COMPASS PLASTICS & TECHNOLOGIES INC, S-1/A, 1997-06-25

COMPASS PLASTICS & TECHNOLOGIES INC
S-1/A, 1997-06-25
PLASTICS PRODUCTS, NEC

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<PAGE>

As filed with the Securities and Exchange Commission on June 25, 1997
Registration No. 333-28741
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
Amendment No. 1
to
Form S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------
Compass Plastics & Technologies, Inc.
(Exact name of Registrant as specified in its charter)

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<CAPTION>
<S> <C> <C>
Delaware 2821 95-4611994
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer identification no.)
incorporation or organization) classification code number)
</TABLE>

15730 South Figueroa Street, Gardena, California 90248
telephone: (213) 770-8771; facsimile: (310) 523-9859
(Address and telephone number of principal executive offices and principal
place of business)
---------------------

MICHAEL A. GIBBS, President
Compass Plastics & Technologies, Inc.
15730 South Figueroa Street, Gardena, California 90248
telephone: (213) 770-8771; facsimile: (310) 523-9859
(Name, address and telephone number of agent for service)
---------------------

Copies to:

<TABLE>
<S> <C>
STEPHEN A. WEISS, ESQ. SCOTT W. ALDERTON, ESQ.
SPENCER G. FELDMAN, ESQ. JOHN D. JENKINS, ESQ.
Greenberg, Traurig, Hoffman, Troop Meisinger Steuber & Pasich, LLP
Lipoff, Rosen & Quentel 10940 Wilshire Boulevard
153 East 53rd Street Los Angeles, California 90024
New York, New York 10022 telephone: (310) 824-7000 facsimile: (310) 443-8569
telephone: (212) 801-9200 facsimile: (212) 223-7161
</TABLE>

Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering./ /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

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

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

===============================================================================
<PAGE>

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

SUBJECT TO COMPLETION, DATED JUNE 25, 1997

PROSPECTUS
1,300,000 Shares
Compass Plastics & Technologies, Inc.
Common Stock
------------

All of the 1,300,000 shares of Common Stock (the "Common Stock") offered
hereby are being sold by Compass Plastics & Technologies, Inc. (the "Company").
Prior to this offering, there has been no public market for the Common Stock of
the Company. It is currently estimated that the initial public offering price
will be between $7.00 and $8.00 per share. See "Underwriting" for a discussion
of the factors to be considered in determining the initial public offering
price. The Company has applied for quotation of the Common Stock on the Nasdaq
National Market ("Nasdaq") under the symbol "CPTI."
---------------------
The shares offered hereby involve a high degree of risk. See "Risk Factors"
beginning on page 7 hereof.
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
================================================================================
Price to Underwriting Discounts Proceeds
Public and Commissions (1) to Company (2)
- --------------------------------------------------------------------------------
Per Share ...... $ $ $
- --------------------------------------------------------------------------------
Total (3) ...... $ $ $
================================================================================

(1) Excludes the value of warrants to be issued to the representative of the
Underwriters (the "Representative") to purchase up to 130,000 shares of
Common Stock (the "Representative's Warrants"). The Company has agreed to
indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."

(2) Before deducting expenses of the offering payable by the Company estimated
to be $792,000, including the Representative's non-accountable expense
allowance.

(3) The Company has granted the Underwriters a 45-day option to purchase up to
195,000 additional shares of Common Stock solely to cover over-allotments,
if any. If such option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."

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

The shares of Common Stock are offered by the several Underwriters, when,
as and if delivered to and accepted by the Underwriters and subject to various
prior conditions, including their right to withdraw, cancel or modify such
offer and to reject orders in whole or in part. It is expected that delivery of
share certificates will be made against payment therefor at the offices of
Cruttenden Roth Incorporated in Irvine, California or through the facilities of
the Depository Trust Company, on or about , 1997.

CRUTTENDEN ROTH
INCORPORATED

The date of this Prospectus is , 1997

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[Artwork depicting the Company's manufacturing operations]

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

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
ON NASDAQ IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE "UNDERWRITING."

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."

The Company intends to furnish annual reports to stockholders containing
audited financial statements and make available quarterly reports and such
other periodic reports as it may determine to be appropriate or as may be
required by law.

<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and Financial Statements and Notes thereto appearing elsewhere in
this Prospectus, including information under "Risk Factors." The shares of
Common Stock offered hereby involve a high degree of risk and investors should
carefully consider information set forth in "Risk Factors." Unless otherwise
indicated, all information in this Prospectus (i) gives effect to a 5.4 -for-1
stock split to be consummated prior to the effectiveness of this offering, and
(ii) assumes that the Underwriters' over-allotment option as described in
"Underwriting" is not exercised. As used in this Prospectus, (i) unless the
context otherwise requires, the term "Company" refers to Compass Plastics &
Technologies, Inc. and its wholly-owned subsidiary, and (ii) the term "year" or
"fiscal year" refers to the Company's fiscal year ending on the last Sunday of
the 52 consecutive weeks ending in October.

The Company

Compass Plastics & Technologies, Inc., through its wholly-owned
subsidiary, AB Plastics Corporation ("AB Plastics"), is a leading contract
manufacturer and assembler of custom injection-molded plastic components. The
Company manufactures the plastic exteriors of computer monitors, televisions,
electronic music keyboards and other consumer electronics equipment. In
addition to injection-molded components, the Company offers a broad range of
"value-added" services, including painting, decorating and assembly. A
significant percentage of the Company's components are manufactured using
gas-assist molding technology which reduces material usage and permits the
molding of lighter and stronger parts. The Company believes its technical and
manufacturing capabilities to produce large injection-molded plastic components
on both a "just-in-time" basis and in production volumes with low reject rates
provide a significant competitive advantage.

The Company charges its customers a fixed price for each component or part
it manufactures, which components may consist of single or multiple parts.
Negotiated prices include the cost of thermoplastic resins, packaging, other
materials and parts, labor and overhead. Although thermoplastic resins have
historically accounted for at least 80% of its raw materials costs, the Company
does not believe that its results of operations are subject to the risk of
fluctuations in resin prices, since the Company's arrangements with most of its
customers provide that price changes in such resins are passed through to the
customer by changes in the component prices charged by the Company.

The Company's two major original equipment manufacturer ("OEM") customers
are Sony Corporation ("Sony"), through its computer monitor and television
manufacturing divisions, and Matsushita Electronic Corporation of America
("Matsushita"), through its Panasonic and Quasar brands. Sales to these
customers represented approximately 66.5% and 18.0%, respectively, of the
Company's total sales for the fiscal year ended October 27, 1996. Of sales to
Sony, computer monitor components accounted for approximately 39.1% and
television components accounted for approximately 27.4% of the Company's total
sales during the fiscal year ended October 27, 1996. The Company has been an
uninterrupted supplier of custom injection-molded components to Sony since
1972, to Matsushita since 1983 and to virtually all of its other customers for
at least seven years. To improve its ability to support major customers, in
addition to its current manufacturing facility in Gardena, California
(approximately 15 miles south of Los Angeles), the Company is currently
completing a new "build-to-suit" manufacturing facility in Tijuana, Mexico.
This new facility has been logistically located near many of its customers'
manufacturing plants in Mexico and is expected to add significant manufacturing
capacity by September 1997. Management believes that this facility will enable
the Company to capitalize on demand from new and existing customers which have
relocated their manufacturing operations from the Far East and the United
States to Mexico in recent years due to lower labor and transportation costs.
Closer proximity to its major customers will allow the Company to be more
efficient in delivering 15 to 20 daily truckloads of components to its
customers' production facilities and eliminate time-consuming border crossings.

<PAGE>

Injection-molded plastic components are used in a wide variety of
industries, including automotive, telecommunications, computer, consumer
electronics, medical and packaging. Based on information provided in Plastic
News, a leading industry publication, sales of the top 100 North American
plastic injection molders were approximately $11.3 billion in 1994, $12.5
billion in 1995 and $14.4 billion in 1996, reflecting a 12.9% industry-wide
average annual growth rate. The Company was ranked by sales in 1996 as the 96th
largest plastic injection molder in North America, the 9th largest plastic
injection molder in the western United States (comprised of the states of
California, Arizona, Oregon and Washington), and one of the three largest
plastic injection molders in Southern California. According to Stanford
Resources' Monitrak Quarterly Report, United States sales of computer monitors,
the Company's major market, rose to approximately 21.7 million units in 1996,
from sales of approximately 13.4 million units in 1994.

The Company's goal is to be a dominant supplier of injection-molded plastic
components to the increasing number of computer monitor and television OEM
plants located in Southern California and Tijuana, Mexico. Management believes
that the commencement of digital broadcasting in the television industry in the
United States, starting in 1998, will create a demand for new high-definition
television sets ("HDTV") and flat panel displays as consumers replace obsolete
television sets unable to receive digital broadcasting with HDTV quality.
According to Stanford Resources, at least 20 million television sets have been
sold each year since 1991 and 380 million television sets have been sold since
1974 in the United States. The key elements of the Company's growth strategy
include the following:

o Continue to expand computer monitor and television component business --
through the continuation of the overall growth of the Company's computer
monitor sales to Sony, which have grown from $2.9 million in fiscal 1994
to $15.4 million in fiscal 1996, expansions into new products such as
Sony's personal computer, known as "Vaio," and by targeting sales to other
computer monitor and television OEMs doing business in Tijuana, Mexico;

o Acquire complementary businesses -- which the Company believes will
diversify its customer base, technical capabilities and geographic areas
served;

o Capitalize on customer demand in Tijuana market -- by completing the
construction of its manufacturing facility in Tijuana, Mexico to increase
manufacturing capacity by 50% and to be located near existing and
potential customers;

o Pursue long-term relationships with new customers -- that require
responsive manufacturing services in the computer, television and consumer
electronics industries; and

o Continue commitment to quality and service -- by continuing to achieve
the highest levels of quality control through continuous improvement of
its engineering and manufacturing capabilities.

The Company was incorporated under the laws of the State of Delaware in
May 1996 under the name AB Plastics Holding Corporation. In June 1997, the
Company changed its name to Compass Plastics & Technologies, Inc. The Company's
principal executive offices are located at 15730 South Figueroa Street,
Gardena, California 90248, and its telephone number is (213) 770-8771. For a
description of the background of the Company, see "The Company."

<PAGE>

The Offering

Common Stock offered ... 1,300,000 shares of Common Stock

Common Stock outstanding after
the Offering(1)......... 6,106,000 shares of Common Stock

Use of Proceeds ......... The Company intends to use the net proceeds of
this offering to repay approximately $4.0 million in
principal and interest outstanding under its
subordinated loan agreement with Sirrom Investments,
Inc. ("Sirrom"). The remaining net proceeds of
approximately $4.0 million will be used to complete
the construction of the warehouse at the Company's
Gardena, California facility and equip its newly-
constructed Tijuana, Mexico manufacturing facility.
Pending such uses, the Company intends to
temporarily reduce approximately $4.0 million in
borrowings expected to be outstanding under the
Company's maximum $10.0 million revolving line of
credit facility with The Sumitomo Bank of
California ("Sumitomo"). See "Use of Proceeds."

Proposed Nasdaq National Market
Symbol.................. CPTI

- ------------
(1) Does not include (i) 130,000 shares of Common Stock issuable upon exercise
of the Representative's Warrants, (ii) 594,000 shares of Common Stock
reserved for issuance upon exercise of outstanding options with an
exercise price of $0.74 per share under the Company's 1996 Stock Option
Plan and (iii) 300,000 shares of Common Stock reserved for issuance upon
exercise of outstanding options with an exercise price equal to the
initial public offering price per share, and 700,000 shares of Common
Stock reserved for issuance upon exercise of options reserved for future
grant, under the Company's 1997 Stock Option Plan. See "Management --
Employment Agreements," "-- Stock Option Plans," "Certain Transactions"
and "Underwriting."

<PAGE>

Summary Financial Data
(in thousands, except share and per share data)

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<CAPTION>
52 Weeks Ended 26 Weeks Ended
--------------------------------------------- ------------------------
October 30, October 29, October 27, April 28, April 27,
1994 1995 1996 1996 1997
------------- ------------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Sales ................................. $ 34,027 $ 42,679 $ 39,345 $ 19,410 $ 20,244
Cost of sales ........................ 30,695 38,961 34,001 17,338 16,393
-------- -------- ---------- ---------- ----------
Gross profit ........................ 3,332 3,718 5,344 2,072 3,851
Selling, general and administrative . 1,715 1,683 1,732 1,021 1,456
-------- -------- ---------- ---------- ----------
Operating income ..................... 1,617 2,035 3,612 1,051 2,395
Net interest expense .................. 225 375 485 226 451
Other (income) expense ............... (218) (70) 1,146 0 --
-------- -------- ---------- ---------- ----------
Income before income taxes ............ 1,610 1,730 1,981 825 1,944
Income tax expense(1) ............... 48 26 107 12 764
-------- -------- ---------- ---------- ----------
Net income ........................... $ 1,562 $ 1,704 $ 1,874 $ 813 $ 1,180
======== ======== ========== ========== ==========
Net income per share(2) ............... -- -- $ 0.39 $ 0.17 $ 0.24
Weighted average number of shares
outstanding(2) ...................... -- -- 4,860,000 4,860,000 4,860,000
Supplemental Non-GAAP Data:
Depreciation and amortization ......... $ 746 $ 876 $ 909 $ 492 $ 636
EBITDA(3) ........................... 2,363 2,911 4,521 1,543 3,031
Pro forma net income(4) ............... 966 1,039 1,880 495 1,166
Pro forma net income per share(4) . 0.20 0.21 0.39 0.10 0.24
</TABLE>

April 27, 1997
---------------------------
Actual As Adjusted (5)
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Balance Sheet Data:
Cash .............................. $ 803 $ 1,733
Working capital ..................... 2,272 3,202
Total assets ........................ 18,827 19,757
Total current liabilities ............ 5,774 5,774
Total long-term liabilities(6) ...... 9,509 2,359
Stockholders' equity ............... 3,543 11,623

- ------------
(1) For each of the 52 weeks ended October 30, 1994 and October 29, 1995 and
the 11 months ended September 27, 1996, AB Plastics elected to be taxed as
a subchapter S corporation, as a result of which all federal income taxes
were paid by the stockholders. Upon completion of the acquisition of AB
Plastics, the Company terminated such subchapter S corporation election.

(2) Assumes that warrants and stock options to purchase an aggregate of
2,106,000 shares of Common Stock, each at an exercise price of $0.74 per
share, had been exercised as of the end of such period.

(3) EBITDA is earnings (net income) before interest, taxes, depreciation,
amortization and other (income) expense. EBITDA is a financial measure
commonly used in financial analysis, but should not be construed as an
alternative to net income (as determined in accordance with generally
accepted accounting principles) as an indicator of operating performance.

(4) Pro forma net income and pro forma net income per share reflect the
Company's net income and net income per share on a pro forma basis as
though the Company had been subject to full federal income taxes in each
of fiscal 1994, 1995 and 1996 and for the 26 weeks ended April 28, 1996,
calculated using a 40% effective tax rate. Pro forma net income and pro
forma net income per share for fiscal 1996 exclude a restructuring charge
of $1,151,288.

(5) Adjusted to reflect the sale by the Company of 1,300,000 shares of Common
Stock offered hereby at an assumed initial public offering price of $7.50
per share, after deduction of underwriting discounts and commissions and
estimated offering expenses and the application of the estimated net
proceeds therefrom. See "Use of Proceeds" and "Capitalization."

(6) Includes long-term debt, less current portion, of $7,775,004 and deferred
income tax liability of $1,734,437.

<PAGE>

RISK FACTORS

This Prospectus contains certain forward-looking statements within the
meaning of the Securities Act of 1933. Actual results could differ materially
from those projected in the forward-looking statements as a result of certain
risks and uncertainties set forth below and elsewhere in this Prospectus. An
investment in the shares of Common Stock offered hereby involves a high degree
of risk. Prospective investors should carefully consider the following risk
factors, in addition to the other information set forth in this Prospectus, in
connection with an investment in the shares of Common Stock offered hereby.

Dependence on Computer and Consumer Electronics Industries

The Company's principal customers are OEMs of computer monitors,
televisions, electronic music keyboards and other consumer electronics
equipment. These industry segments, as well as the computer and consumer
electronics industries as a whole, are subject to economic cycles,
technological change, product obsolescence and changes in consumer demand.
Discontinuance or modification of products containing injection-
molded plastic components manufactured by the Company could adversely affect
the Company's business, financial condition and results of operations. The
Company believes, for example, that consumers are currently postponing
purchases of new televisions in anticipation of the introduction of HDTV and
flat panel displays, which may result in the postponement of OEM orders on
certain television consoles. The Company's growth has resulted, in part, from
its ability to focus on customers in these industries. There can be no
assurance that the Company will continue to be able to identify and attract
customers with steady growth rates or that these industry segments will
continue to grow at their historical rates or at all. Pricing pressures, a
general downturn in the economy or any other event leading to excess capacity
in the computer and consumer electronics industries may result in intensified
price competition, reduced profit margins and a decrease in unit volume of
custom injection-molded plastic components ordered by OEMs, all of which could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business -- Customers."

Customer Concentration

The Company's largest customer, Sony, through its computer monitor and
television manufacturing divisions, accounted for approximately 66.5% of the
Company's sales for the 52 weeks ended October 27, 1996, and 72.6% of the
Company's sales for the 26 weeks ended April 27, 1997. In addition, the
Company's two largest customers, Sony and Matsushita (through its Panasonic and
Quasar brands), together accounted for approximately 84.5% and 82.3%,
respectively, of the Company's sales for such periods. The loss of, or a
significant curtailment of purchases by, either of these major customers would
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company anticipates that, by virtue of the
markets it serves, a significant portion of the Company's sales will continue
to be concentrated in a small number of customers. See "Business -- Customers."

Fluctuations in Operating Results

The Company's operating results are affected by a number of factors,
including timing of orders from major customers, process yields, timing of
capital expenditures in anticipation of future sales, economic conditions in
the computer and consumer electronics industries and the Company's mix of
products. As a result, the Company's results of operations have varied and may
continue to fluctuate significantly from period to period, including on a
quarterly basis. Historically, shipments of the Company's components have been
higher in the second and fourth fiscal quarters as a result of increased demand
for computer and consumer electronic products during the spring and year-end
holiday seasons. Operating results can also be significantly influenced by
development and introduction of new products or product models by the Company's
customers. In addition, a significant portion of the Company's operating
expenses are relatively fixed in nature and planned capital expenditures are
based in part on anticipated orders. Any inability to adjust spending quickly
enough to compensate for revenue shortfall may magnify the adverse impact of
such revenue shortfall on the Company's results of operations and cash flows.
Moreover, there can be no assurance that the industry-wide trends that have
benefitted the Company in recent periods will continue. Quarterly sales and
operating results depend in large part on the volume

<PAGE>

and timing of bookings received during the quarter, which are difficult to
forecast. The Company's customers generally require short production and
delivery cycles, and substantially all of the Company's backlog is typically
scheduled for delivery within 30 days. See "Business -- Industry Overview and
Trends" and " -- Customers."

Potential Significant Indebtedness and Leverage

At June 4, 1997, on an as adjusted basis after giving effect to this
offering and the application of the net proceeds therefrom, the Company
anticipates having outstanding long-term debt of approximately $1.4 million,
comprised of a $1.0 million loan from Transamerica Business Credit Corporation
("Transamerica") and approximately $350,000 in capitalized leases. In addition,
the Company will have up to an additional $10.0 million available for borrowing
under its revolving line of credit and $2.0 million available under its
equipment line of credit with Sumitomo. Subsequent to June 4, 1997, the Company
expects to spend approximately $5.0 million to purchase and expand its Gardena,
California facility and approximately $6.2 million for equipment and leasehold
improvements at its new Tijuana, Mexico facility. The Company expects to
finance the approximately $11.2 million in expansion by borrowing $3.5 million
under a conventional mortgage facility with Sumitomo, an additional $3.0
million from Transamerica and approximately $4.7 million from the revolving
line of credit and equipment line of credit with Sumitomo. Although the Company
expects to continue to have sufficient earnings from operations to satisfy its
anticipated increased debt service obligations, there can be no assurance that
the Company will be able to meet its debt obligations in the future or to pay
or refinance its indebtedness as it becomes due. Borrowings under its revolving
line of credit facility bear interest at floating rates (currently 9.0%) and
are secured by a pledge of all of the capital stock of AB Plastics. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Business -- Facilities" and
"Certain Transactions."

Competition

The injection-molded plastic industry is highly fragmented and
characterized by intense competition. The Company competes principally in the
custom injection-molded plastic market in the western United States, which is
also highly competitive but is much less fragmented than the industry as a
whole. Certain of the Company's competitors have substantially greater
manufacturing, financial, marketing and/or other resources than the Company. As
a result, they may be able to respond more quickly to new or emerging
technologies and changes in customer requirements than the Company. In
addition, in recent years, several foreign plastic injection molders (primarily
from the Far East), including competitors of the Company, have established
manufacturing facilities in Tijuana, Mexico. There can be no assurance that the
Company will be able to compete successfully against present and future
competitors or that competitive pressures faced by the Company will not
materially adversely affect the Company's business, financial condition and
results of operations. See "Business -- Competition."

Variability of Customer Requirements; Nature of Customer Commitments on Orders

The level and timing of orders placed by the Company's customers varies
due to a number of factors, including customer attempts to manage inventory,
changes in customers' manufacturing strategies and variations in demand for
their own products. Since the Company typically does not obtain firm long-term
purchase orders or commitments, it must anticipate the future volume of orders
based on discussions with its customers. The Company relies on its estimate of
anticipated future volumes when making commitments regarding the level of
business that it will seek and accept, the mix of products that it intends to
manufacture, the timing of production schedules and the levels and utilization
of equipment and personnel. A variety of conditions, both specific to the
individual customer and generally affecting the customer's industry, may cause
customers to cancel, reduce or delay orders that were previously made or
anticipated. Generally, customers may cancel, reduce or delay purchase orders
and commitments without penalty, except for payment for work and materials
expended through the cancellation date. Significant or numerous cancellations,
reductions or delays in orders by a customer or group of customers could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Customers."

<PAGE>

Integration of New Manufacturing Facility

For the first 35 years of its existence, substantially all of the Company's
sales were made to customers located in California. In the late 1980s, many of
these customers relocated to Tijuana, Mexico, primarily due to reduced labor
costs. The Company is currently overseeing the construction a new manufacturing
facility in Tijuana, Mexico, which it expects to lease from an unaffiliated
third-party commencing in September 1997. There can be no assurance that the
Company will be able to complete this facility in such time frame. Consequently,
if the Company is unsuccessful in Tijuana, the Company's relationships with its
most important customers could be damaged which would have a material adverse
effect on the business, financial condition and results of operations of the
Company. The Company's expanded manufacturing capacity has and will continue to
significantly increase its fixed costs, and the future profitability of the
Company will depend, in part, upon its ability to utilize efficiently its
manufacturing capacity. Gross profit margins, although partially offset by lower
labor costs in Mexico, may be adversely affected to the extent that the Company
does not fully utilize its increased manufacturing capacity. Delays in
completing construction and/or the Company's inability to generate the
additional sales necessary to utilize its additional capacity could have a
material adverse effect on the Company's business, financial condition and
results of operations. Furthermore, operating in Mexico subjects the Company to
certain additional risks, including unexpected changes in regulatory
requirements, political and economic conditions, difficulties in staffing and
managing international operations and other factors which could have a material
adverse effect on the Company's business and results of operations. Because
sales from this facility will be all U.S. dollar-denominated and managed at the
Company's Gardena, California executive offices, the Company believes that it
will not be significantly affected by exchange rate fluctuations in the Mexican
peso relative to the U.S. dollar. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Overview" and "Business --
Manufacturing."

