UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB





[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

For the quarterly period ended  March 31, 2001

[ ]  Transition Report under Section 13 or 15 (d) of the Exchange Act

For the transition period from__________  to _____________

Commission file Number 1-4591

                          FAIRMOUNT CHEMICAL CO., INC.
            (Exact name of registrant as specified in its charter.)

           New Jersey                                   22-0900720
(State of other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                      Identification No.)

                     117 Blanchard Street, Newark, NJ 07105
               (Address of principal executive offices) (Zip Code)

                                 (973)-344-5790
                (Issuer'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 the latest practical date:

 Common Stock, $1 Par Value - 8,292,866 shares as of  May 11, 2001

Transitional Small Business Disclosure Format (check one):  Yes [  ]     No  [X]


<PAGE>



                                      INDEX
<TABLE>
<CAPTION>

                                                                                              PAGE

<S>                                                                                              <C>
PART I   FINANCIAL INFORMATION

         Item 1

                  Statements of Operations
                           Three months ended March 31,
                           2001 and 2000                                                         3

                  Balance Sheets
                           March 31, 2001 and December 31, 2000                                  4

                  Statements of Changes in Stockholders' Equity and
                  Comprehensive     (loss) income for the three months
                  Ended March 31, 2001and 2000                                                   5

                  Statements of Cash Flows
                           Three months ended March 31, 2001 and 2000                            6

                  Notes to Financial Statements                                                  7 - 10

         Item 2.

                  Management's Discussion and Analysis of
                           Financial Condition and Results of Operation                          11 - 13

         Item 3.

                  Quantitative and Qualitative Disclosures about                                 14
`                          Market Risks


PART II  OTHER INFORMATION

         Item 1.  Legal Proceedings                                                              15

         Item 4. Submission of Matters to Vote of Security Holders                               15

         Item 6. Exhibits and Reports on Form 8-K                                                15

</TABLE>


                                       2


<PAGE>


                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                          FAIRMOUNT CHEMICAL CO., INC.

                            Statements of Operations

               For The Three Months Ended March 31, 2001 and 2000
                                   (Unaudited)


                                                     Three Months Ended
                                              March 31, 2001    March 31, 2000
                                              --------------    --------------

Net sales                                      $ 2,784,000       $  3,464,100

Cost of goods sold                               2,860,000          2,708,400
                                               -----------       ------------

Gross (loss) profit                                (76,000)           755,700

Research & development                             102,500            101,400
Selling, general and
  administrative expense                           520,700            538,600
                                               -----------       ------------

        Operating (loss) income                   (699,200)           115,700

Interest expense, net                              (30,100)           (43,000)
Insurance proceeds                                    --              100,000
Foreign currency exchange loss                     (50,800)              --
Other (expenses) income, net                       (10,000)            15,300
                                               -----------       ------------

Net (loss) income before income taxes             (790,100)           188,000

Income taxes                                          --                 --
                                               -----------       ------------
      Net (loss) earnings                      $  (790,100)      $    188,000
                                               ===========       ============
(Loss) earnings per share
     Basic                                     $      (.10)      $        .02
                                               ===========       ============

     Diluted                                   $      (.10)      $        .01
                                               ===========       ============

Common shares and equivalents
  outstanding

     Basic                                       8,292,866          8,292,866
                                               ===========       ============

     Diluted                                     8,292,866         14,226,700
                                               ===========       ============


                 See Accompanying Notes to Financial Statements.


                                       3
<PAGE>


                          FAIRMOUNT CHEMICAL CO., INC.

