<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

         For Quarter Ended March 31, 1997 Commission File Number 0-9998

                          THE METAL ARTS COMPANY, INC.
             (Exact name of registrant as specified in its charter)

            New York                                             06-0945588
            --------                                             ----------
(State or other jurisdiction of                                (IRS Employer
incorporation or organization)                               Identification No.)

  1 American Center, Geneva, New York                             14456-1188
  -----------------------------------                             ----------  
(Address of principal executive offices)                          (Zip Code)

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
    ---      ---

The number of shares of common stock, $.01 par value, outstanding at March 31,
1997 was 7,407,402.

                               Page 1 of 11 Pages
                           Exhibit Index is on Page 2

<PAGE>


                         THE METAL ARTS COMPANY, INC.

                                  I N D E X

Part I                    Financial Information:

                  Consolidated Condensed Balance Sheets,
                  March 30, 1997 and June 30, 1996.                      4 and 5

                  Consolidated condensed Statements of

                  Operations, six months ended March 30,
                  1997 and 1996.                                               6

                  Consolidated Condensed Statement of
                  Cash Flows, six months ended
                  March 30, 1997 and 1996.                                     7

                  Notes to Consolidated Condensed
                  Financial Statements.                                        8

                  Management's Discussion and Analysis
                  of Financial Condition and Results
                  of Operations.                                               9

Part II                   Other Information                                   10

                                     (2)

                                       
<PAGE>


                          PART I FINANCIAL INFORMATION
               ---------------------------------------------------
























                                     (3)


<PAGE>






                          THE METAL ARTS COMPANY, INC.

                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                   (UNAUDITED)

ASSETS

                                                       3/31/97     6/30/96

Current Assets:

         Cash                                         $  47,419    $ 112,215
         Trade accounts receivable - net                255,361      207,596
         Current portion of due from NYSERDA             31,869       25,768
         Due from former subsidiary - net                 4,500        9,000
         Current portion of deferred tax asset           14,200       14,200
         Prepaid expenses and other current assets       18,079       29,519
                                                      ---------    ---------
                                                        371,428      398,298

PROPERTY, PLANT AND EQUIPMENT                           924,927      884,157
         Less accumulated depreciation                 (445,190)    (375,890)
                                                      ---------    ---------
                                                        479,737      508,267
OTHER ASSETS

         Due from NYSERDA, net of current portion        31,295       21,303
         Cash value of life insurance                     7,893        7,893
         Operating rights - net                          18,090       18,090
         Debt issuance costs - net                       15,933       15,933
         Deferred tax asset, net of current portion     179,000      179,000
         Other assets                                    36,919       30,479
                                                      ---------    ---------
                                                        289,130      272,698
                                                      ---------    ---------




TOTAL ASSETS                                         $1,140,295   $1,179,263
                                                     =======================


                                     (4)


<PAGE>




                          THE METAL ARTS COMPANY, INC.

                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                   (UNAUDITED)

                                   (CONTINUED)

                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

                                                      3/31/97        6/30/96

CURRENT LIABILITIES

         Current portion of long-term debt         $    66,679    $    66,679
         Accounts payable - trade                      133,185        208,213
         Accrued expenses                               26,438          9,412
         Accrued payroll and related taxes              25,596         19,725
         Accrued commissions                            33,419         34,492
                                                   -----------    -----------
                                                       285,317        338,521

LONG-TERM LIABILITIES

         Long-term debt, net of current portion        348,270        404,946
         Other long-term liability                     243,222        243,222
         Deferred tax liability                         12,000         12,000
                                                   -----------    -----------
                                                       603,492        660,168

MINORITY INTEREST IN SUBSIDIARY                        141,448        129,898

STOCKHOLDERS' EQUITY

Common stock- $.01 par value, 15,000,000 shares
authorized; issued and outstanding; 7,407,402 at
March 31, 1997 and 7,307,402 at June 30, 1996           74,074         73,074
     Paid-in capital in excess of par value          2,407,188      2,358,188
     Accumulated deficit                            (2,371,224)    (2,380,586)
                                                   -----------    -----------
                                                       110,038         50,676
                                                   -----------    -----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY                               $ 1,140,295    $ 1,179,263
                                                   ===========    ===========

                                     (5)

