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

    
                                  FORM 10-K/A     

 X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
---                                                                            
     ACT OF 1934

     For the fiscal year ended September 30, 1996

___  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 1-9822

                              BUFFTON CORPORATION
             (Exact Name of Registrant as Specified in Its Charter)

              Delaware                                     75-1732794          
         (State or Other Jurisdiction                    (I.R.S. Employer      
       of Incorporation or Organization)                 Identification Number)
                                                 
       226 Bailey Avenue, Suite 101              
          Fort Worth, Texas                                      76107
     (Address of principal executive office)                   (Zip Code)
                                (817) 332-4761
              Registrant's Telephone Number, Including Area Code:

          Securities registered pursuant to Section 12(b) of the Act:
                                     None

          Securities registered pursuant to Section 12(g) of the Act:
    Title of Each Class                Name of Each Exchange on Which Registered
Common stock, $.05 par value                     American Stock Exchange

  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 ___
                                               ---        

  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ___

  State the aggregate market value of the voting stock held by non-affiliates of
the registrant.

     The aggregate market value of the voting stock held by non-affiliates of
     the registrant as of December 10, 1996 was $15,131,909.

     The number of shares outstanding of the registrant's common stock, $.05 par
     value, as of December 10, 1996 was 6,543,528.

                      Documents Incorporated By Reference

Portions of the following documents are incorporated by reference into the
indicated part or parts of this report:

     Definitive proxy statement of the registrant relating to the 1997
     Stockholders' meeting filed with the Commission pursuant to Regulation 
     14A - Parts I and III.

                                       1
<PAGE>
 
                              BUFFTON CORPORATION

                         1996 FORM 10-K ANNUAL REPORT

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I                                                                     PAGE
------                                                                     ----
<S>           <C>                                                          <C>
  Item 1.     Business...................................................     3
  Item 2.     Properties.................................................     6
  Item 3.     Legal Proceedings..........................................     7
  Item 4.     Submission of Matters to a Vote of Security Holders........     7
 
 
PART II
-------
 
  Item 5.     Market for the Registrant's Common Stock and Related
              Stockholder Matters........................................     8
  Item 6.     Selected Financial Data....................................     9
  Item 7.     Management's Discussion and Analysis of Operations
              and Financial Condition....................................    10
  Item 8.     Financial Statements and Supplementary Data................    16
  Item 9.     Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure...................................    16
 
 
PART III
--------
 
  Item 10.    Directors and Executive Officers of the Registrant.........    17
  Item 11.    Executive Compensation.....................................    20
  Item 12.    Security Ownership of Certain Beneficial Owners
              and Management.............................................    24
  Item 13.    Certain Relationships and Related Transactions.............    26
 

PART IV
-------

  Item 14.    Exhibits, Financial Statement Schedules, and Reports
              on Form 8-K................................................    27

  Signatures  ...........................................................    29
</TABLE> 

                                       2
<PAGE>
 
                                    PART I
                                    ------

ITEM 1 - BUSINESS
-----------------

GENERAL DEVELOPMENT OF BUSINESS
-------------------------------

Buffton Corporation (the registrant and Company) is a Delaware corporation and
was incorporated on December 17, 1980.

The Company is principally engaged in the manufacture of filter surge
suppressors and power distribution systems and the operation of food and
beverage and lodging establishments. See Financial Information About Industry
Segments, page 4.

Effective January 1, 1994, the Company entered into a purchase and sale
agreement with Entertainment Centers of America, Inc. (ECA) to acquire certain
entertainment facilities in New Orleans, Louisiana (Bourbon Street Hospitality)
of ECA in exchange for the Company's outstanding note receivable from and equity
interest in ECA approximating $2,641,000 as well as 600,000 shares of its common
stock and $159,000 in cash. The market value of the 600,000 shares was $824,000
at the date of the acquisition. Bourbon Street Hospitality originally consisted
of operations located at 701 Bourbon Street, 735 Bourbon Street and 441 Bourbon
Street and American Food Classics, Inc. (AFC) and are included in BFX
Hospitality Group, Inc. (Hospitality Group). During 1994, the Company closed 735
Bourbon Street. During 1996 the Company sold the operations located at 441
Bourbon Street.

In addition to the above described transactions with ECA, the Company had a note
receivable from ECA at January 1, 1994 aggregating $400,000 and advances of
$320,000. The Company also had an option to purchase the stock of AFC from ECA
at the greater of fair market value, to be determined by an independent
appraisal, or $300,000. The Company exercised its option January 1, 1994 and
exchanged its note receivable from and advances to ECA for the stock of AFC. The
note receivable and advances approximated the fair market value of the AFC stock
at the date of exchange. AFC operates Lucile's, A Stateside Bistro, located in
Fort Worth, Texas. After the January 1, 1994 transactions, the Company no longer
held an interest in ECA.

Effective February 28, 1994, Contex Electronics, Inc. (Contex), a wholly owned
subsidiary of the Company, sold all of the operating assets and liabilities of
MoldCon, Inc. (MoldCon) and Tri-Tec Engineering Corporation (Tri-Tec), two of
its wholly owned subsidiaries. The sales price for the assets was $9,277,000 in
cash plus the assumption of certain liabilities by the buyer. The net proceeds
from the disposition were used to reduce bank debt approximately $5,000,000 and
for short-term investments. During June 1994, Contex shut down its remaining
cable assembly plant in Vestal, New York and sold certain inventory, customer
contracts and certain machinery and equipment to The JPM Company. The remaining
assets, primarily trade accounts receivable, were liquidated.

By approval of the Company's Board of Directors in December 1994, in a
transaction effective January 1, 1995, the Company sold the operations of Flo
Control, Inc. (Flo Control), headquartered in Burbank, California. The Company.
Mr. Sarno purchased virtually all of the assets of Flo Control for $3,100,000 in
cash and assumed $800,000 of Flo Control's liabilities. As a condition of the
sale, Mr. Sarno agreed to purchase Flo Control's 95% ownership interest in the
Florida Realty Joint Venture for $150,000 in cash and assume the non-recourse
mortgage approximating $2.3 million. In connection with these transactions, Flo
Control's secondary containment product line was sold to Mr. Pat Hopkins, an
unrelated third party, for a $500,000 note. The note is secured by the assets

                                       3
<PAGE>
 
sold and the personal guaranty of an unrelated third party individual. As a
result of the above transactions, the Company recognized a loss on disposal of
$2,314,000, net of income tax benefit, during fiscal 1995. The sale of Flo
Control was accounted for as a discontinued operation. The cash proceeds from
the sale were used to reduce the Company's outstanding debt with its lender. In
addition, the sale of Flo Control's 95% interest in the Florida Realty Joint
Venture eliminated the ongoing monthly expense of the Flo Control lease.

In 1995 the Company established Buffton Realty Ventures, a commercial real
estate operation, to engage in acquiring properties offering unique
opportunities for profit. During August 1995, the Company acquired 100 Main
Street, a commercial office building located in Fort Worth, Texas. The property,
approximately 44,000 square feet, is 100% occupied with two tenants under lease.
Lease rentals are $438,000 annually. The total cost of the property was
approximately $1,650,000.

Effective January 1, 1996, the Company entered into an agreement to purchase the
assets of Cabo Tacobar One, Ltd., a Mexican restaurant concept with Central and
South American influences located in Houston, Texas, for $589,000 in cash and
375,000 shares of the Company's common stock. Additionally, the Company issued
76,500 shares of its common stock for commissions incurred in connection with
the acquisition which resulted in increased acquisition costs of $153,000.
Excess of purchase price over fair value of net tangible assets acquired,
recorded as Goodwill, approximates $1,300,000 and is being amortized on a
straight line basis over 15 years. Effective January 1, 1996, the Company also
entered into an agreement to purchase the assets and assume certain liabilities
of the Stockyards Hotel, located in Fort Worth, Texas, for $500,000 in cash,
450,000 shares of the Company's common stock and the refinancing of a $1,600,000
bank term loan. Under this agreement, the Company has guaranteed, until March
15, 1997, a sales price of $2.05 per share for any of this stock that may be
sold. At September 30, 1996, no liability had been incurred under the guarantee
agreement. These acquisitions were accounted for under purchase accounting and
are included in the Company's Results of Operations beginning on the
acquisitions' effective date of January 1, 1996.

Unaudited proforma results from continuing operations, as if the acquisitions
had occurred at the beginning of each respective period, are as follows:

<TABLE>
<CAPTION>
                                                          Year Ended September 30,        
                                                  ----------------------------------------
                                                         1996                   1995      
                                                  -------------------  -------------------
                                                  (In thousands, except per share amounts)
       <S>                                        <C>                  <C>                
       Revenues...............................                $25,973              $21,670
       Net income from continuing operations..                  1,437                1,389
       Primary income per average common share                    .22                  .22
       Fully diluted income per common share..                    .21                  .22 
</TABLE>

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
---------------------------------------------

The Company's operations are conducted primarily in the United States by two
principal business segments. Electronic Products involves the manufacture of
filter surge suppressors and power distribution systems. Hospitality Group
includesinvolves the operation of food and beverage establishments, a
hotel and commercial real estate.  Information concerning the Company's industry
segments is included in Note 11 of the Consolidated Financial Statements.

                                       4
<PAGE>
 
NARRATIVE DESCRIPTION OF BUSINESS
---------------------------------

The Company's subsidiaries have separate marketing, manufacturing, engineering
and administrative staffs.

ELECTRONIC PRODUCTS:

CURRENT TECHNOLOGY, INC. (CURRENT TECHNOLOGY)

Current Technology was acquired January 1, 1989. Current Technology designs,
manufactures and markets electronic filter/surge suppression products (TVSS),
power supply/power conversion products and custom power distribution systems.
The TVSS products are designed to reduce the adverse effects of electrical
disturbances on sensitive solid state electronics such as computer-based
systems, point-of-sale systems, medical imaging equipment (MRI/CAT), robotics,
telecommunication equipment, industrial control systems and other applications.
These products are sold nationally through well-defined channels of
distribution, utilizing the services of independent sales representatives with
specific geographic responsibility. Current Technology also relies upon the
services of a select group of international distributors in a limited number of
foreign markets. The primary markets served are the medical, factory automation,
data processing/office automation and telecommunication industries.
 
HOSPITALITY GROUP:

BFX HOSPITALITY GROUP, INC. (HOSPITALITY GROUP)

The Hospitality Group owns and operates food and beverage facilities in Fort
Worth, Texas (Lucile's), Houston, Texas, (Cabo) and New Orleans, Louisiana,
(Cat's Meow) as well as a hotel in Fort Worth (Stockyards Hotel). Lucile's, A
Stateside Bistro, opened in April, 1993 and offers a variety of menu items
centered around classic American dishes. Cabo, The Original "Mix Mex" Grill,
opened in December 1994 offers Mexican food with Central and South American
influences and has a distinctive and colorful "diner look" decor. Cat's Meow
offers highly produced, high energy karoake and includes talented MC's and DJ's.
In addition, the Company established Buffton Realty Ventures in 1995.


SOURCES AND AVAILABILITY OF RAW MATERIAL
----------------------------------------

During 1996, raw parts and part assemblies required in the Electronic Products
segment were plentiful. Under present conditions, an adequate supply of these
materials should be available. No long-term contracts are in effect, thus, the
Company has maximum flexibility to purchase advantageously according to its
volume needs.


COMPETITION
-----------

Both industry segments of the Company are in highly competitive markets. There
are numerous manufacturers of filter/surge suppressors and power distribution
systems which compete with the Company's operations. There are many food and
beverage and lodging establishments located in the same geographical area as the
Company's operations which compete for the same customer base. Many of the
competitors of each of the segments have resources greater than the Company.


PATENTS AND LICENSES
--------------------

The Company owns patents covering certain technology applying to its surge
suppressors and power distribution systems and trademarks relating to certain of
its hospitality group operations. There are no other patents, trademarks,
franchises or concessions which are materially significant.

                                       5
<PAGE>
 
ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATIONS
------------------------------------------------

See Item 7 - Management's Discussion and Analysis of Operations and Financial
Condition - "Liquidity and Capital Resources".


SEASONAL ASPECTS OF THE BUSINESS
--------------------------------

The Company's two operating segments are not materially impacted by seasonality.


BACKLOG
-------

The Company's Electronic Products backlog at September 30, 1996 was $5,290,000.
Substantially all backlog orders have estimated shipment dates within the fiscal
year ending September 30, 1997.

EMPLOYEES
---------

The Company and its subsidiaries employed approximately 208 full-time and 83
part-time employees as of September 30, 1996, none of which were represented by
unions. Relations with employees are satisfactory.


ITEM 2 - PROPERTIES
-------------------

GENERAL
-------

The Company and its subsidiaries have facilities with remaining primary lease
terms ranging from one to five years at annual rentals of approximately
$533,000. All leases provide for one or more renewal terms. All premises are in
good condition, adequate and appropriate for the operations presently being
conducted by both of the Company's business segments. The manufacturing location
in Irving, Texas is not operating at maximum capacity and, therefore, management
believes that no expansion of its existing facility will be required in the next
year.
The Company owns a manufacturing facility located in Vestal, New York. The
127,000 square foot facility is situated on approximately 14 acres. In
conjunction with the 1991 sale of National Pipe Company, the buyer, LCP National
Plastics, Inc. signed a ten year lease agreement with the Company and is
presently occupying sixty percent of the facility. Annual rental for this lease
is approximately $310,000 plus real estate taxes and insurance. The Company is
actively seeking a lessee for the remainder of the facility.

ELECTRONIC PRODUCTS
-------------------

Current Technology leases its headquarters and manufacturing operations space.
This facility located in Irving, Texas consists of approximately 43,000 square
feet of space. 


HOSPITALITY GROUP
-----------------

The Hospitality Group leases the facility in New Orleans, Louisiana for its
entertainment operations. The facility has 5,400 square feet. The operation's
restaurant in Fort Worth, Texas leases approximately 5,000 square feet of space,
while the operation's restaurant in Houston, Texas leases approximately 3,000
square feet of space.

The real estate for the hotel located in Fort Worth, Texas is owned.

                                       6
<PAGE>
 
During August 1995, the Company, through Buffton Realty Ventures, acquired 100
Main Street, a commercial office building located in Fort Worth, Texas.  The
property, approximately 44,000 square feet, is 100% occupied with two tenants
under lease.  Lease rentals are $438,000 annually.


CORPORATE OFFICES
-----------------

The Company leases approximately 3,500 square feet of space at 226 Bailey Avenue
in Fort Worth, Texas for its corporate headquarters.


ITEM 3 - LEGAL PROCEEDINGS
--------------------------

The Company is a party to various legal actions which are in the aggregate
immaterial, and due to the nature of the Company's business, it could be a party
in other legal or administrative proceedings arising in the ordinary course of
business.  While occasional adverse settlements or resolutions may occur and
negatively impact earnings in the year of settlement, it is the opinion of
management that their ultimate resolution will not have a materially adverse
effect on the Company's financial position.


ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------

No matters were submitted for a vote to security holders during the fourth
quarter of the fiscal year ended September 30, 1996.