                                 Balance Sheets

<TABLE>
<CAPTION>
                                                               March 31,        December 31,
                                                                 2001               2000
                                                                 ----               ----
                                                              (Unaudited)
<S>                                                           <C>              <C>
Assets
   Current Assets:
         Cash                                                   1,240,300        2,093,900
         Accounts receivable, less allowance
              for doubtful accounts of $20,600
              in 2001 and 2000                                  2,449,700        1,913,400
         Inventories                                            2,790,600        2,700,100
         Prepaid expenses                                         142,100          124,100
         Other current assets                                      16,900           11,300
                                                              -----------      -----------
                  Total Current Assets                          6,639,600        6,842,800

   Property, plant and equipment
        Less accumulated depreciation of
        $5,921,800 and $5,756,800 in 2001
       and 2000, respectively                                   3,800,100        3,938,900
   Other assets                                                       700              700
                                                              -----------      -----------
         Total Assets                                          10,440,400       10,782,400
                                                              ===========      ===========

Liabilities and Stockholders' Equity
   Current Liabilities:
         Short-term bank borrowings                               700,000          200,000
         Accounts payable                                       1,682,700        1,590,400
         Accrued compensation                                     115,900          136,400
         Accrued pension liability                                 65,500          153,000
         Other accrued liabilities                                426,100          399,600
                                                              -----------      -----------
                  Total Current Liabilities                     2,990,200        2,479,400

   Promissory notes to affiliated parties                       1,571,600        1,571,600
   Accrued pension liability                                       84,000          146,700

   Redeemable convertible Preferred stock,
        par and liquidation value $1 per share:
        Authorized - 10,000,000 shares: 5,400,000
        shares issued and outstanding (liquidation
        value $5,400,000)                                       5,400,000        5,400,000
Commitments and contingencies

Stockholders' Equity:
   Common stock, par value $1 per share:
        Authorized - 15,000,000 shares; 8,293,366
        shares issued and outstanding in 2001 and 2000          8,293,400        8,293,400
   Less: Treasury stock (at cost) - 500 shares                       (500)            (500)
   Capital in excess of par value                               7,316,000        7,316,000
   Accumulated deficit                                        (15,036,900)     (14,246,800)
   Accumulated other comprehensive loss -
        additional minimum pension liability                     (177,400)        (177,400)
                                                              -----------      -----------
         Total Stockholders' Equity                               394,600        1,184,700
                                                              -----------      -----------
   Total Liabilities and Stockholders' Equity                  10,440,400       10,782,400
                                                              ===========      ===========
</TABLE>


                See accompanying notes to financial statements.


                                       4
<PAGE>


                          FAIRMOUNT CHEMICAL CO., INC.

                  Statement of Changes in Stockholders' Equity
                                       and
                           Comprehensive (Loss) Income
               For The Three Months Ended March 31, 2001 and 2000

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                    2001                               2000
                                                       ------------------------------     ------------------------------

                                                                        Comprehensive                      Comprehensive
                                                                            Loss                                Loss
                                                                        -------------                      -------------
<S>                                                    <C>              <C>               <C>              <C>
Common stock:
      Balance at March 31,                               8,293,400                          8,293,400
           (8,293,366 shares)

Treasury stock:
     Balance at March 31,                                     (500)                              (500)
           (500 shares)

Capital in excess of par value:                          7,316,000                          7,316,000
     Balance at March 31,


Accumulated deficit:
     Balance at January 1                              (14,246,800)                       (13,574,700)           --
          Net (loss) income                               (790,100)        (790,100)          188,000         188,000
                                                       -----------                        -----------
     Balance at March 31,                              (15,036,900)                       (13,386,700)

Accumulated other comprehensive
     loss:
           Balance at January 1                           (177,400)                           (97,200)
           Additional minimum pension
           liability                                          --               --                --              --

           Comprehensive (loss) income                                  $  (790,100)                       $  188,000
                                                                        ===========                        ==========
                                                       -----------                        -----------
Balance at March 31,                                      (177,400)                           (97,200)

Total Stockholders' Equity                             $   394,600                        $ 2,125,000
                                                       ===========                        ===========
</TABLE>


                 See accompanying notes to financial statements


                                       5
<PAGE>


                          FAIRMOUNT CHEMICAL CO., INC.