<PAGE>




                          THE METAL ARTS COMPANY, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED             NINE MONTHS ENDED
                                               MARCH 31,                     DECEMBER 31,
                                            1997            1996         1997          1996
                                       -------------  -------------  -------------  ---------
<S>                                    <C>            <C>            <C>            <C>
SALES - NET                            $   431,115    $   412,222    $ 1,212,862    $ 1,250,596

COST OF SALES                             (350,501)      (363,545)    (1,006,053)    (1,091,504)
                                       -------------  -------------  -------------  -----------
GROSS MARGIN                                80,614         48,677        206,809        159,092

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES                    (72,975)       (86,494)      (200,499)      (204,643)
RESEARCH AND DEVELOPMENT                     4,888         19,094         40,868         36,049
                                       -------------  -------------  -------------  -----------
OPERATING INCOME (LOSS)                     12,527        (18,723)        47,178         (9,502)

INTEREST EXPENSE                            (8,945)       (13,733)       (27,148)       (27,217)
INTEREST INCOME                                 76            728            882          1,974
MINORITY INTEREST IN INCOME
OF SUBSIDIARY                               (1,434)           335        (11,550)        (9,975)
                                       -------------  -------------  -------------  -----------
                                           (10,303)       (12,670)       (37,816)       (35,218)
                                       -------------  -------------  -------------  -----------
NET INCOME (LOSS)
FOR THE PERIOD                         $     2,224    ($   31,393)   $     9,362    ($   44,720)
                                       =============  =============  =============  ===========

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING                7,407,402      7,307,402      7,357,402      7,307,402

EARNINGS PER SHARE OF
COMMON STOCK:

    Net income (loss) for the period   $      0.00    $      0.00    $      0.00    $      0.00
                                       ========================================================
</TABLE>
                                     (6)
<PAGE>
                          THE METAL ARTS COMPANY, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                          NINE MONTHS ENDED
                                                              MARCH 31
                                                           1997         1996

CASH FLOWS FROM OPERATING ACTIVITIES

         Net income (loss) for the period              $   9,362    ($ 44,720)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
TO NET CASH PROVIDED BY OPERATING ACTIVITIES

         Rent expense offset against advances to
           former subsidiary                               4,500            0
         Depreciation and amortization                    69,300       61,123
         Minority interest in income of subsidiary        11,550        9,975
         Change in operating accounts:

                  Accounts receivable                     (63,858)      44,309
                  Prepaid expenses and other                5,000      (22,764)
                  Accounts payable                        (31,028)       8,254
                  Accrued expenses                         17,026       (3,471)
                  Accrued payroll and commissions           4,798          554
                                                        ---------    --------- 
                                                           26,650       53,260
CASH FLOWS FROM INVESTING ACTIVITIES
         Capital expenditures                             (40,770)     (54,316)
         Advances to former subsidiary                          0      (15,000)
                                                        ---------    ---------
                                                          (40,770)     (69,316)
CASH FLOWS FINANCING ACTIVITIES
         Proceeds from issuance of common stock             6,000            0
         Proceeds of long-term debt                             0      100,000
         Payments on long-term debt                       (56,676)     (29,592)
                                                        ---------    ---------
                                                          (50,676)      70,408
                                                        ---------    ---------
NET INCREASE IN CASH                                      (64,796)      54,352
CASH - BEGINNING                                          112,215       78,592

                                                        ---------    ---------
CASH ENDING                                             $  47,419      132,944
                                                        =========    =========
SUPPLEMENTAL CASH FLOW INFORMATION
         Cash paid for interst expense                  $  27,148    $  27,217
                                                        =========    =========
SCHEDULE OF NON-CASH INVESTING AND
  FINANCING ACTIVITIES

         Accounts payable-trade satisfied               $  44,000    $       0
         Common stock issued                              (44,000)           0
                                                        ---------    ---------
         Cash paid                                      $       0    $       0
                                                        =========    =========

                                     (7)

<PAGE>
                         THE METAL ARTS COMPANY, INC.

             Notes to Consolidated Condensed Financial Statements

         1. These statements should be read in conjunction with the
         audited financial statements and the notes thereto and with
         Management's Discussion and Analysis of Financial Condition
         and Results of Operations included in the Company's Form 10-K
         for the fiscal year ended June30, 1996. In the opinion of
         management, the accompanying consolidated condensed financial
         statements contain all adjustments of a normal recurring
         nature necessary for the fair presentation of the Company's
         financial position as of March 31, 1997 and the results of
         operations for the nine months ended March 31, 1997and 1996

         2. The results of operations for the nine months ended March
         31, 1997 are not necessarily indicative of the results to be
         expected for the full year.