                                       7
<PAGE>
 
                                    PART II
                                    -------

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
--------------------------------------------------------------------------
         MATTERS
         -------

The Company's common stock is traded on the American Stock Exchange, under the
common stock ticker symbol "BFX". The quarterly trading range of common stock
follows:

<TABLE>
<CAPTION>
     FISCAL 1996                                   HIGH         LOW  
                                                   ----         ---  
     <S>                                          <C>          <C>   
     October 1 - December 31.................     $2.31        $1.50 
     January 1 - March 31....................      2.38         1.75 
     April 1 - June 30.......................      2.38         1.75 
     July 1 - September 30...................      2.50         1.56 
                                                                     
     FISCAL 1995                                   HIGH         LOW  
                                                   ----         ---  
     October 1 - December 31.................     $1.81        $1.31 
     January 1 - March 31....................      1.87         1.06 
     April 1 - June 30.......................      1.81         1.38 
     July 1 - September 30...................      2.44         1.38  
</TABLE>

The number of named stockholders of common stock as of September 30, 1996 was
approximately 1,550 as recorded by the transfer agent and registrar.

There are no restrictions on declaration or payment of dividends; however, no
dividends have been paid on common stock to date.  The Company intends to
maintain a policy of retaining earnings for use in the development of the
business.

Continental Stock Transfer & Trust Company, 2 Broadway, New York, N.Y. 10004, is
the transfer agent and registrar for the Company's common stock.

                                       8
<PAGE>
 
ITEM 6 - SELECTED FINANCIAL DATA
--------------------------------

<TABLE>  
<CAPTION> 
                                                                                  September 30,                    
                                                              ------------------------------------------------------
FOR THE YEAR ENDED                                              1996      1995       1994       1993       1992 
------------------                                            --------  --------  ---------   --------   --------
                                                                   (In thousands, except per share amounts)      
<S>                                                           <C>      <C>        <C>         <C>        <C>             
Net revenues.....................................             $25,175  $19,187     $30,432    35,879     $33,449         
                                                              =======  =======     =======    ======     =======         
                                                                                                                         
Income (loss) from continuing operations (a).....             $ 1,394  $ 1,304     $ 2,002       398     $(1,551)        
Income (loss) from discontinued operation........                   -   (2,513)        (94)     (134)     (3,402)        
                                                              -------  -------     -------    ------     -------         
                                                                                                                         
Net income (loss)................................             $ 1,394  $(1,209)    $ 1,908       264     $(4,953)        
                                                              =======  =======     =======    ======     =======         
                                                                                                                         
Primary income (loss) per average common share:                                                                          
  Continuing operations..........................             $   .22  $   .24     $   .39       .09     $  (.35)        
  Discontinued operation.........................                   -     (.46)       (.02)     (.03)       (.76)        
                                                              -------  -------     -------    ------     -------         
                                                                                                                         
  Net income (loss)..............................             $   .22  $  (.22)    $   .37       .06     $ (1.11)        
                                                              =======  =======     =======    ======     =======         
                                                                                                                         
Fully diluted income (loss) per common share:                                                                            
  Continuing operations..........................             $   .21  $   .24     $   .39       .09     $  (.35)        
  Discontinued operation.........................                   -     (.46)       (.02)     (.03)       (.76)        
                                                              -------  -------     -------    ------     -------         
                                                                                                                         
  Net income (loss)..............................             $   .21  $  (.22)    $   .37       .06     $ (1.11)        
                                                              =======  =======     =======    ======     =======         
                                                                                                                         
AT YEAR END                                                                                                              
-----------                                                                                                              
                                                                                                                         
Working capital..................................             $ 3,743  $ 2,824     $ 7,149     8,126     $ 8,910         
Current assets...................................               6,917    5,429      11,125    16,636      16,336         
Total assets.....................................              23,164   17,224      25,070    31,168      30,644         
Long-term debt...................................               2,493        -       5,507     9,855      10,198         
Total liabilities................................               5,671    2,605       9,813    18,643      18,516         
Stockholders' equity.............................              17,493   14,619      15,257    12,525      12,128         
Current ratio....................................                2.18     2.08        2.80      1.95        2.20         
Book value per share.............................                2.60     2.57        2.89      2.68        2.67         
Total liabilities to equity ratio................                 .32      .18         .64      1.49        1.53          
</TABLE>

(a)  Income from continuing operations in 1994 includes a net gain of $1,050,000
     on the sale of the cable assembly plants in West Springfield, Massachusetts
     and Gardena, California.

                                       9
<PAGE>
 
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL
-------------------------------------------------------------------------
         CONDITION
         ---------


GENERAL INFORMATION

At September 30, 1996, the Company consists of operations in two principal
segments as discussed in Part I, Item 1 - Business.  During the years ended
September 30, 1995 and 1996, the Company entered into acquisition and
disposition transactions as follows:

By approval of the Company's Board of Directors in December 1994, in a
transaction effective January 1, 1995, the Company sold the operations of Flo
Control, Inc. (Flo Control), headquartered in Burbank, California.  The
purchaser of these operations was Mr. Russell J. Sarno, President of Flo Control
and a board member of the Company.  See Liquidity and Capital Resources in
this section and Note 2 of Notes to Consolidated Financial Statements for
details of the sale.

Effective January 1, 1996, the Company entered into agreements to purchase the
assets of Cabo Tacobar One, Ltd. (Cabo), located in Houston, Texas and to
purchase the assets and assume certain liabilities related to the Stockyards
Hotel (SYH), located in Fort Worth, Texas. See Liquidity and Capital Resources
in this section and Note 2 of Notes to Consolidated Financial Statements for
details of the acquisitions.

FACTORS THAT MAY AFFECT FUTURE RESULTS

Certain matters discussed herein are forward-looking statements about the
business, financial condition and prospects of the Company. The actual results
could differ materially from those indicated by such forward-looking statements
because of various risks and uncertainties. Such risks and uncertainties may
include, but are not limited to regional and national economic conditions,
changes in customer demand for products offered by the Company, and other
matters that may adversely affect the availability of products and pricing,
state and federal regulatory environment, possible future acquisitions or
dispositions, amendments to the Record of Decision issued by the Environmental
Protection Agency (see Liquidity and Capital Resources) and other risks
indicated in the Company's previous filings with the Securities and Exchange
Commission. The Company cannot control these risks and uncertainties, and in
many cases, cannot predict the risks and uncertainties that could cause its
actual results to differ materially from those indicated by the forward-looking
statements.

                                       10
<PAGE>
 
RESULTS OF CONTINUING OPERATIONS

1996 VERSUS 1995

Consolidated net revenues in 1996 increased 31% compared to 1995. Electronic
Products revenues increased 31%. This increase was primarily due to sales to a
customer for power distribution modules incorporating surge suppression for
integration into the customer's sorter equipment. Management expects sales
levels in fiscal 1997 for this customer to remain constant or slightly increase
over 1996 levels. Hospitality group revenues increased 36% in 1996 compared to
1995 due to the inclusion of the results of operations of Cabo and SYH effective
January 1, 1996. Revenues for the hospitality group are expected to increase in
fiscal 1997 as Cabo and SYH will contribute a full twelve months of operations
versus nine months in fiscal 1996. Additionally, a second Cabo location and a
destination food and beverage restaurant at SYH is expected to open during the
third quarter of fiscal 1997. The expected increases in hospitality group
revenues will be partially offset by the sale of 441 Bourbon Street in fiscal
1996.

Consolidated total costs and expenses during 1996 increased 28% compared to
1995. Consolidated costs of sales increased 43% during 1996 compared to the
prior year. As a percent of related revenue, these costs were 33% during 1996
versus 31% a year earlier. Electronic products cost of sales during 1996 periods
increased 54% compared to 1995. These costs as a percent of revenue were 40% in
1996 compared to 34% in 1995. The increase in absolute dollars was due to
increased sales and the increase in costs as a percent of revenue is due to a
greater percentage of sales of products related to sorter equipment in 1996,
which have a lower gross margin than the power siftor line. Cost of sales
related to the Hospitality Division during 1996 periods increased 18%. This
increase is due to the inclusion of the results of operations of Cabo and SYH
effective January 1, 1996.

Consolidated selling, general and administrative expenses for 1996 increased 19%
compared to 1995. The absolute dollar increase in these expenses is due to
increased sales levels incurred during 1996. Electronic products selling,
general and administrative expenses for 1996 increased 3% compared to 1995 due
to an increase in commissions and certain other costs directly correlated to an
increase in revenues. The expenses associated with the Hospitality Division for
1996 periods increased 47% compared to 1995. This increase is due to the
inclusion of the results of operations of Cabo and SYH effective January 1,
1996.

Consolidated depreciation and amortization expense increased 33% during 1996
compared to 1995, primarily as a result of the previously discussed acquisition
of Cabo and SYH as well as the purchase of a commercial office building in late
fiscal 1995. The increase in interest expense to $235,000 for 1996 from $124,000
in 1995 is primarily due to the refinancing of a $1,600,000 bank term loan
assumed in connection with the acquisition of SYH and the borrowing of
$1,200,000 in March 1996 from an insurance company, secured by a deed of trust
on a commercial office building located in Fort Worth, Texas.

During 1996, the Company reported income from continuing operations before
income taxes of $2,205,000 compared to $1,273,000 in 1995. Operating profit
associated with the Company's power surge suppressor operation increased 58%
over the 1995 level. The Hospitality Group reported operating income of $149,000
in 1996 compared to $244,000 in 1995. Operating income for the Hospitality Group
was hindered by the poor operating results of 441 Bourbon Street which was sold
in July 1996 at a price approximating net book value.

Income tax rate on pre-tax income from continuing operations was 36.8% in 1996
compared to a benefit of (2.4%) in 1995. The 1995 rate is substantially lower
than the federal statutory rate of 34% as a result of favorable state tax
developments that resulted in the reversal of certain state tax reserves
approximating $255,000 and the recognition of certain federal tax benefits
aggregating $314,000.

                                       11
<PAGE>
 
1995 VERSUS 1994

Consolidated net revenues in 1995 decreased 37% compared to 1994. Electronic
Products revenues declined 52% during 1995 compared to 1994. The Electronic
Products revenues in 1994 were impacted by the sale of the cable assembly plants
in West Springfield, Massachusetts and Gardena, California effective February
28, 1994 and the shut down of the cable assembly plant in Vestal, New York in
June of 1994. Revenue for the three plants in 1994 was $14,019,000. The
Company's power surge suppressor manufacturing operations revenues increased 10%
during 1995 compared to 1994. This operation's revenues increased due to the
sale of new products, in the power siftor line securing, a large contract for
shipment of power supply products. This operation's revenues increased primarily
due to the sale of products in the power siftor line. Sales in the power siftor
line increased due to improved product acceptance in the market place.
Hospitality Group revenues increased 33% in 1995 compared to 1994. These
revenues increased primarily due to inclusion for a full year in 1995 compared
to nine months in 1994.

Consolidated total costs and expenses for 1995 decreased 39% compared to the
prior year. Consolidated costs of sales declined 66% during 1995 compared to
1994. As a percent of revenues these costs were 31% in 1995 versus 56% in 1994.
Electronic Products costs of sales declined 74% during 1995 versus 1994. The
decline in the Electronic Products costs of sales in 1995 resulted primarily
from the sale of the previously discussed cable assembly plants effective
February 28, 1994 and the shut down of the Vestal, New York plant in June 1994.
Costs of sales in the power surge suppressor operation decreased 9% during 1995
compared to 1994. Gross profit as a percentage of revenue in this operation was
66% in 1995 compared to 60% in 1994. Product mix which consisted primarily of
power siftor sales improved the overall gross profit. ratio. Hospitality Group's
cost of sales increased 30% in 1995 compared to 1994 partially due to inclusion
for a full year in 1995 compared to nine months in 1994 and a higher volume of
sales.

Consolidated selling, general and administrative expenses increased 3% during
1995 compared to 1994. Electronic Products selling, general and administrative
expenses declined 18% during 1995 compared to the prior year. The decline during
1995 was primarily associated with the sale of the two cable assembly plants and
the shut down of the Vestal, New York plant as previously discussed. Selling,
general and administrative expenses associated with the Company's power surge
suppressor operation increased 15% during 1995 compared to 1994. This increase
was primarily attributable to an increase in commissions and certain other costs
directly correlated to the increase in revenues and an increase in costs
associated with the growth in this operation's work force during the year ended
September 30, 1995. Selling, general and administrative expenses of the
Hospitality Group increased 22% primarily due to inclusion for a full year in
1995 compared to nine months in 1994 partially offset by the closing of 735
Bourbon Street. Unallocated corporate expense increased 42% due to higher
director fees and bonuses paid to various management employees.

Consolidated depreciation and amortization expense decreased 20% during 1995
compared to 1994, primarily as a result of the previously discussed sale and
shut down of the Company's cable assembly plants.

Consolidated interest expense declined 61% in 1995 versus the prior year
primarily due to the Company's ability to repay a substantial portion of the
debt with its lender using the proceeds from the sale of Flo Control. In
addition, the Company was able to eliminate the Florida Realty Joint Venture
(FRJV) debt as a result of the sale of Flo Control's 95% interest in the FRJV,
thereby further reducing consolidated interest expense for 1995. At September
30, 1995, the Company had no bank debt outstanding.

During 1995, the Company reported income from continuing operations before
income taxes of $1,273,000 compared to $2,235,000 in 1994. The 1994 income
included a net gain of $1,050,000 on the sale of the cable assembly plants in
West Springfield, Massachusetts and Gardena, California. Therefore, the
Company's operating income from continuing operations before income taxes,
exclusive of the gain on the sale of assets, was $1,185,000 in 1994. Operating
profit associated with the Company's power surge suppressor operation increased
55% over the 1994 level. The Hospitality Group reported operating income of
$244,000 in 1995 compared to a loss of

                                       12
<PAGE>
 
$202,000 in 1994.  Operating income for the Hospitality Group was bolstered by
the closing of 735 Bourbon Street during 1994 which had been operating at a
loss.

Income tax rate on pre-tax income from continuing operations was a benefit of
(2.4%) in 1995. The 1995 rate is substantially lower than the federal statutory
rate of 34% as a result of favorable state tax developments that resulted in the
reversal of certain state tax reserves approximating $255,000. In addition, the
Company's improved profitability from continuing operations allowed for the
recognition of certain federal tax benefits aggregating $314,000. These benefits
had been reserved for the valuation allowance in 1994 due to their uncertainty
of utilization.

The sale of Flo Control in 1995 resulted in a loss from discontinued operation
of $2,513,000, net of income tax benefit. The loss consists of a loss from
operations of $199,000, net of income tax benefit and a loss on disposal of
$2,314,000, net of income tax benefit.


IMPACT OF INFLATION

From October 1993 to September 1996, inflation did not have a material impact on
the Company's operations.

LIQUIDITY AND CAPITAL RESOURCES

During March 1992, the United States Environmental Protection Agency (EPA),
issued a Record of Decision (ROD) with respect to the Company's Superfund Site
in Vestal, New York. An Administrative Order for Remedial Design and Remedial
Action was issued on October 1, 1992. The ROD requires the Company to construct
a water treatment facility at the site and to pump contaminated ground water
from bedrock and overburden extraction wells for 15 to 30 years until
remediation goals were met. In December 1992, the Company's environmental
consultants prepared and submitted a Remedial Design Work Plan (RDWP) to the
EPA. The EPA issued comments on the RDWP on October 1, 1993, and a revised RDWP
was submitted to the EPA on October 21, 1993. During February 1994, the Company
received comments from the EPA with respect to the revised RDWP and the
Company's environmental consultants submitted a response. The EPA approved the
revised RDWP in October 1994. On November 14, 1994, engineering design and
related fieldwork was begun in order to meet the specifications of the revised
RDWP.

