<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities 
Exchange Act of 1934

For the fiscal year ended June 30, 1998

Commission file number 1-9429

                          ROTONICS MANUFACTURING INC.
             -----------------------------------------------------
             (Exact name of registrant as specified in its charter)

                  Delaware                                     36-2467474
         -------------------------------                    ------------------
         (State or other jurisdiction of                     (I.R.S. Employer
         incorporation or organization)                     Identification No.)

         17022 South Figueroa Street
              Gardena, California                                 90248
         -------------------------------                    ------------------
         (Address of principal offices)                         (Zip Code)

Registrant's telephone number, including area code: (310) 538-4932

Securities registered pursuant to Section 12(b) of the Act:

         Common Stock ($.01 stated value)               American Stock Exchange
         --------------------------------               -----------------------
              Titles of each class                       Name of each Exchange
                                                          on which registered

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

Indicate by check mark whether the Registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) for 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 has been subject to such 
filing requirements for the past 90 days. Yes /X/ No

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

The aggregate market value of the voting stock held by non-affiliates of the 
registrant, as of September 15, 1998, was $6,222,100 (1).

The number of shares of common stock outstanding at September 15, 1998 was 
15,532,661.

(1) Excludes 8,421,696 shares held by directors, officers and stockholders 
whose ownership exceeded 5% of the outstanding shares at September 15, 1998. 
Exclusion of such shares should not be construed to indicate that the holders 
thereof possess the power, direct or indirect, to direct the management or 
policies of registrant, or that such persons are controlled by or under 
common control with the registrant.


<PAGE>


                     DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>

Document                                                         Form 10-K
--------                                                         ---------
                                                                   Part
                                                                   ----
<S>                                                               <C>
Definitive Proxy Statement to be used in connection 
with the Annual Meeting of Stockholders to be held on 
December 8, 1998                                                    III
</TABLE>









                                       2


<PAGE>

                                             TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                          ------
<S>                                                                                       <C>
PART I

Item 1   Business                                                                            4
Item 2   Properties                                                                          6
Item 3   Legal Proceedings                                                                   7
Item 4   Submission of Matters to a Vote of Security Holders                                 7

PART II

Item 5   Market for Registrant's Common Stock and Related
           Stockholder Matters                                                               8
Item 6   Selected Financial Data                                                             9
Item 7   Management's Discussion and Analysis of Financial
           Condition and Results of Operations                                              11
Item 8   Financial Statements and Supplementary Data                                        14
Item 9   Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure                                              14

PART III

Item 10  Directors and Executive Officers of the Registrant                                 15
Item 11  Executive Compensation                                                             15
Item 12  Security Ownership of Certain Beneficial Owners
           and Management                                                                   15
Item 13  Certain Relationships and Related Transactions                                     15

PART IV

Item 14  Exhibits, Financial Statement Schedules, and Reports
           on Form 8-K                                                                      16

SIGNATURES                                                                                  17
</TABLE>

                                           3

<PAGE>

                                  PART I

ITEM 1.  BUSINESS

INTRODUCTION

Rotonics Manufacturing Inc. (the "Company") was founded as an Illinois 
Corporation, and was reincorporated in Delaware in December 1986. Effective 
July 1, 1991, the Company merged with Rotonics Molding, Inc.-Chicago 
("Rotonics"), with the Company being the surviving entity. In accordance with 
the 1991 merger agreement, the Company issued 2,666,666 (after giving effect 
to a 1-for-3 reverse stock split) shares of its common stock and 4,999,997 
shares of a newly issued non-voting preferred stock in exchange for all the 
outstanding voting stock of Rotonics. The preferred stock, which has 
subsequently been redeemed, was entitled to cumulative dividends of $.09 per 
share per annum and had a liquidation value of $1.00 per share, plus accrued 
unpaid dividends in preference to any payment on the common stock.

Rotonics had operations in Itasca, Illinois; Deerfield, Wisconsin; Denver, 
Colorado; and Bartow, Florida. These operations currently conduct business as 
divisions of the Company using the trade names RMI-C, RMI-D, and RMI-F, 
respectively. Rotonics was a privately held California Corporation which was 
52% owned by Mr. Sherman McKinniss. Mr. McKinniss became president and chief 
executive officer of the Company on August 12, 1991.

In September 1991, the Company's wholly owned subsidiary, Rotational Molding, 
Inc. ("RMI"), was merged into the Company and now operates as two divisions 
using the trade names RMI-G and RMI-I with manufacturing operations in 
Gardena, California and Caldwell, Idaho, respectively.

Effective January 1, 1992, the Company acquired Plastech Holdings, Inc. 
("Plastech"), and its wholly owned subsidiary, Plastech International, Inc., 
for $1,777,070 in cash. Plastech was headquartered in Warminster, 
Pennsylvania with an additional operation in Gainesville, Texas. In July 
1992, Plastech was merged with the Company and now operates as a division of 
the Company using the trade name RMI-T.

Effective April 1, 1995, the Company purchased certain assets and assumed 
certain liabilities of Custom Rotational Molding, Inc. ("CRM") for 300,000 
shares of the Company's common stock. The Company assumed CRM's operations in 
Arleta, California.

In September 1994, the Company purchased a larger manufacturing facility in 
Bensenville, Illinois and subsequently relocated its Itasca, Illinois 
operations into this new facility. In December 1995, the Company discontinued 
its operations at its Deerfield, Wisconsin location and combined these 
operations into its newly purchased Bensenville, Illinois operation. The 
Wisconsin facility is currently being leased on a month-to-month term basis 
at $6,250 per month.

In February 1997, the Company purchased a 9.73 acre facility consisting of 
63,000 square feet of manufacturing and office building space in Commerce 
City, Colorado. The Company has since expended significant resources to 
refurbish the facility to house its Colorado operations. In addition to the 
new facility the Company added two state of the art roto-molding machines and 
a CNC router to increase and enhance existing manufacturing capacity. Also, 
the facility is located within an enterprise zone which should provide 
additional benefits.

Effective April 1, 1998, the Company merged with Rotocast International, Inc. 
and its wholly owned subsidiaries ("Rotocast"), with the Company being the 
surviving entity. In accordance with the Merger Agreement, the Company issued 
2,072,539 shared of its common stock and a $2,000,000 note payable secured by 
a stand-by letter of credit in exchange for all the outstanding voting stock 
of Rotocast.

Rotocast had operations in Miami, Florida; Knoxville, Tennessee; Brownwood, 
Texas; Las Vegas, Nevada; and Bossier City, Louisiana. These operations 
currently conduct business as divisions of the Company using the trade names 
Rotocast of Miami, Nutron/AMP, Rotocast of Tennessee, Rotocast of Texas and 
Rotocast of Nevada. Prior to the merger the operations in Bossier City, 
Louisiana were substantially discontinued. As of September 1998, the Company 
completed the discontinuance process and has returned the facility to the 
landlord. Rotocast was a privately held Florida corporation owned by GSC 
Industries, Inc. ("GSC"). The Company leases the remaining Rotocast 
facilities from GSC under long-term lease arrangements. Effective April 1998, 
and pursuant to the Merger Agreement, Mr. Robert Grossman, a shareholder of 
GSC and former President of Rotocast, was named to the Company's Board of 
Directors.

                                       4

<PAGE>

In conjunction with the Rotocast merger the Company initiated the 
consolidation of its Warminster, Pennsylvania and Arleta, California 
facilities into its remaining operations. The consolidation of these 
facilities will greatly enhance the operations of the Company's remaining 
facilities, reduce its overall manufacturing overhead costs, and take greater 
advantage of its marketing and distribution channels since the completion of 
the Rotocast merger. The consolidation of the facilities was substantially 
completed as of June 30, 1998. During fiscal 1999, the Company will continue 
to work on streamlining the operations effected by the consolidation as well 
as supplement these operations with additional roto-molding machines and CNC 
routers.

Following the closure of the Company's Warminster, Pennsylvania facility the 
Company opened a sales office in this region. The Company utilizes this 
office to continue its marketing and sales efforts in conjunction with the 
Plastech line of products.

The Corporate office of the Company is located at the same site as the RMI-G 
(Gardena, California) facility.

DESCRIPTION OF BUSINESS

The Company currently has ten manufacturing locations and was again listed by 
a plastics industry periodical as one of the top ten Rotational Molders in 
North America. These operating divisions manufacture a variety of plastic 
products for commercial, agricultural, pharmaceutical, point of purchase 
display, medical waste, refuse, retail, marine, healthcare and residential 
use, as well as a vast number of custom plastic products for a variety of 
industries, utilizing the roto-molding process and, on a smaller scale; 
injection molding and dip molding processes. In April 1998, the injection 
molding process was added to the Company's manufacturing operations as part 
of the Rotocast merger. Utilizing this process the Company markets a variety 
of parts for commercial, promotional and residential uses under the trade 
names Nutron and AMP. Roto-molding is a process for molding plastic resin by 
rotating a mold in a heated environment while the plastic resin powder placed 
inside the mold melts and evenly coats the inner wall of the mold. The 
injection molding process varies in that the plastic resin is first heated to 
a molten state and then injected under pressure into a mold. The roto-molding 
process has been used for many years and continues to be recognized as a 
growth industry in recent years as a result of numerous ongoing business 
consolidations and the development of new resins. These new resins allow 
roto-molded items to compete with more traditional materials such as carbon 
and stainless steel, especially in the fabrication of large, lightweight, 
one-piece molded items such as storage tanks. Roto-molding is a particularly 
advantageous process for users of molded plastic products who may want to 
test different prototypes, or who do not require sufficient numbers of such 
products to justify a more expensive manufacturing process. The Company's 
products include various types of storage tanks, bin lids, refuse containers 
for automated removal, medical waste containers, point-of-purchase displays, 
agricultural / livestock products and containers and other molded items.

The Company purchases resin from eight major suppliers in the U.S. and 
Canada. There are six additional suppliers of minor significance. As the 
majority of the resin used in the manufacturing process is a polyethylene 
derived from natural gas, resin price is not directly related to the price 
for petrochemicals and until recent years has not been generally subject to 
volatile fluctuations which are often experienced by the petroleum industry. 
The Company also incorporates the use of post-consumer plastic products 
blended with virgin materials in the manufacturing of products that call for 
its use.

The Company holds several patents on storage containers used for 
pharmaceutical, commercial and residential applications. The patents expire 
through the year 2010. Although the Company has been able to capture its 
share of these niche markets and expects to see continued growth, no one 
patent or groups of patents is considered material to the business as a whole.

Competition for the Company's products is governed by geography and region 
since large capacity tanks and bulky hollow products are expensive to ship 
long distances and, as such, any prospective competitor is constrained by 
shipping costs. There are numerous single-location as well as a growing trend 
to structure multi-location roto-molding businesses throughout the United 
States. However, each of these businesses still competes in a geographic 
region as determined by customer demand within that region, a constraint 
inherent to the industry. Due to its nationwide presence, the Company has 
substantially alleviated such constraint as the Company's operations are 
located within approximately 500 miles of all potential customers in the 
continental United States. The Company's sales are usually not subject to 
large seasonal fluctuations as the business typically operates on significant 
backlogs with a diverse product mix. Peak season is usually experienced in 
the period from April through June. Historically the quarter from January 
through March is the slowest production period of the year. The Company's 
backlog was $4,252,800 and $4,313,400 as of June 30, 1998 and 1997, 
respectively. All of the backlog orders of June 30, 1998 are expected to be 
filled during fiscal 1999.

The products are marketed through the Company's in-house sales and 
engineering staff, various distributors and outside commission-based sales 
representatives. The Company continues to build a strong, broad customer base 
which covers a 

                                       5

<PAGE>

multitude of industries. As such, since fiscal 1991, no sales to any one 
single customer represented a material part of the Company's business.

Research and development expenditures for the Company were insignificant for 
the last three fiscal years.

REGULATION

The Company believes that it is in compliance with all applicable federal, 
state and local laws relating to the protection of the environment and does 
not anticipate that any such laws will have any material effect on its 
financial position, capital expenditures, or competitive position.

EMPLOYEES

As of June 30, 1998, the Company employed a total of 600 individuals. The 
Company maintains, for its respective employees who are eligible, a medical 
insurance plan (some of which is contributory), a group life insurance plan, 
an annual bonus plan and a semi-annual attendance bonus plan.