                            Statements of Cash Flows
                 For Three Months Ended March 31, 2001 and 2000
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  2001              2000
                                                                  ----              ----
<S>                                                          <C>                <C>
Cash Flow from Operating Activities:
    Net (loss) income                                        $  (790,100)       $   188,000
   Adjustments to reconcile net (loss)
        income to net cash used in operating
        activities
             Depreciation                                        165,000            165,000
             Insurance proceeds                                     --             (100,000)

   Increase (decrease) from changes in:
        Accounts receivable-trade                               (536,300)          (730,500)
        Inventories                                              (90,500)          (552,800)
        Prepaid expenses                                         (18,000)           (24,000)
        Other current assets                                      (5,600)            (3,800)
        Accounts payable                                          92,300            773,900
        Accrued compensation                                     (20,500)           (16,900)
        Other liabilities                                       (123,700)            54,100
                                                             -----------        -----------

               Net Cash Used In
                     Operating Activities                     (1,327,400)          (247,000)
                                                             -----------        -----------

Cash Flow (Used In) Provided by
 Investing Activities:
   Capital expenditures                                          (26,200)          (379,700)
    Insurance proceeds                                                --            100,000
                                                             -----------        -----------

    Net Cash (Used In) Provided by
         Investing Activities                                    (26,200)           279,700
                                                             -----------        -----------

Cash Flow Provided by
 Financing Activities:
   Bank borrowings                                               500,000             50,000
                                                             -----------        -----------

        Cash Flow Provided by
            Financing Activities                                 500,000             50,000
                                                             -----------        -----------


Decrease in Cash                                                (853,600)          (476,700)

Cash at Beginning of Period                                    2,093,900          2,481,100
                                                             -----------        -----------

Cash at End of Period                                        $ 1,240,300        $ 2,004,400
                                                             ===========        ===========

Supplemental Disclosure of Cash Flow Information:

Interest paid                                                $    60,400        $    43,000
                                                             ===========        ===========

Income taxes paid                                            $      --          $      --
                                                             ===========        ===========
</TABLE>


                 See accompanying Notes to Financial Statements


                                       6
<PAGE>


                          FAIRMOUNT CHEMICAL CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2001


Note 1. Summary of Significant Accounting Policies

ORGANIZATION

     The accompanying financial statements,  which should be read in conjunction
with the financial  statements of Fairmount  Chemical Co., Inc. (the  "Company")
included in the 2000 Annual Report filed on Form 10-KSB,  are unaudited but have
been  prepared in the  ordinary  course of business for the purpose of providing
information  with respect to the interim period.  The Company  believes that all
adjustments (none of which were other than normal recurring  accruals) necessary
for a fair  presentation  for such periods  have been  included.  The  Company's
interim  results of  operations  are not  necessarily  indicative of what may be
expected for the full year.

RECLASSIFICATIONS

     Certain prior year amounts have been  reclassified to conform with the 2001
presentation.

REVENUE

     Revenue is recognized upon shipment of product. The Company's terms are FOB
shipping point and accordingly title for goods pass to the customer when product
is shipped.  Sales are final, without a right of return. If the product does not
meet specifications, the Company may accept returns.

ACCOUNTS RECEIVABLE

     Trade  accounts  receivable are recorded at the invoice  amount.  Potential
uncollectable  amounts  are  recognized  when  in  the  judgment  of  management
collection is in doubt.  There were no provisions for bad debts recorded in 2001
and 2000

INCOME TAXES

     The Company  accounts  for income  taxes in  accordance  with the asset and
liability method. Under the asset and liability method,  deferred tax assets and
liabilities  are  recognized  for the future tax  consequences  attributable  to
differences  between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carryforwards.  Deferred tax assets and  liabilities  are measured using enacted
tax rates  expected  to apply to  taxable  income  in the  years in which  those
temporary differences are expected to be recovered or settled.

     No  provisions  for income  taxes have been  recorded  by the  Company as a
result of net operating losses utilized. A valuation allowance has been recorded
at March 31,  2001 and March 31, 2000 for that  portion of  deferred  tax assets
that are not presently considered more likely than not to be realized.

