<PAGE>   1
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q


        [x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES ACT OF 1934

                  For the Quarterly Period Ended June 30, 1997

                                       OR

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

            For the transition period from __________ to __________.


                         Commission File Number 0-10096


                            STRIKER INDUSTRIES, INC.
              (Exact name of Company as specified in its charter)


          DELAWARE                                      84-0834953
(state or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                    Identification Number)


                            ONE RIVERWAY, SUITE 2450
                              HOUSTON, TEXAS 77056
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (713) 622-4092
               (Company's telephone number, including area code)

                                 NOT APPLICABLE
                   (Former name if changed since last report)

Indicate by check mark whether the Company (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 Company 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 August 14, 1997, there were 4,756,188 shares of Common Stock, par value
$0.50 per share, outstanding and no shares of Preferred Stock, par value $0.50
per share, were outstanding.


                                  Page 1 of 27

<PAGE>   2
     INDEX TO QUARTERLY REPORT ON FORM 10-Q


<TABLE>
<CAPTION>
PART I.     FINANCIAL INFORMATION                            PAGE NO.
                                                             --------
<S>         <C>                                              <C>
Item 1.     Financial Statements

            Consolidated Balance Sheet                            3

            Consolidated Statements of Operations                 4

            Consolidated Statements of Cash Flows                 5

            Notes to Consolidated Financial Statements            6

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


PART II.    OTHER INFORMATION


Item 1.     Legal Proceedings                                    23

Item 2.     Changes in Securities                                23

Item 3.     Defaults Upon Senior Securities                      24

Item 4.     Submission of Matters to a
            Vote of Security Holders                             25

Item 5.     Other Information                                    25

Item 6.     Exhibits and Reports on Form 8-K                     26


SIGNATURES                                                       27
</TABLE>


                                  Page 2 of 27
<PAGE>   3
PART I - FINANCIAL INFORMATION

Item 1: Financial Statements


                   STRIKER INDUSTRIES, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                             For the Period Ending

<TABLE>
<CAPTION>
                                                                    June 30,      December 31,
                                                                      1997            1996
                                                                  ------------    ------------
<S>                                                               <C>                  <C>    
                          Assets

Current assets:
   Cash and cash equivalents                                      $     10,581         292,485
   Cash, restricted as to use                                          360,000         360,000
   Accounts receivable:
      Trade                                                            126,376         492,533
      Other, net of bad debt allowance of 489,671
        and 489,671 for June 30, 1997 and
        December 31, 1996, respectively                                672,047          45,067
   Inventories:
      Raw materials                                                     26,728          25,221
      Finished goods                                                   220,695         210,301
   Prepaid expenses and other current assets                           227,977         418,958
                                                                  ------------    ------------
               Total current assets                                  1,644,404       1,844,565

Property and equipment, net                                         15,647,609      15,943,490

Deferred costs and other, net                                        1,249,562       1,412,411
                                                                  ------------    ------------
               Total assets                                       $ 18,541,575      19,200,466
                                                                  ============    ============


           Liabilities and Stockholders' Equity

Current liabilities:
   Trade accounts payable                                         $  3,127,853       2,524,519
   Accrued liabilities                                                 947,930         932,515
   Revolving line of credit                                            589,814         529,950
   Current portion of long term debt                                 2,621,500       3,463,950
   Current obligations under capital leases                             21,244          35,962
                                                                  ------------    ------------
               Total current liabilities                             7,308,341       7,486,896

Long-term liabilities:
   Subordinated notes payable                                        8,967,532       5,300,000
   Term loans, net of current portion                                       --         534,650
   Capital lease obligation                                             15,969          18,750
                                                                  ------------    ------------
               Total long-term liabilities                           8,983,501       5,853,400
                                                                  ------------    ------------

Stockholders' equity:
   Preferred stock, $.20 par value, 5,000,000 shares
      authorized, none issued                                               --              --
   Common stock, $0.50 par value, 25,000,000 shares authorized,
      4,756,188 and 4,756,188 shares issued, respectively            2,184,913       2,184,913
   Stock subscriptions receivable                                     (275,000)       (275,000)
   Additional paid-in capital                                       14,098,118      14,098,034
   Accumulated deficit                                             (13,599,019)     (9,988,500)
   Foreign currency translation adjustment                             (84,279)        (84,277)
   Less treasury stock at cost; 4,800 shares                           (75,000)        (75,000)
                                                                  ------------    ------------
               Total stockholders' equity                            2,249,733       5,860,170

Commitments and contingencies
                                                                  ------------    ------------
               Total liabilities and stockholders' equity         $ 18,541,575      19,200,466
                                                                  ============    ============
</TABLE>


See accompanying notes to consolidated financial statements.


                                  Page 3 of 27

<PAGE>   4
                   STRIKER INDUSTRIES, INC., AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

          For the quarter and six months ended June 30, 1997 and 1996



<TABLE>
<CAPTION>
                                             Quarter ended June 30,         Six Months ended June 30,
                                          ----------------------------    ----------------------------
                                              1997            1996            1997            1996
                                          ------------    ------------    ------------    ------------
<S>                                       <C>             <C>             <C>             <C>      
Revenues                                  $    725,566       1,669,712       1,495,137       3,062,461

Cost of sales                                  986,857       1,498,748       2,347,807       2,942,017
                                          ------------    ------------    ------------    ------------

           Gross margin                       (261,291)        170,964        (852,670)        120,444

Selling, general and
  administrative expenses                      819,965         462,851       1,773,589         835,606
                                          ------------    ------------    ------------    ------------

           Operating loss                   (1,081,256)       (291,887)     (2,626,259)       (715,162)
                                          ------------    ------------    ------------    ------------

Other income (expense):
  Interest expense, net                       (457,753)       (147,415)       (984,260)       (240,600)
  Other income                                      --              --              --              --
                                          ------------    ------------    ------------    ------------

           Loss before income taxes and
              extraordinary item            (1,539,009)       (439,302)     (3,610,519)       (955,762)

Income taxes                                        --              --              --              --
                                          ------------    ------------    ------------    ------------

           Net loss before
             extraordinary item             (1,539,009)       (439,302)     (3,610,519)       (955,762)
                                          ------------    ------------    ------------    ------------

Extraordinary item, gain
  on extinguishment of debt                         --              --              --              --
                                          ------------    ------------    ------------    ------------

           Net income (loss)              $ (1,539,009)       (439,302)     (3,610,519)       (955,762)
                                          ============    ============    ============    ============

Income (loss) per common share:
  Loss before extraordinary item          $       (.32)           (.09)           (.76)           (.20)
W  Extraordinary item                                --              --              --              --
                                          ------------    ------------    ------------    ------------

  Net income (loss) per common share      $       (.32)           (.09)           (.76)           (.20)
                                          ============    ============    ============    ============
</TABLE>


See accompanying notes to consolidated financial statements.



