<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
CONFORMED COPY
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _________________ to _________________.
COMMISSION FILE NUMBER 0-18583
POLYMER SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
Nevada, U.S.A. 88-0360526
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
1569 Dempsey Road
Vancouver, British Columbia
Canada V7K 1S8
(Address of principal executive offices)
(604) 683-3473
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of September 30, 1999.
TITLE OF CLASS NO. OF SHARES
Common Shares, par value $0.001 8,783,522
<PAGE> 2
POLYMER SOLUTIONS, INC.
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page
Number Number
PART I - FINANCIAL INFORMATION
<S> <C> <C>
1. Financial Statements
Consolidated Balance Sheets
at September 30, 1999 and March 31, 1999 3
Consolidated Statements of Operations
for the periods ended September 30, 1999 and 1998 4
Consolidated Statements of Shareholders' Equity (Deficit)
for the periods ended September 30, 1999 and 1998 5
Consolidated Statements of Cash Flows
for the periods ended September 30, 1999 and 1998 6
Notes to Consolidated Financial Statements 7
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II - OTHER INFORMATION
1. Legal Proceedings 13
2. Changes in Securities and Use of Proceeds 13
3. Defaults Upon Senior Securities 13
4. Submission of matters to a vote of securities holders 13
5. Other Information 13
6. Exhibits Index and Reports on Form 8-K 14
SIGNATURES 14
</TABLE>
The accompanying interim consolidated financial statements and notes are
unaudited; However, in the opinion of management, they reflect all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of the results for the interim periods presented. Results of operations for the
periods ended September 30, 1999 are not necessarily indicative of results
expected for an entire year.
Certain statements in this Quarterly Report on Form 10-Q are not based on
historical facts, but are instead based upon a number of assumptions concerning
future conditions that may ultimately prove to be inaccurate. Actual events and
results may materially differ from anticipated results described in such
statements. The Company's ability to achieve such results is subject to certain
risks and uncertainties, including but not limited to, adverse business
conditions in the industries served by the Company and the general economy,
competition, new laws and regulations impacting the products that the Company
provides, and other risk factors affecting the Company's business which are
beyond the Company's control.
<PAGE> 3
POLYMER SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(U.S. DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999
SEPTEMBER 30 MARCH 31
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash $ 1,064,086 $ 39,303
Accounts receivable, net 1,421,245 1,143,919
Inventories, net 1,248,258 1,009,754
Prepaid expenses 191,717 97,647
------------ ------------
3,925,306 2,290,623
Fixed assets, net 882,111 907,533
Other assets 167,428 8,324
------------ ------------
$ 4,974,845 $ 3,206,480
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 1,053,526 $ 992,532
Payroll related and commissions payable $ 251,157 $ 244,332
Current portion of capital lease obligations 150,810 126,912
------------ ------------
1,455,493 1,363,776
Bank loan facilities 1,609,697 1,286,473
Capital lease obligations 453,779 482,719
Due to related parties 11,186 46,350
------------ ------------
3,530,155 3,179,318
------------ ------------
Minority interest 190,790 225,036
------------ ------------
Commitments (Note 4)
Shareholders' equity (deficit):
Preferred stock, $0.001 par value;
Authorized - 4,000,000 shares; issued and outstanding - nil
Common stock, $0.001 par value;
Authorized - 20,000,000 shares; issued and outstanding,
September 30, 1999 - 8,783,522 and March 31, 1999 6,410,833 8,783 6,410
Additional paid-in capital 11,463,261 10,309,361
Accumulated deficit (10,218,144) (10,513,645)
------------ ------------
1,253,900 (197,874)
------------ ------------
$ 4,974,845 $ 3,206,480
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE> 4
POLYMER SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(U.S. DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Sales revenue $ 2,906,894 $ 1,957,047 $ 5,702,517 $ 3,692,308
Costs of goods sold (1,993,537) (1,389,359) (3,915,990) (2,770,789)
----------- ----------- ----------- -----------
913,357 567,688 1,786,527 921,519
----------- ----------- ----------- -----------
Corporate and administrative expenses:
Marketing and sales 266,498 255,996 569,615 445,755
General and administrative 285,499 226,608 516,556 460,912
Research and development 149,574 150,571 286,449 239,453
----------- ----------- ----------- -----------
701,571 633,175 1,372,620 1,146,120
----------- ----------- ----------- -----------
Income (loss) from operations 211,786 (65,487) 413,907 (224,601)
Other income 945 74,594 945 74,594
Interest expense (57,900) (74,904) (119,351) (152,490)
----------- ----------- ----------- -----------
Income (loss) before provision for income taxes 154,831 (65,797) 295,501 (302,497)
Provision for income taxes - - - -
----------- ----------- ----------- -----------
Net income (loss) $ 154,831 $ (65,797) $ 295,501 $ (302,497)
=========== =========== =========== ===========
Weighted average basic number
