                Quarterly Report Pursuant to Section 13 or 15 (d)

                     of the Securities Exchange Act of 1934

For Quarterly Period Ended:    January 31, 1997

Commission File Number:   0-26508

                               PURETEC CORPORATION

             (Exact name of Registrant as specified in its charter)

           DELAWARE                                              22-3376449
(State or other jurisdiction of                                (IRS Employer
incorporation or organization)                               Identification No.)

                65 Railroad Avenue, Ridgefield, New Jersey 07657
                    (Address of principal executive offices)

Registrant's telephone number, including area code: (201)941-6550

         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
 
         As of March 13, 1997, there were 29,339,172 shares of common stock
outstanding.



<PAGE>



                      PURETEC CORPORATION AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                 C O N T E N T S

                                                                        Page

Part I  FINANCIAL INFORMATION:

       Item 1.        Financial Statements:

                      Consolidated Balance Sheets as of                   3
                      January 31, 1997 and July 31, 1996

                      Consolidated Statements of Operations              4-5
                      for the three and six  month periods ended
                      January 31, 1997 and 1996

                      Consolidated Statements of Cash Flows              6-7
                      for the six month periods ended
                      January 31, 1997 and 1996

                      Notes to Consolidated Financial                    8-10
                      Statements

       Item 2.        Management's Discussion and Analysis              11-15
                      of Financial Condition and Results of
                      Operations

Part II  OTHER INFORMATION:

       Item 1 to Item 6.                                                16-17

       Signatures
                                                                          18

                           * * * * * * * * * * * *

<PAGE>
                     PURETEC CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                            (Dollars in thousands)

<TABLE>
<CAPTION>


                                                                                               January 31,      July 31,
                                       ASSETS                                                     1997           1996
                                                                                               ---------       ---------
                                                                                              (Unaudited)
<S>                                                                                          <C>              <C>
CURRENT ASSETS:
       Cash and cash equivalents......................................................       $  1,408         $  5,995
       Accounts receivable, less allowance for doubtful accounts of $838
          as of January 31, 1997 and $980 as of July 31, 1996.........................         45,231           53,675
       Inventories....................................................................         77,777           41,403
       Prepaid expenses and other current assets......................................          3,290            3,955
                                                                                             --------         --------
            TOTAL CURRENT ASSETS......................................................        127,706          105,028

PROPERTY, PLANT AND EQUIPMENT, net....................................................         83,377           84,206
EXCESS OF COST OF INVESTMENTS OVER NET ASSETS ACQUIRED
       (net of accumulated amortization of $4,820 and $3,168 as of January 31,
          1997 and July 31, 1996, respectively).......................................         90,918           92,570
OTHER INTANGIBLE ASSETS, net..........................................................          1,338            1,344
OTHER ASSETS, net.....................................................................         11,131           12,592
                                                                                             --------         --------
            TOTAL ASSETS..............................................................       $314,470         $295,740
                                                                                             ========         ========

                        LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
       Short-term borrowings..........................................................       $ 56,366         $ 20,170
       Accounts payable...............................................................         26,384           28,974
       Accrued plant closing and disposal costs.......................................          2,165            3,554
       Accrued expenses...............................................................         21,714           24,947
       Current portion of long term debt..............................................          1,765            5,114
                                                                                             --------         --------
            TOTAL CURRENT LIABILITIES.................................................        108,394           82,759
                 

OTHER LONG TERM LIABILITIES...........................................................          3,059            2,923
PENSION AND POSTRETIREMENT LIABILITIES................................................          7,510            7,882
DEFERRED INCOME TAXES.................................................................             51            1,280
LONG-TERM DEBT........................................................................        132,380          130,162
                                                                                             --------         --------
            TOTAL LIABILITIES.........................................................        251,394          225,006

COMMITMENTS AND CONTINGENCIES

MINORITY INTEREST.....................................................................             26               26


STOCKHOLDERS' EQUITY
     Common stock, $.01 par value  50,000,000 authorized; 29,339,172
          and 29,334,551 shares issued and outstanding
          at January 31, 1997 and July 31, 1996, respectively.........................            293              293
     Treasury Stock...................................................................           (687)               -
     Additional paid-in capital.......................................................        129,607          129,606
     Deficit..........................................................................        (64,641)          (8,671)
     Minimum pension liability........................................................           (137)            (137)   
     Cumulative foreign currency translation adjustment ..............................         (1,385)            (383)
                                                                                             --------         --------
            TOTAL STOCKHOLDERS' EQUITY................................................         63,050           70,708
                                                                                             --------         --------
            TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................................       $314,470         $295,740
                                                                                             ========         ========
</TABLE>
                See notes to consolidated financial statements

                                      3


<PAGE>
                     PURETEC CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   (Dollars in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                                       Three Months Ended
                                                                                                          January 31,
                                                                                                   ---------------------------
                                                                                                      1997              1996
                                                                                                   ----------       ----------
                                                                                                          (Unaudited)
<S>                                                                                                <C>              <C>
NET SALES..............................................................................            $   66,431       $   73,053
                                                                                                   ----------       ----------
COSTS AND EXPENSES:
       Cost of goods sold..............................................................                52,564           59,147
       Selling, general and administrative.............................................                 9,518            9,194
       Amortization of intangible assets...............................................                   641              868
       Research and development........................................................                   169              354
                                                                                                   ----------       ----------
                                                                                                       62,892           69,563
                                                                                                   ----------       ----------