During fiscal 1996 and 1995, $238,000 and $430,000, respectively, were incurred
for work related to the engineering design. These costs were capitalized when
incurred because the remedy would prevent further environmental contamination
with respect to the contaminated ground water being pumped from the extraction
wells and improve the property compared with its condition when acquired by the
Company. Due to concerns about the correctness of the remedy provided for in the
ROD, additional fieldwork was performed and in June 1995, an RDWP Addendum was
prepared and submitted to the EPA. The Company received comments from the EPA
regarding this Addendum, and the Company's environmental consultants submitted a
response shortly thereafter.

On August 24, 1995, the Company and its legal and environmental consultants met
with officials of the EPA and agreed on additional fieldwork deemed necessary by
the EPA to support the Company's position regarding the RDWP Addendum. At this
meeting, officials of the EPA agreed the remedy needed to be modified and that
certain requirements under the existing ROD needed to be eliminated or reduced
in scope. However, the EPA has not approved any changes to the remedy and
amended the ROD.

Additional fieldwork provided for in the RDWP Addendum has been conducted at the
site and resulted in the formulation of a revised remedy. On December 19, 1995,
the Company and its legal and environmental consultants presented to the EPA the
RDWP Addendum and the recommended changes to the ROD in the form of a revised
remedy. The revised remedy was favorably received by the EPA and is currently
being reviewed. The revised remedy would eliminate certain requirements of the
existing ROD and would primarily include removing and treating contaminated
soil, significantly reducing the time period for remediation. Initial estimates
of the revised

                                       13
<PAGE>
 
remedy indicate initial costs of approximately $800,000 to $900,000, and ongoing
maintenance costs of approximately $200,000 to $250,000 in the aggregate. The
costs would be incurred over a one to two year period after the ROD is amended
with the ongoing maintenance costs being incurred over a five year period after
initial cost completion. If the EPA amends the ROD and adopts the revised
remediation treatment, the Company would, at the date of amendment, expense the
estimated future costs of implementing this alternative as well as all prior
costs incurred, approximating $668,000 through September 30, 1996, associated
with the implementation of the original ROD. On July 16, 1996, the Company and
its legal and environmental representatives met with the EPA to review the EPA's
written response to the revised remedy presented in December 1995. As a result
of this meeting, a review of a more cost efficient remedy is being discussed
with the EPA. The EPA now estimates that a revised ROD can be issued by early
1997.

By approval of the Company's Board of Directors in December 1994, in a
transaction effective January 1, 1995, the Company sold the operations of Flo
Control, Inc. (Flo Control), headquartered in Burbank, California. The purchaser
of these operations was Mr. Russell J. Sarno, President of Flo Control and a
board member of the Company. Mr. Sarno purchased virtually all of the assets of
Flo Control for $3,100,000 in cash and assumed $800,000 of Flo Control's
liabilities. As a condition of the sale, Mr. Sarno agreed to purchase Flo
Control's 95% ownership interest in the Florida Realty Joint Venture for
$150,000 in cash and assume the non-recourse mortgage approximating $2.3
million. In connection with these transactions, Flo Control's secondary
containment product line was sold to Mr. Pat Hopkins, an unrelated third party,
for a $500,000 note. The note is secured by the assets sold and the personal
guaranty of an unrelated third party individual. As a result of the above
transactions, the Company recognized a loss on disposal of $2,314,000, net of
income tax benefit, during fiscal 1995. The sale of Flo Control was accounted
for as a discontinued operation. The cash proceeds from the sale were used to
reduce the Company's outstanding debt with its lender. In addition, the sale of
Flo Control's 95% interest in the Florida Realty Joint Venture eliminated the
ongoing monthly expense of the Flo Control lease.

The Company established Buffton Realty Ventures, a commercial real estate
operation, to engage in acquiring properties offering unique opportunities for
profit. During August 1995, the Company acquired 100 Main Street, a commercial
office building located in Fort Worth, Texas. The property is 100% occupied with
two tenants under lease through August 2000. Lease rentals are $438,000
annually. The purchase price for the property was approximately $1,650,000 and
was funded with cash held by the Company. No pro forma financial information is
presented due to immateriality.

Effective January 1, 1996, the Company entered into an agreement to purchase the
assets of Cabo Tacobar One, Ltd., a Mexican restaurant concept with Central and
South American influences located in Houston, Texas, for $589,000 in cash and
375,000 shares of the Company's common stock (with an estimated fair market
value of $656,000). Additionally, the Company issued 76,500 shares of its common
stock for commissions incurred in connection with the acquisition which resulted
in increased acquisition costs of $153,000. Excess of purchase price over fair
value of net tangible assets acquired, recorded as Goodwill, approximates
$1,300,000 and is being amortized on a straight line basis over 15 years.
Effective January 1, 1996, the Company also entered into an agreement to
purchase the assets and assume certain liabilities of the Stockyards Hotel,
located in Fort Worth, Texas, for $500,000 in cash, 450,000 shares of the
Company's common stock (with an estimated fair market value of $788,000) and the
refinancing of a $1,600,000 bank term loan. Under this agreement, the Company
has guaranteed, until March 15, 1997, a sales price of $2.05 per share for any
of this stock that may be sold. At September 30, 1996, no liability had been
incurred under the guarantee agreement. These acquisitions were accounted for
under purchase accounting and are included in the Company's Results of
Operations beginning on the acquisitions' effective date of January 1, 1996. In
fiscal 1997, the Company currently plans to open a second Cabo unit in downtown
Houston and to develop a destination food and beverage operation at the SYH at
an estimated total cost of approximately $1 million.

                                       14
<PAGE>
 
Unaudited proforma results from continuing operations, as if the acquisitions
had occurred at the beginning of each respective period, are as follows:

<TABLE>
<CAPTION>
                                                   Year Ended September 30,
                                                   ------------------------      
                                                     1996            1995
                                                     ----            ---- 
                                             (In thousand, except per share amounts)
  <S>                                             <C>             <C>
  Revenues.................................       $25,973         $21,670
  Net income from continuing operations....         1,437           1,389
  Primary income per average common share..           .22             .22
  Fully diluted income per common share....           .21             .22 
</TABLE>

In March 1996, one of the Company's subsidiaries entered into a one year
financing agreement with a bank to replace its existing line of credit. The
commitment consists of a $2,000,000 revolving line of credit, all of which was
available for borrowing at September 30, 1996, and is secured by the accounts
receivable and inventory of the subsidiary. The loan provides for interest to be
paid monthly at a floating rate equal to the established prime rate.

In March 1996, the Company borrowed $1,200,000 from an insurance company. The
note is secured by a deed of trust on a commercial office building located in
Fort Worth, Texas. The note bears interest at 7.75%, payable in 119 monthly
installments of $9,852 with a final payment of $831,000 due April 1, 2006.

Effective July 1, 1996, the Company sold one of its entertainment facilities
located in New Orleans, Louisiana. The proceeds of $464,000, consisting of cash
and a note receivable for $350,000, approximated the net book value of the
assets that were sold.

During fiscal 1996, the Company purchased 183,350 shares of its common stock at
a cost of $356,000. The shares are recorded as Treasury Stock and will be
available for employee stock plans and other corporate requirements.

The Company invested $1,613,000 in machinery, equipment, furniture, fixtures,
and enhancements to existing property during 1996, as well as invested
$1,212,000 for Cabo and SYH.

The Company's operating activities provided cash of $3,653,000, reflecting
improved operations resulting from the disposition of Flo Control.

The Company believes that its current cash on hand ($1,659,000 at September 30,
1996), current borrowing availability and expected cash flow from operations, is
adequate to fund the Company's current operating needs and its projected growth
for Cabo and SYH during fiscal 1997.

ACCOUNTING CHANGES

IMPAIRMENT OF ASSETS

In March 1995, the Financial Accounting Standards Board issued FAS 121 on
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." This statement requires companies to investigate potential
impairments of long-lived assets, certain identifiable intangibles, and
associated goodwill on an exception basis, when there is evidence that events or
changes in circumstances have made recovery of an asset's carrying value
unlikely. Upon adoption, where such circumstances exist, the Company will
evaluate the carrying amount of its long-lived assets and associated goodwill by
estimating future cash flows expected to result from the use of such assets and
their eventual disposition. If future cash flows (undiscounted and without
interest charges) are less than the carrying amount of the assets, an impairment
loss will be recorded. The impairment loss is to be measured as the amount by
which the carrying amount of the asset exceeds the fair value of the asset. The
Company is required to adopt this statement by October 1, 1996; however, such
adoption is not expected to have a material impact on the Company's results of
operations or financial condition.

                                       15
<PAGE>
 
ACCOUNTING FOR STOCK-BASED COMPENSATION

In October 1995, the FASB issued FAS No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123"), which is effective for fiscal years beginning after
December 15, 1995. Effective October 1, 1996, the Company will adopt FAS 123
which establishes financial accounting and reporting standards for stock-based
employee compensation plans. The pronouncement defines a fair value based method
of accounting for an employee stock option or similar equity instrument and
encourages all entities to adopt that method of accounting for all of their
employee stock option compensation plans. However, it also allows an entity to
continue to measure compensation cost for those plans using the intrinsic value
based method of accounting as prescribed by Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). Entities electing
to remain with the accounting in APB 25 must make proforma disclosures of net
income and earnings per share as if the fair value based method of accounting
defined in FAS 123 had been applied. The Company will continue to account for
stock-based employee compensation plans under the intrinsic method pursuant to
APB 25 and will make the disclosures in its footnotes as required by FAS 123.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-----------------------------------------------------

The financial statements and supplementary data are included under item 14(a)(1)
and (2) of this report.


ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------------------------------------------------------------------------
         FINANCIAL DISCLOSURE
         --------------------

No changes in accountants or disagreements with accountants on accounting and/or
financial disclosure have arisen.

                                       16
<PAGE>
 
                                   PART III
                                   --------

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------

    
The following table reflects the name and age of each of the Directors,
including the name and age of each continuing Director, the positions and
offices with the Company currently held by each continuing Director, the period
of service as a Director of the Company, and the year in which such continuing
Directors' terms will expire.

<TABLE>
<CAPTION>
                                         POSITION HELD                        TERM TO 
          DIRECTOR'S NAME           AGE  WITH THE COMPANY     DIRECTOR SINCE  EXPIRE  
          ---------------           ---  ----------------     --------------  ------  
          <S>                       <C>  <C>                  <C>             <C>     
          Bruno V. D'Agostino        54  Director             December 1991   1998    
          John M. Edgar              53  Director             September 1987  1998    
          Hampton Hodges             59  Director             December 1980   1997    
          H.T. Hunnewell             70  Director             January 1981    1999    
          Robert H. McLean           55  President, Chief     January 1981    1998    
                                         Executive Officer,                           
                                         Chairman of the                              
                                         Board of Directors                           
          Walter D. Rogers, Jr.      52  Director, President  February 1995   1997    
                                         and Chief Executive                          
                                         Officer of Current                           
                                         Technology, Inc.                             
          Russell J. Sarno           61  Director             May 1984        1999     
</TABLE>

The executive officers of the Company, their respective ages, positions held,
and tenure with the Company are as follows:

<TABLE> 
<CAPTION>
                                                                       OFFICER OF THE          
          NAME                    AGE  POSITION HELD WITH THE COMPANY  COMPANY SINCE           
          ----                    ---  ------------------------------  -------------           
          <S>                     <C>  <C>                             <C>                     
          Robert H. McLean         55  President, Chief Executive      1985                    
                                       Officer,                                                
                                       Chairman of the Board of                                
                                       Directors                                               
          Robert Korman            49  Vice President, Treasurer,      1982                    
                                       Chief                                                   
                                       Financial Officer and                                   
                                       Secretary                                               
          Walter D. Rogers, Jr.    52  President of Current            1988                    
                                       Technology, Inc.                                         
</TABLE>

BUSINESS EXPERIENCE

The following is a brief summary of the business experience of each of the
Directors and Executive Officers for the past five years.

     BRUNO V. D'AGOSTINO served from 1978 to 1987 as Senior Vice President of
Benjamin Thompson & Associates, a firm specializing in marketplace architecture.
In August 1987, Bruno D'Agostino became a founding partner of D'Agostino Izzo
Quirk Architects, and he continues to serve in that capacity, directing urban
design projects throughout the United States. Mr. D'Agostino received a B.A.
degree in Architecture from the University of Cincinnati in 1964, and a Masters
degree in Architecture and Urban Design from Harvard University in 1969.     

                                       17
<PAGE>
 
    
     JOHN M. EDGAR has been engaged in the private practice of law in Kansas
City, Missouri since 1968. Mr. Edgar is currently the managing partner of the
Kansas City offices of the law firm of Bryan Cave LLP, and a member of such
firm's Management Committee. Mr. Edgar received a B.S. degree in Business
Administration and Accounting from the University of Kansas in 1965, and a J.D.
degree, with honors, from the University of Missouri at Kansas City in 1968.

     HAMPTON HODGES serves as president of Cottonwood Properties, a commercial
real estate company located in Paris, Texas. Mr. Hodges received a Bachelor of
Science degree from the United States Military Academy at West Point in 1961.

     H.T. HUNNEWELL serves as President of Twin Montana, Inc., an oil and gas
exploration and development company located in Graham, Texas. Prior to October
1991, Mr. Hunnewell was Vice President of Twin Montana, Inc. Mr. Hunnewell is
also a director of Pyramid Oil Company. Mr. Hunnewell received a B.S. degree in
Petroleum Engineering and a B.S. degree in Geology from Texas A&M University in
1950.

     ROBERT KORMAN, a Certified Public Accountant, has served as Vice President,
Treasurer, and Chief Financial Officer of the Company since February 1989. Mr.
Korman served as the Treasurer of the Company from December 1982 ; to February
1989. Mr. Korman was elected as the Secretary of the Company February 1994.

     ROBERT H. MCLEAN co-founded the Company in 1980 and has served as the
Chairman of the Board, President and Chief Executive Officer of the Company
since February 1989. Mr. McLean received a B.B.A. in Business Administration
from the University of Texas at Austin in 1963 and a L.L.B. from the University
of Texas School of Law in 1966.

     WALTER D. ROGERS, JR. has served as President of Current Technology, Inc.
since May 1992. Mr. Rogers served as Executive Vice President of CTI from
October 1990 to May 1992 and served as Vice President of the Company between
March 1988 and October 1990. Mr. Rogers received a B.S. degree in Business
Administration and Accounting from the University of Alaska in 1972.

     RUSSELL J. SARNO, since January 1, 1995, has served as President of Flo
Control, Inc., a California corporation and manufacturer of specialty fluid
control devices located in Burbank, California. For ten years prior to January
1, 1995, Mr. Sarno served as President of Flo Control, Inc., a Delaware
corporation and at the time, a wholly-owned subsidiary of the Company.

