<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
( X ) Annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934 (Fee Required) For the fiscal year ended December 31, 1995 or
( ) Transition report pursuant to Section 15(d) of the Securities Exchange
Act of 1934 (No Fee Required)
For the transition period from to
---- ----
Commission File Number 0-16109
ADVANCED POLYMER SYSTEMS, INC.
SALARY REDUCTION PROFIT SHARING PLAN
ADVANCED POLYMER SYSTEMS, INC.
3696 Haven Avenue
Redwood City, California 94063
Telephone: (415) 366-2626
<PAGE> 2
Financial Statement and Exhibits
ADVANCED POLYMER SYSTEMS, INC.
SALARY REDUCTION PROFIT SHARING PLAN
STATEMENT OF FINANCIAL CONDITION
at December 31, 1995
<TABLE>
<CAPTION>
Nationwide Nationwide Nationwide Nationwide
American Bond Fidelity Twentieth Guaranty APS Total
Balanced Fund of Magellan Century and Savings Common Participant All
Fund America Fund Growth Fund Stock Loans Funds
---------- ---------- -------- ---------- ----------- ------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash account $ 0 $ 0 $ 0 $ 0 $ 7,114 $ 0 $ 0 $ 7,114
Investments, at market 293,031 156,631 122,349 491,553 352,975 33,808 0 1,450,347
Participant loans 0 0 0 0 0 0 6,531 6,531
Contributions receivable 3,458 2,570 8,911 6,582 5,583 1,254 0 28,358
-------- -------- -------- -------- -------- ------- ------ ----------
TOTAL ASSETS $296,489 $159,201 $131,260 $498,135 $365,672 $35,062 $6,531 $1,492,350
======== ======== ======== ======== ======== ======= ====== ==========
LIABILITIES:
Distributions payable $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-------- -------- -------- -------- -------- ------- ----- ----------
TOTAL LIABILITIES 0 0 0 0 0 0 0 0
PLAN EQUITY:
Salary Reduction Accounts 250,543 135,232 104,974 420,447 301,560 28,418 6,531 1,247,705
Employer Matching Accounts 45,946 23,969 26,286 77,688 64,112 6,644 0 244,645
-------- -------- -------- -------- -------- ------- ------ ----------
TOTAL EQUITY 296,489 159,201 131,260 498,135 365,672 35,062 6,531 1,492,350
TOTAL LIABILITIES
AND EQUITY $296,489 $159,201 $131,260 $498,135 $365,672 $35,062 $6,531 $1,492,350
======== ======== ======== ======== ======== ======= ====== ==========
</TABLE>
See accompanying notes.
<PAGE> 3
Financial Statement and Exhibits
ADVANCED POLYMER SYSTEMS, INC.
SALARY REDUCTION PROFIT SHARING PLAN
STATEMENT OF FINANCIAL CONDITION
at December 31, 1994
<TABLE>
<CAPTION>
Nationwide Nationwide Nationwide Nationwide
American Bond Fidelity Twentieth Guaranty APS Total
Balanced Fund of Magellan Century and Savings Common Participant All
Fund America Fund Growth Fund Stock Loans Funds
---------- ---------- -------- ---------- ----------- ------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash account $ 0 $ 0 $ 0 $ 0 $ 1,965 $ 0 $ 0 $ 1,965
Investments, at market 194,624 137,245 23,372 400,805 240,328 22,894 0 1,019,268
Participant loans 0 0 0 0 0 0 10,108 10,108
Contributions receivable 0 0 0 0 1,430 0 0 1,430
-------- -------- ------- -------- -------- ------- ------- ----------
TOTAL ASSETS $194,624 $137,245 $23,372 $400,805 $243,723 $22,894 $10,108 $1,032,771
======== ======== ======= ======== ======== ======= ======= ==========
LIABILITIES:
Distributions payable $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-------- -------- ------- -------- -------- ------- ------- ----------
TOTAL LIABILITIES 0 0 0 0 0 0 0 0
PLAN EQUITY:
Salary Reduction Accounts 165,942 117,673 20,449 342,841 206,140 18,892 10,108 882,045
Employer Matching Accounts 28,682 19,572 2,923 57,964 37,583 4,002 0 150,726
-------- -------- ------- -------- -------- ------- ------- ----------
TOTAL EQUITY 194,624 137,245 23,372 400,805 243,723 22,894 10,108 1,032,771
TOTAL LIABILITIES
AND EQUITY $194,624 $137,245 $23,372 $400,805 $243,723 $22,894 $10,108 $1,032,771
======== ======== ======= ======== ======== ======= ======= ==========
</TABLE>
See accompanying notes.