INCOME  FROM OPERATIONS................................................................                 3,539            3,490

OTHER (INCOME) EXPENSES:
       Interest expense................................................................                 5,014            5,114
       Debt issuance cost and discount amortization....................................                   608              510
       Equity in loss of affiliates....................................................                   265              401
       Other, net .....................................................................                   (80)              40
                                                                                                    ----------      ----------
                                                                                                        5,807            6,065
                                                                                                    ----------      ----------

LOSS  FROM CONTINUING OPERATIONS BEFORE INCOME TAXES...................................                (2,268)          (2,575)
       Provision (benefit) for income taxes............................................                   404             (292)
                                                                                                   ----------       ----------
LOSS FROM CONTINUING OPERATIONS........................................................                (2,672)          (2,283)

DISCONTINUED OPERATIONS:
       Loss from non-woven textiles operations.........................................                  (545)          (2,218)
                                                                                                   ----------       ----------
NET LOSS...............................................................................            $   (3,217)      $   (4,501)  
                                                                                                   ==========        ==========


LOSS  PER COMMON SHARE:
          Loss from continuing operations..............................................            $    (0.09)      $    (0.09)
          Loss from discontinued operations............................................            $    (0.02)      $    (0.08)
                                                                                                   ==========       ==========
       Net loss........................................................................            $    (0.11)         $ (0.17) 
                                                                                                   ==========       ==========




WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING..................................             29,339,172       27,223,000 
                                                                                                   ==========       ==========
</TABLE>

                See notes to consolidated financial statements

                                      4

<PAGE>
<TABLE>
<CAPTION>
                                PURETEC CORPORATION AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Dollars in thousands, except share data)

                                                                             Six Months Ended
                                                                                January 31,
                                                                           ------------------------
                                                                             1997          1996 
                                                                           ----------    ----------
                                                                                  (Unaudited)
<S>                                                                      <C>              <C>
NET SALES ..........................................................     $     132,391    $   140,701
                                                                           ------------   -----------
COSTS AND EXPENSES:
       Cost of goods sold ..........................................           106,126        115,272
       Selling, general and administrative .........................            17,776         15,438
       Amortization of intangible assets ...........................             1,784          2,020
       Research and development ....................................               327            662
                                                                           ------------    ----------
                                                                               126,013        133,392
                                                                           ------------    ----------

INCOME FROM OPERATIONS .............................................             6,378          7,309

OTHER (INCOME) EXPENSES:
       Interest expense ............................................             9,493          9,693
       Debt issuance cost and discount amortization ................             1,188          1,012
       Equity in loss of affiliates ................................               265            566
       Other, net ..................................................               (94)          (163)
                                                                              ----------     ----------
                                                                                10,852         11,108
                                                                              ----------     ----------

LOSS FROM CONTINUING OPERATIONS BEFORE
       INCOME TAXES ................................................            (4,474)        (3,799)
       Provision for income taxes ..................................               951            153
                                                                           ------------    -----------
LOSS FROM CONTINUING OPERATIONS ....................................            (5,425)        (3,952)

DISCONTINUED OPERATIONS:
       Loss from non-woven textiles operations .....................              (545)        (2,424)
                                                                           ------------    -----------

NET LOSS ...........................................................        $   (5,970)     $  (6,376)
                                                                            ===========    ==========


LOSS PER COMMON SHARE: .............................................                                   
          Loss from continuing operations ..........................         $   (0.18)         (0.15)
          Loss from discontinued operations ........................         $   (0.02)         (0.09)
                                                                           ------------    -----------

       Net loss ....................................................         $   (0.20)         (0.24)
                                                                           ============    ===========



WEIGHTED AVERAGE NUMBER OF COMMON
       SHARES OUTSTANDING ..........................................        29,339,172     27,173,000
                                                                           ===========     ===========   
</TABLE>
                     See notes to consolidated statements

                                       5

<PAGE>
                     PURETEC CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Dollars in thousands)


                                                            Six Months Ended
                                                              January 31,
                                                            1997          1996
                                                          --------      --------
NET CASH FLOWS FROM OPERATING ACTIVITIES:                         (Unaudited)

Net Loss from continuing operations....................... $ (5,425)   $ (6,376)
Adjustments to reconcile net loss from continuing
  operations to net cash used in operating
  activities from continuing operations:

    Depreciation and amortization.........................    7,603       7,120
    Gain on disposal of property and equipment............      (10)       (301)
    Bad debt allowance....................................     (143)        591
    Deferred income tax benefit...........................   (1,252)        (64)
    Changes in operating assets and liabilities net
      of effects from acquisition:
   (Increase) decrease in assets:
      Accounts receivable.................................    8,621      (2,296)
      Inventories.........................................  (36,328)    (18,240)
      Prepaid expenses and other current assets...........      658      (1,447)
      Other assets........................................     (589)       (540)
    Increase (decrease) in liabilities:
      Accounts payable....................................   (2,640)      2,883
      Accrued plant closing and disposal costs............   (1,389)       (347)
      Accrued expenses....................................   (3,233)      1,397
      Other Liablities....................................     (372)        216
                                                            -------     -------
NET CASH USED IN OPERATING ACTIVITIES
      FROM CONTINUING OPERATIONS..........................  (34,499)    (17,404)
                                                            -------     -------

      Loss from discontinued operations...................     (545)      1,445
                                                            -------     -------
NET CASH USED IN OPERATING ACTIVITIES FROM
      DISCONTINUED OPERATIONS.............................     (545)      1,445
                                                            -------     -------

