<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549




                                    FORM 10-Q

(Mark One)

(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the quarterly period ended September 30, 1998

                                       OR

( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934.



                         Commission File Number: 0-24416


                             ADFLEX SOLUTIONS, INC.
             (Exact name of registrant as specified in its charter)

                       DELAWARE                           04-3186513
            (State or other jurisdiction of            (I.R.S. Employer
            incorporation or organization)            Identification No.)

                   2001 W. CHANDLER BLVD., CHANDLER, AZ 85224
                                 (602) 963-4584
               (Address, including zip code, and telephone number,
                      including area code, of registrant's
                          principal executive offices)

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 the filing requirements for the past 90 days.

Yes  X     No
    ---       ---
The number of shares outstanding of the issuer's common stock, as of September
30, 1998:

                 COMMON STOCK, $.01 PAR VALUE: 8,928,249 SHARES
<PAGE>   2
                             ADFLEX SOLUTIONS, INC.
                                      INDEX



<TABLE>
<CAPTION>
                                                                                                                 Page
                                                                                                                 ----
<S>                                                                                                             <C>
PART I     FINANCIAL INFORMATION                                                                                 
                                                                                                                 
           Item 1.  Condensed Consolidated Financial Statements                                                  
                                                                                                                 
              Condensed Consolidated Balance Sheets -                                                            
                  September 30, 1998 and December 31, 1997.....................................................     3
                                                                                                                 
              Condensed Consolidated Statements of Operations -                                                  
                  Three and Nine Months Ended September 30, 1998 and 1997......................................     4
                                                                                                                 
              Condensed Consolidated Statements of Cash Flows -                                                  
                  Nine Months Ended September 30, 1998 and 1997................................................     5
                                                                                                                 
              Notes to Condensed Consolidated Financial Statements.............................................     6
                                                                                                                 
           Item 2.  Management's Discussion and Analysis of                                                      
                    Financial Condition and Results of Operations..............................................     9
                                                                                                                 
                                                                                                                 
PART II  OTHER INFORMATION                                                                                       
                                                                                                                 
           Item 6.  Exhibits and Reports on Form 8-K...........................................................    17
                                                                                                                 
                                                                                                                 
SIGNATURES ....................................................................................................    18
</TABLE>


EXHIBITS

         (10.56)  Third Amendment to Credit Agreement, dated October 30, 1998,
                  among the Registrant, BankBoston, N.A. and BankBoston, N.A. as
                  agent for Lenders

         (11.1)   Computation of Net Income (Loss) per Share

         (27.1)   Financial Data Schedule (filed only electronically with the
                  SEC)


                                       2
<PAGE>   3
                          PART I. FINANCIAL INFORMATION

Item 1.   Condensed Consolidated Financial Statements

                             ADFlex Solutions, Inc.
                      Condensed Consolidated Balance Sheets
                                 (In thousands)

<TABLE>
<CAPTION>
                                               September 30,  December 31,
                                                   1998           1997
                                               -------------  ------------
                                                (Unaudited)
<S>                                            <C>            <C>     
ASSETS
Current assets:
     Cash & cash equivalents                     $  3,719       $  9,092
     Accounts receivable, net                      20,617         31,581
     Other receivables                                806          1,167
     Inventories                                   11,271         19,297
     Prepaid taxes                                  2,846          2,951
     Other current assets                           1,815          1,400
                                                 --------       --------
Total current assets                               41,074         65,488
Property, plant & equipment, net                   53,176         42,257
Deferred tax assets                                 6,509          5,481
Intangible assets                                   2,062          2,449
Other assets                                           15             24
                                                 --------       --------
                                                 $102,836       $115,699
                                                 ========       ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Line of credit                              $  3,500       $  7,000
     Notes payable                                  1,188          2,250
     Accounts payable                              10,878         22,692
     Accrued liabilities                            8,007          6,548
     Current portion of long-term debt and
          capitalized leases                       13,061          1,959
                                                 --------       --------
Total current liabilities                          36,634         40,449
Deferred tax liabilities                              678          1,113
Long-term debt and capitalized leases              17,000         23,230
Stockholders' equity                               48,524         50,907
                                                 --------       --------
                                                 $102,836       $115,699
                                                 ========       ========
</TABLE>