Note 2.  Earnings Per Share

     Basic  earnings per share is based on the net earnings of the Company since
there were no preferred  dividends  paid in the periods ended March 31, 2001 and
2000.  Basic (loss)  earnings per share is calculated by dividing the net (loss)
earnings by the average number of common shares  outstanding.  Diluted  earnings
per share is calculated by dividing the net earnings of the Company


                                       7


<PAGE>


Notes to Financial Statements (Continued)

by the  weighted  average  number of shares  outstanding  adjusted  for dilutive
common share  equivalents  including  preferred  stock and shares  granted under
stock  option  arrangements.  Due to the Company  reporting a loss for the three
months  ended March 31,  2001,  the  exercise of options and  conversion  of the
preferred  stock is not assumed,  as the results would be  anti-dilutive.  As of
March 31,  2001,  1,059,000  stock  options  were  outstanding,  59,000  with an
exercise price of $1.00 per share,  and 1,000,000 with an exercise price of $.11
per share.  As of March 31, 2000,  1,072,500  stock  options  were  outstanding,
72,500 with an exercise price of $1.00 per share, and 1,000,000 with an exercise
price of $.11 per share.

Diluted common shares and equivalents outstanding as of March 31, 2000:

                                            March 31, 2000
                                       Shares                  Earnings
                                    Outstanding               Per Share
                                   ------------               -----------

     Common shares out standing       8,292,900                    $.02
     Preferred stock                  5,400,000
     Common share equivalents:
          Stock options                 533,800
                                     ----------                    ----
     Total diluted                   14,226,700                    $.01
                                     ==========                    ====

Note 3. Long Term Promissory Notes to Affiliated Parties

         All  promissory  notes have similar terms and  conditions.  Interest is
payable at the corporate base rate posted by Citibank,  N. A. (or its successor)
on the last banking day of the previous  calendar  year.  Interest  payable from
January 1, 2001 through December 31, 2001 is at the rate of 9.5 % per annum. All
of the  promissory  notes  are  subordinated  to the  Company's  line of  credit
financing with Summit Bank and are collateralized by security  agreements on the
Company's accounts receivable, inventories and personal property. All promissory
notes are due January 1, 2005.  Interest paid on promissory  notes to affiliated
parties  during the three  months  ended  March 31, 2001 was $37,300 and $33,400
during the three months ended March 31, 2000.

       Promissory Notes:
                Leistner Trust                             $  491,600
                Leistner Trust                             $  648,000
                da Mota Family Partnership                 $  224,600
                Glen da Mota                               $  142,600
                Lynn da Mota                               $   64,800
                                                           ----------
                                                           $1,571,600
                                                           ==========

     Note 4.  Bank Borrowings

         The  Company  has a  $1,250,000  line  of  credit,  all  of  which  was
available,  from Summit Bank, of which $700,000 was  outstanding as of March 31,
2001. As of March 31, 2000  Fairmount's  line of credit was  $1,250,000 of which
$50,000 was  outstanding.  The line of credit is subject to an annual review for
renewal.  As of May 11,  2001 the line of credit has not been  renewed,  however
Fairmount is negotiating with Summit and expects to reach an agreement, shortly.
The working  capital  line of credit was  renewed and amended  during the second
quarter of 2000. Under the amended loan agreement, the Company has available the
lesser of  $1,250,000 or up to 80 % of its eligible  receivables,  as defined in
the loan agreement.  Foreign  customer's  accounts  receivable were  ineligible,
however  Fairmount  has  obtained  insurance  coverage  for most of its  foreign
customers, and Summit Bank now considers those customers as eligible for


                                       8
<PAGE>


Notes to Financial Statements (Continued)

borrowing  purposes.  The bank has been given a first  security  interest in the
accounts receivable, inventories and personal property of the Company.

Note 5.  Inventories

     Inventories  at March 31,  2001 and  December  31,  2000  consisted  of the
following:

                                             March 31, 2001  December 31, 2000
                                             --------------  -----------------

                 Finished goods                 $2,581,800       $2,481,500
                 Raw materials                     208,800          218,600
                                                ----------       ----------
                                                $2,790,600       $2,700,100
                                                ==========       ==========

Note 6. Insurance Proceeds

     On November 10, 1999, a fire destroyed  certain  equipment and a portion of
the roof in one of the production buildings.  The Company received $100,000 from
its  property  insurance  carrier in March 2000 in  partial  settlement  for its
property losses caused by the fire.

