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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ________________________ to____________________

Commission file number _________________1-7190_________________________________

________________________________IMPERIAL_INDUSTRIES,_INC._____________________
(Exact name of registrant as specified in its charter)

______________Delaware________________ _____59-0967727_____
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

__________________3009_Northwest_75th_Avenue,__Miami,_Florida__33122___________
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (305)_477-7000

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None

Securities registered pursuant to Section 12(g) of the Act:
Common_Stock,_$.10_par_value
(Title of class)
$1.10_Cumulative_Convertible_Preferred_Stock
(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES __X__ NO ____

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (S229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]

The aggregate market value of the voting stock of the Registrant held by
non-affiliates computed by reference to the average bid and asked price of the
registrant's Common Stock ($.10 par value) and $1.10 Cumulative Convertible
Preferred Stock on March 3, 1997 is: $1,822,305

Number of shares of Imperial Industries, Inc. Common Stock ($.10 par
value) outstanding on March 3, 1997: 5,595,794

Total number of pages contained in this document: 49
Page 1 of 49

PART I

Item 1. Business
Imperial Industries, Inc. (hereinafter referred to as "the
Company") is a Delaware corporation organized in 1968. The Company's
executive offices are located at 3009 Northwest 75th Avenue, Miami,
Florida 33122, and the telephone number at such offices is
(305) 477-7000.

The Company is engaged in the manufacture of building materials
for sale to building materials dealers and others located primarily in
Florida, and to a lesser extent, other states in the Southeastern part
of the United States as well as foreign countries. In addition, the
Company has three distribution outlets through which it markets
certain of its products directly to end users. The Company's products
are used in the construction industry by developers, builders,
contractors, and sub-contractors.

The Company's business is directly related to the level of
activity in the new and renovation construction market in Florida, and
to a lesser extent other states in the Southeastern part of the United
States. The Company's products are used by developers, general
contractors and subcontractors in the construction or renovation of
residential, multi-family and commercial buildings and swimming pools.
In Florida, demand for new construction is related to, among other
things, population growth. Population growth, in turn, is principally
a function of migration of new residents to the state. When economic
conditions reduce migration, demand for new construction decreases.
Construction activity is also affected by the size of the inventory of
available housing units, mortgage interest rates, availability of
funds and local government growth management policies. The Company's
operations are directly related to the general economic conditions
existing in the Southeastern part of the United States.

The Company's manufacturing and sales operations are conducted by
its wholly owned subsidiaries, Premix-Marbletite Manufacturing Co.
("Premix") and Acrocrete, Inc. ("Acrocrete").

Premix, together with its predecessors, has been in business for
approximately 40 years. The names "Premix" and "PremixMarbletite"
are among the registered trademarks of Premix. The Company believes
the trade names of its manufactured products represent a substantial
benefit to the Company because of industry recognition and brand
preference. Premix manufactures stucco, roof tile mortar, plaster and
swimming pool finishes. The products manufactured by Premix basically
are a combination of portland (or masonry) cement, sand, lime, marble
and a plasticizing agent and other chemicals, including color-
impregnating materials.

Stucco products are applied as a finishing coat to exterior
surfaces and to swimming pools. Roof tile mortar is used to adhere
cement roof tiles to the roof. Plaster customarily is used to finish
interiors of structures.





Page 2 of 49

Item 1. Business (continued)

Premix

In August 1994, the Company entered into a five year licensing
agreement with an unaffiliated company to exclusively manufacture and
sell a new roof tile mortar product throughout the State of Florida
and foreign countries. The Company has the option to renew the
agreement for two additional five year periods. Premix has also
entered into agreements to manufacture this product on behalf of
selected wholesalers who distribute this product under the wholesalers
names through their existing established dealer networks to service
the roofing contractor industry. To date, a majority of all roof tile
mortar sales have been derived from South Florida. Until 1996, the
Company's licensed roof tile mortar product was the only mortar
product approved by Dade County, Florida, building authorities for use
to adhere all types of cement roof tiles to roofs. Other adhesive
products used for similar purposes were also used by the industry. The
manufacturing of this new product did not require any significant
change to the current manufacturing facility.

Premix accounted for approximately 49%, 59% and 64% of the
Company's consolidated annual revenues in the fiscal years ended
December 31, 1996, 1995 and 1994, respectively.

Acrocrete

Acrocrete, organized in 1988, manufactures synthetic acrylic
stucco products. The Company's trade name "Acrocrete" and certain of
its manufactured products are described by trade names protected by
registered trademarks. Acrocrete's products, used principally for
exterior wall coatings, broaden and complement the range of products
produced and sold by Premix. Management believes acrylic stucco
products have certain advantages over traditional cementitious stucco
products for certain types of construction applications because
synthetic acrylic products provide a hard durable finish with stronger
color retention properties. Further, acrylic stucco products have
improved flexibility characteristics, which minimizes the problems of
cracking of cement coating. Acrocrete's product system provides for
energy efficiency for both residential and commercial buildings.

For the fiscal years ended December 31, 1996, 1995 and 1994,
Acrocrete's sales accounted for approximately 51%, 41% and 36%,
respectively, of the Company's consolidated annual revenues.

Suppliers

Premix's raw materials and products are purchased from
approximately 18 suppliers. While five suppliers account for
approximately 67% of Premix's purchases, Premix is not dependent on
any one supplier for its requirements. Equivalent materials are
readily available from other sources at similar prices.






Page 3 of 49

Item 1. Business (continued)

Suppliers (continued)

Acrocrete's raw materials are purchased from approximately 17
suppliers, of which five account for approximately 89% of Acrocrete's
raw material purchases. However, equivalent materials are available
from several other sources at similar prices and Acrocrete is not
dependent on any one supplier for its requirements.

Marketing and Sales

The Company's marketing and sales strategy is to create a profit
center for the products it manufactures, as well as enlarging its
product offering by selling certain complementary products
manufactured by other companies that are part of wall system
applications. The complementary items are purchased by the Company
and held in inventory, together with manufactured products, for sale
to customers. Generally, sales orders are filled out of existing
inventory within several days of receipt of the order. The total
package sales approach to the new and renovation construction markets
is targeted at both the end user of the Company's products, being
primarily the contractor or subcontractor, and the distributor,
principally building materials dealers who purchase products from the
Company and sell to the end user, and in some instances, to retail
customers. A majority of the Company's sales are made directly by the
Company to approximately 250 distributors.
While the Company's sales are typically to distributors, the
Company focuses marketing efforts on the contractor/subcontractor end
user to create a brand preference for the Company's products. One
distributor accounted for approximately 11% of total sales in 1995 but
only 5% of total sales in 1996. The Company does not believe the loss
of that distributor would cause a material loss in sales because the
brand preference contractors and subcontractors have developed for the
Company's products would generally cause the user to seek a
distributor who carries the Company's products. Sales from other
customers and to end users contributed to the percentage decline in
sales to the one distributor The Company primarily markets its
products to distributors through Company salesmen, who promote both
Premix and Acrocrete products, located in the Southeastern United
States.

In April 1994, the Company started a pilot program in Savannah,
Georgia to sell its Acrocrete products directly to the end user. The
Company's products and certain complementary products manufactured by
other companies are inventoried and sold from a leased warehouse
distribution facility. In January 1995, the Company opened a second
distribution facility in Jacksonville, Florida. In May 1995, the
Company opened a third distribution facility in Norcross, Georgia.
Each leased facility contains between approximately 6,250 to 7,600
square feet. The distribution facilities are designed to promote
product brand preference to the contractor and sub-contractor, and
also to improve service capabilities, increase market share, and to





Page 4 of 49

Item 1. Business (continued)

Marketing and Sales (continued)

increase profit margins from the sale of the Company's products. The
Company sells Acrocrete and complementary products of other
manufacturers at such distribution facilities. The Company intends to
close the Savannah Facility at the end of the first quarter of 1997.
The closing will not have a material adverse effect on the Company.
The Company presently does not plan to open other warehouse
distribution facilities.

Seasonality

The sale of Premix's and Acrocrete's products in the construction
market for the Southeastern United States is somewhat seasonal, with a
slightly lower rate of sales historically occurring in the period
December through February compared to the rest of the year.

Competition

The Company's business is highly competitive. Premix and
Acrocrete encounter significant competition from local, regional and
national manufacturers of acrylic, cement and plaster products, most
of whom manufacture products similar to those of Premix and Acrocrete.
Many of these competitors are larger, more established and better
financed than the Company. The Company believes it can compete with
the other companies based upon product quality, customer service and
maintaining lower overhead costs than larger national companies.

Environmental Matters

In 1992, the Company removed its fuel pumps and underground tanks
at its facilities in Miami and Casselberry, Florida, rather than
upgrade the storage tank systems to comply with more stringent
environmental standards which went in effect December 31, 1992. Upon
removal of the tanks, test results showed evidence of soil and ground
water contamination at each site. The contaminated soil was removed
from the properties and the regulatory authorities required the
Company to test the groundwater and provide engineering reports to
determine what remedial actions, if any, were necessary. In December
1994 and June 1995, the environmental authorities released the Company
from having to undertake any additional remedial action to its
Casselberry and Miami, Florida facilities, respectively.

Premix is eligible for reimbursement of certain allowable costs
associated with the removal of the contamination and engineering
studies that were required in connection with the assessment of
contamination through an insurance program established by the State of
Florida environmental authorities. Because of the uncertainty
surrounding these reimbursements, the Company has elected to account
for the insurance proceeds, if any, to be derived from this matter on
a cash basis.





Page 5 of 49

Item 1. Business (continued)

Environmental Matters (continued)

During 1995 and 1994, the Company incurred expenses of
approximately $7,000 and $22,000, respectively, in connection with the
previously described engineering studies, tank removal and
contamination removal.

Employees

The Company and its subsidiaries had 76 employees as of December
31, 1996. The Company considers its employee relations to be
satisfactory. The Company's employees are not subject to any
collective bargaining agreement.