TERMS OF OFFICE; RELATIONSHIP

The officers of the Company are elected annually by the Board of Directors of
the Company at the Annual Meeting of Directors held immediately following each
Annual Meeting of Stockholders, or as soon thereafter as necessary and
convenient in order to fill vacancies of newly created offices. Each officer
holds office until his successor is duly elected and qualified or until his
death, resignation or removal, if earlier. Any officer or agent elected or
appointed by the Board of Directors of the Company may be removed by the Board
of Directors whenever, in its judgment, the best interests of the Company will
be served thereby, but such removal shall be without prejudice to the
contractual rights, if any, of the person so removed.

There are no family relationships among the executive officers of the Company.
There are no arrangements or understandings between any officer and any other
person pursuant to which that officer was elected.     

                                       18
<PAGE>
 
    
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and the American Stock Exchange.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.

Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during fiscal 1996 all
filing requirements were complied with by its officers, directors and greater
than ten-percent beneficial owners.     

                                       19
<PAGE>
 
     ITEM 11 - EXECUTIVE COMPENSATION
     --------------------------------

    
     The following table sets forth the compensation paid or accrued by the
     Company and its subsidiaries for services rendered during the last three
     fiscal years to (i) the Company's Chief Executive Officer, and (ii) each of
     the most highly compensated executive officers of the Company whose cash
     compensation exceeds $100,000.


                          SUMMARY COMPENSATION TABLE

<TABLE> 
<CAPTION> 
                                                                                     Long Term Compensation
                                                                                     ----------------------
                                            Annual Compensation                      Awards         Payouts
                                            -------------------                      ------         ------- 
       (a)               (b)         (c)            (d)           (e)            (f)            (g)     (h)         (i)
                              
Name and                                                     Other Annual    Restricted      Options/  LTIP      All Other    
Principal Position      Year      Salary (1)     Bonus (1)   Compensation    Stock Awards    SAR'S     Payouts   Compensation
------------------      ----      ----------     ---------   ------------    ------------    -----     -------   ------------
<S>                     <C>       <C>            <C>         <C>             <C>             <C>       <C>       <C>    
Robert H. McLean        1996        250,000        175,000         --                   --    200,000     --        4,500 (2)
Chief Executive         1995        250,000         75,000         --           140,650 (3)   300,000     --        4,500 (2)
Officer                 1994        250,000        225,000         --                   --         --     --        1,613 (2)
                                                                                                                
Robert Korman           1996        125,000        50,000          --                   --     10,000     --        4,500 (2)
Chief Financial         1995        125,000        40,000          --            13,750 (4)   100,000     --        2,171 (2)
Officer                 1994        125,000        80,000          --                   --         --     --          368 (2)
                                                                                                                
Walter D. Rogers Jr.    1996        175,000       100,000          --                   --     50,000     --        4,500 (2)
President of Current    1995        148,333        90,000          --            56,890 (5)   100,000     --        4,150 (2)
Technology, Inc.        1994        135,833        60,000          --                   --         --     --          964 (2) 
</TABLE> 

     (1)  The amounts shown include cash and non-cash compensation earned and
          received by executive officers as well as amounts earned but deferred
          at the election of those officers.

     (2)  Contributions by the Company to it's 401(k) Profit Sharing Plan on
          behalf of the named executive officer.

     (3)  Represents 50,000 shares of the Company's common stock issued in
          February 1995 and 50,000 shares of the Company's common stock issued
          in August 1995 to Mr. McLean. These shares are included in the
          security ownership schedule included at Item 12.

     (4)  Represents 10,000 shares of the Company's common stock issued in
          February 1995 to Mr. Korman. These shares are included in the security
          ownership schedule included at Item 12.

     (5)  Represents 10,000 shares of the Company's common stock issued in
          February 1995 and 30,000 shares of the Company's common stock issued
          in August 1995 to Mr. Rogers. These shares are included in the
          security ownership schedule included at Item 12.     

                                       20
<PAGE>
 
    
The following table sets forth the options granted during the last completed
fiscal year to (i) the Company's Chief Executive Officer, and (ii) each of the
most highly compensated executive officers whose cash compensation exceeds
$100,000.

                     OPTION/SAR GRANTS IN LAST FISCAL YEAR

                               INDIVIDUAL GRANTS

<TABLE> 
<CAPTION> 
                          NUMBER OF          PERCENT OF TOTAL                                        POTENTIAL REALIZABLE     
                          SECURITIES           OPTIONS/SAR'S                                           VALUE AT ASSUMED  
                          UNDERLYING            GRANTED TO         EXERCISE OF                          ANNUAL RATES OF  
                         OPTIONS/SAR'S           EMPLOYEES          BASE PRICE        EXPIRATION     STOCK PRICE APPRECIATION 
      NAME                GRANTED (#)          IN FISCAL YEAR        ($/SH)              DATE          FOR OPTION TERM  
      (A)                    (B)                    (C)                (D)                (E)        5%  ($)         10%  ($)
<S>                      <C>                 <C>                   <C>                <C>            <C>             <C>   
Robert H. McLean                200,000                62.50%              1.62           8/15/2001       89,515          197,805
Chief Executive Officer                                                                                                 
                                                                                                                        
Robert Korman                    10,000                 3.13%              1.94           9/6/2001         5,360           11,844
Chief Financial Officer                                                                                                 
                                                                                                                        
Walter D. Rogers Jr.             50,000                15.63%              1.94           9/6/2001        26,799           59,219
President of Current 
Technology, Inc.
</TABLE> 
       
OPTIONS EXERCISED

There were no stock options exercised by any named executive officer of the
Company during the last fiscal year.

EQUITY PARTICIPATION PLANS

In September 1989, the Board of Directors adopted the Buffton Corporation Equity
Participation Plan (the "1989 Plan") to afford key employees the opportunity to
purchase shares of the Company's common stock as a reward for past performance
and an incentive for future performance. Under the 1989 Plan, 500,000 shares of
the Company's stock may be issued. At February 3 and August 2, 1995, 450,000
options and 50,000 options, respectively, were granted to certain officers of
the Company at an exercise price of $1.50 per share which was the fair market
value at date of grant. The non-qualified options are fully vested and must be
exercised within five years of the date of grant. The options do not expire upon
termination of the officer's employment and may be transferred by will or by the
laws of descent and distribution. The options may be exchanged for options that
are substantially equivalent in number, percentage of ownership and price (as it
relates to book value) in each of the Company's subsidiaries.

In August 1996, the Board of Directors adopted the Buffton Corporation Equity
Participation Plan (the "1996 Plan") to afford key employees the opportunity to
purchase shares of the Company's common stock as a reward for past performance
and an incentive for future performance. Under the 1996 Plan, 300,000 shares of
the Company's stock may be issued. In August and September, 1996, 260,000
options were granted to certain officers of the Company at an exercise price of
$1.62 - $1.94 per share which was the fair market value at date of grant. The
non-qualified options are fully vested and must be exercised within five years
of the date of grant. The options do not expire upon termination of the
officer's employment and may be transferred by will or by the laws of descent
and distribution. The options may be exchanged for     

                                       21
<PAGE>
 
    
options that are substantially equivalent in number, percentage of ownership and
price (as it relates to book value) in each of the Company's subsidiaries.
Additionally, in September 1996, 40,000 options were granted under the 1996 Plan
to certain employees of the Company at an exercise price of $1.94 which was the
fair market value at date of grant. The term of the options is for six years and
become exercisable at a rate of 20% per year beginning one year after the date
of grant. The options terminate and become unexercisable upon termination of the
employee, unless such termination is without cause or is due to death or total
and permanent disability.

COMPENSATION OF DIRECTORS

For the 1996 fiscal year the outside members of the board of Directors were
issued shares of Common Stock in lieu of cash compensation for director's fees.
As a result, Mr. D'Agostino, Mr. Edgar, Mr. Hodges and Mr. Hunnewell, as non-
employee Directors, received 10,000 shares of the Company's Common Stock. The
Company reimburses the Directors for expenses in connection with meetings, and
otherwise does not incur any cash outlays with respect to Director expenses.

EMPLOYMENT AGREEMENTS

Mr. McLean has an Employment Agreement with the Company providing for an annual
salary of $250,000.00, a term of thirty-six (36) months beginning October 1,
1995 and contains a non-competition provision. This Employment Agreement has an
automatic renewal feature which operates to insure that the term of the
Employment Agreement is never less than twenty-four (24) months, nor more than
thirty-six (36) months. Mr. McLean also has a Change in Control Agreement, with
the same term as his Employment Agreement, which provides that if Mr. McLean's
employment with the Company is terminated within two years following a Change in
Control, unless such termination is because of his death or disability or by the
Company for cause, Mr. McLean shall be entitled to receive a lump sum payment
equal to three times his base amount as that term is defined in Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), subject to reduction
in order to avoid the payment of an "excess parachute payment" as that term is
defined in Section 280G of the Code.

Mr. Rogers has an Employment Agreement with CTI providing for an annual salary
of $175,000.00, a term of thirty-six (36) months beginning June 1, 1995 and
contains a non-competition provision. This Employment Agreement has an automatic
renewal feature which operates to insure that the term of the Employment
Agreement is never less than twenty-four (24) months, nor more than thirty-six
(36) months. Mr. Rogers' Employment Agreement also provides that if Mr. Rogers'
employment with CTI is terminated within twenty-four (24) months after a Change
in Control, unless such termination is because of his death or disability or by
CTI for cause, Mr. Rogers shall be entitled to receive a lump sum payment equal
to three times his base amount as that term is defined in Section 280G of the
Code, subject to reduction in order to avoid the payment of an "excess parachute
payment" as that term is defined in Section 280G of the Code.

Mr. Korman has an Employment Agreement with the Company providing for an annual
salary of $125,000.00, with a term of twelve (12) months beginning August 1,
1995. This Employment Agreement has an automatic renewal feature which operates
to insure that the term of the Employment Agreement is always twelve (12)
months. Mr. Korman's Employment Agreement also has a Change in Control provision
which provides that if Mr. Korman's employment with the Company is terminated
within twenty-four (24) months following a Change in Control, unless such
termination is because of his death or disability, or by the Company for cause,
Mr. Korman shall be entitled to receive a lump sum payment equal to his salary
for the remaining balance of his employment term.

For purposes of the Employment Agreements and the Change in Control agreement
referred to immediately above, a "Change in Control" is defined as having
occurred upon any of the following events:

     (i)  the acquisition directly or indirectly, by any person (as such terms
     are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
     1934, as amended), other than the Company,     

                                       22
<PAGE>
 
    
     any of its subsidiaries or any employee benefit plan maintained by Company
     or any such subsidiary, of beneficial ownership of securities of Company
     representing fifteen percent (15%) or more of the combined voting power of
     Company's then outstanding securities (with the terms used herein and in
     Sections 13(d) and/or 14(d) of the Securities Exchange Act of 1934, as
     amended, having the meanings of such terms in such Sections);

     (ii)   if the stockholders of Company approve a merger of consolidation, a
     sale or disposition of all or substantially all of Company's assets or a
     plan of liquidation or dissolution of Company.

     (iii)  the election during any period of twenty-four (24) months or less of
     a member or members of Company's Board without the approval of the election
     or nomination for election of such new member or members by a majority of
     the members of the Board who were members at the beginning of the period,
     or members of the Board thereafter recommended to succeed such original
     members (or their successors hereunder) by a majority of the members of the
     Board who were members at the beginning of the period (or their successors
     hereunder); or

     (iv)   any person (as such term is used in Section 13(d) and 14(d) of the
     Securities Exchange Act of 1934, as amended) other than Company, any of its
     subsidiaries or any employee benefit plan maintained by Company or any such
     subsidiary, makes a tender or exchange offer for any shares of Company's
     outstanding voting securities at any point in time, pursuant to which any
     such shares are purchased.

Unless, the Continuing Board of Directors of Company (as hereinafter defined)
determines that the happening of any of the foregoing events in a particular
case should not be deemed a Change in Control. The "Continuing Board of
Directors of Company" shall mean (i) the members of Company's Board of Directors
in office immediately prior to the Change in Control, excluding any who initiate
a Change in Control or are affiliated with one who initiates a Change in
Control, and (ii) any subsequent director who may be selected, nominated or
approved by a majority of the other Continuing Board of Directors of 
Company.     

                                       23
<PAGE>
 
ITEM 12 -SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 
-----------------------------------------------------------------------

    
The following table sets forth information as of January 20, 1997, regarding the
beneficial ownership (as defined by the SEC) of Common Stock by (i) each person
known by the Company to own beneficially more than 5% of the outstanding Common
Stock; (ii) each director of the Company; (iii) each executive officer of the
Company named in the Executive Compensation Table (see "Executive
Compensation"); and (iv) all directors and executive officers of the Company as
a group. Except as otherwise noted, each named beneficial owner has sole voting
and investment power with respect to the shares owned.

<TABLE> 
<CAPTION> 
         Name and Address             Amount and Nature of   
      of Beneficial Owner (1)       Beneficial Ownership (2)          Percent of 
      -----------------------       ------------------------          ---------- 
                                                                        Class      
                                                                        -----
<S>                                 <C>                               <C>  
Steel Partners II, L.P.                     655,000                      9.81  
750 Lexington Avenue 27th Floor             
New York, NY  10022       

Robert H. McLean                            619,831 (3)                  8.63 (4)

James Hillyer                               565,000 (5)                  8.21 (6) 
3350 McCue, #2103
Houston, TX  77056        

Alphi Fund, L.P.                            384,200                      5.75 
155 Pfingsten Rd, Suite 360
Deerfield, IL  60015      

John M. Edgar                                15,040                      0.23

Hampton Hodges                               48,000                      0.72

H.T. Hunnewell                              123,151                      1.84

Russell J. Sarno                             22,614                      0.34

Bruno V. D'Agostino                          55,000                      0.82

Robert Korman                               122,354 (7)                  1.80 (8)

Walter D. Rogers, Jr.                       202,225 (9)                  2.96 (10)

All current Directors and Officers        1,208,215 (11)                16.24 (12) 
as a group (9 in number)  
</TABLE> 

(1)  Unless otherwise indicated, the address of the security holders named above
     is: 226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107-1220.     

                                       24
<PAGE>
 
    
(2)  Shares are deemed to be "beneficially owned" by a person if such person,
     directly or indirectly, has or shares (i) the voting power thereof,
     including the power to vote or to direct the voting of such shares, or (ii)
     the investment power with respect thereto, including the power to dispose
     or direct the disposition of such shares. In addition, a person is deemed
     to beneficially own any shares as to which such person has the right to
     acquire beneficial ownership within 60 days. The number of shares shown
     represents sole voting and investment power except as otherwise indicated
     in the footnotes below.

(3)  This figure includes 100,000 shares owned of record by Mr. McLean, 500,000
     shares covered by currently exercisable stock options owned by Mr. McLean,
     4,831 shares owned by the Company's Employee Stock Ownership Plan which are
     voted by Mr. McLean pursuant to such plan and 15,000 shares held in a trust
     of which Mr. McLean is the trustee.

(4)  This percentage is calculated including the 500,000 shares covered by the
     stock options owned by Mr. McLean.