Note 7. New Accounting Pronouncements

     Effective  January 1, 2001,  the Company  adopted  Statement  of  Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative  Instruments and
Hedging  Activities" as amended by SFAS No. 137 and SFAS No. 138. This statement
requires the  recognition  of derivative  financial  instruments  on the balance
sheet as assets or liabilities,  at fair value.  Gains or losses  resulting from
changes in the value of derivatives  are accounted for depending on the intended
use of the  derivative  and  whether  it  qualifies  for hedge  accounting.  The
implementation  of this standard did not have a material effect on the Company's
financial statements because the Company did not have any financial  instruments
entered into for trading or hedging  purposes during the quarter ended March 31,
2001, nor does the Company currently have any derivative  financial  instruments
or derivative commodity instruments outstanding at March 31, 2001.

Note 8.  Contingencies

     The  Company  has  received  notice  from  the  New  Jersey  Department  of
Environmental  Protection ("NJDEP") that the NJDEP is investigating  whether any
material  from the  Company  has  caused  or  contributed  to the  contamination
detected at the Ciuba landfill property in Newark.  The NJDEP alleges that there
is a possibility  that during the 1970's the Company disposed of waste generated
at the  Company's  facility  through  contracts  with  certain  garbage  removal
companies  located at the Ciuba  landfill.  The Company has also received notice
from the United States Environmental  Protection Agency ("USEPA") that the USEPA
has information  indicating that hazardous  substances from the Company may have
been discharged into the Passaic River. It is the Company's  understanding  that
these  allegations  by the USEPA are related to  historical  rather than present
events. The Company believes that its material neither caused nor contributed to
the contamination of the Passaic River and that it has not discharged  hazardous
substances  into  the  Passaic  River.  In  both  cases,  it  is  possible  that
potentially  responsible  parties will bring claims against the Company alleging
that it is at least  partially  responsible for the  contamination.  To date, no
litigation has commenced with respect to these matters.

     It  is  the  Company's  policy  to  accrue  and  charge  against  earnings,
environmental  cleanup  costs  when it is  probable  that a  liability  has been
incurred  and an amount is  reasonably  estimable.  These  accruals are reviewed
periodically  and adjusted,  if necessary,  as  additional  information  becomes
available.  These  accruals  can  change  substantially  due to such  factors as
additional


                                       9
<PAGE>


Notes to Financial Statements (Continued)

information on the nature or extent of the contamination, methods of remediation
required  and other  actions by  government  agencies or private  parties.  Cash
expenditures  often lag behind the period in which an accrual is  recorded  by a
number of years. The Company has not accrued costs associated with the above two
matters, because the amounts cannot be reasonably estimated.

     Management does not believe that the resolution of such matters will have a
material  adverse  affect on the financial  position of the Company but could be
material  to the results of  operations  and cash flow of the Company in any one
accounting period.

     A bodily  injury claim was filed against the Company on December 2, 1998 in
the Superior  Court of New Jersey Law  Division,  Hudson  County.  The plaintiff
alleges that on March 25, 1997, the date of an explosion at the Company's plant,
the force of the  explosion  threw him backward  and  resulted in injuries.  The
plaintiff was an invitee upon the adjoining property to the Company.  This claim
was settled on July 20, 2000, for an immaterial amount.