Item 2. Properties

The Company and its subsidiaries maintain a total of 6 facilities
in Florida and Georgia. The location and size of the Company's
facilities and the nature of the operations in which such facilities
are used, are as follows:


Approximate Owned/
Location Sq. Footage Leased Company Products
-------------------------------------- -----------------------
Miami, Fl. 30,000 Owned Premix (Manufacturing)
Casselberry, Fl. 20,000 Owned Premix (Manufacturing)
Atlanta, Ga. 14,750 Leased Acrocrete (Manufacturing)
Savannah, Ga. 6,250 Leased Acrocrete (Distribution)
Jacksonville, Fl. 7,500 Leased Acrocrete (Distribution)
Norcross, Ga. 7,600 Leased Acrocrete (Distribution)

The lease on the Atlanta facility expires April 30, 1997, and
provides for rental payments of $2,500 per month. The Company was
offered a renewal of its lease for an additional year for rental
payments of $3,500 per month, which it intends to accept.

The facilities located in Savannah and Norcross, Georgia and
Jacksonville, Florida are utilized for the distribution of Acrocrete's
products directly to the end-user (contractor/subcontractor).
Acrocrete leases the Savannah facility at a monthly rental of $2,000
per month, through the lease expiration date of September 30, 1997.
The Company is closing the Savannah facility effective March 31, 1997.
The lease on the Jacksonville facility expires December 31, 1998, and
provides for rental payments of $2,656 per month. Acrocrete leases
the Norcross facility at $2,808 per month. The monthly rent increases
to $2920, on May 1, 1997, through the lease expiration date of April
30, 1998. Comparable properties at equivalent rentals are available
for replacement of these facilities if such leases are not extended.







Page 6 of 49

Item 2. Properties (continued)

The Miami and Casselberry facilities are encumbered by first
mortgage liens with outstanding principal balances at December 31,
1996, of $523,000 and $316,000, respectively. See "Notes to
Consolidated Financial Statements".

Management believes that the Company's facilities and equipment
are well-maintained, in good operating condition and sufficient for
its present operating needs.

Item 3. Legal Proceedings

In April 1996, the Company was dismissed as a defendant, to which
it had been a party with other unaffiliated companies, in the
remaining 27 asbestos lawsuits pending in various circuit courts in
Alabama and Florida. Such lawsuits sought unspecified damages
alleging injuries to persons exposed to products containing asbestos.
As of March 3, 1997, the Company is not a defendant in any lawsuits
which allege injuries due to asbestos exposure.

The Company and Premix are parties to an Interim Agreement for
Defense and Indemnity of Asbestos Bodily Injury Cases (the
"Agreement") with certain of its insurance carriers under which each
party agreed to pay a negotiated percentage share of defense costs and
indemnification expenditures, subject to policy limits, for the
pending and future asbestos claims. The Agreement has been extended
until May 15, 1997. The Agreement is subject to cancellation upon
sixty days notice by any party.

The insurance carriers have agreed to pay, in the aggregate,
approximately 93% of the damages, costs and expenditures related to
the litigation. Premix is responsible for the remaining 7%. At
December 31, 1996, the Company had accrued approximately $1,000 in
estimated litigation and settlement costs related to the previously
described asbestos claims, net of any amounts paid by the insurers.

The Company believes, based upon the Agreement with its insurance
carriers, and its experience in these claims to date, it has adequate
insurance coverage for any future similar type of claims. To date, no
case went to trial with Premix as a defendant. Premix has either
settled for a nominal amount of money or been voluntarily dismissed
without payment from approximately 193 cases. Based upon historical
results, the Company does not believe any potential future claims
would be material. However, there can be no assurance that insurance
will ultimately cover the aggregate liability for damages to which
Premix may be exposed. Premix is unable, at this time, to determine
the exact extent of its exposure or outcome of the litigation of any
other similar cases that may arise in the future.

Acrocrete is a co-defendant in a lawsuit captioned "Stephen P.
Zabow, II and Karen I. Zabow, et al. vs. M/I Schottenstein Homes,
Inc., Heiner Construction Company and Acrocrete, Inc.", filed October
2, 1996 in Wake County, North Carolina. The lawsuit involves claims




Page 7 of 49

Item 3. Legal Proceedings (continued)

by owners of eight homes in Cary, North Carolina, against the general
contractor, a subcontractor, and Acrocrete. The claims relate to the
use of synthetic stucco in the construction of such homes. The
lawsuit alleges negligent misrepresentation, breach of warranty,
unfair and deceptive trade practices, fraud and negligence due to
defective material, and requests punitive damages. The plaintiffs
allege that Acrocrete knew of inherent defects prevalent in synthetic
stucco wall systems that permitted water intrusion to cause moisture
damage to the interior and wood framing of the houses.

Acrocrete believes it has meritorious defenses against the claim
and cross-claims against the general contractor and installer of the
product. The Company's insurance carriers are providing a defense and
accepted coverage under reservation of rights. Acrocrete is unable,
at this time, to determine the exact extent of its exposure or outcome
of the litigation of this lawsuit.

In the fourth quarter of 1993, the Company incurred a $100,000
charge to settle a product liability lawsuit for which the Company was
not insured. The Company entered into an agreement to settle this
lawsuit for $100,000, payable in equal monthly installments of $2,083
over a four year period with an annual interest rate of 71/2%. In
accordance with the terms of the agreement, in the event of the
Company's bankruptcy, the plaintiff will be permitted to file a claim
for $160,000, less any amounts previously paid. See "Notes to
Consolidated Financial Statements".

Premix and Acrocrete are engaged in other legal actions and
claims arising in the ordinary course of its business, none of which
are believed to be material to the Company.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.






















Page 8 of 49

PART II

Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters

The Company's Common Stock is traded in the overthe-counter
market. The following table sets forth the high and low bid
quotations of the Common Stock for the quarters indicated, as
reported by the National Quotation Bureau, Inc. Such quotations
represent prices between dealers and do not include retail mark-up,
mark-down, or commission, and may not necessarily represent actual
transactions.

Quarter, 1995 High Low
------------ ---- ----
First $.07 $.01
Second .13 .05
Third .25 .06
Fourth .19 .02

Quarter, 1996 High Low
------------ ---- ----
First $.06 $.03
Second .10 .06
Third .14 .07
Fourth .14 .08

The Company has not paid any cash dividends on its Common Stock
since 1980. The Company is prohibited from paying any dividends on
the Common Stock until all accrued and unpaid dividends on the
Company's $1.10 Cumulative Redeemable Convertible Preferred Stock are
paid in full. The Company has omitted cash dividends on its
Preferred Stock since the fourth quarter of 1985 aggregating
$3,714,000 at December 31, 1996. See "Notes to Consolidated
Financial Statements".

On March 3, 1997, the Common Stock was held by 2,152
stockholders of record.

As of March 3, 1997, the closing bid and asked prices of the
Common Stock was $.17 and $.22, respectively.


















Page 9 of 49


Item 6. Selected Financial Data

The following is a summary of selected financial data (in thousands
except as to per share amounts) for the five years ended December 31, 1996:

Statements of Operations Data Year ended December 31,

1996 1995 1994 1993 1992

Net sales $ 13,742 $11,615 $7,996 $7,714 $7,118
Cost of sales 9,881 8,239 5,726 5,637 5,070
Selling, general
and administrative expenses 3,313 2,979 2,104 2,068 1,901
Interest expense (317) (282) (204) (168) (188)
Miscellaneous income 43 7 23 17 177
Provision (benefit) for income tax 38
Income (loss) from operations 274 122 (15) (142) 98
Extraordinary gain 38
Net income (loss) 274 122 (15) (142) 136
Less: dividends on redeemable
preferred stock (330) (330) (330) (330) (330)
Net loss applicable to common
stockholders $ (56) $ (208) $ (345) $ (472) $ (194)
Net loss per share applicable
to common stockholders $ (.01) $ (.04) $ (.06) $ (.09) $ (.03)
Number of shares used in computation
of loss per share 5,471 5,382 5,317 5,217 5,096

Balance Sheets Data
As of December 31,
1996 1995 1994 1993 1992

Working capital $ 872 $ 733 $ 334 $ 417 $ 283

Total assets $4,116 $3,747 $3,067 $2,668 $2,810

Long-term debt,
less current maturities $ 895 $1,000 $ 576 $ 678 $ 339

Redeemable preferred stock $3,001 $3,001 $3,001 $3,001 $3,001

Preferred dividends
in arrears (1) $3,714 $3,384 $3,054 $2,723 $2,393

Common stock and other
stockholders' deficit $(5,879) $(5,846) $(5,641) $(5,301) $(4,833)



(1) No cash dividends have been paid on the cumulative redeemable preferred
stock since 1985.






Page 10 of 49


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

General

The Company's business is related primarily to the level of
construction activity in Florida and Georgia. The majority of the
Company's products are sold to building materials dealers located
principally in Florida and Georgia who provide materials to
contractors and subcontractors engaged in the construction of
residential, commercial and industrial buildings and swimming
pools. One indicator of the level and trend of construction
activity is the amount of construction permits issued for the
construction of buildings. The level of construction activity is
subject to population growth, inventory of available housing units,
government growth policies and construction funding, among other
things.

Results of Operations

Year Ended December 31, 1996 Compared to 1995

Net sales in 1996 increased $2,127,000, or approximately 18%,
compared to 1995. The increase in sales was derived primarily from
increased sales of Acrocrete products, together with certain
complementary products manufactured by other companies, sold
through the Company's distribution outlets.

Gross profit as a percentage of net sales for 1996 was
approximately 28%, compared to 29% in 1995. The decrease in gross
profit margins was principally due to higher manufacturing expenses
and a greater proportion of sales of lower gross profit margin
products, including certain complementary products manufactured by
other companies. The Company has been reviewing all raw material
purchases to ensure it realizes the lowest cost possible and is in
the process of streamlining and updating its manufacturing
processes by acquiring and modifying certain equipment to gain
greater production efficiency. As a result, the Company expects to
achieve higher gross profit margins in 1997 compared to 1996.

Selling, general and administrative expenses as a percentage
of net sales for 1996 was approximately 24% compared to 26% in
1995. In 1995, selling, general and administrative expenses
included start-up costs associated with the opening of two of the
Company's three distribution outlets. However, selling, general
and administrative expenses increased $334,000 or approximately 11%
in 1996, compared to 1995. The increase in expenses was primarily
due to expenses associated with the expanded operations,
particularly additional sales expenses related to the Company's
distribution outlets. Selling, general and administrative expenses
as a percentage of net sales decreased in 1996 compared to 1995
because of spreading expenses over greater revenues without the
corresponding increase of overhead. Interest expense was greater
in 1996 compared to 1995, primarily because of increase borrowings



Page 11 of 49


Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition (continued)

Results of Operations (continued)

Year Ended December 31, 1996 Compared to 1995 (continued)

under its line of credit with its commercial lender to fund working
capital requirements resulting from increased sales.