of common shares outstanding 8,160,857 5,476,428 7,206,484 5,411,048
=========== =========== =========== ===========
Basic earnings per share $ .02 $ (.01) $ .04 $ (.06)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
POLYMER SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (UNAUDITED)
(U.S. DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------------------------------
1999 1998
-------------------------------- ------------------------------
COMMON COMMON
SHARES AMOUNT SHARES AMOUNT
------------ ------------ ---------- ------------
<S> <C> <C> <C> <C>
COMMON STOCK:
Balance, beginning of year 6,410,833 $ 6,410 5,344,617 $ 5,345
Shares issued, pursuant to -
Private Placements 2,043,915 2,044 432,000 432
Conversion of debt for common stock - - 633,883 633
Exercise of warrants 313,500 314 - -
Minority interest shareholder
exchange of shares 15,274 15 333 -
------------ ------------ ------------ ------------
Balance, end of period 8,783,522 8,783 6,410,833 6,410
------------ ------------ ------------ ------------
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of year - 10,309,361 - 9,775,173
Shares issued, pursuant to -
Private placement, net - 959,605 - 244,290
Conversion of debt for common stock - - - 289,151
Exercise of warrants - 160,064 - -
Minority interest shareholder
exchange of shares - 34,231 - 747
------------ ------------ ------------ ------------
Balance, end of period - 11,463,261 - 10,309,361
------------ ------------ ------------ ------------
EQUITY (DEFICIT):
Balance, beginning of period - (10,513,645) - (9,987,355)
Net income (loss) - 295,501 - (302,497)
------------ ------------ ------------ ------------
Balance, end of period - (10,218,144) - (10,289,852)
------------ ------------ ------------ ------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) 8,783,522 $ 1,253,900 6,410,833 $ 25,919
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
POLYMER SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(U.S. DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30,
-------------------------------
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net income (loss) $ 295,501 $ (302,497)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 120,761 116,334
Gain on disposal of assets (945) (74,594)
Changes in operating assets and liabilities:
Accounts receivable (277,326) (61,410)
Inventory (238,504) 199,385
Other Assets 531 (88,592)
Other operating activities (26,251) (307,930)
----------- -----------
Net cash used in operating activities $ (126,233) $ (519,304)
----------- -----------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES (192,229) 148,340
----------- -----------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Borrowings on bank loan facilities, net 323,224 38,934
Proceeds from issuance of stock 1,122,027 534,505
Other financing activities (102,006) (201,604)
----------- -----------
Net cash provided by financing activities 1,343,245 371,835
----------- -----------
Increase in cash 1,024,783 871
Cash, beginning of year 39,303 1,177
----------- -----------
Cash, end of period $ 1,064,086 $ 2,048
=========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Minority interest shareholder exchange of shares $ 34,246 $ 746
=========== ===========
Acquisition of equipment under capital leases $ 61,800 $ 142,985
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
POLYMER SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the rules and regulations of the
United States Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements
prepared in accordance with United States generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. The consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for this period are not necessarily indicative of the
results to be expected for the whole year. These statements should be
read in conjunction with the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for
the year ended March 31, 1999, as filed with the Securities and Exchange
Commission (File No. 000-18583).
RECLASSIFICATIONS
Certain prior period balances have been reclassified to conform to the
current period presentation.
2. INVENTORIES
<TABLE>
<CAPTION>
1999
--------------------------------
SEPTEMBER 30, MARCH 31,
------------- -------------
<S> <C> <C>
Raw materials and supplies $ 771,995 $ 605,288
Finished goods 669,035 603,250
Less allowance for slow-moving inventory (192,772) (198,784)
------------- -------------
$ 1,248,258 $ 1,009,754
============= =============
</TABLE>
3. INCOME TAXES
The Company and its subsidiaries have operating loss carry-forwards in
excess of $6,000,000 expiring at various dates through 2014, as well as
federal and state tax credits of $221,000 and $104,000, which are
indefinite. These operating loss carry-forwards and tax credits are
available for offset against future taxable income arising from Canadian
and United States operations. There are no other material temporary
differences. The Company has provided a valuation allowance of 100%
against all available loss carry-forwards and tax credits. However, to
the extent the Company continues to generate future taxable income,
management will reassess the need for a full allowance against the
deferred tax assets. No provision is provided for second quarter
profits because of the application of loss carry-forwards and because
the impact of State minimum and alternative taxes is de minimis.
