Securities and Exchange Commission
                            Washington, D.C. 20549

                                 FORM 10-KSB/A
(MARK ONE)

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 or 15(D)
      OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
      YEAR ENDED DECEMBER 31, 1997

                                      or

[ ]   Transition  Report  Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 For the Transition Period From _____ to _____

                        Commission file number 33-82468

                                AIM GROUP, INC.
 -----------------------------------------------------------------------------
             (Exact name of small business issuer in its charter)

                 Delaware                               13-3773537
       ---------------------------------            -------------------
       (State or other jurisdiction of               I.R.S. Employer
       incorporation or organization)               Identification No.)

         2001 W. Sample Road, Suite 300
         Pompano Beach, Florida                             33064
       ---------------------------------            -------------------
        (Address of principal executive offices)        (Zip Code)

Registrant's telephone number, including area code (954)972-9339
                                                   -------------

      The  undersigned  registrant  hereby  amends the  following  item of its
Annual Report on Form 10-KSB for the year ended  December 31, 1997, as
set forth in the pages attached hereto:

      Part I - Item 7   -     Financial   Statements  -  name  and   conformed
                              signature of independent auditor on page F-1

      Signatures        -     Signature page with conformed signatures

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

                                        AIM GROUP, INC.

                                        By: /s/ PAUL R. ARENA
                                        ---------------------
                                        Paul R. Arena
                                        Chairman of the Board, Chief Executive
                                        Officer and President

Date: April 30, 1998


<PAGE>
 Amendment No. 1 to AIM Group, Inc. Annual Report
 on Form 10-KSB for the year ended December 31, 1997
 ---------------------------------------------------

      The Annual Report on Form 10-KSB of AIM Group,  Inc. (the "Company") for
the year ended  December 31, 1997, as filed with the  Securities  and Exchange
Commission  on March 31,  1998,  inadvertently  did not  include  the name and
conformed  signature  of  the  independent  auditor  of  the  Company  in  the
Independent  Auditor's  Report set forth as page F-1 of the audited  financial
statements filed pursuant to Item 7 of Part II of the Form 10-KSB and attached
thereto.  Furthermore,  the Form  10-KSB  inadvertently  did not  include  the
signature page with conformed  signatures  required by the form.  Accordingly,
set forth below is the amended  Item 7 of the Form 10-KSB and set forth on the
attached  pages  are the  related  financial  statements  and the Form  10-KSB
signature page.


PART II

Item 7.     FINANCIAL STATEMENTS

The financial statements of the Company and the Report of Independent Auditors
thereon are set forth elsewhere in this report.


<PAGE>

                           FINANCIAL STATEMENTS AND
                         INDEPENDENT AUDITORS' REPORT

                       AIM GROUP, INC. AND SUBSIDIARIES

                          December 31, 1997 and 1996


<PAGE>

INDEPENDENT AUDITOR'S REPORT


Board of Directors
AIM Group, Inc.


We have audited the  accompanying  consolidated  balance  sheets of AIM Group,
Inc. as of December 31, 1997 and 1996 and the related consolidated  statements
of  operations,  stockholders'  equity  and cash  flows  for the  years  ended
December  31,  1997,  1996  and  1995.  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 audit.

We  conducted  our  audits in  accordance  with  generally  accepted  auditing
standards.  Those  standards  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.  An audit
also  includes  assessing  the  accounting  principles  used  and  significant
estimates  made by  management,  as well as evaluating  the overall  financial
statement  presentation.  We believe our audits provide a reasonable basis for
our opinion.

In our  opinion,  the  consolidated  financial  statements  referred  to above
present fairly, in all material respects, the financial position of AIM Group,
Inc. as of December  31, 1997 and 1996 and the results of its  operations  and
its cash  flows  for the  years  ended  December  31,  1997,  1996 and 1995 in
conformity with generally accepted accounting principles.

The accompanying  financial statements have been prepared assuming the Company
will  continue  as a  going  concern.  As  discussed  in  Notes A and B to the
financial  statements,   the  Company  has  incurred  continuing  losses  from
operations,  has  insufficient  cash flow  from  operations,  has  substantial
non-earning  assets and is dependent on very few customers.  These items raise
substantial   doubt  about  its  ability  to  continue  as  a  going  concern.
Management's  plans  regarding those matters are also discussed in Notes A and
B. The financial  statements do not include any adjustments  that might result
from the outcome of these uncertainties.

