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 September 30, 1999



|      |                                                                  
|----- | -----------------------------------------------------------------
|[   ] | 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
	(State of other jurisdiction of
	incorporation or organization)
	117 Blanchard Street, Newark, NJ
	(Address of principal executive offices) |  | 22-0900720
	(I.R.S. Employer
	Identification No.)
	07105
	(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 November 11, 1999

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



---






---



INDEX

|                              |                                           |                                                                                                                          |                                                                        |       |  
|----------------------------- | ----------------------------------------- | ------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------- | ----- | -
|                              |                                           | Page                                                                                                                    
|                              |                                           |                                                                                                                         
|PART I  FINANCIAL INFORMATION |                                           |                                                                                                                         
|                              | Item 1.                                   |                                                                                                                          |                                                                       
|                              |                                           | Statements of Operations                                                                                                 |                                                                        |      
|                             
|                             
|                             
|                             
|                              |                                           |                                                                                                                          | Three months and nine months ended September 30, 1999 and
        1998 |       | 2
|                              |                                           | Balance Sheets                                                                                                           |                                                                        |      
|                             
|                             
|                             
|                             
|                              |                                           |                                                                                                                          | September 30, 1999 and December 31, 1998                               |       | 3
|                             
|                             
|                             
|                             
|                              |                                           | Statement of Stockholders Equity and Comprehensive Income
        for the nine months ended September 30, 1999 and 1998 |                                                                        | 4    
|                              |                                           | Statements of Cash Flows                                                                                                 |                                                                        |      
|                             
|                             
|                             
|                             
|                              |                                           |                                                                                                                          | Nine months ended September 30, 1999 and 1998                          |       | 5
|                             
|                             
|                             
|                             
|                              |                                           | Notes to Financial Statements                                                                                            |                                                                        | 69  
|                              | Item 2.                                   |                                                                                                                          |                                                                       
|                             
|                             
|                             
|                             
|                              |                                           | Managements Discussion and Analysis of Financial Condition
        and Results of Operation                             |                                                                        | 1013
|PART II  OTHER INFORMATION    |                                           |                                                                                                                         
|                             
|                             
|                             
|                             
|                              | Item 1.  Legal Proceedings                |                                                                                                                          | 14                                                                    
|                             
|                             
|                             
|                             
|                              | Item 6.  Exhibits and Reports on Form 8-K |                                                                                                                          | 1416                                                                 

1



---



PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

FAIRMOUNT CHEMICAL CO., INC.

STATEMENTS OF OPERATIONS

For The Three Months and Nine Months Ended September 30,
1999 and 1998


(Unaudited)


|                                            |                                     |                    |           |                   |   |                |           |                |  |   |           |           |   |   |            |            | 
|------------------------------------------- | ----------------------------------- | ------------------ | --------- | ----------------- | - | -------------- | --------- | -------------- |  | - | --------- | --------- | - | - | ---------- | ---------- | 
|                                            |                                     |                    |           |                  
|                                            |                                     | Three Months Ended |           | Nine Months Ended
|                                            |                                     |                    |           |                  
|                                            |                                     | Sept. 30, 1999     |           | Sept. 30, 1998    |   | Sept. 30, 1999 |           | Sept. 30, 1998
|                                            |                                     |                    |           |                   |   |                |           |               
|Net sales                                   |                                     | $                  | 2,912,400 |                   |   | $              | 3,631,800 |                |  | $ | 8,346,500 |           |   | $ | 10,277,200 |           
|                                           
|                                           
|                                           
|                                           
|Cost of goods sold                          |                                     |                    | 2,537,100 |                   |   |                | 2,686,800 |                |  |   | 7,085,800 |           |   |   | 7,822,600  |           
|                                            |                                     |                    |           |                   |   |                |           |                |  |   |           |           |   |   |            |           
|                                            | Gross profit                        |                    |           | 375,300           |   |                |           | 945,000        |  |   |           | 1,260,700 |   |   |            | 2,454,600  | 
|                                           
|                                           
|                                           
|                                           
|Research and development                    |                                     |                    | 94,400    |                   |   |                | 91,700    |                |  |   | 284,500   |           |   |   | 276,600    |           
|                                           
|                                           
|                                           
|                                           
|Selling, general and administrative expense |                                     |                    | 465,100   |                   |   |                | 472,400   |                |  |   | 1,363,700 |           |   |   | 1,418,800  |           
|                                            |                                     |                    |           |                   |   |                |           |                |  |   |           |           |   |   |            |           
|                                            | Operating income (loss)             |                    |           | (184,200          | ) |                |           | 380,900        |  |   |           | (387,500  | ) |   |            | 759,200    | 
|                                           
|                                           
|                                           
|                                           
|Interest expense                            |                                     |                    | 51,300    |                   |   |                | 32,600    |                |  |   | 117,500   |           |   |   | 101,000    |           
|                                           
|                                           
|                                           
|                                           
|Insurance proceeds                          |                                     |                    |           |                   |   |                |          |                |  |   | (375,000  | )         |   |   | (1,140,100 | )         
|                                           
|                                           
|                                           
|                                           
|Other (income) expense                      |                                     |                    | (25,400   | )                 |   |                | (23,000   | )              |  |   | (79,700   | )         |   |   | (46,900    | )         
|                                            |                                     |                    |           |                   |   |                |           |                |  |   |           |           |   |   |            |           
|                                            | Earnings (loss) before income taxes |                    |           | (210,100          | ) |                |           | 371,300        |  |   |           | (50,300   | ) |   |            | 1,845,200  | 
|                                           
|                                           
|                                           
|                                           
|Income taxes                                |                                     |                    |           |                   |   |                |          |                |  |   |          |           |   |   |           |           
|                                            |                                     |                    |           |                   |   |                |           |                |  |   |           |           |   |   |            |           
|Net earnings (loss)                         |                                     | $                  | (210,100  | )                 |   | $              | 371,300   |                |  | $ | (50,300   | )         |   | $ | 1,845,200  |           
|                                            |                                     |                    |           |                   |   |                |           |                |  |   |           |           |   |   |            |           
|Earnings (loss) per share                   |                                     |                    |           |                   |   |                |           |                |  |   |           |           |   |   |            |           
|                                           
|                                           
|                                           
|                                           
|                                            | Basic                               |                    | $         | (.03              | ) |                | $         | .04            |  |   | $         | (.01      | ) |   | $          | .22        | 
|                                            |                                     |                    |           |                   |   |                |           |                |  |   |           |           |   |   |            |           
|                                            | Diluted                             |                    | $         | (.03              | ) |                | $         | .03            |  |   | $         | (.01      | ) |   | $          | .13        | 
|                                            |                                     |                    |           |                   |   |                |           |                |  |   |           |           |   |   |            |           
|Common shares and equivalents outstanding   |                                     |                    |           |                   |   |                |           |                |  |   |           |           |   |   |            |           
|                                           
|                                           
|                                           
|                                           
|                                            | Basic                               |                    |           | 8,292,900         |   |                |           | 8,292,900      |  |   |           | 8,292,900 |   |   |            | 8,292,900  | 
|                                            |                                     |                    |           |                   |   |                |           |                |  |   |           |           |   |   |            |           
|                                            | Diluted                             |                    |           | 8,292,900         |   |                |           | 14,033,144     |  |   |           | 8,292,900 |   |   |            | 14,045,870 | 
|                                            |                                     |                    |           |                   |   |                |           |                |  |   |           |           |   |   |            |           

See Accompanying Notes to Financial Statements.