                                  Page 4 of 27
<PAGE>   5
                   STRIKER INDUSTRIES, INC., AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                For the six months ended June 30, 1997 and 1996


<TABLE>
<CAPTION>
                                                                   Six months ended June 30,
                                                                 ----------------------------
                                                                     1997            1996
                                                                 ------------    ------------
<S>                                                              <C>                 <C>      
Cash flows from operating activities:
    Net income (loss)                                            $ (3,610,519)       (955,762)
    Adjustments to reconcile net income (loss) to net cash
       used in operating activities:
          Depreciation                                                358,944         243,620
          Amortization                                                580,377              --
          Changes in assets and liabilities:
            Increase in accounts receivable                          (260,823)       (523,689)
            (Increase) decrease in inventories                        (11,901)          5,175
            Decrease in prepaid expenses and other
              current assets                                          190,981          43,487
            Increase (decrease) in accounts payable and
              accrued liabilities                                     618,747        (206,230)
                                                                 ------------    ------------

                     Net cash provided by (used) in
                       operating activities                        (2,134,194)     (1,393,399)
                                                                 ------------    ------------

Cash flows from investing activities:
    Purchases of property and equipment                              (138,063)       (591,618)
    Proceeds from disposition of property and equipment                75,000              --
    Increase in deferred acquisition costs                                 --        (564,734)
                                                                 ------------    ------------

                     Net cash used in investing activities            (63,063)     (1,156,352)
                                                                 ------------    ------------

Cash flows from financing activities:
    Proceeds received from issuance of common stock                        --         200,000
    Proceeds from revolving lines of credit                         1,807,562       2,871,175
    Repayment of revolving lines of credit                         (1,747,614)     (3,107,884)
    Proceeds from fixed asset line of credit                               --         517,500
    Repayments of fixed asset line of credit                         (134,100)       (171,600)
    Repayments of original issue discount notes                    (1,978,000)             --
    Principal payments on capital leases                              (17,499)        (25,212)
    Proceeds received from issuance of common stock subscribed             --         236,000
    Deferred and other costs paid                                    (417,528)       (695,229)
    Proceeds from subordinated notes payable                        4,402,532       2,600,000
                                                                 ------------    ------------

                     Net cash provided by financing activities      1,915,353       2,424,750
                                                                 ------------    ------------

Net increase (decrease) in cash                                      (281,904)       (125,001)

Cash and cash equivalents, beginning of year                          292,485         141,557
                                                                 ------------    ------------

Cash and cash equivalents, end of year                           $     10,581          16,556
                                                                 ============    ============
</TABLE>


See notes to accompanying consolidated financial statements.



                                  Page 5 of 27
<PAGE>   6
                   STRIKER INDUSTRIES, INC., AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
Striker and its wholly owned subsidiaries. All material intercompany accounts
and transactions have been eliminated.

Interim Financial Information

The consolidated interim financial statements included herein are unaudited;
however, they include all adjustments of a normal recurring nature which, in
the opinion of management, are necessary to present fairly the consolidated
financial position of the Company at June 30, 1997, the consolidated results of
operations for the quarter and six months ended June 30, 1997 and 1996 and the
cash flows for the six months ended June 30, 1997 and 1996.

Earnings (Loss) Per Common Share

During May, 1997, the Company's shareholders approved a 1-for-2.5 reverse stock
split. For consistency, the number of shares used in computing the earnings
(loss) per share for the quarter and six months ended June 30, 1996 has been
restated as if the reverse stock split had been in effect for all historical
periods.

The computation of earnings or loss per share in each year is based on the
weighted average number of common shares outstanding. When dilutive, stock
options and warrants are included as share equivalents using the treasury stock
method. The number of shares used in computing the earnings (loss) per share
was 4,756,188 and 4,756,188 for the three and six months ended June 30, 1997,
respectively, and 4,746,188 and 4,686,188 for the three and six months ended
June 30, 1996, respectively. Primary and fully diluted earnings per share are
the same for each of these years.

Cash Flow Information

For purposes of reporting cash flows, cash and cash equivalents include cash
and short-term investments which mature within three months of their date of
purchase.


                                 Page 6 of 27

<PAGE>   7


2. PROPERTY AND EQUIPMENT, NET:

The Company's property and equipment consisted of the following:


<TABLE>
<CAPTION>
                                                    June 30,    December 31,
                                    Useful Life       1997          1996
                                    -----------   -----------   -----------
<S>                                 <C>           <C>           <C>
Machinery, equipment and vehicles   5 - 12 years  $16,100,268   $15,993,022
Buildings                           25 years          747,409       807,229
Computer and office equipment       5 years           737,956       728,092
Land improvements                   5 years           266,533       260,760
Machinery, equipment and vehicles
  under capital leases              2 - 5 years       139,266       139,266
Spare parts                                           274,472       274,472
Land                                                  150,000       150,000
                                                  -----------   -----------
                                                   18,415,904    18,352,841
Less- Accumulated depreciation 
      and amortization                             (2,768,295)   (2,409,351)
                                                  -----------   -----------
                                                  $15,647,609   $15,943,490
                                                  ===========   ===========
</TABLE>

3. DEFERRED COSTS AND OTHER, NET:

The Company's deferred costs and other, net, consisted of the following:


<TABLE>
<CAPTION>
                                                         June 30,    December 31,
                                                           1997         1996
                                                        ----------   -----------
<S>                                                     <C>          <C>
Deferred financing costs, net                           $1,143,594   $1,344,297
Deposits                                                    88,151       47,751
Patents                                                     25,029       25,029
Less- Accumulated amortization - patents                    (7,212)      (4,666)
Organization costs                                          78,025       78,025
Less- Accumulated amortization - organizational costs      (78,025)     (78,025)
                                                        ----------   ----------
                                                        $1,249,562   $1,412,411
                                                        ==========   ==========
</TABLE>


                                 Page 7 of 27

<PAGE>   8

4. DEBT:

The Company's debt consisted of the following at:


<TABLE>
<CAPTION>
                                                         June 30,    December 31,
                                                           1997         1996
                                                       -----------   ----------- 
<S>                                                    <C>           <C>
Subordinated notes payable, 10.25% due 12/31/98        $ 8,967,532   $ 5,300,000
Subordinated notes payable @ 13% interest, due the
  earlier of (i) 5/15/97, or (ii) the closing of 
  any public or private debt or equity financing 
  exceeding $10.5 million                                  798,000       798,000
Original Issue Discount Notes due the earlier of 
  (i) 4/25/97, or (ii) the closing of any public 
  or private debt or equity financing exceeding 
  $10.5 million                                            332,000     1,575,000
Stephens:                                         
  Term loan, prime (8.25%) +3.5%, due 5/31/98              593,750       652,850
  Revolving line of credit, prime + 3.5%                   224,939       164,148
Canadian Facility:                                     
  Term loan, prime (6.5%) +2.5%, due 4/01/01               897,750       972,750
  Revolving line of credit, prime +2.5%                    364,874       365,802
Capitalized lease obligations bearing interest at      
  rates from 10% to 18% maturing between 1996 and        
  2000, secured by underlying machinery, vehicles
  and computer equipment.                                   37,213        54,712 
                                                       -----------   ----------- 
                                                        12,216,058     9,883,262 
Less-Current maturities and revolving lines of credit   (3,232,557)   (4,029,862)
                                                       -----------   ----------- 
                                                       $ 8,983,501   $ 5,853,400 
                                                       ===========   ===========
</TABLE>

On May 4, 1995, the Company entered into a financing agreement consisting of a
term loan based upon the liquidation value of certain of the Company's fixed
assets at the Stephens mill and a revolving line of credit based upon eligible
accounts receivable assets (collectively "the Stephens Facility"). Advances
under the Facility are limited to $2,500,000 in the aggregate and bear interest
at prime plus 3.5%.

