SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 AMENDMENT NO. 1
                                       ON
                                   FORM 10-K/A

         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 for the fiscal year ended June 30, 1997

Commission file number                                  0-22924

                            HILITE INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)

           Delaware                                               75-2147742
---------------------------------                            -------------------
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)
                                                            



        1671 S. Broadway
        Carrollton, Texas                                           75006
----------------------------------------                          ----------
(Address of principal executive offices)                          (Zip code)

                                 (972) 466-0475
              ----------------------------------------------------
              (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: Common Stock, $.01
                                                      par value (Title of Class)

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 [_]

Based upon the closing price on the NASDAQ  National  Market System on September
12, 1997, the aggregate market value of the voting stock held by  non-affiliates
of the registrant was $6,463,000.

As of  September  12,  1997,  the Company had  4,900,000  shares of Common Stock
outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

Registrant's  Definitive  Proxy Statement to be filed pursuant to Regulation 14A
promulgated  by the  Securities  and Exchange  Commission  under the  Securities
Exchange Act of 1934,  which  Definitive  Proxy  Statement is  anticipated to be
filed within 120 days after the end of the  registrant's  fiscal year ended June
30, 1997 is incorporated by reference in Part III hereof.

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) 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.     Yes [X] No [_]


<PAGE>

================================================================================
The purpose of this amendment is to correct a  typographical  error appearing in
the Balance Sheet on page F-2.
================================================================================



                                    PART IV


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

(a) (1) and (2)  Consolidated Financial Statements and Schedules

The consolidated  financial statements and schedules of Hilite Industries,  Inc.
are included in Part IV of this report on the pages indicated below: Page

Report of Independent Accountants                                           F-1

Consolidated Financial Statements:

Consolidated Balance Sheets at June 30, 1997 and 1996                       F-2

Consolidated Statements of Operations for the years ended
 June 30, 1997, 1996 and 1995                                               F-3

Consolidated Statements of Cash Flows for the years ended
 June 30, 1997, 1996 and 1995                                               F-4

Consolidated Statements of Stockholders' Equity for the 
 years ended June 30, 1997, 1996 and 1995                                   F-5

Notes to Consolidated Financial Statements                            F-6 - F-15

Consolidated Financial Statement Schedules:

II.      Valuation and Qualifying Accounts and Reserves
        for the years ended June 30, 1997, 1996 and 1995                   F-16


<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and
       Shareholders of Hilite Industries, Inc.

In our  opinion,  the  consolidated  financial  statements  listed  in the index
appearing under Item 14(a)(1) and (2) on page 19 present fairly, in all material
respects,  the financial position of Hilite Industries,  Inc. and its subsidiary
at June 30, 1997 and 1996,  and the results of their  operations  and their cash
flows  for each of the  three  years in the  period  ended  June  30,  1997,  in
conformity  with  generally  accepted  accounting  principles.  These  financial
statements   are  the   responsibility   of  the  Company's  m  anagement;   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.


PRICE WATERHOUSE LLP



Dallas, Texas
August  12,  1997,  except as to the last  paragraph  of Note 7,  which is as of
September 18, 1997.










                                      F-1

<PAGE>

                             HILITE INDUSTRIES, INC.
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                          As of June 30,      
                                                                   ---------------------------
                                                                       1997           1996
                                                                   ------------   ------------
                          ASSETS                                   
                                                                   ------------   ------------
<S>                                                              <C>            <C>    
Current assets:
  Cash and cash equivalents ..................................   $       --      $       --
  Accounts receivable, less allowance for doubtful accounts of
    $195,427 at June 30, 1997 and $91,100 at June 30, 1996 ...      9,991,098      11,356,477
  Tooling receivable .........................................         96,734         760,982
  Inventories ................................................     10,075,786       8,845,457
   
  Income taxes receivable ....................................           --           235,615
    
  Deferred income taxes ......................................      1,774,082         472,627
  Prepaid expenses and other current assets ..................        739,803         542,089
    Total current assets .....................................     22,677,503      22,213,247

Property, plant and equipment ................................     38,400,240      38,139,671
Less accumulated depreciation and amortization ...............    (12,077,533)    (10,349,569)
                                                                 ------------    ------------
Property, plant and equipment, net ...........................     26,322,707      27,790,102
                                                                 ------------    ------------

Assets held for disposal .....................................      2,330,800            --
Goodwill, net of accumulated amortization ....................      5,888,167       6,195,290
                                                                 ------------    ------------

TOTAL ASSETS .................................................   $ 57,219,177    $ 56,198,639
                                                                 ============    ============

           LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses ......................   $ 11,875,962    $  8,607,287
  Long-term debt - current portion ...........................      2,422,950       2,320,672
  Income taxes payable .......................................         49,883            --
                                                                 ------------    ------------
    Total current liabilities ................................     14,348,795      10,927,959
                                                                 ------------    ------------

Long-term debt ...............................................     16,486,252      17,672,368
Subordinated debt ............................................      1,785,184       1,860,184
Deferred income taxes ........................................      2,595,392       2,077,589
                                                                 ------------    ------------
    Total non-current liabilities ............................     20,866,828      21,610,141
                                                                 ------------    ------------

Commitments and Contingencies (See Note 11.)