2



---



FAIRMOUNT CHEMICAL CO., INC.

BALANCE SHEETS

|                                                                                                                                                       |                                                                                                                                                                    |                            |                            |                   |           |           |            |             |           |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------- | -------------------------- | ----------------- | --------- | --------- | ---------- | ----------- | --------- | --------- | 
|                                                                                                                                                       |                                                                                                                                                                    | September 30, 1999         |                            | December 31, 1998
|                                                                                                                                                       |                                                                                                                                                                    |                            |                            |                  
|                                                                                                                                                       |                                                                                                                                                                    | (Unaudited)                |                            |                  
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Assets                                                                                                                                                 |                                                                                                                                                                    |                            |                            |                   |           |           |            |            
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       | Current Assets:                                                                                                                                                    |                            |                            |                   |           |           |            |             |          
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       |                                                                                                                                                                    | Cash                       |                            | $                 | 1,895,800 |           |            | $           | 2,422,700 |          
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       |                                                                                                                                                                    | Accounts receivable-trade  |                            |                   | 2,596,300 |           |            |             | 1,881,400 |          
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       |                                                                                                                                                                    | Inventories                |                            |                   | 2,395,300 |           |            |             | 1,941,900 |          
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       |                                                                                                                                                                    | Prepaid expenses           |                            |                   | 135,500   |           |            |             | 186,800   |          
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       |                                                                                                                                                                    | Other current assets       |                            |                   | 12,800    |           |            |             | 19,100    |          
|                                                                                                                                                       |                                                                                                                                                                    |                            |                            |                   |           |           |            |            
|                                                                                                                                                       |                                                                                                                                                                    |                            | Total Current Assets       |                   |           | 7,035,700 |            |             |           | 6,451,900 | 
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Property, plant and equipment less accumulated depreciation of
	$5,139,400 and $4,599,400 as of September 30, 1999 and
	December 31 1998, respectively |                                                                                                                                                                    |                            | 3,813,200                  |                   |           |           | 4,185,900  |            
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Other assets                                                                                                                                           |                                                                                                                                                                    |                            | 700                        |                   |           |           | 700        |            
|                                                                                                                                                       |                                                                                                                                                                    |                            |                            |                   |           |           |            |            
|Total Assets                                                                                                                                           |                                                                                                                                                                    | $                          | 10,849,600                 |                   |           | $         | 10,638,500 |            
|                                                                                                                                                       |                                                                                                                                                                    |                            |                            |                   |           |           |            |            
|Liabilities and Stockholders Equity                                                                                                                   |                                                                                                                                                                    |                            |                            |                   |           |           |            |            
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       | Current Liabilities:                                                                                                                                               |                            |                            |                   |           |           |            |             |          
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       |                                                                                                                                                                    | Accounts payable           |                            | $                 | 753,300   |           |            | $           | 508,500   |          
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       |                                                                                                                                                                    | Accrued compensation       |                            |                   | 36,800    |           |            |             | 115,700   |          
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       |                                                                                                                                                                    | Pension liability          |                            |                   | 266,900   |           |            |             | 145,300   |          
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       |                                                                                                                                                                    | Other accrued liabilities  |                            |                   | 276,200   |           |            |             | 156,400   |          
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       |                                                                                                                                                                    | Short-term bank borrowings |                            |                   |          |           |            |             | 33,900    |          
|                                                                                                                                                       |                                                                                                                                                                    |                            |                            |                   |           |           |            |            
|                                                                                                                                                       |                                                                                                                                                                    |                            | Total Current Liabilities  |                   |           | 1,333,200 |            |             |           | 959,800   | 
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       | Promissory notes to affiliated parties                                                                                                                             |                            |                            | 1,571,600         |           |           |            | 1,571,600   |          
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       | Pension liability                                                                                                                                                  |                            |                            | 297,000           |           |           |            | 409,000     |          
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Stockholders Equity                                                                                                                                   |                                                                                                                                                                    |                            |                            |                   |           |           |            |            
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       | Preferred stock, par and liquidation value $1 per shares
	authorized  10,000,000 shares; 5,400,000 shares issued
	 and outstanding (liquidation value $5,400,000) |                            |                            | 5,400,000         |           |           |            | 5,400,000   |          
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       | Common stock, par value $1 per share authorized 
	15,000,000 shares; 8,293,366 shares issued and outstanding in
	1999 and 1998                                    |                            |                            | 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                                                                                                                                                |                            |                            | (13,059,500       | )         |           |            | (13,009,200 | )        
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                       | Additional minimum pension liability                                                                                                                               |                            |                            | (301,600          | )         |           |            | (301,600    | )        
|                                                                                                                                                       |                                                                                                                                                                    |                            |                            |                   |           |           |            |            
|                                                                                                                                                       |                                                                                                                                                                    |                            | Total Stockholders Equity |                   |           | 7,647,800 |            |             |           | 7,698,100 | 
|                                                                                                                                                       |                                                                                                                                                                    |                            |                            |                   |           |           |            |            
|Total Liabilities and Stockholders Equity                                                                                                             |                                                                                                                                                                    | $                          | 10,849,600                 |                   |           | $         | 10,638,500 |            
|                                                                                                                                                       |                                                                                                                                                                    |                            |                            |                   |           |           |            |            

See accompanying Notes to Financial Statements.

3



---



FAIRMOUNT CHEMICAL CO., INC.

STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY

AND


COMPREHENSIVE INCOME


For Nine Months Ended September 30, 1999 and 1998


|                                      |                                          |      |           |               |   |  |   |               |   |   |           |             |   |  |   |           | 
|------------------------------------- | ---------------------------------------- | ---- | --------- | ------------- | - |  | - | ------------- | - | - | --------- | ----------- | - |  | - | --------- | 
|                                      |                                          |      |           |              
|                                      |                                          | 1999 |           | 1998         
|                                      |                                          |      |           |              
|                                      |                                          |      |           | Comprehensive |   |  |   | Comprehensive
|                                      |                                          |      |           | Income        |   |  |   | Income       
|                                      |                                          |      |           |               |   |  |   |              
|Preferred stock:                      |                                          |      |           |               |   |  |   |               |   |   |           |             |   |  |   |          
|                                     
|                                     
|                                     
|                                     
|                                      | Balance at September, (5,400,000 shares) |      | $         | 5,400,000     |   |  |   |               |   |   | $         | 5,400,000   |   |  |   |           | 
|                                     
|                                     
|                                     
|                                     
|Common stock:                         |                                          |      |           |               |   |  |   |               |   |   |           |             |   |  |   |          
|                                     
|                                     
|                                     
|                                     
|                                      | Balance at September, (8,293,366 shares) |      |           | 8,293,400     |   |  |   |               |   |   |           | 8,293,400   |   |  |   |           | 
|                                     
|                                     
|                                     
|                                     
|Capital in excess of par value:       |                                          |      |           |               |   |  |   |               |   |   |           |             |   |  |   |          
|                                     
|                                     
|                                     
|                                     
|                                      | Balance at September 30,                 |      |           | 7,316,000     |   |  |   |               |   |   |           | 7,316,000   |   |  |   |           | 
|                                     
|                                     
|                                     
|                                     
|Accumulated deficit:                  |                                          |      |           |               |   |  |   |               |   |   |           |             |   |  |   |          
|                                     
|                                     
|                                     
|                                     
|                                      | Balance at January 1                     |      |           | (13,009,200   | ) |  |   |               |   |   |           | (14,866,200 | ) |  |   |           | 
|                                     
|                                     
|                                     
|                                     
|                                      | Net (loss) income                        |      |           | (50,300       | ) |  |   | (50,300       | ) |   |           | 1,845,200   |   |  |   | 1,845,200 | 
|                                      |                                          |      |           |               |   |  |   |               |   |   |           |             |   |  |   |          
|                                      | Balance at September 30,                 |      |           | (13,059,500   | ) |  |   |               |   |   |           | (13,021,000 | ) |  |   |           | 
|                                     
|                                     
|                                     
|                                     
|Accumulated other comprehensive loss: |                                          |      |           |               |   |  |   |               |   |   |           |             |   |  |   |          
|                                     
|                                     
|                                     
|                                     
|                                      | Balance at January 1                     |      |           | (301,600      | ) |  |   |               |   |   |           | (297,500    | ) |  |   |           | 
|                                     
|                                     
|                                     
|                                     
|                                      | Additional minimum pension liability     |      |           |              |   |  |   |              |   |   |           |            |   |  |   |          | 
|                                      |                                          |      |           |               |   |  |   |               |   |   |           |             |   |  |   |          
|                                      | Comprehensive income                     |      |           |               |   |  | $ | (50,300       | ) |   |           |             |   |  | $ | 1,845,200 | 
|                                      |                                          |      |           |               |   |  |   |               |   |   |           |             |   |  |   |          
|                                      | Balance at September 30                  |      |           | (301,600      | ) |  |   |               |   |   |           | (297,500    | ) |  |   |           | 
|                                     
|                                     
|                                     
|                                     
|Treasury stock:                       |                                          |      |           |               |   |  |   |               |   |   |           |             |   |  |   |          
|                                     
|                                     
|                                     
|                                     
|                                      | Balance at September 30, (500 shares)    |      |           | (500          | ) |  |   |               |   |   |           | (500        | ) |  |   |           | 
|                                      |                                          |      |           |               |   |  |   |               |   |   |           |             |   |  |   |          
|Total Stockholders Equity            |                                          | $    | 7,647,800 |               |   |  |   |               |   | $ | 7,690,400 |             |   |  |   |          
|                                      |                                          |      |           |               |   |  |   |               |   |   |           |             |   |  |   |          

See accompanying notes to financial statements

4



---



FAIRMOUNT CHEMICAL CO., INC.

STATEMENTS OF CASH FLOWS

For The Nine Months Ended September 30, 1999 and 1998


(Unaudited)


|                                                      |                                                                                     |                                           |                                                      |          |          |          |           |           |            |           | 
|----------------------------------------------------- | ----------------------------------------------------------------------------------- | ----------------------------------------- | ---------------------------------------------------- | -------- | -------- | -------- | --------- | --------- | ---------- | --------- | 
|                                                      |                                                                                     | 1999                                      |                                                      | 1998    
|                                                      |                                                                                     |                                           |                                                      |         
|Cash Flow from Operating Activities:                  |                                                                                     |                                           |                                                      |          |          |          |           |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Net earnings (loss)                                                                 |                                           | $                                                    | (50,300  | )        |          | $         | 1,845,200 |           
|                                                      | Adjustments to reconcile net earnings to net cash provided by
	operating activities |                                           |                                                      |          |          |          |           |           |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                     | Depreciation                              |                                                      |          | 540,000  |          |           |           | 540,000    |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                     | Insurance proceeds                        |                                                      |          | (375,000 | )        |           |           | (1,140,100 | )        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Increase (decrease) from changes in:                                                |                                           |                                                      |          |          |          |           |           |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                     | Accounts receivable-trade                 |                                                      |          | (714,900 | )        |           |           | 211,400    |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                     | Inventories                               |                                                      |          | (453,400 | )        |           |           | (470,500   | )        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                     | Prepaid expenses                          |                                                      |          | 51,300   |          |           |           | 206,400    |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                     | Other assets                              |                                                      |          | 6,300    |          |           |           | 44,200     |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                     | Accounts payable                          |                                                      |          | 244,800  |          |           |           | (134,800   | )        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                     | Accrued compensation                      |                                                      |          | (78,900  | )        |           |           | (29,400    | )        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                     | Other liabilities                         |                                                      |          | 129,400  |          |           |           | 198,600    |          
|                                                      |                                                                                     |                                           |                                                      |          |          |          |           |          
|                                                      |                                                                                     |                                           | Cash Flow (Used in) Provided by Operating Activities |          |          | (700,700 | )         |           |            | 1,271,000 | 
|                                                     
|                                                     
|                                                     
|                                                     
|Cash Flow (Used in) Provided by Investing Activities: |                                                                                     |                                           |                                                      |          |          |          |           |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Capital expenditures                                                                |                                           |                                                      | (167,300 | )        |          |           | (246,500  | )         
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Insurance proceeds                                                                  |                                           |                                                      | 375,000  |          |          |           | 1,140,100 |           
|                                                      |                                                                                     |                                           |                                                      |          |          |          |           |          
|                                                      |                                                                                     | Net Cash Provided by Investing Activities |                                                      |          | 207,700  |          |           |           | 893,600    |          
|                                                     
|                                                     
|                                                     
|                                                     
|Cash Flow Used in Financing Activities:               |                                                                                     |                                           |                                                      |          |          |          |           |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Bank repayment                                                                      |                                           |                                                      | (33,900  | )        |          |           | (307,100  | )         
|                                                      |                                                                                     |                                           |                                                      |          |          |          |           |          
|                                                      |                                                                                     | Cash Flow Used in by Financing Activities |                                                      |          | (33,900  | )        |           |           | (307,100   | )        
|                                                      |                                                                                     |                                           |                                                      |          |          |          |           |          
|Increase (decrease) in Cash                           |                                                                                     |                                           | (526,900                                             | )        |          |          | 1,857,500 |          
|                                                     
|                                                     
|                                                     
|                                                     
|Cash at Beginning of Period                           |                                                                                     |                                           | 2,422,700                                            |          |          |          | 711,800   |          
|                                                      |                                                                                     |                                           |                                                      |          |          |          |           |          
|Cash at End of Period                                 |                                                                                     | $                                         | 1,895,800                                            |          |          | $        | 2,569,300 |          
|                                                      |                                                                                     |                                           |                                                      |          |          |          |           |          
|Supplemental Disclosure of Cash Flow Information:     |                                                                                     |                                           |                                                      |          |          |          |           |          
|                                                     
|                                                     
|                                                     
|                                                     
|Interest paid                                         |                                                                                     | $                                         | 102,000                                              |          |          | $        | 101,000   |          
|                                                      |                                                                                     |                                           |                                                      |          |          |          |           |          
|Income taxes paid                                     |                                                                                     | $                                         |                                                     |          |          | $        |          |          
|                                                      |                                                                                     |                                           |                                                      |          |          |          |           |          