Technological Change; Intellectual Property

Injection-molded plastic manufacturing technology has continued to move
toward more highly engineered processes. Technological change is continuous
and, in the future, higher margin products will be the most demanding in terms
of technological and manufacturing expertise. There is no assurance that the
Company will be able to maintain its current technological position. In
addition, the introduction of new technologies could require the Company to
substantially increase its capital expenditures. The Company's success depends
in part on its proprietary techniques and manufacturing expertise in the area
of custom injection-molded plastic components. The Company has no patents for
these proprietary techniques and chooses to rely on trade secret protection.
There can be no assurance that the Company's precautions will provide
meaningful protection from competition or that the Company's competitors will
not develop superior technology. The Company believes that although such
techniques and expertise are subject to misappropriation or obsolescence, the
Company will continue to improved methods and processes and new techniques on
an ongoing basis as dictated by the technological needs of the industry. See
"Business -- Manufacturing."

Management of Growth

The Company's current construction of its new manufacturing facility in
Tijuana, Mexico has placed, and is expected to continue to place, significant
demands on the Company's managerial, technical, financial and other resources.
Utilization of the Company's expanded facilities will require the Company to
continue to invest in its financial, management information, engineering and
logistics systems, and to retain, motivate and effectively manage its
employees. There can be no assurance that the management skills and systems
currently in place will be adequate to implement the Company's strategy, and
the Company's failure to manage growth effectively or to implement its strategy
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Growth Strategy" and
"Management."

Dependence on Key Personnel

The Company's success depends to a significant degree upon the continued
contributions of members of its senior management team, particularly Michael A.
Gibbs, James S. Adams, G. Michael Frink, Stephen M. Adams,

<PAGE>

Jawed Ghias and Paul J. Iacono, as well as other key personnel, many of whom
would be difficult to replace. The future success of the Company also depends
on its ability to identify, attract and retain additional qualified technical
and managerial personnel. The loss of these officers or other key personnel
could have a material adverse effect on the Company's business, financial
condition and results of operations. The Company's President, Michael A. Gibbs,
is engaged in other business activities, including acting as a consultant to
other businesses which do not compete with the Company. Although Mr. Gibbs
actively manages the Company and spends a minimum of two weeks per month at the
Company's Gardena, California offices, he resides in Connecticut. In addition,
pursuant to Mr. Gibbs' employment agreement, he is required to spend only 75%
of his business and professional time on the affairs of the Company. There can
be no assurance that the inability of Mr. Gibbs to devote his full time and
resources to the Company will not adversely affect the Company's business,
operating results or financial condition. See "Management."

Acquisitions

The Company may from time to time pursue the acquisition of other
companies, assets or product lines that would complement or expand its existing
business. Acquisitions involve a number of risks that could adversely affect
the Company's operating results, including the diversion of management's
attention, the assimilation of the operations and personnel of the acquired
companies, the amortization of acquired intangible assets and the potential
loss of key employees of the acquired companies. See "Business -- Growth
Strategy."

Equipment and Tool Failure

The Company's business involves manufacturing equipment that is subject to
failure. In the past, equipment and tool failures have occurred which have
resulted in temporary delays in product shipments. Although the Company has
in-house tooling and maintenance departments and maintains spare parts to
reduce the impact of such failures, there can be no assurance that failures
will not occur in the future. In addition, the Company currently has only one
manufacturing facility which is located in Southern California. The loss of
revenue and earnings to the Company from an equipment or tool failure, as well
as any disruption of the Company's operations resulting from a natural disaster
such as an earthquake, fire or flood, could have a material adverse effect on
its business, financial condition and results of operations.

Environmental Matters

The Company's operations and properties are subject to a wide variety of
international, federal, state and local laws and regulations, including those
governing the use, storage and handling, generation, treatment, emission,
release, discharge and disposal of certain materials, substances and wastes,
the remediation of contaminated soil and groundwater, and the health and safety
of employees. As such, the nature of the Company's operations exposes it to the
risk of claims with respect to such matters and there can be no assurance that
material costs or liabilities will not be incurred in connection with such
claims. See "Business -- Environmental Matters."

Availability of Raw Materials

Raw materials used by the Company in producing injection-molded plastic
components are purchased by the Company and, in certain limited circumstances,
the Company bears the risk of price fluctuations. In addition, shortages of
certain types of materials have occurred in the past and may occur in the
future. Future shortages or price fluctuations in raw materials or components
could have a material adverse effect on the Company's business, financial
condition and results of operations. Significant increases in the cost of
materials purchased by the Company could also have a material adverse effect on
the Company's results of operations in the event the Company is unable to pass
such price increases through to its customers. See "Business -- Raw Materials
and Supplies."

<PAGE>

Benefits of the Offering to Existing Stockholders

The Company intends to use approximately $4.0 million of the net proceeds
of this offering to repay the principal amount and interest outstanding under
its subordinated loan agreement with Sirrom, which will become a stockholder of
the Company upon the consummation of this offering. In addition, Sirrom and
other stockholders of the Company, including Geoffrey J.F. Gorman and Michael
A. Gibbs, the Chairman of the Board and the President of the Company,
respectively, will purchase Common Stock prior to the date of this Prospectus,
upon exercise of outstanding warrants and stock options, at prices
significantly lower than the initial public offering price of the shares
offered hereby. See "Use of Proceeds," "Principal Stockholders" and "Certain
Transactions."

No Prior Public Market; Possible Volatility of Stock Price

Prior to this offering, there has been no public market for the Company's
Common Stock. Accordingly, there can be no assurance that an active trading
market will develop or be sustained subsequent to this offering. The initial
public offering price of the Common Stock will be determined by negotiations
among the Company and the Underwriters and may not be indicative of the prices
that may prevail in the public market. Upon commencement of this offering, it
is expected that the Common Stock will be quoted on the Nasdaq National Market.
This stock market generally, and the plastics manufacturing sector in
particular, have experienced and are likely in the future to experience
significant price and volume fluctuations which could adversely affect the
market price of the Common Stock without regard to the Company's operating
performance. The trading price of the Common Stock could also be subject to
significant fluctuations in response to variations in quarterly operating
results, shortfalls in sales or earnings below analyst estimates, developments
in the computer and consumer electronics industries, stock market conditions
and other factors. There can be no assurance that the market price of the
Common Stock will not experience significant fluctuations or decline below the
initial public offering price. See "Underwriting."

Dilution

Purchasers of the Common Stock offered hereby will incur immediate
substantial dilution in pro forma net tangible book value per share from the
initial offering price in the amount of $5.89. To the extent outstanding
options to purchase the Company's Common Stock are exercised, there will be
further dilution to such new investors. See "Dilution."

Control by Certain Existing Stockholders

Following the sale of the shares offered hereby, the directors and
executive officers of the Company and their affiliates will own 45.7% of the
outstanding Common Stock (approximately 44.2% assuming full exercise of the
Underwriters' over-allotment option). Based on their stock ownership, such
persons will continue to have significant influence over the Company's policies
and affairs and most corporate actions requiring stockholder approval,
including the election of directors. See "-- Anti-Takeover Considerations,"
"Management" and "Principal Stockholders."

Shares Eligible for Future Sale; Potential for Adverse Effect on Stock Price

Sales of substantial amounts of Common Stock in the public market
following this offering could have an adverse effect on the market price of the
Common Stock. The 1,300,000 shares offered hereby will be freely tradeable
without restriction. All of the Company's officers, directors and principal
stockholders have agreed that they will not sell any Common Stock without the
prior consent of the representative of the Underwriters (the "Representative")
for a period of 365 days from the date of this Prospectus (the "Lock-up
Period"). The Lock-up Period may be waived by the Representative without notice
to the Company's stockholders or the Nasdaq National Market, the market on
which the Company's securities will be initially traded. Additionally, at June
4, 1997, options to purchase 894,000 shares of Common Stock were outstanding,
none of which options were exercisable. The Company intends to register all
shares reserved for issuance under its stock option plans. Shares covered by
such registration will be eligible for resale in the public market, subject to
Rule 144 limitations applicable to affiliates and to the lock-up agreements
described above. See "Management -- Stock Option Plans" and "Shares Eligible
for Future Sale."

<PAGE>

Anti-Takeover Considerations

Certain provisions of the Company's Restated Certificate of Incorporation,
By-Laws and Delaware General Corporation Law ("Delaware Law") could, together or
separately, discourage potential acquisition proposals, delay or prevent a
change in control of the Company, and limit the price that certain investors
might be willing to pay in the future for the Company's Common Stock. These
provisions include the issuance, without further stockholder approval, of
preferred stock with rights and preferences which could be senior to the Common
Stock. The Company is also subject to Section 203 of the Delaware Law, which may
also inhibit a change in control of the Company. See "Description of Securities
- -- Preferred Stock" and "-- Delaware Anti-Takeover Law."

<PAGE>

THE COMPANY

The Company's injection-molded plastic business began in 1952, and operated
until September 1996 as a family-owned business. In September 1996, a corporate
affiliate of Michael A. Gibbs, President of the Company, and Private Equity
Partners, L.L.C. ("PEP"), an affiliate of Geoffrey J.F. Gorman, Chairman of the
Board of the Company, formed the Company and sponsored the acquisition of all of
the outstanding capital stock of AB Plastics for a purchase price of $7.0
million. Of such purchase price, $2.0 million was paid by equity contributions
by PEP and certain investors originated by PEP, and $5.0 million was financed
from the proceeds of a $4.0 million subordinated loan from Sirrom and $1.0
million of borrowings under the Company's revolving line of credit with
Sumitomo. In addition, approximately $4.5 million in bank indebtedness then
outstanding of AB Plastics was refinanced by the Company with a portion of the
Sumitomo revolving line of credit, and approximately $700,000 in equipment
financing was assumed by the Company. The acquisition was accounted for as a
purchase transaction and was valued at approximately the fair value of the net
assets acquired. The Company has no assets other than the shares of Common Stock
of AB Plastics.

Prior to the acquisition of AB Plastics, in October 1995, a corporate
affiliate of Mr. Gibbs entered into a letter of intent to acquire AB Plastics
and a consulting agreement to evaluate the systems and manufacturing processes
of AB Plastics. Beginning in early 1996, and accelerated by a new management
team following the September 1996 acquisition, the Company initiated a profit
improvement program to focus on reducing overtime, staffing levels, tooling and
maintenance problems, rework and excessive warehousing costs, and on increasing
the use of robotics in its manufacturing process. Since October 1995, the
Company has reduced its work force by approximately 20% and achieved annualized
cost savings in excess of $3.0 million. From October 1995 to October 1996, the
Company increased income before income taxes by 14.4% and, from April 1996 to
April 1997, increased income before income taxes by 135.6%.

<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,300,000 shares of
Common Stock offered hereby are estimated to be approximately $8,080,000
($9,367,000 if the Underwriters' over-allotment option is exercised in full),
assuming an initial public offering price of $7.50 per share (which is the
mid-point of the filing range) and after deducting underwriting discounts and
commissions and estimated offering expenses.

The Company intends to use the net proceeds of this offering to repay the
approximately $4.0 million in principal and accrued interest outstanding under
its subordinated loan agreement with Sirrom. The remaining net proceeds of
approximately $4.0 million will be used, in conjunction with additional lending
arrangements, to complete the construction of the warehouse at the Company's
Gardena, California facility and equip its newly-constructed Tijuana, Mexico
manufacturing facility. Pending such uses, the Company intends to temporarily
reduce approximately $4.0 million in borrowings expected to be outstanding under
the Company's revolving line of credit facility with Sumitomo upon the
consummation of this offering. Amounts repaid under the Company's revolving line
of credit may be reborrowed by the Company, from time to time, based on certain
percentages of eligible inventories and accounts receivable, up to a maximum
$10.0 million available under such facility. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

The Sirrom subordinated loan matures in September 2001, subject to certain
mandatory prepayments, and has a stated interest rate of 13.5% per annum. The
repayment of the Sirrom subordinated loan will eliminate the Company's current
annual interest obligations thereunder of $540,000. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."

DIVIDEND POLICY

The Company has never paid or declared any cash dividends. The Company
intends to retain future earnings, if any, to finance the development and
expansion of its business and, therefore, does not anticipate paying any cash
dividends on its Common Stock in the foreseeable future. In addition, the
Company's revolving line of credit with Sumitomo prohibits the Company from
declaring, paying or making any dividend or distribution on its Common Stock.

<PAGE>

CAPITALIZATION

The following table sets forth, as of April 27, 1997, the short-term debt
and capitalization of the Company on an actual basis and as adjusted to give
effect to the sale and issuance of the 1,300,000 shares of Common Stock offered
by the Company hereby (after deducting the estimated underwriting discounts and
commissions and estimated offering expenses) at an assumed public offering
price of $7.50 and the application of the net proceeds therefrom as described
in "Use of Proceeds." This table should be read in conjunction with the
Consolidated Financial Statements and Notes thereto included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
April 27, 1997
------------------------
Actual As Adjusted
--------- ------------
(in thousands)
<S> <C> <C>
Short-term debt ................................................ $ 283 $ 283
======== ========
Long-term debt:
Revolving line of credit ....................................... $ 3,150 $ 0
Subordinated term loan ....................................... 4,000 0
Capitalized leases, less current portion ..................... 625 625
-------- --------
Total long-term debt .......................................... 7,775
Stockholders' equity:
Preferred Stock, par value $.0001; 5,000,000 shares authorized;
no shares outstanding ....................................... -- --
Common Stock, par value $.0001; 20,000,000 shares authorized;
4,806,000 shares (actual) and 6,106,000 shares (as adjusted)
issued and outstanding(1) .................................... 0 1
Additional paid-in capital .................................... 2,200 10,279
Retained earnings ............................................. 1,343 1,343
-------- --------
Total stockholders' equity ................................. 3,543 11,623
-------- --------
Total capitalization ....................................... $11,601 $12,531
======== ========
</TABLE>

- ------------
(1) Does not include (i) 130,000 shares of Common Stock issuable upon exercise
of the Representative's Warrants, (ii) 594,000 shares of Common Stock
reserved for issuance upon exercise of outstanding options with an
exercise price of $0.74 per share under the Company's 1996 Stock Option
Plan and (iii) 300,000 shares of Common Stock reserved for issuance upon
exercise of outstanding options with an exercise price equal to the
initial public offering price per share, and 700,000 shares of Common
Stock reserved for issuance upon exercise of options reserved for future
grant, under the Company's 1997 Stock Option Plan. See "Management--
Employment Agreements," "-- Stock Option Plans," "Certain Transactions"
and "Underwriting."

<PAGE>

DILUTION

The pro forma net tangible book value of the Company as of April 27, 1997
was $1,732,253 or $0.36 per share of Common Stock. Pro forma net tangible book
value per share represents the amount of net tangible assets, less total
liabilities, divided by the number of shares of Common Stock outstanding. After
giving effect to the sale by the Company of 1,300,000 shares of Common Stock
offered hereby at an assumed initial public offering price of $7.50 per share,
and applying the net proceeds thereof to the repayment in full of the Company's
subordinated term loan from Sirrom having an outstanding principal balance of
$4.0 million at April 27, 1997, and to effect a temporary reduction of the
Company's revolving line of credit with Sumitomo expected to be approximately
$4.0 million upon the consummation of this offering, the pro forma net tangible
book value of the Company as of April 27, 1997 would have been $9,812,253, or
$1.61 per share. This represents an immediate increase in net tangible book
value of $1.25 per share to existing stockholders and an immediate dilution of
$5.89 per share to new investors. The following table illustrates this per share
dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share ........................ $7.50
Pro forma net tangible book value per share at April 27, 1997 ......... $0.36
Increase in pro forma net tangible book value per share attributable to
new investors ......................................................... 1.25
Pro forma net tangible book value per share after this offering ...... ----- 1.61
------
Dilution per share to new investors .................................... $5.89
======
</TABLE>

The following table summarizes, as of April 27, 1997, the differences in
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price paid per share by
existing and new investors:

Shares Purchased Total Consideration Average
----------------------- ------------------------- Price Per
Number Percent Amount Percent Share
----------- --------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C>
Existing stockholders ...... 4,806,000 78.7% $ 2,757,020 22.0% $0.57
New investors ............... 1,300,000 21.3 9,750,000 78.0 7.50
---------- ------- ------------ -------
Total ..................... 6,106,000 100.0% $12,507,020 100.0%
========== ======= ============ =======
</TABLE>

The above table assumes no exercise of the Underwriters' over-allotment
option. If the Underwriters' over-allotment option is exercised in full, new
investors will have paid $11,212,500 for 1,495,000 shares of Common Stock,
representing approximately 80.3% of the total consideration for the total number
of shares of Common Stock outstanding. See "Underwriting."

<PAGE>

SELECTED FINANCIAL DATA
(in thousands, except share and per share data)

The selected financial data set forth below with respect to the Company's
statement of operations for the fiscal year ended October 27, 1996, and with
respect to the balance sheet at October 27, 1996, are derived from the financial
statements audited by Marcum & Kliegman LLP, independent accountants, which are
included elsewhere in this Prospectus and are qualified by reference to such
financial statements. The selected financial data set forth below with respect
to the Company's statement of operations for each of the fiscal years ended
October 29, 1995 and October 30, 1994, and with respect to the balance sheet at
October 29, 1995, are derived from the financial statements audited by Block,
Plant, Eisner, Fiorito & Belak-Berger, independent accountants, which are
included elsewhere in this Prospectus and are qualified by reference to such
financial statements. The balance sheet data at October 30, 1994 is derived from
financial statements not included in this Prospectus. The statement of
operations data for the 26 weeks ended April 27, 1997 and April 28, 1996, and
the balance sheet data at April 27, 1997 are derived from unaudited financial
statements included elsewhere in this Prospectus. The unaudited financial
statement data includes all adjustments, consisting only of normal recurring
adjustments, which the Company considers necessary for a fair presentation of
the financial position and results of operations for such periods. Operating
results for the 26 weeks ended April 27, 1997 are not necessarily indicative of
the results that may be expected for the year ending October 26, 1997. The data
set forth below should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the Consolidated
Financial Statements and related notes included herein.

<TABLE>
<CAPTION>
52 Weeks Ended 26 Weeks Ended
--------------------------------------------- ------------------------
October 30, October 29, October 27, April 28, April 27,
1994 1995 1996 1996 1997
------------- ------------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Sales ................................. $ 34,027 $ 42,679 $ 39,345 $ 19,410 $ 20,244
Cost of sales ........................ 30,695 38,961 34,001 17,338 16,393
-------- -------- ---------- ---------- ----------
Gross profit ........................ 3,332 3,718 5,344 2,072 3,851
Selling, general and administrative.... 1,715 1,683 1,732 1,021 1,456
-------- -------- ---------- ---------- ----------
Operating income ..................... 1,617 2,035 3,612 1,051 2,395
Net interest expense .................. 225 375 485 226 451
Other (income) expense ............... (218) (70) 1,146 -- --
-------- -------- ---------- ---------- ----------
Income before income taxes ............ 1,610 1,730 1,981 825 1,944
Income tax expense(1) ............... 48 26 107 12 764
-------- -------- ---------- ---------- ----------
Net income ........................... $ 1,562 $ 1,704 $ 1,874 $ 813 $ 1,180
======== ======== ========== ========== ==========
Net income per share(2) ............... -- -- $ 0.39 $ 0.17 $ 0.24
Weighted average number of shares
outstanding(2) ...................... -- -- 4,860,000 4,860,000 4,860,000
Supplemental Non-GAAP Data:
Depreciation and amortization ......... $ 746 $ 876 $ 909 $ 492 $ 636
EBITDA(3) ........................... 2,363 2,911 4,521 1,543 3,031
Pro forma net income(4) ............... 966 1,039 1,880 495 1,166
Pro forma net income per share(4)...... 0.20 0.21 0.39 0.10 0.24
</TABLE>

<TABLE>
<CAPTION>
April 27, 1997
October 30, October 29, October 27, --------------------------
1994 1995 1996 Actual As Adjusted(5)
------------- ------------- -------------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash .............................. $ 128 $ 468 $ 730 $ 803 $ 1,733
Working capital .................. 2,590 801 4,114 2,272 3,202
Total assets ..................... 14,349 20,613 19,594 18,827 19,757
Total current liabilities ......... 5,479 10,855 5,109 5,774 5,774
Total long-term liabilities ...... 3,288 2,886 12,121 9,509 2,359
Stockholders' equity ............ 5,582 6,872 2,364 3,543 11,623
</TABLE>

footnotes appear on next page

<PAGE>

(6) Includes long-term debt, less current portion, of $7,775,004 and deferred
income tax liability of $1,734,437.

<PAGE>

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

The following Management's Discussion and Analysis of Financial Condition
and Results of Operations includes forward-looking statements with respect to
the Company's future financial performance. These forward-looking statements
are subject to various risks and uncertainties, including the factors described
under "Risk Factors" and elsewhere in this Prospectus, that could cause actual
results to differ materially from historical results or those currently
anticipated.

Overview

The Company is a leading contract manufacturer and assembler of custom
injection-molded plastic components for computer and consumer electronics OEMs
located in Southern California and Mexico. The Company supplies plastic
exteriors for direct-tube televisions ranging from 13" to 35" and frames for
50" and 60" projection televisions. The Company also supplies plastic exterior
and base stands for 17" computer monitors manufactured by Sony for leading PC
manufacturers, such as Gateway 2000, Dell Computer, Silicon Graphics, Sun
Microsystems and Digital Equipment Corporation, and, starting in August, the
plastic exteriors for Sony's personal computer, known as "Vaio," in both 15"
and 17" models. The Company also manufactures enclosures for electronic music
keyboards.

The Company maintains approximately 150 active molds for its customers,
pursuant to which it may produce all the plastic components for a product or
only select parts. During the product life cycle, components are ordered by the
Company's customers to meet their just-in-time production requirements. Typical
lead times range from two to four weeks. Historically, shipments of the
Company's components have been higher in the second and fourth fiscal quarters
as a result of increased demand for computer and consumer electronics products
during the spring and year-end holiday seasons. As a result, sales may vary from
period to period solely dictated by the demand for the products of the Company's
customers. As product introduction and acceptance are not determined in advance,
OEM customers generally allocate molds for new components to their suppliers,
such as the Company, before they know actual volume purchase requirements.
Traditionally, once a tool is allocated to a particular molder and is in
production, it is rarely moved to a competitor. The Company is one of two
principal regional suppliers to its two largest customers, Sony and Matsushita.

For the first 35 years of its existence, substantially all of the
Company's sales were made to customers located in California. In the late
1980s, many of these firms relocated to Tijuana, Mexico, primarily due to
reduced labor costs. There are currently approximately 350 manufacturing plants
operating in Tijuana. Four of the Company's largest customers have a total of
seven plants located in Tijuana. Trends within the computer and consumer
electronics industries indicate that OEMs based in the Far East (such as Japan,
Taiwan and South Korea) will continue to relocate the manufacturing and
engineering of products for sale in the United States, formerly manufactured in
Far Eastern facilities, to North America, in particular Tijuana.

Sony commenced manufacturing computer monitors at its computer monitor
manufacturing division in Rancho Bernardo, California in 1994. As one of two
principal United States injection-molders for Sony computer monitors, the
Company's monitor sales rose from $2.9 million in 1994 to $15.4 million in
1996. The Company expects to manufacture additional models in 1997 and 1998 to
supply Sony's anticipated computer monitor growth, including anticipated public
response to the Sony Vaio. In fiscal 1997, Sony transferred all of its
television production and a significant portion of its computer monitor
production from its Rancho Bernardo, California facility to its Tijuana, Mexico
plant. When operational, the Company's new Tijuana, Mexico facility will
manufacture components for computer monitors and televisions for Sony's Tijuana
manufacturing and assembly plant. Because sales from this facility will be all
U.S. dollar-denominated and managed at the Company's Gardena, California
executive offices, the Company does not believe that it will be significantly
affected by exchange rate fluctuations in the Mexican peso relative to the U.S.
dollar. The Company's Gardena, California plant will continue to service Sony's
Rancho Bernardo plant.

