<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, 1997

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.  [    ]

The aggregate market value of the voting stock held by non-affiliates of the 
registrant, as of September 11, 1997, was $11,935,000 (1).

The number of shares of common stock outstanding at September 11, 1997 was 
13,987,564.

(1) Excludes 6,349,157 shares held by directors, officers and stockholders 
whose ownership exceeded 5% of the outstanding shares at September 11, 1997. 
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

Document                                                             Form 10-K
--------                                                             ---------
                                                                        Part
                                                                        ----
Definitive Proxy Statement to be used in connection with 
the Annual Meeting of Stockholders to be held on December 9, 1997       III


                                      2

<PAGE>

                               TABLE OF CONTENTS

PART I                                                                  Page
                                                                        ----

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

PART II

Item 5         Market for Registrant's Common Stock and Related
                    Stockholder Matters                                    7
Item 6         Selected Financial Data                                     8
Item 7         Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                   10
Item 8         Financial Statements and Supplementary Data                13
Item 9         Changes in and Disagreements with Accountants on
                    Accounting and Financial Disclosure                   13

PART III

Item 10        Directors and Executive Officers of the Registrant         14
Item 11        Executive Compensation                                     14
Item 12        Security Ownership of Certain Beneficial Owners
                    and Management                                        14
Item 13        Certain Relationships and Related Transactions             14

PART IV

Item 14        Exhibits, Financial Statement Schedules, and Reports
                    on Form 8-K                                           15

SIGNATURES                                                                16


                                      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-W, 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 two divisions 
of the Company using the trade names RMI-P and 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 and currently operates this business as a division of 
the Company at this location using the trade name RMI-A.

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 and prepare the facility to house its Colorado operations.  By 
fiscal year end the Company had substantially relocated its operations into 
this new facility. Management anticipates the remaining improvements to be 
completed during the second quarter of fiscal 1998.  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.  This 
relocation is pivotal to the Company's growth.  Also, the facility is located 
within an enterprise zone which should provide additional benefits as we move 
forward.

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 eight 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 
containers for commercial, agricultural, pharmaceutical, point of purchase 
display, medical waste, refuse, marine, 


                                      4

<PAGE>

health care 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, the dip molding process. 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 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 six major suppliers in the U.S. and Canada. 
There are six additional suppliers of minor significance.  As 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 and commercial applications.  The patents expire through the 
year 2010. Although the Company has been able to capture its share of this 
niche market 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 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 
$4,313,400 and $4,936,400 as of June 30, 1997 and 1996, respectively.  All of 
the backlog orders of June 30, 1997 are expected to be filled during fiscal 
1998.

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 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, 1997, the Company employed a total of 450 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..


                                      5

<PAGE>

ITEM 2. PROPERTIES

The Company's corporate office occupies a separate building comprising 
approximately 2,500 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

Arleta, California               29,000       59,000       $184,400      October 1997

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

Warminster, Pennsylvania (1)     39,100      217,800       $113,000          May 1998

Bartow, Florida                  34,000      150,600       $103,800    September 1999

Gainesville, Texas (3)              -        108,900       $  1,000        April 2001
</TABLE>

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

The Company owns 2.1 unencumbered 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) currently encumbered by a $1.15 
million mortgage in Bensenville, Illinois for the Company's Illinois 
manufacturing operations.  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

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.


                                      6

<PAGE>

                                       PART II

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 6,600 at 
September 11, 1997.

                             PRICE RANGE OF COMMON STOCK

The following table sets forth the quarterly price ranges of the Company's 
Common Stock in Fiscal 1997 and 1996, as reported on the composite 
transactions reporting system for AMEX listed stocks.

                                                        High        Low  
                                                     ---------   ---------
Fiscal 1996
         First Quarter Ended September 30, 1995       $      3    $1-15/16
         Second Quarter Ended December 31, 1995         2-7/16       1-3/8
         Third Quarter Ended March 31, 1996            2-13/16       1-1/2
         Fourth Quarter Ended June 30, 1996              2-1/4      1-5/16

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            1-11/16       1-3/8
         Fourth Quarter Ended June 30, 1997              1-1/2       1-1/4


In fiscal 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.


                                      7

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                         Year ended June 30,
                                              -------------------------------------------------------------------------
                                                   1997           1996         1995(B)          1994           1993
                                              -------------  -------------  -------------  -------------  -------------
<S>                                           <C>            <C>            <C>            <C>            <C>
INCOME STATEMENT DATA
Net sales                                     $  39,385,100  $  35,703,600  $  35,887,600  $  31,346,300  $  27,983,800

Cost of goods sold                               29,292,100     26,443,700     26,298,900     23,312,300     20,817,400

Gross margin                                     10,093,000      9,259,900      9,588,700      8,034,000      7,166,400

Selling, general and 
   administrative expenses                        6,239,600      6,313,100      5,767,900      5,636,800      5,905,700

Interest expense                                    556,500        696,500        766,500        592,500        577,700

Income from continuing operations
   before change in accounting principle
   for income taxes (C)                           1,441,800      1,472,700      3,287,600      1,873,000        203,000

Loss on disposal of 
   discontinued operations                                -              -              -              -       (167,800)

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

Net income                                     $  1,441,800   $  1,472,700   $  3,287,600   $  5,886,000  $      35,200

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

Average common shares
   outstanding (A)                               14,135,200     13,858,300     12,607,900     11,959,600      9,942,700

OTHER FINANCIAL DATA

Income from continuing
   operations as a percent of sales                    3.7%           4.1%           9.2%           6.0%           0.7%
</TABLE>

(A)  Computed on the basis of the weighted average number of common shares
     outstanding during each year, including dilutive common stock 
     equivalents and adjusted to reflect a 1-for-3 reverse stock split 
     effective December 17, 1992.

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

(C)  Fiscal years 1997 and 1993 include $1,010,800 and $469,000,
     respectively, in costs relating to two different lawsuit settlements.

(D)  Represents the recognition of a net deferred tax asset in conjunction
     with the adoption of FAS 109, "Accounting for Income Taxes" (see
     Note 13 of Notes to Financial Statements). 