Stockholders' equity:
  Preferred Stock, $.01 par value; 5,000 shares authorized,
    none issued and outstanding ..............................           --              --
  Common stock, $.01 par value; 15,000,000 shares authorized,
    4,900,000 isssued and outstanding at June 30, 1997 and
    1996......................................................         49,000          49,000
  Additional paid-in capital .................................      9,105,674       9,105,674
  Retained earnings ..........................................     12,848,880      14,505,865
                                                                 ------------    ------------
    Total stockholders' equity ...............................     22,003,554      23,660,539
                                                                 ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...................   $ 57,219,177    $ 56,198,639
                                                                 ============    ============
</TABLE>

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

                                       F-2

<PAGE>

                             HILITE INDUSTRIES, INC.
                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                 For the Year Ended June 30,
                                                         ----------------------------------------
                                                             1997           1996         1995
                                                         -----------    -----------   -----------
<S>                                                      <C>            <C>           <C>        
Net sales............................................    $73,492,117    $72,641,500   $44,899,515
Cost of sales ........................................    63,938,186     57,710,737    34,849,251
                                                         -----------    -----------   -----------

Gross profit .........................................     9,553,931     14,930,763    10,050,264

Selling, general and administrative expenses .........    10,339,722      7,575,953     4,286,120
                                                         -----------    -----------   -----------

Operating income (loss) ..............................      (785,791)     7,354,810     5,764,144

Interest income ......................................          --            9,390       124,873
Interest expense .....................................     1,713,763      1,668,763       254,376
                                                         -----------    -----------   -----------

Income (loss) before income taxes ....................    (2,499,554)     5,695,437     5,634,641

Income tax provision (benefit) .......................      (842,569)     2,063,580     2,016,000
                                                         -----------    -----------   -----------

Net income (loss)....................................    $(1,656,985)   $ 3,631,857   $ 3,618,641
                                                         ===========    ===========   ===========

Per share data:

Earnings (loss) per share............................    $     (0.34)   $      0.74   $      0.74
                                                         ===========    ===========   ===========


Weighted average number of shares outstanding ........     4,900,000      4,900,000     4,900,000
                                                         ===========    ===========   ===========
</TABLE>




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

                                       F-3
<PAGE>
                             HILITE INDUSTRIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                    For the Year Ended June 30,
                                                           --------------------------------------------
                                                               1997            1996             1995
                                                           ------------    ------------    ------------
<S>                                                       <C>              <C>             <C>         
Cash flows from operations:
Net income (loss)......................................   $  (1,656,985)   $  3,631,857    $  3,618,641
  Adjustments to reconcile net income (loss) to net
   cash provided by operations:
     Depreciation ......................................      3,517,792       3,005,474       1,649,518
     Goodwill amortization .............................        307,123         316,968            --
     Restructuring charge ..............................      2,738,352            --
     Increase (decrease) in net deferred income taxes ..       (783,652)        647,962         481,000
                                                           ------------    ------------    ------------
Cash provided from operations before changes in
   operating assets and liabilities ....................      4,122,630       7,602,261       5,749,159

     Changes in operating assets and liabilities
       (Increase) decrease in accounts receivable ......      1,365,379      (2,491,920)        280,734
       (Increase) decrease in tooling receivable .......        664,248        (106,215)       (385,618)
       Increase in inventories .........................     (1,370,079)       (149,820)     (1,807,335)
       (Increase) decrease in prepaid expenses and
         other current assets ..........................       (370,017)        332,406         371,154
       Increase (decrease) in accounts payable and
         accrued expenses ..............................      1,285,554         (80,014)     (1,306,850)
       Increase (decrease) in income taxes payable .....        285,498        (248,952)       (188,747)
                                                           ------------    ------------    ------------
    Total changes in operating assets and liabilities ..      1,860,583      (2,744,515)     (3,036,662)
                                                           ------------    ------------    ------------

Net cash provided by operations ........................      5,983,213       4,857,746       2,712,497
                                                           ------------    ------------    ------------

Cash flows from investing activities:
  Additions to property, plant and equipment, net ......     (4,824,375)     (5,764,817)     (8,589,351)
  Acquisition of subsidiary ............................           --        (7,789,000)           --
                                                           ------------    ------------    ------------
Net cash used in investing activities ..................     (4,824,375)    (13,553,817)     (8,589,351)
                                                           ------------    ------------    ------------

Cash flows from financing activities:
  Proceeds from acquisition financing ..................           --        15,397,000            --
  Repayment of subordinated debt .......................        (75,000)           --
  Proceeds from long-term debt .........................      1,212,258       1,841,085       2,600,000
  Repayments of long-term debt .........................     (2,296,096)     (9,662,557)       (916,000)
                                                           ------------    ------------    ------------

Net cash provided by (used in) financing activities ....     (1,158,838)      7,575,528       1,684,000
                                                           ------------    ------------    ------------

Net increase (decrease) in cash and cash equivalents ...           --        (1,120,543)     (4,192,854)
Cash and cash equivalents at beginning of period .......           --         1,120,543       5,313,397
                                                           ------------    ------------    ------------

Cash and cash equivalents at end of period.............    $       --      $       --      $  1,120,543
                                                           ============    ============    ============
</TABLE>

As part of the  acquisition of North American  Spring and Stamping Corp. on July
21,  1995,  $2,000,000  in  subordinated  notes  were  issued to the  sellers as
consideration  for the purchase price.  The issuance of the  subordinated  notes
increased the price for the acquisition. See Note 2 of Notes to the Consolidated
Financial Statements.