     On May 13,  1999,  a toxic tort case was  brought  against  the Company and
other defendants by former employees,  family members of the former employees or
heirs of  deceased  former  employees  of La Gloria and Gas  Company  and the La
Gloria Refinery located in Tyler, Texas. The claimants contend that the employee
plaintiffs  and their  families  were exposed to a number of toxic  chemicals by
working  in  and  around  them  or  with  them  at the La  Gloria  Plant  and by
second-hand  exposure occurring as a result of the toxic substance being brought
home on the clothing and bodies of the employee plaintiffs. Plaintiffs have sued
the employer defendants and numerous manufacturers,  suppliers, and distributors
of chemicals, solvents and products supplied to the La Gloria Plant. The Company
sold a hydrazine  blend to La Gloria  during 1990 and 1991. On October 21, 1999,
the  Federal  Court  granted  defendants'  motion to dismiss  because of lack of
subject matter  jurisdiction.  Claimants  re-filed this cause of action in Texas
state court in the  District  Court of Harrison  County,  Texas on December  15,
1999.  Claimants'  allegations  in the state court petition are identical to the
allegations  discussed above. The discovery  process is in the initial phase and
the  Company is not able to  determine  potential  exposure  at this  time.  The
Company's commercial general liability and commercial umbrella insurance carrier
is defending the Company in that action.

     On October 10,  2000,  a breach of contract  claim was brought  against the
Company in the Worcester  Superior Court of the  Commonwealth of  Massachusetts.
The  plaintiff  alleges  that  a  defective   component  chemical  used  in  the
plaintiff's  manufacturing  process was supplied by  Fairmount.  This action has
been moved from Worcester  Superior Court to the Federal  District Court for the
Western District of  Massachusetts.  The Company is in the process of exchanging
documents.  The Company  intends to contest the case  vigorously.  The Company's
commercial  general  liability  and  commercial  umbrella  insurance  carrier is
defending the Company in that action

     The  Company is subject to various  claims,  and other  routine  litigation
arising in the  normal  course of its  business.  Management  believes  that the
resolution  of such  matters  will not have a  material  adverse  affect  on the
financial  position  of the  Company  but could be  material  to the  results of
operations and cash flow of the Company in any one accounting period.


                                       10


<PAGE>

                          FAIRMOUNT CHEMICAL CO., INC.

Item 2                     MANAGEMENT'S DISCUSSION AND
                      ANALYSIS OF FINANCIAL CONDITION AND
                            RESULTS OF OPERATIONS
                                March 31, 2001


Liquidity and Capital Resources

     To  meet  its  liquidity  requirements,   including  its  capital  program,
Fairmount accesses funds generated from operations,  its available cash balances
and its  bank  line of  credit  with  Summit  Bank in  Hackensack,  New  Jersey.
Fairmount believes theses sources to be adequate to meet operating  requirements
for the year  ending  December  31,  2001.  The line of credit is  subject to an
annual  review for  renewal.  As of May 11, 2001 the line of credit has not been
renewed,  however  Fairmount is negotiating  with Summit and expects to reach an
agreement  shortly.  The working  capital line of credit was renewed and amended
during the second quarter of 2000. Under the amended loan agreement, the Company
has  available  the  lesser  of  $1,250,000  or  up  to  80  % of  its  eligible
receivables,  as  defined in the loan  agreement.  Foreign  customer's  accounts
receivable were ineligible,  however Fairmount has obtained  insurance  coverage
for most of its foreign customers, and Summit Bank now considers those customers
as eligible for borrowing purposes.  The 80 % limitation on eligible receivables
should not have a material effect on Fairmount.  The bank has been given a first
security interest in the accounts receivable,  inventories and personal property
of the Company.  As of March 31, 2001,  Fairmount's  borrowing  availability was
$1,250,000,  of which  Fairmount  had  borrowed  $700,000.  As of March 31, 2000
Fairmount's line of credit was $1,250,000 of which $50,000 was outstanding

     The Company's working capital  decreased by $714,400 in 2001,  resulting in
working  capital of  $3,649,000  compared to  $4,363,400  in 2000.  The decrease
during  the  first  three  months  of 2001  was due in part to net  loss for the
period, higher accounts payable of $92,300, and increased borrowing of $500,000.
The decrease was partially offset by higher accounts receivables of $536,300 and
higher inventories of $90,500.

     On November 10, 1999, a fire  destroyed some equipment and a portion of the
roof in one of the production buildings. No employees were injured. The fire had
an adverse  effect on operations  during the fourth  quarter of 1999,  and first
half of 2000.  Production  returned to normal levels in the second half of 2000.
Fairmount  incurred  approximately  $17,500 in professional  cost related to the
fires and  wrote-off  approximately  $22,000 of net  capitalized  equipment  and
building improvements damaged or destroyed by the fire.