                                      8

<PAGE>

<TABLE>
<CAPTION>
                                                                             At June 30,
                                              -------------------------------------------------------------------------
                                                   1997           1996         1995(B)          1994           1993
                                              -------------  -------------  -------------  -------------  -------------
<S>                                           <C>            <C>            <C>            <C>            <C>
BALANCE SHEET DATA

Current assets                                $  12,814,000  $  13,023,000  $  11,903,200   $  9,244,500   $  6,811,000

Current liabilities                               5,099,700      4,864,500      4,766,000      7,256,300      7,734,300

Working capital surplus/(deficit)                 7,714,300      8,158,500      7,137,200      1,988,200       (923,300)

Total assets                                     30,634,400     29,055,700     30,359,400     24,939,000     19,418,100

Long-term debt                                    6,486,100      5,864,100      7,707,700      2,834,400      1,982,500

Total liabilities                                11,589,800     10,732,600     12,477,700     10,095,700      9,790,500

Preferred stock                                           -              -      3,000,000      3,875,000      4,250,000

Current ratio                                      2.5 to 1       2.7 to 1       2.5 to 1       1.3 to 1        .9 to 1

Net book value per
  common share (A)                                  $  1.35        $  1.29        $  1.15         $  .92         $  .46
</TABLE>


(A) Computed on the basis of the actual number of common shares outstanding 
    at the end of the fiscal year, adjusted to reflect a 1-for-3 reverse 
    stock split effective December 17, 1992.

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


                                      9

<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 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 the 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 is watching these trends to ascertain what 
impact, if any, it will have on the Company's growth projections.  In fiscal 
1997, the Company continued to reinvest a large portion of its cashflows to 
expand its manufacturing capacity and operations.  In the later part of 
fiscal 1997, the Company also purchased a new facility in Commerce City, 
Colorado and by year end had relocated its Colorado operations into this 
larger facility.  Management believes this region offers great growth 
potential and will strive for similar performance that the Illinois facility 
has obtained since its relocation in fiscal 1996.

Net sales for fiscal 1996 were relatively consistent with prior year results 
reporting net sales of $35,703,600 compared to $35,887,600 for fiscal 1995. 
Fiscal 1996 was a challenging year for the Company as well as the 
roto-molding industry in general due to tremendous fluctuations in raw 
material which in turn caused confusion and anxiety in the marketplace.  
Management was pleased that in spite of these adverse conditions it was still 
able to maintain its overall market share.  In fiscal 1996, the Company 
closed its Wisconsin facility and combined the operations into its Illinois 
facility.  During this transition the Company did realize an overall 
reduction in sales volumes.  However, since completion of the relocation 
process during the fourth quarter of fiscal 1996, the restructured Illinois 
facility is primed to handle increased sales volumes. Management anticipates 
realizing increased volumes in this region as it capitalizes on Illinois 
facilities resources, increased capacity and growth potential.  Again, due to 
a lackluster marketplace in fiscal 1996, several of the Company's proprietary 
product lines fell below fiscal 1995 sales volume levels but, the Company 
also reported notable increases in marine, custom, customer tooling and 
medical waste sales which aided to minimize any shortfalls realized.  The 
Company continues to see future growth potential in these aforementioned 
product lines as well as continued focus to increase market share for its 
material handling and agricultural product lines.

Cost of goods was $29,292,100 or 74.4% of net sales in fiscal 1997 compared 
to $26,443,700 or 74.1% and $26,298,900 or 73.3% of net sales in fiscal 1996 
and 1995.  Since fiscal 1995, the Roto-molding Industry has experienced 
extreme volatility in plastic resin prices.  These price increases have 
resulted in approximately a 50% increase in raw material prices per pound 
since the beginning of this three 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


                                      10

<PAGE>

typically follow market trends and allow the Company to obtain gross margin 
levels consistent with Company objectives.  Between fiscal 1995 and 1996, the 
Company experienced increased costs as it depleted lower priced resin 
reserves and replaced them with resin purchased at higher market prices.  
These costs were partially mitigated during the remainder of fiscal 1996 
using the strategies mentioned above coupled with temporary restructure in 
resin prices and improved customer buying trends.  As the Company moves 
forward into fiscal 1998, management will continue to monitor and take the 
necessary defensive tactics to minimize future increases in resin prices.  If 
resin prices do not stabilize and the marketplace reacts adversely to future 
pricing structures these factors could have an effect on the Company's gross 
profit margin in fiscal 1998.

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 has also benefited from the operating 
efficiencies realized since the completed consolidation of the Illinois and 
Wisconsin facilities.

Selling, general and administrative expenses were $6,313,100 or 17.7% of net 
sales in fiscal 1996 compared to $5,767,900 or 16.1% in fiscal 1995.  The 
increase is substantially attributed to approximately $435,000 in additional 
expenses incurred associated with the Arleta, California facility which was 
acquired during the fourth quarter of fiscal 1995.  The remaining increase is 
attributed to increased professional fees of approximately $110,000 
associated with a proposed acquisition of the Company and approximately 
$50,000 in excess administrative expenses incurred during the Wisconsin 
facility consolidation. The latter costs have been partially mitigated due to 
improved operating efficiencies realized subsequent to the consolidation of 
the two plants.

Income from operations was $3,853,400 or 9.8% of net sales in fiscal 1997 
compared to $2,946,800 or 8.3% and $3,820,800 or 10.6% of net sales in fiscal 
1996 and 1995.  Management is pleased with the progress the Company has made 
in fiscal 1997 to improve the level of income from operations in relation to 
current sales volumes.  The Company continues to face industry challenges but 
will strive to obtain the same satisfactory results which were obtained 
between fiscal 1997 and 1996 by mitigating the effect of resin price 
increases, maintaining consistent levels of selling, general and 
administrative and expanding marketshare of its products.

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 cashflows 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 will 
result in additional interest costs in fiscal 1998.

Interest  expense decreased  $70,000 to $696,500  in fiscal 1996 compared to 
$766,500 in fiscal 1995.  The decrease is  attributed  to  a overall  
reduction in the Company's debt structure of approximately  $1.8 million as 
of June 30, 1996 coupled with last years renegotiated interest rates and 
reductions in the bank's prime lending interest rate which lowered interest 
rates by 1.75% - 2%.

Income before income taxes remained relatively consistent at $2,384,600 or 
$.17 per common share in fiscal 1997 compared to $2,407,200 or $.17 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 14 of "Notes to Financial 
Statements").  Total litigation costs represent an out of court settlement of 
$750,000 plus additional related legal costs of $260,800.