As of the date of this report, the Company is in default for non-payment of
July, 1997 principal and interest on the Stephens Facility. The Company has not
received any notice from the Stephens Facility lender. Management does not
anticipate any notice or action from the lender. Consequently, the entire 
Stephens Facility has been classified as current debt for the period ended 
June 30, 1997.

On July 28, 1995, the Company's Canadian Subsidiary, Striker Paper Canada, Inc.
("Striker Canada"), entered into a financing agreement with a Canadian lender
consisting of a term loan based upon the liquidation value of certain of
Striker Canada's fixed assets and a revolving line of credit based upon
eligible accounts receivable (collectively "the Canadian Facility"). Advances
under the Canadian Facility are limited to $2,000,000 Canadian in the aggregate
and bear interest at Canadian prime plus 2.5%. At December 31, 1996 and June
30, 1997, Striker Canada was not in


                                  Page 8 of 27

<PAGE>   9


compliance with certain covenants of the Canadian Facility, subsequently, the
Company had reclassified the entire Canadian Facility as current debt for the
year ended December 31, 1996 and the period ended June 30, 1997. On August 11,
1997, the Company signed a Forbearance agreement with the Canadian lender to
waive demand rights, subject to certain provisions, for a period of three years
beginning August 1, 1997. As part of the Forbearance agreement, Striker Canada
has agreed to prepay, on or before August 29, 1997, principal and interest
through February, 1998.

On February 16, 1996, a wholly-owned subsidiary of the Company issued
$1,300,000 in aggregate principal amount of 10.25 % Subordinated Notes (the
"1996 Notes") to seven purchasers. The proceeds of the 1996 Notes were used for
Transaction costs and/or working capital needs.

On June 5, 1996, a wholly-owned subsidiary of the Company issued $1,300,000 in
aggregate principal amount of 10.25 % Subordinated Notes (the "1996 B Notes")
to twelve international investors, five of which are stockholders. The 1996 B
Notes mature on December 31, 1998 and interest is payable quarterly beginning
July 1, 1996. The proceeds of the 1996 B Notes were used for Transaction costs
and/or working capital needs.

On July 10, 1996, a wholly-owned subsidiary of the Company issued $1,500,000 in
aggregate principal amount of 10.25 % Subordinated Notes (the "1996 C Notes") to
nine international investors. The 1996 C Notes mature on December 31, 1998 and
interest is payable quarterly beginning July 1, 1996. The proceeds of the 1996 C
Notes were used for Transaction costs and/or working capital needs.

A wholly-owned subsidiary of the Company issued $798,000 in aggregate principal
amount of Subordinated Notes (the "1996 D Notes") dated October 28, 1996 to
several investors. Management is presently in communication with the 1996 D
noteholders regarding implementation of the issuance to them, in full payment,
cancellation and exchange for the 1996 D Notes, of Warrants to purchase shares
of Common Stock of the Company, in accordance with the provisions of the letter
agreement between the Company and each noteholder attached as Exhibit A to each
of the 1996 D Notes.

In December, 1996 and January, 1997, the Company issued $2,310,000 in aggregate
principal amount of Original Issue Discount Notes (the "1996 E Notes") to
twenty-one investors. The maturity date of the 1996 E Notes by agreed extension
was 5/19/97. As a result of the repudiation of the Transaction (see Note 5 to
the Notes to Consolidated Financial Statements), the 1996 E Notes were in
default. However, on May 16, 1997, $1,978,000 was repaid and the remaining
balance thereof, by agreement in principle, was to be paid by June 30, 1997. The
Company was unable to make any payments to reduce or retire the remaining
balance as of the date of this report. The Company is in default of the terms of
the 1996 E Notes. In addition, in conjunction with other financing needs, the
Company is attempting to raise funds to retire the balance remaining due on the


                                  Page 9 of 27

<PAGE>   10


1996 E Notes. The proceeds of the 1996 E Notes were used for Transaction costs
and/or working capital needs.

In February, March and April, 1997, the Company issued $643,000 in aggregate
principal amount of 10.25 % Subordinated Notes (the "1997 A Notes") to two
international investors. The 1997 A Notes mature on December 31, 1998 and
interest is payable thereon quarterly. The proceeds of the 1997 A Notes were
used for working capital needs.

In April and May, 1997, a wholly-owned subsidiary of the Company issued
$2,550,000 in aggregate amount of 10.25% Subordinated Promissory Notes (the
"1997 B Notes") to ten international investors. The 1997 B Notes mature on
December 31, 1997 and interest is payable thereon quarterly. The principal use
of the proceeds of the 1997 B Notes was to pay down the 1996 E Notes.

In June, 1997, a wholly-owned subsidiary of the Company issued $475,000 in
aggregate amount of 10.25% Subordinated Promissory Notes (the "1997 C Notes")
to three international investors. The 1997 C Notes mature on December 31, 1998
and interest is payable thereon quarterly. The proceeds of the 1997 C Notes was
for working capital needs.

At June 30, 1997, there were no amounts available under the lines of credit.

Interest paid for the three and six months ended June 30, 1997 was $65,319 and
$115,914, respectively, and interest paid for the three and six months ended
June 30, 1996, was $74,887 and $171,021, respectively.

5. COMMITMENTS AND CONTINGENCIES:

Contingencies

On April 25, 1996, the Company signed an agreement to combine in a merger
transaction (the Transaction) with the indirect parent corporation of one of the
largest privately-owned manufacturers of asphalt shingles and built up roofing
(GS Roofing Products Company, Inc.). The closing of the Transaction had been
extended in writing by mutual agreement of the parties to April 21, 1997,
provided that (i) a Registration Statement required to raise the equity
component of the financing required for closing was filed with the Securities
and Exchange Commission (which document was filed with the Securities and
Exchange Commission December 26, 1996) and (ii) the merger became effective on
or before April 21, 1997 or within incremental five business day periods of time
thereafter so long as bona fide marketing efforts were being conducted by the
underwriters with a view to such Registration Statement becoming effective on or
before April 30, 1997.