NET CASH USED IN OPERATING ACTIVITIES.....................  (35,044)    (15,959)
                                                            -------     -------

                                                                     (Continued)

                See notes to consolidated financial statements

                                      6


<PAGE>
                 PURETEC CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF CASH FLOWS
                        (Dollars in thousands)

                                                        Six Months Ended
                                                           January 31,
                                                       1997           1996
                                                    -----------    -----------
NET CASH FLOWS FROM INVESTING ACTIVITIES:                  (Unaudited)
  Additions to property, plant and equipment.....        (3,844)        (5,304)
  Additions to intangibles.......................             -         (1,095)
  Purchase of net assets.........................             -        (26,820)
  Proceeds from the sale of property, 
    plant, & equipment...........................            20            848
  Investment used for Burlington purchase........             -         13,500 
                                                    -----------    -----------

NET CASH USED IN INVESTING ACTIVITIES............        (3,824)       (18,871)
                                                    -----------    -----------

NET CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowing under revolving credit
    facility and short-term borrowing, net.......        36,196         16,872
  Proceeds from long-term debt...................         2,288         11,359
  Repayments of long-term debt...................        (3,349)        (1,217)
  Proceeds from private placements...............             -            967
  Proceeds from warrant/option exercise..........             1              -
                                                    -----------    -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES.........       35,136         27,981
                                                    -----------    -----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH...........         (855)           170
                                                    -----------    -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS.........       (4,587)        (6,679)
                                                    -----------    -----------

CASH AND CASH EQUIVALENTS, beginning 
  of the period...................................        5,995          7,097
                                                    -----------    -----------

CASH AND CASH EQUIVALENTS, end of period..........  $     1,408    $       418 
                                                    ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest .......................................  $     9,304    $     9,068
  Income taxes....................................        1,296            652

Non-cash transactions:
  Debenture conversion............................            -          1,000
  Issuance of note payable to seller-

    Burlington Resins.............................            -          4,000
  Exchange of equity investment stock for 
    PureTec stock (Treasury) .....................          687              -

                See notes to consolidated financial statements

                                      7

<PAGE>

                      PURETEC CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in thousands, except per share data)

1.     ORGANIZATION

       PureTec's principal businesses are the manufacturing of garden hose,
specialty plastic compounds and fabricated precision plastic components for
consumer and industrial markets, the manufacturing of dispersion (plastisol) and
specialty suspension (copolymer and blending) polyvinyl chloride ("PVC") resins
and the recycling of plastics and injection molding of custom parts using both
recycled and virgin plastic materials. The Company services its markets through
its network of 22 manufacturing facilities, located in key points throughout the
United States, with two locations in Europe and one in Canada.

       In September 1996, the recycling operations of PureTec were sold to
Plastic Specialties & Technologies, Inc., ("PST") an 83% owned subsidiary of the
Company. This sale transaction included the sale of certain fixed assets, raw
material inventory and other assets for $4,400 in cash and a $1,769 contribution
to capital. This transaction had no material effect on consolidated financial
statements of the Company as PST is a consolidated subsidiary, except to the
extent that the operating results of the recycling operations are attributable
to the minority interests in PST. Such transaction had no material affect on the
current operating results herein.

2.      INTERIM FINANCIAL INFORMATION

       The consolidated balance sheet of the Company as of January 31, 1997, the
consolidated statements of operations for the three and six month periods ended
January 31, 1997 and 1996 and the consolidated statements of cash flows for the
six months ended January 31, 1997 and 1996 are unaudited and have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. In the opinion of management, all adjustments (which include
only normal recurring accruals) necessary to present fairly the financial
position, results of operations and cash flows have been included.

       Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The July 31, 1996 balance sheet data
is derived from the audited consolidated financial statements. The attached
financial statements should be read in connection with the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K/A-1 for the year ended July 31, 1996.

3.     COMMITMENTS AND CONTINGENCIES

       The Company and certain of its directors are currently defendants in two
proceedings brought by shareholders and former employees who seek, among other
things, injunctive relief, damages, and royalties. The Company has agreed to
indemnify the directors for any final judgments against them in these
proceedings. The Company currently has accrued $150 in connection with settling

this matter.

       Ozite Corporation, a wholly owned subsidiary ("Ozite") has been named as
a potentially responsible party ("PRP") by the Texas Natural Resource
Conservation Commission ("TNRCC") concerning a site near Ranger, Texas, formerly
used as a disposal site for toxic materials. On August 25, 1994, a Proposed
Remedial Action report was distributed by TNRCC that described six alternatives
to remediate the contaminants identified as present in the soil. The monetary
range of the alternatives advanced by the TNRCC was an estimate of $47 on the
low end to $1,392 for the high end. The TNRCC has recommended the remediation
alternative that provides for excavation and off-site disposal of contaminated
soil, backfill of the site with clean fill, possible fence-line ambient air
monitoring and routine sampling and monitoring of the groundwater. The estimated
cost for this remediation alternative is $663. At this time, the approximately
40 PRP's include a significant number of major corporations which will be
involved in the cleanup and will, more likely than not, significantly
participate in the expense of such cleanup. At this time, other than as
indicated above, Ozite cannot assess its ultimate liability. However,
considering the remediation alternative currently being recommended by the TNRCC
and the significant number of major corporations involved in the clean-up, the
Company

                                      8


<PAGE>

believes that the ultimate outcome will not have a material adverse effect on
its consolidated financial position or results of operations.