                                                 /s/ M. A. CABERA & COMPANY PA
                                                 -----------------------------
                                                 M.A. Cabera & Company PA

Plantation, Florida
March 13, 1998


                                     F-1

<PAGE>

                          AIM Group and Subsidiaries

                          CONSOLIDATED BALANCE SHEETS

                         "December 31, 1997 and 1996"

<TABLE>
<CAPTION>
                                                                          1997           1996
                                                                       -----------    -----------
CURRENT ASSETS
<S>                                                                    <C>            <C>
  Cash                                                                 $    9,898     $   70,342
  Accounts receivable - trade                                             368,832        504,864
  Accounts receivable - affiliate and other                                     -            564
  Inventories                                                             202,155        160,770
  Prepaid expenses                                                          6,967         18,529
                                                                       -----------    -----------
      Total current assets                                                587,852        755,069

RESOURCE PROPERTY                                                       4,000,373      3,995,373

PROPERTY, PLANT AND EQUIPMENT - Net                                       572,711        557,059

OTHER ASSETS                                                               40,511         46,836
                                                                       -----------    -----------
                                                                       $5,201,447     $5,354,337
                                                                       ===========    ===========

                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                                     $  630,692     $  281,454
  Receivable financing liability                                          277,441        324,293
  Current portion of long-term debt                                        80,954         14,960
  Accrued expenses                                                         46,062         96,111
                                                                       -----------    -----------
         Total current liabilities                                      1,035,149        716,818

LONG-TERM DEBT, less current portion                                       93,091         76,073

CONVERTIBLE NOTES PAYABLE                                               1,050,000      1,050,000

COMMITMENTS                                                                     -              -

STOCKHOLDERS' EQUITY
  Preferred stock; 1,000,000 shares authorized; $1 par value;
   no shares issued or outstanding.                                             -              -
  Common stock; 12,000,000 shares authorized; $.01 par value;
   3,980,053 shares issued and 3,971,107 outstanding in 1997
   and 3,978,766 in 1996.                                                  39,801         39,801
  Additional paid in capital                                            4,222,809      4,222,809
  Common stock held in treasury -  8,946 shares in 1997 and
   1,287 shares in 1996                                                    (6,876)        (1,400)
  Accumulated deficit                                                  (1,232,527)      (749,764)
                                                                       -----------    -----------
                                                                        3,023,207      3,511,446
                                                                       -----------    -----------
                                                                       $5,201,447     $5,354,337
                                                                       ===========    ===========
</TABLE>

The accompanying notes are an integral part of these statements.


                                      F-2
<PAGE>

                          AIM Group and Subsidiaries

                     CONSOLIDATED STATEMENTS OF OPERATIONS

            "For the years ended December 31, 1997 , 1996 and 1995"

<TABLE>
<CAPTION>
                                                           1997           1996            1995
                                                       -----------     -----------     -----------
<S>                                                    <C>             <C>             <C>
SALES                                                  $2,316,472      $3,092,278      $2,399,493

COST OF GOODS SOLD                                      1,795,780       2,148,191       1,692,943
                                                       -----------     -----------     -----------
       GROSS PROFIT                                       520,692         944,087         706,550

EXPENSES
  General and administrative                              575,973         791,826         673,105
  Selling and marketing                                   157,781         270,612         132,532
  Write-off of investment - abandoned project                   -          93,396               -
  Interest                                                189,872         131,429         162,505
  Depreciation and amortization                            79,829          72,487          47,249
                                                       -----------     -----------     -----------
                                                        1,003,455       1,359,750       1,015,391
                                                       -----------     -----------     -----------
      Loss before income taxes                           (482,763)       (415,663)       (308,841)

Income taxes                                                     -              -                -
                                                       -----------     -----------     -----------
      NET LOSS                                         $ (482,763)     $ (415,663)     $ (308,841)
                                                       ===========     ===========     ===========


Net loss per share                                     $    (0.12)     $    (0.10)     $    (0.08)
                                                       ===========     ===========     ===========

Weighted average shares outstanding                     3,958,243       3,960,158       3,672,894
                                                       ===========     ===========     ===========
</TABLE>

The accompanying notes are an integral part of these statements.


                                      F-3

<PAGE>

                          AIM Group and Subsidiaries

                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

            "For the years ended December 31, 1997 , 1996 and 1995"

<TABLE>
<CAPTION>
                                                                          Additional
                                                             Common        Paid-in        Treasury     Accumulated
                                              Shares         Stock         Capital         Stock         Deficit         Total
                                           ------------   ------------   ------------   ------------   ------------   ------------
<S>                                        <C>            <C>            <C>            <C>            <C>            <C>
Balances - December 31, 1994                     1,000    $        10    $        90    $         -    $   (25,260)   $   (25,160)

Issuance of 3,898,929 shares of
common stock upon merger and
cancellation of original shares issued          (1,000)           (10)           (90)                                        (100)
                                             3,898,929         38,989      4,022,185        (11,575)             -      4,049,599