All molds held by the Company are owned by the customer but the Company is
responsible for general maintenance and safe storage during the life of the
mold. Costs for maintenance of the mold are expensed as incurred. Major tool
modifications are charged to the customer.

<PAGE>

Prices are quoted based on component drawings provided by customers with
estimates of part weight, resin costs, machine requirements and parts produced
per hour (cycle time). Most component prices are negotiated after initial
production runs, and weight and cycle times are verified. The Company charges
its customers a fixed price for each component it manufactures, which
components may consist of single or multiple parts. Negotiated prices include
the cost of thermoplastic resins, packaging, other materials and parts, labor
and overhead. Although thermoplastic resins have historically accounted for at
least 80% of its raw material costs, the Company does not believe that its
results of operations are subject to the risk of fluctuations in resin prices,
since the Company's arrangements with most of its customers provide that price
changes in such resins are passed through to the customer by changes in the
component prices charged by the Company. In addition, each of Sony, Matsushita
and Hitachi negotiate separate supply agreements with thermoplastic resin
producers which deliver such resins to the Company for use in their products.
During periods of rising resin prices, sales revenues tend to increase for the
same number of units while gross profit margin remains unchanged, but gross
profit margin as a percentage of sales decreases. The reverse tends to be true
in periods of declining resin prices. In fiscal 1995, resin prices increased
rapidly to 20% greater than 1994, resulting in $4.0 million of sales inflation.
Resin prices declined over 18% in fiscal 1996 and have been relatively stable
the first half of fiscal 1997. As customers generally seek price reductions
during the product life cycle, the Company's ability to improve operating
performance is generally dependent on increasing manufacturing efficiency
through improved process control, increased automation, engineering changes to
molds and reduced operating and labor expenses.

Results of Operations

26 Weeks ended April 27, 1997 Compared to 26 Weeks ended April 28, 1996

The Company's net sales for the 26 weeks ended April 27, 1997 were $20.2
million, an increase of $800,000 or 4.1%, from $19.4 million for the 26 weeks
ended April 28, 1996. For the 26 weeks ended April 27, 1997, net sales were
comprised of $9.7 million in computer monitor component sales, $8.4 million in
television component sales and $1.8 million in electronic music keyboard
component sales, and other component sales of approximately $280,000.

Television component sales decreased $1.3 million, or 13.4%, from sales of
$9.7 million for the 26 weeks ended April 28, 1996. This decrease was due to a
decrease in orders from Matsushita of $3.0 million, which was partially offset
by an increase in orders from Sony of $1.6 million. Computer monitor component
sales increased $2.5 million, or $34.7% from sales of $7.2 million for the 26
weeks ended April 28, 1996. This increase was principally due to an increase in
orders from Sony of approximately $1.8 million, and an increase in orders from a
smaller customer of approximately $682,000. Electronic music keyboard component
sales increased approximately $112,000, or 6.6%, from sales of $1.7 million for
the 26 weeks ended April 28, 1996. This increase was the result of an increase
in orders from Casio. During this time resin prices decreased and were passed on
to the customers in the form of lower prices.

The Company's gross profit for the 26 weeks ended April 27, 1997 was $3.8
million, or 19.0% of net sales, compared to $2.1 million, or 10.7% of net
sales, for the 26 weeks ended April 28, 1996. This increase was principally due
to productivity improvements in labor and overhead.

The Company's selling, general and administrative ("SGA") expenses for the
26 weeks ended April 27, 1997 were $1.5 million, or 7.2% of net sales, compared
to $1.02 million, or 5.3% of net sales, for the 26 weeks ended April 28, 1996.
These expenses consisted of increased administrative expenses and incentive
compensation accruals.

The Company's net interest expense for the 26 weeks ended April 27, 1997
was $451,000, or 2.2% of net sales, compared to $226,000, or 1.3% of net sales,
for the 26 weeks ended April 28, 1996. The increase in interest expense is due
to the increase in long-term debt related to the acquisition of AB Plastics by
the Company in September 1996.

The Company's net income tax expense for the 26 weeks ended April 27, 1997
was $764,000, or 3.8% of net sales, compared to $12,000 for the 26 weeks ended
April 28, 1996. Prior to the acquisition of AB Plastics by the Company in
September 1996, the Company made an election to be taxed under the provisions
of subchapter S of the Internal Revenue Code. Under these provisions, the
Company did not pay federal corporate income taxes

<PAGE>

on its taxable income and only paid 1.5% state income taxes. Instead, the
stockholders were liable for individual federal and state income taxes on their
respective shares of the Company's taxable income. Subsequent to the date of
acquisition, the Company terminated its subchapter S corporation election and
elected to be governed by the provisions under subchapter C of the Internal
Revenue Code. Under these provisions, the Company is liable for federal and
state income taxes on its taxable income.

Fiscal Year ended October 27, 1996 Compared to Fiscal Year ended October
29, 1995

The Company's net sales for the fiscal year ended October 27, 1996 ("1996
fiscal year") were $39.4 million, a decrease of $3.3 million, or 7.7%, from
$42.7 million in the fiscal year ended October 29, 1995 (the "1995 fiscal
year"). For the 1996 fiscal year, net sales were comprised of $19.5 million in
television component sales, $15.6 million in computer monitor component sales,
and $3.3 million in electronic music keyboard component sales, and other
component sales of $1.0 million.

Television component sales decreased $4.6 million, or 19.1%, from 1995
fiscal year sales of $24.1 million. This decrease was due to a decrease in
orders from Sony of $3.93 million and a decrease from Hitachi of $1.7 million,
slightly offset by an increase in orders by Matsushita of approximately
$799,000. Computer monitor component sales in the 1996 fiscal year increased
$4.3 million, or 38.3%, from 1995 fiscal year sales of $11.2 million. This
increase was due to an increase in orders from Sony of $4.1 million and an
increase from a smaller customer of approximately $179,000. Electronic music
keyboard component sales decreased $2.9 million, or 46.7%, from 1995 fiscal
year sales of $6.2 million. This decrease was the result of a decrease in
orders from Casio. During this time resin prices decreased and were passed on
to the customers in the form of lower prices.

The Company's gross profit for the 1996 fiscal year was $5.3 million, or
13.6% of net sales, compared to $3.7 million, or 8.7% of net sales, for the
1995 fiscal year. This increase was principally due to productivity
improvements in labor and overhead.

The Company's SGA expenses for the 1996 fiscal year were $1.7 million, or
4.4% of net sales, compared to $1.7 million, or 3.9% of net sales, for the 1995
fiscal year. The increase in expense as a percentage of sales was due solely to
the decrease in revenue.

The Company's net interest expense for the 1996 fiscal year was $485,000,
or 1.2% of net sales, compared to $375,000, or 0.9% of net sales, for the 1995
fiscal year. The interest was due to greater borrowings by the Company during
the 1996 fiscal year.

The Company's other expense for the 1996 fiscal year was $1.1 million, or
2.8% of net sales, compared to income of $70,000, or 0.2% of net sales, for the
1995 fiscal year. This expense represents one-time restructuring costs recorded
as a result of the acquisition of AB Plastics by the Company in September 1996.

The Company's income tax expense for the 1996 fiscal year was
approximately $107,000, or 0.3% of net sales, compared to approximately
$26,000, or 0.06% of net sales, for the 1995 fiscal year, reflecting the
termination of subchapter S status on September 27, 1996.

Fiscal Year ended October 29, 1995 Compared to Fiscal Year ended October
30, 1994

The Company's net sales for the 1995 fiscal year were $42.7 million, an
increase of $8.7 million, or 25.5%, from $34.0 million in the fiscal year ended
October 30, 1994 (the "1994 fiscal year"). For the 1995 fiscal year, net sales
were comprised of $24.1 million in television component sales, $11.2 million in
computer monitor component sales, and $6.2 million in electronic keyboard
component sales, and other component sales of $1.2 million.

Television component sales in the 1995 fiscal year decreased $1.5 million,
or 5.9%, from 1994 fiscal year sales of $25.6 million. This decrease was due to
a reduction in orders from Sony of $2.9 million, offset by increases from both
Matsushita of approximately $756,000 and Hitachi of approximately $591,000.
Computer monitor component sales in the 1995 fiscal year increased $8.4
million, or 290%, from 1994 fiscal year sales of $2.9 million. This increase
was due to the growth of Sony's computer monitor business in Rancho Bernardo,

<PAGE>

California and resin price increases which were passed on to customers in terms
of higher prices. Electronic music keyboard component sales increased $2.6
million, or 70.2%, from 1994 fiscal year sales of $3.7 million. This increase
was the result of market demand for Casio's keyboard products.

The Company's gross profit for the 1995 fiscal year was $3.7 million, or
8.7% of net sales, compared to $3.3 million, or 9.8% of net sales, for the 1994
fiscal year. This increase was principally due to higher revenue. The decrease
in gross profit as a percentage of sales was due to higher resin prices.

The Company's SGA expenses for the 1995 fiscal year were $1.7 million, or
3.9% of net sales, compared to $1.7 million, or 5.0% of net sales, for the 1994
fiscal year. The decrease in expense as a percentage of sales was due solely to
the increase in revenue.

The Company's net interest expense for the 1995 fiscal year was $375,000,
or 0.9% of net sales, compared to $225,000, or 0.6% of net sales, for the 1994
fiscal year.

The Company's other income for the 1995 fiscal year was $70,000, or 0.2%
of net sales, compared to income of $218,000, or 0.6% of net sales, for the
1994 fiscal year. Other income consisted mainly of workers' compensation
rebates.

The Company's income tax expense for the 1995 fiscal year was
approximately $26,000, or 0.1% of net sales, compared to approximately $48,000,
or 0.1% of net sales, for the 1994 fiscal year.

Liquidity and Capital Resources

As of April 27, 1997, the Company had working capital of $2.3 million
compared to $4.1 million at the end of the 1996 fiscal year. The reduction was
attributable to improved collection of accounts receivable and increased trade
payables and accrued wages and benefits. The Company used such funds to pay
down its revolving line of credit, which is classified as a long-term
liability. The Company's available borrowings under its revolving line of credit
was $4.1 million at April 27, 1997.

Net cash provided by operating activities for the 26 weeks ended April 27,
1997 was approximately $3.4 million, compared to $1.7 million for the 26 weeks
ended April 28, 1996. The difference between the Company's net income of $1.2
million and operating cash flow of $3.4 million was attributable to $600,000 in
depreciation and amortization, reduction in accounts receivable of $2.3
million, an increase in accounts payable of $600,000, less an increase in
inventory of $1.1 million.

Net cash used in investing activities for the 26 weeks ended April 27,
1997 was $845,000, compared to $700,000 for the 26 weeks ended April 28, 1996.
Cash flow for the 26 weeks ended April 27, 1997 reflects the capital
expenditures incurred in connection with the Company's routine replacement of
manufacturing and support equipment, the addition of two molding machines, and
leasehold improvements related to expansion of its administrative offices.

Net cash used for financing activities for the 26 weeks ended April 27,
1997 was $2.6 million, compared to $2.0 million used for the 26 weeks ended
April 28, 1996. This reflects approximately $2.9 million in payments to reduce
the Company's outstanding line of credit borrowings, approximately $152,000 in
principal payments related to equipment lease obligations during the 26 weeks
ended April 27, 1997, and the addition of $396,000 in capitalized leases
related to the purchase of two molding machines.

AB Plastics is party to a loan agreement with Sumitomo, which includes (a)
a revolving line of credit facility (the "Revolver"), available through July
31, 2001, with a maximum borrowing limit equal to the lesser of $10.0 million
or the sum of (i) 85% of AB Plastics' eligible accounts receivable, plus (ii)
50% of AB Plastics' eligible inventory, plus (iii) a supplemental amount of
$5.3 million (reducing at the rate of $100,000 per month commencing May 31,
1997), and (b) an equipment line of credit (the "Equipment Line"), available
through October 31, 1997, in an aggregate principal amount of up to $2,000,000
to be utilized for the purchase of equipment. The loans under the Sumitomo loan
agreement are secured by a first priority lien and security interest on
substantially all of the assets of AB Plastics, and by a guaranty of the
Company which is secured by a pledge of all of the outstanding capital stock of
AB Plastics. The loans bear interest at prime rate plus 0.50% per annum (or, at
AB Plastics' option, at short-term LIBOR plus 2.75% per annum) with respect to
the Revolver, and at

<PAGE>

prime rate (through October 31, 1997) and prime rate plus 0.25% per annum (from
and after November 1, 1997) under the Equipment Line. Advances under the
Revolver are repayable in full on July 31, 2001, and advances under the
Equipment Line as of October 31, 1997 are repayable in 48 equal monthly
payments from December 1, 1997 through November 1, 2001. It is contemplated
that approximately $4.0 million in principal amount of loans will be
outstanding under the Revolver upon the consummation of this offering. Pending
the use of the net proceeds of this offering for its facilities, the Company
intends to use approximately $4.0 million of the net proceeds of this offering
for the reduction of the outstanding loans under the Revolver. See "Use of
Proceeds."

The Company and AB Plastics are co-borrowers under a subordinated loan
agreement with Sirrom, pursuant to which the Company and AB Plastics borrowed
from Sirrom a subordinated term loan in the original principal amount of $4.0
million, bearing interest at the rate of 13.5% per annum, and secured by a lien
and security interest on substantially all of the assets of AB Plastics and a
pledge of all of the outstanding capital stock of AB Plastics. The Sirrom loan
and the liens, security interests and pledge securing the Sirrom loan are
subordinated to the Sumitomo loans and the liens, security interests and pledge
securing the Sumitomo loans. The interest on the Sirrom loan is payable in
monthly installments of $45,000 through September 2001, when the then
outstanding principal amount matures, subject to certain mandatory prepayments
out of excess cash flow (if any) achieved in the calendar years 1998, 1999 and
2000. As of June 4, 1997, the outstanding principal balance of the Sirrom loan
was $4.0 million. The Company intends to use a portion of the net proceeds of
this offering to repay the Sirrom loan in full. See "Use of Proceeds."

In May 1997, AB Plastics borrowed the sum of $1.0 million from
Transamerica Business Credit Corporation ("Transamerica"). Of such $1.0
million, approximately $535,000 was utilized to pay in full the remaining
outstanding balances of certain capitalized leases, and the remaining $465,000
of proceeds was retained by AB Plastics with the intent of utilizing such funds
to acquire equipment for the new Tijuana, Mexico facility. The loan from
Transamerica bears interest at the rate of 10.03% per annum, is repayable in 60
equal monthly installments of combined principal and interest payable monthly
through May 2002, and is secured by a lien on the equipment acquired under the
refinanced capitalized leases and by a guaranty of the Company.

The contemplated repayment of approximately $8.0 million of the Company's
existing indebtedness with the net proceeds of this offering is expected to
significantly improve the Company's liquidity by reducing both the Company's
interest expense and the principal amount of indebtedness required to be repaid
by the Company in the future. The Company believes that, subsequent to this
offering and such repayments, funds generated from operations and expected
borrowing availability under the Company's revolving line of credit will be
sufficient to satisfy the Company's working capital requirements.

Capital Expenditures

At April 27, 1997, the Company's commitments for capital expenditures
totaled approximately $2.7 million related primarily to equipment for its new
Tijuana, Mexico manufacturing facility. The Company also expects to spend an
additional $3.5 million on equipment and improvements on such facility. The
Company intends to finance these expenditures through separate lending
arrangements, as well as a portion of the net proceeds of this offering. The
Company expects to spend approximately $5.0 million to purchase the land and
buildings at its Gardena, California manufacturing facility and construct an
additional 75,000 square foot warehouse and distribution facility to replace an
off-site leased facility of roughly equivalent size. The Company intends to pay
for the purchase of the Gardena, California property by borrowing approximately
$3.5 million under a conventional mortgage loan, with the balance to be funded
from the revolving line of credit.

Recent Accounting Pronouncements

In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"). SFAS 123 requires compensation expense
to be recorded (i) using the new fair value method or (ii) using existing
accounting rules prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations with pro forma disclosure of what net income and earnings per
share would have been had the Company adopted the new fair value method. The
Company intends to continue to account for its stock-based compensation plans
in accordance with the provisions of APB 25.

<PAGE>

BUSINESS

Overview

The Company is a leading contract manufacturer and assembler of custom
injection-molded plastic components. The Company manufactures the plastic
exteriors of computer monitors, televisions, electronic music keyboards and
other consumer electronics equipment. In addition to injection-molded
components, the Company offers a broad range of "value-added" services,
including painting, decorating and assembly. A significant percentage of the
Company's components are manufactured using gas-assist molding technology which
reduces material usage and permits the molding of lighter and stronger parts.
The Company believes its technical and manufacturing capabilities to produce
large injection-molded plastic components on both a "just-in-time" basis and in
production volumes with low reject rates provides a significant competitive
advantage.

The Company's two major OEM customers are Sony, through its computer
monitor and television manufacturing divisions, and Matsushita, through its
Panasonic and Quasar brands. Sales to these customers represented approximately
66.5% and 18.0%, respectively, of the Company's total sales for the fiscal year
ended October 27, 1996. Of sales to Sony, computer monitor components accounted
for approximately 39.1% and television components accounted for approximately
27.4% of the Company's total sales during the fiscal year ended October 27,
1996. The Company has been an uninterrupted supplier of custom injection-molded
components to Sony since 1972, to Matsushita since 1983 and to virtually all of
its other customers for at least seven years. To improve its ability to support
major customers, in addition to its current manufacturing facility in Gardena,
California, the Company is currently completing a new "build-to-suit"
manufacturing facility in Tijuana, Mexico. This new facility has been
logistically located near many of its customers' manufacturing plants in Mexico
and is expected to add significant manufacturing capacity by September 1997.
Management believes that this facility will enable the Company to capitalize on
demand from new and existing customers which have relocated their manufacturing
operations from the Far East and the United States to Mexico in recent years due
to lower labor and transportation costs. Closer proximity to its major customers
will allow the Company to be more efficient in delivering 15 to 20 daily
truckloads of components to its customers' production facilities and eliminate
time-consuming border crossings.

Industry Overview and Trends

Custom injection-molded plastic components are essential in virtually all
computer monitors, televisions, electronic music keyboards and other consumer
electronic products that require an enclosure or cabinet. The continuing
development and refinement of these products by OEMs has created a strong demand
for injection-molded plastic components for new and replacement sales of these
products. According to Stanford Resources' Monitrak Quarterly Report, United
States sales of computer monitors, the Company's major market, rose to
approximately 21.7 million units in 1996, representing an increase of 61.9% from
sales of approximately 13.4 million units in 1994. As computer monitors are
built to incorporate more features of a television, videocassette recorder,
videophone and gameplayer, and with the anticipated introduction of cable-ready
monitors, cable modems, ISDN and 3-D graphics applications, the Company believes
that these technological advancements will spur continued growth in the computer
monitor market. In addition, according to Stanford Resources, United States
direct-view color television sales were approximately 22.1 million units in 1996
and, since 1991, sales have exceeded 20 million units per year. The Company
believes that the anticipated availability of digital broadcasting, Internet
access, HDTV and flat panel displays has the potential to significantly increase
television sales over the next ten years.

<PAGE>

the western United States (comprised of the states of California, Arizona,
Oregon and Washington), and one of the three largest plastic injection molders
in Southern California. In addition, according to CIT's Sixth Annual Plastics
Industry Outlook 1997-1999, the electronics industry, which has itself been
experiencing significant growth in recent years, is expected to increase its
plastic consumption the most rapidly of all other industries through 1999.

Management believes that the Company is well positioned to take advantage
of the following trends in the injection-molded plastic industry:

Continued Demand for Plastic Components. In recent years, OEMs have
focused their efforts on developing and employing lower-cost and lighter
materials, such as plastic, in the design of components for televisions,
electronic and computer products. Plastic provides OEMs with a number of design
advantages over metal, including increased design flexibility and aesthetic
appeal and resistance to corrosion. Substituting plastic for metal can also
reduce manufacturing costs by eliminating machining costs, reducing painting
costs, facilitating assembly, minimizing tooling costs and reducing the number
of parts used in a particular product. The continued growth of high performance
engineered plastics and the ability of resin suppliers to deliver resins with
specific properties, such as high-impact strength and flame retardancy, will
allow a more diverse range of plastics applications. The Company believes that
while the majority of opportunities for converting metal into plastic have
already occurred in computer and television exterior applications, there are
significant growth opportunities in the use of plastic in computer base stands
and business equipment that require electromagnetic and radio frequency
interference shielding.

Further Outsourcing by OEMs. According to Plastic News, since the early
1990s, OEMs have purchased an increasingly larger share of their total
injection-molded plastic requirements from independent manufacturers. Management
believes that this trend toward greater outsourcing is driven by increasingly
sophisticated engineering and manufacturing requirements and the substantial
capital investment required to manufacture injection-molded plastic. In
addition, this trend in outsourcing of injection-molded plastic requirements is
part of another trend among OEMs toward outsourcing manufacturing services to
those suppliers which accept significant responsibility for product management
and meet strict standards for product quality, on-time delivery and
manufacturing costs.

Increased Demand for Just-in-Time Deliveries. Because production delays
resulting from undelivered or late production orders can have severe
consequences and stockpiling of inventory entails significant carrying costs,
OEMs are increasingly asking for the assistance of component manufacturers with
the management of their inventories by providing just-in-time delivery to avoid
temporary inventory shortages and unnecessary carrying costs.

Consolidation of Industry. According to Plastic News, the number of North
American injection-molded plastic manufacturers has decreased from the late
1970s due to significant mergers and acquisitions activity. The Company
believes that this consolidation is primarily due to the substantial capital
investment and the engineering and manufacturing expertise required to remain
technologically competitive and thereby meet customer specifications for
injection-molded plastic, as well as national and global relationships with
customers and price competition in the injection-molded plastic market.

Growth Strategy

The Company's goal is to be a dominant supplier of injection-molded plastic
components to the increasing number of computer monitor and television OEMs
plants located in Southern California and Tijuana, Mexico. Management believes
that the commencement of digital broadcasting in the television industry in the
United States, starting in 1998, will create a demand for new HDTV and flat
panel displays as consumers replace obsolete television sets unable to receive
digital broadcasting with HDTV quality. According to Stanford Resources, at
least 20 million television sets have been sold each year since 1991 and 380
million television sets have been sold since 1974 in the United States.

<PAGE>

The key elements of the Company's growth strategy include the following:

Continue to Expand Computer Monitor and Television Component Business. The
Company will seek to expand its computer monitor component business through the
continuation of the overall growth of the Company's computer monitor sales to
Sony, which have grown from $2.9 million in fiscal 1994 to $15.4 million in
fiscal 1996, a 431% increase. The Company will continue to support not only
Sony's private label programs on behalf of leading computer hardware companies
such as Gateway 2000, Dell Computer, Silicon Graphics, Sun Microsystems and
Digital Equipment Corporation, but also Sony's personal computer, known as Vaio,
beginning in July 1997. In addition, the Company's recent marketing strategy
includes targeting sales to other computer monitor and television OEMs doing
business in Tijuana, Mexico.

Acquire Complementary Businesses. The Company believes that the acquisition
of manufacturers of injection-molded plastics products will enable the Company
to diversify its customer base, technical capabilities and geographic areas
served, capitalize on consolidation opportunities in its fragmented market and
on OEMs' desire to outsource their supply requirements, reduce the number of
suppliers used and use only those suppliers who can provide a broad range of
products and services. Accordingly, the Company regularly reviews acquisition
prospects that would augment or complement the Company's existing operations or
otherwise offer significant growth opportunities. At the present time, while the
Company has held exploratory discussions with several potential acquisition
candidates, the Company does not have any arrangement or agreement with respect
to any acquisition transactions.