(5)  This figure includes 15,000 shares of Common Stock owned directly by Mr.
     Hillyer, 350,000 shares of Common Stock owned beneficially by Mr. Hillyer
     through Bermuda Trust (Cook Islands) Limited, as trustee of the Hillyer
     Family Trust, and 200,000 shares of Common Stock issuable to Mr. Hillyer
     Pursuant to non-qualified stock options which are currently exercisable.

(6)  This percentage is calculated including the 200,000 shared covered by the
     stock options owned by Mr. Hillyer.

(7)  This figure includes 110,000 shares issuable to Mr. Korman pursuant to non-
     qualified stock options which are currently exercisable. This figure also
     includes 2,354 shares which are owned by the Employee Stock Ownership Plan
     and are voted by Mr. Korman pursuant to the plan.

(8)  This percentage is calculated including the 110,000 shares covered by the
     stock options owned by Mr. Korman.

(9)  This figure includes 150,000 shares issuable to Mr. Rogers pursuant to non-
     qualified stock options which are currently exercisable. This figure also
     includes 2,125 shares which are owned by the Employee Stock Ownership Plan
     and are voted by Mr. Rogers pursuant to the plan.

(10) This percentage is calculated including the 150,000 shares covered by the
     stock options owned by Mr. Rogers.

(11) This figure includes the 760,000 shares of the Company's common stock
     issuable pursuant to the non-qualified stock options described in notes 4,
     8 and 10 hereinabove.

(12) This percentage is calculated including the 760,000 shares of the Company's
     common stock issuable pursuant to the non-qualified stock options described
     in notes 3, 7 and 9 hereinabove, and all percentages are rounded to the
     nearest one-hundredth of a percent.     

                                       25
<PAGE>
 
    
     No written or oral agreement or other arrangement exists between any of the
     above-named individuals or companies and the Company regarding the manner
     in which the shares of Common Stock owned by each will be voted on any
     issue or policy affecting the Company.     


ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

    
The law firm of Bryan Cave LLP provides certain legal services to the Company.
John M. Edgar, a director of the Company, is a managing partner of Bryan Cave
LLP.    

                                       26
<PAGE>
 
                                    PART IV
                                    -------

  ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
  --------------------------------------------------------------------------

     (a)  The following documents are filed as a part of this report:

          1.   Financial Statements - The financial statements listed in the
               --------------------
               "Index to Consolidated Financial Statements and Financial
               Statement Schedule" described at F-1.

          2.   Financial Statement Schedule - The financial statement schedule
               ---------------------------- 
               listed in the "Index to Consolidated Financial Statements and
               Financial Statement Schedule" described at F-1.

          3.   Exhibits - Refer to (c) below.
               --------
  
(b)       Reports on Form 8-K.
          --------------------
 
               Report dated November 15, 1995 reporting changes to the Company's
               Rights Agreement

(c)       Exhibits
          --------

          3.1  Certificate of Incorporation (Exhibit 3.1 to Form S-1
               Registration Statement No. 2-71057 and incorporated herein by
               reference).

          3.2  By-laws (Exhibit 3.2 to Form S-1 Registration Statement No. 2-
               71057 and incorporated herein by reference).

          3.3  Certificate of Amendment to the Certificate of Incorporation
               Creating Classified Board of Directors, eliminating a
               Stockholder's right to call a special meeting, and adopting a
               fair price supermajority provision dated February 21, 1989
               (Exhibit 4.4 to Form 10-Q for the quarter ended March 31, 1989
               and incorporated herein by reference).

          3.4  Restated by-laws of Buffton Corporation dated February 21, 1989
               (Exhibit 4.5 to Form 10-Q for the quarter ended March 31, 1989
               and incorporated herein by reference).

    
          3.5  Restated by-laws of Buffton Corporation dated January 31, 
               1996.     

          4    Rights Agreement (Exhibit 1 to Form 8-K dated June 23, 1988 and 
               incorporated herein by reference).

          10   Asset Purchase Agreement dated January 19, 1996 incorporated 
               herein by reference to Form 8-K dated January 19, 1996.

                                       27
<PAGE>
 
          10.1  Agreement for Sale of Assets from Flo Control, Inc. dated as of
                January 20, 1995, by and among Buffton Corporation, a Delaware
                corporation, Flo Control, Inc., a Delaware corporation
                ("Seller") and F.C. Acquisition, Inc., a California corporation
                ("Buyer") incorporated herein by reference to Form 8-K dated
                January 20, 1995.

          10.2  Agreement for sale of Florida Realty Joint Venture interests
                from Flo Control, Inc., dated January 20, 1995 by and among
                Buffton Corporation, a Delaware corporation, Flo Control, Inc. a
                Delaware corporation, ("Seller") and F.L.C. Property
                Acquisition, Inc., a California corporation ("Buyer")
                incorporated herein by reference to Form 8-K dated January 20,
                1995.

          10.3  Agreement for Sale of Secondary Containment Assets from Flo
                Control, Inc., dated January 20, 1995, by and among Buffton
                Corporation, a Delaware corporation, Flo Control, Inc., a
                Delaware corporation ("Seller") and Patrick Hopkins and Flo-Safe
                Systems, Inc. a Wisconsin corporation ("Buyer") incorporated
                herein by reference to Form 8-K dated January 20, 1995.

          10.4  Second Amendment to Accounts Financing Agreement dated January
                20, 1995 by and among Congress Financial Corporation, Current
                Technology, Inc., Electro-Mech, Inc., and Flo Control, Inc.
                incorporated herein by reference to Form 8-K dated January 20,
                1995.

          10.5  Second Amended and Restated Revolving Credit Note incorporated
                herein by reference to Form 8-K dated January 20, 1995.

          10.6  Rights Amendment Agreement dated November 15, 1995 incorporated
                herein by reference to Form 8-K dated November 15, 1995.

          11    Statement of Computation of Earnings Per Share

          21    Subsidiaries of the Company

          23    Consent of Independent Accountants

          27    Financial Data Schedule

                                       28
<PAGE>
 
                                  SIGNATURES


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

BUFFTON CORPORATION                                              Date
                                                          -------------------
                                                          
                                                             
By: /s/ Robert H. McLean                                   January 28, 1997     
    --------------------------------------------          -------------------
    Robert H. McLean, President and
    Chief Executive Officer


Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacity and on the dates indicated.

                                                                                
    /s/ Robert H. McLean                                   January 28, 1997    
    --------------------------------------------         --------------------  
    Robert H. McLean, President and Chief                
    Executive Officer; Chairman of the                   
    Board of Directors (Principal                        
    Executive Officer)                                   
                                                         
                                                                                
    /s/ Robert Korman                                      January 28, 1997     
    --------------------------------------------         --------------------   
    Robert Korman, Vice President and                      
    Chief Financial Officer                              
                                                         
                                                                
    /s/ Bruno D'Agostino                                   January 28, 1997     
    --------------------------------------------         --------------------
    Bruno D'Agostino, Director                             
                                                         
                                                                                
    /s/ John M. Edgar                                      January 28, 1997    
    --------------------------------------------         --------------------
    John M. Edgar, Director                                
                                                           
                                                                                
    /s/ Hampton Hodges                                     January 28, 1997    
    --------------------------------------------         --------------------
    Hampton Hodges, Director                               
                                                           
                                                                               
    /s/ H.T. Hunnewell                                     January 28, 1997    
    --------------------------------------------         --------------------
    H.T. Hunnewell, Director                               
 
                                                                                
    /s/ Walter D. Rogers, Jr.                              January 28, 1997    
    --------------------------------------------         --------------------
    Walter D. Rogers, Jr., Director                        
                                                           
                                                                                
    /s/ Russell J. Sarno                                   January 28, 1997     
    --------------------------------------------         --------------------
    Russell J. Sarno, Director                              
  
                                       29
<PAGE>
 
                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                       AND FINANCIAL STATEMENT SCHEDULE


<TABLE> 
<CAPTION> 
CONSOLIDATED FINANCIAL STATEMENTS:                                    PAGE
---------------------------------                                     ----
<S>                                                                   <C> 
   Report of Independent Accountants                                  F-2
 
   Consolidated Statements of Operations                              F-3
 
   Consolidated Balance Sheets                                        F-4
 
   Consolidated Statements of Cash Flow                               F-5
 
   Consolidated Statements of Changes in Stockholders' Equity         F-6
 
   Notes to Consolidated Financial Statements                         F-7

FINANCIAL STATEMENT SCHEDULE:
---------------------------- 

   Schedule IX -   Valuation and Qualifying Accounts                  F-20
</TABLE> 


Schedules other than the ones listed above have been omitted since they are
either not required, not applicable, or the required information is shown in the
financial statements or related notes.

                                      F-1
<PAGE>
 
                       REPORT OF INDEPENDENT ACCOUNTANTS



To the Stockholders and Board of Directors of Buffton Corporation

In our opinion, the consolidated financial statements listed in the index
appearing on page F-1 present fairly, in all material respects, the financial
position of Buffton Corporation and its subsidiaries at September 30, 1996 and
1995, and the results of their operations and their cash flows for each of the
three years in the period ended September 30, 1996, in conformity with generally
accepted accounting principles.  These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits.  We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.



/s/ Price Waterhouse LLP


Fort Worth, Texas
November 15, 1996

                                      F-2
<PAGE>
 
                              BUFFTON CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS



<TABLE> 
<CAPTION> 
                                                                      For the Years Ended September 30,      
                                                                      -------------------------------------      
                                                                       1996         1995          1994          
                                                                       ----         ----          ----
                                                                      (In thousands, except per share amounts)
<S>                                                                  <C>          <C>           <C>
Net revenues.................................................         $25,175      $19,187       $30,432
Net gain on sale of certain operating assets.................               -            -         1,050
                                                                      -------      -------       -------
                                                                       25,175       19,187        31,482
                                                                      -------      -------       -------
Costs and expenses:
  Cost of goods sold (exclusive of depreciation).............           8,402        5,890        17,080
  Selling, general and administrative........................          13,052       10,939        10,649
  Depreciation and amortization..............................           1,281          961         1,202
  Interest...................................................             235          124           316
                                                                      -------      -------       -------

  Total costs and expenses...................................          22,970       17,914        29,247
                                                                      -------      -------       -------

Income from continuing operations before income taxes........           2,205        1,273         2,235
Income tax provision (benefit)...............................             811          (31)          233
                                                                      -------      -------       -------
Income from continuing operations............................           1,394        1,304         2,002
                                                                      -------      -------       -------

Discontinued operation:
  Loss from operations, net of income tax benefits of
   $107,000 and $49,000, respectively........................               -         (199)          (94)
  Loss on disposal, net of income tax benefit
  of $754,000................................................               -       (2,314)            -
                                                                      -------      -------       -------

  Loss from discontinued operation...........................               -       (2,513)          (94)
                                                                      -------      -------       -------

Net income (loss)............................................         $ 1,394      $(1,209)      $ 1,908
                                                                      =======      =======       =======

Primary income (loss) per average common share:
  Continuing operations......................................         $   .22      $   .24       $   .39
  Discontinued operation.....................................               -         (.46)         (.02)
                                                                      -------      -------       -------
  Net income (loss)..........................................         $   .22      $  (.22)      $   .37
                                                                      =======      =======       =======

  Weighted average common shares outstanding.................           6,441        5,465         5,120
                                                                      =======      =======       =======

Fully diluted income (loss) per common share:
  Continuing operations......................................         $   .21      $   .24       $   .39
  Discontinued operation.....................................               -         (.46)         (.02)
                                                                      -------      -------       -------
  Net income (loss)..........................................         $   .21      $  (.22)      $   .37
                                                                      =======      =======       =======

  Fully diluted common shares outstanding....................           6,649        5,465         5,120
                                                                      =======      =======       =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                      F-3
<PAGE>
 
                              BUFFTON CORPORATION

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                    ASSETS

                                                                                   September 30,
                                                                               --------------------
                                                                               1996          1995
                                                                               ----          ----
                                                                                (In thousands)
<S>                                                                           <C>           <C>
Current assets:
 Cash and cash equivalents..............................................      $ 1,659       $     7
 Accounts receivable, less allowance for doubtful accounts of
  $35,000 and $75,000, respectively.....................................        3,370         2,893
 Inventories............................................................        1,396         2,031
 Prepaid and other current assets.......................................          492           498
                                                                              -------       -------

  Total current assets..................................................        6,917         5,429

Property, plant and equipment, net......................................        9,631         5,467

Patents, net of accumulated amortization of $1,529,000
  and $1,358,000, respectively..........................................        1,451         1,617
Goodwill, net of amortization of $845,000 and $666,000, respectively....        4,120         3,503
Deferred income taxes...................................................            -           590
Long-term notes receivable..............................................          540           350
Other assets, net.......................................................          505           268
                                                                              -------       -------
                                                                              $23,164       $17,224
                                                                              =======       =======

                     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Current portion of long-term debt......................................      $   187       $     -
 Accounts payable.......................................................        1,152         1,001
 Accrued liabilities....................................................        1,524         1,368
 Income taxes...........................................................          311           236
                                                                              -------       -------
  Total current liabilities.............................................        3,174         2,605

Long-term debt..........................................................        2,493             -
Deferred income taxes...................................................            4             -

Stockholders' equity:
 Preferred stock $.01 par value; 5,000,000 shares authorized;
  no shares issued and outstanding......................................            -             -
 Common stock $.05 par value; 30,000,000 shares authorized;
  outstanding shares 6,726,878 and 5,685,378, respectively..............          337           284
 Additional paid-in capital.............................................       14,354        12,571
 Retained earnings......................................................        3,158         1,764
 Treasury stock, at cost, 183,350 shares................................         (356)            -
                                                                              -------       -------
                                                                               17,493        14,619
Commitments and contingencies (Note 2 and 12)...........................
                                                                              -------       -------
                                                                              $23,164       $17,224
                                                                              =======       =======
 </TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                      F-4
<PAGE>
 
                              BUFFTON CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOW


<TABLE>
<CAPTION>
                                                                          For the Years Ended September 30,  
                                                                         ------------------------------------
                                                                            1996         1995         1994   
                                                                         -----------  -----------  ----------
                                                                                    (In thousands)           
<S>                                                                      <C>          <C>          <C>
Cash flows from operating activities:
 Net income (loss)............................................           $ 1,394      $(1,209)     $ 1,908
 Adjustments to reconcile net income (loss) to net cash
   provided by (used for) operating activities:
   Depreciation...............................................               704          594        1,424
   Amortization...............................................               577          564          662
   Deferred income taxes......................................               594         (920)         102
   Bad debt provision.........................................                40          (84)          (3)
   Net (gain) loss on sale of assets..........................                 -        3,068       (1,050)
   Issuance of common stock in payment for services...........               139          571            -
   Change in components of current assets and liabilities
    (exclusive of acquisitions and dispositions):
    Accounts receivable.......................................              (662)      (1,137)        (269)
    Inventories...............................................               639         (958)        (387)
    Prepaid and other.........................................                 -         (536)          80
    Accounts payable..........................................                34          191         (438)
    Accrued liabilities.......................................               119         (297)      (2,238)
    Income taxes payable......................................                75          (18)         152
                                                                         -------      -------      -------
Net cash provided by (used for) operating activities..........             3,653         (171)         (57)
                                                                         -------      -------      -------

Cash flows from investing activities:
 Additions to property, plant and equipment...................            (1,613)      (1,337)      (1,257)
 Proceeds from sale of operating assets.......................               100        3,750        9,461
 Acquisitions.................................................            (1,212)      (1,653)        (159)
 Additions to other assets....................................                 -          (55)           -
                                                                         -------      -------      -------

Net cash provided by (used for) investing activities..........            (2,725)         705        8,045
                                                                         -------      -------      -------

Cash flows from financing activities:
 Additions to debt............................................             1,200            -          600
 Repayments of debt...........................................              (120)      (3,723)      (5,842)
 Treasury stock purchases.....................................              (356)           -            -
                                                                         -------      -------      -------

Net cash provided by (used for) financing activities..........               724       (3,723)      (5,242)
                                                                         -------      -------      -------

Net increase (decrease) in cash...............................             1,652       (3,189)       2,746

Cash at beginning of year.....................................                 7        3,196          450
                                                                         -------      -------      -------

Cash at end of year...........................................           $ 1,659      $     7      $ 3,196
                                                                         =======      =======      =======
</TABLE>



The accompanying notes are an integral part of these consolidated financial
statements.