       On February 18, 1993, Ware Chemical Co. ("Ware Chemical"), a former PST
subsidiary (now dormant), was served with a third party complaint in the matter
of United States v. Davis. In Davis, the United States has alleged that certain
private entities are liable, pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), for cleanup costs that have
been incurred, and will be incurred in the future, with respect to the
remediation of the Davis Landfill site in Rhode Island. Ware Chemical was owned
by Dart Industries (now Kraft, Inc.) during the time in question (1975-1977),
and Kraft has agreed to assume all liability.

       Ozite is also engaged in litigation in which it seeks damages from the
former owner of Dalen ("Dalen"), a discontinued segment of Ozite. In December
1987, Ozite commenced legal proceedings against the seller of Dalen, seeking
monetary damages and other equitable relief from Dalen for various
misrepresentations made in its financial statements and other miscellaneous
information presented on which Ozite elected to proceed with the purchase of
Dalen. The former owner of Dalen has counterclaimed for the enforcement of his
rights in the subject matter and for recovery of the balance of the purchase
price in an amount approximately equal to $3,000 plus accrued interest, amounts
claimed to be due under a consulting agreement, and punitive damages. The total
amount demanded by the seller is approximately $11,000. The ultimate outcome of
either of these actions is presently undeterminable. However, the Company
believes the ultimate outcome will not have any material adverse effect on its
financial position or results of operations.


4.       INVENTORIES:

Inventories consist of the following:

                                                   January 31,       July 31,
                                                      1997             1996
                                                   -----------       --------
                                                   (Unaudited)

       Raw materials & supplies                      $21,339        $16,028
       Recycled material                                 613          1,944
       Work-in-process                                 2,051          2,074
       Finished goods                                 53,774         21,357
                                                      ------         ------
                                                     $77,777        $41,403
                                                      ======         ======


5.       INCOME TAXES

              The Company's tax provision for the periods ended January 31, 1997
and 1996 are primarily due to the Company's foreign operations. The tax
provisions do not reflect the expected 34% benefit based on existing Federal tax
rates due to the sizable operating losses experienced in its domestic
operations. The Company has not anticipated the tax benefits of such losses as
it is more likely than not that such deferred tax asset would not be realizable
at this time. Information with respect to net operating losses is as reported in
Note 12 of the Company's 10K/A-1 for the year ended July 31, 1996.

6.      STYREX TERM AND REVOLVING CREDIT FACILITY

        In connection with the sale of the recycling operations to PST in
September 1996 (see Note 1), the Company repaid the bank loans outstanding at
that time relating to Pure Tech Plastics, Inc., a wholly owned subsidiary..
Styrex subsequently paid off its loans to the bank on November 11, 1996 when it
signed a new Loan and Security Agreement (the "Styrex Loan Agreement") with a
Finance Company. The Styrex Loan Agreement provides for a term loan and
revolving loans, for a period of three years up to a maximum of $6,000 and
letters of credit of up to $1,000, and is secured by all of the assets of
Styrex. Advances under the agreement bear interest at the rate of prime plus 1
1/2%. The initial term loan of $1,360 has scheduled repayments of $23 per month
beginning December 1, 1996.

                                      9

<PAGE>

7.      ACCOUNTING FOR STOCK BASED COMPENSATION

        In October of 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation" ("SFAS 123"). SFAS 123 established a fair value- based method of
accounting for compensation cost related to stock options and other stock-based

compensation awards. SFAS 123 is effective for fiscal years beginning after
December 15, 1995 (the Company's 1997 fiscal year) for employee compensation
awards and effective for all transactions entered into after December 15, 1995
for transactions to acquire goods or services from other than employees.
However, SFAS 123 allows an entity to continue to measure employee compensation
costs using the principles of Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees," ("APB No. 25") if certain proforma
disclosures are made. The Company will continue to account for its employee
stock compensation arrangements under the provisions of APB No. 25, and stock
transactions to acquire goods or services from other employees under the
provisions of SFAS 123.

                                      10



<PAGE>

                                    PART I

                             FINANCIAL INFORMATION

                 (Dollars in thousands, except per share data)

Item 1.        FINANCIAL STATEMENTS

               See pages 3 through 10.

Item 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               RESULTS OF OPERATIONS.

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

        The following table sets forth the percentages of net sales of the
Company represented by the components of income and expense for the three and
six month periods ended January 31, 1997 and 1996:

<TABLE>
<CAPTION>

                                                                         Three Months Ended                Six Months Ended
                                                                            January 31,                       January 31,
                                                                         1997          1996                1997         1996
                                                                        ------        ------              ------       ------
<S>                                                                     <C>           <C>                 <C>          <C>
Net sales                                                                 100%          100%                100%         100%
Cost of goods sold                                                      (79.1)        (81.0)              (80.2)       (81.9)
                                                                        ------        ------              ------       ------
Gross profit                                                             20.9          19.0                19.8         18.1
Selling, general and administrative                                     (14.3)        (12.6)              (13.4)       (11.0)
Amortization of intangible assets                                        (1.0)         (1.1)               (1.4)        (1.4)
Research and developement                                                (0.3)         (0.5)              ( 0.2)        (0.5)
                                                                        ------        ------             ------        ------
Income from operations                                                    5.3           4.8                4.8           5.2
Interest expense                                                         (7.5)         (7.0)              (7.2)         (6.9)
Debt issuance costs and discount amortization                            (0.9)         (0.7)              (0.9)         (0.7)
Equity in loss of affilliate                                             (0.4)         (0.5)              (0.2)         (0.4)
Other, net                                                                0.1          (0.1)               0.1           0.1
                                                                        ------        ------             ------        ------
Loss from continuing operations before income taxes                      (3.4)         (3.5)              (3.4)         (2.7)
Income tax provision (benefit)                                            0.6          (0.4)               0.7           0.1
                                                                        ------        ------             ------        ------
Income (loss) from continuing operations                                 (4.0)         (3.1)              (4.1)         (2.8)
Discontinued operations                                                  (0.8)         (3.1)              (0.4)         (1.7)
                                                                        ------        ------             ------        ------
Net loss                                                                 (4.8)%        (6.2)%             (4.5)%        (4.5)%
                                                                        ======        ======             ======        ======
</TABLE>