     Fairmount's insurance carrier notified Fairmount that when its property and
boiler  insurance  policy  expired on February 1, 2000,  it would not be renewed
because of adverse loss  experience.  Fairmount  has obtained  coverage  through
another carrier, though at a substantially higher premium.

Results of Operations

         Net sales for the three months ended March 31, 2001 were $2,784,000,  a
decrease of $680,100 or 19.6 % as compared to 2000.

                                           Three Months Ended March 31,
                               -------------------------------------------------
                                   2001              2000               Change
                               ----------         ----------          ----------

Imaging & photographic
     chemicals                 $  778,300         $  849,700          $ (71,400)
Hydrazine blends                  446,000            580,500           (134,500)
Hydrazine derivatives             484,400            212,600            271,800
Plastic additives                 787,800          1,405,500           (617,700)
Specialty chemicals               287,500            415,800           (128,300)
                               ----------         ----------          ---------
               Total           $2,784,000         $3,464,100          $(680,100)
                               ==========         ==========          =========



                                       11
<PAGE>


     The demand for certain  types of chemicals  used in  photographic  films is
expected to decrease  during the coming years as the market for film  diminishes
due in part to new  digital  imaging  technologies.  Fairmount  is aware of this
possibility  and is taking steps to  substitute  new  products  that are used in
making  photographic paper and increase its market share of existing products by
broadening its customer base.

     Hydrazine  blend sales  decreased from $580,500 during the first quarter of
2000 to $446,000, a decrease of $134,500.  The decrease in hydrazine blend sales
is mainly due to the loss of one customer.  In addition,  customers ordering are
lower in the quarter ended March 31, 2001 compared to the same period in 2000.

     Hydrazine  derivatives  increased from $212,600 during the first quarter of
2000 to  $484,400,  an  increase  of  $271,800.  This  increase  is due to a new
customer and Fairmount expects shipments to this customer to remain at the first
quarter level for the balance of 2001.

     Sales of plastics additives  decreased from $1,405,500 in the first quarter
of 2000 to $787,800 in the first  quarter of 2001,  a decrease of $617,700 or 44
%. The decrease in plastic  additive sales is due to lower  shipments to a major
European  customer and an Asia  customer.  The sales  decrease also reflects the
negative  effect of the weak EURO  during  the first  quarter  of 2001.  To meet
competition,  Fairmount  sales  are at a fixed  EURO  price and the  Company  is
therefore subject to currency exchange rate changes.  Fairmount sells at a fixed
EURO price for competitive  reasons.  As in prior years,  Fairmount  expects the
downward pressure on plastic additive prices to continue.

     The decrease in specialty  chemicals was due in part to decreased shipments
of  pharmaceutical  intermediates.  The demand for one of the  intermediates has
decreased during the past few years,  and Fairmount  expects that the trend will
continue.

         Each class of similar products  contributed the following percentage of
total sales in each of the following periods:


                                                         Three Months Ended
                                                              March 31,
                                                         2001        2000
                                                         ----        ----
     Imaging & photographic chemicals                      28%         25%
     Hydrazine blends                                      16%         16%
     Hydrazine derivatives                                 18%          6%
     Plastic additives                                     28%         41%
     Specialty chemicals                                   10%         12%
                                                        -----       -----
                                                        100.0%      100.0%
                                                        =====       =====

     The gross  profit  for the three  months  of March  31,  2000 was  $755,700
compared to a gross loss of $76,000 for the three  months  ended March 31, 2001.
This  decrease  was due in part to lower sales volume and the product sold had a
lower gross profit  compared the products  sold in the first quarter of 2000. In
addition, production was lower, but production expenses were higher in the first
quarter of 2001 compared to the same period in 2001. .