         3. Earnings (loss) per share of common stock is computed on
         the weighted average number of shares outstanding during the
         three months ended March 31, 1997 and 1996. The weighted
         average number of shares outstanding at the end of each period
         is determined by totaling the number of shares outstanding at
         the end of each month in the period and dividing the sum by
         the number of months in the period.

                                     (8)


<PAGE>



                         THE METAL ARTS COMPANY, INC.

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

Liquidity and Capital Resources

Private Placement of Debentures

The company sold, as of September 30, 1994, eleven debentures for a total of
$275,000.  The purpose of the private placement was to acquire the technology
for plating electroless nickel on aluminum, conduct research, development and
test trials with potential customers leading up to commercialization in the
computer disk market.


New York State Energy Research and Development Authority Funding

The company signed an agreement with the New York State Energy Research and
Development Authority (NYSERDA) dated June 22, 1995 for funding of $325,000 for
its new technology. This was done as a part of NYSERDA's Industrial Waste
Minimization Program. The purpose of the funding is to provide money for the
completion of research and development, test trials, commercial demonstrations
and commercialization of the technology.

During the quarter ended March 31, 1997 the company received a seventh payment
of $25,130 as a part of NYSERDA's funding program.  This brings the total
received to date of $263,830.

Operating Activities

Over the past three fiscal years Coating Technology has shown steady growth in
sales and earnings. Cash flow was adequate to provide for the acquisition of
capital equipment and provide the working capital necessary to tun the business.
There was a significant increase in cash generated during the fiscal year 1996
over 1995 and 1994 as well as the cash balance at the end of the year. In
addition, all relevant measures relating to: Debt to Equity; current ratio;
working capital; and net worth increased substantially.

Through the first nine months of fiscal year 1997, Coating Technology operated
profitably with sufficient resources to sustain operations.

If Metal Arts is successful in commercializing its new technology it will be
necessary to raise additional capital The amount of capital required will depend
on how rapidly market acceptance might occur. If this does occur it could result
in growth in the company's sales and earnings over the next few years. The
company will seek, if commercial sales commence, to raise additional capital in
the form of receivables financing, warrant conversion or other investment
mechanisms to sustain operations.

                                     (9)
<PAGE>
                         The Metal Arts Company, Inc.

                   Management's discussion and Analysis of
                 financial Condition and Results of Operation

B.       RESULTS OF OPERATIONS:
-------------------------------
   
The following table illustrates the major components of consolidated net sales
and net income (loss).

                                   Nine Months Ended
                                      March 31,
                                   1997           1996
                               -----------    -----------
Consolidated Net Sales:

       Metal Arts              $    44,000    $       500
       Coating Technology        1,168,900      1,250,000
                               -----------    -----------
                               $ 1,212,900    $ 1,250,500
                               ===========    ===========

Consolidated Net Income (Loss)

       Metal Arts              ($   29,200)   ($   77,700)
       Coating Technology           38,500         33,000
                               -----------    -----------
                               $     9,300    ($   44,700)
                               ===========    ===========

The Metal Arts Company, Inc.
----------------------------

The net sales for the Company for the nine (9) months ended March 31, 1997 were
$44,000 compared with $500 in the previous year.  The Company showed a loss of
$29,000 versus a loss of $77,700 the previous year.

Coating Technology, Inc.
------------------------

Coating Technology's sales for the nine (9) months ended March 31, 1997 were
$1,168,900 as compared with $1,250,000 in the previous year. The Company showed
a profit of $38,500 as compared with a profit of $33,000 in the previous year.

                                     (10)
<PAGE>
                         THE METAL ARTS COMPANY, INC.
                         ----------------------------

Part II - Other Information:

        Item 6 - Exhibits and Reports on form 8-K

        A.  Exhibits - None

        B.  Reports on Form 8 - K - None

Signatures:

Pursuant to the requirements of the Securities Exchange Act of 1934, the

registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                         THE METAL ARTS COMPANY, INC.
                         ----------------------------

Date: May 12, 1997                                            Stanley J. Dahle
      ------------                                            ----------------
                                                              Stanley J. Dahle
                                                                President

Date: May 12, 1997                                            Albert A. Cauwels
      ------------                                            -----------------
                                                              Albert A. Cauwels
                                                                Secretary

                                     (11)