ITEM 2.  PROPERTIES

The Company's corporate office occupies a separate building comprising 
approximately 3,100 square feet of the facilities of RMI-G in Gardena, 
California.

The operating divisions lease warehouse, production and office space as 
follows:

<TABLE>
<CAPTION>
                                    Building          Total Facility            Annual
Property                             Square               Square                 Base             Expiration
Location                             Footage              Footage                Rent               Date (2)
--------                             -------              -------                ----             ------------
<S>                                 <C>               <C>                     <C>               <C>
Gardena, California (1)              42,800               183,300             $ 259,300         October 2001

Caldwell, Idaho                      21,250                71,200             $  73,900         September 2000

Bartow, Florida                      34,000               150,600             $ 106,900         September 2004

Miami, Florida                       48,000                86,000             $ 148,600         March 2013

Gainesville, Texas (3)                    -               108,900             $   1,000         April 2001

Brownwood, Texas                     42,800               136,120             $  67,000         March 2013

Las Vegas, Nevada                    30,000                90,000             $ 122,600         March 2013

Knoxville, Tennessee                 44,000               174,240             $ 135,900         March 2013
</TABLE>

(1) The Company has an option to purchase these facilities. 
(2) Does not give effect to any renewal options. 
(3) Represents a 2.5 acre ground lease adjacent to Texas facility.

The Company owns 2.1 acres (including 38,000 square feet of warehouse,
production and office space) in Gainesville, Texas. In September, 1994 the
Company purchased 3.1 acres (including 63,300 square feet of warehouse,
production and office space) in Bensenville, Illinois for the Company's Illinois
manufacturing operations. The Texas and Illinois facilities are currently
encumbered by a combined $2 million mortgage. In February 1997 the Company
purchased for cash 9.73 acres (including 63,000 square feet of warehouse,
production and office space) in Commerce City, Colorado for the Company's
Colorado manufacturing operations. The Company also owns approximately 1.59
unencumbered acres (including 35,100 square feet of warehouse, production and
office space) in Deerfield, Wisconsin which was vacated in December 1995 by the
Company and its operations incorporated into the Illinois facility. The
Wisconsin facility is currently leased to an unrelated lessee for $6,250 per
month.

ITEM 3.  LEGAL PROCEEDINGS

                                       6

<PAGE>

In the normal course of business, the Company encounters certain litigation 
matters, which in the opinion of management, will not have a significant 
adverse effect on the financial position or the results of operations of the 
Company.

On April 16, 1996, the Company was named as defendant in a complaint filed by 
Bonar U.S., Inc. in Delaware Superior Court. The complaint alleged claims for 
breach of contract and promissory estoppel relating to an Agreement in 
Principle entered into in connection with a proposed acquisition of the 
Company by Bonar U.S., Inc. On April 3, 1996 the Company announced that it 
had terminated the Agreement in Principle pursuant to its terms. The 
complaint requested damages of $7,011,484. On May 17, 1996, the Company filed 
a counterclaim against Bonar U.S., Inc. and Bonar Plastics, Inc. seeking 
damages totaling $25,237,725 for breach of the Confidentiality Agreement with 
the Company, misappropriation of trade secrets, intentional interference with 
a prospective economic advantage which the Company obtained as a result of an 
indication of interest from a third party and breach of a Royalty Agreement 
between Bonar Plastics, Inc. and one of the Company's operating divisions 
(formally known as Custom Rotational Molding, Inc.). In March 1997, the 
Company reached an amicable out of court settlement with Bonar. The 
settlement involved mutual general releases by the parties, dismissals of the 
actions brought by the parties and payments to Bonar of $400,000 in March 
1997 and $350,000 in September 1997.

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

None.

                                       7

<PAGE>

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

The Company's Common Stock ($.01 stated value) is traded on the American 
Stock Exchange ("AMEX") under the symbol "RMI". The number of stockholders of 
record of the Company's Common Stock was approximately 6,200 at September 15, 
1998.

                         PRICE RANGE OF COMMON STOCK

The following table sets forth the quarterly price ranges of the Company's 
Common Stock in Fiscal 1998 and 1997, as reported on the composite 
transactions reporting system for AMEX listed stocks.

<TABLE>
<CAPTION>
                                                                      High                  Low
                                                                    ---------             --------
<S>                                                                 <C>                   <C>
Fiscal 1997
             First Quarter Ended September 30, 1996                  $ 1-1/2               $1-5/16
             Second Quarter Ended December 31, 1996                    1-3/4                 1-1/4
             Third Quarter Ended March 31, 1997                       1-1/16                 1-3/8
             Fourth Quarter Ended June 30, 1997                        1-1/2                 1-1/4

Fiscal 1998
             First Quarter Ended September 30, 1997                  $1-5/16               $ 1-3/8
             Second Quarter Ended December 31, 1997                    1-3/4                 1-3/8
             Third Quarter Ended March 31, 1998                       1-9/16                 1-1/4
             Fourth Quarter Ended June 30, 1998                        1-3/8                 15/16
</TABLE>

In fiscal 1998, 1997 and 1996, the Company paid a regular cash dividend of 
$.04 per share on its Common Stock. Any future cash dividends or other 
distributions of stock will be determined solely by the Board of Directors 
and will be based on the Company's future financial ability to declare and 
pay such dividends. Additionally, certain lending agreements restrict the 
Company from declaring or paying dividends on its Common Stock. (See Item 7, 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations: Liquidity and Capital Resources.") According to the lending 
agreement with its bank, the Company may not declare or pay any dividend or 
distribution on any stock or redeem, retire, repurchase or otherwise acquire 
any of such shares unless the Company can obtain prior bank authorization and 
appropriate waivers.

                                       8
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                          Year ended June 30,
                                          ------------------------------------------------------------------------------------
                                             1998 (B)           1997             1996            1995(C)           1994
                                          ------------------------------------------------------------------------------------
<S>                                           <C>              <C>              <C>              <C>              <C>
INCOME STATEMENT DATA

Net sales                                     $38,058,900      $39,385,100      $35,703,600      $35,887,600      $31,346,300

Cost of goods sold                             29,268,400       29,292,100       26,443,700       26,298,900       23,312,300

Gross margin                                    8,790,500       10,093,000        9,259,900        9,588,700        8,034,000

Selling, general and
  administrative expenses (F)                   7,327,300        6,239,600        6,313,100        5,767,900        5,636,800

Interest expense                                  793,700          556,500          696,500          766,500          592,500

Income from continuing operations
  before change in accounting principle
  for income taxes (D)                            417,200        1,441,800        1,472,700        3,287,600        1,873,000

Cumulative effect of change in account-
  ting principle for income taxes (E)                  -                -                -                -         4,013,000

Net income                                  $     417,200     $  1,441,800     $  1,472,700     $  3,287,600     $  5,886,000

Income/(loss) from continuing 
  operations per common share               $         .03     $        .10     $        .10     $        .24      $       .13

Average common shares
  outstanding (A)                              14,445,200       14,134,600       13,848,500       12,595,200       11,942,200

OTHER FINANCIAL DATA

Income from continuing
  operations as a percent of sales                   1.1%             3.7%             4.1%             9.2%             6.0%
</TABLE>

(A) Computed on the basis of the weighted average number of common shares
    outstanding during each year.

(B) Includes the results of operations of Rotocast since the effective date
    of merger.

(C) Includes the results of operations of CRM since the effective date of
    acquisition.

(D) Fiscal year 1997 includes $1,010,800 in costs relating to a lawsuit
    settlement.

(E) Represents the recognition of a net deferred tax asset in conjunction
    with the adoption of FAS 109, "Accounting for Income Taxes" (see Note 14 
    of Notes to Financial Statements).

(F) In 1998, includes $280,300 in plant consolidation expenses.

                                       9

<PAGE>

<TABLE>
<CAPTION>
                                                                                 At June 30,
                                          ------------------------------------------------------------------------------------
                                             1998 (B)           1997             1996            1995(C)           1994
                                          ------------------------------------------------------------------------------------
<S>                                           <C>              <C>              <C>              <C>              <C>
BALANCE SHEET DATA

Current assets                            $16,463,600      $12,814,000      $13,023,000      $11,903,200     $  9,244,500

Current liabilities                         6,452,800        5,099,700        4,864,500        4,766,000        7,256,300

Working capital surplus                    10,010,800        7,714,300        8,158,500        7,137,200        1,988,200

Total assets                               40,563,800       30,634,400       29,055,700       30,359,400       24,939,000

Long-term debt                             10,976,500        6,486,100        5,864,100        7,707,700        2,834,400

Total liabilities                          19,155,900       11,589,800       10,732,600       12,477,700       10,095,700

Preferred stock                                    -                -                -         3,000,000        3,875,000

Current ratio                                2.6 to 1         2.5 to 1         2.7 to 1         2.5 to 1         1.3 to 1

Net book value per
  common share (A)                        $      1.35      $      1.35      $      1.29      $      1.15     $        .92
</TABLE>

(A) Computed on the basis of the actual number of common shares outstanding at
    the end of the fiscal year.

(B) Includes the effect of the Rotocast merger.

(C) Includes the effect of the acquisition of CRM.

                                      10
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

INTRODUCTION

To the extent that this 10-K Annual Report discusses matters which are not 
historical, including statements regarding future financial results, 
information or expectation about products or markets, or otherwise makes 
statements about future events, such statements are forward-looking and are 
subject to a number of risks and uncertainties that could cause actual 
results to differ materially from the statements made. These include, among 
others, fluctuations in costs of raw materials and other expenses, costs 
associated with plant closures, downturns in the markets served by the 
Company, the costs associated with new product introductions, as well as 
other factors described under the heading Item 3, "Legal Proceedings", under 
this Item 7, "Management's Discussion and Analysis of Financial Condition and 
Results of Operations", and Footnote 1 to Financial Statements.

OPERATIONS

Net sales were $38,058,900 in fiscal 1998 which fell 3.4% below fiscal 1997 
net sales of $39,385,100. Fiscal 1998 was transitional year for the Company 
as it endured difficult market conditions while continuing its internal 
efforts to increase manufacturing capabilities, promote efficient operations 
and restructure and build its marketing functions. Following fiscal 1997's 
stellar increase in custom molded sales, the Company reported a 17.6% drop in 
this category. As such, during fiscal 1998 this reduction accounted for the 
majority of the loss in sales volumes in the current period. The Company's 
markets have been unpredictable over the last few years and has caused the 
Company to readily adapt itself to always take the utmost advantage of the 
current economic and market conditions we operate in. During the fourth 
quarter of fiscal 1998, the Company began to see improvements in the 
marketplace. This coupled with the Rotocast merger resulted in improved sales 
volumes in the fourth quarter of fiscal 1998. Sales volumes increased 
approximately 26.5% to $12,798,400 for the three months ended June 30, 1998 
compared to the same period last year. Sales from the recently merged 
Rotocast divisions accounted for 9% of the Company's net sales in fiscal 1998.

Net sales increased $3,681,500 or 10.3% to $39,385,100 in fiscal 1997 
compared to $35,703,600 in fiscal 1996. The majority of the Company's product 
lines sustained relatively level sales volumes as compared to fiscal 1996 
with the increased volumes related directly to increases in marine, custom 
molded products and customer tooling. Custom molded products reported an 
impressive 40% increase over prior year volumes. Management attributes this 
gain to its experienced sales/engineering staff's ability to expand the 
Company's marketshare of these products. During the last several years the 
Company has also capitalized on the roto-molding industry's overall expanding 
marketplace for its products. In fiscal 1996, we experienced a lackluster 
marketplace due to volatile resin prices and then what appeared to be a 
return of consumer confidence in fiscal 1997. However, certain analysts in 
the industry have indicated that the industry appears to have reached a 
temporary plateau. Management continues to watch these trends to ascertain 
what impact it will have on the Company's growth projections.