Issuance of stock during December
1995 relating to the exercise of options
and warrants                                   214,536          2,146        128,073              -              -        130,219

Net loss for the year                                -              -              -              -       (308,841)      (308,841)
                                           ------------   ------------   ------------   ------------   ------------   ------------
Balances - December 31, 1995                 4,113,465         41,135      4,150,258        (11,575)      (334,101)     3,845,717

Issuance of 80,000 shares                       80,000            800         81,992              -             -          82,792

Purchase of 1,287 shares for treasury                -              -              -         (1,400)             -         (1,400)

Cancellation of 213,412 shares of
  treasury stock                              (213,412)        (2,134)        (9,441)        11,575              -              -

Net loss for the year                                -              -              -              -       (415,663)      (415,663)
                                           ------------   ------------   ------------   ------------   ------------   ------------
Balances - December 31, 1996                 3,980,053         39,801      4,222,809         (1,400)      (749,764)     3,511,446

Purchase of 79,088 shares for treasury               -              -              -        (30,476)             -        (30,476)

Sale of 71,429 shares held in treasury               -              -              -         25,000              -         25,000

Net loss for the year                                -              -              -              -       (482,763)      (482,763)
                                           ------------   ------------   ------------   ------------   ------------   ------------
Balances - December 31, 1997                 3,980,053    $    39,801    $ 4,222,809    $   (6,876)    $(1,232,527)   $ 3,023,207
                                           ============   ============   ============   ============   ============   ============
</TABLE>


The accompanying notes are an integral part of these statements.


                                      F-4

<PAGE>

                          AIM Group and Subsidiaries

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

            "For the years ended December 31, 1997 , 1996 and 1995"


<TABLE>
<CAPTION>
                                                                  1997            1996            1995
                                                               -----------     -----------     -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                            <C>             <C>             <C>
  NET LOSS                                                     $ (482,763)     $ (415,663)     $ (308,841)
  Adjustments to reconcile net loss to net cash
   provided (used) by operating activities:
    Depreciation and amortization                                  79,829          72,487          47,249
    Changes in current assets and liabilities:
      Decrease (Increase) in accounts receivable                  136,596         195,789        (341,714)
      (Increase) in inventories                                   (41,385)         (7,741)        (79,007)
      Increase (decrease) in receivable financing liability       (46,852)       (150,922)        475,215
      Increase in short term loan                                  96,152               -               -
      Increase (decrease) in accounts payable
       and accruals                                               299,189         (86,891)         90,693
      Other                                                         7,171           9,140         (22,892)
                                                               -----------     -----------     -----------
      Net cash provided (used) by operations                       47,937        (383,801)       (139,297)
                                                               -----------     -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment                      (95,481)       (129,130)       (148,751)
  (Increases) decreases in other assets                             6,325          21,392         (22,564)
  Additions to resource property                                   (5,000)         (3,599)        (15,522)
                                                               -----------     -----------     -----------
    Net cash (used) by investing activities                       (94,156)       (111,337)       (186,837)
                                                               -----------     -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from sale of stock                                           -               -         141,894
  Stock subscription received                                           -               -          82,792
  Proceeds from convertible note                                        -         300,000         750,000
  Cash balances of merged entities                                      -               -          92,759
  Receivables from affiliates eliminated upon merger                    -               -        (241,583)
  Reductions of notes payable                                           -               -        (325,000)
  Long-term debt financing                                              -          21,070          84,433
  Repayment of long-term debt                                      (8,749)        (14,470)              -
  Purchase of stock for treasury - net                             (5,476)         (1,400)              -
  Loans received - net                                                  -               -               -
  Advances to affiliated company, net of repayments                     -               -               -
                                                               -----------     -----------     -----------
    Net cash provided (used)  by financing activities             (14,225)        305,200         585,295
                                                               -----------     -----------     -----------

    NET INCREASE (DECREASE) IN CASH                               (60,444)       (189,938)        259,161

Cash, beginning of period                                          70,342         260,280           1,119
                                                               -----------     -----------     -----------
Cash, end of period                                            $    9,898      $   70,342      $  260,280
                                                               ===========     ===========     ===========
</TABLE>


                                      F-5

<PAGE>

                          AIM Group and Subsidiaries

               CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

            "For the years ended December 31, 1997 , 1996 and 1995"


<TABLE>
<CAPTION>
                                                                         1997           1996           1995
                                                                      -----------    -----------    -----------
SUPPLEMENTAL DISCLOSURE OF CASH
  FLOW INFORMATION:
<S>                                                                   <C>            <C>            <C>
  Interest paid                                                       $  172,968     $  129,395        167,851
                                                                      ===========    ===========    ===========