                                      F-5
<PAGE>
 
                              BUFFTON CORPORATION

          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

            For the Years Ended September 30, 1996, 1995, and 1994

<TABLE>
<CAPTION>
                                                  Additional
                                          Common   Paid-in    Treasury   Retained
                                          Stock    Capital      Stock    Earnings    Total
                                          ------  ----------  ---------  ---------  --------
<S>                                       <C>     <C>         <C>        <C>        <C>
 
Balance at September 30, 1993...........  $  234     $11,226   $     -    $ 1,065   $12,525
 
Issuance of 600,000 shares of $.05 par
 value common stock for acquisition.....      30         794         -          -       824
 
Net income..............................       -           -         -      1,908     1,908
                                          ------     -------   -------   --------   -------
 
Balance at September 30, 1994...........     264      12,020         -      2,973    15,257
 
Issuance of 407,356 shares of $.05 par
 value common stock for payment of
 services...............................      20         551         -          -       571
 
Net loss................................       -           -         -     (1,209)   (1,209)
                                          ------     -------   -------   --------   -------
 
Balance at September 30, 1995...........     284      12,571         -      1,764    14,619
 
Issuance of 951,500 shares of $.05 par
 value common stock for acquisitions....      48       1,649         -          -     1,697
 
Issuance of  90,000 shares of $.05 par
 value common stock for services........       5         134         -          -       139
 
Purchase of 183,350 shares of $.05
par value common stock..................       -           -      (356)         -      (356)
 
Net income..............................       -           -         -      1,394     1,394
                                          ------     -------   -------   --------   -------
 
Balance at September 30, 1996...........  $  337     $14,354   $  (356)   $ 3,158   $17,493
                                          ======     =======   =======   ========   =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                      F-6
<PAGE>
 
                              BUFFTON CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       SEPTEMBER 30, 1996, 1995 AND 1994


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

Buffton Corporation (the Company) is principally engaged in the manufacture of
filter surge suppressors and power distribution systems  and the operation of
food and beverage and lodging establishments.  These consolidated financial
statements include all of the assets, liabilities, revenues, and costs and
expenses of the Company and its wholly-owned subsidiaries.  All significant
intercompany accounts and transactions have been eliminated.


CASH AND CASH EQUIVALENTS

For purposes of the Consolidated Statements of Cash Flow, cash and cash
equivalents consist of cash in banks and cash investments in immediately
available interest bearing accounts.


INVENTORIES

Inventories are stated at the lower of cost (first in, first out) or market.


PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost and depreciated by the
straight-line method over estimated useful lives of three to forty years.

Maintenance and repairs are charged to income as incurred.  The Company
capitalizes renewals and betterments which significantly enhance the value or
extend the useful life of an asset.  Upon the sale or retirement of depreciable
assets, the cost and related accumulated depreciation are removed from the
accounts, and the resulting gain or loss is credited to or charged against
income.


INTANGIBLES

Patents are carried at the Company's cost as determined at acquisition and are
being amortized on a straight-line basis over their remaining legal lives.

Goodwill represents the excess of cost over net assets acquired and is being
amortized on a straight line basis over fifteen years. Annually, the Company
evaluates the carrying value of goodwill by reviewing estimated recoverability
from future operations of the associated assets to which it relates.
Recoverability is assessed based upon future cash flows (undiscounted and
without interest charges) to be generated by related assets. Impairments are
recognized to the extent that the carrying value of goodwill exceeds such
estimated future cash flows.

                                      F-7
<PAGE>
 
IMPAIRMENT OF LONG-LIVED ASSETS

In March 1995, the Financial Accounting Standards Board issued FAS 121 on
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed of." This statement requires companies to investigate potential
impairments of long-lived assets, certain identifiable intangibles, and
associated goodwill on an exception basis, when there is evidence that events or
changes in circumstances have made recovery of an asset's carrying value
unlikely. Upon adoption, where such circumstances exist, the Company will
evaluate the carrying amount of the related long-lived assets by estimating
future cash flows expected to result from the use of such assets and their
eventual disposition. If future cash flows (undiscounted and without interest
charges) are less than the carrying amount of the assets, an impairment loss
will be recorded. The impairment loss is to be measured as the amount by which
the carrying amount of the asset exceeds the fair value of the asset. The
Company is required to adopt this statement on October 1, 1996; however, such
adoption is not expected to have a material impact on the Company's results of
operations or financial condition.

ACCOUNTING FOR STOCK-BASED COMPENSATION

In October 1995, the FASB issued FAS No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123"), which is effective for fiscal years beginning after
December 15, 1995.  Effective October 1, 1996, the Company will adopt FAS 123
which establishes financial accounting and reporting standards for stock-based
employee compensation plans.  The pronouncement defines a fair value based
method of accounting for an employee stock option or similar equity instrument
and encourages all entities to adopt that method of accounting for all of their
employee stock option compensation plans.  However, it also allows an entity to
continue to measure compensation cost for those plans using the intrinsic value
based method of accounting as prescribed by Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25").  Entities
electing to remain with the accounting in APB 25 must make proforma disclosures
of net income and earnings per share as if the fair value based method of
accounting defined in FAS 123 had been applied.  The Company will continue to
account for stock-based employee compensation plans under the intrinsic method
pursuant to APB 25 and will make the disclosures in its footnotes as required by
FAS 123.

INCOME TAXES

The Company records deferred income taxes under the asset and liability method,
which requires recognition of deferred tax assets and liabilities for expected
future tax consequences of temporary differences between the book and tax basis
of assets and liabilities and other tax attributes, including tax loss and
credit carryforwards.  The Company provides a valuation allowance for the amount
of tax assets not expected to be realized.

ADVERTISING COST

The Company's advertising expenditures are expensed in the period the
advertising first occurs. Advertising expense for fiscal years ended September
30, 1996, 1995 and 1994 approximated was $185,000, $215,000 and $249,000,
respectively.

NET INCOME (LOSS) PER SHARE

Primary net income (loss) per share has been computed on the basis of the
weighted average number of common shares outstanding; the effect of outstanding
stock options is immaterial for purposes of calculating primary net income
(loss) per share for 1996, 1995 and 1994.  Fully diluted net income (loss) per
share for fiscal 1996 includes an additional 208,000 shares relating to
outstanding stock options calculated using the treasury stock method.  The
effect of outstanding stock options was immaterial for purposes of calculating
fully diluted net income (loss) per share for 1995 and 1994.

                                      F-8
<PAGE>
 
PERVASIVENESS OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and related revenues and
expenses, and disclosure of gain and loss contingencies at the date of the
financial statements. Actual results could differ from those estimates.


RECLASSIFICATIONS

Certain prior years' amounts have been reclassified to conform with the 1996
presentation.


NOTE 2 - ACQUISITIONS AND DISPOSITIONS

Effective January 1, 1994, the Company entered into a purchase and sale
agreement with Entertainment Centers of America, Inc. (ECA) to acquire certain
entertainment facilities located in the New Orleans, Louisiana operations
(Bourbon Street Hospitality) of ECA in exchange for the Company's outstanding
note receivable from and equity interest in ECA approximating $2,641,000 as well
as 600,000 shares of its common stock and $159,000 in cash. The market value of
the 600,000 shares was $824,000 at the date of the acquisition. The assets
acquired consisted of cash, inventory, leasehold interests and improvements,
sound, light, video and bar equipment and certain other assets, including
prepaids. Liabilities assumed by a subsidiary of the Company consisted of trade
accounts payable, other accrued liabilities in ordinary course of business and
debt outstanding at January 1, 1994. The total purchase price was $4,192,000
including liabilities assumed of $568,000.

In addition to the above described transactions with ECA, the Company had a note
receivable from ECA at January 1, 1994 aggregating $400,000 and advances of
$320,000. The Company also had an option to purchase the stock of AFC from ECA
at the greater of fair market value, to be determined by an independent
appraisal, or $300,000. The Company exercised its option January 1, 1994 and
exchanged its note receivable from and advances to ECA for the stock of AFC. The
note receivable and advances approximated the fair market value of the AFC stock
at the date of exchange. The total purchase price was $832,000 including
liabilities assumed of $112,000 consisting primarily of ordinary trade payables.
AFC operates an American Bistro restaurant, Lucile's, located in Fort Worth,
Texas. After the January 1, 1994 transactions, the Company no longer held an
interest in ECA.

The 1994 acquisitions were accounted for under purchase accounting and the
results of operations were consolidated beginning with the effective dates.
Excess of purchase price over fair value of net tangible assets acquired was
$4,113,000 at effective date of the acquisitions and is included in Goodwill in
the accompanying Consolidated Balance Sheet. Unaudited proforma results from
continuing operations as if the acquisitions had occurred at the beginning of
fiscal 1994, are as follows:


<TABLE> 
<CAPTION> 
                                                               Year Ended
                                                            September 30, 1994
                                                         -----------------------
                                                  (In thousand, except per share amounts)
   <S>                                                   <C>
   Revenues..................................                    $42,882
   Income (loss) from continuing operations..                      1,889
   Income (loss) per average common share....                        .37
</TABLE>

Bourbon Street Hospitality, originally consisting of 701 Bourbon Street, 735
Bourbon Street and 441 Bourbon Street, and American Food Classics, Inc. (AFC)
are included in BFX Hospitality Group, Inc. (Hospitality Group). During 1994,
the Company closed the 735 Bourbon Street facility. During 1996, the Company
sold the operations located at 441 Bourbon Street . The proceeds of $464,000,
consisting of cash and a note receivable of $350,000, approximated the book
value of the assets that were sold. There was no change to the carrying value of
assets that were not sold as they were transferred for use in the other Bourbon
Street Hospitality location.

                                      F-9
<PAGE>
 
Effective February 28, 1994, Contex Electronics, Inc., a wholly owned subsidiary
of the Company, sold all of the operating assets and liabilities of MoldCon,
Inc. (MoldCon) and Tri-Tec Engineering Corporation (Tri-Tec), two of its wholly
owned subsidiaries.  The sales price for the assets was $9,277,000 in cash plus
the assumption of certain liabilities by the buyer.  The net proceeds from the
disposition were used to reduce bank debt approximating $5,000,000 and for
short-term investments.  The assets sold consisted primarily of trade accounts
receivable, inventory, machinery, equipment and furniture and fixtures.
Liabilities assumed by the Buyer consisted of trade accounts payable and other
accrued liabilities in the ordinary course of business.  The assets and
liabilities related to the manufacture of molded internal and external cable
assemblies and internal wiring harnesses.  After deducting applicable selling
expenses, the Company reported a pretax gain of $1,050,000 on the sale.  Revenue
and operating profit of the businesses sold were $10,243,000 and $146,000,
respectively, during fiscal 1994.

During June 1994, the Company shutdown its Contex cable assembly plant in
Vestal, New York and sold certain inventory, customer contracts and certain
machinery and equipment to The JPM Company.  The remaining assets, primarily
trade accounts receivable, were liquidated.

By approval of the Company's Board of Directors in December 1994, in a
transaction effective January 1, 1995, the Company sold the operations of Flo
Control, Inc. (Flo Control), headquartered in Burbank, California. The purchaser
of these operations was Mr. Russell J. Sarno, President of Flo Control and a
board member of the Company. Mr. Sarno purchased virtually all of the assets of
Flo Control for $3,100,000 in cash and assumed $800,000 of Flo Control's
liabilities. As a condition of the sale, Mr. Sarno agreed to purchase Flo
Control's 95% ownership interest in the Florida Realty Joint Venture for
$150,000 in cash and assume the related non-recourse mortgage approximating
$2.3 million. In connection with these transactions, Flo Control's secondary
containment product line was sold to Mr. Pat Hopkins, an unrelated third party,
for a $500,000 note. The note bears interest at 8% per annum. Payments are due
semiannually and continue through December 31, 1999 in the amount of $50,000
plus earned interest. The note is secured by the assets sold and the personal
guaranty of an unrelated third party individual. As a result of the above
transactions, the Company recognized a loss on disposal of $2,314,000, net of
income tax benefit, during fiscal 1995. The sale of Flo Control was accounted
for as a discontinued operation. The cash proceeds from the sale were used to
reduce the company's outstanding debt with its lender. Revenues for Flo Control
were as follows (In thousands):

<TABLE> 
                   <S>                   <C>             

                   1995................  $  2,435
                   1994................    10,987
</TABLE> 

Through its commercial real estate operation, Buffton Realty Ventures, the
Company acquired an office building located in Fort Worth, Texas during August
1995.  The purchase price for the property was approximately $1,650,000.
Revenue generated from this property for fiscal 1996 approximated
$438,000.

At September 30, 1996, future minimum rentals for non-cancellable leases
associated with this building were as follows (in thousands):

<TABLE>
                   <S>                   <C>
                   1997................  $  438
                   1998................     438
                   1999................     438
                   2000................     365
                                         ------
                                         $1,679
                                         ======
</TABLE>

Effective January 1, 1996, the Company entered into an agreement to purchase the
assets of Cabo Tacobar One, Ltd., a Mexican restaurant concept with Central and
South American influences located in Houston, Texas, for $589,000 in cash,
375,000 shares of the Company's common stock (with an estimated fair market
value of $656,000), and a one year option to purchase an additional 150,000
shares of the Company's common stock at a price of $2.00 per share.
Additionally, the Company issued 76,500 shares of its common stock for
commissions incurred in connection with the acquisition which resulted in
increased acquisition costs of $153,000. Excess of purchase price over fair
value of net tangible assets acquired, recorded as Goodwill, approximates
$1,300,000 and

                                      F-10
<PAGE>
 
is being amortized on a straight line basis over 15 years. Effective January 1,
1996, the Company also entered into an agreement to purchase the assets and
assume certain liabilities of the Stockyards Hotel, located in Fort Worth,
Texas, for $500,000 in cash, 450,000 shares of the Company's common stock (with
an estimated fair market value of $788,000) and the refinancing of a $1,600,000
bank term loan.  Under this agreement, the Company has guaranteed, until March
15, 1997, a sales price of $2.05 per share for any of this stock that may be
sold.  At September 30, 1996, no liability had been incurred under the guarantee
agreement.  These acquisitions were accounted for under purchase accounting and
are included in the Company's results of operations beginning on the
acquisitions' effective date of January 1, 1996.