Cost of goods was $29,268,400 or 76.9% of net sales in fiscal 1998 compared 
to $29,292,100 or 74.4% and $26,443,700 or 74.1% of net sales in fiscal 1997 
and 1996. Since fiscal 1995, the roto-molding industry has experienced 
extreme volatility in plastic resin prices. These price increases have 
resulted in substantial increases in raw material prices per pound since the 
beginning of this four year period. The price increases were enacted by the 
various resin suppliers in response to domestic and foreign material demands 
as well as various natural and internal disasters experienced by the resin 
suppliers. The cost of plastic resin represents a significant portion of the 
Company's manufacturing costs and has continually challenged the Company to 
effectively mitigate these increases. Since fiscal 1995, the Company was 
relatively successful in mitigating these resin price increases by initiating 
customer price increases and various raw material purchasing strategies. In 
fiscal 1997, the Company also benefited from increased volumes of custom 
molded products. Pricing structures for custom molded products typically 
follow market trends and allow the Company to obtain gross margin levels 
consistent with Company objectives. However, due to fiscal 1998's adverse 
market conditions which resulted in the reduction in fiscal 1998 sales 
volumes coupled with high resin prices during the majority of the year, the 
Company was unable to maintain consistent operating results. In the fourth 
quarter of fiscal 1998, management began to see more favorable trends in 
resin prices. As these trends continue into fiscal 1999, management is 
optimistic about improved gross profit margins. Management will continue to 
monitor these trends and their affect on the marketplace to maximize any 
obtainable benefits. During the fourth quarter of fiscal 1998, management 
also consolidated two of its manufacturing locations into its remaining ten 
locations. These restructuring efforts should have a positive impact on gross 
margins during future periods due to the elimination of the fixed overhead 
costs associated with the closed facilities.

                                      11

<PAGE>

Selling, general and administrative expenses were $7,047,000 or 18.5% of net 
sales in fiscal 1998 compared to $6,239,600 or 15.8% of net sales in fiscal 
1997. The increase relative to net sales is attributed to the decrease in 
sales volumes during the first three quarters of fiscal 1998 plus the 
additional expenses related to the Rotocast operations (approximately $1.2 
million) which was incurred in the fourth quarter of fiscal 1998. Since the 
Rotocast merger, management has focused its efforts on restructuring sales 
and administrative functions at these facilities. These efforts coupled with 
the plant consolidations mentioned above should result in necessary cost 
reductions to bring SG&A costs in synch with future sales volumes and 
management's objectives.

Selling, general and administrative expenses were $6,239,600 or 15.8% of net 
sales in fiscal 1997 compared to $6,313,100 or 17.7% of net sales in fiscal 
1996. The overall decrease is primarily attributable to the 10.3% increase in 
1997 sales volumes and management's ability to keep these costs in synch with 
the current sales volume levels. Management continued the restructuring of 
its sales/engineering staff in fiscal 1997. The changes enacted have had a 
positive impact on the Company's sales growth with a minimal impact to 
increased selling costs. The Company continues to benefit from the operating 
efficiencies realized since the completed consolidation of the Illinois and 
Wisconsin facilities.

Income from operations was $1,463,200 or 3.8% of net sales in fiscal 1998 
compared to $3,853,400 or 9.8% and $2,946,800 or 8.3% of net sales in fiscal 
1997 and 1996. Again, current year operations were effected by sluggish sales 
volumes, high resin prices and the additional SG&A costs related to the 
Rotocast operations. Management perceives some indication within the industry 
to move beyond its previous sales plateau. This potential improvement in 
market conditions coupled with favorable resin costs and the cost savings 
related to the recent plant consolidations should improve future operating 
results. However, if resin prices do not remain stable and the marketplace 
reacts adversely to current domestic and foreign economic conditions which 
have recently arisen, these factors could adversely effect the Company's 
ability to meet future operating objectives.

Interest expense increased $237,200 to $793,700 in fiscal 1998, compared to 
$556,500 in fiscal 1997. The increase is primarily attributed to an increase 
in the Company's debt structure when compared to the same period last year. 
The increase in the Company's debt structure is attributed to the Colorado 
facility purchase and its subsequent improvements in the later part of fiscal 
1997 and during fiscal 1998 (approximately $1.4 million), $1.6 million in 
capital expenditures at the other Company facilities in fiscal 1998, and the 
additional debt issued in connection with the Rotocast merger as well as the 
debt assumed in the transaction which together amount to approximately $3.8 
million. In addition, the Company has incurred an increase in short-term 
borrowings due to a decrease in cash flows from operations.

Interest expense decreased $140,000 to $556,500 in fiscal 1997 compared to 
$696,500 in fiscal 1996. The decrease is attributed to reductions in the 
Company's overall debt structure during the first half of fiscal 1997 coupled 
with stable interest rates during the majority of the year and the Company's 
extensive use of optional bank LIBOR interest rates. During later part of 
fiscal 1997, the Company made significant machinery and equipment purchases 
and purchased a 9.73 acre facility in Commerce City, Colorado to expand and 
relocate its Colorado operations. These expenditures set the stage for the 
Company's future growth and were funded by operating cash flows and the 
issuance of additional bank financing. The later has increased the Company's 
overall debt structure by approximately $725,000 at fiscal year end and which 
resulted in additional interest costs in fiscal 1998.

Net income was $417,200 or $.03 per common share in fiscal 1998 compared to 
$1,441,800 or $.10 per common share in fiscal 1997. The decrease is directly 
related to the reduction in sales volume levels which impeded the 
preservation of the Company's gross margin goals coupled with the increases 
in SG&A and interest expenses outlined above. As we look forward, management 
is extremely pleased with the benefits which will result from the Rotocast 
merger and the consolidation of two of its operating divisions in fiscal 
1998. The Rotocast merger has provided the Company a unique opportunity to 
capitalize on expanding its marketshare with the newly acquired product lines 
and distribution channels as well as the cost savings obtainable by combining 
various manufacturing, sales and administrative functions.

Net income remained relatively consistent at $1,441,800 or $.10 per common 
share in fiscal 1997 compared to $1,472,700 or $.10 per common share in 
fiscal 1996. Although consistent with prior year, the Company's 1997 results 
included costs of $1,010,800 or $.07 per common share related to litigation 
settlement expenses (see Note 15 of "Notes to Financial Statements). Total 
litigation costs represent an out of court settlement of $750,000 plus 
additional legal costs of $260,800.

LIQUIDITY AND CAPITAL RESOURCES

Working capital increased $2,296,500 to $10,010,800 at June 30, 1998 compared 
to $7,714,300 at June 30, 1997. The increase is primarily related to the 
inclusion of Rotocast's net current assets as of June 30, 1998, net of normal 
fluctuations in 

                                      12

<PAGE>

accounts receivables and accounts payables, an increase in inventories 
related to raw material purchasing strategies and an increase in the current 
portion of long-term debt related to additional machinery and equipment 
financing.

Cash provided by operations was $1,937,300 for fiscal 1998 which reflected a 
decrease of $1,841,600 in relation to prior period results. The reduction is 
primarily attributed to the lower sales volume levels reported in the current 
period which resulted in a decrease in net income of approximately $1 
million, as well as a decrease in accounts payable and increases in accounts 
receivable and inventories, as indicated above, which increased cash used by 
operating activities by $769,000.

The Company expended a total of $2,103,100 for property, plant and equipment 
during fiscal 1998 compared to $3,797,800 for fiscal 1997. The decrease over 
prior year is directly related to the costs incurred to purchase the Commerce 
City, Colorado facility. The Company continued to complete its internal 
expansion project that it began in fiscal 1997. During the current period the 
Company acquired two additional roto-molding machines for its Idaho facility, 
CNC routers for its Chicago, Nevada and Idaho facilities, as well as resin 
silo projects in Florida and Colorado. The Company has also substantially 
completed its building improvement project at its new Commerce City, Colorado 
facility. The Company will continue its internal expansion project in fiscal 
1999 as it determines the additional requirements associated with the 
Rotocast operations. This commitment has allowed the Company to stay in the 
forefront of the industry and optimizes our position for future growth.

In January 1998, the Company advanced $700,000 on its fourth machinery and 
equipment term-loan commitment with Wells Fargo Bank. The proceeds were used 
to repay amounts originally borrowed under the Company's revolving line of 
credit to finance $875,000 in machinery and equipment purchases. The note is 
due in monthly interest only payments through November 15, 1998, at which 
time it will convert to a sixty month fully amortizable note.

In connection with the Rotocast merger, the Company issued a eighteen month 
$2,000,000 note payable to the seller and also replaced Rotocast's existing 
line of credit and term debt with a 90 day bank note in the amount of 
$1,750,000. The note to the seller is payable with one interest only payment 
due March 25, 1999 and second principal and interest payment due upon 
maturity on September 25, 1999. The $2,000,000 note is secured by an 
irrevocable standby letter of credit which can only be called upon if the 
principal balance is not paid within 10 days of maturity.

In April 1998, the bank increased the Company's total loan facility to $16.5 
million. This was done in conjunction with an appraisal of Rotocast's fixed 
assets. The ninety day note which was issued to retire Rotocast's existing 
debt was replaced with a $2,000,000 sixty month fully amortizable note 
payable and then in July 1998, the note was increased to $3,000,000. The note 
is payable in monthly principal payments of $50,000 plus interest and will 
mature on July 1, 2003. Also, in July 1998, the bank replaced the Company's 
existing real estate loan with a new $2,000,000 loan secured by the Company's 
Bensenville, Illinois and Gainesville, Texas properties. The note will be due 
in monthly principal payments of approximately $6,700 plus interest on a 
twenty-five year amortization with the outstanding principal due on July 1, 
2008. The other major change to the Company's total debt structure with the 
bank was an increase to the total principal available on the Company's line 
of credit from $5 million to $7 million which is also inclusive of a $2 
million subfeature for the issuance of a standby letter of credit securing 
the note payable due to the seller of Rotocast. The maturity date of the line 
of credit was extended to October 1, 2000. In addition, the bank reduced the 
LIBOR interest rate spread from 2.5% down to 2.25% and made this option 
available on all bank borrowings.

Net borrowings under the line of credit increased $1.5 million to $3.9 
million between June 30, 1997 and June 30, 1998. Current increases in the 
line balance are related to a combination of the ongoing capital 
expenditures, including the building improvements in Commerce City, Colorado, 
payments made during the year in connection with the Bonar litigation 
settlement, the fiscal 1998 common stock dividend payment and an increased 
reliance on the line of credit due to the reduction in income from 
operations. At June 30, 1998, the Company had approximately $1.1 million 
available for future borrowings under the line of credit. The remaining 
$2,000,000 open on the line of credit is reserved for the letter of credit 
which was issued to secure the GSC note payable. With the advances on the 
additional long-term debt in July 1998 the available borrowings under the 
line of credit will increase by an additional $2 million.

Effective July 15, 1998, the Company initiated an interest rate swap 
agreement with the bank. The agreement will allow the Company to fix a 
portion of its outstanding term and line of credit debt from a variable 
floating rate to a fixed interest rate in efforts to hedge against future 
increases in the bank's prime rate. The agreement matures July 15, 2003.

Stockholder's equity increased $2,363,300 to $21,407,900 in fiscal 1998 and 
since fiscal 1992 stockholder's equity has more than doubled. This increase 
includes the effect of the Rotocast merger net of the Company's third annual 
common stock dividend of $.04 per common share, or $552,800, which was 
declared on December 9, 1997 and paid on January 28, 1998 to 

                                      13

<PAGE>

stockholders of record on January 8, 1998. In fiscal 1998, the Company 
initiated and completed a common stock buy back program which resulted in the 
repurchase and subsequent retirement of 332,200 shares of common stock at a 
cost of $501,100.

On April 16, 1996, the Company was named as a defendant in a complaint filed 
by Bonar U.S., Inc. in Delaware Superior Court. The complaint alleged claims 
for breach of contract and promissory estoppel relating to an Agreement in 
Principle entered into in connection with a proposed acquisition of the 
Company by Bonar U.S., Inc. On April 3, 1996, the Company announced that it 
had terminated the Agreement of Principle pursuant to its terms. The 
complaint requested damages of $7,011,484. On May 17, 1996, the Company filed 
a counterclaim against Bonar U.S., Inc. and Bonar Plastic, Inc. seeking 
damages totaling $25,237,725 for breach of the Confidentiality Agreement with 
the Company, misappropriation of trade secrets, intentional interference with 
a prospective economic advantage which the Company obtained as a result of an 
indication of interest from a third party and breach of a Royalty Agreement 
between Bonar Plastic, Inc. and one of the Company's operating divisions 
(formally known as Custom Rotational Molding Inc.) In March 1997, the Company 
reached an amicable out of court settlement with Bonar. The settlement 
involved mutual general releases by the parties, dismissals of the actions 
brought by the parties and payments to Bonar of $400,000 in March 1997 and 
$350,000 in September 1997. The $350,000 payment had been previously accrued 
for and was included in accounts payable in the accompanying June 30, 1997 
balance sheet.