Three months ended January 31, 1997  vs. three months ended January 31, 1996:

                                      11

<PAGE>

        Net sales from continuing operations in the three month period ended
January 31, 1997 were $66,431 compared to $73,053 in the three month period
ended January 31, 1996. The decrease is mainly attributable to price decreases
for PET and decreases in sales volume for specialty resins and garden hose. The
decrease was partially offset by increased sales volume in dip tubing, gaskets,
medical tubing, PVC compound and injection molding. The comparative decline in
hose sales volume is directly attributable to a late hose selling season.

        Gross profit for the three months ended January 31, 1997 was $13,867, a
decrease of $39, (0.3 %) compared to a gross profit of $13,906 for the three
months ended January 31, 1996. Gross profit as a percentage of sales increased
to 20.9 % from 19.0% for the same period. The increase is principally
attributable to lower raw material costs for most segments and improved
manufacturing efficiencies, partially offset by a sharp decline in selling
prices for PET.

        Selling, general and administrative expenses for the three months ended
January 31, 1997 were $9,518, a $324 (3.5 %) increase compared to the three
months ended January 31, 1996. As a percentage of net sales, these expenses
increased to 14.3 % from 12.6% for the same period. The increase is attributable
to (i) the Company evaluated and reduced certain previously accrued expenses,
including management compensation in the first quarter of fiscal 1996 (ii) an
increase in warehousing costs, and (iii) since the purchase of the specialty
vinyl resins facility from Oxy Chem in August of 1995, the Company has added to
its technical sales and marketing capabilities in connection with this business.

        Operating income for the three months ended January 31, 1997 and 1996
was $3,539 and $3,490, respectively. The $49 increase in operating income is
primarily attributable to a lower cost of goods sold partially offset by a
decline in PET prices.

        Interest expense, net of amortization of deferred financing costs for
the three month periods ended January 31, 1997 and 1996 was $5,014 and $5,114,
respectively. This $100 or 2% decrease is primarily attributable to lower
average short term borrowing.

        The income tax provision (benefit) for the three months ended January
31, 1997 and 1996 is comprised of foreign tax provisions (benefits) of $404 and
$(292), respectively.

        The Company had a loss from continuing operations for the three
month period ended January 31, 1997  and 1996 of $ 2,672 and $2,283,
respectively.

        The Company sold its Ozite manufacturing division in March of 1996. The

$2,218 loss recorded by this operation for the three months ended January 31,
1996 is reflected as a discontinued operation for the period.

Six months ended January 31, 1997 vs. Six months ended January 31, 1996:

        Net sales from continuing operations in the six month period ended
January 31, 1997 were $132,391 compared to $140,701 in the six month period
ended January 31, 1996. The decrease is mainly attributable to price decreases
for PET and decreases in sales volume for specialty resins and garden hose. The
decrease was partially offset by increased sales volume in dip tubing, gaskets,
medical tubing, PVC compound and injection molding. The comparative decline in
hose sales volume is directly attributable to a late hose selling season.

        Gross profit for the six months ended January 31, 1997 was $26,265, an
increase of $836, (3.3 %) compared to a gross profit of $25,429 for the six
months ended January 31, 1996. Gross profit as a percentage of sales increased
to 19.8 % from 18.1% for the same period. The increase is principally
attributable to lower raw material costs for most segments and improved
manufacturing efficiencies, partially offset by a sharp decline in selling
prices for PET.

        Selling, general and administrative expenses for the six months ended
January 31, 1997 were $17,776, a $2,338 (15.1 %) increase compared to the six
months ended January 31, 1996. As a percentage of net sales, these expenses
increased to 13.4 % from 11.0% for the same period. The increase is attributable
to (i) the Company evaluated and reduced certain previously accrued expenses,
including management compensation in the first quarter of fiscal 1996 (ii) an
increase in warehousing costs, and (iii) since the purchase of the specialty
vinyl resins facility from Oxy Chem in August of 1995, the Company has added to
its technical sales and marketing capabilities in connection with this business.

                                      12
<PAGE>

        Operating income for the six months ended January 31, 1997 and 1996 was
$6,378 and $7,309, respectively. The $931 decrease in operating income is
primarily attributable to the decline in PET prices and sales volume as well
as higher selling, general and administrative costs.

        Interest expense, net of amortization of deferred financing costs for
the six month periods ended January 31, 1997 and 1996 were $9,493 and $9,693,
respectively. This $200 or 2% decrease is primarily attributable to lower
average short term borrowings.