      See accompanying notes to condensed consolidated financial statements


                                       3
<PAGE>   4
                             ADFlex Solutions, Inc.
                 Condensed Consolidated Statements of Operations
                    (In thousands, except per share amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     Three Months Ended                Nine Months Ended
                                                        September 30,                    September 30,
                                                ------------------------------    -----------------------------
                                                 1998             1997             1998             1997
                                               ---------        ---------        ---------        ---------

<S>                                            <C>              <C>              <C>              <C>      
Net sales                                      $  36,142           55,058        $ 130,469        $ 159,524
Cost of sales                                     34,556           44,913          117,212          132,857
                                               ---------        ---------        ---------        ---------
    Gross profit                                   1,586           10,145           13,257           26,667
Operating expenses:
    Engineering, research & development            1,675            1,798            5,775            5,987
    Selling, general & administrative              2,761            3,854            9,798           11,283
    Amortization of intangible assets                129               --              387               --
                                               ---------        ---------        ---------        ---------
Total operating expenses                           4,565            5,652           15,960           17,270
                                               ---------        ---------        ---------        ---------
    Operating income (loss)                       (2,979)           4,493           (2,703)           9,397
Interest income                                       44               58              241              135
Interest expense                                    (661)            (590)          (2,085)          (1,535)
Other income (expense), net                          (30)             (10)            (390)            (175)
Minority interest in earnings of
consolidated joint venture                            --             (132)              --             (181)
                                               ---------        ---------        ---------        ---------
    Income (loss) before income taxes             (3,626)           3,819           (4,937)           7,641
Income taxes (benefit)                            (1,016)           1,222           (1,384)           2,292
                                               ---------        ---------        ---------        ---------
Net income (loss)                              $  (2,610)       $   2,597        $  (3,553)       $   5,349
                                               =========        =========        =========        =========
Net income per share:
Basic                                          $   (0.29)       $    0.30        $   (0.40)       $    0.62
                                               =========        =========        =========        =========
Diluted                                        $   (0.29)       $    0.29        $   (0.40)       $    0.60
                                               =========        =========        =========        =========

Common and common equivalent shares used
in the calculation of net income (loss)
per share:
Basic                                              8,901            8,732            8,847            8,693
                                               =========        =========        =========        =========
Diluted                                            8,901            9,022            8,847            8,863
                                               =========        =========        =========        =========
</TABLE>


      See accompanying notes to condensed consolidated financial statements


                                       4
<PAGE>   5
                             ADFlex Solutions, Inc.
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                      Nine Months Ended
                                                                                        September 30,
                                                                                   ------------------------
                                                                                     1998            1997
                                                                                   --------        --------
<S>                                                                                <C>             <C>     
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income (loss)                                                                  $ (3,553)       $  5,349
Adjustments to reconcile net income (loss) to net cash
 provided by (used in) operating activities:
       Depreciation and amortization                                                  6,532           4,888
       Minority interest                                                                 --             181
       Net (gain)/loss on disposal of asset                                            (103)             --
       Deferred taxes                                                                (2,085)          3,441
       Changes in operating assets and liabilities:
          Accounts receivable                                                        10,964          (6,329)
          Other receivables                                                             361             315
          Inventories                                                                 8,026          (4,787)
          Other current assets                                                         (127)           (844)
          Accounts payable and accrued liabilities                                   (9,915)         (2,956)
                                                                                   --------        --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                  10,100            (742)

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
Capital expenditures                                                                (16,959)         (7,641)
Increase in other assets                                                                 10              --
Investment in joint venture                                                              --            (500)
                                                                                   --------        --------
NET CASH (USED IN) INVESTING ACTIVITIES                                             (16,949)         (8,141)