Income before income taxes decreased $784,800 to $2,407,200 or $.17 per 
common share in fiscal 1996 compared to $3,192,000 or $.23 per common share 
in fiscal 1995.  The decrease is due to slightly lower sales volumes during 
the current fiscal year coupled with the resin cost increase and increases in 
selling, general and administrative expenses outlined above.  Although 
operating results were below prior years' levels, management feels the 
current year's results were satisfactory when one considers the challenging 
events which plagued fiscal 1996.  Income tax expense was $942,800 or $.07 
per common share for fiscal 1997 compared to $934,500 or $.07 per common 
share 


                                      11

<PAGE>


in fiscal 1996. Since fiscal 1996 when the Company depleted its federal 
valuation allowance reserve, the Company's income tax provision has included 
a significant deferred tax component of $786,200 or $.06 per common share and 
$743,100 or $.05 per common share in fiscal 1997 and 1996, respectively.  The 
Company will continue to report a large deferred tax provision until such 
time that the Company's NOL's ($9.3 million at June 30, 1997) and 
corresponding deferred tax assets are fully utilized.  Management also notes 
that the deferred tax provision does not result in current outlays of 
cashflows 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.

Income tax expense was $934,500 or $.07 per common share for fiscal 1996 
compared to income tax benefits of $95,600 for fiscal 1995.  The increase is 
due to the recognition of deferred income taxes during fiscal 1996 which in 
prior years were minimized by the reversal of the Company's deferred tax 
asset valuation allowance.  During fiscal 1996, the Company depleted the 
remaining $590,300 valuation allowance reserve based on management's 
continuing assessment and belief that the Company will continue to utilize 
its NOL's in the foreseeable future.

LIQUIDITY AND CAPITAL RESOURCES

Working capital decreased $444,200 to $7,714,300 at June 30, 1997 compared to 
$8,158,500 at June 30, 1996.  The decrease was primarily due to reductions in 
accounts receivable and current deferred tax assets and an increase in 
accounts payable, net of decreases in accrued liabilities and an increase in 
inventories. The decrease in accounts receivable was due to improvements in 
the Company's days sales outstanding in fiscal 1997.  The increases in 
inventories and accounts payable are primarily due to the higher transaction 
levels related to increased sales volumes and also to raw material purchasing 
strategies initiated at fiscal year end.

Cash provided by operations was $3,778,900 for fiscal 1997 which was 
consistent with fiscal 1996 results of $3,774,100.  The main source of funds 
were net income and non-cash expense items including depreciation, 
amortization and deferred income taxes.

The Company expended a total of $3,797,800 for property, plant and equipment 
during fiscal 1997 compared to $981,100 for fiscal 1996.  This reflects an 
increase of $2,816,700 over prior period expenditures.  The increase is 
partially attributed to the purchase of the Commerce City, Colorado facility 
in February 1997.  The facility consists of 9.73 acres of land and 63,000 sq. 
feet of manufacturing and office building space.  The facility was purchased 
for $825,000 and to date the Company has expended an additional $325,000 on 
building and facility improvements.  Management anticipates spending an 
additional $250,000 in fiscal 1998 to complete the project.  In January 1997, 
we also completed a 13,800 sq. foot facility expansion at our Texas facility. 
 The Company spent approximately $222,700 on this expansion project.  Fiscal 
1997 has also been a record period for machinery and equipment acquisitions.  
The Company added six additional roto-molding machines and five automated 
routers to its manufacturing operations.  Since the 1991 merger, management 
has been very committed to expanding and improving its operations.  This 
commitment has allowed the Company to stay in the forefront of the industry 
and optimizes our position for future growth.

In March and June 1997, the Company borrowed $500,000 and $1,000,000, 
respectively against its machinery and equipment term loan commitments.  The 
proceeds were used to pay down the Company's revolving line of credit which 
had been used to temporarily finance approximately $1.9 million in machinery 
and equipment purchases.  The notes are each due in sixty monthly principal 
installments plus interest at the bank's prime or optional LIBOR interest 
rates. In addition, the Company received an additional $1.2 million machinery 
and equipment term loan commitment from the bank for the financing of future 
capital expenditures.

In July 1997, the Company renewed its $5 million secured line of credit with 
the bank which extended its maturity date to July 15, 1999.  Net borrowings 
under the line of credit increased $389,900 to $2,373,400 between June 30, 
1996 and June 30, 1997.  Current increases in the line are primarily related 
to ongoing capital expenditures, including the building improvement in 
Commerce City, until such time these costs are refinanced under long-term 
debt arrangements.


                                      12

<PAGE>

The Company's financial position continues to strengthen.  Stockholder's 
equity increased $721,500 to $19,044,600 in fiscal 1997 and since fiscal 1992 
stockholder's equity has more than doubled.  This increase is net of the 
Company's second annual common stock dividend of $.04 per common share, or 
$565,400, which was declared on December 10, 1996 and paid on January 24, 
1997 to stockholders of record on January 6, 1997.  In fiscal 1997, the 
Company initiated and completed a common stock buy back program which 
resulted in the repurchase and subsequent retirement of 100,000 shares of 
common stock at a cost of $161,000.

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.

Cashflows 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.

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

In September 1995, the Registrant replaced Price Waterhouse LLP with Arthur 
Andersen LLP as the Registrant's Independent Certified Public Accountants, as 
more fully described in the Company's 8-K filing dated September 20, 1995 
incorporated herein by reference.


                                      13

<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 9, 1997 ("the Proxy Statement")

EXECUTIVE OFFICERS

As of September 11, 1997, the executive officers of the Company were as 
follows:

Name                         Age            Position
----                         ---            --------
Sherman McKinniss            61             President, Chief Executive Officer,
                                            Chairman of the Board

E. Paul Tonkovich            59             Secretary, Director

Douglas W. Russell           36             Chief Financial Officer,
                                            Assistant Secretary/Treasurer

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.

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 Executives", the "Summary Compensation Table" and 
related disclosure information, "Certain Transactions", "Compensation of 
Directors", and "Compensation Pursuant to Plans" 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.


                                      14

<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:

                                                                      Page
                                                                      ----
         (1)  Financial Statements:

              Report of Independent Public Accountants                F-1 - F-2
              Balance Sheet, June 30, 1997 and 1996                   F-3
              Statement of Income,
                Years Ended June 30, 1997, 1996 and 1995              F-4
              Statement of Changes in Stockholders' Equity,
                Years Ended June 30, 1997, 1996, and 1995             F-5
              Statement of Cash Flows,
                Years Ended June 30, 1997, 1996, and 1995             F-6
              Notes to Financial Statements                           F-7

         (2)  Financial Statement Schedules:

              VIII   Valuation and Qualifying Accounts,
                     Years Ended June 30, 1997, 1996, and 1995        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:

         No reports were filed on Form 8-K during the last quarter of fiscal 
         year ended June 30, 1997.