<PAGE> 4
ADVANCED POLYMER SYSTEMS, INC.
SALARY REDUCTION PROFIT SHARING PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
for the year ended December 31, 1995
<TABLE>
<CAPTION>
Nationwide Nationwide Nationwide Nationwide
American Bond Fidelity Twentieth Guaranty APS
Balanced Fund of Magellan Century and Savings Common
Fund America Fund Growth Fund Stock
---------- ---------- --------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Interest and dividends $ 0 $ 0 $ 0 $ 0 $ 18,162 $ 0
--------- --------- --------- --------- --------- --------
Total investment income 0 0 0 0 18,162 0
--------- --------- --------- --------- --------- --------
Net realized and unrealized
gains (losses) on investments 46,387 21,690 26,872 71,238 0 5,247
--------- --------- --------- --------- --------- --------
Contributions:
Employee 43,172 19,728 57,220 61,994 66,221 11,399
Employer 12,777 7,237 20,869 21,815 22,760 4,036
Rollovers 3,458 3,270 2,417 18,285 16,689 0
--------- --------- --------- --------- --------- --------
Total contributions 59,407 30,235 80,506 102,094 105,670 15,435
--------- --------- --------- --------- --------- --------
Withdrawals, transfers and
distributions:
Member accounts
withdrawn & distributed (12,848) (20,558) (7,413) (57,690) (22,723) (2,885)
Member accounts
transferred-in (out) 8,919 (9,411) 7,923 (18,312) 20,840 (5,629)
--------- --------- --------- --------- --------- --------
Net withdrawals, transfers and
distributions (3,929) (29,969) 510 (76,002) (1,883) (8,514)
--------- --------- --------- --------- --------- --------
Net increase (decrease) in plan
equity 101,865 21,956 107,888 97,330 121,949 12,168
Plan equity:
Beginning of the year 194,624 137,245 23,372 400,805 243,723 22,894
--------- --------- --------- --------- --------- --------
End of the year $ 296,489 $ 159,201 $ 131,260 $ 498,135 $ 365,672 $ 35,062
========= ========= ========= ========= ========= ========
</TABLE>
<TABLE>
<CAPTION>
Total
Participant All
Loans Funds
----------- -----------
<S> <C> <C>
Investment Income:
Interest and dividends $ 753 $ 18,915
-------- -----------
Total investment income 753 18,915
-------- -----------
Net realized and unrealized
gains (losses) on investments 0 171,434
-------- -----------
Contributions:
Employee 0 259,734
Employer 0 89,494
Rollovers 0 44,119
-------- -----------
Total contributions 0 393,347
-------- -----------
Withdrawals, transfers and
distributions:
Member accounts
withdrawn & distributed 0 (124,117)
Member accounts
transferred-in (out) (4,330) 0
-------- -----------
Net withdrawals, transfers and
distributions (4,330) (124,117)
-------- -----------
Net increase (decrease) in plan
equity (3,577) 459,579
Plan equity:
Beginning of the year 10,108 1,032,771
-------- -----------
End of the year $ 6,531 $ 1,492,350
======== ===========
</TABLE>
See accompanying notes.
<PAGE> 5
ADVANCED POLYMER SYSTEMS, INC.