Cash flows from operations in conjunction with the Company's revolving line 
of credit and machinery and equipment loan commitment are expected to meet 
the Company's needs for working capital, capital expenditures and repayment 
of long-term debt for the foreseeable future.

YEAR 2000

Management has been fully apprised of the issues surrounding the year 2000 
dilemma. In assessing the potential impact this issue has on the Company, 
management reviewed both its manufacturing and accounting systems to 
ascertain critical applications which would be affected. Due to the nature of 
the Company's manufacturing process and the equipment utilized, it was 
determined that even equipment which was operated or incorporated 
computerized controls or programs were not dependent on calendar functions to 
operate and thus would not be impacted by the year 2000 problem.

As part of the year 2000 issue the Company also assessed compliance of its 
network computing systems. To date the Company believes that all of its 
operating divisions except one are 2000 compliant. The remaining site along 
with the Company's Corporate division has resolved to make the necessary 
hardware and software enhancements to become compliant at this final site by 
the end of fiscal 1999 (June 30, 1999). The Company does not believe it will 
encounter any problems associated with the year 2000 issue between now and 
such time that it completes the necessary upgrades to is computer systems. 
The costs associated with becoming compliant will not have a material effect 
to the Company's financial position.

To complete the Company's assessment of the year 2000 problem, the Company 
will be contacting its major suppliers to ascertain their readiness and 
ability to function beyond this critical date and what impact, if any, it 
will have on the Company's ability to continue normal operations.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Financial Statements and Financial Statement Schedules listed in Item
14(a)(1) and (2).

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

None.

                                      14

<PAGE>

                              PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

The Company incorporates by reference the information set forth under the 
caption "Election of Directors" in the Company's Proxy Statement to be filed 
with the Securities and Exchange Commission, and mailed to stockholders in 
connection with the Company's Annual Meeting of the Stockholders to be held 
on December 8, 1998 ("the Proxy Statement")

EXECUTIVE OFFICERS

As of September 15, 1998, the executive officers of the Company were as follows:

<TABLE>
<CAPTION>

Name                               Age               Position
----                              -----              --------
<S>                               <C>                <C>
Sherman McKinniss                  62               President, Chief Executive Officer, Chairman of the Board

Robert E. Gawlik                   50               Chief Operating Officer

E. Paul Tonkovich                  60               Secretary, Director

Douglas W. Russell                 37               Chief Financial Officer, Assistant Secretary/Treasurer
</TABLE>

SHERMAN MCKINNISS.  Mr. McKinniss has served as President, Chief Executive 
Officer and a Director of the Company since August 1991 and was appointed as 
Chairman of the Board in December 1994. He was President and a Director of 
Rotonics from 1987-1991. Previously, he owned and operated RMI, which he sold 
to the Company in 1986 and was a partial owner of Rotational Molding, 
Inc.-Florida which was merged into Rotonics in 1988.

ROBERT E. GAWLIK.  Mr. Gawlik was appointed as Chief Operating Officer of the 
Company in August 1998.  Prior to this, he served as General Manager for 
Bonar Plastic's Oregon facility from 1991-1998, and as Executive  
Vice-President of Encore Industries from 1986-1989, and later as President of 
Encore Group from 1989-1991.

E. PAUL TONKOVICH.  Mr. Tonkovich has served as Secretary and a Director of 
the Company since August 1991. He has been a practicing attorney since 
January 1966.  He was legal counsel to Rotonics and to Mr. McKinniss and is 
now legal counsel for the Company.

DOUGLAS W. RUSSELL.  Mr. Russell has served as Chief Financial Officer and 
Assistant Secretary/Treasurer of the Company since 1991.  Prior to that he 
was a Senior Auditor for the accounting firm Hallstein & Warner from 1988 
until 1991, and was Assistant Controller of RMI from September 1985 to 
September 1987.

ITEM 11.  EXECUTIVE COMPENSATION

The Company incorporates by reference the information set forth under the 
captions "Compensation of Executive Officers", the "Summary Compensation 
Table" and related disclosure information, "Certain Transactions", and 
"Compensation of Directors" in the Proxy Statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Company incorporates by reference the information set forth under the 
caption "Security Ownership by Certain Beneficial Holders" in the Proxy 
Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company incorporates by reference the information set forth under the 
headings "Information Concerning the Board of Directors" under the caption 
"Election of Directors", "Executive Officers", and "Certain Transactions" in 
the Proxy Statement.

                                      15

<PAGE>

                                    PART IV

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

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

<TABLE>
<CAPTION>
                                                                           Page
                                                                          ------
               <S>                                                        <C>
               (1)  Financial Statements:

                    Report of Independent Public Accountants                F-1
                    Balance Sheet, June 30, 1998 and 1997                   F-2
                    Statement of Income,
                      Years Ended June 30, 1998, 1997 and 1996              F-3
                    Statement of Changes in Stockholders' Equity,
                      Years Ended June 30, 1998, 1997, and 1996             F-4
                    Statement of Cash Flows,
                      Years Ended June 30, 1998, 1997, and 1996             F-5
                    Notes to Financial Statements                           F-6

               (2)  Financial Statement Schedules:

                     VIII  Valuation and Qualifying Accounts,
                           Years Ended June 30, 1998, 1997, and 1996        F-17

               All other schedules are omitted because they are not applicable or 
               the required information is shown in the financial statements or notes thereto.

          (b)  Reports on Form 8-K.

               During the fourth quarter of fiscal year ended June 30, 1998, the registrant filed 
               current reports on Form 8-K and 8-K/A for the following events:

               1.  March 25, 1998 (Date of earliest event reported), Item 2, "Acquisition or Disposition 
                   of Assets". This report provided a description of the Rotocast International Inc. and 
                   subsidiaries merger with the registrant.

               2.  March 25, 1998 (Date of earliest event reported), Item 7, "Financial Statements and 
                   Exhibits". This report was an amendment to the original Form 8-K and provided financial
                   statements of Rotocast for the year ended December 31, 1997, and for the three months 
                   ended March 31, 1998, proforma combined balance sheets of Rotocast and the registrant as 
                   of March 31, 1998, and the proforma combined statement of operations for the year ended 
                   June 30, 1997, and for the nine months ended March 31, 1998.

          (c)  The following exhibits are filed as part of this report:
</TABLE>

<TABLE>
<CAPTION>

Exhibit
Number       Exhibit Title
-------      -------------
<S>          <C>
10.1         Credit Agreement and related Promissory notes between registrant and Wells Fargo Bank dated June 15, 1998.

23(a)        Consent of Independent Public Accountants - Arthur Andersen LLP
</TABLE>

                                      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.

                                        ROTONICS MANUFACTURING INC.

                                        By    /s/   SHERMAN MCKINNISS
                                           -----------------------------------
                                                             Sherman McKinniss
                                            President, Chief Executive Officer

                                                               Date 09/25/1998

                                        By    /s/   DOUGLAS W. RUSSELL
                                           -----------------------------------
                                                            Douglas W. Russell
                                                       Chief Financial Officer
                                                 Assistant Secretary/Treasurer

                                                               Date 09/25/1998

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

<TABLE>
<CAPTION>

Signature                              Title                        Date
---------                              -----                        ----
<S>                                    <C>                          <C>

/s/  E. PAUL TONKOVICH                  Secretary, Director          09/25/1998
------------------------------
     E. Paul Tonkovich


   /s/  DAVID C. POLITE                 Director                     09/25/1998
------------------------------
        David C. Polite



   /s/  LARRY DEDONATO                  Director                     09/25/1998
------------------------------
        Larry DeDonato



   /s/  JAMES E. EVANS                  Director                     09/25/1998
------------------------------
        James E. Evans



   /s/  LARRY L. SNYDER                 Director                     09/25/1998
------------------------------
        Larry L. Snyder



   /s/  ROBERT GROSSMAN                 Director                     09/25/1998
------------------------------
        Robert Grossman

</TABLE>

                                       17

<PAGE>
                                       








                           ROTONICS MANUFACTURING INC.

                              FINANCIAL STATEMENTS

                                   * * * * *

                                 JUNE 30, 1998


<PAGE>
                                       
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors
and Stockholders of Rotonics Manufacturing Inc.:

We have audited the accompanying balance sheets of ROTONICS MANUFACTURING 
INC. (a Delaware corporation) as of June 30, 1998 and 1997, and the related 
statements of income, changes in stockholders' equity and cash flows for each 
of the three years in the period ended June 30, 1998. These financial 
statements are the responsibility of the Company's management. Our 
responsibility is to express an opinion on these financial statements based 
on our audits.

We conducted our audits 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 that our audits provide a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Rotonics Manufacturing Inc. 
as of June 30, 1998 and 1997, and the results of their operations and their 
cash flows for each of the three years in the period ended June 30, 1998 in 
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic 
financial statements taken as a whole. The schedule listed in the index 
appearing under Item 14(a)(2) is presented for purposes of complying with the 
Securities and Exchange Commission's rules and is not a required part of the 
basic financial statements. This schedule has been subjected to the auditing 
procedures applied in our audits of the basic financial statements and, in 
our opinion, is fairly stated in all material respects in relation to the 
basic financial statements taken as a whole.


                                       ARTHUR ANDERSEN LLP

Orange County, California
August 27, 1998

                                     F-1



<PAGE>
                                       
                         ROTONICS MANUFACTURING INC.
                               BALANCE SHEET
<TABLE>
<CAPTION>
                                                                                      JUNE 30,
                                                                           -----------------------------
                                                                               1998              1997
                                                                           -----------       -----------
<S>                                                                        <C>               <C>
                         ASSETS
Current assets:
   Cash                                                                    $    30,700       $    12,100
   Accounts receivable, net of allowance for doubtful accounts
    of $148,000 and $90,000, respectively (Notes 8 and 9)                    6,973,800         5,334,400
   Current portion of notes receivable (Note 3)                                 62,600            48,100
   Inventories (Notes 4 , 8 and 9)                                           7,081,900         5,602,700
   Deferred income taxes, net (Note 14)                                      2,106,400         1,574,600
   Prepaid expenses and other current assets                                   208,200           242,100
                                                                           -----------       -----------
     Total current assets                                                   16,463,600        12,814,000

Notes receivable, less current portion (Note 3)                                455,000           455,000
Investment in partnership (Note 5)                                             133,200                 -
Deferred income taxes, net (Note 14)                                                 -         1,441,400
Property, plant and equipment, net (Notes 6, 8 and 9)                       18,250,000        10,799,500
Intangible assets, net (Note 7)                                              5,131,800         5,065,500
Other assets                                                                   130,200            59,000
                                                                           -----------       -----------
                                                                           $40,563,800       $30,634,400
                                                                           -----------       -----------
                                                                           -----------       -----------

               LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt (Note 9)                               $ 1,784,000       $ 1,281,300
  Accounts payable                                                           3,719,600         2,953,100
  Accrued liabilities (Note 11)                                                949,200           865,300
                                                                           -----------       -----------
     Total current liabilities                                               6,452,800         5,099,700

Bank line of credit (Note 8)                                                 3,926,200         2,373,400
Long-term debt, less current portion (Note 9)                                5,050,300         4,112,700
Long-term debt  due related parties (Note 10)                                2,000,000                 -
Deferred income taxes, net (Note 14)                                         1,726,600                 -
Other liabilities                                                                    -             4,000
                                                                           -----------       -----------
     Total liabilities                                                      19,155,900        11,589,800
                                                                           -----------       -----------
Commitments and contingencies (Note 15)

Stockholders' equity:
Common stock, stated value $.01: authorized 20,000,000 shares;
  issued and outstanding 15,806,361 and 14,065,995 shares, 
  respectively, net of treasury shares (Notes 10 and 13)                    26,921,400        24,422,500
Accumulated deficit                                                         (5,513,500)       (5,377,900)
                                                                           -----------       -----------
     Total stockholders' equity                                             21,407,900        19,044,600
                                                                           -----------       -----------
                                                                           $40,563,800       $30,634,400
                                                                           -----------       -----------
                                                                           -----------       -----------
</TABLE>