7
<PAGE> 8
4. EARNINGS PER SHARE ("EPS")
The Company's basic net income per share is computed by dividing net
income by the weighted average number of outstanding common shares. The
diluted EPS amounts are the same as the basic EPS for all periods
presented.
5. COMMON STOCK AND SUBSEQUENT EVENTS
In February 1999, the Company entered into a non-binding letter of
intent to acquire all of the outstanding common stock of U.S. Cellulose
Co., Inc. for $1,000,000 in cash. The Company repriced certain warrants
to encourage exercise and conducted two private placements in order to
finance the transaction.
During the second quarter, the Company issued 263,500 shares on the
exercise of warrants, at an exercise price of $0.52 (Cdn$0.76) per
share, for which the Company received $134,511 in cash.
On July 5, 1999, the Company closed an offering agreement and issued
800,000 shares at $0.54 (Cdn$0.80) with transferable warrants to
purchase an aggregate of 400,000 common shares. Two warrants entitle
the holder to purchase one common share at $0.60 (Cdn$0.90) up to June
30, 2000. In accordance with the Agency Agreement, the Company issued
50,000 common shares as a finance fee, paid 8% commission in cash and
provided Broker's warrants entitling the Agent to purchase 160,000
common shares at a price of $0.60 (Cdn$.90) for one year.
On July 30, 1999, the Company completed a private placement and issued
1,127,750 common shares at $0.54 (Cdn$.80) with non-transferable
warrants to purchase an aggregate of 1,127,750 common shares. Each
warrant entitles the holder to purchase a common share at $0.60
(Cdn$0.90) for one year to July 30, 2000 and at $0.84 (Cdn$1.25) for one
year to July 30, 2001. In accordance with the Agency Agreement a
commission was paid and warrants were issued under the same terms as
offered.
The value ascribed to the warrants issued through the short-form
offering and private placement is $335,389, which is included in
additional paid-in capital.
In October, 1999, further warrants were exercised to purchase 65,250
shares and the warrants to acquire 237,500 shares expired on October 30,
1999.
MINORITY INTEREST
During the six month period ended September 30, 1999 15,274 PSI
Acquisitions Corp. preferred shares were exchanged or redeemed for
15,274 shares of the Company's common stock.
8
<PAGE> 9
6. SUBSEQUENT EVENT
ACQUISITION OF U.S. CELLULOSE COMPANY, INC.
Effective October 18, 1999 Alternative Materials Technology, Inc.
("AMT"), a wholly-owned subsidiary of the Company purchased all of the
capital stock of U.S. Cellulose Co. ("USCC"), a California corporation,
pursuant to a Stock Purchase Agreement dated October 15, 1999. The
purchase price for USCC was $1,000,000 in cash. In addition, the
Company entered in a Continuing Guaranty for performance obligations
under a USCC Severance Plan which provides certain benefits to employees
of USCC upon the change in ownership. The Company has also agreed to
enter into Consulting Agreements with the former owner and a senior
officer of USCC to provide for continuity of management and a smooth
transition to new ownership. Through September 30, 1999, the Company
has incurred $159,635 of professional services expenses related to the
acquisition that are reflected in other assets. The purchase will be
further discussed in the forthcoming Form 8-K document.
BANK LOAN FACILITIES
Effective October 20, 1999, the Company's line of credit was increased
from $1,800,000 to $3,000,000.
9
<PAGE> 10
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999
RESULTS FROM OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 COMPARED
WITH SEPTEMBER 30, 1998:
Sales revenue in the six-month period ended September 30, 1999 were $5,702,517
compared to $3,692,308 during the six-month period ended September 30, 1998, an
increase of 54%. The Company's water-based products are the principal source of
revenue and increased 36% over the same period last year. The secondary source
of revenue is the Company's low volatile organic compound solvent-based products
which increased by 80% as compared to the same period last year. These
increases reflect the demand for the Company's coatings and other products,
which has been stimulated by concerted marketing efforts and increased brand
name recognition.