Net cash effects of merger as of March 31, 1995:
  Increases in assets and liabilities
    Trade accounts receivable                                                                       $  129,723
    Inventories                                                                                         74,022
    Prepaid expenses                                                                                    19,417
    Property, plant and equipment                                                                      398,914
    Resource property                                                                                3,979,345
    Other assets                                                                                        45,666
    Accounts payable                                                                                  (368,500)
    Accrued expenses                                                                                   (77,500)
    Other                                                                                               (2,764)
                                                                                                    -----------
                                                                                                     4,198,323

Add cash balances of merged companies                                                                   92,759
Less receivables from merged entities - eliminated in merger                                          (241,583)
                                                                                                    -----------

                                                                                                    $4,049,499
                                                                                                    ===========

Value attributed to common stock upon merger                                                        $4,046,074
Less cost of treasury stock - assumed in merger                                                        (11,575)
                                                                                                    -----------
                                                                                                    $4,034,499
                                                                                                    ===========
</TABLE>

The accompanying notes are an integral part of these statements.


                                      F-6

<PAGE>

                       AIM Group, Inc. and Subsidiaries

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       December 31, 1997, 1996 and 1995


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      BASIS OF PRESENTATION

      The  financial  statements  are  presented  assuming  the  Company  will
      continue as a going concern which contemplates the realization of assets
      and  satisfaction  of liabilities in the normal course of business.  The
      Company  has  incurred  losses  since  its  inception  and  there  is no
      guarantee  that the Company will generate  sufficient  revenues from its
      proposed  products and  operations  to generate a profit.  The financial
      statements do not include any adjustments that might be necessary if the
      Company is unable to continue as a going concern. Also see Note B.

      The financial  statements  are reported in (U.S.  Dollars) in accordance
      with generally accepted accounting  principles under the jurisdiction of
      the United  States and there are no material  differences  with Canadian
      generally accepted accounting principles.

      PRINCIPLES OF CONSOLIDATION

      The  consolidated  financial  statements  contain  the  accounts  of the
      Company and its  subsidiaries,  HeatShield  Technologies,  Inc. ("HTI"),
      United Minerals Corp. of Arkansas ("UMC(AR)"),  United Minerals Corp. of
      Arizona   ("UMC(AZ)"),   and  HST  Capital  Corporation   ("HST").   All
      subsidiaries are wholly-owned. All significant intercompany transactions
      and balances have been eliminated in consolidation.

      CASH AND CASH EQUIVALENTS

      For purposes of the statement of cash flows,  the Company  considers all
      highly liquid debt  instruments  purchased with an original  maturity of
      three months or less to be cash and/or cash equivalents.

      INVENTORIES

      Inventories  are  stated  at the  lower  of  cost  or  market.  Cost  is
      determined using the first-in, first-out method. Inventories at December
      31, 1997 and 1996 consist of:

<TABLE>
<CAPTION>
                                           1997               1996
                                           ----               ----
<S>                                     <C>                <C>     
      Finished Goods                    $   -              $ 28,513
      Raw materials                      141,926             76,421
      Klannerite(R) Ore                   48,645             48,645
      Spare parts and supplies            11,584              7,191
                                        --------           --------
                                        $202,155           $160,770
                                        ========           ========
</TABLE>


                                     F-7

<PAGE>

                        AIM Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 1997, 1996 and 1995


NOTE A - CONTINUED

      PROPERTY AND EQUIPMENT

      Property  and  equipment  are recorded at cost for  financial  reporting
      purposes and are  depreciated  utilizing the  straight-line  method over
      their estimated  economic lives.  Significant  additions and betterments
      are  capitalized.   Expenditures  for  maintenance,  repairs  and  minor
      renewals are charged to operations as incurred.  The lives  utilized for
      depreciation are summarized as follows:

<TABLE>
<CAPTION>
                                                         Years
<S>                                                      <C>
            Building                                      39
            Plant equipment                               10
            Engineering and start up                       5
            Laboratory equipment                           7
            Furniture and office equipment               5-7
</TABLE>

      TRADEMARKS AND PATENTS

      The Company has received the trademark registration for the product name
      Klannerite(R)  in 1993.  The  Company was granted a patent on the Photon
      Diffusive  Coating  November 6, 1996.  Trademarks  and  patents  will be
      amortized over 10 years. The Company's  trademarks are: AIM GroupR,  the
      Corporate   entity   Uni-KoteR,   the  UMC(AR)   marketing   label;  and
      Klannerite(R), the rock from UMC (AZ)'s Viva Luz Mine.

      DEFERRED START-UP

      Deferred  start-up  costs  associated  with  the  surface   modification
      business in Arkansas are being amortized over sixty months.