        The income tax provision for the six months ended January 31, 1997 and
1996 is comprised of  foreign tax provisions of $951 and $153, respectively.

        The Company had a loss from continuing operations for the six month
period ended January 31, 1997  and 1996 of $ 5,425 and $3,952, respectively.

        The Company sold its Ozite manufacturing division in March of 1996. The
$2,424 loss recorded by this operation for the six months ended January 31, 1996
is reflected as a discontinued operation for the period.


Liquidity and Capital Resources

        In the past, the Company has expanded its operations through the
expansion of existing activities, acquisitions of new facilities and various
business combinations. Historically, the Company's sources of liquidity and
capital resources have been net cash provided by operations, bank financing,
private placements of the Company's securities and other private and public
financial sources.

        While the management of the Company believes that the Company will be
able to operate on a positive cash flow basis with respect to continuing
operations during the fiscal year ending July 31, 1997, the ability of the
Company to continue to expand its operations may require additional funding.

        Cash and cash equivalents decreased $4,587 for the six months ended
January 31, 1997 compared to a $6,679 decrease for the six months ended January
31, 1996. The changes for these periods were attributable to the factors
discussed below.

        For the six months ended January 31, 1997, net cash used in operating
activities was $35,044. The Company funded operating activities (which included
$36,328 of inventory), repaid $3,349 of its outstanding debt, and disbursed
$3,844 on capital improvements by increasing short term borrowings by $36,196
and decreasing its cash by $4,587.

        For the six months ended January 31, 1996, net cash used in operating
activities was $15,959. The Company funded its operating activities, repaid
$1,217 of its outstanding debt, disbursed $5,304 on capital improvements and
purchased the net assets of a resin manufacturing facility for $26,820. The
Company increased short term borrowings by $16,872 and reduced cash by $6,376.

        The Company had working capital of approximately $19,312 at January 31,
1997 compared to working capital of approximately $22,269 at July 31, 1996. This
decrease in working capital is attributable to an $8,621 decrease in accounts
receivable, a $36,196 increase in short term borrowing, and aggregate increases
in accrued expenses (including interest) of $3,233, partially offset by a
$36,328 increase in inventories.

        The Company's businesses are relatively stable and mature and do not
generally require significant ongoing additions to plant and equipment. Capital
expenditures for the six month period ended January 31, 1997 and 1996 were
$3,844 and $5,304, respectively.

Borrowings, Debt Offerings and Redemptions

        On December 30, 1992 PST entered into a $50,000 Senior Loan Agreement
(the "Agreement") with a commercial lending company ("CLC"). Proceeds were used
to repay the borrowings outstanding under a prior loan and security agreement
with a bank. The Agreement contains covenants, the most restrictive of which are
maintenance of certain financial ratios, prohibition of the occurrence of
additional indebtedness, the payment of dividends, certain related party
transactions and limitations on capital expenditures. Borrowings under the
Agreement are secured by


                                      13

<PAGE>

substantially all the domestic current assets of PST. Additionally, the CLC has
a security interest in PST's intangible assets, and this security interest ranks
pari passu with the security interest of the Senior Secured Notes (see below) in
PST's intangible assets. Revolving credit advances under the Agreement are based
on eligible receivables and inventory.

        Effective January 31, 1997, PST amended this Agreement with the CLC
("Amended Agreement"), representing the fourth amendment to the Agreement. The
Amended Agreement provides, among other things, for revolving credit advances of
up to $50,000 through July 31, 2000 and letters of credit of up to $1,000. The
Amended Agreement provides for certain pricing performance adjustments based on
defined Performance Ratios. The Company will pay interest at a defined Index
Rate plus the Applicable Revolver Index Margin (ranging from 0.00% to 0.25%) or,
at the election of PST, the LIBOR Rate plus the Applicable LIBOR Margin (ranging
from 2.50% to 3.00%). The Amended Agreement also provides that outstanding
revolving credit advances shall not exceed $20,000 for 30 consecutive days
during the period from July 1 to September 30 for each year. Furthermore, the
Amended Agreement provides that domestic capital expenditures are limited to
$8,500, $9,000 and $9,500 in fiscal years ending 1997, 1998 and 1999 (and each
fiscal year thereafter), respectively. The Company also has the right to cancel
the Agreement on 30 days' written notice and pay the CLC an early termination
fee of $175 if such cancellation occurs prior to January 31, 1998, and $100 if
cancellation occurs on or after January 31, 1998 and prior to September 30,
1998.

        In addition, on January 31, 1997 PST signed a Receivables Agreement with
the CLC that provides PST with the ability to sell a 100% ownership interest,
without recourse, in certain Eligible Receivables generated by PST. The CLC's
commitment to purchase said receivables from PST are restricted to the period
beginning each February 1 and ending on each May 31.

        On November 8, 1993, PST issued $125,000 principal amount of 11-1/4%
Senior Secured Notes due in 2003. The Senior Secured Notes are senior secured
obligations of PST, ranking pari passu in right of payment with all existing and
future senior indebtedness of PST and senior to all subordinated indebtedness of
PST, if any. The Senior Secured Notes are secured by substantially all real
property, machinery, equipment, general intangibles and other intellectual
property now owned or hereafter acquired by PST and by a pledge of all
outstanding capital stock of Plastic Specialties and Technologies Investments,
Inc., a wholly-owned subsidiary of PST. The indenture for the Senior Secured
Notes contains covenants which restrict, among other matters, the ability of PST
and its subsidiaries to incur additional indebtedness, pay dividends, (except as
defined in the indenture) redeem capital stock, prepay subordinated
indebtedness, create liens, dispose of certain assets, engage in sale and merger
transactions, make contributions, loans or advances and enter into transactions
with affiliates.