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

                                      F-2

<PAGE>

                           ROTONICS MANUFACTURING INC.
                              STATEMENT OF INCOME

<TABLE>
<CAPTION>
                                                                    For the year ended June 30,
                                                       ------------------------------------------------------
                                                           1998                  1997                1996
                                                       ------------          ------------        ------------
<S>                                                   <C>                   <C>                 <C>
Net sales                                              $ 38,058,900          $ 39,385,100        $ 35,703,600
                                                       ------------          ------------        ------------
Costs and expenses:
  Cost of goods sold                                     29,268,400            29,292,100          26,443,700
  Selling, general and administrative expenses            7,047,000             6,239,600           6,313,100
  Plant consolidation expenses (Note 2)                     280,300                     -                   -
                                                       ------------          ------------        ------------
     Total costs and expenses                            36,595,700            35,531,700          32,756,800
                                                       ------------          ------------        ------------
Income from operations                                    1,463,200             3,853,400           2,946,800
                                                       ------------          ------------        ------------
Other (expense)/income:
  Interest expense                                         (793,700)             (556,500)           (696,500)
  Lawsuit settlement (Note 15)                                    -            (1,010,800)                  -
  Other income, net                                          96,200                98,500             156,900
                                                       ------------          ------------        ------------
     Total other expense                                   (697,500)           (1,468,800)           (539,600)
                                                       ------------          ------------        ------------
Income before income taxes                                  765,700             2,384,600           2,407,200
Income tax provision (Note 14)                             (348,500)             (942,800)           (934,500)
                                                       ------------          ------------        ------------
Net income                                                  417,200             1,441,800           1,472,700
Preferred stock dividends                                         -                     -             (62,000)
                                                       ------------          ------------        ------------
Net income applicable to common shares                      417,200             1,441,800           1,410,700
                                                       ------------          ------------        ------------
                                                       ------------          ------------        ------------
Basic/diluted income per common share (Note 1)           $      .03            $      .10         $       .10
                                                       ------------          ------------        ------------
                                                       ------------          ------------        ------------
</TABLE>

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

                                       
                                      F-3


<PAGE>
                                       
                           ROTONICS MANUFACTURING INC.
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                     Accumulated
                                              Preferred Stock                 Common Stock              Deficit         Total
                                         --------------------------   ---------------------------   ------------    ------------
                                             Shares       Amount         Shares        Amount
                                         -----------    -----------   -----------   ------------
<S>                                     <C>            <C>           <C>           <C>              <C>             <C>
Balances, June 30, 1995                   3,000,000    $ 3,000,000   $12,903,752    $21,980,500     $(7,098,800)     $17,881,700
Redemptions of preferred stock           (2,749,800)    (2,749,800)    1,374,884      2,749,800               -                -
Stock issued in connection with
 exercise of outstanding options                  -              -         5,333          4,200               -            4,200
Repurchase of preferred shares             (250,200)      (250,200)            -              -               -         (250,200)
Repurchase of common stock                        -              -      (125,452)      (157,100)              -         (157,100)
Preferred stock dividends                         -              -             -              -         (62,000)         (62,000)
Common stock dividends                            -              -             -              -        (566,200)        (566,200)
Net income                                        -              -             -              -       1,472,700        1,472,700
                                         -----------    -----------   -----------   ------------    ------------     -----------
Balances, June 30, 1996                           -              -    14,158,517      24,577,400     (6,254,300)      18,323,100
Stock issued in connection with
 exercise of outstanding options                  -              -         7,500           6,100              -            6,100
Repurchase of common stock                        -              -      (100,022)       (161,000)             -         (161,000)
Common stock dividends                            -              -             -               -       (565,400)        (565,400)
Net income                                        -              -             -               -      1,441,800        1,441,800
                                         -----------    -----------   -----------   ------------    ------------     -----------
Balances, June 30, 1997                           -              -    14,065,995      24,422,500     (5,377,900)      19,044,600
Stock issued in connection with
 Rotocast International Inc. merger               -              -     2,072,539       3,000,000              -        3,000,000
Repurchase of common stock                        -              -      (332,173)       (501,100)             -         (501,100)
Common stock dividends                            -              -             -               -       (552,800)        (552,800)
Net income                                        -              -             -               -        417,200          417,200
                                         -----------    -----------   -----------   ------------    ------------     -----------
Balances, June 30, 1998                           -     $        -    15,806,361    $ 26,921,400    $(5,513,500)     $21,407,900
                                         -----------    -----------   -----------   ------------    ------------     -----------
                                         -----------    -----------   -----------   ------------    ------------     -----------

</TABLE>

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

                                       F-4

<PAGE>
                                       
                           ROTONICS MANUFACTURING INC.
                             STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                      For the year ended June 30,
                                                            ------------------------------------------------
                                                                1998              1997              1996
                                                            ------------      ------------     -------------
<S>                                                         <C>               <C>               <C>
Cash flows from operating activities:
  Net income                                                $   417,200       $  1,441,800      $  1,472,700
  Adjustments to reconcile net income to
   net cash provided by operating activities:
     Depreciation and amortization                            2,034,800          1,617,000         1,588,100
     Loss on sales of equipment                                  67,500             21,800                 -
     Deferred income tax expense                                323,000            786,200           743,100
     Provision for doubtful accounts                             39,300             63,900            58,800
     Changes in assets and liabilities, net of
      effect from purchase of business:
        (Increase)/decrease in accounts receivable             (324,900)           392,400          (508,000)
        (Increase)/decrease in inventories                     (267,000)          (663,300)          412,700
        Decrease/(increase) in prepaid expenses and 
         other current assets                                   177,200            (23,600)         (103,700)
        (Increase)/decrease in other assets                     (72,400)            23,200             2,900
        (Decrease)/increase in accounts payable                (177,100)           243,700           329,000
        Decrease in accrued liabilities                        (280,300)          (124,200)         (198,100)
        Decrease in income taxes payable                              -                  -           (23,400)
                                                            ------------      ------------     -------------
Net cash provided by operating activities                     1,937,300          3,778,900         3,774,100
                                                            ------------      ------------     -------------
Cash flows from investing activities:
  Acquisition of Rotocast, net of cash obtained                 (74,100)                 -                 -
  (Advances)/repayments on notes receivable                     (11,600)            (1,200)            5,800
  Capital expenditures                                       (2,103,100)        (3,797,800)         (981,100)
  Proceeds from sales of equipment                               93,500              3,200                 -
  Distribution from investment in partnership                     2,300                  -                 -
                                                            ------------      ------------     -------------
Net cash used in investing activities                        (2,093,000)        (3,795,800)         (975,300)
                                                            ------------      ------------     -------------
Cash flows from financing activities:
  Borrowings under line of credit                            11,638,800          9,700,000         7,758,800
  Repayments under line of credit                           (10,086,000)        (9,310,100)       (8,835,600)
  Proceeds from issuance of long-term debt                      950,000          1,526,400           500,000
  Repayments of long-term debt                               (1,285,500)        (1,189,700)       (1,264,600)
  Redemption of preferred stock                                       -                  -          (250,200)
  Payment of preferred stock dividends                                -                  -           (85,400)
  Payment of common stock dividends                            (541,900)          (554,300)         (554,000)
  Proceeds from exercise of stock options and warrants                -              6,100             4,200
  Repurchases of common stock                                  (501,100)          (161,000)         (157,100)
                                                            ------------      ------------     -------------
Net cash provided by/(used in) financing activities             174,300             17,400        (2,883,900)
                                                            ------------      ------------     -------------
Net increase/(decrease) in cash                                  18,600                500           (85,100)
Cash at beginning of year                                        12,100             11,600            96,700
                                                            ------------      ------------     -------------
Cash at end of year                                         $    30,700       $     12,100     $      11,600
                                                            ------------      ------------     -------------
                                                            ------------      ------------     -------------

</TABLE>

  The accompanying notes are an integral part of these financial statements.
                                        
                                      F-5

<PAGE>

                            ROTONICS MANUFACTURING INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION AND OPERATIONS

Rotonics Manufacturing Inc. (the "Company"), a Delaware corporation 
manufactures and markets plastic products for commercial, agricultural, 
refuse, pharmaceutical, marine, healthcare, retail, and residential use, as 
well as an array of custom molded plastic products to customers in a variety 
of industries located in diverse geographic markets. No single customer 
accounted for more than 10% of the Company's net sales in fiscal 1998, 1997, 
or 1996. In fiscal 1998, the Company purchased in aggregate approximately 89% 
of its plastic resin from four vendors. Plastic resin represents a 
significant portion of the Company's manufacturing costs. As such, economic 
factors which affect the Company's plastic resin vendors will have a 
potential impact on the Company's future operations.

The Company's significant accounting policies are as follows:

REVENUE RECOGNITION

Revenues are recognized upon shipment to the customer or when title passes to 
the customer based on the terms of the sales, and are recorded net of sales 
discounts, returns and allowances.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted 
accounting principles requires management to make estimates and assumptions 
that affect the reported amounts of assets and liabilities and 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. 
Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of accounts receivable and trade payables approximates the 
fair value due to their short-term maturities. The carrying value of the 
Company's line of credit and notes payable is considered to approximate fair 
market value because the interest rates of these instruments are based 
predominately on variable reference rates.

INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined on 
the first-in, first-out method.

PROPERTY, PLANT AND EQUIPMENT

Depreciation is computed using the straight-line method and the estimated 
useful lives of the assets range from three to thirty-nine years. When assets 
are retired or otherwise disposed of, the cost and related accumulated 
depreciation are removed from the accounts, and any resulting gain or loss is 
included in income for the period. The cost of maintenance and repairs is 
charged to income as incurred; costs relating to significant renewals and 
betterments are capitalized.

INTANGIBLE ASSETS

The excess of the aggregate purchase price over the fair value of the net 
assets of businesses acquired is amortized on the straight-line basis over 
periods ranging from fifteen to forty years. Patents are amortized on the 
straight-line basis over their useful lives of seventeen years, or at their 
remaining useful life from date of acquisition.

                                    F-6

<PAGE>

INCOME TAXES

The Company accounts for income taxes pursuant to Statement of Financial 
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes". 
SFAS 109 is an asset and liability approach that requires the recognition of 
deferred tax assets and liabilities for the expected future tax consequences 
of events that have been recognized in the Company's financial statements or 
tax returns. In estimating future tax consequences, SFAS 109 generally 
considers all expected future events other than enactments of changes in tax 
laws or rates.

EARNINGS PER SHARE

Earnings per share are calculated under guidelines of SFAS No. 128 "Earnings 
per Share" which was adopted by the Company as of December 31, 1997. SFAS No. 
128 replaces primary EPS with basic EPS and fully diluted EPS with diluted 
EPS. Basic EPS is computed by dividing reported earnings by weighted average 
shares outstanding. Diluted EPS is computed the same way as fully diluted EPS 
except the calculation now uses the average share price for the reporting 
period to compute dilution from potential dilutive securities under the 
treasury stock method. Potential dilutive securities for the Company include 
outstanding stock options, which had no impact on EPS for all periods 
presented. The weighted average number of shares used in determining basic 
EPS was 14,445,200, 14,134,600 and 13,848,500 in fiscal 1998, 1997 and 1996, 
respectively. The adoption of this pronouncement had no impact to the 
Company's results of operations.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

Effective July 1, 1996, the Company adopted Statement of Financial Accounting 
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-lived 
Assets and Long-lived Assets to be Disposed of" and SFAS No. 123, "Accounting 
for Stock-Based Compensation." Under SFAS No. 123, the Company has elected to 
disclose pro forma net income and earnings per share as if the fair value 
based accounting method of SFAS No. 123 had been used for stock based 
compensation. The adoption of these pronouncements had no impact to the 
Company's financial position or results of operations.

Effective September 30, 1998, the Company will be required to adopt SFAS No. 
130 "Reporting Comprehensive Income". SFAS No. 130 defines comprehensive 
income as a measure of all changes in equity of an enterprise during a period 
that results from transactions and other economic events of the period other 
than transactions with owners. The adoption of this pronouncement is not 
expected to have a significant impact on the Company's results of operations.

