<PAGE>

                                   FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549


(Mark One)
 x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
---
     ACT OF 1934
For the Quarterly Period Ended June 30, 1997
                               -------------
          OR

     TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
---
     EXCHANGE ACT OF 1934
For the Transition Period From            To           
                               ----------    ----------

Commission file number  0-20614 
                        ------- 
                    THE ROTTLUND COMPANY, INC.             
-----------------------------------------------------------
(Exact name of registrants as specified in its charter)


     MINNESOTA                                                    41-1228259
---------------------------------------                        ---------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization                                Identification No.)


2681 Long Lake Road, Roseville, MN                             55113       
---------------------------------------------------------------------------
(Address of principal executive offices)                    (Zip Code)


                             (612) 638-0500                           
----------------------------------------------------------------------
(Registrant's telephone number, including area code)


                              Not Applicable                               
-------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
 report)

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.

                                Yes   x    No     
                                     ---       ---

The number of shares outstanding of the Registrant's common stock, par value 
$.10 per share, at August 7, 1997 was 5,745,110 shares.




                                        1

<PAGE>

                   THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES

                                     INDEX



PART I.        FINANCIAL INFORMATION                                       PAGE

Item 1.        Financial Statements

               Consolidated balance sheets - June 30, 1997 
               and March 31, 1997                                            3

               Consolidated statements of operations - Three
               months ended June 30, 1997 and 1996                           4

               Consolidated statements of cash flows - Three 
               months ended June 30, 1997 and 1996                           5

               Notes to consolidated financial statements                    6

Item 2.        Management's Discussion and Analysis of Financial
               Condition and Results of Operations                           7


PART II.       OTHER INFORMATION                                            11


SIGNATURES                                                                  12



















                                       2


<PAGE>

Part I.  Financial Information
Item 1.  Financial Statements


                 THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES
                    Consolidated Balance Sheets - Unaudited
                                     As of

<TABLE>
<CAPTION>
                                                                     June 30,           March 31,
                                                                       1997                1997
                                                                ----------------    ----------------

<S>                                                             <C>                 <C>             
     ASSETS

Cash and cash equivalents                                           $  3,536,703        $  7,015,543
Escrow and other receivables                                           1,388,774           1,512,322
Land, development costs and finished lots                             49,540,350          49,236,190
Residential housing completed and under construction                  28,979,651          32,588,608
Property and equipment, net                                              620,578             710,204
Deferred financing costs and other assets                              5,768,966           5,171,226
                                                                ----------------    ----------------
                                                                     $89,835,022         $96,234,093
                                                                ----------------    ----------------
                                                                ----------------    ----------------

     LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
     Revolving credit facility                                     $  10,335,000       $  15,185,000
     Senior notes payable                                             33,162,773          33,867,893
     Notes payable                                                     4,978,631           5,083,554
     Accounts payable                                                  8,544,654           9,290,150
     Accrued liabilities                                               3,565,361           4,078,617
     Income taxes payable                                              1,976,218           1,910,139
                                                                ----------------    ----------------
           Total liabilities                                          62,562,637          69,415,353
                                                                ----------------    ----------------

Shareholders' equity:
     Preferred stock, $.10 par value,
          10,000,000 shares authorized;
          none issued                                                          -                   -
     Common stock, $.10 par value,
          40,000,000 shares authorized;
          issued and outstanding 5,683,493 
          and 5,661,065 respectively                                     140,511             137,578
     Paid-in capital                                                  11,652,618          11,655,551
     Retained earnings                                                15,479,256          15,025,611
                                                                ----------------    ----------------
          Total shareholders' equity                                  27,272,385          26,818,740
                                                                ----------------    ----------------
                                                                     $89,835,022         $96,234,093
                                                                ----------------    ----------------
                                                                ----------------    ----------------
</TABLE>


          See accompanying notes to consolidated financial statements



                                       3


<PAGE>

                  THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

<TABLE>
<CAPTION>
                                                      For the Three Months
                                                         Ended June 30,
                                                 ------------------------------
                                                    1997                 1996
                                              ----------------     ----------------
<S>                                           <C>                  <C>
Net sales                                          $42,704,063          $38,074,484 
Cost of sales                                       36,628,063           32,502,624 
                                              ----------------     ----------------
                                                     6,076,000            5,571,860 

Selling, general and
 administrative expense                              5,040,047            4,422,787 
                                              ----------------     ----------------
Operating income                                     1,035,953            1,149,073 

Other (income) expense:
  Interest expense                                     279,505              116,587 
  Other income                                         (13,197)             (54,697)
                                              ----------------     ----------------

Income before provision provision
 for income taxes                                      769,645            1,087,183 
                                              ----------------     ----------------
Provision for taxes                                    316,000              435,000 
                                              ----------------     ----------------
Net income                                            $453,645             $652,183 
                                              ----------------     ----------------
                                              ----------------     ----------------


  Net income per share                                   $0.08                $0.11 
                                              ----------------     ----------------
                                              ----------------     ----------------