Capitalize on Customer Demand in Tijuana Market. The Company intends to
lease and purchase equipment for a newly-constructed "build-to-suit"
manufacturing facility in Tijuana, Mexico, adjacent to its largest customer's
manufacturing facilities. Management believes the new facility will increase
existing manufacturing space by 50% and house initially 12 molding machines
with the potential to house 33 to 35 molding machines. The Company believes
that the new facility will begin to add significant manufacturing capacity by
September 1997, thereby enabling the Company to capitalize on current demand
from existing customers and to attract new customers located in Tijuana,
Mexico. The Company's strategic focus will continue to be on niche markets,
such as computer monitors and televisions, as well as other business equipment
and telecommunications.

Pursue Long-Term Relationships with New Customers. The Company intends to
continue to develop long-term alliances with new and existing customers in the
computer and consumer electronics industries. The Company seeks to establish
and maintain long-term relationships by providing total manufacturing solutions
for new and proposed products, just-in-time delivery services and strong
engineering support, including design for manufacturability analyses that
assist customers in the tool design phase of the development process. The
Company believes that frequent interaction with its customers in the tool
design phase of their product development process allows the Company to
anticipate the customers' future technological requirements, prepare the
appropriate manufacturing infrastructure and develop long-term relationships
across a number of products and through multiple product models.

Continue Commitment to Quality and Service. The Company strives to ensure
the highest levels of quality control in all phases of its operations,
primarily through continuous improvement of its engineering capabilities,
manufacturing processes and quality assurance systems. The Company believes
that its strategy of investing in real-time computer process and quality
systems provides improved management controls which maximize scheduling
flexibility and increase product throughput and yields. The Company is
currently in the process of ISO 9002 certification.

Products and Services

The Company manufactures and assembles custom injection-molded plastic
components. These components consist primarily of the entire plastic exteriors
of computer monitors, televisions, electronic music keyboards and other
consumer electronics equipment. The Company also offers a broad range of
value-added services, including painting, decorating and assembly. The
Company's three primary lines of components are as follows:

Computer Monitor Components. The Company focuses on the production of
computer monitor components which require the molding and assembly of multiple
parts. Computer monitor components manufactured by the Company include the
front (or "bezel") assembly, the rear cover and the base stand. The bezel
assembly consists of the bezel frame, door latch, light pipe, logo badge and
pad printing. The Company manufactures these

<PAGE>

components pursuant to the strict color, cosmetic and dimensional
specifications of its customers and assembles the parts on automated production
lines. At the present time, the Company manufacturers computer monitor
components only for Sony. Sony manufactures computer monitors for private label
programs on behalf of leading computer hardware companies such as Gateway 2000,
Dell Computer, Silicon Graphics, Sun Microsystems and Digital Equipment
Corporation. Sony began manufacturing computer monitors at its computer
manufacturing division in Rancho Bernardo, California in 1994, and sales to
such division have grown from $2.9 million in the fiscal year ended October 30,
1994 to $15.4 million for the fiscal year ended October 27, 1996. The Company
has been selected to manufacture computer monitor components beginning in July
1997 for Sony's personal computer, known as Vaio. The Vaio computer was
introduced April 1996, in the United States. Computer monitor components
represented approximately 44.5% and 39.1% of the Company's product sales for
the 26 weeks ended April 27, 1997 and the fiscal year ended October 27, 1996,
respectively.

Television Components. Television components include the bezel and the
rear cover. For projection televisions, the Company also manufactures the
exterior frame housing the projection screen. All bezels are pad printed to
include the logo and the operating instructions. Historically, the Company's
largest customers for its television components have been Sony, Matsushita
(Panasonic and Quasar brands) and Hitachi. Television components represented
approximately 40.8% and 49.0% of the Company's product sales for the 26 weeks
ended April 27, 1997 and the fiscal year ended October 27, 1996, respectively.

Electronic Music Keyboards and Other Consumer Electronics Components. The
Company manufacturers a variety of consumer electronics components such as the
top and bottom covers for electronic music keyboards and storage containers for
various consumer products. As part of this process, electronic music keyboards
are manufactured for Casio using a specialized thermal transfer process, which
prints the whole surface display of logos and instructions in a single step on
automatic equipment. Electronic music keyboards and other consumer electronics
components represented approximately 14.8% and 11.9% of the Company's product
sales for the 26 weeks ended April 27, 1997 and the fiscal year ended October
27, 1996, respectively.

Value-Added Services. In addition to injection-molded plastic components,
the Company offers a broad range of value-added services including painting,
finishing and assembly services. These services include solvent and waterborne
painting, electromagnetic and radio frequency interference shielding, hot
stamping, pad printing, silkscreening, solvent bonding, impulse welding,
ultrasonic welding and insertion, and heat staking. See "-- Manufacturing."

The Company provides design and engineering assistance in the early stages
of product development, thus assuring that tooling, process and assembly
considerations achieve reproducible, high-quality and cost effective product.
The Company evaluates customer designs for manufacturability and, when
appropriate, recommends design changes to reduce manufacturing costs or lead
times or to increase manufacturing yields and the quality of finished
components. The Company believes that by offering this range of services it has
established a "partnership" relationship with its customers.

The Company assists its customers by reducing their inventories through
just-in-time deliveries in which finished components are inspected at the
Company's facilities to conform to a pre-approved quality plan and shipped
directly to the customer for use in its manufacturing without incoming
inspection at the customer's facility.

Customers

The Company's principal customers are Sony, Matsushita, Casio and Hitachi,
for which it supplies components for computer monitors, televisions and other
consumer electronics equipment. The Company has focused its marketing efforts
on maintaining long-term relationships with its existing OEM customers while
pursuing new customers in the computer and consumer electronics industries.

<PAGE>

Historical sales of the Company by principal customer are set forth in the
table below (dollars in thousands):

<TABLE>
<CAPTION>
52 Weeks Ended 26 Weeks Ended 26 Weeks Ended
October 27, 1996 April 28, 1996 April 27, 1997
--------------------- --------------------- ---------------------
Customer Amount % Amount % Amount %
- -------------------------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sony -- Computer manufacturing division . $15,373 39.1% $ 7,174 37.0% $ 8,999 44.5%
Sony -- Television manufacturing division . 10,773 27.4 4,081 21.0 5,679 28.1
Matsushita -- Panasonic and Quasar ......... 7,093 18.0 4,918 25.3 1,954 9.7
Others .................................... 6,106 15.5 3,237 16.7 3,612 17.8
-------- ------- -------- ------- -------- -------
Total sales .............................. $39,345 100.0% $19,410 100.0% $20,244 100.0%
======== ======= ======== ======= ======== =======
</TABLE>

The Company's customers typically have relationships with a limited number
of injection molders, and allocate the molding of individual components or parts
to one of their molders. In the Company's experience, purchase orders will be
placed with the same molder for a particular component or part generally for
six-month periods, but typically the order will remain in place until the
component is redesigned or eliminated in a model change. Customers generally
provide the Company with periodic forecasts for their requirements, which are
updated regularly. Customers give the Company non-cancellable releases from
their purchase orders based on two to four week lead times and, therefore, the
Company does not have a significant amount of backlog orders. Except for Sony
and Matsushita, no other single customer has accounted for more than 10% of the
Company's sales during any of the past three fiscal years.

The Company has been selected as a supplier of a variety of
injection-molded plastic components. The following table presents an overview
of the major products for which the Company currently produces components for
its OEM customers:

Customer Product
---------- --------
Sony .............................. Computer monitors:
Private label programs--
Gateway 2000
Dell Computer
Silicon Graphics
Sun Microsystems
Digital Equipment Corporation
Vaio brand (beginning in July 1997)
Sony ........................ Television monitors
13" to 32" models
Matsushita (Panasonic) ...... Television monitors
13" to 61" models
Matsushita (Quasar) ......... Television monitors
20" to 32" models
Hitachi ..................... Television monitors
27" to 60" models
Casio ........................ Electronic music keyboards

<PAGE>

Sony has been a customer for 25 years, Matsushita has been a customer for
14 years, and Hitachi and Casio have been customers for more than seven years.
The Company believes that, as it adds new customers and completes acquisitions
of complementary businesses, it will diversify its customer base and reduce its
dependence on these major customers. The Company anticipates, however, that a
significant portion of its sales, by virtue of the markets it serves, will
continue to be concentrated in a small number of customers.

Sales

The Company's primary sales strategy is to develop and maintain close
working relationships with the engineering, procurement, quality, tooling and
manufacturing departments of its customers. Sales of the Company's products to
OEMs are made directly by the Company's sales and production teams. Through
these teams, the Company services its OEM customers and manages its continuing
programs of product design improvement and development. The Company's sales and
technical teams currently consist of 14 executives and senior technical
personnel.

In January 1996, the Company expanded its in-house sales department to
solicit new customer accounts. Three full-time senior sales executives were
hired, each with substantial experience in the injection-molded plastic
industry. With these executives, the Company has targeted 30 prospects for new
business. These prospects include computer monitor and television OEMs, as well
as other business equipment and telecommunications manufacturers that require a
plastic enclosure or cabinet as part of their products. The Company is actively
quoting terms for new business. There can be no assurance that any such new
business will be obtained.

The Company's products are typically sold on net 30-day terms under
separate purchase orders. The Company offers no formal warranty but generally
adheres to a replacement policy of products with defects in materials or
workmanship.

Customer Molds

The Company maintains an in-house tooling department. In the plastics
industry, the molds to make plastic parts are commonly referred to as "tools."
With each new project, the Company's tooling engineers may attend an initial
meeting with the OEM and contract mold maker to review drawings,
specifications, timing and other information. Following the design stage, the
Company may be asked to attend one or more mold trials to ensure the accuracy
and completeness of the mold and mold part, record process parameters and begin
assuring the capability of the process. The next milestone, the new project
meeting, brings the Company's decorating and assembly, engineering, production
control, quality assurance and tooling departments together to ensure that the
entire project is understood throughout the organization. Once the mold is
received by the Company, the mold is inspected, prepared for production and
tested by the Company. Generally, sample parts are produced initially and
submitted to the customer for final approval. The Company's tooling department
frequently makes engineering changes to the mold. For the life of the tool, the
Company is obligated to maintain it at its expense and to make major repairs at
the Customer's expense. The Company's tooling department is headed by a tooling
engineer and eight toolmakers.

As of June 4, 1997, the Company held approximately 150 molds of its
customers which are being actively used to produce injection-molded plastic
components. The Company estimates that the value of such customer molds is
approximately $15 million.

Manufacturing

The Company currently conducts its molding, assembly and finishing
operations at its facility in Gardena, California, which consists of
approximately 120,000 square feet of manufacturing space. The Company operates
29 injection molding machines ranging in size from 60 to 1,800 tons of clamping
pressure and processes more than 20 million pounds of resin per year. Since
1993, 16 of the Company's molding machines have been purchased and all other
machines have been updated with electronic controls. The Company stores bulk
resin in four silos with a combined capacity of approximately 400,000 pounds.
The Company has an automated materials handling system that transports resin
from each of the four silos to any of the 29 molding machines. The Company also
stores other resin in 1,000 pound corrugated containers. The Company's
finishing equipment is "state of the art" and includes 24 paint stations, a
1,265-foot overhead conveyor, infrared and gas fired drying ovens, hot stamp
machines, pad printing machines, silk screen machines, ten motorized assembly
lines and sonic welders.

<PAGE>

The Company is currently completing a new "built-to-suit" manufacturing
facility in Tijuana, Mexico, which will consist of approximately 90,000 square
feet of manufacturing and warehouse space and will house initially 12 injection
molding machines, eight paint lines and four automated assembly lines. Of the 12
machines, five are newly-purchased and seven will be transferred from the
Company's Gardena facility. The Company has a one year option and thereafter a
right of first refusal to expand its manufacturing space by 50,000 square feet,
with the capacity to house 33 to 35 molding machines. This new facility has been
located logistically near many of its customers' Tijuana manufacturing plants
and is expected to add significant manufacturing capacity by September 1997. It
is expected that the Company will relocate a significant amount of its assembly
operations to this facility, primarily due to the area's lower-cost labor pool
and customer requirements.

The Company employs six process engineers who utilize extensive CAD/CAM
(computer-aided design/computer-aided manufacturing) capabilities to transfer
design data, generate tooling processes and verify manufacturing efficiencies.
As a result of the Company's use of real-time statistical quality and process
controls and protective packaging, customers report that they have fewer than
500 defects in 1,000,000 units in their production lines. The Company has a
fully integrated management information system which enhances its inventory
control scheduling and machine efficiency. The Company implements a continuous
quality improvement program to ensure that competitive advantages through
cost-efficient operations are maintained. The Company is currently in the
process of ISO 9002 certification.

A significant percentage of the Company's components are manufactured
using gas-assist molding technology, which is a low-pressure process that works
in conjunction with injection molding. In this process, nitrogen gas is
injected into the plastic exterior part to hollow out that part, which saves on
material usage and creates a more cosmetically appealing part by eliminating
flow marks, surface splay and warp. Using this technology, the Company is able
to offer its customers the competitive advantages of (i) eliminating thicker
than necessary wall sections that control the cycle time and increase part
weight, (ii) allowing designers more freedom to incorporate thick and thin
sections in the same part and (iii) making parts stronger by creating high
strength, cored-out sections, rib patterns or box structures, all of which
improve deflection or impact strength. The Company licenses, on a non-exclusive
basis, the use of gas-assist molding technology from Melea Limited pursuant
to a long-term license under which the Company pays such licensor the annual
amount of $50,000 per site. The Company has a central nitrogen generator
connected to all 29 of its molding machines to efficiently utilize this
technology.

While the Company has developed proprietary techniques and manufacturing
expertise for the manufacture of injection-molded plastic components, the
Company has no patents for these proprietary techniques and chooses to rely on
trade secret protection. The Company believes that although its proprietary
techniques and expertise are subject to misappropriation or obsolescence,
development of improved methods and processes and new techniques by the Company
will continue on an ongoing basis as dictated by the technological needs of the
business.

Manufacturing occurs primarily on a three-shift, seven-day-per-week
schedule at the Company's current manufacturing facility. The Company provides
training to all of its molding, finishing and assembly personnel before they
are put on the production line and on a periodic basis thereafter. The Company
provides such training in accordance with ISO 9002 certification standards. The
Company believes that its manufacturing work force is well-trained and is
comprised of a dedicated staff of experienced personnel, approximately 40% of
whom have been employees of the Company for at least ten years.

Raw Materials and Supplies

The Company orders certain materials and supplies based on its purchase
orders and seeks to minimize its inventory of other materials that are not
identified for use in filling specific orders. Raw materials used in connection
with the Company's components consist mainly of thermoplastic resins such as
high impact, ignition resistant polystyrene and
acrylonitrile-butadiene-styrene, and paint and ink, as well as corrugated
cardboard packaging. Although the Company uses a select group of suppliers, the
materials used in manufacturing injection-molded plastic components are
generally readily available in the open market. The Company has not experienced
any significant raw material shortages in the past ten years and does not
anticipate raw material shortages in the foreseeable future.

<PAGE>

Although thermoplastic resins have historically accounted for at least 80%
of its raw material costs, the Company does not believe that its results of
operations are subject to the risk of fluctuations in resin prices, since the
Company's arrangements with most of its customers provide that increases or
decreases in the price of such resins are passed through to the customer by
changes in the component prices charged by the Company. In addition, each of
Sony, Matsushita and Hitachi negotiate separate supply agreements with
thermoplastic resin producers which deliver such resins to the Company for use
in their products.

Competition

According to Plastic News, sales of the top 100 plastic injection-molders
in North America were approximately $14.4 billion in 1996. The Company's
competitive market, however, is regional due to the significant relative impact
of freight costs. As a result, the Company believes that it has only six
principal competitors, two of which are also located in California and five of
which are already located in Tijuana, Mexico. The Company believes that none of
its competitors has a dominant position in the market. The Company believes
that the primary bases of competition in the market for injection-molded
plastic are product quality, responsiveness to customers, delivery time, volume
capabilities, advanced manufacturing technology and engineering skills and
price. The Company further believes that the Company's primary competitive
strengths include its ability to provide technologically advanced design and
manufacturing services, to hire and retain experienced product managers and a
skilled manufacturing work force, maintain superior product quality and deliver
finished products on a just-in-time or scheduled lead-time basis.

Environmental Matters

The Company's operations and properties are subject to a wide variety of
international, federal, state and local laws and regulations, including those
governing the use, storage and handling, generation, treatment, emission,
release, discharge and disposal of certain materials, substances and wastes,
the remediation of contaminated soil and groundwater, and the health and safety
of employees (collectively, "Environmental Laws"). As such, the nature of the
Company's operations exposes it to the risk of claims with respect to such
matters and there can be no assurance that material costs or liabilities will
not be incurred in connection with such claims. The Company has taken steps to
reduce the environmental risks associated with its operations and believes that
it is currently in substantial compliance with applicable Environmental Laws.

The Company is also subject to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), and similar
state laws which impose liability, without regard to fault or to the legality
of the original action, on certain classes of persons (referred to as
potentially responsible parties or "PRPs") associated with the release or
threat of release of certain hazardous substances to the environment.
Generally, liability of PRPs to the government under CERCLA is joint and
several. Financial responsibility for the remediation of contaminated property
or for natural resources damage can extend to properties owned by third
parties. The Company believes that it is in substantial compliance with all
Environmental Laws applicable to its business.

Employees

As of June 4, 1997, the Company had approximately 285 full-time employees,
of which 268 were engaged in manufacturing activities and 17 in sales, office
administration and management functions. None of the employees is represented
by a union and the Company believes there is an adequate pool of labor
available to satisfy its foreseeable hiring needs. The Company has not
experienced any labor-related work stoppage and considers its relations with
employees to be good.

<PAGE>

Facilities

The Company maintains its principal executive offices and conducts its
molding, assembly and finishing operations from two adjacent buildings in
Gardena, California (approximately 15 miles south of Los Angeles), which
consist of a 100,000 square foot manfacturing building and a 20,000 square foot
warehouse on eight acres of land. This facility is leased from an entity
affiliated with the former owners of AB Plastics under a lease expiring in 2006
and providing for rent of $35,200 per month. The Company also maintains an
off-site leased facility in Compton, California consisting of approximately
60,000 square feet, from which the Company's warehousing and distribution
activities are conducted. The Compton facility is leased from an unaffiliated
entity under a lease expiring in December 2000 and providing for rent of
$19,465 per month.

The Company has exercised its option to purchase the Gardena, California
facility from a partnership whose interests are held by members of the Adams
family, who include the former principal stockholders of AB Plastics, for
approximately $3.0 million. Following the purchase, the Company intends to
demolish the 20,000 square foot warehouse and construct a 75,000 square foot
warehouse and distribution facility attached to the existing manufacturing
facility. Construction costs for such warehouse and distribution facility are
anticipated to be approximately $2.0 million, for a total capital expenditure of
$5.0 million at such site. Subsequent to the completion of the warehouse
construction, the Company intends to sublease the Compton warehouse. The
purchase is expected to be completed prior to the consummation of this offering
and, with the construction, will be financed by a mortgage and construction loan
facility of $3.5 million provided by Sumitomo and the balance through the
Company's revolving line of credit. The Company expects the annual operating
savings from owning this expanded facility to be approximately $900,000 (before
mortgage payments) from the elimination of rent, certain personnel and other
operating expenses. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" and
"Certain Transactions."

The Company is currently completing a new "build-to-suit" manufacturing
facility in Tijuana, Mexico, which will consist of approximately 90,000 square
feet of manufacturing and warehouse space and will house initially 12 injection
molding machines. The new facility will be leased from an unaffiliated entity
under a lease which will commence upon completion of construction (estimated to
be in September 1997) and expiring in 2007, and requiring the payment of
approximately $38,000 per month in rent. The Company also has a one-year option
and thereafter a right of first refusal to expand the facility by 50,000 square
feet. In addition, the Company has committed to expend approximately $6.2
million to equip the new Tijuana facility, of which approximately $2.7 million
of capital expenditures have been committed as of April 27, 1997. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Capital Expenditures."

Legal Proceedings

The Company is not a party to any legal proceedings other than routine
litigation incidental to its business, none of which is material.

<PAGE>

MANAGEMENT

Executive Officers and Directors

The directors and executive officers of the Company and the executive
officers and key employees of AB Plastics, and their ages at June 4, 1997, are
as follows:

<TABLE>
<CAPTION>
Name Age Positions
- --------------------------------- ----- -----------------------------------------------------------
<S> <C> <C>
Geoffrey J.F. Gorman ......... 40 Chairman of the Board of the Company and AB Plastics
Michael A. Gibbs ............ 61 President and Director of the Company and Chief Executive
Officer of AB Plastics
James S. Adams ............... 68 President of AB Plastics
G. Michael Frink ............ 47 Vice President - Sales and Marketing of AB Plastics
Stephen M. Adams ............ 36 Vice President -- Technology of AB Plastics
Jawed Ghias .................. 42 Vice President -- Manufacturing of AB Plastics
Paul J. Iacono ............... 36 Vice President -- Finance of the Company and AB Plastics
Christopher H.B. Mills ...... 44 Director
Jay M. Swanson ............... 44 Director
</TABLE>

Geoffrey J.F. Gorman became the Chairman of the Board of the Company and
AB Plastics in September 1996. Mr. Gorman also serves as managing partner of
Private Equity Partners, L.L.C., an investment fund, which he founded in March
1996. From 1985 to June 1996, Mr. Gorman was a managing partner and shareholder
of Ardshiel, Inc., an investment fund specializing in leveraged buyouts. Mr.
Gorman is currently the Co-Chairman of the Board of Santa Maria Foods
Corporation, a producer and distributor of Italian specialty foods, and a
director of Analab, Inc., an environmental testing company. He was previously a
director of Golden State Vintners, Koala Springs International, Inc., Protein
Genetics, Inc. and The Swanson Company. Mr. Gorman received a B.A. from Boston
University in 1979 and an M.B.A. from the Amos Tuck School of Business
Administration at Dartmouth College in 1985.

Michael A. Gibbs became the President of the Company, Chief Executive
Officer of AB Plastics and a director of the Company and AB Plastics in
September 1996. Mr. Gibbs is also the President of Page Mill Corporation, a
consulting firm which he began in 1971. Mr. Gibbs has been involved since 1991
as an advisor and principal in the identification, evaluation, acquisition and
operation of companies in the plastics industry including Styrex Industries,
Inc., an injection-molded plastics components manufacturer which was sold in
1993 to PureTech Industries, Inc. Mr. Gibbs began his business career in 1964
with the international business consulting firm of Booz Allen & Hamilton and
spent five years as Vice President of Corporate Planning for Reliance Holdings
Corporation (formerly, Leasco Corporation) before becoming an independent
entrepreneur and business advisor in 1973. For the past 25 years, Mr. Gibbs has
served as a financial and business advisor to third parties in the
identification, financing, acquisition and operation of approximately 42
businesses, and has participated as a principal stockholder, executive officer
and director in certain of such businesses. A food distribution business and a
glass distribution business in which Mr. Gibbs was the sole stockholder and
served as chief executive officer filed for Chapter 11 reorganization under the
federal Bankruptcy Code in 1980 and 1991, respectively. From July 1991 through
October 1993, Mr. Gibbs rendered services for various corporate affiliates of
The Selzer Group and Transnational Capital Ventures, Inc., privately-owned
companies engaged in situations involving financially and/or operationally
troubled companies. In connection with providing such services, Mr. Gibbs
served in various capacities as an executive officer or director of C-B/Murray
Corporation, Inc. and American Specialty Equipment Corp., companies which filed
for Chapter 11 reorganization within the past five years. Mr. Gibbs received a
B.S. degree in Engineering from the University of Alabama in 1957 and a Masters
degree in Industrial Management from New York Polytechnic Institute in 1965.