    (c)  The following exhibits are filed as part of this report:

Exhibit
Number        Exhibit Title
-------       -------------
 3.1     Restated Certificate of Incorporation, as amended February 11, 1997

10.1     Credit Agreement and related Promissory notes between registrant and 
         Wells Fargo Bank dated July 16, 1997

23(a)    Consent of Independent Public Accountants - Arthur Andersen LLP

23(b)    Consent of Independent Accountants - Price Waterhouse LLP


                                      15

<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 09/15/1997


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

                                                              Date 09/15/1997


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.

Signature                              Title                         Date
---------                              -----                         ----


 /s/   L. JOHN POLITE, JR.             Director                      09/15/1997
--------------------------------
L. John Polite, Jr.



 /s/  E. PAUL TONKOVICH                Secretary, Director           09/15/1997
--------------------------------
E. Paul Tonkovich



 /s/  DAVID C. POLITE                  Director                      09/15/1997
--------------------------------
David C. Polite



 /s/  LARRY DEDONATO                   Director                      09/15/1997
--------------------------------
Larry DeDonato



 /s/  JAMES E. EVANS                   Director                      09/15/1997
--------------------------------
James E. Evans


                                      16

<PAGE>

                             ROTONICS MANUFACTURING INC.

                                 FINANCIAL STATEMENTS

                                    *  *  *  *  *

                                    JUNE 30, 1997


<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, 1997 and 1996, and the related 
statements of income, changes in stockholders' equity and cash flows for the 
years then ended.  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, 1997 and 1996, and the results of their operations and their 
cash flows for the years then ended 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 21, 1997


                                      F-1

<PAGE>

                      REPORT OF INDEPENDENT ACCOUNTANTS


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

In our opinion, the financial statements listed in the index appearing under 
Item 14(a)(1) and (2) present fairly, in all material aspects, the results of 
operations of Rotonics Manufacturing Inc. and its cash flows for the year 
ended June 30, 1995 in conformity with generally accepted accounting 
principles.  These financial statements are the responsibility of the 
Company's management; our responsibility is to express an opinion on these  
statements based on our audit.  We conducted our audit of these statements in 
accordance with generally accepted auditing standards which require that we 
plan and perform the audit to obtain reasonable assurance about whether the 
financial statements are free of material misstatement. An audit includes 
examining, on a test basis, evidence supporting the amounts and disclosures 
in the financial statements, assessing the accounting principles used and 
significant estimates made by management, and evaluating the overall 
financial statement presentation.  We believe that our audit provides a 
reasonable basis for the opinion expressed above.



Price Waterhouse LLP
Los Angeles, California
September 11, 1995


                                      F-2

<PAGE>

                          ROTONICS MANUFACTURING INC.
                                 BALANCE SHEET
<TABLE>
<CAPTION>
                                                                                               JUNE 30,
                                                                                  --------------------------------
                                                                                       1997               1996 
                                                                                  -------------       ------------
<S>                                                                               <C>                 <C>
                                          ASSETS
Current assets:
 Cash                                                                             $     12,100        $     11,600
 Accounts receivable, net of allowance for doubtful accounts
  of $90,000 (Notes 7 and 8)                                                         5,334,400           5,790,700
 Current portion of notes receivable (Note 3)                                           48,100              46,900
 Inventories (Notes 4 , 7 and 8)                                                     5,602,700           4,939,400
 Deferred income taxes, net (Note 13)                                                1,574,600           2,015,900
 Prepaid expenses and other current assets                                             242,100             218,500
                                                                                    ----------        ------------

   Total current assets                                                             12,814,000          13,023,000

Notes receivable, less current portion (Note 3)                                        455,000             455,000
Deferred income taxes, net (Note 13)                                                 1,441,400           1,786,300
Property, plant and equipment, net (Notes 5, 7 and 8)                               10,799,500           8,316,900
Intangible assets, net (Note 6)                                                      5,065,500           5,382,100
Other assets                                                                            59,000              92,400
                                                                                  ------------        ------------

                                                                                  $ 30,634,400        $ 29,055,700
                                                                                  ------------        ------------
                                                                                  ------------        ------------

                             LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current portion of long-term debt (Note 8)                                        $   1,281,300       $   1,176,700
Accounts payable                                                                      2,953,100           2,686,100
Accrued liabilities (Note 10)                                                           865,300           1,001,700
                                                                                  -------------       -------------

    Total current liabilities                                                         5,099,700           4,864,500

Bank line of credit (Note 7)                                                          2,373,400           1,983,500
Long-term debt, less current portion (Note 8)                                         4,112,700           3,880,600
Other liabilities                                                                         4,000               4,000
                                                                                  -------------       -------------

    Total liabilities                                                                11,589,800          10,732,600
                                                                                  -------------       -------------
                                                                                  -------------       -------------
Commitments and contingencies (Note 14)

Stockholders' equity:
Common stock, stated value $.01: authorized 20,000,000 shares;
  issued and outstanding 14,065,995 and 14,158,517 shares, respectively,
net of treasury shares (Notes 9 and 12)                                              24,422,500          24,577,400
Accumulated deficit                                                                  (5,377,900)         (6,254,300)
                                                                                  -------------       -------------

    Total stockholders' equity                                                       19,044,600          18,323,100
                                                                                  -------------       -------------

                                                                                  $  30,634,400       $  29,055,700
                                                                                  -------------       -------------
                                                                                  -------------       -------------
</TABLE>

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


                                      F-3

<PAGE>

                         ROTONICS MANUFACTURING INC.
                              STATEMENT OF INCOME

<TABLE>
<CAPTION>
                                                                     For the year ended June 30,
                                                             -------------------------------------------
                                                                  1997           1996           1995
                                                             -------------  -------------  -------------
<S>                                                          <C>            <C>            <C>
Net sales                                                    $  39,385,100  $  35,703,600  $  35,887,600
                                                             -------------  -------------  -------------

Costs and expenses:
  Cost of goods sold                                            29,292,100     26,443,700     26,298,900
  Selling, general and administrative expenses                   6,239,600      6,313,100      5,767,900
                                                             -------------  -------------  -------------

     Total costs and expenses                                   35,531,700     32,756,800     32,066,800
                                                             -------------  -------------  -------------

Income from operations                                           3,853,400      2,946,800      3,820,800
                                                             -------------  -------------  -------------
Other (expense)/income:
  Interest expense                                                (556,500)      (696,500)      (766,500)
  Lawsuit settlement (Note 14)                                  (1,010,800)         -              -
  Other income, net                                                 98,500        156,900        137,700
                                                             -------------  -------------  -------------
     Total other expense                                        (1,468,800)      (539,600)      (628,800)
                                                             -------------  -------------  -------------

Income before income taxes                                       2,384,600      2,407,200      3,192,000