  Weighted average
   shares outstanding                                5,745,110            5,755,191 
                                              ----------------     ----------------
                                              ----------------     ----------------
</TABLE>
          See accompanying notes to consolidated financial statements
















                                       4


<PAGE>

                  THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

<TABLE>
<CAPTION>
                                                                           For the Three Months
                                                                                   Ended 
                                                                                  June 30,
                                                                     ------------------------------------
                                                                           1997                1996
                                                                     ----------------    ----------------
<S>                                                                  <C>                 <C>
OPERATING ACTIVITIES:

   Net income                                                                $453,645          $  652,183

   Adjustments to reconcile net income to
   net cash provided by operating activities:
      Depreciation                                                            101,397              84,683
      Changes in operating items:
         Escrow and other receivables                                         123,548             175,021
         Land, development costs and finished
            lots                                                             (304,160)         (3,141,405)
         Residential housing completed and under
            construction                                                    3,608,957            (825,247)
         Deferred financing costs and other
            assets                                                           (597,740)            137,131
         Accounts payable                                                    (745,496)         (2,238,815)
         Accrued liabilities                                                 (513,256)           (393,645) 
         Income taxes payable                                                  66,079             (65,200)
                                                                     ----------------    ----------------
            Net cash provided by(used for)
            operating activities                                            2,192,974          (5,615,293)
                                                                     ----------------    ----------------

INVESTING ACTIVITIES:
   Purchase of property and equipment, net                                    (11,771)            (61,642)
                                                                     ----------------    ----------------

FINANCING ACTIVITIES:
   Proceeds from mortgage notes payable                                       572,529             319,649
   Repayments of mortgage notes payable                                      (677,452)         (2,041,210)
   Proceeds from revolving credit facility, net                            (4,850,000)          7,975,000
   Stock options exercised                                                          0              14,375
   Repayment of Senior Notes Payable                                         (705,120)                   
                                                                     ----------------    ----------------
    Net cash used for financing activities                                 (5,660,043)          6,267,814
                                                                     ----------------    ----------------

NET DECREASE IN CASH AND CASH EQUIVALENTS
                                                                           (3,478,840)            590,878
CASH AND CASH EQUIVALENTS:
   Beginning of period                                                      7,015,543           3,437,186
                                                                     ----------------    ----------------

   End of period                                                         $  3,536,703        $  4,028,064
                                                                     ----------------    ----------------
                                                                     ----------------    ----------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
 INFORMATION:
   Cash paid for interest, net of amounts
   capitalized                                                                279,505            $116,587
   Cash paid for income taxes                                                 250,000             500,200
                                                                     ----------------    ----------------
                                                                     ----------------    ----------------
</TABLE>


          See accompanying notes to consolidated financial statements

                                       5


<PAGE>

                  THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1.   General

The financial statements included herein have been prepared by the Company 
without audit, in accordance with generally accepted accounting principles, 
and pursuant to the rules and regulations of the Securities and Exchange 
Commission. These interim financial statements should be read in conjunction 
with the consolidated financial statements and notes in the Company's annual 
report for the year ended March 31, 1997 as filed with the Securities and 
Exchange Commission.  In the opinion of management of the Company, these 
financial statements contain all adjustments of a normal recurring nature 
necessary to present fairly the financial position, results of operations and 
cash flows of the Company for the interim periods presented.

The Company has experienced, and expects to continue to experience, 
significant variability in quarterly net sales and net income.  Operating 
results for the three months ending June 30, 1997 are not necessarily 
indicative of the results that may be expected for the year ending March 31, 
1998.

Note 2.   Note Payable to Bank

As of June 30, 1997, the Company had a line-of-credit arrangement with a bank 
totaling $18,000,000, with interest at the bank's prime rate plus .5%.  
Borrowings outstanding at June 30, 1997 were $10,335,000 under this 
arrangement. In addition, letters of credit totaling approximately $1,561,753 
were outstanding under this arrangement at June 30, 1997.


















                                       6


<PAGE>

Item 2.

                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


GENERAL

The following table sets forth certain information regarding the Company's 
operations for the periods indicated.

                             PERCENTAGE OF NET SALES

                                                  For The Three Months
                                                      Ended June 30
                                                      -------------
                                                   1997           1996
                                                 ------         ------

Net sales                                        100.0   %      100.0   %
Cost of sales                                     85.8           85.4
                                                 -------        -------
 Gross profit                                     14.2           14.6

 Selling, general and
 administrative expense                           11.8           11.6
                                                 -------        -------
Operating income                                   2.4            3.0

Other (income) expense:
 Interest                                           .6             .3
 Other                                             (.0)           (.1)
                                                 -------        -------
 Income before provision
  for income taxes                                 1.8            2.8
 Provision for income
  taxes                                             .7            1.1
                                                 -------        -------
 Net income                                        1.1   %        1.7   %
                                                 -------        -------
                                                 -------        -------

Number of homes closed                             311            310
                                                 -------        -------
                                                 -------        -------

BACKLOG

The following table sets forth the Company's backlog as of the dates indicated:

                                          Number of
                    June 30,              Homes           Sales Value
                    --------              ---------       -----------