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

                                       F-4

<PAGE>
                             HILITE INDUSTRIES, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                      Common Stock           Additional                     Total
                                -------------------------     Paid-in       Retained    Stockholders'
                                   Shares        Amount       Capital       Earnings       Equity
                                -----------   -----------   -----------   -----------   -----------
<S>          <C> <C>              <C>              <C>        <C>           <C>          <C>       
Balance June 30, 1994 .......     4,900,000        49,000     9,105,674     7,255,367    16,410,041

Net income for the year ended
  June 30,1995 ..............          --            --            --       3,618,641     3,618,641
                                -----------   -----------   -----------   -----------   -----------

Balance June 30, 1995 .......     4,900,000        49,000     9,105,674    10,874,008    20,028,682

Net income for the year ended
  June 30,1996 ..............          --            --            --       3,631,857     3,631,857
                                -----------   -----------   -----------   -----------   -----------

Balance June 30, 1996 .......     4,900,000        49,000     9,105,674    14,505,865    23,660,539

Net loss for the year ended
  June 30,1997 ..............          --            --            --      (1,656,985)   (1,656,985)
                                -----------   -----------   -----------   -----------   -----------

Balance June 30, 1997 .......     4,900,000   $    49,000   $ 9,105,674   $12,848,880   $22,003,554
                                ===========   ===========   ===========   ===========   ===========


</TABLE>




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

                                       F-5

<PAGE>
                            HILITE INDUSTRIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.      BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        Hilite  Industries,  Inc.  ("Hilite" or the "Company") is engaged in the
        manufacture of products used primarily in the automotive  industry.  The
        Company's  products are sold primarily to  manufacturers  of automobiles
        and their suppliers,  pursuant to credit terms  customarily  extended in
        the  industry.  The Company  operates  separately  under the names Pitts
        Industries  ("Pitts"),  Surfaces,  Machine Parts  Company  ("MAPCO") and
        North American Spring and Stamping Corp.  ("NASS").  Pitts  manufactures
        electromagnetic clutches for various applications. Surfaces manufactures
        brake   proportioning   valves  for  automotive  brake  systems.   MAPCO
        manufactures   mounting   brackets,   fan  blades  and   pulleys.   NASS
        manufactures specialty springs, stamping products and assemblies.

        On July 21, 1995, the Company  acquired 100% of the  outstanding  common
        stock of  North  American  Spring  and  Stamping  Corp.  from its  three
        stockholders   ("Selling   Shareholders").   In  consideration  for  the
        transaction, the Company paid $17,397,000. The acquisition was accounted
        for  by  the  purchase   method  of  accounting  and  NASS'  assets  and
        liabilities  were  recorded  at  their  fair  value  at the  date of the
        acquisition. The Company's consolidated statements of operations include
        the results of operation of NASS subsequent to July 21, 1995.

        The Company's significant accounting policies are as follows:

        Cash and Cash  Equivalents - Cash and cash  equivalents  include cash on
        hand and short-term investments with original maturities of three months
        or less.

        Inventory - Inventories are stated at the lower of cost or market,  cost
        being determined on a first in-first out ("FIFO") basis.

        Property,  Plant and  Equipment  -  Property,  plant and  equipment  are
        carried at cost.  Depreciation  and  amortization  are  computed  on the
        straight  line basis over the  estimated  useful  lives of the assets as
        follows:

          Buildings and improvements         20 years or  remaining  useful life
          Machinery and equipment            5 to 10 years 
          Other assets                       3 years

        Repair  and  maintenance  expenditures  are  charged  to  operations  as
        incurred  and  expenditures  for  major  renewals  and  betterments  are
        capitalized.  When  units of  property  are  disposed  of,  the cost and
        related accumulated  depreciation are removed from the accounts, and the
        resulting gains or losses are included in the results of operations.

        Property,  plant and  equipment  are  reviewed for  impairment  whenever
        events or changes in  circumstances  indicate the carrying  amount of an
        asset or group of assets may not be recoverable.  The impairment  review
        includes a comparison  of future cash flows  expected to be generated by
        the asset or group of assets with their  associated  carrying  value. If
        the carrying value of the asset or group of assets exceeds expected cash
        flows (undiscounted and without interest charges), an impairment loss is
        recognized to the extent carrying amounts exceed fair value.

        The  Company  routinely  makes  expenditures  for tooling  fixtures  and
        equipment  required for  production of specific  products for customers.
        These  costs are often  reimbursed  by  customers.  To the  extent  that
        expenditures  exceed related  reimbursements,  the excess is capitalized
        and included in property,  plant and equipment  (other) and  depreciated
        over the related  production  life. Net costs expended for tooling which
        are  expected to be  reimbursed  within one year are included in prepaid
        expenses  and other  current  assets.  Net  reimbursements  in excess of
        amounts expended which are expected to be fully expended are recorded in
        accounts  payable and accrued  expenses until  expended.  


                                      F-6

<PAGE>


        Goodwill - The excess of cost over the fair value of net assets acquired
        in an  acquisition  (goodwill)  is  being  amortized  over 20 years on a
        straight-line  basis. The  recoverability of goodwill is assessed by the
        Company on an  ongoing  basis by  comparing  the  undiscounted  value of
        expected future  operating cash flows to the carrying value of goodwill.
        Accumulated  amortization  was $624,000 and $317,000 as of June 30, 1997
        and 1996, respectively.