      EARNINGS (LOSS) PER SHARE

      Earnings  (loss)  per  share are based on the  weighted  average  shares
      outstanding  during the year.  The  preferred  stock,  stock options and
      warrants have not been factored into the  computation  of loss per share
      because their effect is anti-dilutive.

      MAJOR CUSTOMERS

      The  Company  sold  products  from its  surface  modifications  facility
      representing  more than 10% of its revenues for the years ended December
      31,  1997 and 1996,  to a single  customer  in the amount of 67% and 83%
      respectively.  In  addition,  the sales to the three  largest  customers
      accounted for 92% of total sales in 1997.


                                     F-8

<PAGE>

                       AIM Group, Inc. and Subsidiaries

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       December 31, 1997, 1996 and 1995


NOTE A - CONTINUED

      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 disclosure of contingent  assets and  liabilities at the date of the
      financial  statements and the reported  amounts of revenues and expenses
      during the reporting period.

NOTE B - GOING CONCERN

As shown in the accompanying  financial statements,  the Company has recurring
losses from  operations.  In addition,  the Company has not been successful in
the  development  of its resource  property.  Due to the lack of cash flow the
Company was unable to continue to invest in and exploit the property and there
is uncertainty in the potential market for the deposit.  There is no assurance
that  the  resource  property  will be  fully  recoverable  at  these  levels.
Management believes that alternative  applications have been identified and it
is the recommendation of the Board of Directors that further  investigation of
these alternatives is warranted.  Although the Company's surface  modification
business in Arkansas has been profitable, it is reliant on very few customers.
Unless the Company is  successful in  diversifying  and expanding its customer
base, the prospects for this line of business remains uncertain. These factors
raise  substantial  doubt about the  Company's  ability to continue as a going
concern.

Management is seeking alternative sources of equity financing that would allow
the marketing and diversification effort for the surface modification business
as well as the  continued  research  and  development  effort for the resource
property. There can be no assurance that the Company will be successful in its
efforts to obtain  additional  financing.  If the Company is not successful in
its efforts,  it may be necessary  to undertake  such other  actions as may be
appropriate to preserve asset value.  The financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.

NOTE C - OPERATIONS/NATURE OF BUSINESS

AIM Group is the parent company that provides centralized management, finance,
long range planning,  accounting and administration to two principal operating
entities.  These operations are a surface  modification  facility and a mining
lease.  The Company has  discontinued  manufacture of the coatings and did not
actively market these coatings during 1997.

AIM Group  shares  are listed on the  Vancouver  Stock  Exchange  and Over the
Counter - Bulletin  Board  (OTC-BB).  The Company's  common stock is currently
quoted under the symbols AGDU.V and AIMG, respectively.


                                     F-9

<PAGE>

                       AIM Group, Inc. and Subsidiaries

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       December 31, 1997, 1996 and 1995


NOTE C - CONTINUED

      UNITED MINERALS ARKANSAS (UMC(AR)) SURFACE MODIFICATION PLANT

      UMC(AR) is the Company's  core business and has completed its third full
      year of  operations  as of  December  31,  1997.  It  operates a surface
      modification  facility,  both as principal and as a toll processor,  for
      industrial   minerals  used  as  fillers  in  the  rubber  and  plastics
      industries.   The  plant  commenced  operations  in  April  1994.  Since
      inception  UMC(AR)  has  carried  out  leasehold  improvements  and  the
      engineering,  procurement,  and construction of machinery and equipment.
      UMC(AR) purchased the land and building in 1995.

      The UMC(AR)  Malvern  facility  has been  designed  to treat  industrial
      fillers such as silica,  clay, mica, alumina  trihydrate,  wollastonite,
      magnesium hydroxide and microspheres with silanes.  The treated products
      are  used  in  the  plastics  and  elastomer   industries.   Silanes  or
      "organosilicon  chemicals" were  recognized as superior  coupling agents
      approximately 40 years ago.

      Typical  customers  of  UMC(AR)  are  compounders  in the  plastics  and
      elastomer  industries  seeking to improve the  physical  mechanical  and
      electrical properties and the performance of their products. Through the
      application of small quantities of organosilicon chemicals, UMC(AR) can,
      through   surface   modification,   appreciably   improve  the  physical
      characteristics   of  the  filler  resin  composites.   Improvements  in
      composite  properties  that are desired by customers  are: (i) lower oil
      absorption, (ii) less moisture ingress or accumulation,  (iii) increased
      tensile  strength,   and  (iv)  better  mixing   viscosity.   Composites
      containing  surface  modified  fillers  are  used  in  the  electronics,
      communications,  transportation,  construction materials,  and appliance
      industries.