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
Net activity on line of credit                                                       (3,500)         (9,000)
Net activity on note payable                                                         (1,063)             --
Net activity on long-term debt                                                        5,000          15,000
Payments on capitalized lease obligations                                              (130)           (111)
Issuance of common stock, net of expenses                                             1,169           1,541
                                                                                   --------        --------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES                                       1,476           7,430
                                                                                   --------        --------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                            (5,373)         (1,453)
Cash and cash equivalents at beginning of period                                      9,092           6,097
                                                                                   --------        --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                         $  3,719        $  4,644
                                                                                   ========        ========
</TABLE>


                                       5
<PAGE>   6
                             ADFLEX SOLUTIONS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(1)      BASIS OF PRESENTATION

         The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring items) considered necessary for a fair
presentation have been included. Preparing financial statements requires the use
of estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses. Actual results may differ from these
estimates. Operating results for the nine month period ended September 30, 1998
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1997.

         The accompanying unaudited condensed consolidated financial statements
include the accounts of the Company and its subsidiaries. All intercompany
accounts and transactions have been eliminated in consolidation.

         In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-1, Accounting for the Costs of Computer
Software Developed for or Obtained for Internal-Use, which requires the
capitalization of certain costs incurred in connection with developing or
obtaining computer software. The Company elected to adopt SOP 98-1 effective
January 1, 1998 in connection with the purchase of a manufacturing cost control
system. Capitalized costs are being amortized on a straight-line basis over a
period of five years upon completion of the project in October 1998.



 (2)     ACCOUNTS RECEIVABLE, NET

         Accounts receivable consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                September 30,    December 31, 
                                                    1998            1997
                                                -------------    ------------

<S>                                             <C>              <C>     
Accounts receivable trade                         $ 21,558        $ 33,331
Allowance for doubtful accounts and returns           (941)         (1,750)
                                                  --------        --------
                                                  $ 20,617        $ 31,581
                                                  ========        ========
</TABLE>


                                       6
<PAGE>   7
(3)      INVENTORIES

         Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                      September 30,       December 31, 
                                         1998                1997
                                      -------------       ------------

<S>                                   <C>                 <C>     
Raw materials                           $  7,686           $ 12,688
Work-in-process                            5,709              8,849
Finished goods                             1,505                595
Allowance for obsolescence and
excess inventory                          (3,629)            (2,835)
                                        --------           --------
                                        $ 11,271           $ 19,297
                                        ========           ========
</TABLE>

(4)      ACCRUED LIABILITIES

         Accrued liabilities consist of the following (in thousands):

<TABLE>
<CAPTION>
                                       September 30,     December 31,
                                          1998               1997  
                                       -------------     ------------

<S>                                    <C>                <C>    
Salaries and benefits                    $ 3,158           $ 3,259
Income taxes payable (benefit)              (201)               --
Accrued interest                             583               138
Accrued commissions                          453               346
Accrued relocation                           100               429
Accrued restructuring charges                172               339
Deferred tax liability, current              934               385
Other                                      2,808             1,652
                                         -------           -------
                                         $ 8,007           $ 6,548
                                         =======           =======
</TABLE>


(5)      LINE OF CREDIT  AND LONG-TERM DEBT

         In February 1998, the Company amended its existing credit facility to
more adequately meet its working capital requirements by increasing the existing
revolving line of credit from $20.0 million to $25.0 million. In addition, the
existing $25.0 million term loan was replaced with a $35.0 million term loan. In
July 1998, the Company cancelled $10.0 million of existing credit facility
commitments, $5.0 million relating to the revolving line of credit and $5.0
million relating to the term loan. The Company is required, under the amended
credit agreement, to maintain certain financial ratios, meet certain net worth
and indebtedness tests and and maintain an operating income or net income
position for any period comprised of two consecutive fiscal quarters. As of
September 30, 1998, the Company was in technical default of the interest
coverage and the operating/net income requirements which have been waived by the
lenders for the three month period ended September 30, 1998. At September 30,
1998, the Company had $15.6 million available for borrowing based on collateral
requirements under the revolving line of credit with an outstanding balance of
$3.5 million, and $30.0 million was outstanding under the term loan.