Effective for fiscal year end June 30, 1999, the Company will be required to 
adopt SFAS No. 131 "Disclosures About Segments of an Enterprise and Related 
Information". SFAS No. 131 introduces management's approach to defining 
operating segments. This approach corresponds to the way management organizes 
units and internally evaluates performance of its operations based on 
products, services, geography, legal or management structure. Once operating 
segments are identified, they are then grouped based on similar 
characteristics to determine reportable segments. This approach is 
anticipated to improve segment reporting which will improve analysis of 
companies involved in diverse business segments. The adoption of this 
pronouncement is not expected to significantly effect the way the Company 
reports its operating segments.

NOTE 2 - ACQUISITIONS:

Pursuant to an Agreement and Plan of Merger and Reorganization dated March 
24, 1998 between the Company and GSC Industries, Inc. ("GSC"), the Company 
acquired all of GSC's outstanding common stock holdings in Rotocast 
International, Inc. ("Rotocast") and Rotocast's wholly owned subsidiaries 
Rotocast Plastic Products, Inc.; Wonder Products, Inc.; Nutron Plastic, Inc.; 
Rotocast Plastic Products of Texas, Inc.; Rotocast Plastic Products of 
Nevada, Inc.; Rotocast Plastic Products of Tennessee, Inc.; and Rotocast 
Management Corporation. In accordance with the merger and reorganization 
Rotocast was merged into the Company and the Company issued to GSC 2,072,539 
shares of its own common stock and a $2,000,000 eighteen month promissory 
note bearing interest at 5.26% per annum. The promissory note is secured by a 
$2,000,000 irrevocable standby letter of credit issued by Wells Fargo Bank 
which can only be called upon if the principal balance of the note is not 
paid within ten days of maturity. Pursuant to the merger agreement the 
transaction was effective March 31, 1998.

                                    F-7

<PAGE>

To provide recourse to the Company, five percent of the common shares issued 
to GSC will be held in an escrow account to cover any claims by the Company 
in the event of any breaches of representations, warranties or covenants by 
GSC as outlined in the agreement. The Company has incurred approximately 
$80,000 of fees and expenses in conjunction with the merger. In addition the 
Company obtained an appraisal on Rotocast's machinery and equipment which 
resulted in the write-up of Rotocast's machinery and equipment to $7.2 
million and the recognition of goodwill amounting to $357,200. These amounts 
will be amortized over their estimated useful life of fifteen years. The 
above transaction was accounted for using the purchase accounting method and 
the results of the transaction were included in the Company's financial 
statements effective as of March 31, 1998.

As part of the reorganization of Rotonics and Rotocast, the Company relocated 
its operations in Warminster, Pennsylvania and Arleta, California into its 
other operating facilities. The relocation of these plants resulted in 
non-recurring costs of approximately $280,300.

PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

The following unaudited pro forma condensed statement of combined operations 
for the years ended June 30, 1998 and 1997 assumes the Rotocast merger 
occurred at the beginning of the respective periods after giving effect to 
certain adjustments, including amortization of goodwill, increased interest 
expense on acquisition debt, depreciation expense and related income tax 
effects. The pro forma results have been prepared for comparative purposes 
only and do not purport to indicate the results of operations which would 
actually have occurred had the combination been in effect on the date 
indicated, or which may occur in the future.

<TABLE>
<CAPTION>
                                                                               Combined
                                                                      For the years ended June 30,
                                                                  ------------------------------------
                                                                       1998                   1997
                                                                  --------------          ------------
<S>                                                               <C>                     <C>
Net sales                                                           $ 45,746,800          $ 49,152,100

Total costs and expenses                                             (45,765,700)          (47,422,300)
                                                                    ------------          ------------

Income/(loss) before provision for income taxes                          (18,900)            1,729,800

Provision for income taxes                                                     -              (691,900)
                                                                    ------------          ------------

Net income/(loss)                                                   $    (18,900)         $  1,037,900
                                                                    ------------          ------------
                                                                    ------------          ------------

Income per common share                                                  $   .00               $   .06
                                                                         -------               -------
                                                                         -------               -------
</TABLE>

NOTE 3 - NOTES RECEIVABLE:

On March 31, 1995, the Company and a customer entered into an agreement under 
which the Company acquired from this customer certain assets, including molds 
and trade accounts receivable, at their total estimated fair value of 
$357,800, which was applied against the principal of a 1993 Promissory Note 
owed by this customer to the Company. The remaining unpaid principal, 
together with accrued interest and open trade receivable from this customer 
as of March 31, 1995, were exchanged for a new note with a principal balance 
of $455,000, bearing interest at 8% per annum and maturing on March 31, 2005.

Effective March 31, 1995, the Company sold products manufactured using these 
molds directly to end users. The Company shall pay to this former customer 
royalties at the initial rate of 10% of the Company's net sales of these 
products. Half of the royalty payments shall be applied to reduce principal 
and interest until the former customer has received a total of $300,000 in 
royalty payments or March 31, 1998, whichever is earlier. Subsequently, all 
royalty payments shall be applied to principal and interest until such 
principal and interest are paid in full, at which time the royalty rate will 
be reduced to 5% through March 31, 2005. As of June 30, 1998 and 1997, the 
total balance of this note amounted to $517,600 and $503,100 including 
accrued interest of $62,600 and $48,100, respectively. The Company intends to 
hold this note until maturity.

                                    F-8

<PAGE>

NOTE 4 - INVENTORIES:

<TABLE>
<CAPTION>
                                                                                         June 30,
                                                                              -----------------------------
                                                                                  1998               1997
                                                                              ------------      ------------
<S>                                                                           <C>               <C>
Inventories consist of:

Raw materials                                                                 $  4,002,400      $ 3,160,000
Finished goods                                                                   3,079,500        2,442,700
                                                                              ------------      ------------

                                                                              $  7,081,900       $ 5,602,700
                                                                              ------------      ------------
                                                                              ------------      ------------
</TABLE>

NOTE 5 - INVESTMENT IN PARTNERSHIP

The Company owns a 33-1/3% interest in a real estate venture which was 
acquired in 1998 and is accounted for using the equity method. The investment 
consists principally of a note receivable which is payable in monthly 
installments, including interest at 7%, to 2004, with annual principal 
reductions as provided.

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT:

<TABLE>
<CAPTION>
                                                                                         June 30,
                                                                              ------------------------------
                                                                                  1998              1997
                                                                              ------------      ------------
<S>                                                                           <C>               <C>
Property, plant and equipment consist of:

Land                                                                          $ 1,039,500       $  1,039,500
Buildings and building improvements                                             4,021,000          3,274,500
Machinery, equipment, furniture and fixtures                                   21,534,500         13,762,700
Construction in progress                                                          836,300            359,900
                                                                              -----------       ------------
                                                                               27,431,300         18,436,600

Less - accumulated depreciation                                                (9,181,300)        (7,637,100)
                                                                              -----------       ------------

                                                                              $18,250,000        $10,799,500
                                                                              -----------       ------------
                                                                              -----------       ------------
</TABLE>


NOTE 7 - INTANGIBLE ASSETS:

<TABLE>
<CAPTION>
                                                                                         June 30,
                                                                              ------------------------------
                                                                                  1998              1997
                                                                              ------------      ------------
<S>                                                                           <C>               <C>
Intangible assets consist of:

Patents, net of accumulated amortization of $100,900 and $95,200              $     51,300       $    35,200
Goodwill, net of accumulated amortization
  of $2,377,000 and $2,070,000                                                   5,080,500         5,030,300
                                                                              ------------       -----------

                                                                              $  5,131,800       $ 5,065,500
                                                                              ------------       -----------
                                                                              ------------       -----------
</TABLE>

The carrying values of long-lived assets are reviewed if the facts and 
circumstances suggest that an item may be impaired. If this review indicates 
that a long-lived asset will not be recoverable, as determined based on the 
future undiscounted cash flows of the asset, the Company's carrying value of 
the long-lived asset is reduced to fair value.

                                    F-9

<PAGE>

NOTE 8 - BANK LINE OF CREDIT:

The Company has a $7,000,000 revolving line of credit with Wells Fargo Bank, 
which matures on October 1, 2000. The line is secured by the Company's 
machinery and equipment, accounts receivable and inventories. Interest is 
payable monthly at the bank's prime rate. The bank's prime rate at June 30, 
1998 was 8.5% per annum. In addition, the loan agreement allows the Company 
to convert the outstanding principal balance in increments of $250,000 to a 
LIBOR-based loan for up to 90-day periods. At June 30, 1998, total borrowings 
under the Company's line of credit were $3,926,200 of which $3,750,000 was 
borrowed under the LIBOR option. The LIBOR borrowings consist of two 
borrowings of $1,500,000 and $2,250,000 bearing a LIBOR interest rates of 
8.15625% and 7.91797% per annum and maturing on July 5, 1998 and July 15, 
1998, respectively. Proceeds from the loan were used for working capital 
purposes. At June 30, 1998, the Company had approximately $1,075,000 
available for future borrowings under the revolving line of credit. The 
remaining $2,000,000 open on the line of credit is reserved for the letter of 
credit which was issued to secure the GSC note payable The loan agreement 
contains various covenants pertaining to tangible net worth, net income and 
liquidity ratios, capital expenditures, payments of dividends, payment of 
subordinated debt as well as various other restrictions. The Company was in 
compliance with these covenants for fiscal 1998.

NOTE 9 - LONG-TERM DEBT:

<TABLE>
<CAPTION>
                                                                                         June 30,
                                                                              ------------------------------
                                                                                  1998              1997
                                                                              ------------      ------------
<S>                                                                           <C>               <C>
Long-term debt consists of:

Note payable - Bank       (A)                                                  $ 1,533,300       $ 2,333,300
Note payable - Bank       (B)                                                      291,700           391,700
Note payable - Bank       (C)                                                      389,800           491,500
Note payable - Bank       (D)                                                      800,000         1,000,000
Note payable - Bank       (E)                                                      700,000                 -
Note payable - Bank       (F)                                                    2,000,000                 -
Note payable - Bank       (G)                                                    1,080,600         1,147,100
Other                                                                               38,900            30,400
                                                                               -----------       -----------
                                                                                 6,834,300         5,394,000

Less-current portion                                                            (1,784,000)       (1,281,300)
                                                                               -----------       -----------
                                                                               $ 5,050,300       $ 4,112,700
                                                                               -----------       -----------
                                                                               -----------       -----------
</TABLE>

(A)  In May 1995 the Company restructured its credit agreement with Wells 
     Fargo Bank. The loan consists of a $4,000,000 sixty-month term loan. The 
     note is due in monthly principal installments of $66,700 plus interest 
     at the bank's prime rate (8.5% at June 30, 1998). In addition, the loan 
     agreement allows the Company to convert all or a portion of the 
     outstanding principal in increments of $250,000 to a LIBOR-based loan 
     for periods up to 180 days. At June 30, 1998 the Company had $1,500,000 
     of the outstanding principal balance under the LIBOR option at 7.91797% 
     per annum maturing on July 15, 1998. The note is secured by the 
     Company's machinery and equipment, accounts receivable and inventories 
     and matures on May 16, 2000.

(B)  In fiscal 1996, the Company was advanced $500,000 on its machinery and 
     equipment term-loan commitment with Wells Fargo Bank. The proceeds were 
     used to repay amounts originally borrowed under the Company's revolving 
     line of credit to finance approximately $700,000 in machinery and 
     equipment purchases. The note is due in monthly principal installments 
     of approximately $8,300 plus interest at the bank's prime rate (8.5% at 
     June 30, 1998) or LIBOR interest rate option for periods up to six 
     months. At June 30, 1998, the total outstanding principal was under the 
     LIBOR option at 7.91797% per annum maturing July 15, 1998. The note is 
     secured by the Company's machinery and equipment and matures on May 15, 
     2001.

(C)  In March 1997 the Company was advanced $500,000 on its second machinery 
     and equipment term-loan commitment with Wells Fargo Bank. The proceeds 
     were used to repay amounts originally borrowed under the Company's 
     revolving line of credit to finance approximately $625,000 in machinery 
     and equipment purchased. The note is due in monthly principal 
     installments of approximately $8,500 plus interest at the bank's prime 
     rate (8.5% per annum at June 30, 1998) or LIBOR interest rate option for 
     periods up to six months. At June 30, 1998, the total outstanding 
     principal was under the LIBOR option at 7.91797% per annum maturing July 
     15, 1998. The note is secured by the Company's machinery and equipment 
     and matures on May 15, 2002.