Due to the above factors and after giving effect to preferred
stock dividends accrued but not paid, the Company incurred a net
loss applicable to common stockholders of $56,000, or $.01 per
share in 1996, compared to a net loss of $208,000 or $.04 per share
in 1995. Net loss to common stockholders includes charges of
$330,000 in 1996 and 1995 for unpaid cumulative dividends on
preferred stock.


Year Ended December 31, 1995 compared to 1994

Net sales in 1995 increased $3,619,000, or approximately 45%,
compared to 1994. Premix products, principally a new roof tile
mortar product and new aggregate pool finish products, accounted
for $1,821,000 of the sales increase for 1995. The balance of the
increase in sales was derived from the sale of Acrocrete products,
together with certain complementary products manufactured by other
companies, and sold through the Company's wholesale distribution
facilities. The Company opened its first location in April 1994 and
two additional facilities in January and May, 1995.

Gross profit as a percentage of net sales for 1995 was
approximately 29%, compared to 28% in 1994. The increase in gross
profit margins was principally due to a greater proportion of sales
of higher gross profit margin products.

Selling, general and administrative expenses as a percentage of
net sales for 1995 was approximately 26%, the same as in 1994.
However, selling, general and administrative expenses increased
$875,000 or approximately 42%, in 1995 compared to 1994. The actual
increase in expenses was primarily due to the additional
expenses associated with the establishment of the Company's new
distribution outlets and additional costs related to the increase in
sales of Premix products. Interest expense was greater in 1995
compared to 1994, primarily because of increased borrowing under the
Company's line of credit with its commercial lender to fund working
capital requirements resulting from increased sales.

The results of the Company's new distribution outlets had a
material impact on the Company's consolidated results of operations
for 1995. Although the distribution outlets realized sales of
$2,511,000 in 1995, compared to $603,000 in 1994 when only one
outlet was opened, management estimates the Company's distribution
outlets incurred a loss of approximately $200,000 in 1995, compared



Page 12 of 49


Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition (continued)

Results of Operations (continued)

Year Ended December 31, 1995 compared to 1994 (continued)

to a nominal profit in 1994. The wholesale distribution outlets
generate lower gross profit margins than direct sale of manufactured
products and consequently, gross profits derived from initial sales
levels were not sufficient to cover the costs and expenses of
opening and establishing the units in 1995. Efforts are being made
to reduce losses and generate profits by decreasing expenses through
a reduction and realignment of personnel, improving operating
efficiency by upgrading each outlet's delivery capabilities,
implementing a more restrictive credit policy and developing a
larger customer base to increase sales.

As a result of the above factors and after giving effect to
preferred stock dividends accrued, but not paid, the Company
incurred a net loss applicable to common stockholders of $208,000,
or $.04 per share in 1995, compared to a net loss of $345,000, or
$.06 per share in 1994. Net loss to common stockholders includes
charges of $330,000 in 1995 and 1994 for unpaid cumulative dividends
on preferred stock.

Liquidity and Capital Resources

At December 31, 1996, the Company had working capital of
approximately $872,000 compared to working capital of $733,000 at
December 31, 1995. As of December 31, 1996 the Company had cash and
cash equivalents of $455,000.

The Company's principal source of short-term liquidity is
existing cash on hand and the utilization of a line of credit with
a commercial lender scheduled to expire on June 20, 1997. The line
of credit is automatically extended for an additional one year term
unless either party gives the other notice of nonextension 60 days
prior to the expiration date. Premix and Acrocrete, the Company's
subsidiaries, borrow on the line of credit, based upon and
collateralized by, its eligible accounts receivable and inventory.
Generally, accounts not collected within 120 days are not eligible
accounts receivable under the Company's borrowing agreement with its
commercial lender. At December 31, 1996, $1,424,000 had been
borrowed against $1,609,000 in available lines of credit limits.

Trade accounts receivable represent amounts due from building
materials dealers located principally in Florida and Georgia who
have purchased products on an unsecured open account basis and sales
directly to the end-user (contractors and subcontractors), through
Company owned warehouse distribution outlets. The Company presently
owns and operates three warehouse distribution outlets. As a result
of sales to the end user and a higher level of sales generated in
1996, compared to 1995, the Company's accounts receivable increased



Page 13 of 49


Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition (continued)

Liquidity and Capital Resources (continued)

from $1,510,000 at December 31, 1995 to $1,653,000, at December 31,
1996.

The Company's common stockholders' deficit of $5,879,000, at
December 31, 1996, resulted primarily from losses incurred in
1987 and prior years, and unpaid cumulative dividends required by
the Company's issued and outstanding preferred stock. The Company
has attempted to generate net income and adequate cash to support
operations by various methods, including the commencement of
manufacturing acrylic stucco products, opening warehouse
distribution outlets to sell its products directly to the end user,
and the development and sale of new products. In 1996, these
actions enabled the Company to derive net income of $274,000 prior
to the application of unpaid dividends on the redeemable preferred
stock in 1996, compared to net income of $122,000 in 1995.

The Company has omitted payment of cash dividends on its
preferred stock since the fourth quarter of 1985, and has accrued
$3,714,000 of dividends in arrears on the preferred stock as of
December 31, 1996. The Company is continuing its efforts to develop
a plan to satisfy the preferred stock dividend arrearage and
mandatory sinking fund requirements which would be acceptable to
its stockholders.

The Company believes its cash on hand and the maintenance of
its borrowing arrangement with its commercial lender will provide
sufficient cash to supplement any cash shortfalls from operations
and provide adequate liquidity for the next twelve months.

The Company has no material capital expenditures planned for
the next twelve months, other than expenditures that the Company
may elect to spend to upgrade the Company's manufacturing
facilities in Casselberry, Florida and Atlanta, Georgia.
Management estimates it will require a $75,000 to $100,000 cash
investment to fund the improvements to its equipment.

The ability of the Company to maintain and improve its long
term liquidity is dependent upon the Company's ability to
successfully (i) achieve long-term profitable operations; (ii) pay
or otherwise satisfy omitted preferred stock dividends and
preferred stock redemption requirements; and (iii) resolve current
litigation on terms favorable to the Company.

Item 8. Financial Statement and Supplementary Data

See Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K for the Index to Financial Statements contained
herein.



Page 14 of 49

Report of Independent Certified Public Accountants




To the Board of Directors and Shareholders of
Imperial Industries, Inc.


In our opinion, the consolidated financial statements listed in the index

appearing under Item 14(a)(1) and (2) on page 43 present fairly, in all

material respects, the financial position of Imperial Industries, Inc. and its

subsidiaries at December 31, 1996 and 1995, and the results of their operations

and their cash flows for each of the three years in the period ended December

31, 1996, in conformity with generally accepted accounting principles. These

financial statements are the responsibility of the Company's management; our

responsibility is to express an opinion on these financial statements based on

our audits. We conducted our audits of these statements in accordance with

generally accepted auditing standards which require that we plan and perform

the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatement. An audit includes examining, on a test

basis, evidence supporting the amounts and disclosures in the financial

statements, assessing the accounting principles used and significant estimates

made by management, and evaluating the overall financial statement

presentation. We believe that our audits provide a reasonable basis for the

opinion expressed above.



PRICE WATERHOUSE LLP
Miami, Florida
March 27, 1997










Page 15 of 49


IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets

December 31,
1996 1995

Assets
Current assets:
Cash and cash equivalents $ 455,000 $ 252,000
Trade accounts receivable (less
allowance for doubtful accounts of
$145,000 in 1996 and $139,000 in
1995) 1,508,000 1,371,000
Inventories 1,272,000 1,280,000
Other current assets 22,000 38,000
------------ ------------
Total current assets 3,257,000 2,941,000
------------ ------------

Property, plant and equipment, at cost 2,789,000 2,651,000
Less accumulated depreciation (2,020,000) (1,934,000)
------------ ------------
Net property, plant and equipment 769,000 717,000
------------ ------------

Other assets 90,000 89,000
------------ ------------
$4,116,000 $3,747,000
============ ============



























See accompanying notes to consolidated financial statements.
Page 16 of 49


IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets

December 31,
1996 1995


Liabilities and Common Stock and other Stockholders' Deficit
Current liabilities:
Notes payable $1,424,000 $1,245,000
Current portion of long-term debt 161,000 155,000
Accounts payable 660,000 708,000
Accrued expenses and other liabilities 140,000 100,000
------------ ------------
Total current liabilities 2,385,000 2,208,000
------------ ------------

Long-term debt, less current maturities 895,000 1,000,000
------------ ------------

Preferred dividends in arrears 3,714,000 3,384,000
------------ ------------

Redeemable preferred stock, $1.00 par
value, $1.10 cumulative convertible
series; 300,121 shares outstanding; at
$10 per share redemption value 3,001,000 3,001,000
------------ ------------

Commitments and contingencies
------------ ------------

Common stock and other stockholders' deficit:
Common stock, $.10 par value, authorized
20,000,000 shares; 5,562,461 and
5,387,461 issued and outstanding,
respectively 571,000 556,000
Additional paid-in-capital 7,229,000 7,276,000
Accumulated deficit (13,351,000 (13,295,000)
------------ ------------
(5,551,000) (5,463,000)
Less cost of shares in treasury (147,863
shares in 1996 and 172,863 shares in 1995) (328,000) (383,000)
------------ ------------
Total common stock and other
stockholders' deficit (5,879,000) (5,846,000)
------------ ------------
$4,116,000 $3,747,000
============ ============







See accompanying notes to consolidated financial statements.
Page 17 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations



Year Ended December 31,

1996 1995 1994

Net sales $13,742,000 $11,615,000 $7,996,000
Cost of sales 9,881,000 8,239,000 5,726,000
------------ ------------ -----------
Gross profit 3,861,000 3,376,000 2,270,000

Selling, general and
administrative expenses 3,313,000 2,979,000 2,104,000
------------ ------------ -----------
Operating income 548,000 397,000 166,000

Other income (expense):
Interest expense (317,000) (282,000) (204,000)
Miscellaneous income 43,000 7,000 23,000
------------ ------------ -----------
(274,000) (275,000) (181,000)
------------ ------------ -----------

Net income (loss) 274,000 122,000 (15,000)