         Subsequent to September 30, 1998, the Company signed a third amendment
to the existing credit facility to revise certain financial covenants, reduce
the term loan by $10.0 million and revise the debt amortization schedule. Upon
closing of the third amendment, the $30.0 million term loan was reduced by $5.0
million to $25.0 million from borrowings from the Company's revolving line of
credit. The amendment requires a $5.0 million principal payment no later than
January 20, 1999, plus four equal principal payments of $0.8 million each
quarter beginning with the quarter ending December 31, 1998 through the quarter
ending September 30, 1999, increasing to twelve equal principal payments of $1.3
million each quarter thereafter with the last payment due December 31, 2002.
Borrowing under the line of credit is limited to 80% of the aggregate value of
all eligible domestic accounts receivable plus 70% of the aggregate value of all
eligible foreign accounts receivable. Under the terms of the credit facility,
any outstanding balance bears interest at a Base Rate which is defined as
BankBoston N.A.'s prime rate plus 


                                       7
<PAGE>   8
0.50% or LIBOR plus an applicable margin ranging from 1.50% to 2.25%, based on
the Company achieving certain financial objectives at the end of each quarter.
The credit facility is secured by all assets of the Company and a pledge by the
Company of 66 2/3% of the stock of its subsidiaries. Under the third amendment
to the credit agreement, the Company is required to meet certain minimum
profitability covenants, maintain certain financial ratios and meet certain net
worth and indebtedness tests. Based on the revised financial covenants addressed
in the third amendment to the credit agreement, the Company expects that it will
comply with all financial covenants at measurement dates that are within the
next 12 months through operations and the proceeds of expected borrowings. The
amended credit facility prohibits the payment of dividends. In connection with
the third amendment, the Company issued to its lenders a warrant to purchase an
aggregate of 50,000 shares of Common Stock at an exercise price of $5.00 per
share. The warrant vests on March 14, 1999 (subject to certain conditions) and
terminates (if not sooner exercised) on December 29, 2002. The Company also
granted to the lenders certain customary demand and piggyback registration
rights in connection with the warrant. In addition, the Company has the option
to pay $0.3 million in lieu of the warrants up to the vesting date of March 14,
1999.


(6)       SPECIAL CHARGES

         During the nine month period ended September 30, 1998, the Company
implemented new cost and productivity improvement measures designed to address
current adverse industry trends such as intense price competition from Asian
suppliers and decreased demand by certain customers supplying the personal
computer markets - in particular the hard disk drive (HDD) segment. These
actions included the consolidation of administrative functions, a 27% reduction
in staffing, the closing of two manufacturing plants in Mexico and the transfer
of selected manufacturing programs from Mexico to Thailand. As a result, the
Company incurred a special charge of approximately $1.4 million, $0.5 million
related to the workforce reduction which was paid in June 1998 and $0.9 million
related to employee severance and termination costs associated with the closing
of the two plants in Mexico. To date, the Company has paid and charged to the
$0.9 million liability approximately $0.5 million. In addition, the Company
determined that approximately $0.3 million of the employee severance costs
reserve was not needed as previously anticipated and these costs were reversed
out during the three month period ended September 30, 1998. The remaining
accrual for termination costs is approximately $0.1 million, which the Company
believes is adequate to cover the remaining liabilities.


 (8)     INCOME TAXES

         The Internal Revenue Service (IRS) has concluded a field audit of the
Company's income tax returns for the tax year 1993. In connection with this
audit, the IRS issued a 90-day letter in January of 1998 proposing adjustments
to the Company's income and tax credits for the year, which would result in an
additional assessment of $1.6 million, excluding interest. The major proposed
adjustment, which relates to the allocation of the purchase price of assets
obtained from Rogers Corporation (Rogers) pursuant to acquisition agreements
between the Company and Rogers, would extend the period over which the tax
benefit for the purchase price would be recovered. The Company disagrees with
the proposed adjustments and has timely filed a petition in the United States
Tax Court for a judicial determination of these issues. In the opinion of the
Company's management, the final disposition of these matters will not have a
material adverse effect on the Company's business, financial condition, results
of operations and cash flows.