See accompanying Notes to Financial Statements

5



---



FAIRMOUNT CHEMICAL CO., INC.

NOTES TO FINANCIAL STATEMENTS

September 30, 1999


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 1998 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 1999 presentation.

Revenue

Revenue is recognized on the date of invoice to a customer and
invoices are prepared on or after the date of shipment. The
Companys terms are FOB shipping point and accordingly title
 for goods passes to the customer when product is shipped. Sales
are generally final, without a right of return. If the product
does not meet specifications, the Company may accept returns.

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 September 30, 1999 and 1998
for that portion of deferred tax assets which are not presently
considered more likely than not to be realized.

Financial Statements

The statements of operations for the three months and nine months
 ended September 30, 1999 and 1998, the statements of cash
flows for nine months ended September 30, 1999 and 1998, and
 the balance sheet as of September 30, 1999 are unaudited.
The balance sheet as of December 31, 1998 is audited.

Note 2.  Earnings Per Share

Basic earnings per share are based on the net earnings of the
Company since there were no preferred dividends paid in the
periods ending September 30, 1999 and 1998. Diluted earnings per
share is calculated by dividing the net earnings of the Company
by the weighted average number of shares outstanding adjusted for
 dilutive common share equivalents including preferred stock and
shares granted under stock option arrangements. As of
September 30, 1999 and 1998, 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. Due to the
Company reporting a loss for the three months and nine months
ended September 30, 1999, the conversion of preferred stock
and the exercise of the stock options are not assumed as the
result is anti-dilutive.

6



---



FAIRMOUNT CHEMICAL CO., INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 3.  Long Term Promissory Notes to Affiliated
Parties

All promissory notes have similar terms and conditions. Interest
paid from January 1, 1998 through December 31, 1998 was
 at the rate of 7% per annum. Interest payable thereafter
commencing with 1999, is 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,
1999 through December 31, 1999 is at the rate of 7.75% 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
long-term debt to affiliated parties during the nine months ended
 September 30, 1999 was $91,400 and $82,500 during the nine
months ended September 30, 1998.

|                  |                            |  |   |           | 
|----------------- | -------------------------- |  | - | --------- | 
|                 
|                 
|                 
|                 
|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 from Summit Bank. The
 line of credit is comprised of two separate available balances.
There is $750,000 available for working capital purposes and
$500,000 available to finance capital expenditures. Interest on
the borrowings is at the banks prime rate plus 1%.
Borrowings and repayments under the working capital line of
credit are handled on a revolving credit basis. Borrowings
against the capital expenditure line of credit are treated as a
three-year note. The line of credit is subject to an annual
review for renewal. The bank has been given a first security
interest in the accounts receivable, inventories and personal
property of the Company. The line of credit was renewed during
the second quarter of 1999 with the same terms and conditions.

Note 5.  Inventories

Inventories at September 30, 1999 and December 31, 1998
 consisted of the following:

|                                 |  |                    |           |                   |  |   |           | 
|-------------------------------- |  | ------------------ | --------- | ----------------- |  | - | --------- | 
|                                 |  | September 30, 1999 |           | December 31, 1998
|                                 |  |                    |           |                  
|Finished goods and intermediates |  | $                  | 2,184,100 |                   |  | $ | 1,715,700 | 
|                                
|                                
|                                
|                                
|Raw materials                    |  |                    | 211,200   |                   |  |   | 226,200   | 
|                                 |  |                    |           |                   |  |   |           | 
|                                 |  | $                  | 2,395,300 |                   |  | $ | 1,941,900 | 
|                                 |  |                    |           |                   |  |   |           | 

Note 6.  Insurance Proceeds

During February 1999 the Company received a payment of
$375,000 from its property insurance carrier as final settlement
for the property damages sustained from the March 25, 1997
dryer explosion. This payment is in addition to $1,140,000
received in January 1998 and $200,000 received during the
second quarter of 1997. The destroyed assets, principally
property, plant and equipment, were fully depreciated at the time
 of the incident.

7



---



FAIRMOUNT CHEMICAL CO., INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 7.  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 has taken the position 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 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 flows 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. The Company has not
received details as to the extent of the injuries or for the
dollar value of the claim.

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. The discovery process is in the initial phase and the
Company is not able to determine potential exposure at this time.

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 flows of the Company in any one accounting period.

8



---



FAIRMOUNT CHEMICAL CO., INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)

Note 8.  Subsequent Events

On November 10, 1999 there was a fire in one of
Fairmounts buildings which destroyed a portion of the roof,
 and damaged some equipment. No Employees were injured.
Fairmount, at this time, is unable to assess the full extent of
the damage, however it appears that the damage will not be
material to Fairmounts financial condition. Fairmount
believes the its insurance is sufficient to cover the property
and material losses sustained.