Less: Dividends on redeemable
preferred stock (330,000) (330,000) (330,000)
------------ ------------ -----------
Net loss applicable to common
stockholders $ (56,000) $ (208,000) $(345,000)
============ ============ ===========

Weighted average number of shares
outstanding 5,471,000 5,382,000 5,317,000


Net income (loss) per share of common
stock:

Net income $ .05 $ .02 $ -

Dividends on redeemable preferred
stock (.06) (.06) (.06)
------------ ------------ -----------

Net loss applicable to common
stockholders $(.01) $(.04) $(.06)
============ ============ ===========





See accompanying notes to consolidated financial statements.
Page 18 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Common Stock and Other
Stockholders' Deficit

Years ended December 31, 1996, 1995 and 1994




Additional
Common paid-in Accumulated Treasury
Stock capital deficit stock Total

Balance at December 31, 1993 $556,000 $7,534,000 $(12,742,000) $(649,000) $(5,301,000)


Issuance of 70,000 shares of
common stock - (150,000) - 155,000 5,000

Accrued dividends in arrears
on preferred stock - - (330,000) - (330,000)

Net loss - - (15,000) - (15,000)
- - ----------------------------------------------------------------------------------------------
Balance at December 31, 1994 556,000 7,384,000 (13,087,000) (494,000) (5,641,000)

Issuance of 50,000 shares of
common stock - (108,000) - 111,000 3,000

Accrued dividends in arrears
on preferred stock - - (330,000) - (330,000)

Net income - - 122,000 - 122,000
- - ----------------------------------------------------------------------------------------------
Balance at December 31, 1995 556,000 7,276,000 (13,295,000) (383,000) (5,846,000)

Issuance of 175,000 shares of
common stock 15,000 (47,000) 55,000 23,000

Accrued dividends in arrears
on preferred stock (330,000) (330,000)

Net income 274,000 274,000
- - ----------------------------------------------------------------------------------------------
Balance at December 31, 1996 $571,000 $7,229,000 $(13,351,000) $(328,000) $(5,879,000)
==============================================================================================











See accompanying notes to consolidated financial statements.
Page 19 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows

Year Ended December 31,
1996 1995 1994

Cash flows from operating activities:

Net income (loss) $274,000 $122,000 $ (15,000)
Adjustments to reconcile net income
to net cash (used in) provided by:
Depreciation 133,000 119,000 109,000
Amortization 16,000 13,000 14,000
Provision for doubtful accounts 99,000 137,000 42,000
Loss (gain) on disposal of fixed assets 4,000 (3,000) -
Compensation expense-issuance of stock 23,000 3,000 5,000
(Increase) decrease in:
Accounts receivable (236,000) (421,000) (466,000)
Note receivable-trade - - 21,000
Inventories 8,000 (243,000) (109,000)
Prepaid expenses and other assets - (48,000) (20,000)
(Decrease) increase in:
Accounts payable (48,000) 286,000 130,000
Accrued expenses and other liabilities 40,000 (65,000) 23,000
-------- --------- ---------
Net cash provided by (used in)
operating activities 313,000 (100,000) (266,000)
-------- --------- ---------
Cash flows from investing activities
Proceeds received from sale of property
and equipment 11,000 3,000 -
Purchases of property, plant
and equipment (201,000) (224,000) (72,000)
-------- --------- ---------
Net cash used in investing activities (190,000) (221,000) (72,000)
-------- --------- ---------
Cash flows from financing activities
Increase (decrease) in notes payable
banks - net 179,000 201,000 314,000
Proceeds from issuance of long-term debt 66,000 703,000 6,000
-------- --------- ---------
Repayment of long-term debt (165,000) (569,000) (65,000)
-------- --------- ---------
Net cash provided by financing
activities 80,000 335,000 255,000
-------- --------- ---------
Net increase (decrease) in cash and cash
equivalents 203,000 14,000 (83,000)
Cash and cash equivalents,
beginning of year 252,000 238,000 321,000
-------- --------- ---------
Cash and cash equivalents, end of year $455,000 $252,000 $ 238,000
========= ========= ==========
Supplemental disclosure
of cash flow information:

Cash paid during the year for interest $314,000 $284,000 $121,000
========= ========= =========

See accompanying notes to consolidated financial statements.
Page 20 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 1996, 1995 and 1994

(1) Nature of the Business and Summary of Significant Accounting Policies

Imperial Industries, Inc. (the "Company") and its subsidiaries
are primarily involved in the manufacturing and sale of exterior and
interior finishing wall coating and mortar products for the
construction industry. The Company also manufactures and sells
finishing coat products for swimming pools.

The consolidated financial statements contain the accounts of
the Company and its wholly owned subsidiaries, Acrocrete, Inc.
("Acrocrete") and Premix-Marbletite Manufacturing Company ("Premix"),
as well as other subsidiaries which did not have significant
operations during 1994 through 1996.

A summary of the significant accounting policies followed in the
preparation of the accompanying consolidated financial statements is
presented below.

(a) Basis of presentation

The consolidated financial statements of the Company and its
subsidiaries have been prepared in accordance with generally accepted
accounting principles which assume that assets will be realized and
liabilities will be discharged in the normal course of business.

(b) Significant customers:

During 1995, one customer accounted for approximately 11% of
total sales. During 1996 and 1994, no single customer accounted for
more than 10% of the Company's sales.

(c) Principles of consolidation

The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All material
intercompany accounts and transactions have been eliminated in
consolidation.

(d) Inventories

Inventories are stated at the lower of cost or market (net
realizable value), on a first-in, first-out basis. Finished goods
include the cost of raw materials, freight in, direct labor and
overhead.






Page 21 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

-continued-

(1) Nature of the Business and Summary of Significant Accounting Policies
(continued)

(e) Property, plant and equipment

Property, plant and equipment is stated at cost, less
accumulated depreciation. Depreciation is computed on the straight-
line basis over the estimated useful lives of the depreciable assets.
Expenditures for maintenance and repairs are charged to expense as
incurred, while expenditures which extend the useful life of assets
are capitalized.

(f) Income taxes

The Company records income taxes using the liability method.
Under this method, deferred tax liabilities are recognized for
temporary differences that will result in taxable amounts in future
years. Deferred tax assets are recognized for temporary differences
that will result in deductible amounts in future years. These
temporary differences are primarily the result of net operating loss
carryforwards. Valuation allowances are recognized if it is more
likely than not that some or all of the deferred tax assets will not
be realized (See note 7).

(g) Net loss per share of common stock

Net loss per share of common stock is computed, after
considering the effect of preferred stock dividends, on the basis of
the weighted average number of common shares outstanding. The
effect of conversion of warrants, options and other common stock
equivalents is not considered in the calculation of loss per share
when such effect is antidilutive.

(h) Cash and cash equivalents

The Company has defined cash and cash equivalents as those
highly liquid investments with a maturity of three months or less,
when purchased. Included in cash and cash equivalents at December 31,
1996 and 1995 are short term time deposits of $153,000 and $50,000,
respectively.

(i) Revenue recognition policy

Revenue from sales transactions is recorded upon shipment and
delivery of inventory to the customer, net of discounts and
allowances.






Page 22 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

-continued-

(1) Nature of the Business and Summary of Significant Accounting Policies
(continued)

(j) Stock based compensation

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, the
disclosure provisions of which must be implemented for fiscal years
beginning subsequent to December 15, 1995, establishes a fair value
based method of accounting for stock based compensation plans, the
effect of which can either be disclosed or recorded. The Company has
adopted the disclosure requirement provisions of SFAS 123 in 1996.
However, the Company has retained the intrinsic value method of
accounting for stock based compensation, based on APB Opinion No.
25. Had the fair value based accounting provisions of SFAS 123 been
adopted, the effect would not be significant.

(2) Inventories

At December 31, 1996 and 1995, inventories consist of:

1996 1995

Raw materials $ 376,000 $ 376,000
Finished goods 710,000 686,000
Packaging materials 186,000 218,000
---------- ----------
$1,272,000 $1,280,000

(3) Property, Plant and Equipment
A summary of the cost of property, plant and equipment at December
31, 1996 and 1995 is as follows:
Estimated
useful life
1996 1995 (years)

Land $ 74,000 $ 74,000 - - -
Buildings and
improvements 823,000 816,000 10 - 40
Machinery and
equipment 1,129,000 1,028,000 3 - 10
Vehicles 570,000 544,000 2 - 8
Furniture and
fixtures 193,000 189,000 3 - 12
---------- ----------
$2,789,000 $2,651,000

The net book value of property, plant and equipment pledged as
collateral under notes payable and various long-term debt agreements
aggregated $509,000 and $526,000 at December 31, 1996 and 1995,
respectively. See "Note 6."
Page 23 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

-continued-

(4) Notes Payable

Included in notes payable at December 31, 1996 and 1995 is $1,424,000
and $1,245,000, respectively, which represents the amounts outstanding
under a $2 million line of credit from a commercial lender to Premix and
Acrocrete. The line of credit is collateralized by Premix and
Acrocrete's accounts receivable and inventory, bears interest at prime rate
plus 4% (12 1/4% at December 31, 1996) and expires June 20, 1997, subject
to annual renewal. The weighted average effective interest rate on the
line of credit was 15.06%, 14.86%, and 13.16% during the years ended
December 31, 1996, 1995 and 1994, respectively.

The line of credit is automatically extended for an additional one
year term on each June 20th unless either party gives the other notice of
nonextension 60 days prior to the preceding June 20th. At December 31,
1996, the line of credit limit available for borrowing aggregated
$1,609,000, of which $1,424,000 had been borrowed. The average month end
amounts outstanding during 1996 and 1995 were $1,308,000, and $1,151,000,
respectively. The maximum amounts outstanding at any month end during 1996
and 1995 were $1,424,000 and $1,387,000, respectively.