SALARY REDUCTION PROFIT SHARING PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
for the year ended December 31, 1994
<TABLE>
<CAPTION>
Nationwide Nationwide Nationwide Nationwide
American Bond Fidelity Twentieth Guaranty APS
Balanced Fund of Magellan Century and Savings Common
Fund America Fund Growth Fund Stock
---------- ---------- -------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Interest and dividends $ 0 $ 0 $ 0 $ 0 $ 11,201 $ 0
--------- --------- ------- --------- --------- --------
Total investment income 0 0 0 0 11,201 0
--------- --------- ------- --------- --------- --------
Net realized and unrealized
gains (losses) on investments (3,954) (8,797) 449 (8,297) 0 (3,460)
--------- --------- ------- --------- --------- --------
Contributions:
Employee 47,870 22,930 7,831 81,238 54,366 9,375
Employer 11,858 6,741 1,396 20,285 12,505 2,381
Rollovers 0 0 0 0 0 0
--------- --------- ------- --------- --------- --------
Total contributions 59,728 29,671 9,227 101,523 66,871 11,756
--------- --------- ------- --------- --------- --------
Withdrawals, transfers and
distributions:
Member accounts
withdrawn (133,785) (31,598) 0 (217,652) (92,441) (21,528)
Distributions 0 0 0 0 (2,005) 0
Member accounts
transferred-in (out) (27,892) 18,819 13,696 (43,724) 45,804 (3,149)
--------- --------- ------- --------- --------- --------
Net withdrawals, transfers and
distributions (161,677) (12,779) 13,696 (261,376) (48,642) (24,677)
--------- --------- ------- --------- --------- --------
Net increase (decrease) in plan
equity (105,903) 8,095 23,372 (168,150) 29,430 (16,381)
Plan equity:
Beginning of the year 300,527 129,150 0 568,955 214,293 39,275
--------- --------- ------- --------- --------- --------
End of the year $ 194,624 $ 137,245 $23,372 $ 400,805 $ 243,723 $ 22,894
========= ========= ======= ========= ========= ========
<CAPTION>
Total
Participant All
Loans Funds
----------- -----------
<S> <C> <C>
Investment Income:
Interest and dividends $ 966 $ 12,167
-------- -----------
Total investment income 966 12,167
-------- -----------
Net realized and unrealized
gains (losses) on investments 0 (24,059)
-------- -----------
Contributions:
Employee 0 223,610
Employer 0 55,166
Rollovers 0 0
-------- -----------
Total contributions 0 278,776
-------- -----------
Withdrawals, transfers and
distributions:
Member accounts
withdrawn 0 (497,004)
Distributions 0 (2,005)
Member accounts
transferred-in (out) (3,554) 0
-------- -----------
Net withdrawals, transfers and
distributions (3,554) (499,009)
-------- -----------
Net increase (decrease) in plan
equity (2,588) (232,125)
Plan equity:
Beginning of the year 12,696 1,264,896
-------- -----------
End of the year $ 10,108 $ 1,032,771
======== ===========
</TABLE>
See accompanying notes.
<PAGE> 6
ADVANCED POLYMER SYSTEMS, INC.
SALARY REDUCTION PROFIT SHARING PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
for the year ended December 31, 1993
<TABLE>
<CAPTION>
Nationwide Nationwide Nationwide Nationwide
American Bond Twentieth Guaranty APS Total
Balanced Fund of Century and Savings Common Participant All
Fund America Growth Fund Stock Loans Funds
---------- ---------- ---------- ----------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Interest and dividends $ 0 $ 0 $ 0 $ 9,982 $ 0 $ 2,722 $ 12,704
--------- --------- --------- --------- -------- -------- -----------
Total investment income 0 0 0 9,982 0 2,722 12,704
--------- --------- --------- --------- -------- -------- -----------
Net realized and unrealized
gains (losses) on investments 21,185 12,622 16,374 0 (21,224) 0 28,957
--------- --------- --------- --------- -------- -------- -----------
Contributions:
Employee 53,960 25,598 135,817 36,714 12,827 0 264,916
Employer 7,631 3,697 19,776 6,726 2,112 0 39,942
Rollovers 313 0 313 428 0 0 1,054
--------- --------- --------- --------- -------- -------- -----------
Total contributions 61,904 29,295 155,906 43,868 14,939 0 305,912
--------- --------- --------- --------- -------- -------- -----------
Withdrawals, transfers and
distributions:
Member accounts
withdrawn (10,960) (7,071) (60,080) (8,185) (1,314) 0 (87,610)
Distributions 0 0 2,319 1,814 0 0 4,133
Member accounts
transferred-in (out) 44,620 (2,929) (35,123) 15,562 (1,416) (20,714) 0
--------- --------- --------- --------- -------- -------- -----------
Net withdrawals, transfers and
distributions 33,660 (10,000) (92,884) 9,191 (2,730) (20,714) (83,477)
--------- --------- --------- --------- -------- -------- -----------
Net increase (decrease) in plan
equity 116,749 31,917 79,396 63,041 (9,015) (17,992) 264,096
Plan equity:
Beginning of the year 183,778 97,233 489,559 151,252 48,290 30,688 1,000,800
--------- --------- --------- --------- -------- -------- -----------
End of the year $ 300,527 $ 129,150 $ 568,955 $ 214,293 $ 39,275 $ 12,696 $ 1,264,896
========= ========= ========= ========= ======== ======== ===========
</TABLE>
See accompanying notes.