Income tax (provision)/benefit (Note 13)                          (942,800)      (934,500)        95,600
                                                             -------------  -------------  -------------

Net income                                                       1,441,800      1,472,700      3,287,600

Preferred stock dividends                                            -            (62,000)      (301,600)
                                                             -------------  -------------  -------------

Net income applicable to common and equivalent shares         $  1,441,800   $  1,410,700  $   2,986,000
                                                             -------------  -------------  -------------
                                                             -------------  -------------  -------------

Net income per common and equivalent shares (Note 1)                $  .10         $  .10         $  .24
                                                                    ------         ------         ------
                                                                    ------         ------         ------
</TABLE>

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


                                      F-4

<PAGE>

                          ROTONICS MANUFACTURING INC.
                 STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                              Preferred Stock              Common Stock       Accumulated Deficit   Total
                                          ------------------------   ------------------------ ------------------- ----------
                                            Shares       Amount        Shares       Amount
                                          ----------  ------------   ----------  -------------
<S>                                       <C>         <C>            <C>         <C>            <C>             <C>
Balances, June 30, 1994                    3,875,000  $  3,875,000   11,968,745  $  21,053,100  $  (10,084,800) $  14,843,300


Stock issued in connection with
  Custom Rotational Molding, Inc. purchase      -             -         300,000        412,500            -           412,500
Redemptions of preferred stock              (500,000)     (500,000)     615,384        500,000            -              -
Stock issued in connection with
  exercise of outstanding options               -             -          19,623         14,900            -            14,900
Repurchase of preferred shares              (375,000)     (375,000)        -              -               -          (375,000)
Preferred stock dividends                       -             -            -              -           (301,600)      (301,600)

Net income                                      -             -            -              -          3,287,600      3,287,600
                                          ----------  ------------   ----------  -------------  --------------  -------------

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
                                          ----------  ------------   ----------  -------------  --------------  -------------

Balance, June 30, 1997                          -     $       -      14,065,995  $  24,422,500   $  (5,377,900) $  19,044,600
                                          ----------  ------------   ----------  -------------  --------------  -------------
                                          ----------  ------------   ----------  -------------  --------------  -------------
</TABLE>

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


                                      F-5

<PAGE>

                          ROTONICS MANUFACTURING INC.
                           STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                  For the year ended June 30,
                                                                           ------------------------------------------
                                                                                1997           1996          1995
                                                                           ------------   ------------   ------------
<S>                                                                        <C>            <C>            <C>
Cash flows from operating activities:
 Net income                                                                $  1,441,800   $  1,472,700   $  3,287,600
 Adjustments to reconcile net income to
  net cash provided by operating activities:
   Depreciation and amortization                                              1,617,000      1,588,100      1,484,100
   Loss on sales of equipment                                                    21,800            -              -
   Deferred income tax expense/(benefit)                                        786,200        743,100       (304,000)
   Provision for doubtful accounts                                               63,900         58,800         24,200
   Changes in assets and liabilities, net of
      effect from purchase of business:
      Decrease/(increase) in accounts receivable                                392,400       (508,000)      (182,600)
      (Increase)/decrease in inventories                                       (663,300)       412,700     (1,725,600)
      (Increase)/decrease in prepaid expenses and other current assets          (23,600)      (103,700)       127,100
      Decrease/(increase) in other assets                                        23,200          2,900        (17,100)
      Increase/(decrease) in accounts payable                                   243,700        329,000       (318,500)
      (Decrease)/increase in accrued liabilities                               (124,200)      (198,100)        50,900
      (Decrease)/increase in income taxes payable                                   -          (23,400)         6,300
      Decrease in other liabilities                                                 -              -           (1,000)
                                                                           ------------   ------------   ------------

Net cash provided by operating activities                                     3,778,900      3,774,100      2,431,400
                                                                           ------------   ------------   ------------
Cash flows from investing activities:
 Cash obtained from purchase of Custom Rotational Molding, Inc.                     -              -          106,200
 (Advances)/repayments on notes receivable                                       (1,200)         5,800         93,700
 Capital expenditures                                                        (3,797,800)      (981,100)    (3,023,100)
 Proceeds from sales of equipment                                                 3,200            -              -
                                                                           ------------   ------------   ------------

Net cash used in investing activities                                        (3,795,800)      (975,300)    (2,823,200)
                                                                           ------------   ------------   ------------
Cash flows from financing activities:
 Borrowings under line of credit                                              9,700,000      7,758,800     12,384,500
 Repayments under line of credit                                             (9,310,100)    (8,835,600)   (12,291,700)
 Proceeds from issuance of long-term debt                                     1,526,400        500,000      6,080,000
 Repayments of long-term debt                                                (1,189,700)    (1,264,600)    (5,019,100)
 Redemption of preferred stock                                                      -         (250,200)      (375,000)
 Payment of preferred stock dividends                                               -          (85,400)      (307,700)
 Payment of common stock dividends                                             (554,300)      (554,000)           -
 Proceeds from exercise of stock options and warrants                             6,100          4,200         14,900
 Repurchases of common stock                                                   (161,000)      (157,100)           -
                                                                           ------------   ------------   ------------

Net cash provided by/(used in) financing activities                              17,400     (2,883,900)       485,900 
                                                                           ------------   ------------   ------------

Net increase/(decrease) in cash                                                     500        (85,100)        94,100 
Cash at beginning of year                                                        11,600         96,700          2,600 
                                                                           ------------   ------------   ------------

Cash at end of year                                                        $     12,100      $  11,600      $  96,700 
                                                                           ------------   ------------   ------------
                                                                           ------------   ------------   ------------
</TABLE>

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

                                      F-6

<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 containers and vessels for commercial, 
agricultural, refuse, pharmaceutical, marine, health care 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 
1997, 1996, or 1995.  In fiscal 1997 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 five 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 twenty 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-7

<PAGE>

INCOME TAXES

The Company accounts for income taxes pursuant to Statement of Financial 
Accounting Standards No. 109  ("FAS 109"),  "Accounting for Income Taxes".  
FAS 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, FAS 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 based on the weighted average outstanding 
number of common and dilutive common equivalent shares.  Common equivalent 
shares include outstanding stock options and warrants.  The weighted average 
number of shares used in determining income per common share was 14,135,200, 
13,858,300 and 12,607,900 in fiscal 1997, 1996 and 1995, respectively.

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."  SFAS No. 123 requires the Company to disclose 
proforma 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 December 31, 1997, the Company will be required to adopt SFAS No. 
128, "Earnings per Share".  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 that the calculation now 
uses the average share price for the reporting period to compute dilution 
from options under the treasury stock method.  The adoption of this 
promouncement is not expected to have a significant impact on the Company's 
earnings per share.