                                 Page 10 of 27

<PAGE>   11


On or about February 4, 1997, via facsimile transmission, the President of GS
Roofing, Donald F. Smith, sent a notice to the Company of his and GS Roofing's
repudiation of the Transaction. Subsequent to that date, the Company made
protracted attempts to reinstate the Transaction, without success. Accordingly,
management ultimately retained counsel and filed suit against Newgen Holdings,
Inc., Gen Holdings, Inc., GS Roofing Products Company, Inc., Donald F. Smith
and Maredon-I, Ltd. alleging, among other things, a breach of contract by the
defendants resulting from the defendants' wrongful repudiation of the binding
agreements between the Company and the defendants providing for the
Transaction, which action by the defendants severely impaired the Company's
ability to complete the equity and debt offerings which were a critical part of
the Transaction. The lawsuit is in the preliminary stages of pre-trial
discovery. Accordingly, the Company is unable at present to express any opinion
regarding the probable outcome of this litigation.

In connection with the Transaction, the Company received bridge financing from
its underwriter, BlueStone Capital Partners, L.P. (BlueStone). As is customary
with bridge financing, both the Company and the 1996 E noteholders contemplated
payment of the bridge notes out of the debt and equity financing of the
Transaction. During the quarter ended March 31, 1997, and following repudiation
of the Transaction by Donald F. Smith and GS Roofing, et al, the Company
received a demand notice from BlueStone accelerating the due date of the 1996 E
Notes to April 3, 1997 from April 25, 1997. The 1996 E Notes are secured by a
second and subordinate lien and security interest on the assets of each of the
Company's U.S. subsidiaries, including its Stephens, Arkansas plant, junior in
priority to the lien on the same assets held by its senior lender. The 1996 E
Notes are also guaranteed by each of the Company's U.S. subsidiaries. On May 16,
1997, the Company paid $1,978,000 of the total owed under the terms of the 1996
E Notes. Management had negotiated an extension in principle to extend the due
date to pay the balance of this indebtedness to June 30, 1997. The Company was
unable to make any further payments to reduce or retire the remaining balance as
of the date of this report. The Company is in default of the terms of the 1996 E
Notes. The Company is attempting to raise funds for various needs including 
the retirement of the balance of the 1996 E Notes.

In conjunction with the work performed on the closed water loop system, the
Company removed dirt and sludge from the bottom of the filtering ponds at the
Stephens Mill. The dirt and sludge removed from the filtering ponds were placed
on an isolated area of land at the mill. The Company notified the Arkansas
Department of Pollution Control and Environment ("ADPCE) and requested approval
for clean-up. The Company received approval form the ADPCE to re-cover and cap
the sludge, without requirement for any digging up or removal of any thereof.
The Company began work on capping the sludge August 2, 1996. The physical work
is complete. The Company's environmental consultants are completing the
paperwork necessary for the ADPCE to review and approve. The Company
anticipates that this project will be complete in all regards by November 15,
1997. The work being performed will bring the Company in compliance with
provisions of the ADPCE landfill permit.


                                 Page 11 of 27

<PAGE>   12


Commitments

During 1995, the Company entered into sales contracts (the Sales Contracts)
with three of its major customers. Under terms of the Sales Contracts, the
customers were required to purchase at least 1,900 tons of dry felt each month,
in the aggregate, for a period of eighteen months at prices based in part upon
the mix of raw materials used in the manufacture of the dry felt and the quoted
market price of the raw materials. During the fourth quarter of 1996, the Sales
Contracts terminated. One of the three contract customers renewed its contract
for an additional period of twelve months with no change in terms.

Toward the end of the second quarter of 1997, the Company suspended operations
at the Stephens Mill due to a shortage of cash stemming from repayment of
approximately $2,000,000 of the 1996 E Notes (see Note 4 to the Notes to
Consolidated Financial Statements).  This shortage of cash prevented the
implementation of needed repairs and maintenance to the Mill's machinery and
equipment. As a result of this suspension of operations, the Company was unable
to supply its contract customer any product. Management understands that the
contract customer has been able to procure supplies from alternative sources at
market prices. Consequently, Management does not believe that any legal
consequences will result from its inability to comply with the contract.

Upon a resumption of operations, Management believes that there will be a
sufficient market for its product and that the Company will be able to sell its
total production to existing and potential new customers.

6. SUSPENSION OF OPERATIONS AT STEPHENS MILL:

Toward the end of the second quarter, the Company suspended operations at its
Stephens Mill. The Stephens Mill had been experiencing a significant level of
downtime and required continually increasing repairs and maintenance to
operate. Additionally, the Company experienced a shortage of working capital
during the quarter as a result of unanticipated required repayment of
obligations of the Company directly caused by and resulting from the wrongful
repudiation of the Transaction by Don Smith and GS Roofing (See Item 5 above).
These circumstances led to a significant reduction in dry felt produced and
available for sale. The reduction in dry felt produced (and sold), coupled with
unabsorbed production costs, made profitable operations unachievable under the
circumstances. In order to minimize the cash drain and accomplish the needed
repairs and maintenance to the Stephens Mill machinery and equipment,
Management made the decision to suspend operations.


                                 Page 12 of 27

<PAGE>   13

In conjunction with suspending operations at the Stephens Mill, Management is
intently reviewing capital improvement projects that would allow the Stephens
Mill to regain efficiencies and operate profitably. It is Management's present
intention to resume operations at the Stephens Mill in due course, however,
resumption of operations is subject to the Company raising the funds necessary
to complete the capital improvements and repairs and maintenance that will
enable the Stephens Mill to operate efficiently and profitably. While it is
Management's intention to endeavor to raise the necessary capital to accomplish
its objective, there can be no assurances that it will be successful and that
the Stephens Mill will be able to resume operations.

7. CASUALTY LOSSES AT MILLS:

On January 16, 1997, the Company experienced a fire at its Thorold Mill. The
fire was caused by an electrical short in the main building which houses the
paper line. The fire caused extensive damage to a part of the building and the
sheet forming section of the paper line. The Company immediately contacted its
insurance carrier and started planning the rebuilding of the damaged part of the
plant and replacement of the fire damaged equipment. The final settlement claim
indicated total damage to be approximately $1,500,000. The insurance coverage on
the plant and its contents of $5,000,000 proved to be more than adequate to
cover all the costs of rebuilding and replacing all fire damage to the plant and
equipment. The fire damaged repairs were completed on or about May 30, 1997. The
Company has identified additional routine repairs and maintenance that will be
necessary prior to start-up. As of the date of this report, the Company
anticipates having all the repairs completed and the ability to resume full
operations on or about December 31, 1997. The ability of the Company to resume
operations will be dependent upon its obtaining of sufficient cash availability
for start-up costs, aged payable payments and working capital. In addition,
Management will evaluate the market and industry seasonality prior to start-up.
Management has estimated that the start-up of the Thorold Mill will require
approximately $1,000,000 to $1,500,000 to complete capital projects and to
provide working capital. The Company is pursuing several financing options in
order to raise the cash necessary to begin operations.