      The use of surface  modified  fillers may require that customers  change
      their formula or production  method in order to achieve  maximum benefit
      from the modified filler  materials.  As such,  there may be a prolonged
      interval of business  development  during which the customer  undertakes
      testing and evaluation  prior to a change in materials  source.  UMC(AR)
      has  successfully  supplied  samples to a number of customers and sample
      evaluation is ongoing.  Additionally,  UMC(AR) has successfully  carried
      out surface treatment of test quantities of opacifying materials.

      UMC(AR) operated one shift per day during 1997 and treated approximately
      1,900 tons of  commercial  products  at the  Malvern  plant.  Management
      estimates  that the  plant's  capacity is  approximately  7,000 tons per
      year.  The plant  currently  has two mixing  and  packaging  lines,  and
      effective  doubling of capacity  providing  for  treatment  of a diverse
      product  mix,  is under  consideration.  Approximately  seven  full time
      employees currently work at the plant.


                                     F-10

<PAGE>

                       AIM Group, Inc. and Subsidiaries

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       December 31, 1997, 1996 and 1995


NOTE C - CONTINUED

      HEATSHIELD TECHNOLOGIES, INC. (HTI)

      HTI is in the development stage with a limited history of operations.

      HTI carried our reserve  analysis,  surface mining,  and processing of a
      silica/kaolinite  rock,  called  "Klannerite(R)",  at a mining  property
      locally  referred  to as the "Viva Luz Mine"  located in Mohave  County,
      Arizona.

      UNITED MINERALS CORPORATION ARIZONA - VIVA LUZ MINE

      UMC(AZ),  a wholly owned subsidiary,  holds a mining lease (Lease) which
      expires March, 2004 with New Mexico and Arizona Land Company,  the owner
      of the  mining  rights.  The  Lease  is  subject  to a  further  term in
      perpetuity  provided  the  property is in  operation  and is  generating
      minimum royalties.

      The Lease  permits the  exploration  of the  property and removal of the
      mineral  over the  remaining  term.  The Lease  calls for the payment of
      production  royalty of 5% of the gross  consideration  obtained  for the
      mineral less transportation costs, subject to minimum royalty payment of
      $5,000 per year.

      The  Company has  achieved  its  objective  of  identifying  alternative
      applications  for  "Klannerite(R)".  Written,  qualified and independent
      reports  have been  generated  under  acceptable  American  Society  for
      Testing and  Materials  ("ASTM")  standards  and verified  that calcined
      "Klannerite(R)"  is an excellent white pozzolan.  Pozzolan materials are
      used as an  aggregate  additive  in  concrete  to  increase  compressive
      strength in concrete and to stop alkali reactivity.  Further testing and
      marketing of pozzolan applications will be performed this year.

      To date there have been no commercial sales to these markets.


                                     F-11

<PAGE>

                       AIM Group, Inc. and Subsidiaries

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       December 31, 1997, 1996 and 1995


NOTE D - PROPERTY AND EQUIPMENT

Property plant and equipment is summarized as follows:

<TABLE>
<CAPTION>
                                          1997               1996
                                        ---------          --------
<S>                                     <C>                <C>
      Plant                             $108,000           $108,000
      Building improvements              177,328             98,442
      Plant and lab equipment            310,233            306,781
      Engineering costs                   66,412             66,412
      Vehicles                            37,044             37,044
      Furniture and Equipment            100,379             93,920
                                        ---------          ---------
                                         799,396            710,599
      Less accumulated depreciation     (236,685)          (163,540)
                                        ---------          ---------
                                         562,711            547,059
      Land                                10,000             10,000
                                        ---------          ---------
                                        $572,711           $557,059
                                        =========          =========
</TABLE>

NOTE E - OTHER ASSETS

Other assets consist of the following:

<TABLE>
<CAPTION>
                                                           1997               1996
                                                         ---------          --------
<S>                                                      <C>                <C>
      Patents and Trademarks                             $ 28,392           $ 28,392
      Unamortized portion of deferred start up costs        8,566             15,197
      Deposits and other                                    3,553              3,247
                                                         ---------          ---------
                                                         $ 40,511           $ 46,836
                                                         =========          =========
</TABLE>

NOTE F - RESOURCE PROPERTY

The  Company's  resource  property,  located in  Arizona,  consists of mineral
leases and  deposits.  This  property was valued based on appraisal as part of
the merger which occurred March 31, 1995. The following describes the property
and related reserves of rock containing crystobalite, quartz and kaolinite.


                                     F-12

<PAGE>

                       AIM Group, Inc. and Subsidiaries

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       December 31, 1997, 1996 and 1995


NOTE F - CONTINUED

      MINERAL LEASE - VIVA LUZ DEPOSIT

      The  Viva  Luz  Mine,  located  in  Mohave  County  in  Arizona,   is  a
      crystobalite, quartz and kaolinite deposit with proven drilled reserves.
      The deposit has been classified into three different grades. The whitest
      grade is  denoted  as K1,  the off white  grade is denoted as K2 and the
      third, lowest grade as K3.