NOTE 2 - ACQUISITIONS:

On May 31, 1995 the Company purchased certain assets and assumed certain 
liabilities, including $700,000 of debt, of Custom Rotational Molding, Inc. 
("CRM") for 300,000 shares of the Company's common stock with a fair value of 
$412,500.  The acquisition was accounted for as a purchase and in accordance 
with the Agreement and Plan of Reorganization was effective April 1, 1995.  
The Company's results of operations include those of CRM since the effective 
date of the acquisition.  The purchase price allocation, resulted in no 
recognition of goodwill.  The Company's results of operations in fiscal 1995 
would not have been materially different had the acquisition of CRM been 
effective as of the beginning of the respective period.  CRM currently 
conducts business as a division of the Company using the trade name RMI-A and 
primarily manufactures custom molded products for a variety of industries.

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, 1997 and 1996, the 
total balance of this note amounted to $503,100 and $487,100 including 
accrued interest of $48,100 and $32,100, respectively.  The Company intends 
to hold this note until maturity.


                                      F-8

<PAGE>

NOTE 4 - INVENTORIES:

Inventories consist of:                                    June 30,
                                                   ------------------------
                                                     1997           1996
                                                   ----------     ----------
Raw materials                                      $3,160,000     $2,691,300

Finished goods                                      2,442,700      2,248,100
                                                   ----------     ----------
                                                   $5,602,700     $4,939,400
                                                   ----------     ----------
                                                   ----------     ----------


NOTE 5 - PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consist of:                  June 30,
                                                  --------------------------
                                                     1997           1996
                                                  -----------    -----------
Land                                              $ 1,039,500    $   574,200
Buildings and building improvements                 3,274,500      2,701,500
Machinery, equipment, furniture and fixtures       13,762,700     11,376,200
Construction in progress                              359,900         93,800
                                                  -----------    -----------
                                                   18,436,600     14,745,700

Less - accumulated depreciation                    (7,637,100)    (6,428,800)
                                                  -----------    -----------
                                                  $10,799,500    $ 8,316,900
                                                  -----------    -----------
                                                  -----------    -----------


NOTE 6 - INTANGIBLE ASSETS:

Intangible assets consist of:                              June 30,
                                                  --------------------------
                                                     1997            1996
                                                  -----------    -----------
Patents, net of accumulated amortization 
  of $95,200 and $79,600                          $    35,200    $    50,800
Goodwill, net of accumulated amortization
  of $2,070,000 and $1,768,900                      5,030,300      5,331,300
                                                   ----------     ----------

                                                   $5,065,500     $5,382,100
                                                   ----------     ----------
                                                   ----------     ----------

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.

NOTE 7 - BANK LINE OF CREDIT:

The Company has a $5,000,000 revolving line of credit with Wells Fargo Bank, 
which matures on July 15, 1999.  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, 
1997 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, 1997 total borrowings 
under the Company's line of credit was $2,373,400 of which $2,250,000 was 
borrowed under the LIBOR option.  The LIBOR borrowings consist of two 
borrowings of $1,250,000 and $1,000,000 both bearing a LIBOR interest rate of 
8.1875% per annum and maturing on July 16, 1997 and July 28, 1997, 
respectively.  Proceeds from the loan were used for working capital purposes. 
At June 30, 1997 the Company had approximately $2,625,000 available for 
future borrowings under the revolving line of credit.  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 1997.

                                      F-9

<PAGE>

NOTE 8 - LONG-TERM DEBT:

Long-term debt consists of:               June 30,
                                  -------------------------
                                     1997           1996
                                  ----------     ----------

Note payable - Bank       (A)     $2,333,300     $3,133,300
Note payable - Bank       (B)              -        197,500
Note payable - Bank       (C)        391,700        491,700
Note payable - Bank       (D)        491,500              -
Note payable - Bank       (E)      1,000,000              -
Note payable - Bank       (F)      1,147,100      1,213,600
Other                                 30,400         21,200
                                  ----------     ----------
                                   5,394,000      5,057,300

Less-current portion              (1,281,300)    (1,176,700)
                                  ----------     ----------

                                  $4,112,700     $3,880,600
                                  ----------     ----------
                                  ----------     ----------

(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, 1997).  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, 1997 the Company had $2,250,000 of 
    the outstanding principal  balance under the LIBOR option at 8.1875% per 
    annum maturing on July 16 1997.  The note is secured by the Company's 
    machinery and equipment, accounts receivable and inventories and matures 
    on May 16, 2000.

(B) This note  was issued  to the  First State Bank of Gainesville in  the 
    original amount  of  $250,000.  The loan  was due in  monthly 
    installments of $3,000 including interest at 8% per annum beginning 
    September 1993 and continuing for 36 months at which time the entire 
    balance of unpaid principal plus accrued interest was due and payable. 
    The note was secured by a deed of trust on the Company's real property in 
    Gainesville, Texas. Proceeds from the loan were used for working  capital 
    purposes and to finance the majority of a fixed asset expansion project 
    at the Company's Idaho facility.  In August 1996 the note was repaid in 
    full and the lien on the Texas property was removed.

(C) 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, 1997) or LIBOR interest rate option for periods up to six 
    months.  At June 30, 1997 the total outstanding principal was under the 
    LIBOR option at 8.1875% per annum maturing July 16, 1997.  The note is 
    secured by the Company's machinery and equipment and matures on May 15, 
    2001.

(D) 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, 1997) or LIBOR interest rate option for 
    periods up to six months.  At June 30, 1997 the total outstanding 
    principal was under the LIBOR option at 8.1875% per annum maturing July 
    24, 1997.  The note is secured by the Company's machinery and equipment 
    and matures on May 15, 2002.

(E) 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, 1997) or LIBOR interest rate option for 
    periods up to three months.  At June 30, 1997, the total outstanding 
    principal was under the LIBOR option at 8.1875% per annum maturing July 
    28, 1997.  The note is secured by the Company's machinery and equipment 
    and matures on June 15, 2002.


                                      F-10

<PAGE>

    At June 30, 1997, the Company had available a term-loan commitment in the 
    amount of $1,200,000 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 rate options until July 15, 1998, 
    at which time amounts borrowed will convert to a 60 month fully 
    amortizable loan.

(F) 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, 1997) 
    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.