                     1997                    380          57,400,000
                     1996                    638          90,800,000






                                       7


<PAGE>

THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED 
JUNE 30, 1996

Net sales for the three months ended June 30, 1997, increased by 12.1%, to 
$42.7 million, from $38.1 million for the comparable period of 1996.  The 
number of homes closed by the Company increased to 311 homes for the three 
months ended June 30, 1997, from 310 homes during the same period in 1996.  
The average selling price of a home increased 11.8% to $137,300, during the 
three months ended June 30, 1997 from $122,800 for the comparable period in 
1996.  This increase was due to a greater number of closings in single family 
developments where the sales price of homes is generally higher than other 
homes sold by the Company, and higher sales prices in the multi-family 
segment as the product mix changed to a greater emphasis on empty nesters 
from a product targeted towards renters.  This will vary on a quarter by 
quarter basis and does not establish a trend.

Gross profit increased by 8.9%, to $6.1 million for the three months ended 
June 30, 1997, from $5.6 million for the comparable period of 1996.  Gross 
profit as a percentage of net sales decreased to 14.2% from 14.6% primarily 
due to rising material and labor costs caused by the strength in the overall 
homebuilding industry, and continued start up costs in some of the Company's 
newer markets.

Selling, general and administrative expenses increased by 13.6% to $5.0 
million in the three months ended June 30, 1997, from $4.4 million for the 
comparable period of 1996.  This increase is due to an increase in variable 
costs related to the increase in revenue during the quarter as well as 
continued start up costs in some of the Company's newer markets.  As a 
percentage of net sales, selling, general and administrative expense 
increased to 11.8% for the three month period ended June 30, 1997, from 11.6% 
for the same period in 1996.

Interest expense increased to $280,000 for the three months ended June 30, 
1997, from $117,000 for the comparable period in 1996.  The Company 
capitalizes certain interest costs for land development and includes such 
capitalized interest in cost of home sales when the related homes are 
delivered to purchasers.  The increase was primarily due to an increase in 
short term borrowings which were used to finance the Company's increased 
level of business activity.

The Company's effective tax rate for the three month period ending June 30, 
1997 was approximately 41%, compared to 40% for the same period in 1996 which 
reflects the federal statutory rate plus state taxes, net of federal income 
tax benefit.

                                       8


<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1997, the Company had available cash and cash equivalents of 
approximately $3,537,000.

The Company's financing needs depend primarily upon sales volume, asset 
turnover, land acquisition and inventory balances.  In December 1994, the 
Company issued $25 million of 12.11% Senior Notes payable and in February 
1996, the Company issued an additional $10 million of 9.42% Senior Notes 
payable (collectively referred to as the "Senior Notes").  Proceeds were used 
to retire certain mortgage notes payable and for working capital purposes.  
Principal and interest payments of approximately $552,000 are due monthly 
beginning December 1996 through December 2004.  

At June 30, 1997, the Company also had a $18.0 million revolving credit 
facility from a commercial lender.  Borrowings under this facility's line of 
credit totaled approximately $10.3 million at June 30, 1997.  The Company has 
the capacity as of June 30, 1997 to borrow an additional $4.5 of short-term 
debt, if otherwise available, without violating the terms of the Senior 
Notes.  The issuance of the Senior Notes and the availability of the 
unsecured line of credit provide additional liquidity and flexibility to the 
Company over the next two to three years.  The Company believes that amounts 
available under its existing borrowing arrangements (assuming extensions and 
renewals of debt in the ordinary course of business) and amounts generated 
from operations will provide funds adequate for its home building activities 
and debt service including the Company's recent expansions to Iowa, Florida, 
New Jersey and Indiana.

INFLATION

The Company, as well as the homebuilding industry in general, may be 
adversely affected during periods of high inflation, primarily because of 
higher land, material and labor costs.  In addition, higher mortgage interest 
rates may significantly affect the affordability of permanent mortgage 
financing to prospective purchasers.  The Company attempts to pass through to 
its customers any increase in its costs through increased selling prices, and 
to date, inflation has not had a material adverse effect on the Company's 
results of operations.  However, there is no assurance that inflation will 
not have a material adverse impact on the Company's future results of 
operations.

                                       9


<PAGE>

PART II - OTHER INFORMATION

Items 1 through 5.  Not applicable.

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

        (a)    Exhibits.  27. Financial Data Schedule.

        (b)    Reports on Form 8-K.

               The registrant filed no reports on Form 8-K during the three
        months ended June 30, 1997.


























                                      10


<PAGE>

                                  SIGNATURES



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

                                       THE ROTTLUND COMPANY, INC.



Date:   August 7, 1997                 By: /s/ DAVID H. ROTTER
                                          -------------------------------
                                        DAVID H. ROTTER
                                        President and
                                        Chief Executive Officer



Date:   August 7, 1997                 By: /s/ LAWRENCE B. SHAPIRO
                                          -------------------------------
                                        LAWRENCE B. SHAPIRO
                                        Vice President of Finance
                                        Chief Financial Officer
                                       (Principal Financial and
                                        Accounting Officer)























                                      11