9



---



FAIRMOUNT CHEMICAL CO., INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)

FAIRMOUNT CHEMICAL CO., INC.



|       |                                                                                                          
|------ | ---------------------------------------------------------------------------------------------------------
|Item 2 | Managements Discussion and Analysis of Financial
	Condition and Results of Operations September 30, 1999

Liquidity and Capital Resources

To meet its liquidity requirements, including its capital
program, the Company accesses funds generated from operations,
its available cash balances and its bank line of credit with
Summit Bank in Hackensack, New Jersey. The line of credit was
renewed during the second quarter of 1999 with the same terms and
 conditions.

The Companys working capital increased by $210,400 during
the first nine months of 1999. The increase during the first nine
 months of 1999 was due in part to a payment of $375,000 received
 from the Companys property insurance carrier as final
settlement for property damages sustained from a dryer explosion
during March, 1997. In addition, contributing to the increase in
working capital were higher accounts receivable of $714,900, and
higher inventories of $453,400. The increase in working capital
was partially offset by higher accounts payable of $244,800,
higher pension liability of $121,600 and higher other accrued
liabilities of $119,800.

Accounts receivable were higher as of September 30, 1999 as
compared to December 31, 1998 mainly due to higher sales of
plastic additives to foreign customers who have extended payment
terms, and a large shipment of an imaging and photographic
product to a domestic customer in September 1999.

The inventory as of September 30, 1999 was $2,395,300
compared to $1,941,900 as of December 31, 1998, an increase
of $453,400. However the inventory during the quarter ended
September 30, 1999 decreased by $366,000. The increased
inventory was due to increased labor and overhead absorbed into
inventory and production in excess of shipments. The increased
labor and overhead absorbed into inventory was the result of
lower production, without a corresponding decrease in actual
labor and overhead expenses. The accounts payable increase was
the result of increased raw material purchases.

Year 2000 Compliance

Historically, certain computer programs have been written using
two digits rather than four digits to define the applicable year,
 which could result in computers recognizing a date using
00 as the year 1900 rather than the year 2000. This
could result in major system failures or miscalculations, and is
generally referred to as the Year 2000 problem or
issue and could have a materially adverse impact on
Fairmounts operations.

Fairmount has reviewed its information technology systems to
identify any system that could be affected by the Year
2000 issue and has developed a plan to resolve the issue.
Fairmount completed its computer conversions and modifications
and is operating with a Year 2000 compliant system as of
January 1, 1999. Therefore, Fairmount presently expects the
Year 2000 problem will not pose significant operational problems
for Fairmounts information technology systems.
Additionally, Fairmount has reviewed its non-information
technology systems and does not expect Year 2000 related problems
 from such systems.

Fairmount is also exposed to risk to the extent that suppliers of
 products, materials and services purchased by Fairmount and
others with whom Fairmount transacts business do not comply with
Year 2000 requirements. Although this risk is lessened with
respect to suppliers by the availability of alternative
suppliers, the disruption of certain services, such as utilities,
 could, depending upon the extent of the disruption, potentially
have a material adverse impact on Fairmounts operations. As
 part of its Year 2000 plan, Fairmount is communicating
directly with its significant suppliers, service providers,
vendors, customers and government entities that are believed to
be critical to business operations to determine their
Year 2000 capability. Fairmount is currently in the process
of evaluating responses and will send follow-up requests to those
 who have not responded.

Due to the general uncertainty inherent in the Year 2000
problem, Fairmount is unable to determine at this time whether
the consequences of Year 2000 problems will have a material
adverse effect on Fairmount.

10



---





A written contingency plan has not been developed for dealing
with the most reasonable likely worst case scenario and such
scenario has not yet been clearly identified. While the Company
believes that it would be most exposed to the Year 2000
problem in the areas of receipt of raw materials and production
supplies and the production and the delivery of its product to
customers, its exposure should be limited. Most of the
Companys raw materials and production supplies are
available from a variety of sources and the loss of any one
supplier would not adversely affect the Companys ability to
 conduct its business. In addition, the Company has a few sole
source suppliers and they have all advised the Company that they
are Year 2000 compliant. The Companys ability to
deliver its product to its customer is dependent upon third party
 common carriers. The Company believes it has a variety of common
 carriers to choose from, if its current carrier has a
Year 2000 failure. Finally, the Companys production
does not rely on computers or equipment with imbedded chips,
therefore the Company believes its Year 2000 exposure is
limited with respect to production facilities. However, the
Companys production is dependent on the disposal of
production waste using the local sewer authority and the
availability of utilities, primarily gas, electric and water. If
the Companys utilities are interrupted or it was unable to
dispose of its waste, production would be adversely affected.
Fairmount completed its computer conversions and modifications
and is operating with a Year 2000 compliant system as of
January 1, 1999. In the worst case, if the Companys
computer systems failed the Company would be able to continue to
conduct its business through the use of manual systems.

As of September 30, 1999 Fairmount has spent approximately
$75,000 on its Year 2000 initiative and does not anticipate
any additional material expenditures.

Results of Operations

Net sales for the three months ended September 30, 1999 were
 $2,912,400, a decrease of $719,400 or 19.8% as compared to 1998.

|                                 |       |                                  |           |           |  |        |           |           |  |   |            |          |  
|-------------------------------- | ----- | -------------------------------- | --------- | --------- |  | ------ | --------- | --------- |  | - | ---------- | -------- | -
|                                 |       |                                 
|                                 |       | Three Months Ended September 30,
|                                 |       |                                 
|                                 |       | 1999                             |           | 1998      |  | Change
|                                 |       |                                  |           |           |  |       
|Imaging & photographic chemicals |       | $                                | 539,700   |           |  | $      | 184,200   |           |  | $ | 355,500    |         
|                                
|                                
|                                
|                                
|Hydrazine blends                 |       |                                  | 531,200   |           |  |        | 577,800   |           |  |   | (46,600    | )       
|                                
|                                
|                                
|                                
|Hydrazine derivatives            |       |                                  | 323,300   |           |  |        | 352,600   |           |  |   | (29,300    | )       
|                                
|                                
|                                
|                                
|Plastic additives                |       |                                  | 1,099,900 |           |  |        | 595,600   |           |  |   | 504,300    |         
|                                
|                                
|                                
|                                
|Specialty chemicals              |       |                                  | 418,300   |           |  |        | 1,921,600 |           |  |   | (1,503,300 | )       
|                                 |       |                                  |           |           |  |        |           |           |  |   |            |         
|                                 | Total |                                  | $         | 2,912,400 |  |        | $         | 3,631,800 |  |   | $          | (719,400 | )
|                                 |       |                                  |           |           |  |        |           |           |  |   |            |         