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

    Year Ending June 30,
    --------------------
        1998                                     $1,281,300
        1999                                      1,273,500
        2000                                      2,155,100
        2001                                        399,400
        2002                                        284,700
                                                 ----------
                                                 $5,394,000
                                                 ----------
                                                 ----------

NOTE 9 - RELATED PARTY TRANSACTIONS:

In March 1993 the Board of Directors authorized the holders of preferred 
shares the opportunity to convert some of their outstanding Series A 
Preferred Stock ($1 per share redemption value) to common shares based on the 
fair market value of the Company's common stock at the date of conversion.  
Through June 1994 two officers/directors of the Company converted an 
aggregate of 1,400,139 shares of their preferred stock for 2,039,564 shares 
of the Company's common stock.  The conversion factor used a common stock 
value of $0.6875 per share (fair market value at the date of conversion).  In 
June 1994 the Board of Directors approved the additional conversion of 
500,000 shares of preferred stock held by an officer/director of the Company. 
On August 13, 1994 these shares were converted to 615,384 shares of the 
Company's common stock based on the fair market value of the Company's common 
stock ($.8125 per share) at the date of conversion.

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 $412,300, $319,900 and $152,500 in fiscal years 
1997, 1996 and 1995, respectively.  Amounts due on sales to this company were 
$151,500 and $128,800 at June 30, 1997 and 1996, respectively, and are 
included in accounts receivable in the accompanying balance sheet. 

In fiscal years 1997, 1996 and 1995, the Company incurred legal fees and 
costs amounting to $103,400, $83,000 and $48,500, respectively, for services 
by E. Paul Tonkovich Professional Corporation, of which an officer/director 
of the Company is an employee.

NOTE 10 - ACCRUED LIABILITIES:

Accrued liabilities consist of:                            June 30,
                                                      ---------------------
                                                        1997        1996
                                                      --------   ----------
Salaries, wages, commissions and related payables     $640,500   $  806,200
Other                                                  224,800      195,500
                                                      --------   ----------

                                                      $865,300   $1,001,700
                                                      --------   ----------
                                                      --------   ----------


                                      F-11

<PAGE>

NOTE 11 - STOCK OPTION PLAN:

In September 1985, the Company adopted a stock option plan for the granting 
of options to directors and employees to purchase the Company's common stock. 
The option price is determined by a committee of the Board of Directors, but 
cannot be less than 85% of the fair market value of the Company's common 
stock at the date of grant.  Pursuant to the approval of the Company's 
shareholders at the Company's 1992 Annual Meeting, the Company effected a 
one-for-three reverse stock split on December 17, 1992.  As such, the 
Company's authorized shares of common stock for the stock option plan was 
reduced from 2,500,000 shares to 833,300 shares.  In March 1993 the Board of 
Directors approved a  resolution to accelerate the vesting of all outstanding 
options under the plan to 100% so that the employees could fully exercise 
their respective grants.  The following table has been modified to reflect 
the reduction in the number of shares issuable upon exercise and the 
respective increases to the exercise price per share.

In August 1994, the  Company issued to certain key employees options to 
purchase 40,000 shares of common stock under the Company's pre-existing stock 
option plan.  The options  are exercisable  at $.8125 per share (fair market 
value at date of grant) of which  50% are currently exercisable and the 
balance exercisable after one year.  The options expired August 12, 1996.  
The Company's pre-existing stock option plan, and all ungranted options 
thereof, expired November 11, 1994.

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.

STOCK OPTION ACTIVITY
                                      Outstanding  Exercisable  Weighted Average
                                         Shares      Shares     Price Per Share
                                      -----------  -----------  ---------------
Balance outstanding at June 30, 1994      9,300          9,300      $0.7828
                                                   -----------
                                                   -----------
         Granted                         40,000                     $0.8125
         Exercised                      (19,700)                    $0.7632
         Canceled                       (11,800)                    $0.8842
                                      ---------

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        -             -
                                      -------      -----------
                                      -------      -----------

In August 1996 options were exercised for the issuance of an additional 7,500 
shares of common stock and the remaining outstanding options to purchase 
5,000 shares of common stock expired on August 12, 1996.

At June 30, 1997, 1,000,000 shares were available for future grants.

NOTE 12 - 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.


                                      F-12

<PAGE>

On December 10, 1996, 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 24, 1997 to stockholders of record on January 6, 1997.

In March 1997, the Company retired 100,000 shares of its own common stock 
which it had purchased in the open market at a total cost of $161,000.

Treasury stock is recorded at cost.  At June 30, 1997 and 1996, the treasury 
stock consisted of 1,776 and 1,801 shares of common stock at a cost of 
$1,500, respectively.

NOTE 13 - INCOME TAXES:

The components of the income tax (provision)/benefit were:

                                             For the years ended June 30,
                                       --------------------------------------
                                          1997          1996          1995
                                       ----------    ----------    ----------
Current:
   Federal                             $  (63,000)   $  (62,000)   $  (67,200)
   State                                  (93,600)     (129,400)     (141,200)
                                       ----------    ----------    ----------
                                         (156,600)     (191,400)     (208,400)
                                       ----------    ----------    ----------

Deferred:
   Federal                               (744,100)     (642,000)      387,800
   State                                  (42,100)     (101,100)      (83,800)
                                       ----------    ----------    ----------
                                         (786,200)     (743,100)      304,000
                                       ----------    ----------    ----------

                                       $ (942,800)   $ (934,500)   $   95,600
                                       ----------    ----------    ----------
                                       ----------    ----------    ----------

At June 30, 1997, the Company has net operating loss (NOL) carryforwards of 
approximately $9,300,000 for federal income tax purposes.  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 if 
not utilized.  The federal NOL carryforwards expire as follows:

      Amount of unused operating       Expiration during year
         loss carryforwards                ended june 30,
      --------------------------       ----------------------

             $4,600,000                         2003
              3,400,000                         2004
                600,000                         2005
                500,000                         2006
                200,000                         2009
             ----------

             $9,300,000
             ----------
             ----------

At June 30, 1997, the Company had a federal alternative minimum tax credit of 
approximately $190,000 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.

The Company accounts for income taxes pursuant to Statement of Financial 
Accounting Standards No. 109 ("FAS 109"), "Accounting for Income Taxes".  FAS 
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. Under FAS 109 the Company recognizes to a greater degree the 
future tax benefits of expenses which have been recognized in the financial 
statements.


                                      F-13

<PAGE>

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.  
As depicted above, 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.  Management also noted 
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.