        Revenue  Recognition  - Sales  revenue  and  related  cost of sales  are
        recognized as products are shipped.  In the ordinary course of business,
        certain  products sold by the Company are subject to  retroactive  price
        adjustments.  No material retroactive price adjustments were recorded in
        the financial  statements for the 1997,  1996 or 1995 fiscal years.  The
        Company's  management  believes that there are no sales  recorded in the
        financial   statements   for  periods  which  are  subject  to  material
        retroactive adjustment.

        Research and  Development - The Company is engaged in numerous  research
        and  development  projects.  Costs  associated  with these  projects are
        charged to operations  when incurred.  Research and  development  costs,
        which are  included  in general  and  administrative  expenses,  totaled
        $882,000,  $945,000 and $879,000 for the years ended June 30, 1997, 1996
        and 1995, respectively.  Of these expenditures,  $240,000,  $343,000 and
        $596,000,  respectively,  were  sponsored  by  customers  and  $642,000,
        $602,000 and $283,000, respectively, were sponsored by the Company.

        Income  Taxes -  Deferred  income  taxes  are  provided  for  using  the
        liability method. Under this method, deferred tax assets and liabilities
        are  recognized on the tax effect of  differences  between the financial
        statement  and tax  basis of  assets  and  liabilities  using  presently
        enacted tax rates.

        Use of  Estimates - Financial  statements  prepared in  conformity  with
        generally  accepted  accounting  principles  require  management to make
        estimates  and  assumptions   about  reported   amounts  of  assets  and
        liabilities,   disclosure  of  contingent  assets  and  liabilities  and
        reported  amounts of revenue  and  expenses.  Management  must also make
        estimates and judgments  about future  results of operations  related to
        specific elements of the business in assessing  recoverability of assets
        and recorded  values of  liabilities.  Actual  results could differ from
        these estimates.

        Stock-Based  Compensation - The Company  adopted,  on a disclosure basis
        only,  Statement of Financial  Accounting  Standards No. 123, Accounting
        for Stock-Based  Compensation,  in fiscal 1996. The Company continues to
        measure compensation costs under Accounting Principles Board Opinion No.
        25, Accounting for Stock Issued to Employees.

        Reclassifications - Certain prior year amounts have been reclassified to
        conform with the current year presentation.


2.      NASS ACQUISITION

        On July 21, 1995, the Company  acquired 100% of the  outstanding  common
        stock of  North  American  Spring  and  Stamping  Corp.  from its  three
        stockholders.  In consideration  for the  transaction,  the Company paid
        $17,397,000. The amount paid at closing included:


Cash paid to Selling Shareholders.........................  $  7,789,000
Cash used to refinance certain long-term debt of NASS.....     7,608,000
                                                            ------------
   Total cash portion of acquisition......................    15,397,000

Subordinated notes payable ("Subordinated Notes") issued 
 to the Selling Shareholders..............................     2,000,000
                                                            ------------
             Total........................................  $ 17,397,000
                                                            ============
                                      F-7

<PAGE>

        The  Subordinated  Notes bear interest at 9% and the interest is payable
        quarterly.  Interest  payments on these notes were  suspended  effective
        April 30,  1997  pending  the  outcome of the claim  against the Selling
        Shareholders  (See  footnote  11.).  During the year ended June 30, 1996
        certain  adjustments  were made to the purchase price as a result of tax
        considerations   which  lowered  the   Subordinated   Notes  balance  to
        $1,860,184. The Subordinated Notes mature on July 21, 2002 at which time
        the entire balance is due to the Selling  Shareholders.  The Company may
        elect to prepay the Subordinated Notes at any time prior to the maturity
        date at its discretion.

        The  acquisition  was accounted for by the purchase method of accounting
        and NASS' assets and  liabilities  were  recorded at their fair value at
        the date of the acquisition.  The Company's  consolidated  statements of
        operations  include the results of operations of NASS subsequent to July
        21, 1995. In connection with the acquisition, goodwill of $6,512,000 was
        recorded.

        Supplemental Proforma Results of Operations (Unaudited)

        The  following  unaudited  proforma  summary  presents the  consolidated
        results of operations as if the acquisition occurred at the beginning of
        fiscal  1995 and does not  purport to be  indicative  of what would have
        occurred had the  acquisition  actually  been made as of such date or of
        results which may occur in the future.

                                     1996                  1995
                                     ----                  ----

        Net sales.............. $ 73,744,530          $ 74,140,211
        Net income.............    3,597,833             4,113,712
        Net income per share...        0.73                   0.84

        Adjustments  made in  arriving  at the  proforma  unaudited  results  of
        operations include the difference in depreciation expense resulting from
        the change in the  carrying  value of property  and  equipment  to their
        estimated  fair values,  differences  in cost of sales for the change in
        inventory valued on the FIFO method of inventories  rather than the LIFO
        method  and  increase  in  goodwill  amortization   resulting  from  the
        transaction.


3.      RESTRUCTURING CHARGE

        As a  result  of  operating  problems  and  inefficiencies  at the  NASS
        division,  the  Company's  Board of Directors  approved a plan,  in June
        1997,   to   substantially   restructure   the  NASS   operations.   The
        restructuring plan includes the orderly  discontinuance of a significant
        number of commodity-type products currently manufactured and distributed
        by NASS.  A leased  warehouse  facility  is  scheduled  to be closed and
        certain contracts including a sales representative  arrangement has been
        terminated.  In addition,  certain  members of NASS management have been
        released.  It is  expected  that  the  orderly  discontinuance  of these
        products and  transitions  with customers will occur over an approximate
        nine-month period.