Net sales for the nine months ended September 30, 1999 were
$8,346,500, a decrease of $1,930,700 or 18.8 % as compared to
1998.

|                                 |       |                                 |           |           |  |        |           |            |  |   |            |            |  
|-------------------------------- | ----- | ------------------------------- | --------- | --------- |  | ------ | --------- | ---------- |  | - | ---------- | ---------- | -
|                                 |       |                                
|                                 |       | Nine Months Ended September 30,
|                                 |       |                                
|                                 |       | 1999                            |           | 1998      |  | Change
|                                 |       |                                 |           |           |  |       
|Imaging & photographic chemicals |       | $                               | 1,638,000 |           |  | $      | 1,917,800 |            |  | $ | (279,800   | )         
|                                
|                                
|                                
|                                
|Hydrazine blends                 |       |                                 | 1,783,100 |           |  |        | 1,646,600 |            |  |   | 136,500    |           
|                                
|                                
|                                
|                                
|Hydrazine derivatives            |       |                                 | 873,600   |           |  |        | 1,047,000 |            |  |   | (173,400   | )         
|                                
|                                
|                                
|                                
|Plastic additives                |       |                                 | 2,489,100 |           |  |        | 2,685,400 |            |  |   | (196,300   | )         
|                                
|                                
|                                
|                                
|Specialty chemicals              |       |                                 | 1,562,700 |           |  |        | 2,980,400 |            |  |   | (1,417,700 | )         
|                                 |       |                                 |           |           |  |        |           |            |  |   |            |           
|                                 | Total |                                 | $         | 8,346,500 |  |        | $         | 10,277,200 |  |   | $          | (1,930,700 | )
|                                 |       |                                 |           |           |  |        |           |            |  |   |            |           

The decrease in imaging and photographic chemical sales was due
in part to delayed shipments from the first and second quarters
to the third and fourth quarters of 1999. The Company anticipated
 increased sales during the second quarter of 1999; however those
 sales were delayed pending customer approval. The

11



---





The demand for certain types of chemicals used in photographic
films is expected to decrease during the coming years as consumer
 demand changes due to new imaging technologies. Fairmount is
taking steps to substitute new products and increase its market
share of existing products.

The decrease in hydrazine derivative sales in the third quarter
and first nine months of 1999 was due to the softening in that
market and customers consolidating and reducing their
inventories. One of the Companys major hydrazine derivative
 customers has moved the production of their products to other
plants around the world and Fairmount anticipates that it will no
 longer sell the same volume of product to this customer as it
has done in the past. The Company does not believe that its
hydrazine derivatives business will return to its 1998 level in
1999.

Due to a change to a more cost efficient process for making
plastic additives, Fairmount experienced a slower production rate
 than anticipated in the first nine months of 1999. The process
change resulted in higher than normal reprocessing and an
increase of raw materials, intermediates and finished product in
inventory. However, Fairmount expects that any sales short fall
in the first nine months of 1999 will be made up during the
remainder 1999.

As in prior years, lower prices and volume for plastic additives
due to competitive pressures from foreign competitors contributed
 to decreases in sales. Fairmount expects that the downward
pressure on plastic additive prices will continue.

Sales of specialty chemicals were $418,300 during the three
months ended September 30, 1999 compared to $1,921,600
during the quarter ended September 30, 1998, an decrease of
$1,503,300. Sale during the nine months ended September 30,
1999 were 1,562,700 compared to $2,980,400 during the nine months
 ended September 30, 1998, a decrease of $1,417,700. This
decrease was primarily due to a new agricultural intermediates
product which was custom manufactured for a new customer during
the quarter ended September 1998, without corresponding
sales during the same period in 1999.

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

|                                 |  |               |       |               |  |      |       |      |  |  |       |   |  |  |       |  
|-------------------------------- |  | ------------- | ----- | ------------- |  | ---- | ----- | ---- |  |  | ----- | - |  |  | ----- | -
|                                 |  |               |       |              
|                                 |  | Three Months  |       | Nine Months  
|                                 |  | Ended         |       | Ended        
|                                 |  | September 30, |       | September 30,
|                                 |  |               |       |              
|                                 |  | 1999          |       | 1998          |  | 1999 |       | 1998
|                                 |  |               |       |               |  |      |       |     
|Imaging & photographic chemicals |  |               | 18.5  | %             |  |      | 5.1   | %    |  |  | 19.6  | % |  |  | 18.7  | %
|                                
|                                
|                                
|                                
|Hydrazine blends                 |  |               | 18.2  | %             |  |      | 15.9  | %    |  |  | 21.4  | % |  |  | 16.0  | %
|                                
|                                
|                                
|                                
|Hydrazine derivatives            |  |               | 11.1  | %             |  |      | 9.7   | %    |  |  | 10.5  | % |  |  | 10.2  | %
|                                
|                                
|                                
|                                
|Plastic additives                |  |               | 37.8  | %             |  |      | 16.4  | %    |  |  | 29.8  | % |  |  | 26.1  | %
|                                
|                                
|                                
|                                
|Specialty chemicals              |  |               | 14.4  | %             |  |      | 52.9  | %    |  |  | 18.7  | % |  |  | 29.0  | %
|                                 |  |               |       |               |  |      |       |      |  |  |       |   |  |  |       |  
|                                 |  |               | 100.0 | %             |  |      | 100.0 | %    |  |  | 100.0 | % |  |  | 100.0 | %
|                                 |  |               |       |               |  |      |       |      |  |  |       |   |  |  |       |  

The gross profit for the three months of September 30, 1999
was $375,300, a decrease of $569,700 or 60.3% compared to the
same period in 1998. As a percent of sales the gross margin was
12.9% compared to 26.0% during 1998. The decrease in gross profit
 was primarily due to the decrease in sales of specialty
chemicals, which had a higher gross margin than the
Companys other product lines. The negative effect of the
decrease in specialty chemicals sales was somewhat offset by the
effects of increased sales of imaging and photographic sales and
plastic additives sales.

The gross profit for the nine months ended September 30,
1999 was $1,260,700, a decrease of $1,193,900 or 48.6% compared
to 1998. As a percent of gross sales, the gross margin during the
 first nine months of 1999

12



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Research and development expenses increased by $2,700 in the
quarter ended September 30, 1999 compared to the same period
 in 1998. For the nine months ended September 30, 1999
expenses were $284,500 compared to $276,600 for the nine months
ended September 30 1998, an increase of $7,900.