<TABLE>
<CAPTION>
      The following is a table showing the grade and applicable estimated tons
      of the material deposit:
            Grade                                Tons
<S>                                           <C>    
            K1 (proven and probable)            340,000
            K2 and K3                         1,350,000
            Total Tons                        1,690,000
</TABLE>

      The average  estimated  process recovery of the material is 82%, and the
      recovery loss has not been reflected in the tonnage shown above.

<TABLE>
<CAPTION>
      The  carrying  value of the  resource  property  including  the  prepaid
      royalties is as follows:
<S>                                                   <C>
            Resource property purchase price          $3,935,798
            Pre-paid royalties                            64,575
                                                      ----------
            Resource property                         $4,000,373
                                                      ==========
</TABLE>

      MINERAL MINED, PRODUCED AND SOLD IN 1992 THROUGH 1997

      In 1992  the  222.5  tons of K1  processed  during  the  year  1992  was
      considered  to be a trial  production  run.  7.5 tons of the 222.5  tons
      produced was distributed as samples and 2.5 tons were sold.  During 1997
      a nominal number of samples  aggregating  approximately  250 pounds were
      sent to prospective  customers from whom the Company received a positive
      response. The remaining 212.5 tons are being held in inventory.

      No sales of Klannerite(R) have been reported for 1995, 1996 or 1997.


                                     F-13

<PAGE>

                       AIM Group, Inc. and Subsidiaries

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       December 31, 1997, 1996 and 1995


NOTE G - LONG-TERM DEBT

The following is a summary of long-term debt at December 31, 1997 and 1996:

<TABLE>
<CAPTION>
                                                        1997              1996
                                                     ---------          ---------
<S>                                                  <C>                <C>
      Mortgage payable, secured by Arkansas
      manufacturing facility, payable in
      monthly installments of approximately
      $900 including interest at 10.25%.             $ 54,546           $ 60,309

      Loan payable - City of Malvern,
      Arkansas Revolving Loan Fund secured by
      equipment and second mortgage on real
      estate; payable in monthly installments
      of $2,921.72 including interest at 6%.           96,152               -

      Equipment loans payable, secured by
      vehicle and equipment, payable in
      monthly installments of approximately
      $1,061 including interest at 10.2 % to
      14.2%.                                           23,347             30,724
                                                     ---------          ---------
                                                      174,045             91,033
      Less amounts due within one year                 80,954             14,960
                                                     ---------          ---------
                                                     $ 93,091           $ 76,073
                                                     =========          =========
</TABLE>

Maturities of long-term debt over the next five years are as follows:

<TABLE>
<CAPTION>
       Year ended
      December 31,
<S>                                                        <C>
      1998                                                 $ 80,954
      1999                                                   31,861
      2000                                                   34,271
      2001                                                   26,959
                                                           ---------
                                                           $174,095
                                                           =========
</TABLE>

The Company also has a factoring  arrangement for its receivables arising from
its sale of  products  from its  Arkansas  toll  facility.  The  factor  has a
security interest in all factored accounts receivable.  The total interest and
factoring costs for 1997 and 1996 were $71,183 and $85,741, respectively.


                                     F-14

<PAGE>

                       AIM Group, Inc. and Subsidiaries

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       December 31, 1997, 1996 and 1995


NOTE H - CONVERTIBLE NOTES PAYABLE

On April 11,  1997 and May 20, 1997 the Company  executed  an  Amendment  (the
"First  Amendment") with three related parties (see "Related Parties") who are
note holders of the Company's  Series A - 3.5%  Convertible  Promissory  Notes
(the "Notes") having an aggregate face value of $1,050,000 subject to approval
of the Vancouver Stock Exchange which was received on June 18, 1997. The first
Amendment  included  provisions  which:  a) extended the maturity  date of the
notes to March  31,  1998;  b)  increased  the  annual  interest  rate to 10%,
effective  January 1, 1997; c) changed the conversion price to $.70 per share;
and d) agreed that the  Company  will not,  without the prior  approval of the
holders of at least 80% of the principal  amount of Notes  outstanding,  incur
any  indebtedness  which  ranks  senior in  priority  to  payment  to the note
holders. The Notes remain unsecured.