<PAGE> 7
ADVANCED POLYMER SYSTEMS, INC.
SALARY REDUCTION PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 1995, 1994 and 1993
1. DESCRIPTION OF THE PLAN
The following description of the Advanced Polymer Systems, Inc. Salary
Reduction Profit Sharing Plan (the "401(k) Plan" or the "Plan") provides only
general information. Members should refer to the 401(k) Plan document for more
complete information.
(a) General
The 401(k) Plan is a defined contribution plan covering active
employees of Advanced Polymer Systems, Inc. ("APS" or the "Company"). For 1993
and years prior, any employee who had completed six consecutive calendar months
of service and had attained age 21 was eligible to become a voluntary member of
the 401(k) Plan. Further, any newly hired employee who was an active
participant in another 401(k) plan for the ninety day period immediately prior
to employment with the Company, was immediately eligible to become a voluntary
member of the Company's 401(k) Plan as of the date of employment. Beginning
with the 1994 Plan year, the Plan document was amended to allow participants to
be eligible immediately upon employment.
The 401(k) Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
(b) Contributions - Employee
Eligible domestic employees may contribute up to 15% of their total
compensation for each calendar year, limited to $9,240 in 1995 and 1994, and
$8,994 in 1993 (the "Employee Contribution").
(c) Contributions - Employer
For 1993 and years prior, the Company made matching contributions
equal to 25% of each member's Employee Contribution during a Plan year up to a
maximum amount equal to the lesser of 1.5% of each member's annual
compensation, or $1,000 per calendar year (the "Employer Matching
Contribution"). The Plan document was subsequently amended for the 1994 Plan
year to increase the Company's matching contribution to 50%. The Company may
also contribute additional discretionary amounts as it may determine (the
"Employer Discretionary Contribution"). No Employer Discretionary
Contributions have been made to the Plan since its inception. Beginning with
the 1995 Plan year, the Plan document was amended to change the maximum
Employer Matching Contribution to 3% of the participants' annual gross
compensation, limited to $4,500.
(d) Members' Accounts
The company maintains separate Employee Contribution accounts,
Employer Matching Contribution accounts and Employer Discretionary Contribution
accounts for each member. Contributions are credited to the member accounts
each semi-monthly payroll period.
In 1994, the plan trustees added the Fidelity Magellan Fund to the
investment options offered to the participants. Each member may elect from the
following investment options for his/her Employee Contribution accounts:
<PAGE> 8
Company Common Stock:
The Common Stock of APS will be purchased by the 401(k) Plan's investment
manager for the member in a market transaction at the then current market price
as quoted on the NASDAQ National Market System. Each member may elect to
invest up to 10% of his/her Employee Contributions and Employer Matching
Contributions in this option.
Fidelity Magellan Fund:
A mutual fund seeking capital growth by investing primarily in common stocks
and securities convertible into common stock of domestic and foreign
multinational issuers of all sizes.
Nationwide Twentieth Century Growth:
A mutual fund seeking capital growth by investing primarily in common stocks
that are considered by fund management to have better-than-average prospects
for appreciation.
Nationwide American Balanced Fund:
A mutual fund seeking conversion of capital, current income and long-term
growth of both capital and income through investments in stocks, bonds and
other fixed-income securities.
Nationwide Bond Fund of America:
A mutual fund seeking to provide shareholders as high a level of current income
as is consistent with the preservation of capital by investing primarily in
bonds such as marketable corporate debt securities, U.S. Government securities,
mortgage related securities and cash or money market instruments.
Nationwide Guaranty and Savings Fund:
Money market funds invested in short-term securities with a guaranteed rate of
6.1% in 1995, 5.6% in 1994 and 6.2% in 1993.