(5) Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at December 31, 1996 and 1995
are summarized as follows:

1996 1995
Employee compensation and
related items $ 46,000 $ 30,000
Taxes, other than income taxes 32,000 23,000
Interest 8,000 5,000
Legal fees 1,000 8,000
Other 53,000 34,000
-------- --------
$140,000 $100,000
















Page 24 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

-continued-

(6) Long-term Debt

Long-term debt of the Company is as follows:
1996 1995
Adjustable rate mortgage note payable, interest
at 10.5% at December 31, 1996, principal in
the amount of $3,111 together with interest is
payable monthly, with a balloon payment of
approximately $376,000 due December 5, 2000 $ 523,000 $560,000

Adjustable rate mortgage note payable,
interest at 12% at December 31, 1996,
principal and interest payable monthly in
the amount of approximately $3,600, with a
balloon payment of approximately $292,000
due September 1, 2000 316,000 321,000

Litigation settlement agreement,
interest at 7.5% due monthly, principal
payable in equal 48 monthly periods in the
amount of approximately $2,083 through
August 1998 43,000 68,000

Equipment notes payable, interest at various
rates ranging from 8.75% to 15.39%, per annum,
principal and interest payable monthly 174,000 206,000
----------- ----------
1,056,000 1,155,000
Less current maturities (161,000) (155,000)
----------- -----------
$ 895,000 $1,000,000



As of December 31, 1996, long-term debt matures as follows:

Year ended
December 31, Amount
1998 $118,000
1999 56,000
2000 714,000
2001 7,000
--------
$895,000








Page 25 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

-continued-

(6) Long term Debt (continued)

In the fourth quarter of 1993, the Company incurred a $100,000 charge
to settle a product liability lawsuit for which the Company had no
insurance. The Company entered into an agreement to settle this lawsuit
for $100,000, payable monthly over a four-year period with interest at the
rate of 7-1/2% per annum. In accordance with the terms of the agreement,
in the event of the Company's bankruptcy, the plaintiff will be permitted
to file a claim for $160,000, less any amounts previously paid.

(7) Income Taxes

At December 31, 1996, the Company had approximately $12.2 million of
net operating losses, for book and tax purposes, available through the year
2009 and investment and other tax credits of approximately $165,000
available through the year 2001. A valuation allowance for 100% of the
resulting net deferred tax asset of approximately $4.5 million has been
established due to the uncertainties relating to its eventual
realizability. Changes in the Company's ownership, if any, may have the
effect of limiting the annual utilization of these carryforwards.

During the year ended December 31, 1996, the Company's net deferred
tax asset and the related valuation allowance were reduced by approximately
$85,000 primarily as a result of the expiration of unused investment tax
credits and the utilization of net operating loss carry forwards to offset
taxable income in the current year.

(8) Capital Stock

(a) Common Stock

At December 31, 1996, the Company had outstanding 5,562,461 shares of
Common Stock (5,387,461 shares in 1995) with a $.10 par value per share
("Common Stock"). The holders of Common Stock are entitled to one vote per
share on all matters. In the event of liquidation, holders of Common Stock
are entitled to share ratably in all the remaining assets of the Company,
if any, after satisfaction of the liabilities of the Company and the
preferential rights of the holders of outstanding preferred stock.

On March 28, 1994 and February 7, 1995, the Company issued 50,000
shares of Common Stock from treasury on each occasion, to the former
President of Premix and Acrocrete as part of his employment compensation.
On June 15, 1994, the Company issued from treasury 20,000 shares of Common
Stock to a former Director as partial consideration for past services.

On May 23, 1996, the Company issued from treasury 25,000 shares of
Common Stock to an employee of the Company as part of his employment
compensation. On July 12, 1996, the Company issued an aggregate of 150,000




Page 26 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

-continued-

(8) Capital Stock (continued)

Common Stock (continued)

shares of Common Stock to the Directors and Executive Vice President of the
Company as part of their compensation for services rendered.

On February 4, 1997, the Company issued 33,333 shares of authorized,
but unissued Common Stock to the new President of Premix and Acrocrete as
part of his employment compensation.

(b) Redeemable Preferred Stock - $1.10 Cumulative Convertible Series

The authorized preferred stock of the Company consists of 5,000,000
shares, $1.00 par value per share. The preferred stock is issuable in
series, each of which may vary, as determined by the Board of Directors, as
to the designation and number of shares in such series, the voting power of
the holders thereof, the dividend rate, redemption terms and prices, the
voluntary and involuntary liquidation preferences, and the conversion
rights and sinking fund requirements, if any, of such series.

At December 31, 1996 and 1995, the Company had issued and outstanding
300,121 shares of $1.10 cumulative convertible redeemable preferred stock
("Preferred Stock"). The holders of Preferred Stock are entitled to one
vote per share on all matters without regard to class, except that the
holders of Preferred Stock are entitled to vote as a separate class with
regard to the issuance of any equity securities which ranks senior or on
parity with the Preferred Stock, or to change or repeal any of the express
terms of the Preferred Stock in a manner substantially prejudicial to the
holders thereof. Each share of the Preferred Stock is entitled to
cumulative quarterly dividends at the rate of $1.10 per annum and is
convertible into 1.149 shares of common stock. The liquidation preference
of the Preferred Stock is $10.00 per share, plus accrued but unpaid
dividends. The Preferred Stock is callable, in whole or in part, by the
Company at its option at any time upon 30 days prior notice, at $11.00 per
share, plus accrued and unpaid dividends.

The Company has omitted dividends on its Preferred Stock since the
fourth quarter of 1985 aggregating $3,714,000 through December 31, 1996
($3,384,000 through December 31, 1995). The omission of Preferred Stock
dividends is a reduction of net income applicable to Common Stockholders
and is recorded as a non-current liability in the accompanying consolidated
balance sheets.

The Preferred Stock is subject to redemption through a mandatory
sinking fund at a redemption price of $10.00 per share, at the rate of
approximately 66,000 preferred shares a year, starting in 1986, less any
preferred shares converted into common stock. Through December 31, 1996,




Page 27 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

-continued-

(8) Capital Stock (continued)

(b) Redeemable Preferred Stock - $1.10 Cumulative Convertible Series
(continued)

an aggregate of 359,879 shares of Preferred Stock were converted into
1,199,557 shares of Common Stock. As a result of these conversions, the
Company was required to redeem 36,121 shares in 1991 and 66,000 shares for
each year thereafter through 1995, at which time the Preferred Stock was
intended to be fully retired. The Preferred Stock has not been included in
common stock and other stockholders' deficit because of its mandatory
redemption feature.

The Company did not redeem any shares of the Preferred Stock as
required on April 1, 1991, or any year thereafter. Under the provisions of
the sinking fund requirements, if an annual sinking fund requirement is not
met, it is added to the requirements for the next year.

The Company is prohibited from paying any cash dividends on common
stock and from purchasing or otherwise acquiring for value, any shares of
either preferred or common stock, at any time that the Company is in
default in the payment of any dividends on the Preferred Stock or if the
sinking fund requirements are in arrears.

(c) Warrants

At December 31, 1996, the Company had the following outstanding series
of warrants:

(i) 1,316,999 warrants issued in the Company's public offering in 1983.
Each warrant entitles the holder to purchase one share of Common Stock at
$4.80 per share. During February, 1997, the Company's Board of Directors
authorized an extension of the expiration date of these warrants from March
31, 1997 to March 31, 1998. The warrants are not registered nor are they
exercisable until a registration statement covering the underlying Common
Stock is declared effective by the Securities and Exchange Commission.

(ii) 200,000 warrants issued in connection with financing arrangements in
1988. Each warrant entitles the holder to purchase one share of Common
Stock at $.10 per share until June 28, 1997. During 1993, the Board of
Directors extended the expiration date of the warrants from June 28, 1994
to June 28, 1997 and reduced the exercise price from $.40 per share to $.10
per share. Two directors acquired 150,000 and 50,000 warrants,
respectively, in connection with a $400,000 financing in 1988. The loan
has since been repaid by the Company.







Page 28 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

-continued-

(8) Capital Stock (continued)

(d) Stock Options

The Company's 1979 Non-Qualified Stock Option Plan (the "1979 Plan")
expired in 1989 and no additional options may be granted thereunder. At
December 31, 1996, 162,500 shares of common stock were reserved for
issuance upon exercise of outstanding stock options originally granted
under the 1979 Plan.

The Company's 1984 Stock Option Plan (the "1984 Plan") expired in
1994 and no additional options may be granted thereunder. At December 31,
1996, options for 343,000 shares of common stock were outstanding under the
1984 Plan.

Option activity under these plans is summarized as follows:

Fair market value
at date of grant
Number Price per Per
of shares share Total Share Total

Outstanding and exercisable
at December 31, 1993 524,000 $ .10* $52,000 $.02-.20 $53,000

Granted during 1994 83,500 $ .10 8,000 $ .09 8,000
Exercised during 1994 - - - - -
Terminated during 1994 (102,000) $ .10 (10,000) $.02-.20 (11,000)
----------- ---------- ---------
Outstanding and exercisable
at December 31, 1994 505,500 $ .10 50,000 $.02-.20 50,000

Granted during 1995 - - - - -
Exercised during 1995 - - - - -
Terminated during 1995 - - - - -
----------- ---------- ---------
Outstanding and exercisable
at December 31, 1995 505,500 $ .10 50,000 $.02-.20 50,000

Granted during 1996 - - - - -
Exercised during 1996 - - - - -
Terminated during 1996 - - - - -
----------- ---------- ---------
Outstanding and exercisable
at December 31, 1996 505,500 $ .10 $50,000 $.02-.20 $50,000
=========== ========== ==========






Page 29 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

-continued-
(8) Capital Stock (continued)

(d) Stock Options (continued)


The following options to purchase the Company's common stock, all of which are
vested, were outstanding under the Plans on December 31, 1996:

Year of Number of Exercise Expiration
Grant Shares Price Date
1988 75,000 $.10 * 6/01/98
1988 45,000 .10 * 6/26/98
1989 72,000 .10 * 7/29/99**
1992 210,000 .10 1/14/02***
1993 20,000 .10 5/10/98
1994 83,500 .10 3/27/99
-------
505,500

* In 1993, the exercise price per share was reduced from $.20 per share to
$.10 per share on an aggregate of 244,000 options granted in 1988 and 1989.
** In 1994, the expiration date was extended from 7/29/94 to 7/29/99.
*** In 1997, the expiration date was extended from 1/14/97 to 1/14/2002.


(9) Other Income (Expense)

A summary of miscellaneous income (expense) for the years ended
December 31, 1996, 1995 and 1994 is as follows:

1996 1995 1994
Interest income $ 5,000 $ 4,000 $ 7,000
(Loss) gain on disposal of property,
plant and equipment (4,000) 3,000 -
Other, net 42,000 - 16,000

$43,000 $ 7,000 $23,000


(10) Net Loss Applicable to Common Stockholders

Net loss applicable to common stockholders includes $330,000 of
cumulative preferred dividends not declared for each of the years ended
December 31, 1996, 1995 and 1994. Shares issuable in exchange for
convertible preferred stock, stock options and warrants are antidilutive
and, therefore, are not included in the computations of loss per share.