On or about February 25, 1997, the Company's Stephens Mill experienced a severe
storm in connection with tornado activity in the region. The Stephens Mill did
not suffer any damage from tornadoes; however, the heavy rains associated with
the storm damaged the roof covering a section of one the main buildings. The
area damaged was not being utilized by the Company at the time. The area is
currently partitioned and no activity is allowed in or about the area. During
April, 1997, the Company settled the damage claim for $75,000.


                                 Page 13 of 27

<PAGE>   14


On or about May 14, 1997, a fire occurred in a finished goods warehouse at the
Stephens Mill. The building, which is isolated and separate from the main Mill
building and its contents were completely destroyed. At the time of the fire,
there were no finished goods stored in the warehouse, however, a quantity of
raw materials stored in the warehouse were destroyed in the fire. In June,
1997, the Company settled its fire damage claim with the insurance company for
approximately $122,000. In connection with consideration of any rebuilding of
the warehouse, Management is evaluating several structural configuration
changes in the building which would maximize operational efficiencies.
Rebuilding of the finished goods warehouse would be a part of the capital
improvement projects mentioned above.

8. SUBSEQUENT EVENTS:

On July 21, 1997, a Complaint styled Paper Trading International, Inc. vs.
Striker Industries, Inc. and Striker Paper Corporation, No. 97-1113, was filed
in the United States District Court, Western District of Arkansas, El Dorado
Division asserting a cause of action on sworn account against the defendants
seeking recovery of approximately $406,000 for goods and merchandise sold,
pre-judgment and post-judgment interest, reasonable attorneys' fees and costs.
The Company contends that Striker Industries, Inc. is an improper party
defendant in this suit and intends to file such pleadings as may be necessary to
effect its dismissal and severance therefrom.  

During July, 1997, Striker Canada settled its Thorold Mill fire damage claim
with the insurance company, which is being applied to payment of the costs of
repairing and rebuilding the Thorold Mill. In addition, Management obtained an
advance of $150,000 against its ultimate business interruption insurance
claim resulting from the Thorold Mill fire. Management anticipates that the
business interruption insurance claim will be finalized once the Thorold Mill
is restarted and operations have resumed.

In response to a default notice and payment demand received from its Canadian
lender on or about July 23, 1997, on August 11, 1997, Striker Canada signed a
negotiated Forbearance Agreement with its Canadian lender. Striker Canada
agreed to pay all outstanding principal and interest immediately and to prepay
six months of principal and interest by August 29, 1997. In exchange for the
payments, the Canadian lender has agreed to forbear until September 1, 2000
from taking any further action to enforce its rights under its existing
financing and security agreements with Striker Canada. Subject only to 
Striker Canada's compliance with the provisions of the Forbearance Agreement.
Management believes the requirements of the Forbearance Agreement are those
customarily in agreements of this nature and that they will be complied with
by Striker Canada. The decision to seek a Forbearance agreement was made in 
order to attract alternative sources of financing.


                                 Page 14 of 27

<PAGE>   15


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

This discussion should be read in conjunction with the financial statements of
the Company included elsewhere in this Form 10-Q:

Liquidity and Capital Resources

Although the Company has continued to experience operating losses and liquidity
concerns, the Company has been able to make significant progress to survive in
the wake of the failed Transaction.

For the six months ended June 30, 1997, the Company has been able to raise
approximately $3,700,000 of subordinated debt to fund working capital needs and
retire a substantial portion of the 1997 E Notes.

The Company has been proactive with its vendors and has maintained
communication. The Company has been able to negotiate with various vendors
extended payment plans for approximately $400,000 of accounts payable.

The Company has reached an agreement in principle to extend the maturity date
from 1998 to 2005 on approximately $9,000,000 of subordinated debt and reduce
the required interest due thereon.

The Company is working with the 1996 D Noteholders to convert their notes into 
equity (Warrants to purchase common stock).

On August 11, 1997, the Company was able to negotiate a forbearance agreement
with its Canadian lender. This agreement limits the ability of the lender to
enforce its rights under its existing financing and security agreements with
Striker Canada (see Note 8 to the Notes to Consolidated Financial Statements).
The Company has identified a potential financial partner in Canada.

These items in and of themselves do not resolve the liquidity issues, however,
they demonstrate the commitment of Management and its ability to survive under
difficult circumstances.

For the three and six months ended June 30, 1997, the Company had an operating
loss and has continued to experience short term liquidity concerns. At June 30,
1997, the Company has a working capital deficit of $5,663,937.

On June 2, 1997, the Company suspended operations at its Stephens Mill. The
Stephens Mill had experienced a significant level of downtime and required
continually increasing repairs and maintenance to operate. This led to a
significant reduction in dry felt produced and available for sale. The
reduction in dry felt produced (and sold) coupled with unabsorbed production
costs made profitable operations unachievable under the circumstances. In order
to stop the cash drain and to preserve the current working condition of the
machinery and equipment, Management made the decision to suspend operations.

                                 Page 15 of 27

<PAGE>   16


As of the date of this report, both of the Company's plants are idled. The fire
related repairs and rebuilding are complete at the Thorold Mill, however, there
are still four to five capital projects that need to be completed prior to
start-up. Management has also identified several capital projects that are
necessary at the Stephens Mill to improve efficiencies needed for profitable
operation. The Company is vigorously pursuing various sources of financing for
each plant. Management is committed to seek and obtain the necessary financing
to resume operations at both plants, but not to resume operations in either
instance until the financing for each plant is in place and the capital projects
have been completed.

There have been several events from the prior year that continue to effect the
Company. During 1996 and early 1997, the Company devoted substantial amounts of
cash to acquisition activities for the Transaction. The Company raised over
$3,000,000 in subordinated debt during 1996 and early 1997 (including $735,000
raised in January, 1997) to pay for the costs of the Transaction. Because
approximately $500,000 of Transaction costs were not funded, accounts payable
were aged beyond their terms. It was the intention of the Company to pay all
outstanding debt and past-due payables upon the closing of the Transaction. Due
to the significant resources devoted to the Transaction and the subsequent
repudiation of the Transaction by Donald F. Smith and GS Roofing, et al, the
Company's ability to repay debt, pay past-due accounts payable, finance needed
capital projects and continue operations has been gravely impaired.

During late 1995 and throughout 1996, the Company made extensive capital
improvements to both plants. The Thorold Mill, after having been idled for two
years by its previous owners, needed extensive capital improvements, additions,
and repairs. These necessary capital improvements, additions and repairs were
partially financed as the Company's financing and cash resources were limited.
Consequently, the balance of the project was financed by increasing current
liabilities. In addition, there was no production and, consequently, no cash
flow generated. Upon restarting the Thorold Mill in July, 1996, several repairs
were necessary to the paper line in order to operate. These unfunded costs
resulted in an increase of accounts payable and accrued liabilities.


                                 Page 16 of 27

<PAGE>   17


The Company made several capital improvement projects to the Stephens Mill in
1996 which have continued into 1997. The improvements and additions made were
necessary to meet regulatory requirements, however, there was no beneficial
increase to production. These improvements were only partially financed by
debt, the remainder was funded using trade credit.