        On August 16, 1995, in connection with its acquisition of the
Burlington, New Jersey facility, the Company's Burlington Resins, Inc.
subsidiary has entered into a revolving credit facility with a Commercial Bank

for up to $5,500 based on levels of inventory and accounts receivable.  Interest
on this facility is the prime rate plus 1.25%. The prime rate as of January 31,
1997 was 8.25%.  At January 31, 1997, there was $4,443 outstanding on this
loan.  The Company has also received a term loan from the Commercial Bank in the
principal amount of $5,500.  This term loan is payable in 28 quarterly
installments of approximately $196 plus interest accrued at the prime rate plus
1.25%.  At January 31, 1997 there was $3,144 outstanding on this term loan. The
Commercial Bank agreement contains covenants, the most restrictive of which are
the maintenance of certain financial ratios, prohibition of the incurrence of
additional indebtedness, the payment of dividends, certain related party
transactions and limitations on capital expenditures. The loans are secured by
the property, plant and equipment, accounts receivable and inventory of
Burlington Resins, Inc. The Company also has a term loan in the amount of $4,000
provided by Occidental Chemical Corporation. This loan is subordinated to the
Commercial Bank debt, and is payable on a quarterly basis beginning after year
two of the loan, interest only, and after year four, interest and principal. At
January 31, 1997 there was $4,000 outstanding on this loan.

        In February 1996, Styrex and PureTech Plastics, Inc. and subsidiaries
("PTP") entered into a Loan and Security Agreement with a bank ("Styrex/PTP
Loan") providing an aggregate revolving credit line of $7,500 and an aggregate
term loan of $5,000. The proceeds of the loan were used to pay off existing
debt. In September 1996 the Company repaid the amount outstanding at that time
relating to PTP. Styrex subsequently paid off its loans to the bank on November
11, 1996 when it signed a new Loan and Security Agreement (the "Styrex Loan
Agreement") with a Finance Company for a period of three years. The Styrex Loan
Agreement provides for a term loan and revolving loans up to a maximum of $6,000
and letters of credit of up to $1,000 and is secured by all of the assets of
Styrex. Advances under the agreement bear interest at the rate of prime plus 1
1/2%. The initial term loan of $1,360 has scheduled repayments of $23 per month
beginning December 1, 1996. As of January 31, 1997 the revolving loan

                                      14
<PAGE>

and the term loan balances were $2,285 and $1,297, respectively.

Capital Expenditure Commitments

        As discussed above, the Company's businesses are relatively mature and
as a result do not require significant ongoing additions to plant and equipment.
The Company generally finances its ongoing capital expenditure requirements from
its cash flow provided from operations and borrowings under its Revolving Credit
Facility.

        Construction is nearing completion on a new plant in Northern Ireland
for the Company's Unichem division. For purposes of this new business venture, a
new subsidiary has been formed, Colorite Europe Limited (a United Kingdom
company). The anticipated total capital costs for the Company in connection with
this new Unichem plant are approximately $3 million. The Company has received
commitments for certain grants, subsidies and other inducements from government
authorities in Northern Ireland. The Company plans to finance a large part of
its capital costs of this new plant by using cash reserves (and possibly some
additional borrowing from a commercial bank) at Action Belgium N.V.


Inflation

        Generally, the Company's operations have benefited from relatively
stable or declining prices for raw materials. In fiscal 1997 the Company
benefited domestically from declining raw material costs (except for the
significant decline in PET prices). Foreign operations saw raw material costs
continue to rise until they stabilized during the second quarter. Raw material
costs have generally stabilized at this time. In the event significant
inflationary trends were to resume, management believes that the Company will
generally be able to offset the effects thereof through continuing improvements
in operating efficiencies and increasing prices, to the extent permitted by
competitive factors. However, there can be no assurance that all such cost
increases can be passed through to customers.

                                      15


<PAGE>

                                     PART II

                                OTHER INFORMATION

Item 1.    LEGAL PROCEEDINGS

    The Company is party to certain litigation and environmental proceedings in
the ordinary course of business, none of which the Company believes are likely
to have a material adverse effect on its consolidated financial position or
results of operations.

     Ozite is engaged in litigation in which it seeks damages from the former
owner of Dalen ("Dalen"), a discontinued segment of Ozite. In December 1987,
Ozite commenced legal proceedings against the seller of Dalen, seeking monetary
damages and other equitable relief from Dalen for various misrepresentations
made in its financial statements and other miscellaneous information, based on
which Ozite elected to proceed with the purchase of Dalen. The former owner has
counterclaimed for the enforcement of his rights in the subject matter and for
recovery of the balance of the purchase price in an amount approximately equal
to $4,000 plus accrued interest and punitive damages. The ultimate outcome of
either of these actions is presently undeterminable. However, the Company
believes the ultimate outcome will not have a material adverse effect on its
financial position or results of operations.