                                    F-10

<PAGE>

(D)  In June 1997, the Company was advanced $1,000,000 on its third machinery 
     and equipment term-loan commitment with Wells Fargo Bank. The proceeds 
     were used to repay amounts originally borrowed under the Company's 
     revolving line of credit to finance approximately $1,250,000 in 
     machinery and equipment purchases. The note is due in monthly principal 
     installments of approximately $16,700 plus interest at the bank's prime 
     rate (8.5% per annum at June 30, 1998) or LIBOR interest rate option for 
     periods up to three months. At June 30, 1998, the total outstanding 
     principal was under the LIBOR option at 8.15625% per annum maturing July 
     6, 1998. The note is secured by the Company's machinery and equipment 
     and matures on June 27, 2002.

(E)  In January 1998, the Company was advanced $700,000 on its fourth 
     machinery and equipment term-loan commitment with Wells Fargo Bank. The 
     proceeds were used to repay amounts originally borrowed under the 
     Company's revolving line of credit to finance approximately $875,000 in 
     machinery and equipment purchases. The note is due in monthly interest 
     only payments at the bank's prime rate (8.5% per annum at June 30, 1998) 
     or LIBOR interest rate option for periods up to three months until 
     November 15, 1998. At such time the note will convert to a sixty month 
     fully amortizable loan. At June 30, 1998, the total outstanding 
     principal was under the LIBOR option at 8.15625% per annum maturing July 
     6, 1998. The note is secured by the Company's machinery and equipment 
     and matures on July 15, 2003.

     At June 30, 1998, the Company had available a term-loan commitment in 
     the amount of $500,000 for future machinery and equipment purchases. 
     Advances under the line will be subject to monthly interest only 
     payments at the bank's prime or LIBOR interest rates until November 15, 
     1998 at which time amounts borrowed will convert to a sixty month fully 
     amortizable loan.

(F)  In connection with the Rotocast acquisition, the Company retired 
     Rotocast's existing line of credit and long-term debt with a 90 day note 
     issued by Wells Fargo Bank in the amount of $1,750,000. In April 1998, 
     pursuant to an appraisal of Rotocast's machinery and equipment, this 
     note was replaced with a $2,000,000 sixty month fully amortizable note. 
     In July 1998, the note again was replaced with a $3,000,000 sixty month 
     fully amortizable loan. The note is due in monthly interest only 
     payments at the bank's prime rate (8.5% per annum at June 30, 1998) or 
     LIBOR interest rate option for periods up to three months until August 
     15, 1998. At such time the note will convert to a sixty month fully 
     amortizable loan. At June 30, 1998, the total outstanding principal was 
     under the LIBOR option at 8.15625% per annum maturing July 6, 1998. The 
     note is secured by the Company's machinery and equipment and matures on 
     July 1, 2003.

(G)  This note was issued to Wells Fargo Bank on September 15, 1994 in 
     connection with the purchase of real property in Bensenville, Illinois. 
     The note is due in monthly principal installments of approximately 
     $5,500 plus interest at the bank's prime rate (8.5% per annum at June 
     30, 1998) on a twenty-year amortization with the outstanding principal 
     due in five years. The note is secured by a first trust deed on the real 
     property and matures on September 15, 1999. In July 1998, this note was 
     replaced with a new $2,000,000 real estate loan secured by the Company's 
     Bensenville, Illinois and Gainesville, Texas properties. The note will 
     be due in monthly principal installments of approximately $6,700 plus 
     interest at the bank's prime rate or LIBOR interest rate option on a 
     twenty-five year amortization with the outstanding principal due on July 
     1, 2008.

     Effective July 15, 1998, the Company initiated an interest rate swap 
     agreement with the bank. The agreement will allow the Company to fix a 
     portion of its outstanding term and line of credit debt from a variable 
     floating rate to a fixed interest rate in efforts to hedge against 
     future increases in the bank's prime rate. The agreement matures July 
     15, 2003.

Aggregate annual maturities of long-term debt are summarized as follows:

<TABLE>
<CAPTION>
       Year Ending June 30,
       --------------------
       <S>                                                              <C>
              1999                                                      $1,784,000
              2000                                                       2,699,400
              2001                                                         939,400
              2002                                                         824,800
              2003                                                         540,000
             Thereafter                                                     46,700
                                                                        ----------
                                                                        $6,834,300
                                                                        ----------
                                                                        ----------
</TABLE>

                                    F-11

<PAGE>

NOTE 10 - RELATED PARTY DEBTS:

<TABLE>
<CAPTION>
                                                                                         June 30,
                                                                                --------------------------
                                                                                   1998             1997
                                                                                ----------       ---------
<S>                                                                             <C>              <C>
Related party debt consists of:

Note payable - (A)                                                              $2,000,000       $       -
                                                                                ----------       ---------
                                                                                ----------       ---------
</TABLE>

(A)  This note was issued to GSC Industries, Inc., which a director of the 
     Company has a 54% interest, in connection with the acquisition of 
     Rotocast. The note bears interest at 5.26% per annum and is payable with 
     one interest only payment due on March 25, 1999 and a second principal 
     and interest payment due upon maturity of the note on September 25, 1999.

     The note is secured by a $2,000,000 irrevocable standby letter of credit 
     which may be called upon if the principal balance of the note is not 
     paid within ten days of maturity.

ADDITIONAL RELATED PARTY TRANSACTIONS:

In September 1995, in accordance with unanimous approval of the Board of 
Directors, an officer/director of the Company converted his remaining 
2,158,950 outstanding shares of Series A Preferred Stock to 1,079,475 shares 
of the Company's common stock. The shares were converted on the basis of one 
share of common stock issued for every two shares of preferred outstanding.

The Company sells plastic resin and molded plastic products to a company in 
which an officer/director of the Company has a minority interest. Sales to 
the Company amounted to $392,400, $412,300 and $319,900 in fiscal years 1998, 
1997 and 1996, respectively. Amounts due on sales to this company were 
$171,800 and $151,500 at June 30, 1998 and 1997, respectively, and are 
included in accounts receivable in the accompanying balance sheet.

In fiscal years 1998, 1997 and 1996, the Company incurred legal fees and 
costs amounting to $83,400, $103,400 and $83,000, respectively, for services 
by E. Paul Tonkovich Professional Corporation, of which an officer/director 
of the Company is an employee.

The Company leases its facilities in Miami, Florida; Knoxville, Tennessee; 
Brownwood, Texas; Bossier City, Louisiana, and Las Vegas, Nevada from GSC 
Industries, Inc. of which a director of the Company has a 54% ownership 
interest. The facilities, except Bossier City which was leased on a 
month-to-month basis, are leased on a long-term basis through March 2013 and 
are subject to annual CPI adjustments. In fiscal 1998, the Company paid rent 
on these facilities amounting to $135,000.

NOTE 11 - ACCRUED LIABILITIES:

<TABLE>
<CAPTION>
                                                                                         June 30,
                                                                                --------------------------
                                                                                   1998             1997
                                                                                ----------       ---------
<S>                                                                             <C>              <C>
Accrued liabilities consist of:

Salaries, wages, commissions and related payables                               $  607,900       $ 640,500
Other                                                                              341,300         224,800
                                                                                ----------       ---------

                                                                                $  949,200       $ 865,300
                                                                                ----------       ---------
                                                                                ----------       ---------
</TABLE>

NOTE 12 - STOCK OPTION PLAN:

In December 1994, at the Annual Meeting of Stockholders of the Company, the
stockholders voted by majority decision to ratify and approve a new stock option
plan as adopted by the Board of Directors in June 1994. The plan allows, at the
discretion of the Board of Directors, for the granting of options to key
employees, officers, directors, and consultants of the Company to purchase
1,000,000 shares of the Company's common stock. Under the terms and conditions
set forth in the plan, the exercise price of the stock options will be a least
85% of the fair market value of the Company's common stock on the grant date.
The plan expires June 12, 2004.

                                    F-12

<PAGE>

STOCK OPTION ACTIVITY

<TABLE>
<CAPTION>
                                                     Outstanding             Exercisable           Weighted Average
                                                       Shares                  Shares               Price Per Share
                                                     -----------             -----------           ----------------
<S>                                                  <C>                     <C>                   <C>
Balance outstanding at June 30, 1995                      17,800                  17,800                $0.8043
                                                                             -----------
                                                                             -----------
           Exercised                                      (5,300)                                       $0.7852
                                                     -----------

Balance outstanding at June 30, 1996                      12,500                  12,500                $0.8125
                                                                             -----------
                                                                             -----------
           Exercised                                      (7,500)                                       $0.8125
           Canceled                                       (5,000)                                       $0.8125
                                                     -----------

Balance outstanding at June 30, 1997                           -                       -
                                                     -----------             -----------
                                                     -----------             -----------
</TABLE>

In fiscal 1998, there was no activity on the plan. At June 30, 1998, 
1,000,000 shares were available for future grants. In July 1998, the Company 
issued to an employee options to purchase 100,000 shares of common stock at 
fair market value.

NOTE 13 - PREFERRED STOCK AND COMMON STOCK:

In September 1995, the Company redeemed 250,232 shares of its preferred stock 
at the stated redeemed value of one dollar. Subsequent to the redemptions, in 
accordance with unanimous approval of the Board of Directors, the Company 
converted the remaining 2,749,768 shares of the outstanding Series A 
Preferred Stock to 1,374,884 shares of the Company's common stock. The shares 
were converted on the basis of one share of common stock for every two shares 
of preferred stock outstanding. On February 11, 1997, the Company amended its 
Articles of Incorporation to eliminate the authorization of the Company's 
Series A Preferred Stock.

On December 9, 1997, at the Company's Annual Meeting of Stockholders, the 
Board of Directors declared a common stock dividend of $.04 per common share 
payable on January 28, 1998 to stockholders of record on January 8, 1998. 
This marks the third consecutive annual payment of dividends on the Company's 
common stock.

In fiscal year 1998 and 1997, the Company retired 332,200 and 100,000 shares 
of its own common stock which it had purchased in connection with the 
Company's Buy Back Program at a total cost of $501,100 and $161,000, 
respectively.

In March 1998, the Company issued 2,072,539 shares of the Company's common 
stock in connection with the Rotocast merger (see Note 2).

Treasury stock is recorded at cost. At June 30, 1998 and 1997,  the treasury  
stock  consisted of 1,755 and 1,776 shares of common stock at a cost of 
$1,500, respectively.

NOTE 14 - INCOME TAXES:

The components of the income tax provision were:

<TABLE>
<CAPTION>
                                                                     For the years ended June 30,
                                                        -------------------------------------------------------
                                                             1998               1997                1996
                                                        ----------------   ----------------    ----------------
<S>                                                     <C>                <C>                 <C>
Current:
   Federal                                                 $   (6,400)       $    (63,000)       $    (62,000)
   State                                                      (19,100)            (93,600)           (129,400)
                                                           ----------        ------------        ------------
                                                              (25,500)           (156,600)           (191,400)
                                                           ----------        ------------        ------------
Deferred:
   Federal                                                   (301,500)           (744,100)           (642,000)
   State                                                      (21,500)            (42,100)           (101,100)
                                                           ----------        ------------        ------------
                                                             (323,000)           (786,200)           (743,100)
                                                           ----------        ------------        ------------

                                                           $ (348,500)       $   (942,800)       $   (934,500)
                                                           ----------        ------------        ------------
                                                           ----------        ------------        ------------
</TABLE>

                                    F-13

<PAGE>

At June 30, 1998, the Company has net operating loss (NOL) carryforwards of 
approximately $8,400,000 and $6,669,000 for federal and state income tax 
purposes, respectively. The NOL carryforwards, which are available to offset 
future taxable income of the Company and are subject to limitations should a 
"change in ownership" as defined in the Internal Revenue code occur, will 
begin to expire in 2003 and 1999 for federal and state purposes, 
respectively, if not utilized. The federal and state NOL carryforwards expire 
as follows:

<TABLE>
<CAPTION>

         Amount of unused operating loss carryforwards
         ---------------------------------------------                      Expiration during year
               Federal                       State                              ended June 30,
         ----------------                 ------------                      ----------------------
         <S>                              <C>                               <C>
         $    -                           $     95,000                              1999
              -                                371,000                              2000
              -                                405,000                              2001
              -                                207,000                              2002
          3,700,000                            451,000                              2003
          3,400,000                            273,000                              2004
            600,000                            444,000                              2005
            500,000                            235,000                              2006
              -                                708,000                              2007
              -                                603,000                              2008
            200,000                          1,053,000                              2009
              -                                395,000                              2010
              -                                556,000                              2011
              -                                477,000                              2012
              -                                396,000                              2013
        -----------                        -----------

         $8,400,000                         $6,669,000
        -----------                        -----------
        -----------                        -----------
</TABLE>

At June 30, 1998, the Company had a federal alternative minimum tax credit of 
approximately $253,000 which is available to offset future federal income 
taxes once the Company is no longer subject to an alternative minimum tax for 
federal income tax purposes.