Management believes that the operations of the Company will be greatly enhanced
once the remaining capital projects are completed at the Thorold and Stephens
Mills. The identified improvements to the plants will allow production of
varying grades of paper (lightweight, medium weight, and heavyweight) more
efficiently. This will allow the Company to produce paper for all geographic
markets. In addition, the geographic locations of the plants facilitate
distribution of products to the midwest, southwest, southeast, and northeast
markets. However, for the Company to benefit fully from the improvements made
to the plants, the Company must operate the plants at capacity (typically 11.5
months per year). In addition, the Company must maintain the machinery and
equipment improved and continue to identify and complete capital projects that
will allow the plants to operate at lower costs.

During November and December, 1996, the Company issued $1,575,000 in aggregate
principal amount of Original Issue Discount Notes (the "1996 E Notes") to
sixteen investors represented by BlueStone. On January 21, 1997, the Company
issued an additional $735,000 in aggregate principal amount of the 1996 E Notes
to six investors. The maturity date of the 1996 E Notes by agreed extension was
May 19, 1997. The proceeds of the 1996 E Notes were used for Transaction costs
and/or working capital needs. On May 16, 1997, the Company paid $1,978,000 to
BlueStone, the agent for the 1996 E noteholders in partial repayment and
retirement of the 1996 E Notes.

In February, March and April, 1997, the Company issued $643,000 in aggregate
principal amount of 10.25 % Subordinated Notes (the "1997 A Notes") to two
international investors. The 1997 A Notes mature on December 31, 1998 and
interest is payable quarterly beginning July 1, 1997. The proceeds of the 1997 A
Notes were used for working capital needs.


                                 Page 17 of 27

<PAGE>   18


In April and May, 1997, a wholly-owned subsidiary of the Company issued
$2,550,000 in aggregate amount of 10.25% Subordinated Promissory Notes (the
"1997 B Notes") to ten international investors. The 1997 B Notes mature on
December 31, 1997 and interest is payable thereon quarterly. The principal use
of the proceeds of the 1997 B Notes was to pay down the 1996 E Notes.

In June, 1997, a wholly-owned subsidiary of the Company issued $475,000 in
aggregate amount of 10.25% Subordinated Promissory Notes (the "1997 C Notes")
to three international investors. The 1997 C Notes mature on December 31, 1998
and interest is payable thereon quarterly. The proceeds of the 1997 C Notes was
for working capital needs.

Management believes cash generated by operations of both Mills, once the
identified capital improvement projects are complete, will adequately fund the
cash needs of the Company's operations. To meet working capital requirements
and expand its business, the Company will need to borrow additional amounts,
obtain an additional third-party credit facility and/or restructure its
existing debt. The Company currently has two existing credit lines, consisting
of revolving lines of credit and term loans collateralized by receivables,
inventories, and fixed assets. The Company is pursuing additional financing
arrangements which might include private or public sales of equity or debt
securities. However, there can be no assurances that the Company will be able
to obtain any additional debt or equity financing.

The ability of the Company to achieve successful operations and realize its
assets is dependent upon many factors including profitable operation of both
Mills, penetration of existing and new markets at a profitable margin and
volume levels and cash liquidity.

Management is currently pursuing various strategies in order to provide needed
liquidity, finance the acquisition of a saturating plant in Georgia and provide
financing for capital projects. Management believes that negotiations regarding
restructuring existing debt and obtaining new debt and/or equity financing are
vital to continuing operations. Pursuant to this view, Management is in
discussion with the 1996 D noteholders to convert the debt into equity (Warrants
to purchase common stock). As the Company has been able to retire a substantial
amount of the 1996 E Notes, Management believes that it has eliminated the
threat of foreclosure. Management is currently in discussions with BlueStone to
provide interim bridge financing and to continue to work with the Company in its
acquisition strategy including the saturating plant in Georgia and other
potential plants. In addition, Management is in discussions with affiliated
subordinated debt holders to extend the maturity date of the debt from 1998 to
2005 and and reduce the required amount of interest payable thereon which, if
achieved, the conversion of outstanding affiliated debt would result in
significant savings of cash interest payments and interest expense.


                                 Page 18 of 27

<PAGE>   19


While the Company devoted substantial amounts of cash to acquisition
activities, accounts payable and other current liabilities increased.
Management is aware that the Company will need to raise money in order to
reduce accounts payable. Discussions and presentations are being made by
Management to various banks and financial institutions to obtain financing for
potential plant acquisitions, capital improvement projects and short-term
working capital. If the Company is successful in acquiring a saturated felt
plant located in Georgia, management believes that the acquisition of this
plant will absorb allocated costs of administration and provide an additional
source of cash. During the previous eighteen months, Management has identified
several capital improvement projects that would allow the Stephens Mill and
Thorold Mill to operate more efficiently with significant cost savings and
greater production capacity. Management believes that these improvements are
necessary to be competitive and provide adequate margins that would allow the
Company to operate at a profit.

Management believes that strategic acquisitions can enhance profitability and
increase investor/shareholders' value in the Company. The Company intends to
focus on strategic acquisitions in order to grow, gain economies of scale and
allocate administrative costs. Management believes that profitability through
operational changes and improvements and acquisitions will facilitate credit
facilities at favorable terms that could be used for growth and consolidation.

If the Company is successful in acquiring a saturating plant located in Georgia,
management believes that it would provide several benefits to the Company. The
Company's existing dry felt mills can supply the total quantity needed for
saturation operations. This will provide the saturating plant a less expensive
source of dry felt. The Company believes that this potential acquisition would
make the Company one of the more vertically integrated companies in the roofing
industry. The Company believes that if this acquisition can be made, it would
allow cost savings and the ability to allocate certain administrative costs
thereby reducing the existing mills cost structure. In addition, the Georgia
saturating plant is strategically located for the Southeast region. Due to the
level of storm activity and hurricanes in recent history, there are several
proposals before legislative bodies that will require enhanced building code
requirements. This is ideal for the Company's value added product, Lighting Fast
Felt.

Management believes some, if not all, of the above mentioned strategies will
allow the Company to obtain sufficient working capital and acquisition
financing to continue with its plan of growth through acquisitions. However,
there can be no assurance that any of these objectives will be achieved.


                                 Page 19 of 27

<PAGE>   20
Results of Operations


<TABLE>
<CAPTION>
                              Three Months Ended              Six Months Ended
                                  June 30,                         June 30,
                            1997            1996            1997            1996
                        ------------    ------------    ------------    ------------
<S>                     <C>             <C>             <C>             <C>         
Revenue                 $    725,566    $  1,669,712    $  1,495,137    $  3,062,461
Cost of Sales                986,857       1,498,748       2,347,807       2,942,017
                        ------------    ------------    ------------    ------------
Gross Margin                (261,291)        170,964        (852,670)        120,444
Selling, general and
  administrative             819,965         462,851       1,773,589         835,606
                        ------------    ------------    ------------    ------------
Operating loss            (1,081,256)       (291,887)     (2,626,259)       (715,162)
Interest expense, net       (457,753)       (147,415)       (984,260)       (240,600)
                        ------------    ------------    ------------    ------------
Net loss before
  income taxes          $ (1,539,009)   $   (439,302)   $ (3,610,519)   $   (955,762)
                        ============    ============    ============    ============
</TABLE>


COMPARISON OF QUARTERS ENDED JUNE 30, 1997 AND 1996

Sales for the quarter ended June 30, 1997 were $725,566, a decrease of $944,146
from sales of $1,669,712 for the quarter ended June 30, 1996. The decrease in
sales is primarily due to a decrease in the number of units (tons) sold of dry
felt. The decrease in the number of tons sold is primarily due to downtime
experienced at the Stephens Mill during the quarter ended June 30, 1997.