In June 1995, Mr. Gibbs individually filed a petition for reorganization
under Chapter 11 of the Bankruptcy Code. Such filing was occasioned primarily
as a result of litigation commenced against Mr. Gibbs by a financial
institution seeking payment of a personal loan made by such institution to Mr.
Gibbs in 1989. Mr. Gibbs accepted such loan principally in reliance upon the
completion of the sale of a business in which Mr. Gibbs was a principal
stockholder and which such financial institution had committed to finance, but
which sale was not completed. Mr. Gibbs has counterclaimed against the
institution alleging breach of its financial commitment. In

<PAGE>

April 1997, Mr. Gibbs filed a plan of reorganization with the federal
bankruptcy court in Connecticut. Such plan, as well as the litigation between
Mr. Gibbs and the financial institution, is currently pending. Mr. Gibbs has
been advised by bankruptcy counsel that inasmuch as his investment in the
securities of the Company was made following the filing of his petition for
reorganization, the shares of Common Stock of the Company owned of record and
beneficially by Mr. Gibbs would not be part of the bankruptcy estate or be
required to be used to finance his plan of reorganization in a Chapter 11
proceeding.

James S. Adams is one of the co-founders of AB Plastics and for the past
40 years has served as a senior executive officer of AB Plastics. Since 1982,
Mr. Adams has served as President of AB Plastics. Mr. Adams received a B.S. in
Business Management from Pepperdine University in 1979. Mr. Adams is the uncle
of Stephen M. Adams.

G. Michael Frink became Vice President -- Sales and Marketing of AB
Plastics in February 1997. He previously served as a Regional Manager of
Business Development of Southern Plastic Mold, Inc., a custom plastic injection
molder, from January 1992 to January 1997. Mr. Frink also held positions in
sales and program management at Avedon Engineering, a custom plastic injection
molder, from 1984 to December 1991. Mr. Frink received a B.A. in Business
Administration from the University of Oregon in 1972.

Stephen M. Adams, the son of one of the co-founders of AB Plastics, became
the Company's Vice President -- Technology in September 1996. Since 1982, Mr.
Adams has served in a number of engineering and technology-related positions
with AB Plastics, the most recent being Vice President -- Operations. Mr. Adams
received a B.S. in Industrial Technology from Chico State University in 1983
and is currently completing on a part-time basis an M.B.A. from the University
of Phoenix. Mr. Adams is the nephew of James S. Adams.

Jawed Ghias became Vice President -- Manufacturing of AB Plastics in
February 1996. From 1985 to February 1996, Mr. Ghias held a number of positions
with Industrial Molding Corporation ("IMC"), a custom plastic injection molder,
including Vice President of the Plastics Division, Plant Manager, Quality
Assurance Manager and Assembly Manager. Mr. Ghias received a B.S. in Mechanical
Engineering from N.E.D. University of Engineering and Technology in Pakistan in
1983.

Paul J. Iacono became Vice President -- Finance of the Company and AB
Plastics in October 1996. He previously served as Director of Finance of
Compounding Technology, Inc., a plastic compounding subsidiary of M.A. Hanna
Company, from March 1993 to September 1996. Mr. Iacono also served as Manager
of Business Operations of Ele Corporation, a custom plastic injection molder,
from October 1991 to February 1993, and in variety of positions in accounting
and operations including Controller and Materials Manager of IMC from 1980 to
1991. Mr. Iacono received a B.A. in Accounting from California State University
at Fullerton in 1984 and an M.B.A. from Pepperdine University in 1996.

Christopher H.B. Mills joined the Company's Board of Directors in
September 1996. Mr. Mills has been a managing director of North Atlantic
Smaller Companies Investment Trust plc, an investment trust, since 1984, and a
director and senior investment manager of JO Hambro & Partners Limited, an
investment advisor, since 1993, both of which are based in London. Mr. Mills
serves as a director of American Opportunity Trust plc, an investment trust,
Horace Small Apparel plc, a manufacturer of occupational uniforms, and Oryx
International Growth Food plc, an investment fund, which are publicly-traded
companies in the United Kingdom. Mr. Mills also serves as a director of D.S.
Bancor Inc., a bank holding company, and PS Group Holdings Inc., an aircraft
leasing company, which are publicly-traded companies in the United States. Mr.
Mills was educated at Eton College and received a degree in Business Studies
from the Guild Hall in London in 1974,

Jay M. Swanson joined the Company's Board of Directors in May 1997. Since
February 1994, Mr. Swanson has been the Managing Partner of Swanson Ventures
and Blacksmith Partners, private investment firms specializing in leveraged
buyouts. Mr. Swanson currently serves as the Co-Chairman of the Board of Santa
Maria Foods Corporation, a producer and distributor of Italian specialty foods,
is on the Board of Directors of Green Acre Foods, Inc. and Northern Management
Corp. and is a partner in The Contrarion Group, an investment fund. From 1976
to January 1994, Mr. Swanson served in various roles with John Hancock
Financial Services managing portfolios of investments. In 1994, Mr. Swanson was
appointed to the Advisory Board of the Competitiveness Center of the Hudson
Institute. Mr. Swanson received a B.S. in Finance from the University of
Illinois in 1974.

<PAGE>

All directors are elected annually and hold office until the next annual
meeting of stockholders of the Company and until their successors have been
duly elected and qualified. The Company's By-laws provide that the Board of
Directors will consist of between three and nine members, and the number of
directors is currently set at four. Officers are elected by and serve at the
discretion of the Board of Directors. Except for the relationship between James
S. Adams and Stephen M. Adams, there are no family relationships among the
directors and officers of the Company.

Committees of the Board of Directors

The Company will establish an Audit Committee and a Compensation Committee
prior to the consummation of this offering, each of which will be comprised of
at least two independent directors. The Audit Committee will, among other
things, make recommendations to the Board of Directors regarding the independent
auditors to be nominated for ratification by the stockholders, review the
independence of those auditors and review audit results. The Compensation
Committee will recommend to the Board compensation plans and arrangements with
respect to the Company's executive officers and key personnel. It is
contemplated that the Audit Committee will initially include Michael A. Gibbs,
Christopher H.B. Mills and Jay M. Swanson, and the Compensation Committee will
initially include Geoffrey J.F. Gorman and Messrs. Mills and Swanson. The Board
of Directors does not currently have and does not intend to establish a
Nominating Committee as such functions are to be performed by the entire Board
of Directors.

Compensation of Directors

Non-employee directors of the Company currently receive no cash
compensation for serving on the Board of Directors other than reimbursement of
reasonable expenses incurred in attending meetings. See "Certain Transactions."

Limitation of Liability and Indemnification

Pursuant to the provisions of the Delaware Law, the Company has adopted
provisions in its Certificate of Incorporation which provide that directors of
the Company shall not be personally liable for monetary damages to the Company
or its stockholders for a breach of fiduciary duty as a director, except for
liability as a result of (i) a breach of the director's duty of loyalty to the
Company or its stockholders, (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) an act
related to the unlawful stock repurchase or payment of a dividend under Section
174 of the Delaware Law, and (iv) transactions from which the director derived
an improper personal benefit. Such limitation of liability does not affect the
availability of equitable remedies such as injunctive relief or rescission.

The Company's Certificate of Incorporation also authorizes the Company to
indemnify its officers, directors and other agents, in accordance with the
Company's By-laws, agreements or otherwise, to the full extent permitted under
the Delaware Law. The Company intends to enter into indemnification agreements
with its directors and officers which may, in some cases, be broader than the
specific indemnification provisions contained in the Delaware Law. The
indemnification agreements may require the Company, among other things, to
indemnify such officers and directors against certain liabilities that may
arise by reason of their status or service as directors or officers (other than
liabilities arising from willful misconduct of a culpable nature), to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified, and to obtain directors' and officers' insurance if
available on reasonable terms.

At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding which may result in a claim for such indemnification.

Executive Compensation

The following table sets forth the total compensation paid by the Company
to the Company's President and the President and Vice President-Manufacturing of
AB Plastics (collectively, the "Named Executive Officers"), the only executive
officers whose total compensation exceeded $100,000 for the fiscal year ended
October 27, 1996:

<PAGE>

Summary Compensation Table

Long-Term
Compensation
-------------
Annual Compensation(1) No. of
---------------------------------------- Securities
Fiscal Underlying All Other
Name and Principal Position Year Salary Bonus $ Options Compensation ($)
- ----------------------------------- -------- ----------------- --------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Michael A. Gibbs ............... 1996 $ 0(2) $ 0 270,000 $0
President of the Company and Chief
Executive Officer of AB Plastics
James S. Adams .................. 1996 $232,365 $ 0 62,268 $0
President of AB Plastics
Jawed Ghias ..................... 1996 $ 99,523 $5,000 216,000 $0
Vice President-Manufacturing of AB
Plastics
</TABLE>

(1) The column for "Other Annual Compensation" has been omitted because there
is no compensation required to be reported in such column. The aggregate
amount of perquisites and other personal benefits provided to any Named
Executive Officer did not exceed the lesser of $50,000 or 10% of the total
annual compensation paid to such officer.

(2) Mr. Gibbs and his corporate affiliate received in the aggregate
approximately $200,000 from the Company pursuant to a consulting agreement
commencing in February 1996, superseded by a management agreement
effective as of August 1, 1996. See "--Employment Agreements."

Options Granted During 1996

The following table sets forth certain information regarding grants of
options to purchase the Company's Common Stock made to each of the Named
Executive Officers during the fiscal year ended October 27, 1996:

<TABLE>
<CAPTION>
Individual Grants
Number Percent of --------------------------------------------
of Securities Total Options
Underlying Granted Exercise Fair Market
Options to Employees Price Value on Expiration
Name Granted in Fiscal Year Per Share Date of Grant Date
- -------------------------- --------------- ---------------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Michael A. Gibbs ...... 270,000 45.4% $0.74 $0.74 09/27/2002
President of the
Company and Chief
Executive Officer of AB
Plastics
James S. Adams ......... 62,268 10.5% $0.74 $0.74 09/27/2002
President of AB Plastics
Jawed Ghias ............ 216,000 36.4% $0.74 $0.74 09/27/2002
Vice President-
Manufacturing of AB
Plastics
</TABLE>

<PAGE>

Potential
Realizable Value
at Assumed
Annual Rates of
Stock Price
Appreciated for
Option Term(1)
-------------------
Name 0%(2) 5% 10%
- -------------------------- ------- --------- -------
<S> <C> <C> <C>
Michael A. Gibbs ...... 0 125,653 318,430
President of the
Company and Chief
Executive Officer of AB
Plastics
James S. Adams ......... 0 28,978 73,437
President of AB Plastics
Jawed Ghias ............ 0 100,523 254,744
Vice President-
Manufacturing of AB
Plastics
</TABLE>

(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The assumed
5% and 10% rates of stock price appreciation are mandated by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price.

(2) Represents the difference between the fair market value of the Common Stock
on the date of grant and the exercise price of such options.

<PAGE>

Aggregated Fiscal Year-End Option Values

The following table sets forth information regarding the number and value
of unexercised stock options held at October 27, 1996 by each of the Named
Executive Officers. No options were exercised by the Named Executive Officers
during fiscal 1996:

<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Dollar Value of Unexercised
Options at In-the-Money Options
Fiscal Year End at Fiscal Year End(1)
Name (Exercisable/Unexercisable) (Exercisable/Unexercisable)
- ----------------------------------- ----------------------------- ----------------------------
<S> <C> <C>
Michael A. Gibbs ............... 270,000/0 1,825,200/0
President of the Company and Chief
Executive Officer of AB Plastics
James S. Adams .................. 62,268/0 420,932/0
President of AB Plastics
Jawed Ghias ..................... 0/216,000 0/1,460,160
Vice President-Manufacturing of AB
Plastics
</TABLE>

- ------------
(1) The value of the options is based upon the difference between the exercise
price and an assumed initial per share public offering price of $7.50.

Employment Agreements

In October 1996, the Company entered into a management agreement with PEP,
of which Geoffrey J.F. Gorman, the Chairman of the Board of the Company, is the
managing partner. Under this agreement, PEP and Mr. Gorman have agreed to serve
as consultants to the Company and AB Plastics with primary responsibilities,
subject to the direction of the Company's Board, to review the general policies
of the companies and to render assistance in connection with various forms of
financings on their behalf. In exchange for such services, the Company and AB
Plastics have agreed jointly to pay PEP an annual consulting fee of $100,000,
payable in monthly installments, and to provide benefits to Mr. Gorman
comparable to those provided to the Company's executive officers. The
management agreement extends through September 30, 2001, and includes non-
disclosure, non-competition and non-solicitation provisions through the later
of such date or so long as PEP or Mr. Gorman continue to own shares of Common
Stock of the Company or hold options or warrants to purchase such Common Stock.

In October 1996, the Company entered into a management agreement,
effective as of August 1, 1996, with a corporate affiliate of Michael A. Gibbs,
the President of the Company, and Mr. Gibbs, individually. Under this
agreement, Mr. Gibbs and his affiliate have agreed to serve as a consultant of
the Company with primary responsibilities, subject to the direction of the
Company's Board, to review the general policies of the companies and to work
with management of the Company in all aspects of manufacturing, sales,
distribution and customer relations, the establishment of operating systems,
cost savings methods and budgets. In exchange for such services, in September
1996, the Company paid Mr. Gibbs and his affiliate an aggregate of $183,333,
representing fees for services provided prior to the date of such agreement,
and has agreed to pay Mr. Gibbs and his affiliate an aggregate annual
consulting fee of $200,000, payable in monthly installments until the earlier
of December 31, 1998 or the employment by the Company of a full-time chief
executive officer. Following such period (or sooner if Mr. Gibbs' time
commitment is reduced as provided below), the annual consulting fee is to be
reduced to $100,000 per annum. In addition, the Company has agreed to provide
benefits to Mr. Gibbs comparable to those provided to the Company's executive
officers. The management agreement extends through September 30, 2001, and
includes non-disclosure, non-competition and non-solicitation provisions
through the later of such date or so long as Mr. Gibbs continues to own shares
of Common Stock of the Company or hold options or warrants to purchase such
Common Stock.

<PAGE>

Under the terms of the management agreement, Mr. Gibbs agreed to devote a
minimum of 66-2/3% of his business and professional time to the Company for a
period of six months and thereafter 25% of such business and professional time.
Since September 1996, Mr. Gibbs has served in the capacity of President of the
Company and Chief Executive Officer of AB Plastics, and has devoted a minimum
of 75% of his business and professional time to the affairs of these companies.

Upon consummation of this offering, the existing management agreement
between the Company and Mr. Gibbs and his affiliate will terminate. Effective
as of the date of this Prospectus, Mr. Gibbs will enter into an employment
agreement with the Company expiring October 31, 2000. Pursuant to such
agreement, Mr. Gibbs shall serve as the President of the Company and Chief
Executive Officer of AB Plastics, and devote not less than 75% of his business
and professional time to the affairs of the Company and AB Plastics. Under the
terms of such employment agreement, Mr. Gibbs will receive a base salary of
$275,000 per year, and be entitled to receive annual bonuses of between
$100,000 and $300,000 in each of the Company's fiscal years ending in 1998,
1999 and 2000, respectively, if the Company's EBITDA (as defined) shall equal
or exceed $12.0 million, $18.0 million and $24.0 million, or increments
thereof, in the fiscal years ending in 1998, 1999 and 2000, respectively. In
addition, the Company has agreed to provide benefits to Mr. Gibbs comparable to
those provided to the Company's executive officers. The employment agreement
includes non-disclosure, non-competition and non-solicitation provisions.

Pursuant to his employment agreement, the Company has granted Mr. Gibbs
options to purchase an aggregate of 300,000 shares of Common Stock of the
Company pursuant to the 1997 Stock Option Plan. Such options expire October 31,
2002 and are only exercisable at a time in which Mr. Gibbs shall be performing
services for the Company, unless such services are terminated by the Company
"without cause", as defined in his employment agreement. In addition, the
options vest and are exercisable prior to their expiration date, only to the
extent of (i) 100,000 shares if the average of the closing prices of the
Company's Common Stock, as reported on Nasdaq or any national securities
exchange for any 30 consecutive trading days (the "Average Closing Price")
shall exceed $ per share [200% of the initial public offering price of the
shares offered hereby], (ii) 200,000 shares if the Average Closing Price shall
exceed $ per share [300% of the initial public offering price of the shares
offered hereby], and (iii) 300,000 shares if the Average Closing Price shall
exceed $ per share [400% of the initial public offering price of the shares
offered hereby]. See "--Stock Option Plans."

In September 1996, in connection with the acquisition of AB Plastics, AB
Plastics entered into employment agreements with James S. Adams to serve as the
President of AB Plastics through June 1999 and with Stephen M. Adams to serve
as the Vice President-Technology of AB Plastics through September 1999.
Pursuant to the employment agreements, James S. Adams has agreed to continue to
perform services primarily in connection with customer relations and strategic
long-term planning and Stephen Adams has agreed to continue to supervise, on a
day-to-day basis, the technical aspects of the Company's business. The Company
currently pays each of James S. Adams and Stephen M. Adams an annual salary of
$100,000 and provides them with customary health and medical benefits. Both
individuals have also agreed not to compete with the Company for the period
through September 2001 and not to disclose confidential information relating to
the Company at any time.

AB Plastics has also entered into employment agreements with each of G.
Michael Frink, Jawed Ghias and Paul J. Iacono to serve as Senior Vice
President-Sales and Marketing, Vice President-Manufacturing and Vice
President-Finance of AB Plastics, respectively. Under such agreements, AB
Plastics currently pays annual base salaries of $100,000, $140,000 and $85,000
to Messrs. Frink, Ghias and Iacono, respectively. Mr. Iacono's annual base
salary will be increased to $100,000 in September 1997. Each of such
individuals is also entitled to receive an annual bonus, with Mr. Frink
entitled to receive up to $80,000 for achieving target performance levels based
on sales and diversification of AB Plastics' customer base, with a minimum of
$20,000. Mr. Ghias is entitled to participate in AB Plastics' bonus pool to
receive up to one-half of his annual base salary, and Mr. Iacono is entitled to
receive in September 1997 a bonus in the amount of $42,500. Subject to
achievement of AB Plastics' business plan (in whole or in part), Mr. Iacono is
entitled to a bonus of $50,000 in September 1998. Each of such individuals has
also agreed not to compete with the Company during the term of his agreement
and for one year thereafter and not to disclose confidential information
relating to AB Plastics at any time.

<PAGE>

Stock Option Plans

1996 Stock Option Plan. In September 1996, the stockholders of the Company
approved the Company's 1996 Stock Option Plan, as previously adopted by the
Company's Board of Directors (the "1996 Plan"), pursuant to which officers,
directors, key employees and consultants of the Company are eligible to receive
incentive stock options and non-qualified stock options to purchase up to an
aggregate of 1,080,000 shares of Common Stock. There are currently outstanding
under the 1996 Plan stock options for an aggregate of 594,000 shares of Common
Stock at an exercise price of $0.74 per share, expiring on December 31, 2002.
The exercise price under such outstanding stock options represents not less
than 100% of the fair market value of the underlying Common Stock as of the
date that such options were granted, as determined by the Board of Directors of
the Company on the date that such options were granted. Options to purchase
68,591 shares were granted to Mr. Gorman in 1996 at an exercise price of $0.74
per share, and options to purchase 270,000 shares were granted to Mr. Gibbs in
1996 at an exercise price of $0.74 per share, all of which options are being
exercised upon the consummation of this offering. See "Certain Transactions."

With respect to incentive stock options, the 1996 Plan provides that the
exercise price of each such option must be at least equal to 100% of the fair
market value of the Common Stock on the date that such option is granted (and
110% of fair market value in the case of stockholders who, at the time the
option is granted, own more than 10% of the total outstanding Common Stock),
and requires that all such options have an expiration date not later than that
date which is one day before the tenth anniversary of the date of the grant of
such options (or the fifth anniversary of the date of grant in the case of 10%
or greater stockholders). However, with certain limited exceptions, in the
event that the option holder ceases to be associated with the Company, or
engages in or is involved with any business similar to that of the Company,
such option holder's incentive options immediately terminate. Pursuant to the
1996 Plan, the aggregate fair market value, determined as of the date(s) of
grant, for which incentive stock options are first exercisable by an option
holder during any one calendar year cannot exceed $100,000.

1997 Stock Option Plan. In June 1997, the stockholders of the Company
approved the Company's 1997 Stock Option Plan, as previously adopted by the
Company's Board of Directors (the "1997 Plan"), pursuant to which officers,
directors, key employees and consultants of the Company are eligible to receive
incentive stock options and non-qualified stock options to purchase up to an
aggregate of 1,000,000 shares of Common Stock. There are currently 300,000
outstanding stock options under the 1997 Plan. See "-- Employment Agreements."

The requirements of the 1997 Plan with respect to incentive stock options
are identical to the requirements of the 1996 Plan. With respect to
non-qualified stock options, the 1997 Plan requires that the exercise price of
all such options be at least equal to 100% of the fair market value of the
Common Stock on the date such option is granted, provided that non-qualified
options may be issued at a lower exercise price (but in no event less than 85%
of fair market value) if the net pre-tax income of the Company in the full
fiscal year immediately preceding the date of the grant of such option (the
"Prior Year") exceeded 125% of the mean annual average net pre-tax income of
the Company for the three fiscal years immediately preceding such Prior Year.
Non-qualified options must have an expiration date not later than that date
which is the day before the eighth anniversary of the date of the grant of the
subject option. However, with certain limited exceptions, in the event that the
option holder ceases to be associated with the Company, or engages in or becomes
involved with any business similar to that of the Company, such option holder's
non-qualified options immediately terminate.

<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of June 4, 1997, and as adjusted to
reflect the sale of the shares of Common Stock offered hereby, by: (i) each of
the Named Executive Officers who beneficially owns any shares, (ii) each of the
Company's directors who beneficially owns any shares, (iii) all directors and
executive officers of the Company as a group, and (iv) each other person known
by the Company to own beneficially more than 5% of the Company's Common Stock.
Except as otherwise noted, the persons named in this table, based upon
information provided by such persons, have sole voting and investment power
with respect to all shares of Common Stock beneficially owned by them.

<TABLE>
<CAPTION>
Percentage of Outstanding
Number of Shares Common Stock
of Common Stock Beneficially Owned
Beneficially -----------------------------------
Name and Address of Beneficial Owner(1) Owned (2) Before Offering After Offering
- ------------------------------------------------ ------------------ ----------------- ---------------
<S> <C> <C> <C>
North Atlantic Smaller Companies
Investment Trust plc ........................ 1,063,125 22.4% 17.6%
Private Equity Partners, L.P. .................. 675,000(3) 14.0% 11.1%
Sirrom Investments, Inc ........................ 1,080,000(4) 22.5% 17.7%
Geoffrey J.F. Gorman ........................... 946,091(5) 19.7% 15.5%
Michael A. Gibbs .............................. 652,500(6) 13.6% 10.7%
James S. Adams ................................. 62,267(7) 1.3% 1.0%
Stephen M. Adams .............................. 31,136(8) * *
Christopher H.B. Mills ........................ 1,096,125(9) 22.4% 17.6%
All directors and executive officers as a group
(8 persons) ................................. 2,788,119 58.0% 45.7%
</TABLE>

- ------------
* Represents less than 1% of outstanding Common Stock or voting power.

