Year End 1999 Financial Information

Item 1 Financial Information

Item 1 Financial Statements

THE FLAMEMASTER CORPORATION - CONDENSED BALANCE SHEETS

	September 30 1999		September 30 1998
ASSETS:
Current Assets:
Cash and cash equivalents	$ 1,913,201		$ 1,404.347
Marketable securities (note C)	2,449,981		2,308,817
Accounts receivable, less allowance for Doubtful Accounts of $5,000 in 1999 and 1998	496,776		483,706
Inventories (Note D)	873,504		654,551
Settlement Receivable (Note I)	----		48,191
Prepaid Expenses and Other Assets	36,298		32,475
Deferred income taxes (Note K)	33,485		24,273
Other investments	46,287		196,290
Total Current assets:	5,849,532		5,152,650
EQUIPMENT AND IMPROVEMENTS, at cost
Machinery and Equipment	593,122		592,286
Furniture and Fixtures	116,620		117,899
Laboratory Equipment	60,505		56,434
Leasehold Improvements	119,185		119,185
	$ 889,432		885,804
Less Accumulated Depreciation	(868,121)		(857,603)
	21,311		28,201
PRC LICENSE AGREEMENTS, net of
Accumulated Amortization of $68,110 (1999) and $51,430 (1998) (Note F)	87,567		104,247
TOTAL ASSETS	$ 5,958,410		$ 5,285,098

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable	$ 85,880		$ 95,607
Accured Expenses	8,203		9,733
Income tax payable	-----		24,937
Deferred tax liability (Note K)	14,695		15,379
Deferred credits (Notes A and E)	22,262		29,346
Total current liabilities:	131,040		175,002
Long-term liabilities:
Notes payable (Note O)	376,656		376,656
Total Liabilities	507,696		551,658
COMMITMENTS AND CONTINGENCIES (Note F,G and I)
SHAREHOLDERS' EQUITY (Notes A and H)
Preferred Stock, nonvoting, par value $.01 per share $.56 cumulative dividend, convertible, callable at $5.95, authorized 500,000 shares; issued and outstanding -0- in 1999 and 1998.	---		---
Common Stock, per value, $.01 per share, authorized 6,000,000 shares; issued and outstanding 1,626,935 shares in 1999 and 1,645,015 shares in 1998	16,269		16,450
Additional paid-in Capital	3,733,846		3,775,397
Retained earnings	1,562,002		924,052
Allowance for Marketable Securities	138,597		17,541
TOTAL STOCKHOLDERS' EQUITY	$ 5,450,714		$ 4,733,440
TOTAL LIABILITY AND EQUITY	$ 5,958,410		$ 5,285,098

THE FLAMEMASTER CORPORATION CONDENSED STATEMENTS OF INCOME (UNAUDITED) THREE MONTHS ENDED DECEMBER 31,

	1999	1998	1997
Net sales			$ 800,131
Royalties			489
Interest and Other Income			59,527
			860,147
Costs and expenses:
Cost of sales			447,740
Selling			66,871
General and administrative			141,258
Laboratory costs			62,775
Other (income), expenses, net			13,078
Total costs and expenses:			731,722
Income before income taxes			128,425
Income taxes			47,949
Net income			80,476

Other comprehensive income
Net of income tax
Unrealized Holding Gains (Losses)			38,623
Comprehensive Income			$ 119,099

Net income per share, basic			$.05
Net income per share, diluted			$.05
Weighted average shares outstanding:
Basic			1,642,414

Diluted			1,758,801
*****Diluted earnings per share is not presented, as effect of the assumed conversion of notes payabe is anti-dilutive.