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

<TABLE>
<CAPTION>
                                                                              For the year ended June 30,
                                                                          -------------------------------------
                                                                            1997          1996          1995
                                                                          -------------------------------------
<S>                                                                       <C>            <C>            <C>
Federal statutory rate                                                      34.0%          34.0%          34.0%
State income taxes (net of federal benefit)                                  2.6            3.6            2.9
Goodwill amortization                                                        4.3            4.3            3.2
Benefit of current year net operating loss carryforwards                       -              -          (36.1)
Effect of decrease in valuation allowance                                      -           (7.7)          (9.5)
Other items, net                                                            (1.4)           4.6            2.5
                                                                          -------        -------        -------
         Effective income tax rate                                          39.5%          38.8%         (3.0)%
                                                                          -------        -------        -------
                                                                          -------        -------        -------
</TABLE>

Deferred tax assets and liabilities are summarized as follows:

<TABLE>
<CAPTION>
                                                                              June 30,
                                                                     -------------------------
                                                                       1997             1996
                                                                     ----------     ----------
<S>                                                                  <C>            <C>
Deferred tax assets:
    Federal NOL                                                      $3,164,800     $4,262,500
    State NOL  (net of federal benefit)                                    -            86,600
    Tax credit carryforwards                                            208,100         45,900
    Employment-related reserves                                         116,000        143,900
    Allowance for doubtful accounts                                      35,100         33,200
    Accruals not currently deductible                                   136,500           -
                                                                     ----------     ----------
                                                                      3,660,500      4,572,100
Deferred tax liabilities:
    Depreciation and amortization                                      (644,500)      (715,400)
                                                                     ----------     ----------
    Net deferred tax assets before valuation allowance                3,016,000      3,856,700
    Deferred tax assets valuation allowance                                -           (54,500)
                                                                     ----------     ----------
    Net deferred tax assets                                          $3,016,000     $3,802,200
                                                                     ----------     ----------
                                                                     ----------     ----------
</TABLE>

NOTE 14 - COMMITMENTS AND CONTINGENCIES:

COMMITMENTS

The Company leases various office and warehouse facilities, and equipment 
under long-term operating leases expiring through October 2001.  Certain of 
the leases provide for five-year renewal options and rental increases based 
on the Consumer Price Index.  Operating lease expense for fiscal 1997, 1996, 
and 1995 amounted to $830,500, $834,400 and $771,400, respectively.


                                      F-14

<PAGE>

At June 30, 1997, the future minimum lease commitments, excluding insurance 
and taxes, are as follows:

    Year Ending June 30,
    --------------------

       1998                   $  632,100
       1999                      463,000
       2000                      371,100
       2001                      278,100
       2002                       64,800
                              ----------
                              $1,809,100
                              ----------
                              ----------

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.

On April 16, 1996, the Company was named as a defendant in a compliant 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.  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 15 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Supplemental disclosures of cash flows information are as follows:

<TABLE>
<CAPTION>
                                                                       For the years ended June 30,
                                                                     ----------------------------------
                                                                       1997         1996         1995
                                                                     --------     --------     --------
<S>                                                                  <C>          <C>          <C>
Cash paid during the year for:
      Interest                                                       $555,900     $711,600     $767,500
                                                                     --------     --------     --------
                                                                     --------     --------     --------
      Income taxes                                                   $188,500     $245,900     $241,600
                                                                     --------     --------     --------
                                                                     --------     --------     --------
Purchase of Custom Rotational Molding Inc.
  by issuance of common stock                                        $    -     $      -       $306,300
                                                                     --------     --------     --------
                                                                     --------     --------     --------
Conversion of customer note and accounts receivable
  to new note and other assets                                       $    -     $      -       $812,300
                                                                     --------     --------     --------
                                                                     --------     --------     --------
Non-cash financing activity:
  Redemption of preferred stock to common stock                      $    -     $      -       $500,000
                                                                     --------     --------     --------
                                                                     --------     --------     --------
  Preferred dividends declared but not paid                          $    -     $      -       $ 23,400
                                                                     --------     --------     --------
                                                                     --------     --------     --------
  Common dividends declared but not paid                             $ 11,700     $ 12,200     $    -
                                                                     --------     --------     --------
                                                                     --------     --------     --------
</TABLE>


                                      F-15

<PAGE>

NOTE 16 - UNAUDITED QUARTERLY RESULTS:

<TABLE>
<CAPTION>
                                                                      Quarter Ended
                                                --------------------------------------------------------
                                                 September       December        March          June
                                                -----------     ----------     ----------     ----------
<S>                                             <C>             <C>            <C>           <C>
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
                                                -----------     ----------     ----------     ----------
                                                -----------     ----------     ----------     ----------
Fiscal Year 1996:
    Net sales                                    $8,981,900     $8,904,100     $8,178,900     $9,638,700
    Gross Profit                                  2,183,900      2,184,700      2,054,400      2,836,900
    Net income                                      367,400        189,900        129,500        785,900

Per share:
    Net income                                       $  .02         $  .01         $  .01         $  .06
                                                -----------     ----------     ----------     ----------
                                                -----------     ----------     ----------     ----------
</TABLE>


                                      F-16

<PAGE>

                          ROTONICS MANUFACTURING INC. 

                                 SCHEDULE VIII
                       VALUATION AND QUALIFYING ACCOUNTS

                   Years Ended June 30,  1997, 1996 and 1995

<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, 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
                                            ----------        ---------    ---------     -----------        ---------
                                            ----------        ---------    ---------     -----------        ---------
June 30, 1995:
   Allowance for
    doubtful accounts                       $  118,100        $  24,200    $  5,000      $   (37,000)(1)    $ 110,300
                                            ----------        ---------    ---------     -----------        ---------
                                            ----------        ---------    ---------     -----------        ---------

   Deferred tax asset valuation allowance   $1,984,700        $    -    $       -        $(1,394,400)(2)    $ 590,300
                                            ----------        ---------    ---------     -----------        ---------
                                            ----------        ---------    ---------     -----------        ---------
</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.


                                      F-17

<PAGE>


                                                                  EXHIBIT 23a

                      CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the use of our 
report, dated August 21, 1997 on page F-1 of this Form 10-K which is 
incorporated by reference in the Prospectus constituting part of the 
Registration Statements on Form S-3 (Nos. 33-62721 and 33-70526) and in the 
Registration Statement on Form S-8 (No. 33-88410).


                                       ARTHUR ANDERSEN LLP


Orange County, California
September 15, 1997



<PAGE>


                                                                    EXHIBIT 23b

                      CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus 
constituting part of the Registration Statements on Form S-3 (Nos. 33-70526 
and 33-62721) and in the Registration Statement on Form S-8 (No. 33-88410) of 
Rotonics Manufacturing Inc. of our report dated September 11, 1995 appearing 
on page F-2 of this Form 10-K.



Price Waterhouse LLP
Los Angeles, California
September 15, 1997