Cost of sales for the six months ended September 30, 1999 were $3,915,990
compared to cost of sales for the six-month period ended September 30, 1998, of
$2,770,789. Cost of sales as a percentage of sales decreased to 68% from 75%
for the first half of the fiscal year. The related gross profit for the six
months ended September 30, 1999 was $1,786,527 or 31% of sales compared to
$921,519 or 25% of sales for the six-month period ended September 30, 1998.
These significant improvements come from continued negotiation for lower raw
material costs and the effect of improved production efficiencies achieved by
the operation of our new facility.
Marketing and sales expense for the six months ended September 30, 1999, totaled
$569,615 from $445,755 for the six-month period ended September 30, 1998, an
increase of 28%. This increase is due to a combination of higher sales
commissions related to the 54% increase in revenue and the continued
strengthening of the marketing and sales staff required to maintain the
expansion of the customer base.
The Company's general and administrative expenses for the six months ended
September 30, 1999, increased to $516,556 from $460,912 for the six-month period
ended September 30, 1998. The increased expense is related to additional audit
and payroll related costs.
Research and development costs of $286,449 during the six months ended September
30, 1999 increased by 20% over the $239,453 for the six months ended September
30, 1998, which reflects the full cost of the prior year increase in the number
of employees hired to improve product development.
Other Income for the six months ended September 30, 1999, decreased to $945 from
$74,594 for the six-month period ended September 30, 1998. Included in the
$74,594 is the gain of $73,149 realized upon the sale of the Company's old
facilities.
LIQUIDITY AND CAPITAL RESOURCES
Cash increased to $1,064,086 at September 30, 1999 from $39,303 at the end of
fiscal 1999 through the efforts of the Company raising funds for the purchase of
U.S. Cellulose Co. for $1,000,000 in cash. Cash flow used in operating
activities totaled $126,233 for the first half of
10
<PAGE> 11
fiscal year 2000 versus $519,304 in the prior year period ending March, 1999,
primarily because of management's focus on reducing raw material costs. Accounts
receivable and inventory at September 30, 1999 increased by $277,326 and 238,504
respectively from September 30, 1998 due to the increased level of operating
activity. Capital additions were $33,539 in the six-month period ended September
30, 1999, compared to $251,394 for the same period a year ago. Other additional
costs of $159,635 were spent to perform due diligence related to the pending
U.S. Cellulose acquisition. These requirements were financed from borrowings on
the Company's line of credit and proceeds from the exercise of stock warrants.
The Company has working capital of $2,469,812 at September 30, 1999, versus
$926,846 at the end of fiscal 1999. The current ratio at September 30, 1999, was
2.7 versus 1.7 for the fiscal 1999 year-end ratio.
ACQUISITION OF U.S. CELLULOSE AND RELATED FINANCING
Effective October 18, 1999 the Company was successful in completing the
acquisition of U.S. Cellulose for (US)$1 million in cash. The Company is
integrating the operations at this time.
VOTE TO SECURITIES HOLDERS
The Company held it's Annual General Meeting August 17, 1999. Management of the
Company received shareholder approval to amend the 1998 Economic Value Added
Incentive Compensation Plan ("EVA Plan") to provide for the granting of 20,000
stock options per year to each outside Director. Subsequently the Company has
received approval from the Vancouver Stock Exchange to proceed with the issuance
of stock options.
OUTLOOK
With the support of our shareholders and investors over the years, we have
reached our goal of having an efficient, state-of-the-art manufacturing plant
with the capacity to add highly profitable incremental volume. Coupled with our
increased focus on product and customer development, we are at a historical
point in the life of the Company and have been moving continuously and
significantly towards profitability. The results demonstrate the Company's
successful pursuit of significant, profitable growth. Along with pursuing
additional, profitable internal sales growth, we will continue to aggressively
seek opportunities to create a meaningful increase in shareholder value for our
investors through acquisitions, joint ventures, and other strategic alliances.
YEAR 2000
With regard to the state of readiness regarding the year 2000 issue, the Company
has finished the evaluation and risk assessment relating to the potential impact
of the Year 2000 issue in the areas of plant systems, external parties and
information technology. Regarding plant systems, it has
11
<PAGE> 12
been determined that none of the Company's plant operating machinery is
triggered by date, with the exception of the time clock. With regard to external
parties, the Company has surveyed its key suppliers and service providers to
determine their year 2000 readiness and their ability to provide raw materials
and supplies and services without interruption and we are continually assessing
the potential risk. With regard to information technology, the Company has
upgraded its plant operation system software and accounting system software to
be year 2000 compliant. The Company believes that with these computer system
software upgrades, the Year 2000 issue will not pose significant plant operation
system or accounting system problems. The Company has utilized both internal and
external resources to implement the aforementioned upgrades and has manual
back-up systems available to implement.