                                       8
<PAGE>   9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

RESULTS OF OPERATIONS

         Net Sales

         Net sales for the three and nine month periods ended September 30, 1998
decreased 34.4% and 18.2%, respectively, as compared to the same periods in
1997. During the three and nine month periods ended September 30, 1998, the
Company experienced weak demand by certain customers - in particular those
supplying the personal computer markets and the hard disk drive (HDD) segment.
Sales to one major customer, Seagate Technology, decreased approximately 38%
during the nine month period ended September 30, 1998 primarily due to reduced
demand and Seagate's decision to insource a majority of its manufacturing
requirements. In addition, sales were negatively impacted by intense price
competition from Asian suppliers as they tried to mitigate the demand void that
was created by the Asian financial crisis.

         Gross Profit

         Gross profit as a percentage of net sales (gross margin) for the three
and nine month periods ended September 30, 1998 was 4.4% and 10.2% as compared
to 18.4% and 16.7%, respectively, for the same periods in 1997. For the three
month period ended September 30, 1998, the Company's gross profit was negatively
impacted by factory overcapacity and pricing pressures from Asian manufacturers.
The Company's decrease in gross margin during the nine month period ended
September 30, 1998 was attributable to several factors: underutilization of
factories caused by reduced demand, low yields on new product ramps as customers
accelerated new programs to bolster demand, intense price competition from Asian
suppliers and special charges of approximately $1.4 million, of which $0.5
million related to workforce reduction and $0.9 million related to employee
severance and termination costs associated with the closing of the two plants in
Mexico. The Company determined that approximately $0.3 million of the employee
severance costs were not needed as previously anticipated and these costs were
reversed out during the three month period ended September 30, 1998.

          The Company cannot predict whether current unfavorable industry
conditions will continue for the remainder of 1998. However, the Company expects
that its net sales and gross margin for 1998 will be significantly below those
reported for 1997. In addition, the Company expects to report a loss for 1998.

         Operating Expenses

         Engineering, research and development expenses decreased slightly for
the three and nine month periods ended September 30, 1998 at $1.7 million and
$5.8 million, respectively, compared with $1.8 million and $6.0 million for the
same periods in 1997, respectively. Sales, general and administrative (SG&A)
expenses were $2.8 million and $9.8 million for the three and nine month period
ended September 30, 1998, respectively, compared with $3.9 million and $11.3
million for the same periods in 1997, respectively. These results reflect the
Company's reduction in workforce, general reductions in discretionary spending
and elimination of management bonus and profit sharing expenses during the three
month periods ending June 30, 1998 and September 30, 1998.

         In connection with the acquisition of Hana's 20% interest in ADFlex
Thailand Limited (ATL) in September 1997, the Company recorded goodwill which is
being amortized over its estimated useful life of five years. Amortization of
intangible assets was $0.1 million, or 0.4% of net sales, for the three month
period ended September 30, 1998.

         Interest and Other Income (Expense)

         For the three month periods ended September 30, 1998 and 1997, interest
expense includes $0.7 million and $0.6 million of interest expense,
respectively, which related to borrowings under the line of credit, the term
loan and capital lease obligations. Other income (expense) for both periods
represents the net impact of bank fees and exchange gains and losses realized on
the settlement of transactions associated with the Company's foreign
subsidiaries. Exchange gains and losses associated with short-term forward
foreign currency exchange contracts, which the Company began entering into in
December 1997 to manage its exposure, are also included in other income
(expense) for the three month period ended September 30, 1998.

         For the nine month period ended September 30, 1998, interest expense
includes $2.1 million of interest expense related to borrowings under the line
of credit, the term loan and capital lease obligations. For the nine month
period ended September 30, 1997, interest expense includes $0.3 million of
interest expense on the 


                                       9
<PAGE>   10
subordinated debenture and $1.2 million of interest expense related to
borrowings under the line of credit, the term loan and capital lease
obligations. Other income (expense) for both periods represents the net impact
of bank fees and exchange gains and losses realized on the settlement of
transactions associated with the Company's foreign subsidiaries. Exchange gains
and losses associated with short-term forward foreign currency exchange
contracts are also included in other income (expense) for the nine month period
ended September 30, 1998.