Selling, general and administrative expenses decreased by $7,300
in the third quarter of 1999 compared to the same period in 1998.
 Selling expenses increased $19,900 and general and
administrative expenses decreased by $27,200 in the third quarter
 of 1999 compared to the third quarter of 1998. For the nine
months ended September 30, 1999 selling, general and
administrative expenses decreased by $55,100 compared to the same
 period in 1998. Selling expenses increased by $26,800 and
general and administrative expenses decreased by $81,900 for the
nine months ended September 30, 1999 compared to the same
period in 1998.

The Company had an operating loss of $184,200 in the three months
 ended September 30, 1999 compared to operating income of
$380,900 in the same period in 1998. For the nine months ended
September 30, 1999 there was an operating loss of $387,500
compared to operating income of $759,200 for the nine months
ended September 30, 1998. The change in operating income was
 due to the above changes.

During 1999, the Company received gross insurance proceeds of
$375,000, compared to $1,140,100 in 1998, for the property losses
 sustained from the March 25, 1997 explosion.

The Company was subject to a routine tax audit by the State of
New Jersey, Department of the Treasury, Division of Taxation. The
 audit is completed and the Company has been assessed
approximately $58,800 in additional sales and use tax and
interest for the years 1995 through 1998.

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 September 30, 1999 and 1998
for that portion of deferred tax assets, which are not presently
considered more likely than not to be realized.

Forward Looking Statements

This report contains and incorporates by reference
forward-looking statements within the meaning of the safe
harbor provisions of the Private Securities Litigation
Reform Act of 1995. These include statements regarding the
present intent, belief and expectations of Fairmounts
management. All statements that address expectations or
projections about the future, including statements about
Fairmounts strategy for growth, product development, market
 position, expected expenditures and financial results, are
forward-looking statements. Some of the forward-looking
statements may be identified by words like expects,
anticipates, plans, believes,
 intends, projects,
indicates, and similar expressions. These statements
are not guarantees of future performance and involve a number of
risks, uncertainties and assumptions. Many factors could cause
results to differ materially from those stated. These factors
include, but are not limited to, changes in the laws,
regulations, policies and economic conditions; competitive
pressures; failure of Fairmount or related third parties to
become Year 2000 compliant; research and development of new
products, including any required regulatory approval, and market
acceptance of Fairmounts products. Risks and uncertainties
include, but are not limited to, the ability of Fairmount to
maintain existing relationships with customers, the ability of
Fairmount to successfully implement productivity improvements,
cost reduction initiatives, facilities expansion, the risk of
loss of executive officers and other key employees, and the
ability of Fairmount to develop, market and sell new products and
 to continue to comply with environmental laws, rules and
regulations. In accordance with the provisions of the Private
Securities Litigation Reform Act of 1995, Fairmount is making
investors aware that such forward-looking statements, because
they relate to future events, are by their very nature only
predictions and that actual events or results may differ
materially. In evaluating such statements, you should
specifically consider the various factors that could cause actual
 events or results to differ materially from those indicated by
the forward-looking statements.

13



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PART II  OTHER INFORMATION

Item 1.  Legal Proceedings

During the quarter ended September 30, 1999, 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 6.  Exhibits and Reports on
Form 8-K

(a)  Exhibits

| |      |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ---- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3.1  |  |  | Restated Certificate of Incorporation filed May 11, 1982
	with Secretary of State of New Jersey, incorporated by reference
	from Fairmounts Form 10-K for the fiscal year ending
	December 31, 1982, (Exhibit 3.3).                                                                                                                                                                                                                                                                                                  
| | 3.2  |  |  | Restated Certificate of Incorporation filed May 13, 1993
	with the Secretary of State of New Jersey, incorporated by
	reference from Fairmounts Form 10-KSB or the fiscal year
	ending December 31, 1993, (Exhibit 3.1.).                                                                                                                                                                                                                                                                                            
| | 3.3  |  |  | Restated Certificate of Incorporation filed June 8, 1994
	with the Secretary of the State of New Jersey, incorporated by
	reference from Fairmounts Form 10-KSB for the fiscal year
	ending December 31, 1994, (Exhibit 3.1.).                                                                                                                                                                                                                                                                                       
| | 3.4  |  |  | Certificate of Amendment to Certificate of Incorporation filed
	June 9, 1986 with Secretary of State of New Jersey,
	incorporated by reference from Fairmounts Form 10-KSB
	for the fiscal year ending December 31, 1986,
	(Exhibit 3.1.).                                                                                                                                                                                                                                                                           
| | 3.5  |  |  | Certificate of Amendment to Certificate of Incorporation filed
	June 1, 1988 with Secretary of State of New Jersey,
	incorporated by reference from Fairmounts Form 10-K for the
	 fiscal year ending December 31, 1988, (Exhibit 3).                                                                                                                                                                                                                                                                                
| | 3.6  |  |  | By-laws as last amended February 21, 1984, incorporated by
	reference from Fairmounts Form 10-K for the fiscal
	year ending December 31, 1983, (sequentially numbered
	pages 56 through 69).                                                                                                                                                                                                                                                                                                                         
| | 4.1  |  |  | Letter Agreement extending the date for maturity of current
	indebtedness to Fairmount Fund and the Estate of Leistner to
	April 1, 1998 incorporated by reference from the
	Companys Form 10-KSB for the fiscal year ending
	December 31, 1996, (Exhibit 4(a)).                                                                                                                                                                                                                                                     
| | 4.2  |  |  | Employment agreement between Todd K. Walker (Employee) and
	Fairmount incorporated by reference from Fairmounts
	Form  10-KSB for the fiscal year ending December 31,
	1994, (Exhibit 4(b)).                                                                                                                                                                                                                                                                                                                         
| | 4.3  |  |  | Termination of the 1992 Credit Facility Loan Agreement
	incorporated by reference from Fairmounts Form 10-KSB
	for the fiscal year ended December 31, 1997,
	(Exhibit 4(a)).                                                                                                                                                                                                                                                                                                                                         
| | 10.1 |  |  | Amendment No. 10, dated September 10, 1987, to the
	Statement on Schedule 13D, previously filed by Phoenix
	Chemical Company and the Phoenix Chemical Corporation with the
	Securities and Exchange Commission on March 19, 1982 and
	April 9, 1982, respectively, and the American Stock Exchange
	 on March 22, 1982 and April 12, 1982, respectively,
	with respect to Fairmounts issuance to Phoenix Chemical
	Company of 100,000 shares of Fairmounts common stock in
	cancellation of current debt to Phoenix.
| | 10.2 |  |  | Amendment No. 11, dated December 17, 1987, to the
	Statement on Schedule 13D, previously filed by Phoenix
	Chemical Company and Phoenix Chemical Corporation with the
	Securities and Exchange Commission on March 19, 1982 and
	April 9, 1982, respectively, and the American Stock Exchange
	 on March 22, 1982 and April 12, 1982, respectively,
	with respect to Fairmounts issuance to Phoenix Chemical
	Company of 133,334 shares of Fairmounts common stock in
	cancellation of current debt to Phoenix.     