Unaudited proforma results from continuing operations, as if the acquisitions
had occurred at the beginning of each respective period, are as follows:


<TABLE>
<CAPTION>
                                                                                Year Ended September 30,
                                                                                ------------------------ 
                                                                                 1996          1995
                                                                                ------        ------  
  <S>                                                                           <C>           <C>
  Revenues................................................................      $25,973       $21,670
  Net income from continuing operations...................................        1,437         1,389
  Primary income per average common share.................................          .22           .22
  Fully diluted income per common share...................................          .21           .22
</TABLE> 

NOTE 3 - INVENTORIES
 
The components of inventories are as follows:

<TABLE> 
<CAPTION> 
                                                                                     September 30,
                                                                                -----------------------
                                                                                 1996             1995 
                                                                                -------         -------
                                                                                     (In thousands)
     <S>                                                                        <C>             <C> 
     Raw materials........................................................      $ 1,140         $ 1,450            
     Work in process......................................................           86             323     
     Finished goods.......................................................          170             258     
                                                                                -------         -------     
                                                                                                      
        Total inventories.................................................      $ 1,396         $ 2,031
                                                                                =======         =======
</TABLE> 
 
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
 
Major classes of property, plant and equipment consist of the following:

<TABLE> 
<CAPTION> 
                                                                                     September 30,
                                                                                -----------------------
                                                                                  1996          1995
                                                                                -------       -------
                                                                                    (In thousands)
     <S>                                                                        <C>           <C>            
     Building and improvements............................................      $ 9,290       $ 5,377
     Machinery and equipment..............................................          568           394
     Furniture and fixtures...............................................        1,724         1,233
                                                                                -------       -------
                                                                                              
                                                                                 11,582         7,004
     Less accumulated depreciation                                                            
      and amortization....................................................        2,626         2,062
                                                                                -------       -------
                                                                                  8,956         4,942
     Land.................................................................          675           525
                                                                                -------       -------
                                                                                              
        Net property, plant and equipment.................................      $ 9,631       $ 5,467
                                                                                =======       =======
</TABLE>

                                      F-11
<PAGE>
 
NOTE 5 - LONG-TERM DEBT

In January, 1996, the Company refinanced a $1,600,000 bank term loan assumed in
the acquisition of the Stockyards Hotel which is secured by a deed of trust on
the hotel property.  The note currently bears interest at the established prime
rate; however, this rate can increase, subject to certain financial ratios, to a
maximum of 1% above the prime rate.  The note is payable in 59 monthly
installments of $13,350 plus accrued interest, with the balance due on January
19, 2001.  At September 30, 1996, the balance owed on this debt was $1,493,000.

In March 1996, one of the Company's subsidiaries entered into a one year
financing agreement with a bank to replace its existing line of credit.  The
commitment consists of a $2,000,000 revolving line of credit, all of which was
available for borrowing at September 30, 1996, and is secured by the accounts
receivable and inventory of the subsidiary.  The terms of the finance agreement
provide for interest to be paid monthly at a floating rate equal to the
established prime rate.  The agreement also provides for a commitment fee of
0.25% per annum of the unused portion of the facility.

In March 1996, the Company borrowed $1,200,000 from an insurance company.  The
note is secured by a deed of trust on a commercial office building located in
Fort Worth, Texas.  The note bears interest at 7.75%, payable in 119 monthly
installments of $9,852 with a final payment of $831,000 due April 1 ,2006.  At
September 30, 1996, the balance owed on this debt was $1,187,000.

The prime rate at September 30, 1996 was 8.25%.

At September 30, 1996, future principal payments on long-term debt are due as
follows:

<TABLE>
<CAPTION>
          <S>                              <C>
          1997.................            $  187            
          1998.................               189
          1999.................               191
          2000.................               194
          2001 and thereafter..             1,919
                                           ------
                                           $2,680
                                           ======
</TABLE>

NOTE 6 - ACCRUED LIABILITIES

Accrued liabilities are comprised of the following:

<TABLE>
<CAPTION>
                                               September 30
                                             ----------------
                                              1996      1995
                                             ------    ------
                                               (In thousands)
<S>                                           <C>       <C>  
 Accrued commissions.................         $  653    $  537
 Accrued payroll.....................            232       443
 Accrued bonus.......................            270       158
 Other...............................            369       230
                                              ------    ------
                                              $1,524    $1,368
                                              ======    ======
</TABLE> 

                                      F-12
<PAGE>
 
NOTE 7 - INCOME TAXES

The provision (benefit) for income taxes includes the following:

<TABLE>
<CAPTION>
                                                   Years Ended September 30,
                                                  ---------------------------
                                                  1996       1995        1994
                                                  ----       ----        ----
                                                         (In thousands)
<S>                                               <C>       <C>          <C>
Current:
        Federal...............................    $  47     $  (72)     $    - 
        State.................................      170        100          82
Deferred federal..............................      594       (412)        641
Decrease in valuation allowance...............        -       (508)       (539)
                                                  -----     -------     -------
                                                  $ 811     $ (892)     $  184 
                                                  =====     =======     =======
</TABLE>

The income tax provision (benefit) is categorized as follows:

<TABLE>
<CAPTION>
                                                       Years Ended September 30,   
                                                       -------------------------   
                                                       1996        1995     1994   
                                                       ----        ----     ----   
                                                             (In thousands)        
     <S>                                                <C>      <C>         <C>    
     Continuing operations.........................    $ 811    $  (31)     $ 233  
     Discontinued operations.......................        -      (861)       (49) 
                                                       -----    -------     ------ 
                                                       $ 811    $ (892)     $ 184  
                                                       =====    =======     ======  
</TABLE>

Deferred tax assets and liabilities are recognized for temporary differences
between the financial reporting basis and the tax basis of the Company's assets
and liabilities. Deferred tax liabilities and assets are comprised of the
following (in thousands):

<TABLE> 
<CAPTION> 
                                                             September 30,  
                                                       ------------------------ 
                                                       1996                1995 
                                                       ----                ---- 
          <S>                                          <C>                 <C>  
          Gross deferred tax liabilities                                        
          ------------------------------                                        
          Depreciation                                 $ 396             $  357 
          Other                                            -                  - 
                                                         396                357 
          Gross deferred tax assets                                             
          -------------------------                                             
          Capital loss carryforwards                     271                271 
          Alternative minimum tax credit                                        
            carryforwards                                272                424 
          General business credit carryforwards           88                  - 
          Consolidated operating loss carryforward         -                413 
          Inventory costs                                 20                 10 
          Bad debt reserves                               12                 26 
          Other                                            -                 74 
                                                       ------            ------- 
                                                         663              1,218 
          Valuation allowance                           (271)              (271)
                                                       ------            ------- 
                                                         392                947 
                                                       ------            ------- 
          Deferred income tax (benefit) liability      $   4             $ (590)
                                                       ======            ======= 
</TABLE> 

As a result of the disposition of Flo Control (see Note 2) with its historical
losses and the improved profitability of the Company's continuing operations,
the Company reduced its valuation allowance by approximately $314,000 in 1995.

                                      F-13
<PAGE>
 
The Company has tax credits of approximately $360,000 which may be offset
against future income taxes payable. Additionally, the Company has a capital
loss carryforward of $797,000 which expires in 1997. The Company maintained its
valuation allowance associated with the capital loss carryforward since the
carryforward period is limited and its potential future use is restricted.

The Company's consolidated income tax expense (benefit) from continuing
operations differs from that amount calculated by applying the federal statutory
rate for the following reasons (in thousands):

<TABLE>
<CAPTION>
                                                            Years Ended September 30,
                                                            -------------------------
                                                            1996      1995       1994
                                                            ----      ----       ----
<S>                                                         <C>      <C>        <C>
Tax provision (benefit) at federal statutory rate......     $ 750    $ 446      $ 782
State income taxes, net of
 federal income tax benefit............................       112       66         54
Adjustments to valuation allowance for
 deferred tax assets...................................         -     (314)      (539)
Reversal of income tax accrual.........................         -     (255)         -
Other, net.............................................       (51)      26        (64)
                                                            -----     ----      -----
                                                            $ 811    $ (31)     $ 233
                                                            =====     ====      =====
</TABLE>

NOTE 8 - STOCKHOLDERS' EQUITY

STOCK OPTIONS

The Company currently maintains an Employee Incentive Stock Option Plan
(Employee Plan), which allows certain employees and officers of the Company,
other than officers serving on the Board of Directors to acquire or increase
their proprietary interest in the success of the Company and encourage such
individuals to remain in the employ of the Company. A total of 100,000 shares of
the Company's common stock can be issued under the Employee Plan. Stock options
issued are subject to certain terms and conditions. Options granted must be
exercised within ten years of the date of such grant or within five years, if an
option is granted to an employee who owns in excess of 10% of all outstanding
common stock of the Company. Generally options are not exercisable until the
employee has been continuously employed by the Company for one year. Options
terminate and become unexercisable upon the termination of the employee, unless
such termination is without cause or is due to death or total and permanent
disability. On August 2, 1995, and December 26, 1995, 80,000 and 20,000 options,
respectively, were granted to certain employees of the Company at an exercise
price of $1.50 per share which was the fair market value at date of grants. At
September 30, 1996, there were no shares available for grant; 20,000 options
were available at September 30, 1995.

In connection with the acquisition of Cabo, the Company granted 150,000 options
to purchase shares of its common stock to the seller under a nonqualified stock
option agreement. The options were granted at an exercise price of $2.00 per
share, which was the fair market value at date of grant. The option agreement
terminates on December 31, 1996.

In September 1989, the Board of Directors adopted the Buffton Corporation Equity
Participation Plan (the "1989 Plan") to afford key employees the opportunity to
purchase shares of the Company's common stock as a reward for past performance
and an incentive for future performance. Under the 1989 Plan, 500,000 shares of
the Company's stock may be issued. At February 3 and August 2, 1995, 450,000
options and 50,000 options, respectively, were granted to certain officers of
the Company at an exercise price of $1.50 per share which was the fair market
value at date of grant. The non-qualified options are fully vested and must be
exercised within five years of the date of grant. The options do not terminate
upon termination of the officer's employment and may be transferred by will or
by the laws of descent and distribution. The options may be exchanged for
options that are substantially equivalent in number, percentage of ownership and
price (as it relates to book value) in each of the Company's subsidiaries. The
Plan was approved by the shareholders of the Company at the annual meeting on
February 26, 1991. At September 30, 1996 and 1995 there were no shares available
for grant.

                                      F-14
<PAGE>
 
In August 1996, the Board of Directors adopted the Buffton Corporation Equity
Participation Plan (the "1996 Plan") to afford key employees the opportunity to
purchase shares of the Company's common stock as a reward for past performance
and an incentive for future performance. Under the 1996 Plan, 300,000 shares of
the Company's stock may be issued. In August and September, 1996, 260,000
options were granted to certain officers of the Company at an exercise price of
$1.62-$1.94 per share which was the fair market value at date of grant. The non-
qualified options are fully vested and must be exercised within five years of
the date of grant. The options do not terminate upon termination of the
officer's employment and may be transferred by will or by the laws of descent
and distribution. The options may be exchanged for options that are
substantially equivalent in number, percentage of ownership and price (as it
relates to book value) in each of the Company's subsidiaries. Additionally, in
September 1996, 40,000 options were granted under the 1996 Plan to certain
employees of the Company at an exercise price of $1.94 which was the fair market
value at date of grant. The term of the options is for six years and become
exercisable at a rate of 20% per year beginning one year after the date of
grant. The options terminate and become unexercisable upon termination of the
employee, unless such termination is without cause or is due to death or total
and permanent disability. The Plan was approved by the shareholders of the
Company at the annual meeting on February 26, 1991. At September 30, 1996 there
were no shares available for grant.

A summary of outstanding options are as follows:

<TABLE>
<CAPTION>
                                                                       Number of Shares
                                             -------------------------------------------------------------------
                                             Incentive  Other Non-     1989 Equity    1996 Equity
                                               Stock     Qualified       Partici-       Partici-
                                              Options     Options      pation Plan    pation Plan        Total
                                             ---------  ----------     -----------    -----------      ---------
<S>                                          <C>        <C>            <C>            <C>              <C>
Options outstanding
  September 30, 1994...................              -           -               -              -              -

  Issued...............................             80           -             500              -            580
                                             ---------  ----------     -----------    -----------      ---------

Options outstanding
  September 30, 1995...................             80           -             500              -            580

  Issued...............................             20         150               -            300            470
                                             ---------  ----------     -----------    -----------      ---------

Options outstanding
  September 30, 1996...................            100         150             500            300          1,050
                                             ---------  ----------     -----------    -----------      ---------

Options currently exercisable
  September 30, 1996...................             16         150             500            260            926
                                             ---------  ----------     -----------    -----------      ---------

Price range at
  September 30, 1996...................           1.50        2.00            1.50           1.62-
                                                                                             1.94
</TABLE>

PREFERRED RIGHTS

On June 23, 1988, the Company declared a dividend of one Preferred Share
Purchase Right (the Right) on each outstanding share of common stock. Under
certain conditions, each Right may be exercised to purchase one one-hundredth
share of Series A Junior Participating Preferred Stock at a purchase price of
$28.50, subject to adjustment. The Rights may only be exercised 10 days after
public announcement that a third party has acquired or obtained the right to
acquire 20% or more of the Company's common stock or has commenced a tender
offer to acquire more than 30% of the Company's common stock. On November 15,
1995, the Company amended its Rights Agreement to provide for exercise of the
Rights 10 days after public announcement that a third party has acquired or
obtained the right to acquire 15% or more of the Company's common stock or has
commenced a tender offer to acquire more than 15% of the Company's common stock.
The Rights, which do not have voting rights, expire on July 5, 1998 and may be
redeemed by the Company at a price of $.01 per Right at any time prior to their
becoming exercisable.

                                      F-15
<PAGE>
 
Once the Rights become exercisable should the Company be the surviving company
after certain transactions, each holder of a Right will thereafter have the
right, upon exercise, to receive common stock of the Company having a value of
two times the exercise price of the Right. However, Rights acquired by a person
or group acquiring 15%, as amended, or more of the Company's common stock prior
to such transaction will be null and void. Similarly, once the Rights become
exercisable, should the Company not be the surviving company after certain
transactions, each holder of a Right will thereafter have the right, upon
exercise, to receive common stock of the acquiring Company having a value equal
to two times the exercise price of the Right.

NOTE 9 - EMPLOYEE BENEFIT PLANS

The Company has established a Defined Contribution Plan ("the Plan") written in
conformity with Section 401(k) of the Internal Revenue Code covering all
employees subject to certain eligibility requirements. Under the Plan the
Company contributes a discretionary amount to a trust each year. The amounts
charged against income for the Company's contribution for the years ended
September 30, 1996, 1995 and 1994 were $71,000, $65,000, and $60,000,
respectively.