LIQUIDITY AND CAPITAL RESOURCES

         The Company has financed its growth and operations liquidity needs to
date primarily through cash generated from operations, the use of bank credit
lines and through proceeds from the sale of its Common Stock. The primary uses
of cash have been for increased working capital, funding of capital expenditures
and expansion of ADFlex Thailand.

         In February 1998, the Company amended its existing credit facility to
more adequately meet its working capital requirements by increasing the existing
revolving line of credit from $20.0 million to $25.0 million. In addition, the
existing $25.0 million term loan was replaced with a $35.0 million term loan. In
July 1998, the Company cancelled $10.0 million of existing credit facility
commitments, $5.0 million relating to the revolving line of credit and $5.0
million relating to the term loan. The Company is required, under the amended
credit agreement, to maintain certain financial ratios, meet certain net worth
and indebtedness tests and and maintain an operating income or net income
position for any period comprised of two consecutive fiscal quarters. As of
September 30, 1998, the Company was in technical default of the interest
coverage and the operating/net income requirements which have been waived by the
lenders for the three month period ended September 30, 1998. At September 30,
1998, the Company had $15.6 million available for borrowing based on collateral
requirements under the revolving line of credit with an outstanding balance of
$3.5 million, and $30.0 million was outstanding under the term loan.

         Subsequent to September 30, 1998, the Company signed a third amendment
to the existing credit facility to revise certain financial covenants, reduce
the term loan by $10.0 million and revise the debt amortization schedule. Upon
closing of the third amendment, the $30.0 million term loan was reduced by $5.0
million to $25.0 million from borrowings from the Company's revolving line of
credit. The amendment requires a $5.0 million principal payment no later than
January 20, 1999, plus four equal principal payments of $0.8 million each
quarter beginning with the quarter ending December 31, 1998 through the quarter
ending September 30, 1999, increasing to twelve equal principal payments of $1.3
million each quarter thereafter with the last payment due December 31, 2002.
Borrowing under the line of credit is limited to 80% of the aggregate value of
all eligible domestic accounts receivable plus 70% of the aggregate value of all
eligible foreign accounts receivable. Under the terms of the credit facility,
any outstanding balance bears interest at a Base Rate which is defined as
BankBoston N.A.'s prime rate plus 0.50% or LIBOR plus an applicable margin
ranging from 1.50% to 2.25%, based on the Company achieving certain financial
objectives at the end of each quarter. The credit facility is secured by all
assets of the Company and a pledge by the Company of 66 2/3% of the stock of its
subsidiaries. Under the third amendment to the credit agreement, the Company is
required to meet certain minimum profitability covenants, maintain certain
financial ratios and meet certain net worth and indebtedness tests. Based on the
revised financial covenants addressed in the third amendment to the credit
agreement, the Company expects that it will comply with all financial covenants
at measurement dates that are within the next 12 months through operations and
the proceeds of expected borrowings. The amended credit facility prohibits the
payment of dividends. In connection with the third amendment, the Company issued
to its lenders a warrant to purchase an aggregate of 50,000 shares of Common
Stock at an exercise price of $5.00 per share. The warrant vests on March 14,
1999 (subject to certain conditions) and terminates (if not sooner exercised) on
December 29, 2002. The Company also granted to the lenders certain customary
demand and piggyback registration rights in connection with the warrant. In
addition, the Company has the option to pay $0.3 million in lieu of the warrants
up to the vesting date of March 14, 1999.

         Net cash provided by operating activities for the nine month period
ended September 30, 1998 was $10.1 million compared to net cash used by
operations of $0.7 million for the same period in 1997. During these same
periods, net income (loss) was ($3.6 million) and $5.3 million, respectively,
with depreciation and amortization expense of $6.5 million and $4.9 million,
respectively. Decreased sales levels for the nine month period ended September
30, 1998 resulted in the Company maintaining a low level of working capital,
primarily a decreased level of accounts receivable, inventory and accounts
payable.