14



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| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ----- |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.3  |  |  | Amendment No. 12, dated July 7, 1988, to the Statement
	on Schedule 13D, previously filed by Phoenix Chemical
	Company and Phoenix Chemical Corporation with the Securities and
	Exchange Commission on March 19, 1982, and April 9,
	1982, respectively, and the American Stock Exchange on
	March 22, 1982 and April 12, 1982, respectively, with
	respect to Fairmounts issuance to Phoenix Chemical Company
	of 1,000,000 shares of Fairmounts common stock in
	cancellation of current debt to Phoenix.   
| | 10.4  |  |  | Amendment No. 13, dated August 7, 1989 to the Statement
	 on Schedule 13D, previously filed by Phoenix Chemical
	Company and Phoenix Chemical Corporation with the Securities and
	Exchange Commission on March 19, 1982 and April 9,
	1982, respectively, and the American Stock Exchange on
	March 22, 1982, and April 12, 1982, respectively, with
	respect to Fairmounts issuance to Phoenix Chemical Company
	of 1,000,000 shares of Fairmounts common stock in
	cancellation of current debt to Phoenix. 
| | 10.5  |  |  | Amendment No. 14, dated May 23, 1990, to the Statement
	on Schedule 13D, previously filed by Phoenix Chemical
	Company and Phoenix Chemical Corporation with the Securities and
	Exchange Commission on March 19, 1982 and April 9,
	1982, respectively, and the American Stock Exchange on
	March 22, 1982 and April 12, 1982, respectively, with
	respect to Fairmounts issuance to Phoenix Chemical Company
	of 1,500,000 shares of Fairmounts common stock in
	cancellation of current debt to Phoenix.    
| | 10.6  |  |  | Amendment No. 15, dated December 5, 1990, to the Statement
	on Schedule 13D, previously filed by Phoenix Chemical
	Company and Phoenix Chemical Corporation with the Securities and
	Exchange Commission on March 19, 1982 and April 9,
	1982, respectively, and the American Stock Exchange on
	March 22, 1982 and April 12, 1982, respectively, with
	respect to Fairmounts issuance to Phoenix Chemical Company
	of 1,000,000 shares of Fairmounts common stock in
	cancellation of current debt to Phoenix.
| | 10.7  |  |  | Statement on Schedule 13D, dated April 6, 1992,
	previously filed by William E. Leistner with the Securities
	and Exchange Commission on April 15, 1992 with respect to
	the liquidation and winding up of Phoenix Chemical Company and
	the distribution of 3,789,200 shares of Fairmounts common
	stock to Leistner, who was a 60% partner in Phoenix, as the
	result of such liquidation is incorporated into Part III.                                                                                      
|
|
|
|
| | 10.8  |  |  | Statement on Schedule 13D, dated April 6, 1992,
	previously filed by the Estate of Olga H. Knoepke, with the
	Securities and Exchange Commission on May 4, 1992, with
	respect to liquidation and winding up of Phoenix Chemical Company
	 and the distribution of 2,526,134 shares to the Estate of
	Olga  H. Knoepke, who was a 40% partner in Phoenix, as the
	result of such liquidation is incorporated into Part III.                                                                                      
|
|
|
|
| | 10.9  |  |  | Statement on Schedule 13D, dated September 19, 1993,
	previously filed by the Estate of William E. Leistner with
	Securities and Exchange Commission on March 30, 1994 with
	respect to the Estate of William E. Leistner acquiring
	direct beneficial ownership of William E. Leistners
	shares of Common Stock and 5,400,000 shares of Preferred Stock of
	 Fairmount Chemical Co., Inc. upon his death on September 
	19, 1993 is incorporated into Part III.                                                
|
|
|
|
| | 10.10 |  |  | Amendment No. 1, dated December 28, 1992, to the
	Statement on Schedule 13D, previously filed by
	William E. Leistner with the Securities and Exchange
	Commission on April 14, 1992, with respect to
	Fairmounts issuance to Leistner of 1,000,000 shares of
	Fairmounts Common Stock in cancellation of current debt to
	Leistner is incorporated into Part III.                                                                                                                                             
|
|
|
|
| | 10.11 |  |  | Form 8-K of the Company, previously filed September 10,
	 1987, with respect to Issuers issuance to Phoenix Chemical
	 Company of 100,000 shares of Fairmounts common stock in
	cancellation of current debt to Phoenix.                                                                                                                                                                                                                                                                                       

15



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| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ----- |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|
| | 10.12 |  |  | Incentive Stock Option Plan, incorporated by reference to
	Fairmounts Definitive Proxy Statement for its Annual
	Meeting of Stockholders held April 19, 1983
	(Exhibit A), and amendment thereto, incorporated by
	reference from the Fairmounts Definitive Proxy Statement
	for its Annual Meeting of Stockholders held May 15, 1985
	(Exhibit A); Incentive Stock Option Plan, as amended in
	1988, incorporated by reference from Fairmounts
	Form 10-K for the fiscal year ending December 31, 1988
	(Exhibit 10); and amendment to Incentive Stock Option Plan
	in 1991, incorporated by reference to Fairmounts Definitive
	 Proxy Statement for its Annual Meeting of Stockholders held
	May  6, 1991 (Exhibit A).
|
|
|
|
| | 10.13 |  |  | Employment agreement by and between Reidar Halle Ph.D. and
	Fairmount Chemical Co., Inc. incorporated by reference from
	Fairmounts Form 10-QSB for the quarter year ending
	June  30, 1998. (Exhibit 10).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
|
|
|
| | 27.1  |  |  | Financial Data Schedule                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

(b)  No reports have been filed on Form 8-K during the
quarter ended September 30, 1999.

16



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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                  
|
| | /s/ REIDAR T. HALLE         
| |                             
| | Reidar T. Halle             
| | Chief Executive Officer and 
| | President                   

Date: November 12, 1999



| |                          
| | -------------------------
| | /s/ WILLIAM C. KALTNECKER
| |                          
| | William C. Kaltnecker    
| | Controller               

Date: November 12, 1999

17