Members may change their investment options at specified dates during
the Plan year as set forth in the 401(k) Plan document. Income from the
selected investments of 401(k) Plan assets is allocated quarterly in the
proportion that each member's investment option balance bears to the cumulative
balance of each investment option.
(e) Vesting
The 401(k) Plan provides that the allocated contribution and income of
both the Employee Contribution account and the Employer Matching Contribution
account are immediately and fully vested. Employer Discretionary Contributions
become vested over a period of 6 years in accordance with the following
schedule:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Less than 1 0%
1 10%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
</TABLE>
<PAGE> 9
(f) Withdrawal of Member Accounts
The full amounts in a member's accounts, other than the amounts
constituting Employer Discretionary Contributions, will be distributed upon
retirement (at 62 years of age or if later, the employee's fifth anniversary of
employment with the Company), death, or permanent disability of the member.
If a member's employment with the Company terminates prior to normal
retirement (as defined above) for any reason other than death or disability,
the participant will be entitled to a distribution equal to the vested portion
of his/her accounts.
Members should refer to the 401(k) Plan document for a more complete
description of procedures and calculations for the withdrawal of accounts.
(g) Trustees
The 401(k) Plan is administered by the Company. A Trustee is
responsible for investing the assets of the Plan which are held in Trust. The
current trustee is Michael O'Connell.
The Trustee has retained Pension Management Systems, Inc. ("PMSI") to
provide recordkeeping services to the 401(k) Plan. PMSI also invests Plan
assets in the various mutual funds offered by Nationwide Life Insurance.
Members of the Board of Directors and employees of the Company serving
as Trustees receive no additional compensation for services in connection with
the administration of the 401(k) Plan.
(h) Participant loans
Participants are allowed to borrow from the Plan assets. The Plan
will allow a participant to borrow up to the lesser of 50% of his/her vested
Plan balance or $50,000. The loan, secured by the vested Plan balance of the
participant, is repayable in installments over a period up to 5 years at the
prime rate plus 2%. The term of the loan can be extended for more than 5 years
if the loan is used to purchase the principal dwelling of the participant.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Investment Valuation
The value of investments is based upon quoted market values on the
last business day of the year.
(b) Security Transactions and Investment Income
Securities transactions are recorded on a trade date basis. The
difference between cost and market value of investments at the beginning and
end of the period is reported as unrealized appreciation or depreciation in the
market value of investments using the average cost method.
(c) Expenses of the 401(k) Plan
Reasonable fees and expenses incurred in the establishment and
administration of the 401(k) Plan, and reasonable compensation of attorneys,
accountants, investment managers, actuaries, consultants, or expenses of the
Trustees or any agent of the Trustees if not employed by the Company will be
paid out of the assets of the 401(k) Plan, except to the extent that the
Company pays such expenses directly. For the three-year period ended December
31, 1995, all such expenses were paid by the Company.
<PAGE> 10
(d) Forfeited Funds
If a Participant terminates employment with APS prior to completing
six years of service, the unvested portion of such member's Employer
Discretionary Contribution account will be forfeited and allocated among the
remaining participants in the 401(k) Plan.
(e) Basis of Accounting
The financial statements are prepared on the accrual basis of
accounting.
3. INVESTMENTS
Investments of the 401(k) Plan at market value as of December 31 are
summarized as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Nationwide American Balanced Fund $293,031 $194,624
Nationwide Bond Fund of America 156,631 137,245
Fidelity Magellan Fund 122,349 23,372
Nationwide Twentieth Century Growth 491,553 400,805
Nationwide Guaranty and Savings Fund 352,975 240,328
APS Common Stock 33,808 22,894
</TABLE>
Investment option elections of the members of the 401(k) Plan at
December 31 are summarized as follows:
<TABLE>
<CAPTION>
Number of Participants
1995 1994
---- ----
<S> <C> <C>
Nationwide American Balanced Fund 40 23
Nationwide Bond Fund of America 29 20
Fidelity Magellan Fund 33 11
Nationwide Twentieth Century Growth 49 34
Nationwide Guaranty and Savings Fund 43 37
APS Common Stock 39 29
</TABLE>
4. INCOME TAXES
APS received a favorable determination from the Internal Revenue
Service ("IRS") stating that the 401(k) Plan is qualified under Section 401 of
the Internal Revenue Code ("Code") as amended, and is exempt from federal income
taxation under Section 501 of the Code. Accordingly, the financial statements
do not contain a provision for income taxes. The continued qualification is
dependent on the Plan's future operation.