Page 30 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

-continued-

(11) Related Party Transactions

The Company and its subsidiaries paid legal fees of approximately
$29,000, $35,000 and $62,000 in 1996, 1995 and 1994, respectively, to law
firms with which the Chairman of the Board was affiliated.


(12) Commitments and Contingencies


(a) In April 1996, the Company was dismissed as a defendant, to which it
had been a party with other unaffiliated companies, in the remaining 27
asbestos lawsuits pending in various circuit courts in Alabama and Florida.
Such lawsuits sought unspecified damages alleging injuries to persons
exposed to products containing asbestos. As of March 3, 1997, the Company
is not a defendant in any lawsuits which allege injuries due to asbestos
exposure.

The Company and Premix are parties to an Interim Agreement for Defense
and Indemnity of Asbestos Bodily Injury Cases (the "Agreement") with
certain of its insurance carriers under which each party agreed to pay a
negotiated percentage share of defense costs and indemnification
expenditures, subject to policy limits, for the pending and future asbestos
s claims. The Agreement has been extended until May 15, 1997. The
Agreement is subject to cancellation upon sixty days notice by any party.

The insurance carriers have agreed to pay, in the aggregate,
approximately 93% of the damages, costs and expenditures related to the
litigation. Premix is responsible for the remaining 7%. At December 31,
1996, the Company had accrued approximately $1,000 in estimated litigation
and settlement costs related to the previously described asbestos claims,
net of any amounts paid by the insurers.

The Company believes, based upon the Agreement with its insurance
carriers, and its experience in these claims to date, it has adequate
insurance coverage for any future similar type of claims. To date, no case
went to trial with Premix as a defendant. Premix has either settled for a
nominal amount of money or been voluntarily dismissed without payment from
approximately 193 cases. Based upon historical results, the Company does
not believe any potential future claims would be material. However, there
can be no assurance that insurance will ultimately cover the aggregate
liability for damages to which Premix may be exposed. Premix is unable, at
this time, to determine the exact extent of its exposure or outcome of the
litigation of any other similar cases that may arise in the future.








Page 31 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

-continued-

(12) Commitments and Contingencies (continued)

Acrocrete is a co-defendant in a lawsuit captioned "Stephen P. Zabow,
et al. vs. M/I Schottenstein Homes, Inc., Heiner Construction Company and
Acrocrete Inc.", filed October 2, 1996 in Wake County, North Carolina. The
lawsuit involves claims by owners of eight homes in Cary, North Carolina,
against the general contractor, a subcontractor, and Acrocrete. The claims
relate to the use of synthetic stucco in the construction of such homes.
The lawsuit alleges negligent misrepresentation, breach of warranty, unfair
and deceptive trade practices, fraud and negligence due to defective
material, and requests punitive damages. The plaintiffs allege that
Acrocrete knew of inherent defects prevalent in synthetic stucco wall
systems that permitted water intrusion to cause moisture damage to the
interior and wood framing of the houses.

Acrocrete believes it has meritorious defenses against the claim and
cross-claims against the general contractor and installer of the product.
The Company's insurance carriers are providing a defense and accepted
coverage under reservation of rights. Acrocrete is unable, at this time, to
determine the exact extent of its exposure or outcome of the litigation of
this lawsuit.

(b) The Company pays aggregate monthly rent of approximately $10,800 for
four of its operating facilities. The leases expire at various dates
ranging from April 30, 1997 to December 31, 1998. One of the leases provide
for annual increases in monthly rent.

In addition, the Company leases one automobile under an agreement which
provides for a minimum monthly payment of $600 through June, 1998. The
Company is subject to an operating lease agreement for certain computer
equipment which provides for monthly rental payments of $1,000 through
February, 1998.

Rental expenses incurred for operating leases were approximately
$129,000, $122,000 and $86,000, for the years ended December 31, 1996, 1995
and 1994, respectively.

(c) In 1992, the Company removed its fuel pumps and underground tanks at
its facilities in Miami and Casselberry, Florida, rather than upgrade the
storage tank systems to comply with more stringent environmental standards
scheduled to go in effect December 31, 1992. Upon removal of the tanks,
test results showed evidence of soil and ground water contamination at each
site. The contaminated soil was removed from the properties and the
regulatory authorities required the Company to test the groundwater and
provide engineering reports to determine what remedial actions, if any, were
necessary with respect to the ground water contamination. In December 1994,
all appropriate governmental authorities released the Company from further
remedial actions with respect to its Casselberry, Florida facility. In June




Page 32 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

-continued-

(12) Commitments and Contingencies (continued)

1995, the governmental authorities released the Company from further
remedial action with respect to its Miami, Florida facility.

During 1995 and 1994, the Company incurred expenses of approximately
$7,000 and $22,000, respectively, in connection with the engineering
studies, tank removal and contamination removal. The Company is eligible for
reimbursement of certain allowable costs in connection with the removal of
the contamination through a program established by the State of Florida
Department of Environmental Regulation.

(d) Howard L. Ehler, Jr., ("the Executive"), is employed by the Company
pursuant to a one year renewable agreement (the "Employment Agreement").
Mr. Ehler serves as Executive Vice President, Principal Executive Officer
and Chief Financial Officer of the Company at a current annual base salary
of $100,000. The Employment Agreement provides for automatic renewal for
additional one year periods as of July 1, of each year, unless the Company
or the Executive notifies the other party of an intent not to renew at least
90 days prior to expiration of the existing term. The executive receives a
car allowance, as well as certain other benefits, such as health and
disability insurance. The Executive is also entitled to receive incentive
compensation based upon targets formulated by the Company's Compensation
Committee.

Prior to a change in control, the Company has the right to terminate
the Employment Agreement without cause at any time upon thirty days written
notice, provided the Company pays to the Executive a severance payment
equivalent to 50% of his then current annual base salary. As part of the
Employment Agreement, the Executive has agreed not to disclose confidential
information and not to compete with the Company during his term of
employment and, in certain cases, for a two (2) year period following his
termination.

In the event of a "Change in Control" (as defined in the Employment
Agreement), the Employment Agreement is automatically extended to a three
year period. Thereafter, the Executive will be entitle to terminate his
employment with the Company for any reason at any time. In the event the
Executive terminates his employment after a Change of Control, the Executive
will be entitled to receive the lesser of (i) a lump sum amount equal to the
base salary payments and all other compensation and benefits the Executive
would have received had the Employment Agreement continued for the full
term; or (ii) three times Executive's base salary then in effect on the
effective date of termination. The Executive would also be entitled to such
severance in the event the Company terminates the Executive without cause
after a Change of Control.

In addition, Mr. Ehler is eligible to receive up to 75,000 shares of




Page 33 of 49

IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

-continued-

(12) Commitments and Contingencies (continued)

common stock of the Company based on the earnings performance of the Company
each year in the three year period ending December 31, 1999.

(e) During the third quarter of 1996, the Company entered into an
employment arrangement with Fred H. Hansen to serve as President of the
Company's subsidiaries, Premix and Acrocrete, providing for an annual base
salary to $117,600 and a bonus based upon earnings performance of the
Subsidiaries. As an inducement for his employment, the executive is to
receive 100,000 shares of common stock of the Company over a three year
period ending in 1998. Mr. Hansen received 33,333 shares of common stock in
February 1997. In addition, the executive is eligible to receive an
aggregate of 100,000 shares of the common stock of the Company based on the
earnings performance of the subsidiaries for each year in the three year
period ending December 31, 2000. Also, Mr. Hansen received a moving
allowance of $15,000 and is entitled to the use of a Company auto, or auto
allowance of $650 per month during his employment at his election.


(13) Concentration of Credit Risk

Concentrations of credit risk with respect to trade accounts receivable
are limited due to the number of entities comprising the Company's customer
base. However, trade accounts receivable represent amounts due from
building materials dealers located principally in Florida and Georgia who
have purchased products on an unsecured open account basis. At December 31,
1996, accounts aggregating $71,000, or approximately 4% of total gross trade
accounts receivable were deemed to be ineligible for borrowing purposes
under the Company's borrowing agreement with its commercial lender. The
allowance for doubtful accounts at December 31, 1996 of $145,000 is
considered sufficient to absorb any losses which may arise from
uncollectible accounts receivable.




***********************************














Page 34 of 49

PART III

Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure

None

Item 10. Directors and Executive Officers of the Registrant

The following table sets forth certain information with respect
to the directors and executive officers of the Company:

Name Age Position With Company

S. Daniel Ponce 48 Chairman of the Board - Class III
Lisa M. Brock 38 Director - Class III
Leonard C. Ferri 82 Director - Class II
Morton L. Weinberger 67 Director - Class II
Fred H. Hansen 50 President, Premix and Acrocrete
Howard L. Ehler, Jr. 53 Principal Executive Officer/Executive
Vice President and Secretary
Betty J. Murchison 57 Principal Accounting Officer/
Assistant Vice President

The Company's Board of Directors is divided into three classes.
In accordance with the Company's Certificate of Incorporation, the
members of each Class are designated to serve for three (3) year
staggered terms. Class I directors were to serve until the 1994
annual meeting or until their successors were elected, Class II
directors were to serve until the 1995 annual meeting or until their
successors were elected, and Class III directors were to serve until
the 1996 annual meeting or until their successors were elected. The
Company did not have an annual meeting in 1994, 1995 and 1996. Class
I, Class II and Class III directors will serve until the next annual
meeting to be held by the Company. The Company has no Class I
directors.

Subject to certain contractual rights, each officer serves at the
discretion of the board of directors.

S. Daniel Ponce. Mr. Ponce has been Chairman of the Board of the
Company since 1988. Mr. Ponce has been engaged in the practice of
law for over fifteen years and is currently Senior of Counsel to
the law firm of Hanzman, Criden, Korge & Chaykin, P.A. Mr. Ponce
is a member of the Board of Directors of the University of Florida
Foundation, Inc. and serves as Chairman of its audit committee. He
is also a non-practicing certified public accountant.

Lisa M. Brock. Mrs. Brock has been a director of the Company since
1988. Mrs. Brock was employed by the Company and its
subsidiaries, Premix and Acrocrete, as Vice President for over 5
years until December, 1994. Mrs. Brock continues to serve as a
consultant to the Company. Mrs. Brock is the niece of Leonard C.
Ferri.