Gross margin decreased to a negative $261,291 (36.0 percent of total sales for
the quarter ended June 30, 1997) from a gross margin of $170,964 (10.2 per cent
of total sales for the quarter ended June 30, 1996). The decrease in gross
margin is primarily due to the decrease in sales, unabsorbed production
overhead and increased repairs and maintenance due to the downtime during the
quarter ended June 30, 1997.

Selling, general and administrative expenses increased by $357,114 to $819,965
for the quarter ended June 30, 1997, from $462,851 for the quarter ended June
30, 1996. This increase was primarily due to an increase in legal, professional 
and other fees associated with the Transaction.


                                 Page 20 of 27
<PAGE>   21


Interest expense, net, increased to $457,753 for the quarter ended June 30,
1997, from $147,415 for the quarter ended June 30, 1996. This increase is due
to the interest associated with the additional subordinated notes payable and
the amortization of deferred financing costs (amortized as interest expense).

COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 AND 1996

Sales for the six months ended June 30, 1997 were $1,495,137, a decrease of
$1,567,324 from sales of $3,062,461 for the six months ended June 30, 1996. The
decrease in sales is primarily due to a decrease in the number of units (tons)
sold of dry felt. The decrease in the number of tons sold is primarily due to
significant downtime experienced at the Stephens Mill during 1997.

Gross margin decreased to a negative $852,670 (57.0 percent of total sales for
the six months ended June 30, 1997) from a gross margin of $120,444 (3.9 per
cent of total sales for the six months ended June 30, 1996). The decrease in
gross margin is primarily due to the decrease in sales, unabsorbed production
overhead and increased repairs and maintenance due to the downtime during 1997.

Selling, general and administrative expenses increased by $937,983 to
$1,773,589 for the six months ended June 30, 1997, from $835,606 for the six
months ended June 30, 1996. This increase is primarily due to an increase in
legal, professional and other fees expensed as a result of the repudiation of
the Transaction by Donald F. Smith and GS Roofing, et al. These costs were
capitalized in connection with the Transaction as deferred acquisition costs
(See Note 5 to the Consolidated Financial Statements).

Interest expense, net, increased to $984,260 for the six months ended June 30,
1997, from $240,600 for the six months ended June 30, 1996. This increase is
due to the interest associated with the additional subordinated notes payable
and the amortization of deferred financing costs (amortized as interest
expense).

Because the Company has been in a loss position for financial and income tax
reporting purposes, no current or deferred income tax benefits have been
provided due to the uncertainty of realization.

CASH FLOWS - COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996

Cash flows used by operating activities increased to $2,134,194 for the six
months ended June 30, 1997 from $1,393,399 for the six months ended June 30,
1996. This increase is primarily due to a significant increase in operating
losses partially offset by an increase in accounts payable and accrued
liabilities.


                                 Page 21 of 27

<PAGE>   22


Cash flows used by investing activities decreased to $63,063 for the six months
ended June 30, 1997 from cash flows used in investing activities of $1,156,352
for the six months ended June 30, 1996. This decrease is primarily due to a
reduction in purchases of property and equipment and a reduction in deferred
acquisition costs.

Cash flows provided by financing activities decreased to $1,915,353 for the six
months ended June 30, 1997 from $2,424,750 for the six months ended June 30,
1997. This decrease is primarily due to the repayment of the 1996 E Notes.


                                 Page 22 of 27

<PAGE>   23


PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

During the quarter ended June 30, 1997, production of documents by subpoena by
parties to the litigation resulting from the wrongful repudiation of the
Transaction (see Item 1 of Part II of the Company's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1997 as filed with the Securities
and Exchange Commission) occurred, and preliminary pre-trial discovery in the
litigation continued.

The Company and its subsidiaries are not parties to any legal proceedings
commenced during the quarter ended June 30, 1997, other than claims and
disputes arising in the normal course of the conduct of the Company's business,
none of which are material and substantially all of which management is
endeavoring to settle and resolve in due course by agreement.

See Note 8 to Notes to the Company's Consolidated Financial Statements
filed with this Quarterly Report with respect to a Complaint filed subsequent
to June 30, 1997 by Paper Trading International, Inc. against the Company and
its indirect wholly-owned subsidiary, Striker Paper Corporation, now pending in
the United States District Court, Western Division of Arkansas, El Dorado
Division.

Item 2. Changes in Securities.

     Effective June 26, 1997, by amendment of its Certificate of Incorporation
approved by stockholders of the Company at the Annual Meeting of Stockholders
held in Houston, Texas on June 2, 1997 (see Item 4 below) a 1-for-2.5 reverse
stock split of issued Common Stock of the Company (including treasury shares and
shares reserved for issuance to holder of then outstanding options and warrants)
was effected, which amendment increased the par value of the Company's Common
Stock from $0.20 to $0.50 per share simultaneously with the reverse split. All
fractional shares, no matter how small, were rounded up to the nearest whole
share and no stockholder received less than one share as a result of the reverse
split. The reverse split did not affect any stockholder's proportionate equity
interest in the Company, subject to the provision for the elimination of
fractional shares and rounding up to the nearest whole share in every instance.
Each outstanding share of the Company's Common Stock after the reverse split is
entitled to one vote at each meeting of stockholders, as was the case prior to
the reverse split.


                                 Page 23 of 27

<PAGE>   24


Item 3. Defaults Upon Senior Securities.

     In connection with the Transaction referred to in Item 1 of this PART II
above, the Company received bridge financing from its underwriter, BlueStone. As
is customary with bridge financing, both the Company and the 1996 E noteholders
contemplated payment of the bridge notes out of the debt and equity financing of
the Transaction. Subsequent to December 31, 1996, and following repudiation of
the Transaction by Donald F. Smith and GS Roofing, et al, the Company received a
demand notice from BlueStone accelerating the due date of the 1996 E Notes to
April 3, 1997 from April 25, 1997. Subsequently, the Company negotiated an
extension of time to May 19, 1997 within which to remedy the default and repay
the 1996 E Notes. On May 16, 1997, the Company repaid $1,978,000 of the total
$2,310,000 of the 1996 E Notes. The Company is currently in default under terms
of the 1996 E Notes. The Company does not anticipate any legal action at present
with respect to the 1996 E Notes due to the substantial amount of the debt
retired on May 16, 1997. In addition, in conjunction with other financing needs,
the Company is attempting to raise funds to retire the balance remaining due on
the 1996 E Notes.