(1) The address of North Atlantic Smaller Companies Investment Trust plc is c/o
JO Hambro & Partners Limited, 10 Park Place, London SW1A 1LP, United
Kingdom. The address of Private Equity Partners, L.P. and Geoffrey J.F.
Gorman is 808 Lexington Avenue, 2nd Floor, New York, New York 10021. The
address of Sirrom Investments, Inc. is 500 Church Street, Suite 200,
Nashville, Tennessee 37219. The address of each other beneficial owner is
c/o AB Plastics Corporation, 15730 South Figueroa Street, Gardena,
California 90248.

(2) Shares beneficially owned and percentage of ownership are based on
4,806,000 shares of Common Stock outstanding before this offering and
6,106,000 shares of Common Stock to be outstanding after the consummation
of this offering, and assuming no exercise of the Underwriters'
over-allotment option. Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission and generally
includes voting or dispositive power with respect to such shares.

(3) PEP is the general partner of Private Equity Partners, L.P., a Delaware
limited partnership.

(4) Represents shares of Common Stock issued on the date of this Prospectus for
$2,000 upon exercise of a warrant granted in connection with a $4.0
million subordinated term loan made by Sirrom in connection with the
original capitalization of the Company and acquisition of AB Plastics in
September 1996. See "Certain Transactions."

(5) Includes (i) 675,000 shares of Common Stock owned by Private Equity
Partners, L.P., of which Mr. Gorman is the managing partner of PEP, its
general partner, (ii) 202,500 shares of Common Stock issued on the date of
this Prospectus upon exercise of a warrant issued in September 1996 at
$0.74 per share, and (iii) 68,591 shares of Common Stock issued on the
date of this Prospectus upon exercise of a stock option issued in
September 1996 at $0.74 per share. See "Certain Transactions."

(6) Includes (i) 112,250 shares of Common Stock owned beneficially through
Private Equity Partners, L.P. which were purchased for $0.74 per share in
September 1996, (ii) 270,000 shares issued on the date of this Prospectus
upon exercise of a warrant issued in September 1996 at $0.74 per share,
and (ii) 270,000 shares of Common Stock issued on the date of this
Prospectus upon exercise of a stock option issued in September 1996

<PAGE>

at $0.74 per share. Does not include 300,000 shares of Common Stock
which may be issued in the future upon the occurrence of certain events
under options granted to Mr. Gibbs pursuant to the Company's 1997 Plan. See
"Management -- Employment Agreements" and "Certain Transactions."

(7) Represents shares of Common Stock issued on the date of this Prospectus
upon exercise of a stock option issued in September 1996 at $0.74 per
share. See "Certain Transactions."

(8) Represents shares of Common Stock which are issuable at $0.74 per share
upon the exercise of outstanding stock options. See "Management -- Stock
Option Plans."

(9) Represents shares owned beneficially by North Atlantic Smaller Companies
Investment Trust plc, of which Mr. Mills is a managing director.

<PAGE>

CERTAIN TRANSACTIONS

In connection with the capitalization of the Company and the
acquisition of AB Plastics, in September 1996, the Company issued a $4.0 million
13.5% subordinated term note to Sirrom, due September 2001, and a five-year
warrant to purchase an aggregate of 1,080,000 shares of Common Stock of the
Company, at an exercise price of $.01 per share (a total of $2,000). Sirrom has
elected to exercise such warrant on the date of this Prospectus. The Company has
granted to Sirrom certain "piggyback" and demand registration rights with
respect to the shares issued to Sirrom upon exercise of such warrant, which
registration rights Sirrom has agreed not to exercise until at least 180 days
from the date of this Prospectus. See "Shares Eligible for Future Sale."

In September 1996, the Company sold an aggregate of 675,000
shares of Common Stock to Private Equity Partners, L.P. for $500,000, or $0.74
per share, of which Geoffrey J. F. Gorman, the Company's Chairman of the Board
is the managing partner of PEP, its general partner. Michael A. Gibbs, the
President of the Company, purchased an undivided one-sixth interest in the
equity holdings of Private Equity Partners, L.P. for $83,333 and beneficially
owns 112,250 of the shares owned by such limited partnership.

In September 1996, the Company issued five-year options and warrants
exercisable at $0.74 per share to a number of persons, including Geoffrey J.F.
Gorman, Chairman of the Board of the Company, Michael A. Gibbs, President of
the Company, and James S. Adams, President of AB Plastics. Effective on the
date of this Prospectus, each of Messrs. Gorman, Gibbs and Adams will exercise
all options and warrants issued to them, as a result of which Mr. Gorman will
purchase an aggregate of 271,091 shares of Common Stock for $200,607, Mr. Gibbs
will purchase an aggregate of 540,000 shares of Common Stock for $399,600, and
Mr. Adams will purchase an aggregate of 62,267 shares of Common Stock for
$49,778. The purchase price for such shares will be paid by Messrs. Gorman,
Gibbs and Adams by delivering to the Company his 8% full-recourse promissory
notes, payable semi-annually as to interest, and as to principal on the earlier
to occur of (a) the sale of the Company to any unaffiliated third party,
whether through merger, sale of assets or like consolidation or combination, or
(b) September 30, 2001. In addition, to the extent that any of Messrs. Gorman,
Gibbs or Adams shall effect any public or private sale or distribution of any
of their shares of Common Stock, they will be obligated to prepay their
respective notes to the extent of $0.74 of principal for each full share sold
or distributed by them, together with all interest accrued thereon to the date
of sale.

In September 1996, the Company entered into a management agreement with
PEP, of which Geoffrey J.F. Gorman, the Chairman of the Board of the Company,
is the managing partner. In October 1996, the Company entered into a management
agreement, effective as of August 1, 1996, with a corporate affiliate of
Michael A. Gibbs, the President of the Company, and Mr. Gibbs, individually.
See "Management -- Employment Agreements."

In September 1996, the Company entered into an agreement with JO Hambro &
Partners Limited ("JO Hambro"), of which Christopher H.B. Mills, a director of
the Company, is a director. Pursuant to such agreement, the Company pays JO
Hambro an annual fee of $50,000, payable quarterly, as a director's fee. The
Company is required to make these payments to JO Hambro as long as a
representative of JO Hambro serves on the Board of Directors of the Company or
AB Plastics and certain investors, previously introduced to the Company by JO
Hambro, hold in the aggregate in excess of 10% of the outstanding shares of the
Company's Common Stock on a fully-diluted basis.

The Company leases its principal executive offices in Gardena, California
from a partnership of which James M. Adams, President of AB Plastics, is a
partner. The Company has exercised its option to purchase this facility for
approximately $3.0 million, the appraised fair market value of such property.
Such purchase is expected to be completed prior to the consummation of this
offering. See "Business -- Facilities."

The Company's Certificate of Incorporation provides for indemnification of
the Company's officers and directors in certain circumstances. The Company
intends to enter into indemnification agreements with each of its directors and
executive officers. See "Management -- Limitation of Liability and
Indemnification."

<PAGE>

DESCRIPTION OF SECURITIES

General

The Company's authorized capital stock consists of (i) 20,000,000 shares
of Common Stock, par value $.0001 per share, and (ii) 5,000,000 shares of
Preferred Stock, par value $.0001 per share. As of the date of this Prospectus,
an aggregate of 4,806,000 shares of Common Stock were outstanding and held by
15 stockholders. No shares of Preferred Stock have been issued or are
outstanding.

Common Stock

The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of stockholders of the Company. In addition, such
holders are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. In the event of the dissolution, liquidation or winding up
of the Company, the holders of Common Stock are entitled to share ratably in
all assets remaining after payment of all liabilities of the Company. All
outstanding shares of Common Stock are fully paid and nonassessable.

The holders of Common Stock do not have any subscription, redemption or
conversion rights, nor do they have any preemptive or other rights to acquire
or subscribe for additional, unissued or treasury shares. Accordingly, if the
Company were to elect to sell additional shares of Common Stock following this
offering, persons acquiring Common Stock in this offering would have no right
to purchase additional shares, and as a result, their percentage equity
interest in the Company would be reduced.

Pursuant to the Company's By-Laws, except for any matters which, pursuant
to the Delaware Law, require a greater percentage vote for approval, the
holders of a majority of the outstanding Common Stock, if present in person or
by proxy, are sufficient to constitute a quorum for the transaction of business
at meetings of the Company's stockholders. Holders of shares of Common Stock
are entitled to one vote per share on all matters submitted to the vote of
Company stockholders. Except as to any matters which, pursuant to Delaware Law,
require a greater percentage vote for approval, the affirmative vote of the
holders of a majority of the Common Stock present in person or by proxy at any
meeting (provided a quorum as aforesaid is present thereat) is sufficient to
authorize, affirm or ratify any act or action, including the election of
directors.

The holders of Common Stock do not have cumulative rights. Accordingly,
the holders of more than half of the outstanding shares of Common Stock can
elect all of the directors to be elected in any election, if they choose to do
so. In such event, the holders of the remaining shares of Common Stock would
not be able to elect any directors. The Board is empowered to fill any
vacancies on the Board created by the resignation, death or removal of
directors.

In addition to voting at duly called meetings at which a quorum is present
in person or by proxy, Delaware Law and the Company's By-Laws provide the
stockholders may take action without the holding of a meeting by written
consent or consents signed by the holders of a majority of the outstanding
shares of the capital stock of the Company entitled to vote thereon. Prompt
notice of the taking of any action without a meeting by less than unanimous
consent of the stockholders will be given to those stockholders who do not
consent in writing to the action. The purposes of this provision are to
facilitate action by stockholders and to reduce the corporate expense
associated with annual and special meetings of stockholders. Pursuant to the
rules and regulations of the Commission, if stockholder action is taken by
written consent, the Company will be required to send to each stockholder
entitled to vote on the matter acted on, but whose consent was not solicited,
an information statement containing information substantially similar to that
which would have been contained in a proxy statement.

Preferred Stock

The Board of Directors has the authority to issue up to 5,000,000 shares
of Preferred Stock in one or more series and to fix the number of shares
constituting any such series, the voting powers, designation, preferences and
relative participation, optional or other special rights and qualifications,
limitations or restrictions thereof, including the dividend rights and dividend
rate, terms of redemption (including sinking fund provisions), redemption price
or prices, conversion rights and liquidation preferences of the shares
constituting any series,

<PAGE>

without any further vote or action by the stockholders. The issuance of
Preferred Stock by the Board of Directors could affect the rights of the
holders of Common Stock. For example, such issuance could result in a class of
securities outstanding that would have preferences with respect to voting
rights and dividends, and in liquidation, over the Common Stock, and could
(upon conversion or otherwise) enjoy all of the rights appurtenant to Common
Stock.

The authority possessed by the Board of Directors to issue Preferred Stock
could potentially be used to discourage attempts by others to obtain control of
the Company through merger, tender offer, proxy contest or otherwise by making
such attempts more difficult to achieve or more costly. The Board of Directors
may issue the Preferred Stock with voting and conversion rights that could
adversely affect the voting power of the holders of Common Stock. There are no
agreements for the issuance of Preferred Stock and the Board of Directors has
no present intention to issue Preferred Stock.

Delaware Anti-Takeover Law

The Company is subject to Section 203 of the Delaware Law, which prohibits
a publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless
(i) prior to the date of the business combination, the transaction is approved
by the board of directors of the corporation, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owns at least 85% of the outstanding
voting stock, or (iii) on or after such date, the business combination is
approved by the board of directors and by the affirmative vote of at least
66 2/3% of the outstanding voting stock that is not owned by the interested
stockholder. A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the stockholder. An
"interested stockholder" is a person, who, together with affiliates and
associates, owns (or within three years, did own) 15% or more of the
corporation's voting stock.

Transfer Agent

The transfer agent for the Common Stock is American Stock Transfer & Trust
Company, New York, New York.

<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has not been any public market for the
Common Stock and there can be no assurance that a significant public market for
the Common Stock will be developed or sustained after this offering. Sales of
substantial amounts of Common Stock in the public market after this offering,
or the possibility of such sales occurring, could adversely affect prevailing
market prices of the Common Stock or the future ability of the Company to raise
capital through an offering of equity securities.

Upon the completion of this offering, the Company will have outstanding
6,106,000 shares of Common Stock. Of such shares, the 1,300,000 shares of
Common Stock sold in the offering (assuming no exercise of the Underwriter's
over-allotment option) will be freely tradeable in the public market without
restriction under the Securities Act, unless purchased by "affiliates" of the
Company, as defined in Rule 144 under the Securities Act.

The remaining 4,806,000 shares of Common Stock outstanding are "restricted
securities," as defined in Rule 144 under the Securities Act (the "Restricted
Shares"). The Restricted Shares were issued and sold by the Company in private
transactions in reliance upon exemptions from registration under the Securities
Act. Restricted Shares may be sold in the public market only if they are
registered or if they qualify for an exemption from registration under Rules
144 or 701 under the Securities Act, which are summarized below.

Pursuant to certain "lock-up" agreements, all of the Company's officers,
directors and principal stockholders have agreed, subject to certain limited
exceptions, not to offer, sell, contract to sell, grant any option to purchase
or otherwise dispose of any shares of Common Stock of the Company or any
securities exercisable for or convertible into the Company's Common Stock owned
by them for a period of 365 days from the date of this Prospectus. Such
agreements provide that the Representative may, in its sole discretion and at
any time without notice, release all or a portion of the shares subject to
these lock-up agreements.

Rule 701 permits resales of shares in reliance upon Rule 144 but without
compliance with certain restrictions, including the holding period requirement,
imposed under Rule 144. In general, under Rule 144, as amended, beginning 90
days after the date of this Prospectus, a person (or persons whose shares of the
Company are aggregated) who has beneficially owned Restricted Shares for at
least one year (including the holding period of any prior owner who is not an
affiliate of the Company) would be entitled to sell within any three-month
period a number of shares that does not exceed the greater of (i) one percent of
the then outstanding shares of Common Stock (approximately 61,060 shares
following this offering), or (ii) the average weekly trading volume of the
Common Stock during the four calendar weeks preceding the filing of a Form 144
with respect to such sale. Sales under Rule 144 are also subject to certain
manner of sale and notice requirements and to the availability of current public
information about the Company. Under Rule 144(k), a person who is not deemed to
have been an affiliate of the Company at any time during the 90 days preceding a
sale and who has beneficially owned the shares proposed to be sold for at least
two years (including the holding period of any prior owner who is not an
affiliate of the Company) is entitled to sell such shares without complying with
the manner of sale, public information, volume limitation or notice provisions
of Rule 144.

<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), for whom Cruttenden Roth
Incorporated is acting as Representative, have severally agreed to purchase
from the Company and the Company has agreed to sell to the Underwriters, the
respective number of shares of Common Stock set forth opposite each
Underwriter's name below:

Underwriters Number of Shares
- ------------------------------------ -----------------
Cruttenden Roth Incorporated ......
Total ..................... ----------
1,300,000
==========

The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to certain conditions precedent, including
the absence of any material adverse change in the Company's business and the
receipt of certain certificates, opinions and letters from the Company's
counsel and independent public accountants. The nature of the Underwriters'
obligation is such that they are committed to purchase and pay for all the
shares of Common Stock if any are purchased.

The Company has been advised by the Representative that the Underwriters
propose to offer the shares of Common Stock directly to the public at the
initial public offering price set forth on the cover page of this Prospectus
and to certain securities dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow, and such selected dealers may
reallow, a discount not in excess of $ per share to certain brokers and
dealers. After the initial public offering of the shares, the public offering
price and other selling terms may be changed by the Representative. No change
in such terms shall change the amount of proceeds to be received by the Company
as set forth on the cover page of this Prospectus.

The Company has granted an option to the Underwriters, exercisable for a
period of 45 days after the date of this Prospectus, to purchase up to an
additional 195,000 shares of Common Stock at the public offering price set
forth on the cover page of this Prospectus, less the underwriting discounts and
commissions. The Underwriters may exercise this option only to cover
over-allotments, if any. To the extent that the Underwriters exercise this
option, each of the Underwriters will be committed, subject to certain
conditions, to purchase such additional shares of Common Stock in approximately
the same proportion as set forth in the above table.

The Company has agreed to issue to the Representative, for a total of
$130, warrants (the "Representative's Warrants") to purchase up to 130,000
shares of Common Stock at an exercise price per share equal to 120% of the
initial public offering price. The Representative's Warrants are exercisable
for a period of four years beginning one year from the date of this Prospectus.
The holders of the Representative's Warrants will have no voting, dividend or
other stockholder rights until the Representative's Warrants are exercised. In
addition, the Company has granted certain rights to the holders of the
Representative's Warrants to register the Representative's Warrants and the
Common Stock underlying the Representative's Warrants under the Securities Act.

The Company has agreed to pay the Representative a non-accountable expense
allowance equal to 3% of the aggregate Price to Public (including with respect
to shares of Common Stock underlying the over-allotment option, if and to the
extent it is exercised) set forth on the front cover of this Prospectus for
expenses in connection with this offering, of which the sum of $50,000 has been
paid. The Representative's expenses in excess of such allowance will be borne
by the Representative. To the extent that the expenses of the Representative
are less than the non-accountable expense allowance, the excess may be deemed
to be compensation to the Representative.

The Representative has advised the Company that it does not expect any
sales of the shares of Common Stock offered hereby to be made to discretionary
accounts controlled by the Underwriters.

<PAGE>

Prior to this offering, there has been no established trading market for
the Common Stock. Consequently, the initial public offering price for the
Common Stock offered hereby has been determined by negotiation between the
Company and the Representative. Among the factors considered in such
negotiations were the preliminary demand for the Common Stock, the prevailing
market and economic conditions, the Company's results of operations, estimates
of the business potential and prospects of the Company, the present state of
the Company's business operations, an assessment of the Company's management,
the consideration of these factors in relation to the market valuation of
comparable companies in related businesses, the current condition of the
markets in which the Company operates, and other factors deemed relevant. There
can be no assurance that an active trading market will develop for the Common
Stock or that the Common Stock will trade in the public market subsequent to
this offering at or above the initial public offering price.

The Underwriting Agreement provides that the Company will indemnify the
Underwriters and their controlling persons against certain liabilities under
the Securities Act or will contribute to payments the Underwriters and their
controlling persons may be required to make in respect thereof.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for
the Company by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, New York,
New York. Certain legal matters relating to the offering will be passed upon
for the Underwriters by Troop Meisinger Steuber & Pasich, LLP, Los Angeles,
California.

EXPERTS

The financial statements as of October 27, 1996 and for the fiscal year
ended October 27, 1996 included in this Prospectus have been so included in
reliance on the report of Marcum & Kliegman LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.

The financial statements as of October 29, 1995 and for the fiscal year
ended October 29, 1995 and October 30, 1994 included in this Prospectus have
been so included in reliance on the report of Block, Plant, Eisner, Fiorito &
Belak-Berger ("BPEFB"), independent accountants, given on the authority of said
firm as experts in auditing and accounting.

As approved by the Company's Board of Directors, the Company dismissed
BPEFB in January 1997. The reports of BPEFB for each of the fiscal years ended
October 29, 1995 and October 30, 1994 contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principle except for the consistent application of
accounting principles. There were no disagreements on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of BPEFB
would have caused it to make reference to the subject matter of the
disagreements in conjunction with its reports.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (which term shall include any amendments
thereto) on Form S-1 under the Securities Act with respect to the Common Stock
offered hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the
Registration Statement, certain items of which are contained in exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement,
including the exhibits thereto, and the financial statements and notes filed as
a part thereof. Statements made in this Prospectus concerning the contents of
any document referred to herein are not necessarily complete. With respect to
each such document filed with the Commission as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved. The Registration Statement, including the exhibits thereto
and the financial statements and notes filed as a part thereof, as well as such
reports and other information filed with the Commission, may be inspected
without charge at the public reference facilities maintained by the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices
of the Commission located at Seven World Trade Center, 13th Floor, New

<PAGE>

York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of all or any part thereof may be
obtained from the Commission upon the payment of certain fees prescribed by the
Commission. Such reports and other information may also be inspected without
charge at a Web site maintained by the Commission. The address of such site is
http://www.sec.gov.

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
-----
<S> <C>
REPORT OF INDEPENDENT ACCOUNTANTS ................................................ F-2

FINANCIAL STATEMENTS

Consolidated Balance Sheet as of October 27 1996, Balance Sheet as of October 29,
1995 and Consolidated Balance Sheet as of April 27, 1997 (Unaudited) ......... F-5

Consolidated Statement of Operations for the Fifty-Two Weeks Ended October 27,
1996, Statement of Operations for the Fifty-Two Weeks Ended October 29, 1995
and October 30, 1994 (Unaudited) ............................................. F-7

Consolidated Statement of Operations for the Twenty-Six Weeks Ended April 27,
1997 (Unaudited) and Statement of Operations for the Twenty-Six Weeks Ended
April 28, 1996 (Unaudited) ................................................... F-7

Consolidated Statement of Stockholders' Equity for the Fifty-Two Weeks Ended
October 27, 1996, Statement of Stockholders' Equity for the Fifty-Two Weeks
Ended October 29, 1995 and October 30, 1994 (Unaudited) ........................ F-8

Consolidated Statement of Stockholders' Equity for the Twenty-Six Weeks Ended
April 27, 1997 (Unaudited) ................................................... F-8

Consolidated Statement of Cash Flows for the Fifty-Two Weeks Ended October 27,
1996, Statement of Cash Flows for the Fifty-Two Weeks ended October 29, 1995
and October 30, 1994 (Unaudited) ............................................. F-9

Consolidated Statement of Cash Flows for the Twenty-Six Weeks Ended April 27,
1997 (Unaudited) and Statement of Cash Flows for the Twenty-Six Weeks Ended
April 28, 1996 (Unaudited) ................................................... F-9

NOTES TO FINANCIAL STATEMENTS ................................................... F-11

</TABLE>

F-1

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
AB Plastics Holding Corporation and Subsidiary

We have audited the accompanying consolidated balance sheet of AB Plastics
Holding Corporation and Subsidiary as of October 27, 1996, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the fifty-two weeks 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 audit.

We conducted our audit 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 audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of AB Plastics
Holding Corporation and Subsidiary as of October 27, 1996 and the results of
their operations and their cash flows for the fifty-two weeks then ended in
conformity with generally accepted accounting principles.

MARCUM & KLIEGMAN LLP
December 31, 1996

F-2

<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors
AB Plastics Corporation
Gardena, California

We have audited the accompanying balance sheet of AB Plastics Corporation
(an S Corporation) as of October 29, 1995 and the related statements of
operations, shareholders' equity and cash flows for the fifty-two weeks 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 audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of AB Plastics Corporation as
of October 29, 1995, and the results of its operations and its cash flows for
the fifty-two weeks then ended in conformity with generally accepted accounting
principles.

BLOCK, PLANT, EISNER, FIORITO & BELAK-BERGER

Encino, California
December 14, 1995

F-3

<PAGE>

INDEPENDENT AUDITORS REPORT

Board of Directors
AB Plastics Corporation
Gardena, California

We have audited the statements of operations, shareholders equity and cash
flows for the fifty-two weeks ended October 30, 1994, of AB Plastics
Corporation (an S Corporation). These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of AB Plastics
Corporation for the fifty-two weeks ended October 30, 1994 in conformity with
generally accepted accounting principles.