In conjunction with the adoption of FAS 109 in fiscal 1994, management 
determined the future taxable income of the Company will more likely than not 
be sufficient to realize the tax benefits of its NOL's. As such, an initial 
deferred tax asset of $4,013,000, net of a valuation allowance of $2,662,000 
was recorded.

Based on the operating results since the adoption of FAS 109 and management's 
continuing assessment, management believes that the Company will continue to 
utilize its NOL's in the normal course of business. As of fiscal 1997, 
management has reduced the initial $2,662,000 valuation allowance to zero. 
Since this time, the Company's deferred tax provision increased substantially 
in unison with the depletion of the federal valuation allowance in fiscal 
1996. As such, the Company's will continue to report a large deferred tax 
provision until such time that the Company's NOL's and corresponding deferred 
tax assets are fully utilized. In connection with the Rotocast merger, the 
Company recorded a deferred tax asset of $394,400, net of a valuation 
allowance of $192,400 as of June 30, 1998, for the future benefit related to 
state NOL carryforwards. The current state valuation allowance represents the 
estimated amount of NOL's which will expire prior to their utilization. 
Again, realization of the future tax benefits of the NOL carryforwards is 
dependent on the Company's ability to generate taxable income within the 
carryforward period. Management will continue to assess the likelihood of 
utilizing its federal and state NOL's by taking into consideration historical 
results and current economic conditions in which the Company operates. 
Management does not consider any non-routine transactions in assessing the 
likelihood of realization of the recorded deferred tax asset. Any future 
adjustments to the valuation allowance will be reflected as a component of 
the current years tax provision. Management also notes that the deferred tax 
provision does not result in current outlays of cash flows due to the 
utilization of its NOL's. These cashflow savings are then available to 
supplement funding of the Company's expansion projects, pay common stock 
dividends and reduce outstanding debt.

                                    F-14

The following reconciles the federal statutory income tax rate to the 
effective rate of the provision for income taxes:

<TABLE>
<CAPTION>
                                                                                         For the year ended June 30,
                                                                                --------------------------------------------
                                                                                   1998             1997             1996
                                                                                ----------       ---------        ----------
<S>                                                                             <C>              <C>              <C>
Federal statutory rate                                                              34.0%           34.0%            34.0%
State income taxes (net of federal benefit)                                           1.7            2.6              3.6
Goodwill amortization                                                                13.6            4.3              4.3
Effect of decrease in valuation allowance                                               -              -             (7.7)
Other items, net                                                                     (3.8)          (1.4)             4.6
                                                                                ----------       ---------        ----------

         Effective income tax rate                                                   45.5%          39.5%            38.8%
                                                                                ----------       ---------        ----------
                                                                                ----------       ---------        ----------
</TABLE>

Deferred tax assets and liabilities are summarized as follows:

<TABLE>
<CAPTION>
                                                                                          June 30,
                                                                                ----------------------------
                                                                                   1998              1997
                                                                                ----------        ----------
<S>                                                                             <C>               <C>
Deferred tax assets:
    Federal NOL                                                                 $2,852,500        $3,164,800
    State NOL  (net of federal benefit)                                            387,600              -
    Tax credit carryforwards                                                       253,100           208,100
    Employment-related reserves                                                     79,200           116,000
    Allowance for doubtful accounts                                                 57,700            35,100
    Accruals not currently deductible                                                    -           136,500
                                                                                ----------       -----------
                                                                                 3,630,100         3,660,500

Deferred tax liabilities:
    Depreciation and amortization                                               (3,057,900)         (644,500)
                                                                                ----------       -----------
    Net deferred tax assets before valuation allowance                             572,200         3,016,000
    Deferred tax assets valuation allowance                                       (192,400)                -
                                                                                ----------       -----------
    Net deferred tax assets                                                     $  379,800        $3,016,000
                                                                                ----------       -----------
                                                                                ----------       -----------
</TABLE>

NOTE 15 - COMMITMENTS AND CONTINGENCIES:

COMMITMENTS

The Company leases various office and warehouse facilities, and equipment 
under long-term operating leases expiring through March 2013. Certain of the 
leases provide for five-year renewal options and rental increases based on 
the Consumer Price Index. Operating lease expense for fiscal 1998, 1997, and 
1996 amounted to $896,300, $830,500 and $834,400, respectively.

At June 30, 1998, the future minimum lease commitments, excluding insurance 
and taxes, are as follows:

<TABLE>
<CAPTION>

         Year Ending June 30,
         --------------------
         <S>                                                           <C>
              1999                                                     $   986,100
              2000                                                         949,500
              2001                                                         873,200
              2002                                                         646,800
              2003                                                         581,000
             Thereafter                                                  4,756,700
                                                                        ----------
                                                                        $8,793,300
                                                                        ----------
                                                                        ----------
</TABLE>

CONTINGENCIES

In the normal course of business, the Company encounters certain litigation 
matters, which in the opinion of management, will not have a significant 
adverse effect on the financial position or the results of operations of the 
Company.

                                    F-15

<PAGE>

On April 16, 1996, the Company was named as a defendant in a complaint filed 
by Bonar U.S., Inc. in Delaware Superior Court. The complaint alleged claims 
for breach of contract and promissory estoppel relating to an Agreement in 
Principle entered into in connection with a proposed acquisition of the 
Company by Bonar U.S., Inc. On April 3, 1996, the Company announced that it 
had terminated the Agreement of Principle pursuant to its terms. The 
complaint requested damages of $7,011,484. On May 17, 1996, the Company filed 
a counterclaim against Bonar U.S., Inc. and Bonar Plastic, Inc. seeking 
damages totaling $25,237,725 for breach of the Confidentiality Agreement with 
the Company, misappropriation of trade secrets, intentional interference with 
a prospective economic advantage which the Company obtained as a result of an 
indication of interest from a third party and breach of a Royalty Agreement 
between Bonar Plastics, Inc. and one of the Company's operating divisions 
(formally known as Custom Rotational Molding, Inc.). In March 1997, the 
Company reached an amicable out of court settlement with Bonar. The 
settlement involved mutual general releases by the parties, dismissals of the 
actions brought by the parties and payments to Bonar of $400,000 in March 
1997 and $350,000 in September 1997. The $350,000 is included in accounts 
payable in the accompanying balance sheet as of June 30, 1997. The total 
settlement payment of $750,000 plus additional related legal costs of 
$260,800 have been classified as lawsuit settlement in the accompanying 
statement of income.

NOTE 16 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Supplemental disclosures of cash flows information are as follows:

<TABLE>
<CAPTION>
                                                                               For the years ended June 30,
                                                                     -----------------------------------------------
                                                                        1998               1997              1996
                                                                     -----------         --------          --------
<S>                                                                  <C>                 <C>               <C>
Cash paid during the year for:
    Interest                                                         $   749,300         $555,900          $711,600
                                                                     -----------         --------          --------
                                                                     -----------         --------          --------
    Income taxes                                                     $   103,800         $188,500          $245,900
                                                                     -----------         --------          --------
                                                                     -----------         --------          --------
Non-cash investing activity:
    Acquisition of Rotocast by issuance of common stock              $ 3,000,000         $      -          $      -
                                                                     -----------         --------          --------
                                                                     -----------         --------          --------
Non-cash financing activities:
    Acquisition of Rotocast by issuance of note payable              $ 2,000,000         $      -          $      -
                                                                     -----------         --------          --------
                                                                     -----------         --------          --------
    Conversion of Rotocast bank debt to new note payable             $ 1,750,000         $      -          $      -
                                                                     -----------         --------          --------
                                                                     -----------         --------          --------
    Common dividends declared but not paid                           $    11,400         $ 11,700          $ 12,200
                                                                     -----------         --------          --------
                                                                     -----------         --------          --------
</TABLE>

NOTE 17 - UNAUDITED QUARTERLY RESULTS:

<TABLE>
<CAPTION>
                                                                           Quarter Ended
                                                   -----------------------------------------------------------------
                                                      September         December          March             June
                                                   --------------     -----------      -----------     -------------
<S>                                                <C>                <C>              <C>             <C>
Fiscal Year 1998:
     Net sales                                       $8,597,000        $8,563,900      $8,099,600       $12,798,400
     Gross Profit                                     1,803,700         1,873,900       1,700,200         3,412,700
     Net income                                          98,300           107,600          48,400           162,900

Per share:
     Net income                                          $  .01            $  .01         $   -              $  .01
                                                     ----------        ----------      ----------       -----------
                                                     ----------        ----------      ----------       -----------
Fiscal Year 1997:
     Net sales                                      $10,229,900        $9,478,200      $9,560,300       $10,116,700
     Gross Profit                                     2,606,300         2,476,400       2,186,600         2,823,700
     Net income/(loss)                                  517,200           434,400        (14,200)           504,400

Per share:
     Net income                                          $  .04            $  .03         $   -              $  .03
                                                     ----------        ----------      ----------       -----------
                                                     ----------        ----------      ----------       -----------
</TABLE>

                                    F-16


<PAGE>
                                      

                        ROTONICS MANUFACTURING INC.

                               SCHEDULE VIII

                     VALUATION AND QUALIFYING ACCOUNTS

                 Years Ended June 30, 1998, 1997 and 1996

<TABLE>
<CAPTION>


          Column A                             Column B                      Column C                    Column D        Column E
------------------------------------         --------------    -----------------------------------    ---------------   -----------
                                                                             Additions             
                                              Balance at       -----------------------------------                      Balance at
                                              beginning             Charged to                                            end of
         Description                          of period         Costs & Expenses        Other           Deductions        period
------------------------------------         -----------       -----------------    --------------    ---------------   -----------
<S>                                          <C>               <C>                  <C>               <C>               <C>
June 30, 1998:
   Allowance for doubtful accounts           $   90,000           $    34,600         $   49,800(4)    $   (26,400)(1)   $ 148,000
                                             -----------       -----------------    --------------    ---------------   -----------
                                             -----------       -----------------    --------------    ---------------   -----------
   Deferred tax asset valuation allowance    $        -           $         -         $  192,400(3)    $         -         192,400
                                             -----------       -----------------    --------------    ---------------   -----------
                                             -----------       -----------------    --------------    ---------------   -----------

June 30, 1997:
   Allowance for doubtful accounts           $   90,000           $     63,900        $        -       $   (63,900)(1)   $  90,000
                                             -----------       -----------------    --------------    ---------------   -----------
                                             -----------       -----------------    --------------    ---------------   -----------
   Deferred tax asset valuation allowance    $   54,500           $          -        $        -       $   (54,500)(2)   $       -
                                             -----------       -----------------    --------------    ---------------   -----------
                                             -----------       -----------------    --------------    ---------------   -----------
June 30, 1996:
   Allowance for doubtful accounts           $  110,300           $      58,800       $        -       $   (79,100)(1)   $  90,000
                                             -----------       -----------------    --------------    ---------------   -----------
                                             -----------       -----------------    --------------    ---------------   -----------
   Deferred tax asset valuation allowance    $  590,300           $           -       $   54,500 (3)   $  (590,300)(2)   $  54,500
                                             -----------       -----------------    --------------    ---------------   -----------
                                             -----------       -----------------    --------------    ---------------   -----------

</TABLE>

(1) Doubtful accounts written off during the year.

(2) Decrease in valuation allowance based on current years' additional 
    utilization or expiration of net operating loss carryforwards.

(3) Represents valuation allowance for potential state NOL's which will 
    expire prior to utilization.

(4) Represents Rotocast balance at date of merger.

                                        
                                      F-17