Members do not become subject to income taxes as a result of
participation in the 401(k) Plan until assets in the member's accounts are
distributed. Under certain circumstances, a distribution from the 401(k) Plan
is subject to income tax as ordinary income.
5. PLAN TERMINATION
Although it has not expressed any intent to do so, APS has the right
to terminate the 401(k) Plan at any time. In the event of termination, all
accounts will become fully vested, all net assets will be allocated and
<PAGE> 11
distributed to the members based on their respective account balances.
6. SCHEDULE OF MARKETABLE SECURITIES
Marketable Securities of the 401(k) Plan at December 31, 1995 and
1994, inclusive of contributions receivable, consisted of the following:
<TABLE>
<CAPTION>
Market
Units Description Cost Value
- ----- ----------- ---- -----
<S> <C> <C> <C>
1995
----
153,015 Nationwide American Balanced Fund $ 211,711 $ 296,489
78,610 Nationwide Bond Fund of America 123,491 159,201
73,602 Fidelity Magellan Fund 103,939 131,260
133,760 Nationwide Twentieth Century Growth 378,666 498,135
337,790 Nationwide Guaranty and Savings Fund 317,841 365,672
6,375 APS Common Stock 31,869 35,062
---------- -----------
$1,167,517 1,485,819
</TABLE>
<TABLE>
<CAPTION>
1994
----
<S> <C> <C> <C>
127,693 Nationwide American Balanced Fund $156,233 $194,624
80,136 Nationwide Bond Fund of America 123,225 137,245
17,931 Fidelity Magellan Fund 22,923 23,372
129,523 Nationwide Twentieth Century Growth 352,574 400,805
243,723 Nationwide Guaranty and Savings Fund 214,054 243,723
5,233 APS Common Stock 24,768 22,894
-------- --------
$893,777 $1,022,663
</TABLE>
<PAGE> 12
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders of Advanced Polymer Systems, Inc. and
the Trustees and Participants in the Advanced Polymer Systems, Inc. Salary
Reduction Profit Sharing Plan:
We have audited the accompanying statements of financial condition of
the Advanced Polymer Systems, Inc. Salary Reduction Profit Sharing Plan as of
December 31, 1995 and 1994, and the related statements of income and changes in
Plan equity for each of the years in the three-year period ended December 31,
1995. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Advanced
Polymer Systems, Inc. Salary Reduction Profit Sharing Plan as of December 31,
1995 and 1994, and the results of its operations and its changes in Plan equity
for each of the years in the three-year period ended December 31, 1995 in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
San Francisco, California
March 15, 1996
<PAGE> 13
Exhibits.
23 Consent of Independent Certified Public Accountants
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the plan) have duly caused this
annual report to be signed by the undersigned thereunto duly authorized.
Advanced Polymer Systems, Inc.
Salary Reduction Profit Sharing Plan
Date: March 27, 1996 /s/ Michael O'Connell
---------------------
Michael O'Connell
Trustee
<PAGE> 14
EXHIBIT INDEX
Form 11-K Annual Report
ADVANCED POLYMER SYSTEMS, INC.
SALARY REDUCTION PROFIT SHARING PLAN
23 Consent of Independent Certified Public Accountants
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders of Advanced Polymer Systems, Inc. and
the Trustees and Participants in the Advanced Polymer Systems, Inc. Salary
Reduction Profit Sharing Plan;
We consent to incorporation by reference in the Registration Statement (No.
33-29084) on Form S-8 of the Advanced Polymer Systems, Inc. Salary Reduction
Profit Sharing Plan of our report dated March 15, 1996 relating to the
statements of financial condition of the Advanced Polymer Systems, Inc. Salary
Reduction Profit Sharing Plan as of December 31, 1995 and 1994 and the related
statements of income and changes in Plan equity for each of the years in the
three-year period ended December 31, 1995, which report appears in the December
31, 1995 annual report on Form 11-K of the Advanced Polymer Systems, Inc.
Salary Reduction Profit Sharing Plan.
KPMG Peat Marwick LLP
San Francisco, California
March 27, 1996