On March 23, 1998, the Company executed an Amendment (the "Second  Amendment")
with the three  related  parties who are note  holders of the Notes  having an
aggregate face value of $1,050,000  subject to approval by the Vancouver Stock
Exchange.  The Second  Amendment  includes  provisions  which:  a) extends the
maturity  date of the Notes to  December  31,  1998;  b)  maintain  the annual
interest rate at 10%; c) maintain the conversion  price at $.70 per share; and
d) provides  that the note holders may not convert their notes prior to August
1, 1998. If the Company is successful in closing a proposed equity offering in
mid-1998, there will be a mandatory conversion if the closing bid price of the
Company's  common stock on the Vancouver Stock Exchange  averages in excess of
$1.50 for a ninety day period after the closing. In addition, the note holders
have  agreed to be bound by  certain  provisions  restricting  the sale of any
shares issued upon conversion. The Notes remain unsecured.

NOTE I - STOCK OPTIONS AND WARRANTS

The Company had various  non-qualified  incentive  stock  options and warrants
that had been issued to  employees,  directors  and  investors.  Most of these
options and  warrants  were issued  prior to the merger and were  converted to
Company  options and warrants as a result of the merger.  All of these options
and  warrants  have  expired.  There were no  exercises of options or warrants
during 1996 and 1997.

In 1997,  the Company  established a new  non-statutory  stock option plan for
employees,  officers  and  directors.  During  1997,  the  Board of  Directors
approved the issuance of options to purchase  220,000  shares of the Company's
stock at $.30 per share to certain  directors,  officers  and  employees.  The
options  expire ten years from the date of grant and have a four year  vesting
period at 25% per year.


                                     F-15

<PAGE>

                       AIM Group, Inc. and Subsidiaries

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       December 31, 1997, 1996 and 1995


NOTE J - LEASE COMMITMENTS

The Company's corporate headquarters are leased pursuant to an operating lease
expiring  October 31, 1998.  Future lease payments at December 31, 1997 are as
follows:

<TABLE>
<CAPTION>
      Year ending
      December 31,                                          Amount
      ------------                                         --------
<S>                                                        <C>     
      1998                                                 $ 17,333
                                                           ========
</TABLE>

NOTE K - RELATED PARTY TRANSACTIONS

The following transactions with the Corporation are identified as transactions
with related parties.

      PRIVATE PLACEMENT OF CONVERTIBLE 3 1/2% PROMISSORY NOTES

      The Company  announced on November  15, 1995 a private  placement in the
      form of 3 year convertible 3 1/2% Promissory Notes ("Convertible Notes")
      having  a face  value  of  $1,050,000  subject  to the  approval  of the
      Vancouver   Stock  Exchange.   (See  Note  H).  The  following   related
      individuals and affiliated  concerns  acquired the Convertible  Notes as
      follows:

      NORTHERN  FEDERAL MINERALS LLC Paul R. Arena, an officer and director of
      the  Company  is  a  principal  in  this  Michigan   limited   liability
      corporation.   On  November  13,  1995  Northern  Federal  Minerals  LLC
      purchased $450,000 principal amount of the Convertible Promissory Notes.

      BERNARD R. KOSSAR Mr. Kossar,  on December 20, 1995  purchased  $300,000
      principal amount of the Convertible Promissory Notes.

      DR.  AUDREY L.  BRASSWELL  A director  of the  Company,  on May 20, 1997
      purchased  $300,000  principal  amount of Convertible  Promissory  Notes
      issued by the Corporation.

NOTE M - INCOME TAXES - NET OPERATING LOSSES

The Company has net operating  loss  carryforwards  available to offset future
taxable income approximating $2,800,000 expiring through the year 2011. Due to
the  merger  described  in Note B, the net  operating  losses  are  subject to
certain limitations, computed on an annual basis.


                                     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.

                                              AIM GROUP, INC.
                                                Registrant


Dated:  March 31, 1998                        By: /s/ PAUL R. ARENA
                                              ---------------------
                                              Paul R. Arena
                                              Chairman of the Board,
                                              Chief Executive Officer
                                              and President

In accordance  with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

Dated:  March 31, 1998                        By: /s/ PAUL R. ARENA
                                              ---------------------
                                              Paul R. Arena,
                                              Chairman of the Board,
                                              Chief Executive Officer,
                                              President and Director
                                              (Principal Executive
                                              Officer)

Dated:  March 31, 1998                        By: /s/ LEIGH S. ZOLOTO
                                              -----------------------
                                              Leigh S. Zoloto
                                              Chief Financial Officer,
                                              Secretary and Treasurer
                                              (Principal Financial
                                              Officer)

Dated:  March 31, 1998                        By: /s/ JAMES L. AUSTIN
                                              -----------------------
                                              James L. Austin
                                              Director

Dated:  March 31, 1998                        By: /s/ A. L. BRASWELL
                                              ----------------------
                                              A.L. Braswell
                                              Director

Dated: March 31, 1998                         By: /s/ E. W. PURCELL
                                              ---------------------
                                              E.W. Purcell
                                              Director