     Selling,  general and  administrative  expenses decreased by $17,900 in the
first  quarter of 2001  compared  to the same period in 2000.  Selling  expenses
increased $20,400 and general and  administrative  expenses decreased by $38,300
in the first  quarter of 2001  compared to the first  quarter of 2000.  Increase
advertising  and higher  traveling  cost  accounted  for most of the increase in
selling  expenses.  The  decrease  in general  and  administrative  expense  was
primarily due to lower accrued expenses and professional fees.


                                       12
<PAGE>


     As a result  of the  above,  the  Company  recorded  an  operating  loss of
$699,200  in the three  months  ended March 31,  2001  compared to an  operating
income of $115,700 in 2000

     Interest expense was higher in the three months period ended March 31, 2001
versus  the same  period  in 2000,  due to the  increased  interest  rate on the
remaining debt owed to affiliated parties per the promissory note agreements and
increased interest on bank borrowings.

     During 2000, the Company  received gross insurance  proceeds of $100,000 as
partial  settlement of the property losses sustained from a fire on November 10,
1999. During 2001 there was no such item.

     During the quarter  ended  March 31,  2001 the  Company  recorded a foreign
exchange  currency  loss of  approximately  $50,800,  which is included in other
(expenses) income, net.

     No  provisions  for income  taxes have been  recorded  by the  Company as a
result of net operating losses utilized. A valuation allowance has been recorded
at March 31, 2001 and 2000 for that  portion of deferred  tax assets,  which are
not presently considered more likely than not to be realized.

Forward Looking Statements

     This document  contains  forward-looking  statements that involve risks and
uncertainties  that could cause the results of  Fairmount  to differ  materially
from those expressed or implied by such forward-looking statements.  These risks
include the timely  development,  production  and acceptance of new products and
services;  competition;  the  flow of  products  into  third-party  distribution
channels;  and other risks detailed from time to time in Fairmount's  Securities
and  Exchange  Commission   filings.   The  words   "anticipates,"   "believes,"
"estimates,"  "expects,"  "intends,"  "will," and similar  expressions,  as they
relate to Fairmount or our management, may identify forward-looking  statements.
Such  statements  reflect the current views of Fairmount  with respect to future
events and are subject to certain risks,  uncertainties and assumptions.  Should
one or more of these risks or uncertainties  materialize,  or should  underlying
assumptions prove incorrect, actual results may vary from those described herein
as anticipated,  believed,  estimated or expected.  Fairmount does not intend to
update these forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     In the normal course of operations,  the Company is exposed to market risks
arising from adverse changes in interest rates. Market risk is defined for these
purposes as the potential change in the fair value of debt instruments resulting
from an adverse  movement in interest rates.  The Company's  short-term  working
capital borrowings have historically borne interest based on the prime rate. The
Company believes that its exposure to market risk relating to interest rate risk
is not material.

     The Company has no derivative financial instruments or derivative commodity
instruments,  nor does the Company have any financial  instruments  entered into
for trading or hedging purposes.  To meet competition,  the Company sales to one
European  customer at a fixed EURO price and the Company is therefore subject to
currency  exchange  rate  changes.  Fairmount  sells at a fixed  EURO  price for
competitive reasons.


                                       13
<PAGE>


                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

     During the  quarter  ended  March 31,  2001,  there  have been no  material
changes in the potential  claims reported by the Company in its Annual Report on
Form  10-KSB  in  "Item  1.  Business  -   Environmental   Laws  and  Government
Regulations"

Item 4. Submission of Matters to Vote of Security Holders

         None

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits

     (3)  By-laws as amended as of April 10, 2001


     (b)  No reports have been filed on Form 8-K during the quarter  ended March
          31, 2001.


                                       14


<PAGE>


                          FAIRMOUNT CHEMICAL CO., INC.

                                    SIGNATURE


     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.




                                         FAIRMOUNT CHEMICAL CO., INC.
                                         ----------------------------
                                                   Registrant




May 11, 2001                                  /S/ Reidar Halle
---------------------------                   -------------------------
Date                                          Reidar T. Halle
                                              Chief Executive Officer &
                                              President



May 11, 2001                                  /S/ William C. Kaltnecker
------------------                            -------------------------
Date                                          William C. Kaltnecker
                                              Treasurer



                                       15