        In conjunction  with this plan, the Company recorded a charge to pre-tax
        earnings totaling approximately  $2,700,000 ($1,000,000 in cost of sales
        and $1,700,000 in selling, general and administrative costs). The charge
        is  comprised  of a reduction  (approximately  $900,000) in the net book
        value of certain assets, primarily machinery,  equipment and tooling, to
        their estimated fair value, net of estimated  selling costs,  accrual of
        certain  costs  which  the  Company  expects  to  incur  in  terminating
        contractual  obligations,  but for which no future economic benefit will
        be received  (approximately  $1,600,000) and other costs  (approximately
        $200,000).  Operating  losses,  which may  occur  during  the  phase-out
        period, have not been accrued.

                                      F-8

<PAGE>

4.      INVENTORIES

        Inventories at June 30, 1997 and 1996 consisted of the following:


                                            1997                 1996
                                            ----                 ----
        Raw materials...............    $ 3,916,344          $ 3,432,454
        Work in process.............      2,254,960            2,194,099
        Finished goods..............      3,904,482            3,218,904
                                        -----------          -----------
                                        $10,075,786          $ 8,845,457
                                        ===========          ===========


5.      PROPERTY, PLANT AND EQUIPMENT

        Property, plant and equipment at June 30, 1997 and 1996 consisted of the
        following:


                                            1997                 1996
                                            ----                 ----
        Land........................    $  1,150,000        $  1,150,000
        Building and improvements...       6,855,531           6,428,585
        Machinery and equipment.....      29,834,599          29,644,173
        Other.......................         560,110             916,913
                                        ------------        ------------
                                          38,400,240          38,139,671
        Less accumulated depreciation
         and amortization...........     (12,077,533)        (10,349,569)
                                        ------------        ------------
                                        $ 26,322,707        $ 27,790,102
                                        ============        ============

        Progress  payments  for  machinery  ordered  and not  placed in  service
        totaling  $1,635,000  and  $1,149,000  as of June  30,  1997  and  1996,
        respectively,  are included in machinery and equipment. Open commitments
        to purchase machinery and equipment at June 30, 1997 totaled $1,353,000.

        As  part  of the  restructuring  plan  at  NASS,  net  fixed  assets  of
        $2,330,800  (fixed assets of $3,476,318 and accumulated  depreciation of
        $1,146,518)  were  reclassified  on the balance sheet as assets held for
        disposal.  During  fiscal year 1997,  retirements  of fully  depreciated
        machinery  and  equipment  were  $644,310.  There  were  no  significant
        disposals during fiscal year 1996 and 1995.

        Routine  repairs and  maintenance  charged to expense  were  $1,847,735,
        $1,355,757 and  $1,334,532  for the years ended June 30, 1997,  1996 and
        1995, respectively.


                                      F-9

<PAGE>



6.      ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

        Accounts  payable  and  accrued  liabilities  at June 30,  1997 and 1996
        consisted of the following:


                                            1997          1996
                                            ----          ----
        Trade accounts payable......    $ 5,531,022   $ 5,193,615
        Restructuring accrual.......      2,082,026         --
        Accrued payroll and payroll
         related....................      1,447,151     1,196,754
        Accrued employee benefit
         plan costs.................        698,539       660,181
        Accrued health plan claims..        291,961       235,335
        Accrued occupational injury
         plan costs.................        475,000        50,640
        Other accrued expenses......      1,350,263     1,270,762
                                        -----------   -----------
        Total.......................    $11,875,962   $ 8,607,287
                                        ===========   ===========

7.      LONG-TERM DEBT

        Long-term debt at June 30, 1997 and 1996 consisted of the following:


                                            1997           1996
                                            ----           ----
        Consolidated term loans.....    $ 9,973,385    $11,905,952
        Revolving line of credit....      6,500,477      5,933,659
        Equipment acquisition
         term notes payable.........      1,768,673      1,422,762
        Real estate term note
         payable....................        666,667        730,667
                                        -----------    -----------
                                         18,909,202     19,993,040
        Less current portion........     (2,422,950)    (2,320,672)
                                        -----------    -----------
                                        $16,486,252    $17,672,368
                                        ===========    ===========

        Effective  July  21,  1995,  the  Company,   in  conjunction   with  its
        acquisition  of  NASS,  executed  an  amendment  to  its  existing  loan
        agreement ("the Agreement") with a bank to reflect new credit facilities
        totaling  $26,700,000.  The  credit  facilities,  as of June  30,  1997,
        consist of the following:

        1)      Term  loans  of  $13,700,000   original  principal  balance  and
                $9,973,385  outstanding at June 30, 1997.  Principal payments on
                the term loan of approximately  $163,000  together with interest
                are  payable  monthly.  The  maturity  date of the term loans is
                August 1, 2002.  The term loans bear  interest at a blended rate
                of 6 month and 12 month  LIBOR  plus 1 1/2%  (7.428% at June 30,
                1997).  The term loans were used for funding the  acquisition of
                NASS and for refinancing Company debt,

        2)      A revolving line of credit of $10,000,000  with interest payable
                monthly at either the bank's prime rate less 1/2% (8.00% at June
                30, 1997) or a blended rate of 6 month and 12 month LIBOR plus 1
                1/4 % (7.9375%) at June 30, 1997.  As of the balance sheet date,
                the revolving  line of credit was due to expire on July 21, 1998
                and is  reflected  as a  long-term  liability  on the  financial
                statements.  A commitment fee of 1/4%, per annum,  is charged on
                the average  unused  portion of the revolving  line of credit to
                the bank, payable quarterly. As of June 30, 1997, $6,500,477 had
                been used on the line of credit, of which $5,590,000 was used to
                complete financing on the acquisition of NASS, and $3,499,523 is
                available,