BLOCK, PLANT, EISNER, FIORITO & BELAK-BERGER

Encino, California
June 19, 1997

F-4
<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
October 29, October 27, April 27,
1995 1996 1997
------------- ---------------- ---------------
(Consolidated) (Consolidated)
(Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ......... $ 468,344 $ 729,729 $ 802,634
Accounts receivable, net ......... 6,494,304 5,915,207 3,568,967
Accounts receivable, other ......... 12,735 63,827 94,772
Inventories ........................ 3,296,803 1,893,668 2,991,337
Prepaid expenses .................. 653,084 524,185 432,509
Prepaid income taxes ............... 34,393 18,515 78,220
Income tax refund receivable ...... -0- 78,220 -0-
Notes receivable, other ............ 696,791 -0- 77,631
------------ ------------ ------------
Total Current Assets ............ 11,656,454 9,223,351 8,046,070
------------ ------------ ------------
EQUIPMENT AND IMPROVEMENTS,
Net ................................. 8,799,087 8,622,927 8,888,725
------------ ------------ ------------
OTHER ASSETS
Goodwill, net ..................... -0- 1,376,523 1,341,966
Deposits ........................... -0- 167,953 389,599
Other assets, net .................. 157,298 203,447 160,558
------------ ------------ ------------
Total Other Assets ............... 157,298 1,747,923 1,892,123
------------ ------------ ------------
TOTAL ASSETS ..................... $20,612,839 $19,594,201 $18,826,918
============ ============ ============
</TABLE>

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

F-5

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
October 29, October 27, April 27,
1995 1996 1997
------------- ---------------- ---------------
(Consolidated) (Consolidated)
(Unaudited)
<S> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued expenses ..................... $ 5,919,615 $ 4,181,770 $ 4,788,447
Accrued wages ............................................. 494,743 498,717 432,836
Current portion of capitalized lease obligations ............ 312,087 286,705 282,789
Payroll taxes payable ....................................... 61,886 65,648 165,856
Income taxes payable ....................................... 21,423 76,300 104,055
Notes payable, other ....................................... 140,000 -0- -0-
Current portion of long-term debt ........................... 3,677,498 -0- -0-
Distributions payable ....................................... 227,800 -0- -0-
------------ ------------ ------------
Total Current Liabilities ................................. 10,855,052 5,109,140 5,773,983
------------ ------------ ------------
OTHER LIABILITIES
Capitalized lease obligations, net of current portion ...... 673,740 387,034 625,004
Long-term debt ............................................. 2,129,171 10,000,000 7,150,000
Deferred income taxes payable .............................. 82,768 1,734,437 1,734,437
------------ ------------ ------------
Total Other Liabilities .................................... 2,885,679 12,121,471 9,509,441
------------ ------------ ------------
TOTAL LIABILITIES .......................................... 13,740,731 17,230,611 15,283,424
------------ ------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock ................................................ 110,840 270 270
Additional paid-in capital ................................. -0- 2,199,730 2,199,730
Retained earnings .......................................... 6,761,268 163,590 1,343,494
------------ ------------ ------------
TOTAL STOCKHOLDERS' EQUITY ................................. 6,872,108 2,363,590 3,543,494
------------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY ................................................... $20,612,839 $19,594,201 $18,826,918
============ ============ ============
</TABLE>

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

F-6

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
For the Twenty-Six Weeks
For the Fifty-Two Weeks Ended Ended
-------------------------------------------------- --------------------------------
October 30, October 29, October 27, April 28, April 27,
1994 1995 1996 1996 1997
-------------- -------------- ---------------- -------------- ---------------
(Unaudited) (Consolidated) (Unaudited) (Consolidated)
(Unaudited)
<S> <C> <C> <C> <C> <C>
SALES ..................... $ 34,026,925 $ 42,678,959 $ 39,345,443 $ 19,409,976 $ 20,244,365
COST OF SALES ............... 30,695,123 38,960,968 34,001,503 17,337,835 16,393,249
------------ ------------ ------------ ------------ -----------
GROSS PROFIT ............... 3,331,802 3,717,991 5,343,940 2,072,141 3,851,116
------------ ------------ ------------ ------------ -----------
OPERATING EXPENSES
Selling ..................... 431,992 443,916 515,788 223,637 294,133
Administrative ............ 1,283,188 1,239,549 1,216,196 797,067 1,162,066
------------ ------------ ------------ ------------ -----------
TOTAL OPERATING
EXPENSE ............... 1,715,180 1,683,465 1,731,984 1,020,704 1,456,199
------------ ------------ ------------ ------------ -----------
OPERATING INCOME ......... 1,616,622 2,034,526 3,611,956 1,051,437 2,394,917
------------ ------------ ------------ ------------ -----------
OTHER INCOME (EXPENSE)
Other income ............... 284,183 130,676 48,296 -0- -0-
Interest expense ......... (290,837) (434,761) (527,958) (226,088) (451,243)
Other expenses ............ -0- -0- -0- -0- -0-
Restructuring costs ......... -0- -0- (1,151,288) -0- -0-
------------ ------------ ------------ ------------ ------------
TOTAL OTHER EXPENSE ........ (6,654) (304,085) (1,630,950) (226,088) (451,243)
------------ ------------ ------------ ------------ ------------
INCOME BEFORE
INCOME TAXES ............ 1,609,968 1,730,441 1,981,006 825,349 1,943,674
INCOME TAX EXPENSE ......... (48,127) (26,457) (107,310) (12,445) (763,770)
------------ ------------ ------------ ------------ ------------
NET INCOME .................. $ 1,561,841 $ 1,703,984 $ 1,873,696 $ 812,904 $ 1,179,904
============ ============ ============ ============ ============
Net income per share ......... $.32 $.35 $.39 $.17 $.24
==== ==== ==== ==== ====
Weighted average common stock
and common stock equivalents
outstanding ............... 4,860,000 4,860,000 4,860,000 4,860,000 4,860,000
</TABLE>

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

F-7

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
Additional Total
Number of Common Paid-In Retained Stockholders'
Shares Stock Capital Earnings Equity
-------------- ------------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Balance, November 1, 1993 ...... 9,965.40 $ 110,840 $ -0- $ 4,987,020 $ 5,097,860
Net Income .................. -0- -0- -0- 1,561,841 1,561,841
Distributions .................. -0- -0- -0- (1,077,977) (1,077,977)
------------- ---------- ----------- ------------ ------------
Balance, October 30, 1994
(unaudited) ..................... 9,965.40 110,840 -0- 5,470,884 5,581,724
Net Income .................. -0- -0- -0- 1,703,984 1,703,984
Distributions .................. -0- -0- -0- (413,600) (413,600)
------------- ---------- ----------- ------------ ------------
Balance, October 29, 1995 ...... 9,965.40 110,840 -0- 6,761,268 6,872,108
Net Income .................. -0- -0- -0- 1,873,696 1,873,696
Distributions .................. -0- -0- -0- (933,868) (933,868)
Issuance of warrants ............ -0- -0- 199,950 -0- 199,950
Stock retirement ............... (9,965.40) (110,840) -0- -0- (110,840)
Issuance of stock ............... 500,000.00 50 2,000,000 -0- 2,000,050
Recapitalization ............... -0- -0- -0- (7,537,506) (7,537,506)
Stock Split ..................... 2,200,000.00 220 (220) -0- -0-
------------- ---------- ----------- ------------ ------------
Consolidated Balance, October 27,
1996 ........................... 2,700,000.00 270 2,199,730 163,590 2,363,590
Net Income ..................... -0- -0- -0- 1,179,904 1,179,904
------------- ---------- ----------- ------------ ------------
Consolidated Balance, April 27,
1997 (Unaudited) ............... 2,700,000.00 $ 270 $ 2,199,730 $ 1,343,494 $ 3,543,494
============= ========== =========== ============ ============
</TABLE>

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

F-8

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
For the Twenty-Six Weeks
For the Fifty-Two Weeks Ended Ended
-------------------------------------------------- -------------------------------
October 30, October 29, October 27, April 28, April 27,
1994 1995 1996 1996 1997
-------------- -------------- ---------------- ------------- ---------------
(Unaudited) (Consolidated) (Unaudited) (Consolidated)
(Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income ........................ $ 1,561,841 $ 1,703,984 $ 1,873,696 $ 812,904 $ 1,179,904
------------ ------------ ------------ ------------ ------------
Adjustments to reconcile net
income to net cash provided by
operating activities:
(Gain) loss on sale of
equipment ..................... (59,961) 7,975 19,397 -0- -0-
Depreciation and amortization 746,137 875,651 908,623 491,704 635,963
Deferred income taxes ............ 27,390 5,775 36,555 1,343 -0-
Changes in assets - (increase)
decrease:
Accounts receivable, net ......... (81,220) (2,562,502) 579,097 3,237,602 2,346,239
Accounts receivable, other ......... (6,723) 184 (23,461) (244) (57,976)
Inventories ........................ (703,138) (708,385) 1,403,135 (34,146) (1,097,669)
Prepaid expenses .................. 65,911 17,566 128,899 128,355 97,252
Prepaid income taxes ............... 30,422 24,749 15,878 -0- -0-
Income tax refund receivable ...... -0- -0- (78,220) -0- -0-
Deposits ........................... (206,893) (75,008) (167,953) 159,862 (221,646)
Other assets ..................... (50,000) (160,208) 145,358 51,078 -0-
Changes in liabilities - increase
(decrease):
Accounts payable and accrued
expenses ........................ 1,731,337 1,865,574 (1,737,845) (2,977,858) 624,339
Accrued wages and payroll
taxes payable ..................... (97,316) 65,521 7,736 20,254 -0-
Income taxes payable ............... (9,203) (4,067) 54,877 11,102 27,755
------------ ------------ ------------ ------------ ------------
TOTAL ADJUSTMENTS .................. 1,386,743 (647,175) 1,292,076 1,089,052 2,354,257
------------ ------------ ------------ ------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES . 2,948,584 1,056,809 3,165,772 1,901,956 3,534,161
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM
INVESTING ACTIVITIES
Proceeds from sale of equipment . 65,400 91,462 6,000 -0- -0-
Purchase of equipment and
improvements ..................... (1,625,162) (3,490,848) (780,217) (769,511) (561,257)
Collection on note receivable,
other .............................. 134,791 145,979 700,010 69,429 -0-
Proceeds from notes receivable,
other .............................. -0- (90,000) -0- -0- (50,000)
Investment in subsidiary ............ -0- -0- (7,637,555) -0- -0-
------------ ------------ ------------ ------------ ------------
NET CASH USED IN
INVESTING ACTIVITIES ............ (1,424,971) (3,343,407) (7,711,762) (700,082) (611,257)
------------ ------------ ------------ ------------ ------------
</TABLE>

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

F-9

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
For the Twenty-Six Weeks
For the Fifty-Two Weeks Ended Ended
------------------------------------------------ -------------------------------
October 30, October 29, October 27, April 28, April 27,
1994 1995 1996 1996 1997
------------- ------------- ---------------- ------------- ---------------
(Unaudited) (Consolidated) (Unaudited) (Consolidated)
(Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from long-term debt ......... $ 184,600 $ 3,615,439 $ -0- $ -0- $ -0-
Proceeds from line of credit ......... -0- -0- 12,050,000 -0- -0-
Repayment of long-term debt ......... (511,886) (490,000) (7,996,669) (1,545,000) -0-
Repayment of capitalized lease
obligations ........................ (255,961) (312,358) (312,088) (171,920) -0-
Repayment of line of credit ......... -0- -0- -0- -0- (2,850,000)
Proceeds from issuance of stock ...... -0- -0- 2,000,000 -0- -0-
Distributions to shareholders ......... (1,077,977) (185,800) (933,868) (461,801) -0-
------------ ----------- ------------ ------------ ------------
NET CASH (USED IN)
PROVIDED BY FINANCING
ACTIVITIES ........................... (1,661,224) 2,627,281 4,807,375 (2,178,721) (2,850,000
------------ ----------- ------------ ------------ ------------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS ........................ (137,611) 340,683 261,385 (976,847) 72,904
CASH AND CASH
EQUIVALENTS - Beginning ............ 265,272 127,661 468,344 468,344 729,730
------------ ----------- ------------ ------------ ------------
CASH AND CASH
EQUIVALENTS (CASH
OVERDRAFT) - Ending .................. $ 127,661 $ 468,344 $ 729,729 $ (508,503) $ 802,634
============ =========== ============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the periods for:
Interest .............................. $ 293,452 $ 396,569 $ 444,055 $ 231,558 $ 451,470
Income taxes ........................ $ 50,057 $ -0- $ -0- $ -0- $ 717,500
Noncash investing and financing
activities:
Sale of equipment for a note
receivable ........................... $ -0- $ -0- $ 27,631 $ -0- $ -0-
Issuance of warrants .................. $ -0- $ -0- $ 200,000 $ -0- $ -0-
</TABLE>

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

F-10

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

NOTES TO FINANCIAL STATEMENTS

For the Fifty-Two Weeks Ended October 27, 1996, October 29, 1995 and
October 30, 1994 (Unaudited) and for the Twenty-Six Weeks
Ended April 27, 1997 (Unaudited) and April 28, 1996 (Unaudited)

NOTE 1 -- Summary of Significant Accounting Policies

Description of Business

Compass Plastics & Technologies, Inc. (formerly AB Plastics Holding
Corporation) (the "Company") manufactures plastic parts to customer
specifications using custom-made injection molds. The Company has a
concentration of credit risk in accounts receivable from Japanese-owned
television and computer manufacturing companies. Most of the Company's revenues
are derived from several major Japanese television and computer manufacturers.

Business Combination

The Company was formed May 30, 1996 for the purpose of acquiring the stock
of AB Plastics Corporation ("AB Plastics"). This business combination was
accounted for as a purchase effective September 27, 1996.

The aggregate purchase price for the acquisition of AB Plastic's stock was
$7,637,555, which includes the costs of the acquisition, was financed through
equity capital infusion, refinancing of long-term debt and issuance of a
promissory note payable, has been allocated to the assets purchased and the
liabilities assumed of AB Plastics based upon the fair value on the date of
acquisition. The excess of the purchase price over the fair value of the net
assets acquired was $1,381,797 and has been recorded as goodwill on the books of
AB Plastics.

Principles of Consolidation

The consolidated financial statements for the fifty-two weeks ended October
27, 1996 and for the twenty-six weeks ended April 27, 1997 (unaudited) include
the accounts of the Company and its wholly-owned subsidiary, AB Plastics. All
significant intercompany transactions have been eliminated in consolidation.

Fiscal Year

The Company maintains its books on a 52/53 week year ending on the last
Sunday in October. Fiscal years in the three-year period ended October 27,
1996, October 29, 1995 and October 30, 1994, each contained 52 weeks.

Goodwill

Goodwill is being amortized on a straight-line basis over a twenty-year
period. Amortization of goodwill charged to operations for the fifty-two weeks
ended October 27, 1996, October 29, 1995 and October 30, 1994 (unaudited) and
for the twenty-six weeks ended April 27, 1997 (unaudited) and April 28, 1996
(unaudited) amounted to $5,274, $0, $0, $0 and $34,557 and $0, respectively.

Advertising

The Company expenses advertising costs as incurred.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all
short-term investments with an original maturity of three months or less to be
cash equivalents.

The Company has cash balances in excess of the maximum amount insured by
the FDIC as of October 27, 1996, October 29, 1995 and April 27, 1997
(unaudited).

F-11

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 1 -- Summary of Significant Accounting Policies -- (Continued)

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.

Inventories

Inventories are stated at the lower of cost (first-in, first-out method)
or market.

Equipment and Improvements

Equipment and improvements are stated at cost. Depreciation is being
provided on the straight-line and accelerated methods over the estimated useful
lives of the assets.

Deferred Income Taxes

Deferred income taxes result mainly from temporary differences resulting
from using straight-line depreciation for financial statement reporting and
accelerated depreciation for income tax purposes.

Stock Options

In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"). SFAS 123 requires compensation expense
to be recorded (i) using the new fair value method or (ii) using existing
accounting rules prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations with pro forma disclosure of what net income and earnings per
share would have been had the Company adopted the new fair value method. The
Company intends to continue to account for its stock based compensation plans
in accordance with the provisions of APB 25.

Interim Financial Information

Financial information as of and for the twenty-six weeks ended April 27,
1997 and April 28, 1996 is unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of the results for such period
have been included; all adjustments are of a normal and recurring nature.
Interim results are not necessarily indicative of results for a full year.

Restructuring Costs

As a result of the acquisition of AB Plastics' stock by the Company, AB
Plastics recognized restructuring costs of $1,151,288 relating to write-offs of
certain assets in the amount of approximately $754,000, in addition to certain
expenses incurred in connection with the restructuring of AB Plastics of
$397,288.

Fair Value of Financial Instruments

The Company's financial instruments include cash, accounts receivable and
accounts payable. Due to the short-term nature of these instruments, the fair
value of these instruments approximate their recorded value. The Company has
long-term debt which it believes is stated at estimated fair market value.

F-12

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 1 -- Summary of Significant Accounting Policies -- (Continued)

Proforma Operating Results (Unaudited)

The following are the proforma operating results for the fifty-two week
period ended October 27, 1996 as if the acquisition by the Company described
above had occurred on October 30, 1995. The proforma results give effect to
changes in amortization and deferred income taxes from valuing the acquired net
assets at estimated fair value and recording the excess of purchase price over
the net assets acquired.

52 Weeks Ended
October 27, 1996
(Unaudited)
-----------------
Revenue ............... $39,345,443
Operating income ...... $ 3,548,140
Other expense ......... $ 1,150,314
Net income ............ $ 1,630,950

The proforma results of operations are not necessarily indicative of the actual
operating results that would have occurred had the acquisition been consummated
at the beginning of the period.

Earnings per Share

The computation of earnings per share is based on the weighted average
number of outstanding common stock and common stock equivalents (stock options)
and warrants of 4,860,000 for all periods. The number of outstanding common
shares reflects a 5.4-for-1 stock split and the dilutive effects of 2,160,000
common stock equivalents (subsequent to the stock split) related to the
Company's stock option plan and stock purchase warrants using the modified
treasury stock method (see Notes 10 and 12). The number of common outstanding
is applied retroactively to all periods presented for earnings per share
purposes.

Accounts Receivable

Accounts receivable at October 27, 1996, October 29, 1995 and April 27,
1997 is shown net of allowance for doubtful accounts of $12,400.

NOTE 2 -- Inventories

Inventories consist of the following:

<TABLE>
<CAPTION>
October 29, October 27, April 27,
1995 1996 1997
------------- ------------- ------------
(Unaudited)
<S> <C> <C> <C>
Raw materials ........................... $1,944,202 $ 912,708 1,291,472
Finished goods and work in-process ...... 1,352,601 980,960 1,699,865
----------- ----------- -----------
Total ................................. $3,296,803 $1,893,668 $2,991,337
=========== =========== ===========
</TABLE>

NOTE 3 -- Prepaid Expenses

Prepaid expenses consist of the current portion of deferred financing
costs and various other prepaid expenses. Deferred financing costs are being
amortized over the life of the respective loan and other prepaid expenses are
being amortized over their useful lives.

F-13

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 4 -- Equipment and Improvements

Equipment and improvements consist of the following:

<TABLE>
<CAPTION>
October 29, October 27, April 27,
1995 1996 1997
------------- ------------- ------------
(Unaudited)
<S> <C> <C> <C>
Equipment ........................... $15,520,169 $7,947,016 $ 7,954,306
Mobile equipment ..................... 131,669 29,979 30,177
Office furniture and equipment ...... 554,572 353,935 401,373
Leasehold improvements ............... 633,513 367,880 367,880
Construction in progress ............ -- -- 747,890
------------ ----------- -----------
16,839,923 8,698,810 9,501,626
Less: accumulated depreciation ...... 8,040,836 75,883 (612,901)
------------ ----------- -----------
Equipment and Improvements, Net . $ 8,799,087 $8,622,927 $ 8,888,725
============ =========== ===========
</TABLE>

Depreciation expense charged to operations for the fifty-two weeks ended
October 27, 1996, October 29, 1995 and October 30, 1994 and for the twenty-six
weeks ended April 27, 1997 (unaudited) and April 28, 1996 (unaudited) amounted
to $897,986, $808,984, $706,141, $537,017 and $456,704, respectively.

On September 27, 1996, equipment and improvements were revalued in
accordance with the purchase method of accounting.

NOTE 5 -- Other Assets

Other assets are stated at cost and consist of the following as of October
27, 1996:

<TABLE>
<CAPTION>
October 21, October 31, April 27,
1995 1996 1997
------------- ------------- ------------
(Unaudited)
<S> <C> <C> <C>
Deferred financing costs - Net ...... $178,442 $160,558
Other assets ........................ $ 26,465 7,505 -0-
License fee - Net .................. 130,833 17,500 -0-
--------- --------- ---------
$157,298 $203,447 $160,558
========= ========= =========
</TABLE>

Amortization expense charged to operations for the fifty-two weeks ended
October 27, 1996, October 29, 1995 and October 30, 1994 and for the twenty-six
weeks ended April 27, 1997 (unaudited) and April 28, 1996 (unaudited) amounted
to $5,363, $66,667, $39,996, $64,389 and $35,000, respectively.

NOTE 6 -- Long-Term Debt

On October 29, 1995, AB Plastics had a note payable to Manufacturers Bank,
with an outstanding principal balance of $1,306,669, payable in monthly
principal installments of $40,833 plus interest at either the prime rate plus
.50% or the Libor rate plus 2.75%, with all unpaid principal and interest due
in May 1998. AB Plastics also had a revolving line of credit with Manufacturers
Bank of which $3,000,000 was outstanding under this line of credit on October
29, 1995, payable in monthly installments of interest only at either the prime
rate plus .25% or the bank's Libor rate plus 2.50%. Beginning in March 1996,
the line of credit was extended until March 15, 1997.

AB Plastics also had an additional line of credit from Manufacturers Bank
for the purchase of equipment which provided for monthly payments of interest
and principal of $37,161 beginning March 1996 through March 2000. At October
29, 1995, $1,500,000 was outstanding under the equipment line of credit. In
connection with the acquisition of the AB Plastics stock by the Company, all of
the outstanding debt payable to Manufacturers Bank was repaid on September 27,
1996.

F-14

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 6 -- Long-Term Debt -- (Continued)

On September 27, 1996, AB Plastics entered into a line of credit agreement
(the "Credit Agreement"), with a bank (the "Bank") to borrow up to the lesser
of $10,000,000 or the borrowing base, which consists of 85% of eligible
accounts receivable and 50% of eligible inventory (the "Borrowing Base") plus a
Borrowing Base supplemental amount under a revolving line of credit (the "Line
of Credit"). The Borrowing Base supplemental amount at October 27, 1996 is
$6,000,000 and commencing October 31, 1996 is to be reduced by $100,000
monthly. The Line of Credit matures on July 3, 2001, at which time the
outstanding principal balance will be due and payable. The interest rate under
the Line of Credit will be at 1/2% above the Bank's prime rate which was 8 1/4%
on October 27, 1996, unless AB Plastics elects an optional interest calculation
based on Eurodollars. At October 27, 1996, $6,000,000 was outstanding under the
Line of Credit.

In accordance with the Credit Agreement, AB Plastics also has an available
equipment Line of Credit for $2,000,000 for which there is no outstanding
balance at October 27, 1996. The interest rate on this line is 1/4% above the
Bank's prime rate which was 8 1/4% on October 27, 1996. Interest is payable
monthly and principal payments are to be repaid in 36 equal monthly
installments provided that the last payment shall be made no later than July
31, 2000. AB Plastics will also pay a commitment fee of .25% annually, payable
quarterly on the unused line.

The Credit Agreement is collateralized by substantially all of the assets
of AB Plastics. The Company has guaranteed the Credit Agreement and the
guaranty is secured by a pledge of all of the capital stock of AB Plastics. The
Bank requires that AB Plastics maintain a stated net worth amount, and other
financial rations requirements, which AB Plastics met at October 27, 1996.

On September 27, 1996, the Company and AB Plastics entered into a loan
agreement with a financial institution (the "Lender") in the amount of
$4,000,000, which is evidenced by a promissory note (the "Note") which bears
interest at 13.5% per annum with interest only payable monthly commencing on
November 1, 1996. Annual principal payments are required on April 1, 1999,
April 1, 2000 and April 1, 2001 equalling the lesser of excess cash flows as
defined in the Note or $1,000,000. The remaining unpaid principal balance will
be due and payable in September 27, 2001. The debt, which was recorded on the
Company's books, was utilized by the Company to purchase the stock of AB
Plastics. The Note, which has restrictions as to payment of dividends and
issuance of stock rights, is subordinated to the Credit Agreement and is
secured by substantially all the assets of the Company.