     See Note 8 to Notes to the Company's Consolidated Financial Statements
filed with this Quarterly Report with respect to receipt by the Company's
Canadian subsidiary, Striker Paper Canada, Inc., of a default notice and
payment demand from its Canadian lender and its resulting negotiation and
execution of a Forbearance Agreement with the lender on the terms and
conditions stated in Note 8.


                                 Page 24 of 27

<PAGE>   25


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

     An Annual Meeting of Stockholders of the Company was held in Houston,
Texas on Monday, June 2, 1997 at 10:00 a.m. to elect or re-elect three
directors of the Company, consider and act upon a proposal to amend the
Certificate of Incorporation of the Company to increase the par value of the
issued (but not the authorized and unissued) Common Stock of the Company from
$0.20 per share to $0.50 simultaneously with a 1-for-2.5 reverse stock split of
the Company's Common Stock, including treasury shares and shares reserved for
issuance to holders of options and warrants of the Company outstanding on the
effective date of the amendment, and to ratify appointment by the Board of
Directors of KPMG Peat Marwick, LLP, as auditors of the Company for the ensuing
year. The meeting was held pursuant to proxies solicited on behalf of the
Company pursuant to Regulation 14 A under the Securities Exchange Act of 1934,
there was no solicitation in opposition to Management's nominees as listed in
the Proxy Statement, and all three of such nominees were elected at the
meeting. the following table sets forth the number of votes cast for, against
or withheld with respect to each matter voted upon at the meeting, including a
separate tabulation with respect to each nominee for office:

1. Election of Directors:

<TABLE>
<CAPTION>
                                             For     Against  Withheld
                                             ---     -------  --------
          <S>                             <C>        <C>      <C>
          David A. Collins                6,102,518     0        67
          Matthew D. Pond                 6,102,519     0        66
          William B. Locander             6,102,519     0        66
</TABLE>


2. Proposal to amend Certificate of Incorporation to effect a 1-for-2.5 reverse
stock split:

<TABLE>
<CAPTION>
                                             For     Against  Withheld
                                             ---     -------  --------
                                          <S>        <C>      <C>
                                          6,102,435    132      18
</TABLE>


3. Ratification of appointment of auditors:

<TABLE>
<CAPTION>
                                             For     Against  Withheld
                                             ---     -------  --------
                                          <S>        <C>      <C>
                                          6,102,549    30        6
</TABLE>

Item 5. Other Information.


     (1) In April, 1997, the Company issued $93,000 in principal amount of
10.25% Subordinated Promissory Notes (the "1997 A Notes") to an international
investor. The 1997 A Notes mature on December 31, 1998 and interest is payable
thereon quarterly. The proceeds of the 1997 A Notes were used for working
capital needs.

     (2) In April and May, 1997, a wholly-owned subsidiary of the Company
issued $2,550,000 in aggregate principal amount of 10.25% Subordinated
Promissory Notes (the "1997 B Notes") to ten international investors. The 1997
B Notes mature on December 31, 1998 and interest is payable thereon quarterly.
The proceeds were used principally to pay down the 1996 E Notes.


                                 Page 25 of 27

<PAGE>   26


     (3) In June, 1997, a wholly-owned subsidiary of the Company issued
$475,000 in aggregate amount of 10.25% Subordinated Promissory Notes (the "1997
C Notes") to four international investors. The 1997 C Notes mature on December
31, 1998 and interest is payable thereon quarterly. The principal use of the
proceeds of the 1997 C Notes was for working capital needs.

Item 6. Exhibits and Reports on Form 8-K

     (a) Exhibits:

<TABLE>
          <S>  <C>
          3.1  Copy of the Company's Certificate of Amendment to its
               Certificate of Incorporation filed by the Secretary of State of
               Delaware on June 26, 1997, effecting a 1-for-2.5 share reverse
               stock split of Common Stock of the Company.

          4.1  Copy of the Company's 1997 A Notes ($93,000 in aggregate
               principal amount) issued in April, 1997 (filed as Exhibit 4.3 to
               the Company's Form 10-Q for the quarter ended March 31, 1997,
               and incorporated herein by reference).

          4.2  Copy of the Company's 1997 B Notes ($2,550,000 in aggregate
               principal amount) issued in April and May, 1997.

          4.3  Copy of the Company's 1997 C Notes ($475,000 in aggregate
               principal amount) issued in June, 1997.

          10.1 Copy of the August 11, 1997 Forbearance Agreement between
               Striker Paper Canada, Inc., Striker Industries, Inc., Laurentian
               Bank of Canada and Ontario Development Corporation.

          27   Financial Data Schedule
</TABLE>

     (b) Reports on Form 8-K:

A current report on Form 8-K dated June 16, 1997, reporting the vote of
stockholders at the Company's Annual Meeting on June 2, 1997 in favor of
amendment of the Company's Certificate of Incorporation to increase the par
value per share of issued common stock of the Company (including treasury
shares and shares reserved for issuance on the effective date of the amendment
to holders of then outstanding options and Warrants of the Company) was filed
by the Company during the quarter ended June 30, 1997.


                                 Page 26 of 27

<PAGE>   27


SIGNATURES:

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Company has duly caused this report to be signed on its behalf by
the undersigned, hereunto duly authorized.


                                        STRIKER INDUSTRIES, INC.


                                               
DATE: August 19, 1997                   BY: /s/ DAVID A. COLLINS
                                           ------------------------------
                                                David A. Collins
                                                Chief Executive Officer


                                               
DATE: August 19, 1997                   BY: /s/ MATTHEW D. POND
                                           ------------------------------
                                                Matthew D. Pond
                                                Chief Financial Officer



                                 Page 27 of 27
<PAGE>   28
                               INDEX TO EXHIBITS



<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                   DESCRIPTION
  -------                  -----------
   <S>         <C>
   3.1         Copy of the Company's Certificate of Amendment to its
               Certificate of Incorporation filed by the Secretary of State of
               Delaware on June 26, 1997, effecting a 1-for-2.5 share reverse
               stock split of Common Stock of the Company.
              
   4.1         Copy of the Company's 1997 A Notes ($93,000 in aggregate
               principal amount) issued in April, 1997 (filed as Exhibit 4.3 to
               the Company's Form 10-Q for the quarter ended March 31, 1997,
               and incorporated herein by reference).
              
   4.2         Copy of the Company's 1997 B Notes ($2,550,000 in aggregate
               principal amount) issued in April and May, 1997.
              
   4.3         Copy of the Company's 1997 C Notes ($475,000 in aggregate
               principal amount) issued in June, 1997.
              
   10.1        Copy of the August 11, 1997 Forbearance Agreement between
               Striker Paper Canada, Inc., Striker Industries, Inc., Laurentian
               Bank of Canada and Ontario Development Corporation.

   27          Financial Data Schedule
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