                                      F-10
<PAGE>

        (3)     An  equipment   acquisition   facility  of  $3,000,000  for  the
                financing of equipment  purchases  with term loans of $2,142,440
                original   principal   balance   used  under  the  facility  and
                $1,768,673   outstanding  and  $1,231,327  available  under  the
                facility at June 30, 1997.  Any term notes payable  issued under
                this facility bear interest,  at the Company's option, at either
                prime  rate or LIBOR  plus 1 1/2%  (7.727%  at June  30,  1997).
                Principal  payments  on the  equipment  acquisition  facility of
                approximately $35,700 together with interest are payable monthly
                and have a five year term;

        In addition to the above credit facility, the Company has a fifteen year
        real  estate  note with the same bank that  expires on November 1, 2007.
        The note,  which has an  original  principal  amount of  $960,000  and a
        $666,667  outstanding  balance at June 30,  1997,  is payable in monthly
        installments  of $5,333  plus  interest at the prime rate (8.50% at June
        30, 1997).

        All of the notes and line of credit are  collateralized  by the accounts
        receivable,  inventory,  equipment  and real estate of the Company.  The
        bank  has the  right to  accelerate  each of the  maturity  dates of the
        consolidated  term  note  and  real  estate  note to  coincide  with the
        maturity date of the revolving  line of credit.  The Agreement  contains
        certain  covenants  relating to tangible  effective net worth,  debt and
        cash flow coverage ratio.

        Principal  payments on long-term  debt,  excluding the revolving line of
        credit,  due in each of the next five fiscal  years and  thereafter  are
        $2,422,950, $2,422,950, $2,422,950, $2,348,067, $2,123,421 and $668,387,
        respectively.  Interest  payments  during the years ended June 30, 1997,
        1996 and 1995 were $1,662,215, $1,659,373 and $283,377, respectively.

        As of August 30, 1997,  the bank  increased the revolving line of credit
        to $12  million  and  extended  the  expiration  date to July 21,  1999.
        Effective   September   18,  1997  the  bank   increased  the  remaining
        availability under the agreement from $1,231,327 to $3,000,000.


8.      INCOME TAXES

        The  provision  for  federal  income  taxes for the years ended June 30,
        1997, 1996 and 1995 consisted of the following:

                                    1997               1996              1995
                                    ----               ----              ----
       Current:                 
        Federal ................ $ (205,251)        $1,274,580        $1,411,000
        State ..................    145,699            113,000           123,000
        Deferred ...............   (783,017)           676,000           482,000
                                 ----------         ----------        ----------
       Total ................... $ (842,569)        $2,063,580        $2,016,000
                                 ==========         ==========        ==========

        The  following  is a  reconciliation  between the  Company's  income tax
        expense  calculated using the statutory  federal income tax rate and the
        tax expense calculated using the effective income tax rate for the years
        ended June 30, 1997, 1996 and 1995:


                                            1997           1996          1995
                                            ----           ----          ----
        Pretax book income at 
            statutory rate..............$ (849,897)    $1,936,450    $1,916,000
        State taxes.....................    33,257        113,000       123,000
        Other...........................   (25,929)        14,130       (23,000)
                                        ----------     ----------    ----------
                                        $ (842,569)    $2,063,580    $2,016,000
                                        ==========     ==========    ==========

                                      F-11

<PAGE>

        The components of net deferred tax assets and liabilities at of June 30,
        1997 and 1996 consisted of the following:


                                               1997              1996
                                               ----              ----
        Deferred assets:
         Book accruals and reserves 
           in excess of cumulative tax
           deductions...................... $ 1,599,293     $   413,627
        Inventory capitalization...........     174,789          59,000
                                            -----------     -----------
        Total.............................. $ 1,774,082     $   472,627
                                            ===========     ===========
        Deferred liability - tax 
         depreciation in excess of book.... $ 2,595,392     $ 2,077,589
                                            ===========     ===========

Tax payments  during the years ended June 30, 1997, 1996 and 1995 were $139,000,
$1,630,000 and $1,725,000, respectively.


9.      SALES TO MAJOR CUSTOMERS

        The  Company's  five largest  customers  with their  percentages  of the
        Company's  net sales for the 1997,  1996 and 1995  fiscal  years were as
        follows:




                                                   Percentage of Net Sales
                                                   -----------------------
                Customer                            1997    1996    1995
                                                    ----    ----    ----
        Ford........................................ 30%     30%     23%     
        Chrysler....................................  7       7       1      
        Borg-Warner.................................  6       7      17
        General Motors..............................  6       9      12
        Bosch (formerly AlliedSignal)...............  6       7      10

        The Company's customers are primarily in the automotive industry and, as
        a result,  the Company is impacted  by the overall  economic  conditions
        within the industry.


10.     TRANSACTIONS WITH RELATED PARTIES

        During the year  ended June 30,  1997,  1996 and 1995 the  Company  paid
        management fees of $235,000 to Lineberger & Co., LLC, an entity owned by
        the Company's Chairman of the Board.

        In connection with the acquisition of North American Spring and Stamping
        Corp. on July 21, 1995, Lineberger & Co., LLC was paid a transaction fee
        of $150,000.