In consideration of making the loan, the Lender was granted the right to
purchase up to 200,000 shares (the "Warrant") of the Company's common stock at
an exercise price of $.01 per share (see Note 10). The Warrant is exercisable
at any time until October 31, 2001. The Warrant, which was valued at $200,000
on September 27, 1996, has been recorded as deferred loan fees and is being
amortized over the life of the loan.

At April 27, 1997, the outstanding balance under the Credit Agreement and
the Line of Credit was $3,150,000. There was no outstanding balance under the
equipment line. At April 27, 1997, the outstanding balance with the Lender was
$4,000,000.

The following is a schedule of the future minimum principal payment
requirements on the Company's long-term debt:

Fifty-Two Weeks
Ending October 27, Amount
- -------------------- ------------
1997 $ -0-
1998 -0-
1999 1,000,000
2000 1,000,000
2001 8,000,000
------------
Total $10,000,000
============

F-15

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 7 -- Capitalized Lease Obligations

The Company is the lessee of equipment under four capital leases expiring
through the year 2000. The assets and liabilities are recorded at fair-market
value. The assets are being depreciated over their estimated useful lives.
Depreciation of assets under capital leases charged to expense for the
fifty-two weeks ended October 27, 1996, October 29, 1995 and October 30, 1994
and for the twenty-six weeks ended April 27, 1997 and April 26, 1996 amounted
to $78,144, $62,072, $50,592, $39,072 and $39,072, respectively. The following
is a summary of property held under capital leases included in equipment:

<TABLE>
<CAPTION>
October 29, October 27, April 27,
1995 1996 1997
------------- ------------- ------------
(Unaudited)
<S> <C> <C> <C>
Equipment ........................... $ 1,980,334 $ 1,351,859 $ 1,735,644
Less accumulated depreciation ...... (419,472) (6,012) (45,084)
----------- ----------- -----------
$ 1,560,862 $ 1,345,847 $ 1,690,560
=========== =========== ===========
</TABLE>

Minimum future lease payments under capital leases as of October 27, 1996
for each of the next four years, and in the aggregate, are as follows:

Fifty-Two Weeks
Ending October 27,
-------------------
1997 $331,208
1998 225,419
1999 124,620
2000 83,080
---------

Total minimum lease payments ............... 764,327
Less: amount representing interest ......... (90,588)
---------
Present value of net minimum lease payments . $ 673,739
=========
Current portion ........................... $ 286,705
Long-term portion ........................... 387,034
---------
Total ....................................... $ 673,739
=========

Interest rates on capitalized leases vary from 6.9% to 10.25% and are
imputed based on the lessor's implicit rate of return.

NOTE 8 -- Income Tax Expense and Deferred Income Taxes

Prior to its acquisition by the Company, AB Plastics was taxed under the
provisions of subchapter S of the Internal Revenue Code. Under these
provisions, AB Plastics did not pay Federal corporate income taxes and only
paid 1.5% of state income taxes. When AB Plastics was acquired by the Company,
it became a C corporation. The differences in depreciation methods and estimated
lives used by AB Plastics for book and tax purposes resulted in a deferred tax
liability. These same differences for depreciation methods and estimated lives
create ongoing deferred tax adjustments. Income taxes are allocated between the
parent and subsidiary based on the taxable income and loss of each entity. A
summary of income tax expense is as follows:

F-16

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 8 -- Income Tax Expense and Deferred Income Taxes -- (Continued)

A reconciliation of income tax at the statutory rate to the Company's
effective rate is as follows:

<TABLE>
<S> <C> <C> <C> <C> <C>
Computed at the expected statutory rate ........... 34.00% 34.00%
Surtax exemption ................................ (.41) (.70)
State income tax - net of federal tax benefit ...... 6.14 6.00
------- -------
Income tax expense - effective rate ................ 39.73% 39.30%
======= =======
</TABLE>

NOTE 9 -- Commitments and Contingencies

Lease Commitments

The Company is presently obligated under two noncancelable operating
leases for buildings, expiring between December 31, 2000 and August 20, 2004.
The main building at 15730 South Figueroa Street in Gardena, California is
being leased from the prior stockholders of AB Plastics at an annual rental of
$422,400. In addition to minimum rental payments, the building lease requires
payment of real property taxes. A second building located at 1700 South
Wilmington Street in Compton, California is being leased from an outside party
at an annual rental of $230,400. In addition to minimum rental payments, the
building lease requires payment of applicable operating expenses (including
property taxes and various maintenance costs).

The following is a schedule of future minimum rental payments subject to
cost of living increases:

Fifty-Two Weeks
Ending
October 27, Amount
- ---------------- -----------
1997 $ 652,800
1998 664,800
1999 676,800
2000 676,800
2001 464,800
Thereafter 2,041,440
-----------
Total $5,177,440
===========

The Company has an option to purchase the South Figueroa Street facility
from the prior stockholders at fair market value. The option is exercisable on
or before November 20, 2005.

In addition, the Company leases mobile equipment and forklifts for monthly
payments of $1,900. Rent expense for the fifty two weeks ended October 27,
1996, October 29, 1995 and October 30, 1994 (unaudited) and for the twenty-six
weeks ended April 27, 1997 (unaudited) and April 28, 1996 (unaudited) amounted
to $890,315, $900,623, $830,495, and $312,931 and $428,430 respectively.

F-17

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 9 -- Commitments and Contingencies -- (Continued)

Employment Agreements

The Company has employment agreements with certain key employees of the
Company, which expire at various dates through September 29, 2001. Some of the
agreements provide for incentive bonuses which are payable if specified
management goals are attained. The aggregate commitment for future salaries
under these agreements at October 27, 1996, excluding bonuses, was
approximately $1,300,000.

Management Agreements

The Company also entered into management agreements with two companies
individually owned by the Company's Chairman and President, respectively, to
provide consulting services over a five year period. The aggregate commitment
for future services under these agreements at October 27, 1996 was
approximately $1,000,000.

Stock Option Plan

On September 29, 1996, the Company adopted a stock option plan providing
for both incentive and nonqualified stock options, which reserves 120,000
shares of common stock of the Company ("Common Stock") for grant under the
Plan. The Plan required that all options be granted at an exercise price not
less than fair market value unless otherwise determined by the option
committee. On September 29, 1996, the Company granted incentive options to
various employees and officers of the Company to purchase 200,000 shares of
common stock at an exercise price of $4.00 per share to be exercised over a six
year period.

Stock Warrants

The Company issued warrants to the Chairman and President of the Company
to purchase an aggregate of 100,000 shares of common stock at $4.00 per share,
exercisable on the date of grant. The Company also issued a warrant to a
financial institution to purchase 200,000 shares of common stock at $.01 per
share, exercisable on the date of grant (see Note 6).

Contingent Purchase Price

In connection with the acquisition of AB Plastics, on September 27, 1996,
the Company has a contingent liability up to $500,000. The Company cannot
determine the outcome of this matter.

NOTE 10 -- Stock Option Plan and Stock Purchase Warrants

Summary information with respect to the stock option plan is as follows:

<TABLE>
<CAPTION>
Range of Outstanding Outstanding
Exercise Options Options
Incentives Granted Exercisable
------------ ------------- ------------
<S> <C> <C> <C>
September 29, 1996 (Inception)
Granted ........................ $4.00 200,000 23,063
Exercised ..................... -0- -0- -0-
Canceled ..................... -0- -0- -0-
------ -------- -------
Balance, October 27, 1996 ...... $4.00 200,000 23,063
====== ======== =======
</TABLE>

F-18

<PAGE>

COMPASS PLASTICS & TECHNOLOGIES, INC.
(Formerly AB Plastics Holding Corporation)

NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 11 -- Economic Dependency

Major Customers

The Company sells a substantial portion of its product to several major
customers. Sales to major customers which exceeded 10% of sales in the
aggregate and accounts receivable from such customers are as follows:

<TABLE>
<CAPTION>
For the Fifty-Two Weeks Ended For the Twenty-Six Weeks Ended
---------------------------------------------- ------------------------------
October 27, October 29, October 30, April 27, April 28,
1996 1995 1994 1997 1996
---------------- ------------- ------------- ---------------- ------------
(Consolidated) (Unaudited) (Consolidated) (Unaudited)
(Unaudited)
<S> <C> <C> <C> <C> <C>
Sales to major customers ... $33,001,245 $38,614,539 $29,881,703 $14,708,211 $16,207,292
============ ============ ============ ============ ============
Accounts receivable from major
customers .................. $ 5,048,887 $ 5,083,781 $ 3,207,431 $ 2,021,428 $ 2,830,510
============ ============ ============ ============ ============
</TABLE>

Major Suppliers

The Company purchased a substantial portion of its raw material from its
largest customer under their supply agreements with major resin producers.

NOTE 12 -- Initial Public Offering and Subsequent Events (Unaudited)

The Company intends to file a registration statement on Form S-1 offering
1.3 million shares of common stock at an estimated offering price between $7.00
and $8.00 per share, less applicable discounts and commissions, as an Initial
Public Offering ("IPO"). In accordance with the letter of intent between the
Company and the underwriter (the "letter of intent"), the underwriter has
received an option (the "Over-Allotment Option") to purchase an additional
number of shares from the Company or selling shareholders equal to 15 percent
(15%) of the number of shares sold to the public for the purpose of covering
over-allotments in the sale of firm commitment shares. The letter of intent
also provides that the managing underwriter or its designees shall be entitled
to receive, at the closing of the IPO, purchase warrants (the "Underwriter's
Warrants") for the purchase of a number of shares equal to ten percent (10%) of
the number of shares sold to the public. The underwriter's warrants will be
exercisable at a price per share equal to one hundred twenty percent (120%) of
the public offering price.

On May 29, 1997, the Board of Directors of the Company, in connection with
the IPO, approved a 5.4 -for- 1 stock split of the Company's common stock. The
Board of Directors additionally authorized amending the Company's certificate
of incorporation in order to change the name of the Company from AB Plastics
Holding Corporation to Compass Plastics & Technologies, Inc. and increase the
number of authorized shares of the Company from 5 million shares to 20 million
shares of common stock and from 1 million shares to 5 million shares of
preferred stock. In connection with the amendment to the certificate of
incorporation the par value of common stock and preferred stock remains at
$.0001 per share.

On June 4, 1997, AB Plastics amended its Loan Agreement with the Bank to,
among other things, extend the availability period under the Equipment Line to
October 31, 1997 and to extend the repayment terms to 48 months.

F-19

<PAGE>

================================================================================

No dealer, salesperson or any other person has been authorized to give
any information or to make any representation other than those contained in
this Prospectus, and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company or any
Underwriter. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company since the date hereof or that the
information contained herein is correct as of any date subsequent to the date
hereof. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any securities offered hereby by anyone in any jurisdiction
in which such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to any person to
whom it is unlawful to make such offer or solicitation.
--------------------------------------------

TABLE OF CONTENTS

Page
-----
Prospectus Summary .............................. 3
Risk Factors .................................... 7
The Company .................................... 13
Use of Proceeds ................................. 14
Dividend Policy ................................. 14
Capitalization ................................. 15
Dilution ....................................... 16
Selected Financial Data ........................ 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations .................................... 19
Business ....................................... 24
Management ....................................... 33
Principal Stockholders ........................... 40
Certain Transactions ........................... 42
Description of Securities ........................ 43
Shares Eligible for Future Sale .................. 45
Underwriting .................................... 46
Legal Matters .................................... 47
Experts .......................................... 47
Additional Information ........................... 47
Index to Financial Statements ................... F-1

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

Until , 1997 (25 days after the date of this Prospectus), all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This delivery requirement is in addition to the obligations of dealers to
deliver a Prospectus when acting as Underwriters and with respect to their
unsold allotments or subscriptions.

================================================================================
<PAGE>

================================================================================

1,300,000 Shares

Compass Plastics &
Technologies, Inc.

Common Stock

----------
PROSPECTUS
----------

CRUTTENDEN ROTH
INCORPORATED

, 1997

================================================================================

<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth all costs and expenses payable by the
Registrant in connection with the sale and distribution of the securities being
registered, other than underwriting discounts and commissions. All amounts
shown are estimates except the Securities and Exchange Commission registration
fee and the NASD filing fee.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee ...... $ 4,002.46
NASD filing fee .......................................... 1,820.81
Nasdaq National Market fee .............................. 20,800.00
Accounting fees and expenses .............................. 100,000.00
Legal fees and expenses ................................. 200,000.00
Printing and engraving expenses ........................... 75,000.00
Transfer agent and registrar fees ........................ 6,000.00
Blue Sky fees and expenses .............................. 10,000.00
Representative's non-accountable expense allowance ...... 292,000.00
Directors' and Officers' Insurance ........................ 50,000.00
Miscellaneous expenses .................................... 32,376.73
------------
Total ................................................ $792,000.00
============
</TABLE>

Item 14. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law permits
indemnification of officers, directors and other corporate agents under certain
circumstances and subject to certain limitations. The Registrant's Restated
Certificate of Incorporation and By-laws provide that the Registrant shall
indemnify its directors, officers, employees and agents to the full extent
permitted by Delaware General Corporation Law, including the circumstances in
which indemnification is otherwise discretionary under Delaware law. In
addition, the Registrant intends to enter into separate indemnity agreements
with its directors and executive officers that require the Registrant, among
other things, to indemnify then against certain liabilities which may arise by
reason of their status or service (other than liabilities arising from willful
misconduct of a culpable nature) and to maintain directors' and officers'
liability insurance, if available on reasonable terms.

These indemnification provisions and the indemnity agreements to be
entered into between the Registrant and its directors and executive officers
may be sufficiently broad to permit indemnification of the Registrant's
directors and executive officers for liabilities (including reimbursement of
expenses incurred) arising under the Securities Act.

The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Registrant
and its officers and directors for certain liabilities arising under the
Securities Act, or otherwise.

Item 15. Recent Sales of Unregistered Securities.

The Registrant has issued or sold the following unregistered securities:

(a), (c) On September 27, 1996, in connection with the acquisition of AB
Plastics, the Company sold an aggregate of 500,000 shares of its Common Stock,
in each case for $4.00 per share, as follows:

<TABLE>
<CAPTION>
Name of Purchaser Number of Shares
-----------------
<S> <C>
North Atlantic Smaller Companies Investment Trust plc 196,875
Foreign and Colonial Enterprise Trust 37,500
The Equitable Life Assurance Society of the United Kingdom 37,500
Bank of Bermuda 37,500
Chase Nominees Ltd. 37,500
Bank of Scotland (Isle of Man) Limited 28,125
Private Equity Partners, L.P. 125,000
</TABLE>

II-1

<PAGE>

The Company also sold on such date, for nominal consideration, warrants to
purchase Common Stock, as follows:

Name of Purchaser Number of Shares
-----------------
Sirrom Investments, Inc. 200,000
Michael A. Gibbs 50,000
Geoffrey J.F. Gorman and group 50,000

In addition, the Company granted stock options to purchase Common Stock,
each at an exercise price of $4.00 per share, to Michael A. Gibbs (50,000
options), Geoffrey J.F. Gorman and group (16,937 options), James S. Adams
(11,531 options), Stephen M. Adams (5,766 options), Robin Adams Tompkins (5,766
options) and other officers in the aggregate (110,000 options). Further stock
options were granted to Mr. Gibbs under the Company's 1997 Stock Option Plan in
June 1997, at an exercise price equal to the initial public offering price per
share in this offering. No consideration was paid to the Company by any
recipient of any of the foregoing options for the grant of any such options.

In June 1997, the Company's stockholders authorized a 5.4-for-1 stock
split to be consummated prior to the effectiveness of this offering. Pursuant
to such stock split, each stockholder, for no additional consideration, is
entitled to receive 5.4 shares of common stock for each share of common stock
previously held or to which it has the right to receive.

(b) There were no underwriters employed in connection with any of the
transactions set forth in Item 15(a).

(d) The issuances described in Item 15(a) were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act as transactions by an issuer not involving a public offering. In
addition, certain of the issuances described in the third paragraph of Item
15(a) were deemed exempt from registration under the Securities Act in reliance
on Rule 701 promulgated thereunder as transactions pursuant to compensatory
benefit plans and contracts relating to compensation. The recipients of
securities in each such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates and other instruments issued in such transactions. All recipients
either received adequate information about the Registrant or had access, through
employment or other relationships, to such information.

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits.

<TABLE>
<CAPTION>
Exhibit No. Description
- ------------- -----------------------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement
3.1 Restated Certificate of Incorporation of the Company.
3.2 By-Laws of the Company.
4.1** Specimen Common Stock Certificate.
4.2 Form of Representative's Warrant Agreement between the Company and the Representative,
including form of Representative's Warrant therein.
5.1 Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel.
10.1 Form of Indemnification Agreement.
10.2 1996 Stock Option Plan.
10.3 1997 Stock Option Plan.
10.4 Management Agreement, dated as of October 1, 1996 but effective as of August 1, 1996, between
AB Plastics, the Company and Private Equity Partners, L.L.C.
10.5** Employment Agreement, dated June ___, 1997, between the Company and Michael A. Gibbs.
10.6 Employment Agreement, dated September 27, 1996, between AB Plastics and James S. Adams.
10.7 Employment Agreement, dated January 31, 1997, between AB Plastics and G. Michael Frink.
10.8 Employment Agreement, dated September 27, 1996, between AB Plastics and Stephen M. Adams.
10.9 Employment Agreement, dated as of September 27, 1996, between AB Plastics and Jawed Ghias.
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
Exhibit No. Description
- ------------- ------------------------------------------------------------------------------------------------
<S> <C>
10.10 Employment Agreement, dated as of September 27, 1996, between AB Plastics and Paul J.
Iacono.
10.11 Commercial Loan Agreement, dated as of September 27, 1996, between The Sumitomo Bank of
California and AB Plastics.
10.12 Facility License Agreement, dated May 1, 1994, between Melea Limited and AB Plastics.
21.1 Subsidiaries of the Company.
23.1* Consent of Marcum & Kliegman LLP.
23.2* Consents of Block, Plant, Eisner, Fiorito & Belak-Berger.
23.3 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel (included in the opinion filed
as Exhibit 5.1).
24.1 Power of Attorney (set forth on signature page of the Registration Statement).
27.1 Financial Data Schedule.
</TABLE>

- ------------
Unless otherwise indicated, exhibits were previously filed.
* Filed herewith.
** To be filed by amendment.

(b) Financial Statement Schedules.

None.

Item 17. Undertakings.

The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.

(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement, or otherwise, the Registrant has been advised that
in the opinion of the securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.

(b) The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in the
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of Prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on the 24th day of June 1997.

COMPASS PLASTICS & TECHNOLOGIES, INC.

By: /s/ Michael A. Gibbs
---------------------------
Michael A. Gibbs
President

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
- ---------------------------------- --------------------------------------------- --------------
<S> <C> <C>
/s/ Geoffrey J.F. Gorman* Chairman of the Board and Director June 24, 1997
- ---------------------------
Geoffrey J.F. Gorman

/s/Michael A. Gibbs President and Director (Principal Executive June 24, 1997
- --------------------------- Officer)
Michael A. Gibbs

/s/Paul J. Iacono* Vice President-Finance (Principal Financial June 24, 1997
- --------------------------- or Accounting Officer)
Paul J. Iacono

/s/Christopher H.B. Mills* Director June 24, 1997
- ---------------------------
Christopher H.B. Mills

/s/Jay M. Swanson* Director June 24, 1997
- ---------------------------
Jay M. Swanson
</TABLE>

*By: /s/ Michael A. Gibbs
-----------------------
Michael A. Gibbs
Attorney-in-Fact

II-4
<PAGE>

EXHIBIT INDEX

<TABLE>
<S> <C>
Exhibit No. Description
- ------------ -----------------------------------------------------------------------------------------
1.1 Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Company.
3.2 By-Laws of the Company.
4.1 ** Specimen Common Stock Certificate.
4.2 Form of Representative's Warrant Agreement between the Company and the Representative,
including form of Representative's Warrant therein.
5.1 Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel.
10.1 Form of Indemnification Agreement.
10.2 1996 Stock Option Plan.
10.3 1997 Stock Option Plan.
10.4 Management Agreement, dated as of October 1, 1996 but effective as of August 1, 1996,
between AB Plastics, the Company and Private Equity Partners, L.L.C.
10.5 ** Employment Agreement, dated June ___, 1997, between the Company and Michael A.
Gibbs.
10.6 Employment Agreement, dated September 27, 1996, between AB Plastics and James S.
Adams.
10.7 Employment Agreement, dated January 31, 1997, between AB Plastics and G. Michael
Frink.
10.8 Employment Agreement, dated September 27, 1996, between AB Plastics and Stephen M.
Adams.
10.9 Employment Agreement, dated as of September 27, 1996, between AB Plastics and Jawed
Ghias.
10.10 Employment Agreement, dated as of September 27, 1996, between AB Plastics and Paul J.
Iacono.
10.11 Commercial Loan Agreement, dated as of September 27, 1996, between The Sumitomo
Bank of California and AB Plastics.
10.12 Facility License Agreement, dated May 1, 1994, between Melea Limited and AB Plastics.
21.1 Subsidiaries of the Registrant.
23.1 * Consent of Marcum & Kliegman, LLP.
23.2 * Consents of Block, Plant, Eisner, Fiorito & Belak-Berger.
23.3 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel (included in the opinion
filed as Exhibit 5.1).
24.1 Power of Attorney (set forth on signature page of the Registration Statement).
27.1 Financial Data Schedule.
</TABLE>

- ------------
Unless otherwise indicated, exhibits were previously filed.
* Filed herewith.
** To be filed by amendment.

<PAGE>

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of
Compass Plastics & Technologies, Inc.

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-1), and related prospectus of Compass Plastics &
Technologies, Inc. and to the incorporation by reference therein of our report
dated December 31, 1996 with respect to the consolidated financial statements as
of October 27, 1996 and for the fifty-two weeks then ended.

/s/ Marcum & Kliegman LLP
- --------------------------
Marcum & Kliegman LLP

Woodbury, New York
June 24, 1997

<PAGE>

Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS

Board of Directors
AB Plastics Corporation
Gardena, California

We consent to the incorporation by reference in this registration statement on
Form S-1 of our report dated June 19, 1997, relating to the statements of
operations, shareholders' equity and cash flows for the fifty-two weeks ended
October 30, 1994, of AB Plastics Corporation (an S Corporation) and to the
reference to our firm under the heading "Experts" in the Prospectus. We have
read the last paragraph under "Experts" and are in agreement with statements
contained therein.

/s/ Block, Plant, Eisner, Fiorito & Belak-Berger
------------------------------------------------
BLOCK, PLANT, EISNER, FIORITO & BELAK-BERGER

Encino, California
June 19, 1997

1 of 2

<PAGE>

Exhibit 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

Board of Directors
AB Plastics Corporation
Gardena, California

We consent to the incorporation by reference in this registration statement on
Form S-1 of our report dated December 14, 1995, relating to the balance sheet
of AB Plastics Corporation (an S Corporation) as of October 29, 1995 and the
related statements of operations, shareholders' equity and cash flows for the
fifty-two weeks then ended and to the reference to our firm under the heading
"Experts" in the Prospectus. We have read the last paragraph under "Experts"
and are in agreement with the statements contained therein.

/s/ Block, Plant, Eisner, Fiorito & Belak-Berger
------------------------------------------------
BLOCK, PLANT, EISNER, FIORITO & BELAK-BERGER

Encino, California
June 5, 1997

2 of 2