The total cost of the Company's year 2000 activities, including the
aforementioned computer system software upgrades, did not exceed $20,000. Future
additional costs are not expected to be material to the Company's operations,
liquidity or capital resources.
There is still uncertainty about the scope of the year 2000 issues. At this
time the Company cannot quantify the potential impact of these failures. The
Company's year 2000 program and contingency plans have been developed to address
issues within the Company's control. The program minimizes, but does not
eliminate the issues of external parties.
Note to Readers
When used in this discussion, the words "expect(s)", "feel(s)", "believe(s)",
"will", "may", "anticipate(s)" and similar expressions are intended to identify
forward-looking statements Such statements in this Quarterly Report on Form 10-Q
and in letters to shareholders, are not based on historical facts, but are
instead based upon a number of assumptions concerning future conditions that may
ultimately prove to be inaccurate. Actual events and results may materially
differ from anticipated results described in such statements. The Company's
ability to achieve such results is subject to certain risks and uncertainties,
including but not limited to, adverse business conditions in the industries
served by the Company and the general economy, competition, new laws and
regulations impacting the products that the Company provides, and other risk
factors affecting the Company's business beyond the Company's control.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - NOT APPLICABLE
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - NOT APPLICABLE
ITEM 3 DEFAULTS UPON SENIOR SECURITIES - NOT APPLICABLE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
The Annual Meeting of Stockholders was held on August 17, 1999 in
Vancouver, British Columbia, Canada. At such meeting, 3,320,593 shares
were entitled to vote. The table below discloses the vote with respect
to each proposal:
a) To ratify the selection of PricewaterhouseCoopers, LLP, Sacramento,
California as the Company's independent auditors for the fiscal year
ended March 31, 2000.
For 3,317,909
Against 0
Abstain 2,684
b) To elect the following Directors to serve for a term ending upon
the 2000 Annual Meeting of Stockholders or until their successors
are duly elected and qualified:
Ellis, Gordon L. Silbernagel, Stephen H.
Habib, Gerald A. Sutherland, John J.
Jones, Darryl F. Flanagan, E. Laughlin
Maligie, William A.
As proposed by management in the proxy statement to the
stockholders, each of the above nominees were re-elected to the
Board of Directors in an affirmative vote.
For 3,090,720
Against 0
Abstain 229,873
c) To approve the granting of 20,000 stock options per year to each
of the outside directors, with options expiring after three years,
yielding a cumulative maximum amount of 60,000 options outstanding
at any one time.
For 3,208,343
Against 112,250
Abstain 0
ITEM 5. OTHER INFORMATION - NOT APPLICABLE
13
<PAGE> 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBIT 27. FINANCIAL DATA SCHEDULE
27.1 [1] Financial Data Schedule for Commercial and
Industrial Companies
b) FORM 8-K -
A current report on Form 8-K dated July 5, 1999 was filed on August
20, 1999 to report the Company entered into subscription agreements
and issued common stock for the purposes of raising funds for the
Company to acquire all of the outstanding shares of U.S. Cellulose
Co., Inc.
________________________________________________________________________________
[1] Filed herewith.
SIGNATURES
Pursuant to the requirements 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.
POLYMER SOLUTIONS, INC.
(Registrant)
Date: November 12, 1999 /s/ Gordon. Ellis
---------------------------
Gordon L. Ellis
Chairman
Date: November 12, 1999 /s/ Larry Flanagan
---------------------------
E. Laughlin Flanagan
President and CEO
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,064,086
<SECURITIES> 0
<RECEIVABLES> 1,421,245
<ALLOWANCES> 0
<INVENTORY> 1,248,258
<CURRENT-ASSETS> 3,925,306
<PP&E> 191,717
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,974,845
<CURRENT-LIABILITIES> 1,053,526
<BONDS> 0
0
0
<COMMON> 8,783
<OTHER-SE> 11,463,261
<TOTAL-LIABILITY-AND-EQUITY> 4,974,845
<SALES> 5,702,517
<TOTAL-REVENUES> 5,702,517
<CGS> 3,915,990
<TOTAL-COSTS> 1,372,620
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 119,351
<INCOME-PRETAX> 295,501
<INCOME-TAX> 0
<INCOME-CONTINUING> 295,501
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 295,501
<EPS-BASIC> .04
<EPS-DILUTED> .04
</TABLE>