Page 35 of 49


Item 10. Directors and Executive Officers of the Registrant (continued)

Leonard C. Ferri. Mr. Ferri has been a director of the Company since
1976. Mr. Ferri has been an independent management consultant
since 1975. In 1975 Mr. Ferri retired as Managing Director of
Xerox de Mexico, S.A. From 1965 to 1970 he served as Managing
Director of Xerox de Peru, S.A. For the 19 years prior thereto, he
was employed by Radio Corporation of America (RCA), the last six
years as Regional Director - Latin America in RCA's international
division. Mr. Ferri is the uncle of Lisa M. Brock.

Morton L. Weinberger, CPA. Mr. Weinberger has been a director of the
Company since 1988. Mr. Weinberger, a certified public
accountant, has been an independent consultant to various
professional organizations for the past eight years. He provides
consulting services for the Company. For the previous twenty-five
years, he was engaged in the practice of public accounting. During
such period, he was a partner with Peat Marwick Mitchell & Co., now
known as KPMG Peat Marwick, and thereafter BDO Seidman, both public
accounting firms. In 1985, he served as Executive Vice President
for Eagle National Bank. Mr. Weinberger filed a personal petition
for reorganization under Chapter 11 of the Federal Bankruptcy Act
in February 1991 and was reorganized and discharged from bankruptcy
in April 1992.

Fred H. Hansen. Mr. Hansen has been President of Premix and Acrocrete
since September 1996. Prior thereto, from 1986 to 1996, he was
employed by Dryvit Systems Canada Ltd., the last six years acting
as Vice President and General Manager. From 1982 to 1986, Mr.
Hansen was the National Sales Manager for W.R. Grace & Co. of
Canada Ltd., a manufacturer and distributor of building materials.

Howard L. Ehler, Jr. Mr. Ehler has been Principal Executive Officer
of the Company since March 1990 and Executive Vice President, Chief
Financial Officer and Secretary of the Company since April 1988.
Prior thereto he was Vice President, Chief Financial Officer and
Assistant Secretary of the Company for over five years.

Betty J. Murchison. Ms. Murchison has been the Principal Accounting
Officer since June 1995. Prior thereto, from October, 1991 to June
1995, she was Principal Accounting Officer of Royce Laboratories,
Inc., a manufacturer of generic pharmaceutical products. For over
25 years prior thereto, she was employed by the Company, the last
three years acting as the Company's Principal Accounting Officer.

Board of Directors Meetings and Attendance

The Board of Directors met five (5) times in fiscal 1996. Each
director attended all of the Board of Directors meetings in 1996.








Page 36 of 49


Item 10. Directors and Executive Officers of the Registrant (continued)

Compensation and Stock Option Committee

Messrs. Ponce, Ferri, Weinberger and Ms. Brock serve on the
Compensation and Stock Option Committee, with Mr. Ponce serving as
Chairman. The Compensation and Stock Option Committee met two (2)
times in fiscal 1996. Each member attended all of the meetings.

Reports Pursuant to Section 16(a) of the Securities and Exchange
Act of 1934

The Company's officers and directors are required to file Forms
3, 4 and 5 with the Securities and Exchange Commission in accordance
with Section 16(a) of the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder. Based solely on
a review of such reports furnished to the Company as required by Rule
16a-3(e), in 1996 no officer or director failed to file any such
report on a timely basis except Mr. Hansen. Fred H. Hansen filed one
late Form 3 report relating to his date of employment and one late
Form 4 report relating to one purchase transaction.

Item 11. Management Remuneration and Transactions

SUMMARY COMPENSATION TABLE

The following table summarizes the compensation paid or accrued
for each of the three fiscal years in the period ended December 31,
1996 for the Company's chief executive officer. No other executive
officers total annual salary and bonus exceeded $100,000 for any
fiscal year.

Long-Term Compensation
Restricted Stock
Name and Annual Compensation(2) Stock Options
Principal Position Year Salary Bonus(1) Awards(3) (Shares)

Howard L. Ehler Jr. 1996 $98,555 $32,000 $3,500 -
Principal Executive 1995 95,685 15,000 - -
Officer, Executive 1994 86,985 14,000 - 8,500
Vice President and
Secretary


(1) Bonuses shown were earned in the year indicated even though actually
paid in a subsequent year.

(2) Except as indicated, none of the named individuals above have received
personal benefits or perquisites that exceed the lesser of $50,000 or 10% of
the total annual salary and bonus reported for the named executive officer
in the above table. In connection with the individual's employment
agreement, the Company pays the insurance premium for a long-term
disability insurance policy for Mr. Ehler.




Page 37 of 49


Item 11. Management Remuneration and Transactions (continued)

SUMMARY COMPENSATION TABLE (continued)

(3) Restricted stock awards includes shares of common stock Mr. Ehler
received in accordance with the terms of his employment arrangement with the
Company. Mr. Ehler received 25,000 shares of common stock in 1996 in
connection with his employment arrangement.


Compensation Agreements

The Company is party to a one year renewable employment agreement,
(the "Employment Agreement") with Howard L. Ehler, Jr. (the "Executive").
Mr. Ehler serves as Executive Vice President, Principal Executive Officer
and Chief Financial Officer of the Company at a current base salary of
$100,000. The Employment Agreement provides for automatic renewal for
additional one year periods on July 1st of each year, unless the Company or
Executive notifies the other party of intent not to renew at least 90 days
prior to each June 30 of the initial term and any extended term thereafter.
The Executive receives a car allowance, as well as certain other benefits,
such as health and disability insurance. The Executive is also entitled to
receive incentive compensation based upon targets formulated by the
Compensation Committee.

Prior to a Change in Control (as defined in the Employment Agreements),
the Company has the right to terminate the Employment Agreement, without
cause, at any time upon thirty days written notice, provided the Company
pays to the Executive a severance payment equivalent to 50% of his then
current annual base salary. As part of the Employment Agreement, the
Executive has agreed not to disclose information and not to compete with the
Company during his term of employment and, in certain cases, for a two (2)
year period following his termination.

In the event of a Change in Control, the Employment Agreement is
automatically extended to a three year period. Thereafter, the Executive
will be entitled to terminate his employment with the Company for any reason
at any time. In the event the Executive so terminates employment, the
Executive will be entitled to receive the lesser of (i) a lump sum equal to
the base salary payments and all other compensation and benefits the
Executive would have received had the Employment Agreement continued for the
full term; or (ii) three times the Executive's base salary then in effect on
the effective date of termination. The Executive would also be entitled to
such severance in the event the Company terminates the Executive without
cause after a Change of Control.

In addition, Mr. Ehler is eligible to receive up to 75,000 shares of
common stock of the Company based on the earnings performance of the Company
for each year in the three year period ending December 31, 1999.

During the third quarter of 1996, the Company entered into an
employment arrangement with Fred H. Hansen to serve as President of the
Company's subsidiaries, Premix and Acrocrete, providing for an annual base




Page 38 of 49


Item 11. Management Remuneration and Transactions (continued)

Compensation Agreements (continued)

salary to $117,600 and a bonus based upon earnings performance of the
subsidiaries. Under this arrangement, as an inducement for his employment,
the executive is to receive 100,000 shares of common stock of the Company
over a three year period ending in 1998. Mr. Hansen received 33,333 shares
of common stock in the first quarter of 1997 in connection with this
arrangement. In addition, the executive is eligible to receive an aggregate
of 100,000 shares of the common stock of the Company based on the earnings
performance of the subsidiaries for each year in the three year period
ending December 31, 2000. Mr. Hansen received a moving allowance of
$15,000 in 1996 and is entitled, at his election, to the use of a Company
auto, or car allowance of $650 per month during his employment.


Aggregated Option Exercises in Year Ended December 31, 1996 and Fiscal
Year End Option Values

The following table sets forth certain aggregated option information
for each of the named executive officers in the Summary Compensation Table
for the fiscal year ended December 31, 1996.

Number of Value of Unexercised
Securities Underlying In-the-Money
Unexercised Options at Options at
Name(1) December 31, 1996 (2) December 31, 1996 (2) (3)

Howard L. Ehler, Jr. 83,500 -0-

(1) No options were exercised by the above named executive officer during
the fiscal year ended December 31, 1996.

(2) All unexercised options are presently exercisable.

(3) The exercise price of all unexercised options was the same as the
market price of the Common Stock at December 31, 1996. The average
of the bid and asked market price on said date was $.10 per share.

Director Compensation

During the year ended December 31, 1996, each director received an
annual retainer of $5,000, payable in quarterly installments. Effective
June 1, 1994 and January 1, 1995, the Company entered into separate
consulting agreements with Messrs. Ferri and Weinberger and Ms. Brock,
respectively, to provide various management consulting services to the
Company for $500 per month. Each Agreement may be terminated upon 60 days
notice by either party. In addition, in 1996, Ms. Brock was employed by the
Company to oversee a portion of the subsidiaries' operations during the
interim period while the Company conducted an executive search for a new
president for its subsidiaries. Ms. Brock received $60,363 for her services
during this period and during the transition period with the new president.




Page 39 of 49


Item 11. Management Remuneration and Transactions (continued)

Director Compensation (continued)


In May 1996, each director received 25,000 shares of the Company's
common stock. The average of the bid and asked market price on said date
was $.14 per share. Commencing September 1994 Mr. Ponce was provided the
use of a Company car at a cost of approximately $500 per month.