NOTE 10 - RELATED PARTY TRANSACTIONS

By approval of the Company's Board of Directors in December 1994, in a
transaction effective January 1, 1995, the Company sold the operations of Flo
Control, headquartered in Burbank, California. The purchaser of these operations
was Mr. Russell J. Sarno, President of Flo Control and a board member of the
Company. Mr. Sarno purchased virtually all of the assets of Flo Control for
$3,100,000 in cash and assumed $800,000 of Flo Control's liabilities. As a
condition of the sale, Mr. Sarno agreed to purchase Flo Control's 95% ownership
interest in the Florida Realty Joint Venture for $150,000 in cash and assume the
related non-recourse mortgage approximating $2.3 million.

NOTE 11 - BUSINESS SEGMENTS

The Company's operations are conducted primarily in the United States by two
principal business segments. Electronic Products involves the manufacture of
electronic filter surge suppressors and power distribution systems. Hospitality
Group involves the operation of food and beverage establishments and commercial
real estate. See Note 2 for information regarding the 1995 sale of Flo Control
representing the Plastic Products segment and the 1994 sale of two cable
assembly plants and the shutdown of one cable assembly plant included in the
Electronic Products segment. The following table, adjusted to reflect the
discontinuance of the Company's Plastic Products segment, sets forth certain
information regarding the Company's operations in its two segments (in
thousands):

<TABLE>
<CAPTION>
                                                                                     Nonoperating
                                                                                        Gains,
                                                                                     Interest and
                                                                                      Unallocated
                                                          Electronic    Hospitality    Corporate
                                                  Year     Products        Group        Expense       Total
                                                  ----    ----------    -----------  ------------   --------
<S>                                               <C>     <C>           <C>          <C>            <C>
Net Sales (b)..............................       1996    $   15,788    $    9,027   $     360      $ 25,175
                                                  1995        12,056         6,623         331        19,010
                                                  1994        25,056         4,979         346        30,381

Depreciation and amortization..............       1996           312           845         124         1,281
                                                  1995           293           550         118           961
                                                  1994           618           443         141         1,202

Operating profit (loss)....................       1996         3,754           149      (1,698)        2,205
                                                  1995         2,414           244      (1,385)        1,273
                                                  1994         2,179          (227)        283(c)      2,235
</TABLE>

                                      F-16
<PAGE>
 
<TABLE>
<S>                                               <C>          <C>          <C>          <C>          <C>
Capital expenditures...........................   1996           158         4,430         140         4,728
                                                  1995           274         1,873         679         2,826
                                                  1994           433            30          82           545

Identifiable assets (a)........................   1996         6,225        13,285       3,654        23,164
                                                  1995         6,731         6,362       4,131        17,224
                                                  1994         7,707         4,949       2,528        15,184
</TABLE>

(a)  Identifiable assets for 1994 excludes $9,886,000 relating to Flo Control,
     representing the Plastic Products segment, that was sold during 1995.
(b)  The Electronic Products segment had one customer that accounted for 15.2%
     of consolidated net sales in 1996. 
(c)  In 1994, operating loss was reduced by $1,050,000 representing gain on sale
     of assets and $217,000 representing settlement of litigation.

Operating profit (loss), before income taxes, for each segment is the difference
between operating revenues and operating costs and expenses attributable to the
segment, and does not include nonoperating revenues and gains, general corporate
expenses (unallocated general and administrative), interest expense or income
taxes. Intersegment transactions have been eliminated in the preceding table.
The difference between net sales for all segments and net revenue reported in
the statements of operations is comprised of miscellaneous income recorded
during the years.

Corporate operating loss (income) includes the following:

<TABLE>
<CAPTION>
                                                         Years Ended September 30,
                                                       -----------------------------
                                                       1996        1995         1994
                                                       ----        ----         ----
                                                                (In thousands)
     <S>                                               <C>       <C>         <C>
     Interest expense............................      $   235   $   124     $   316
     Other unallocated corporate expenses........        1,463     1,261         668
     Settlement of litigation....................            -         -        (217)
     Gain on sale of assets......................            -         -      (1,050)
                                                       -------   -------     --------
                                                       $ 1,698   $ 1,385     $  (283)
                                                       =======   =======     ========
</TABLE>

General corporate assets are principally fixed assets.


NOTE 12 - COMMITMENTS AND CONTINGENCIES

The Company has various leases for real property and equipment. In addition to
rental payments, certain leases provide that the Company pay taxes, insurance
and other operating expenses applicable to the leased property. Rental expense
under operating leases for the years ended September 30, 1996, 1995 and 1994 was
$795,000, $645,000, and $1,197,000, respectively.

At September 30, 1996, future minimum payments for non-cancellable operating
leases for facilities and equipment with terms in excess of one year were as
follows (in thousands):

<TABLE>
          <S>                                     <C>
          1997................................    $   476
          1998................................        408
          1999................................        408
          2000................................        305
          2001 and beyond.....................      1,284
                                                  -------
                                                  $ 2,881
                                                  =======
</TABLE>

During March 1992, the United States Environmental Protection Agency (EPA),
issued a Record of Decision (ROD) with respect to the Company's Superfund Site
in Vestal, New York. An Administrative Order for Remedial Design and Remedial
Action was issued on October 1, 1992. The ROD requires the Company to construct
a water treatment facility at the site and to pump contaminated ground water
from bedrock and overburden extraction wells for 15 to 30 years until
remediation goals were met. In December 1992, the Company's environmental
consultants

                                      F-17
<PAGE>
 
prepared and submitted a Remedial Design Work Plan (RDWP) to the EPA. The EPA
issued comments on the RDWP on October 1, 1993, and a revised RDWP was submitted
to the EPA on October 21, 1993. During February 1994, the Company received
comments from the EPA with respect to the revised RDWP and the Company's
environmental consultants submitted a response. The EPA approved the revised
RDWP in October 1994. On November 14, 1994, engineering design and related
fieldwork was begun in order to meet the specifications of the revised RDWP.

During fiscal 1996 and 1995, $238,000 and $430,000, respectively, were incurred
for work related to the engineering design. These costs were capitalized when
incurred because the remedy would prevent further environmental contamination
with respect to the contaminated ground water being pumped from the extraction
wells and improve the property compared with its condition when acquired by the
Company. Due to concerns about the correctness of the remedy provided for in the
ROD, additional fieldwork was performed and in June 1995, an RDWP Addendum was
prepared and submitted to the EPA. The Company received comments from the EPA
regarding this Addendum, and the Company's environmental consultants submitted a
response shortly thereafter.

On August 24, 1995, the Company and its legal and environmental consultants met
with officials of the EPA and agreed on additional fieldwork deemed necessary by
the EPA to support the Company's position regarding the RDWP Addendum. At this
meeting, officials of the EPA agreed the remedy needed to be modified and that
certain requirements under the existing ROD needed to be eliminated or reduced
in scope. However, the EPA has not approved any changes to the remedy and
amended the ROD.

Additional fieldwork provided for in the RDWP Addendum has been conducted at the
site and resulted in the formulation of a revised remedy. On December 19, 1995,
the Company and its legal and environmental consultants presented to the EPA the
RDWP Addendum and the recommended changes to the ROD in the form of a revised
remedy. The revised remedy was favorably received by the EPA is currently being
reviewed. The revised remedy would eliminate certain requirements of the
existing ROD and would primarily include removing and treating contaminated
soil, significantly reducing the time period for remediation. Initial estimates
of the revised remedy indicate initial costs of approximately $800,000 to
$900,000, and ongoing maintenance costs of approximately $200,000 to $250,000 in
the aggregate. The costs would be incurred over a one to two year period after
the ROD is amended with the ongoing maintenance costs being incurred over a five
year period after initial cost completion. If the EPA amends the ROD and adopts
the revised remediation treatment, the Company would, at the date of amendment,
expense the estimated future costs of implementing this alternative as well as
all prior costs incurred, approximating $668,000 through September 30, 1996,
associated with the implementation of the original ROD. On July 16, 1996, the
Company and its legal and environmental representatives met with the EPA to
review the EPA's written response to the revised remedy presented in December
1995. The EPA now estimates that a revised ROD can be issued by early 1997.

The Company is a party to various legal actions which are in the aggregate
immaterial, and due to the nature of the Company's business, it could be a party
in other legal or administrative proceedings arising in the ordinary course of
business. While occasional adverse settlements or resolutions may occur and
negatively impact earnings in the year of settlement, it is the opinion of
management that their ultimate resolution will not have a materially adverse
effect on the Company's financial position.


NOTE 13 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

SUPPLEMENTAL SCHEDULE OF CASH PAYMENTS:

<TABLE>
<CAPTION>
                                                  Years Ended September 30,
                                             -----------------------------------
                                              1996            1995          1994
                                             -----            ----          ----
     <S>                                     <C>            <C>           <C>
     Cash paid for:
          Interest.......................    $ 231          $ 249         $ 902
          Income taxes...................       44             58            20
</TABLE>

                                      F-18
<PAGE>
 
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

During the year ended September 30, 1994, the Company acquired the operating
assets and certain liabilities of the New Orleans operations of ECA effective
January 1, 1994. In connection with the acquisition, cash was paid as follows
(in thousands):

<TABLE> 
          <S>                                                              <C> 
          Estimated fair value of assets acquired (including                      
            purchased goodwill)                                            $4,192 
          Less:                                                                   
            Note receivable and equity interest exchanged                  (2,641)
            Liabilities assumed                                              (568)
            Market value of stock issued                                     (824)
                                                                           ------
       
          Cash paid                                                        $  159  
                                                                           ------
</TABLE> 

During the year ended September 30, 1994, the Company acquired all of the
outstanding capital stock of AFC effective January 1, 1994. In connection with
the acquisition, cash was paid as follows (Iin thousands):

<TABLE> 
          <S>                                                              <C> 
          Estimated fair value of assets acquired (including     
            purchased goodwill)                                            $  832 
          Less:                                                  
            Note receivable and advances exchanged                           (720)          
            Liabilities assumed                                              (112)                             
                                                                           ------

          Cash paid                                                        $    -                                             
                                                                           ------
</TABLE> 

Effective January 1, 1995, the Company disposed of the Florida Realty Joint
Venture in conjunction with the sale of Flo Control (see Note 2) and the
purchaser assumed the related $2.3 million mortgage.

During the years ended September 30, 1996 and 1995, the Company issued 90,000
and 407,356 shares, respectively, of common stock to key employees and certain
officers and directors as payment for services and bonuses. The Company
recognized $139,000 and $571,000, respectively, as compensation related to the
issuance of the shares which amount represented fair market value at date of
issuance.

During the year ended September 30, 1996, the Company acquired the operating
assets of Cabo and acquired the assets and assumed certain liabilities of the
Stockyards Hotel. In connection with the acquisitions, the cash was paid as
follows:

<TABLE> 
     <S>                                                                   <C> 
     Noncash investing and financing activities   
       Fair value of assets acquired              
          (including purchased goodwill)                                   $ 4,759    
       Liabilities assumed                                                  (1,754)
       Stock issued                                                         (1,698)
                                                                           ------- 
       Cash paid                                                             1,307 
                                                                                  
       Less:  cash acquired                                                    (95)
                                                                           ------- 
       Net cash paid for acquisitions                                      $ 1,212 
                                                                           ======= 
</TABLE> 

                                      F-19
<PAGE>
 
                                                                     SCHEDULE IX
                                                                     -----------

                              BUFFTON CORPORATION
                              -------------------

                       VALUATION AND QUALIFYING ACCOUNTS


<TABLE> 
<CAPTION> 
                                          Balance        Charged to     Charged to                 Balance   
                                        at beginning      costs and       other                     at end   
Description                              of period         expenses      accounts     Deductions  of period  
------------------------------          ------------     ----------     ----------    ----------  ---------   
                                                                   (In thousands)                            
<S>                                     <C>              <C>            <C>           <C>         <C>         
Reserve for estimated losses
on accounts receivable - trade:

September 30, 1996                      $      75          $   (25)     $    -        $     (15)  $      35

September 30, 1995                            150               84        (159)(a)            -          75

September 30, 1994 (a)                        153              240           -             (243)        150
</TABLE> 

(a)  Includes amounts associated with Flo Control (see Note 2).

                                      F-20
<PAGE>
 
                              BUFFTON CORPORATION
                              -------------------


                                 1996 FORM 10-K

                                 EXHIBIT INDEX



EXHIBITS                                                                    Page
--------                                                                    ----

   3.1    Certificate of Incorporation (Exhibit 3.1 to Form S-1 Registration
          Statement No. 2-71057 and incorporated herein by reference).

   3.2    By-laws (Exhibit 3.2 to Form S-1 Registration Statement No. 2-71057
          and incorporated herein by reference).

   3.3    Certificate of Amendment to the Certificate of Incorporation Creating
          Classified Board of Directors, eliminating a Stockholder's right to
          call a special meeting, and adopting a fair price supermajority
          provision dated February 21, 1989 (Exhibit 4.4 to Form 10-Q for the
          quarter ended March 31, 1989 and incorporated herein by reference).

   3.4    Restated by-laws of Buffton Corporation dated February 21, 1989
          (Exhibit 4.5 to Form 10-Q for the quarter ended March 31, 1989 and
          incorporated herein by reference).
    
   3.5    Restated by-laws of Buffton Corporation dated January 31, 1996.     

   4      Rights Agreement (Exhibit 1 to Form 8-K dated June 23, 1988 and
          incorporated herein by reference).

   10     Asset Purchase Agreement dated January 19, 1996 incorporated herein by
          reference to Form 8-K dated January 19, 1996.

   10.1   Agreement for Sale of Assets from Flo Control, Inc. dated as of
          January 20, 1995, by and among Buffton Corporation, a Delaware
          corporation, Flo Control, Inc., a Delaware corporation ("Seller") and
          F.C. Acquisition, Inc., a California corporation ("Buyer")
          incorporated herein by reference to Form 8-K dated January 20, 1995.
<PAGE>
 
   10.2   Agreement for sale of Florida Realty Joint Venture interests from Flo
          Control, Inc., dated January 20, 1995 by and among Buffton
          Corporation, a Delaware corporation, Flo Control, Inc. a Delaware
          corporation, ("Seller") and F.L.C. Property Acquisition, Inc., a
          California corporation ("Buyer") incorporated herein by reference to
          Form 8-K dated January 20, 1995.

   10.3   Agreement for Sale of Secondary Containment Assets from Flo Control,
          Inc., dated January 20, 1995, by and among Buffton Corporation, a
          Delaware corporation, Flo Control, Inc., a Delaware corporation
          ("Seller") and Patrick Hopkins and Flo-Safe Systems, Inc. a Wisconsin
          corporation ("Buyer") incorporated herein by reference to Form 8-K
          dated January 20, 1995.

   10.4   Second Amendment to Accounts Financing Agreement dated January 20,
          1995 by and among Congress Financial Corporation, Current Technology,
          Inc., Electro-Mech, Inc., and Flo Control, Inc. incorporated herein by
          reference to Form 8-K dated January 20, 1995.

   10.5   Second Amended and Restated Revolving Credit Note incorporated herein
          by reference to Form 8-K dated January 20, 1995.

   10.6   Rights Amendment Agreement dated November 15, 1995 incorporated herein
          by reference to Form 8-K dated November 15, 1995.

   11     Statement of Computation of Earnings Per Share

   21     Subsidiaries of the Company

   23     Consent of Independent Accountants

   27     Financial Data Schedule