11.     CONTINGENCIES

        In May 1997 the Company  initiated a suit in the United States  District
        Court for the Northern District of Illinois  (Eastern  Division) against
        the Selling  Shareholders of NASS (now known as the specialty components
        and assemblies division).  The Company alleges, among other things, that
        the Selling Shareholders made material  misrepresentations in connection
        with the Company's  acquisition  of NASS and the Company is seeking that
        the Selling  Shareholders pay substantial  damages to the Company and/or
        that  the  transaction  be  rescinded.  The  Selling  Shareholders  have
        responded in 


                                      F-12

<PAGE>


        court by denying all claims of the Company and countersuing for recovery
        of  legal  costs.  Management  of  the  Company  intends  to  vigorously
        prosecute this action.

        In the  normal  course of  business,  the  Company is subject to certain
        claims and litigation related to on-the-job  injuries.  The Company does
        not believe that any claims will have a material  adverse  effect on the
        Company.


12.     LEASE COMMITMENTS

        The  following  is a schedule of future  minimum  lease  payments  under
        operating leases with initial lease terms in excess of one year:


                                                        Operating
                                                         Leases
                                                      -----------
        Year ending June 30,
            1998.................................     $   362,531
            1999.................................         352,593
            2000.................................         210,520
            2001.................................          83,399
            2002.................................           4,624
            Thereafter...........................              --
                                                      -----------
            Total minimum lease payments.........     $ 1,013,667
                                                      ===========

        Total  minimum  lease  payments have been reduced by $171,000 to reflect
        the  total  minimum  lease  payments  expected  to be  received  under a
        noncancelable  sublease arrangement.  Rental expense for the years ended
        June  30,  1997,  1996 and 1995 was  $500,047,  $419,231  and  $202,426,
        respectively.


13.     EMPLOYEE BENEFITS

        The Company  sponsors three defined  contribution  retirement  plans for
        Company  employees.  Employees are eligible to  participate  in the plan
        upon attaining certain age and service requirements.  Under these plans,
        eligible  employees may contribute  amounts through payroll  deductions.
        Employer contributions are made either through matching contributions of
        employee deductions or through a discretionary contribution.  During the
        years ended June 30, 1997, 1996 and 1995, a  discretionary  contribution
        was expensed of $346,000, $360,000 and $231,000, respectively.

        The Company has  noncontributory  defined benefit pension plans covering
        NASS salaried and  bargaining  unit  employees.  Pension plan assets are
        primarily  invested in marketable  equity  securities  and corporate and
        government securities. Benefits are generally based on years of service,
        age at retirement and the employee's compensation. The Company's funding
        policy is to contribute amounts equal to, or exceeding,  minimum funding
        requirements of the Employee  Retirement Income Security Act of 1974, as
        amended ("ERISA"). The projected benefit obligation, plan assets and net
        periodic  pension cost  associated  with these defined  benefit  pension
        plans  are  not  significant  to the  Company's  consolidated  financial
        statements.

        In December  1995,  the Company  froze all  benefits in the NASS defined
        benefit pension plan for salaried employees.  In June 1997, the Board of
        Directors of the Company  approved the  termination  of the plan.  Those
        participants  who are vested and  receiving  benefits  will  continue to
        receive benefit  


                                      F-13
<PAGE>

        payments  through  termination  date when all  remaining  assets will be
        distributed in accordance with the plan provisions.

        The  Company  sponsors  two  self-funded  employee  benefit  plans which
        provide comprehensive medical benefits and life and accidental death and
        dismemberment  insurance  to  Company  employees  and their  dependents.
        Eligible  employees include all employees  (excluding union employees at
        the NASS  location) who work  full-time (at least thirty hours per week)
        and have completed  either thirty or sixty days of continuous  full-time
        employment,  depending on their  classification.  During the years ended
        June  30,  1997,  1996  and  1995,  the  Company   incurred  expense  of
        $1,637,000, $1,230,000 and $1,084,000, respectively, under these plans.

        Union employees at the NASS location  receive medical benefits through a
        trust  administered by a third party. The Company paid premiums into the
        trust  during the years ended June 30, 1997 and 1996  totaling  $682,000
        and $613,000, respectively.

        Prior  to  September  1,  1995  the  Company  elected  to  use  a  Texas
        Occupational   Injury   Program  in  lieu  of  standard  Texas  workers'
        compensation  coverage as  permitted by state law.  Under this  program,
        occupational   injuries   sustained  in  the  course  and  scope  of  an
        individual's  employment  with the Company  were  handled by the Company
        through  self-insured  and insured  programs.  On September 1, 1995, the
        Company acquired Texas workers' compensation coverage which entitles all
        employees,  through premium  payments made by the Company,  to full work
        related  injury  benefits as stipulated  by state law.  Employees at the
        NASS  facilities  are  covered  under  Illinois  workers'   compensation
        coverage.


14.     STOCK BASED COMPENSATION

        During November 1993, the  stockholders of the Company  approved a stock
        option  plan and  100,000  shares  of Common  Stock  were  reserved  for
        issuance  upon  exercise  of the  options to be  granted  to  employees,
        officers  and  directors  of  the  Company   under  the  plan.   Options
        exercisable  for 57,800  shares  were  granted  at $9.00 per share,  the
        initial  public  offering  price of the common  stock.  All  options are
        exercisable at June 30, 1997,  and no options were exercised  during the
        years ending June 30, 1997, 1996 and 1995.