Compensation Committee Interlocks and Insider Participation

During the year ended December 31, 1996, the Compensation and Stock
Option Committee consisted of Messrs. Ponce, Ferri, Weinberger and Ms.
Brock. None of these directors has been an officer or employee of the
Company or its subsidiaries during the last ten years, except Ms. Brock, who
was formerly Vice President of Premix and Acrocrete until December 31, 1994.
In 1996, the Company paid legal fees to a law firm in which Mr. Ponce is
affiliated. See Item 13 "Certain Relationships and Related Transactions."
There are no other relationships required to be disclosed pursuant to
applicable Securities and Exchange Commission rules and regulations.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information as of March 3, 1997
with respect to the beneficial ownership of the Company's equity securities
by (i) each director or nominee for director of the Company, (ii) each
executive officer named on the Summary Compensation Table, (iii) each person
known to the Company to own more than 5% of such shares, and (iv) all
executive officers and directors as a group:

Title of Shares Percent
Class Beneficially Owned of Class(1)
Maureen P. Ferri Common 656,981(2) 11.7%
7335 Old Elm Drive
Hialeah, Fl 33015

Jimmy V. Brabham (3) Common 307,000 5.5
412 Rory Street
Lake Charles, La 70601

Estate of M.G. Woodward(4) Preferred 27,000 9.0
147 Maison Place N.W.
Atlanta, Ga 30327

Estate of Latham G. Kays(5) Preferred 15,275 5.1
8 Paris Court
Lake St. Louis, Mo 63367

Derco Ltd.(6) Preferred 23,863 8.0
P.O. Box 1790
Georgetown Grand Cayman
Cayman Islands



Page 40 of 49


Item 12. Security Ownership of Certain Beneficial Owners and Management
(continued)


Title of Shares Percent
Class Beneficially Owned of Class(1)

Lisa M. Brock Common 236,506(7) 4.1

Howard L. Ehler, Jr. Common 178,245(8) 3.1
Preferred 1,000 .3

Leonard C. Ferri Common 178,230(9) 3.1


S. Daniel Ponce Common 441,966(10) 7.6

Morton L. Weinberger Common 139,210(11) 2.5

All directors and officers
as a group (7 persons) Common 1,231,108(12) 19.7
Preferred 1,000 .3



(1) Except as set forth herein, all securities are directly owned and the
sole investment and voting power are held by the person named. A
person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof upon the
exercise of options or warrants. Each beneficial owner's percentage
is determined by assuming that all such exercisable options or
warrants that are held by such person (but not those held by any other
person), have been exercised.

(2) Based upon information provided by stockholder.

(3) Based on the Company's stockholder list at March 3, 1997. To the
Company's knowledge, no Schedule 13D has been filed with the
Securities and Exchange Commission.

(4) Based upon oral representations made by the son of such deceased
stockholder. To the Company's knowledge, no Schedule 13D has been
filed with the Securities and Exchange Commission.

(5) On August 31, 1992, Latham G. Kays filed a Schedule 13D with the
Securities and Exchange Commission, indicating he beneficially owns
15,275 shares of Preferred Stock, or 5.1% of the outstanding
Preferred Stock. In 1995 the Company was advised Mr. Kays had died.








Page 41 of 49


Item 12. Security Ownership of Certain Beneficial Owners and Management
(continued)

(6) On November 30, 1993, Derco Ltd. submitted a proxy at the Annual
Meeting of Stockholders, indicating that Derco Ltd. beneficially owned
an aggregate of 23,863 shares of preferred stock, or 8.0% of the
outstanding preferred stock. To the Company's knowledge, no Schedule
13D has been filed with the Securities and Exchange Commission.

(7) Includes 85,400 and 50,000 shares of common stock issuable upon
exercise of options and warrants, respectively.

(8) Includes 83,500 shares of common stock issuable upon exercise of
options.

(9) Includes 112,400 shares of common stock issuable upon exercise of
options.

(10) Includes 85,400 and 150,000 shares of common stock issuable upon
exercise of options and warrants, respectively.

(11) Includes 85,400 shares of common stock issuable upon exercise of
options.

(12) Includes 452,100 shares of common stock issuable upon exercise of
options and 200,000 shares of common stock issuable upon the exercise
of warrants.

Item 13. Certain Relationships and Related Transactions

The law firm of Hanzman, Criden, Korge & Chaykin, P.A. in which
Mr. Ponce, the Company's Chairman of the Board, is affiliated,
currently serves as general counsel to the Company. In addition, the
law firm represents the Company in certain asbestos litigation.
Approximately 93% of the fees incurred in the asbestos litigation are
paid directly by the insurance companies.





















Page 42 of 49


PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form_8-K

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

1. Financial Statements: Page

Imperial Industries, Inc. and Subsidiaries:

Report of Independent Certified Public Accountant 15

Consolidated Balance Sheets - December 31, 1996 and 1995 16

Consolidated Statements of Operations - Years Ended
December 31, 1996, 1995 and 1994. 18

Consolidated Statement of Changes of Common Stock and
Other Stockholders' Deficit - Three Years Ended
December 31, 1996. 19

Consolidated Statements of Cash Flows -
Years ended December 31, 1996, 1995 and 1994 20

Notes to Consolidated Financial Statements 21

2. Financial Statement Schedules:

II - Valuation and Qualifying Accounts and Reserves 47

3. Exhibits

Incorporated by reference to the Exhibit Index at the
end of this Report. 48

(b) Reports on Form 8-K:
No Form 8-K Reports were filed during the last quarter
of the period covered by this Report.



















Page 43 of 49

EXHIBIT INDEX

Certain of the following exhibits, designated with an asterisk (*), are filed
herewith. The exhibits not so designated have been filed previously with the
Commission, and pursuant to 17 C.F.R. Sec. 201.24 and Sec. 230.411, are
incorporated herein by reference to the documents indicated in parentheses
following the descriptions of such exhibits.

Exhibit No. Description

3.1 Restated Certificate of Incorporation of the Company, filed August
8, 1979 (Registration Statement No. 1-2-65385, Exhibit 3 (a).

3.2 Certificate of Amendment of Restated Certificate of Incorporation of
the Company, filed June 16, 1980. (Form 10-Q, quarter ended June
30, 1980, File No. 1-7190 (unnumbered exhibit)).

3.3 By-Laws of the Company, as amended (Form 10-K, year ended December
31, 1980, File No. 1-7190, Exhibit 3).

3.4 Certificate of Amendment of Restated Certificate of Incorporation
of the Company, filed June 20, 1983 (Form 10-Q, quarter ended June
30, 1983, File No. 1-7190, Exhibit 28).

4.1 Certificate of Designation, filed February 22, 1983, with respect to
the Preferred Stock, $1.10 Cumulative Convertible Series (Form 10-K
for the fiscal year ended December 31, 1982, File No. 1-7190,
Exhibit 3.4).

4.2 Warrant Agreement, dated as of February 15, 1983, between the
Company and Southeast Bank N.A., as Warrant Agent. (Form 10-K for
the fiscal year ended December 31, 1982, File No. 1-7190, Exhibit
4.1).

4.11 Financing Agreements, dated as of June 20, 1988 between Premix and
Congress. (Form 8-K dated June 29, 1988, File No. 1-7190, Exhibit
10.2)

4.12 Warrant Agreements as of June 22, 1988 between the Company and two
of its directors, S. Daniel Ponce and Lisa M. Brock, formerly Lisa
M. Thompson. (Form 8-K dated June 29, 1988, File No. 1-7190,
Exhibit 10.3)

10.4 1979 Non-Qualified Stock Option Plan (Registrant Statement No. 2-
69479, Exhibit 1.D).

10.5 1984 Stock Option Plan (Form 10-K, year ended December 31, 1984,
File No. 1-7190, Exhibit 10.5)










Page 44 of 49

EXHIBIT INDEX

Exhibit No. Description


10.8 Agreement dated as of May 16, 1989, between the Company and four
insurance companies, relating to the defense and indemnity of
asbestos related personal injury claims against Premix. (Form 10-
Q, quarter ended September 30, 1989, File No. 1-7190, Exhibit 10)


10.12 Employment Agreement dated July 26, 1993 between Howard L. Ehler,
Jr. and the Company. (Form 8-K dated July 26, 1993)


*11 Statement recomputation of earnings per share.

*21 Subsidiaries of the Company








































Page 45 of 49

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

IMPERIAL INDUSTRIES, INC.



March 28, 1997 By: S/S Howard L. Ehler, Jr.
------------------------------------------
Howard L. Ehler, Jr., Executive Vice President/
Principal Executive Officer



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



S/S S. Daniel Ponce Chairman of the Board of March 28, 1997
- - -----------------------
S. Daniel Ponce Directors


S/S Lisa M. Brock Director March 28, 1997
- - -----------------------
Lisa M. Brock


S/S Leonard C. Ferri Director March 28, 1997
- - -----------------------
Leonard C. Ferri


S/S Morton L. Weinberger Director March 28, 1997
- - -----------------------
Morton L. Weinberger



S/S Howard L. Ehler, Jr. Executive Vice President, March 28, 1997
- - -----------------------
Howard L. Ehler, Jr. Secretary, Principal
Executive Officer and
Chief Financial Officer

S/S Betty J. Murchison Assistant Vice President March 28, 1997
- - -----------------------
Betty J. Murchison and Principal Accounting
Officer




Page 46 of 49


IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts and Reserves
Years ended December 31, 1996, 1995 and 1994



Charged Charged
Balance to cost to other Balance at
beginning and accounts- Deductions- end of
Description of period expenses describe describe period


Year ended December 31, 1996:

Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts:
Trade $139,000 $ 99,000 $ - $ 93,000(A) $145,000

Year ended December 31, 1995:

Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts:
Trade $116,000 $137,000 $ - $114,000(A) $139,000

Year ended December 31, 1994:

Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts:
Trade $100,000 $ 42,000 $ - $ 26,000(A) $116,000












(A) Uncollectible accounts written off, net of recoveries.












Page 47 of 49

Exhibit 11


IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

Statement Recomputation of Per Share Earnings



Calculation of (loss) income per share for the years ended December 31, 1996,
1995 and 1994 are as follows:

1996 1995 1994

Net income (loss) $274,000 $ 122,000 $ (15,000)

Less: dividends on redeemable
preferred stock, $1.10 cumulative
convertible series *(330,000) *(330,000) *(330,000)

Net loss applicable to
common stockholders $(56,000) $(208,000) $(345,000)

Weighted average number of
shares outstanding 5,471,000 5,382,000 5,317,000

Loss per share of common
stock:

Net income $ .05 $ .02 $ -

Dividends on redeemable
preferred stock (.06) (.06) (.06)

Net loss applicable
to common stockholders $(.01) $(.04) $(.06)




* Includes $330,000, of cumulative dividends not declared for each of the years
ended December 31, 1996, 1995 and 1994.
















Page 48 of 49

Exhibit 21



IMPERIAL INDUSTRIES, INC.

Subsidiaries of the Registrant

December 31, 1996




Incorporated
under laws of

Acrocrete, Inc. Florida

Just-Rite Lumber Company, Inc Florida

Premix-Marbletite Manufacturing Co. Florida

Triple I Leasing, Inc. Florida





















Page 49 of 49