    PTI Plastics ("PTIP"), certain of its directors, three former directors
and its President were defendants in a lawsuit brought in 1989 in New Jersey
Superior Court and are currently defendants in a lawsuit brought in 1989 in New
Jersey Superior Court by Frank Tammera, Sr., a stockholder and former officer
and director of PTIP and Frank Tammera, Jr., a former officer of PTIP.  Trial of
the Frank Tammera, Sr. lawsuit commenced in April 1991 and concluded in 1995. 
In March 1996, the New Jersey Superior Court decided that PTIP did not have to
reinstate Mr. Tammera, Sr., that his termination had been for cause, and in
March 1996 a NJ Superior Court decided for PTIP on all matters except that PTIP
was obligated to pay him only approximately $30 of indebtedness, which PTIP had
acknowledged, and $14 in royalties.  Final judgement in the Frank Tammera, Sr.
suit was entered on June 6, 1996. In August 1996, Mr. Tammera, Sr. appealed the
court's decision.  The Frank Tammera, Jr. lawsuit has been stayed pending the
resolution of the Frank Tammera, Sr. lawsuit.

    In May 1992, PST and all of its directors (as of 1988), as well as K and B
Liquidating Corp. (a former subsidiary of PST which is being liquidated) were
named in two lawsuits filed in the Minnesota state courts. The plaintiffs are
Douglass Hutchinson (since deceased) and James Czaja, both of whom were former
employees of a former subsidiary of PST, Circuit Chemistry Manufacturing Corp.
("Circuit Chemistry"). The suits allege several causes of action, all of which
center upon a claim that PST and/or other defendants did not adequately disclose
sufficient information to the plaintiffs in connection with the acquisition from
the plaintiffs by PST of their 20% equity interest in Circuit Chemistry, and the
termination of their employment agreements. Each complaint seeks various items
of damage totaling approximately $7,000. Counsel has been retained by PST in
Minnesota, and the cases have been removed to the Federal Court in Minnesota.
Only PST, Mr. Fred Broling, Chairman and Chief Executive Officer of PST, and a

former director remain in the suits, as the case against the other defendants
has been dismissed. The matter is being vigorously defended and management
believes the suits have no merit.

    Under the 1984 Agreement of Purchase and Sale between Dart & Kraft and PST
(the "1984 Agreement"), Dart & Kraft retained responsibility for liabilities
resulting from any violation of applicable environmental law or laws and
regulations of the Occupational Safety and Health Administration ("OSHA") prior
to the date of the 1984 Agreement. Dart & Kraft further agreed to indemnify PST,
as of the effective date of the 1984 Agreement, for existing, pending,
threatened, or unasserted action suits, or other claims or proceedings (whether
contingent or otherwise), with respect to certain matters (including
environmental matters). Pursuant to the split-up of Dart & Kraft in 1987, Kraft,
Inc. retained all liability under the 1984 Agreement (accordingly, references to
Dart & Kraft herein include only Kraft after the effective date of the
split-up).

    Under the Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA") and state laws similar to CERCLA, PST may be subject to liability
for cleanup costs and other damages resulting from past off-site disposal of
hazardous substances by PST or its corporate predecessors, or for the
contamination of property currently owned by PST with respect to such materials.
PST is unaware of any on-site or off-site hazardous substance contamination for
which it is reasonably likely to be liable. There are also several matters
governed by CERCLA resulting from the activities of a former PST division,
Synthetic Products Co. (sold to Cookson America, Inc.

                                      16
<PAGE>

("Cookson") in August 1988) and a PST subsidiary, Ware Chemical Co. ("Ware
Chemical"), that is no longer in operation and whose assets were also sold to
Cookson in 1988.

    On February 18, 1993, Ware Chemical Co. ("Ware Chemical"), a former PST
subsidiary (now dormant), was served with a third party complaint in the matter
of United States v. Davis. In Davis, the United States has alleged that certain
private entities are liable, pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), for cleanup costs that have
been incurred, and will be incurred in the future, with respect to the
remediation of the Davis Landfill site in Rhode Island. Ware Chemical was owned
by Dart Industries (now Kraft, Inc.) during the time in question (1975-1977),
and Kraft has agreed to assume all liability.

    The Company's operations are subject to requirements imposed under certain
federal, state and local environmental and health and safety laws and
regulations, including the federal Clean Water Act, Clean Air Act, Resource
Conservation and Recovery Act ("RCRA"), CERCLA and OSHA and comparable state
laws, relating to waste water discharges, air emissions, solid waste management
and disposal practices, work place safety and real property use and ownership.
The Company believes that it is in substantial compliance with such laws and
regulations. No assurances can be given, however, that the Company will continue
to be able to secure, renew, and maintain compliance with the terms and
conditions of the required environmental permits and approvals, that other

environmental permits or approvals may not be required for the Company's
operations or that penalties will not be imposed by regulatory entities for any
failures to have secured all required environmental permits or approvals.
Further, there can be no assurances that more stringent statutory or regulatory
environmental or work place safety requirements will not be enacted or adopted
in the future which could have a material adverse effect on or materially
restrict the Company's operations or business.

Item 2.    CHANGES IN SECURITIES:                                None

Item 3.    DEFAULT UPON SENIOR SECURITIES:                       None

Item 4.    SUBMISSION OF MATTERS TO A VOTE
           OF SECURITY HOLDERS:                                  None

Item 5.    OTHER INFORMATION:                                    None

Item 6.    EXHIBITS AND REPORTS ON FORM 8-K:                     None

                                      17


<PAGE>

                                   SIGNATURES

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

               PURETEC CORPORATION

               By:             /s/  Thomas V. Gilboy
                  --------------------------------------------  
               Thomas V. Gilboy
               Chief Financial Officer and Vice President

Dated: March 14, 1997

                                      18