        Effective November 18, 1994 the Company granted ten year incentive stock
        options to four of its  officers to each  purchase  3,000  shares of the
        Company's  Common Stock, par value $0.01 per share, at an exercise price
        of $9.00, the fair market value at the date of grant. The options become
        exercisable  as to 1,000 shares on November  18,  1995,  1,000 shares on
        November 18, 1996 and 1,000 shares on November 18, 1997.

        Effective January 29, 1997, the Company granted ten year incentive stock
        options to five of its  officers  and one other  employee.  The options,
        exercisable for 30,200 shares, were granted at $5.13 per share, the fair
        market  value at the date of grant.  All options are  exercisable  as of
        June 30, 1997.  The Company  granted an additional  20,200 shares to the
        officers and employee  pending  stockholder  approval of an amendment to
        the 1993 Stock Option Plan to increase  the number of shares  authorized
        thereunder to 125,000.  These options have been  accounted for herein as
        granted and vested as of June 30, 1997 as  management  and directors own
        sufficient common stock to ensure the amendment will be adopted.

        In conjunction with the public offering, 100,000 warrants were issued to
        certain  Underwriters.  The exercise  price for these warrants is $10.80
        per share.  At June 30, 1997 all of these warrants are  outstanding  and
        exercisable.

                                      F-14
<PAGE>


        In fiscal 1996,  the Company  adopted the  disclosure-only  option under
        Statement of Financial  Accounting  Standards No. 123,  "Accounting  for
        Stock-Based  Compensation"  ("FAS  123").  If the Company  had  recorded
        compensation  expense  in  fiscal  1997 and 1996 for the  stock  options
        granted in accordance  with the  provisions of FAS 123, the proforma net
        income (loss) would have been  ($1,754,457)  and  $3,631,857 and the pro
        forma net income  (loss) per share would have been ($0.36) and $0.74 for
        the year ended June 30, 1997 and 1996, respectively.  The estimated fair
        value of the options granted during the year ended June 30, 1997,  using
        the Black-Scholes pricing model, is $147,017.

        The significant assumptions used to estimate the fair value of the stock
        options  granted in fiscal 1997  include a  risk-free  rate of return of
        6.70%,  expected option life of ten years, expected volatility of 29.48%
        and no expected dividend payments.

        A summary of stock option activity is as follows:

                            Summary of Stock Options
<TABLE>
<CAPTION>
                                   1997                    1996                    1995
                            -------------------     -------------------     -------------------
                            Number      Average     Number      Average     Number      Average     
                            of          Exercise    of          Exercise    of          Exercise
                            Shares      Price       Shares      Price       Shares      Price
                            ------      -------     ------      -------     ------      -------
<S>                         <C>         <C>         <C>         <C>         <C>         <C>    
Options outstanding at
   beginning of year        69,800      $  9.00     69,800      $  9.00     57,800      $  9.00
Options granted             50,400      $  5.13        --       $   --      12,000      $  9.00
Options exercised              --       $    --        --       $   --          --      $    --
Options canceled               --       $    --        --       $   --          --      $    --
                            ------      -------     ------      -------     ------      -------
Options outstanding at
  end of year              120,200      $  7.38     69,800      $  9.00     69,800      $  9.00
                           =======      =======     ======      =======     ======      =======

Options exercisable at
   end of year             116,200      $  7.32     53,396      $  9.00     40,998      $  9.00
                           =======      =======     ======      =======     ======      =======
</TABLE>


        The following  information is presented for stock options outstanding at
        June 30, 1997.



                Outstanding                              Exercisable     
        --------------------------------            ----------------------
                    Average     Average                          Average
                    Life        Exercise                         Exercise
        Shares      (in years)  Price                Shares      Price
        --------------------------------            ----------------------
        69,800         7        $  9.00              65,800      $  9.00
        50,400        10        $  5.13              50,400      $  5.13
       -------                  -------             -------      -------
       120,200                                      116,200
       =======                                      =======



                                      F-15

<PAGE>

                                                                     SCHEDULE II

                            HILITE INDUSTRIES, INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                    Years ended June 30, 1997, 1996 and 1995



<TABLE>
<CAPTION>
                                                            Additions
                                                   ------------------------
                                                                Charged to   
                                       Balance     Charged to      other     Increases/      Balance
                                    at beginning   costs and     accounts    (Deductions)    at end
          Description                of period     expenses      describe     describe       of period
          -----------                ---------     --------      --------     --------       ---------
<S>                 <C> <C>          <C>            <C>           <C>         <C>            <C>      
                                                                                    
Allowance for doubtful accounts:                                                 
    Year ended June 30, 1995         $  70,000      $    --       $     --    $    --        $  70,000
                                     =========      =========     =========   ========       =========
                                                   
    Year ended June 30, 1996         $  70,000      $    --       $     --    $ 21,100  (1)  $  91,100
                                     =========      =========     =========   ========       =========
                                                   
    Year ended June 30, 1997         $  91,100      $ 104,327 (2) $     --    $    --        $ 195,427
                                     =========      =========     =========   ========       =========
</TABLE>



(1)     Amount  represents  reserve on receivables for North American Spring and
        Stamping Corp., acquired on July 21, 1995.

(2)     Amount  represents  specific  reserves for primarily pricing disputes at
        the specialty components and assemblies division.


                                      F-16


<PAGE>





                                   SIGNATURES

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

                                        HILITE INDUSTRIES, INC.
                                                (Registrant)


October 16, 1997                           /s/   Roy Wiegmann
                                        ----------------------------
                                        Roy Wiegmann
                                        Chief Financial Officer