                                       10
<PAGE>   11
         Net cash used in investing activities was $17.0 million for the nine
months ended September 30, 1998 compared with $8.1 million for the same period
in 1997. Capital expenditures for the nine months ended September 30, 1998 were
$17.0 million compared with $7.6 million for the same period in 1997. During the
nine month period ended September 30, 1998, the Company invested $4.1 million
related to the implementation of the SAP R/3 software manufacturing/cost control
system. The total cost of implementing the new system, including software,
implementation, hardware and training, is expected to be $5.2 million. The cost
of acquiring and implementing the new system will be recorded as an asset by the
Company and amortized over its estimated benefit period. In addition, capital
expenditures during the nine month period ended September 30, 1998 included $0.6
million related to the Thailand operations expansion and $12.3 million related
to machinery and equipment additions. Capital expenditures during the periods
were financed from existing cash balances and from borrowings under the
Company's bank line of credit. The Company presently expects capital
expenditures to total approximately $22.0 million in 1998.

         Net cash provided by financing activities for the nine months ended
September 30, 1998 was $1.5 million compared with $7.4 million for the same
period in 1997. The Company borrowed an additional $5.0 million on its term loan
during the nine months ended September 30, 1998, which was used to pay down the
Company's bank line of credit. Net repayments on the Company's bank line of
credit totaled $3.5 million during the nine months ended September 30, 1998
compared to net repayments of $9.0 million for the same period in 1997. Under
the original credit agreement as discussed above, the Company borrowed $25.0
million under the term loan during the nine month period ended September 30,
1997. Of the $25.0 million term loan proceeds, approximately $7.5 million in
principal plus $2.0 million in accrued interest was used to retire, ahead of
schedule, the subordinated debenture issued in the acquisition of the Company's
U.K. operation, approximately $15.0 million was used to repay borrowings under
the Company's existing line of credit and the remainder was used to finance
working capital of the Company. In addition, the Company remitted $2.5 million
in principal plus $0.8 million in accrued interest in January 1997 in payment of
the subordinated debenture. Funding for this payment came from the Company's
line of credit. The Company generated $1.2 million and $1.5 million in the nine
months ended September 30, 1998 and 1997, respectively, through sales of its
Common Stock. During the year ended December 31, 1997, the Company paid $0.5
million at closing and issued a note in the principal amount of $1.0 million and
agreed to pay $1.3 million at various dates through December 31, 1998 in
connection with the acquisition of Hana's 20% interest in ATL. The Company
remitted $1.1 million during the nine months ended September 30, 1998. Funding
for this payment came from the Company's line of credit. As of September 30,
1998, $1.2 million was outstanding and will be paid in full during the period
ending December 31, 1998.

         The Company may require additional capital to finance enhancement to,
or expansion of, its manufacturing capacity in accordance with its business
strategy. Management believes that the level of working capital should continue
to grow at a rate generally consistent with the growth of the Company's
operations. Although no assurance can be given that future financing will be
available on terms acceptable to the Company, the Company may seek additional
funds from time to time through public or private debt or equity offerings or
through bank borrowings. Management believes, however, that existing cash
balances, funds generated from operations and expected borrowings will be
sufficient to permit the Company to meet its liquidity and expansion
requirements for the next twelve months.


OTHER MATTERS

         Foreign Operations

         The Company's primary finishing and assembly facilities are located in
Agua Prieta, Mexico and Lamphun, Thailand, and the Company maintains a
technology and pilot production facility in Havant, England. While the Company
believes it has established good relationships with its local labor forces and
the local governments, the spread of the manufacturing process over multiple
countries subjects the Company to risks inherent in international operations.
Those risks include currency fluctuations, inflationary pressures, unexpected
changes in regulatory requirements, tariffs and barriers, potentially limited
intellectual property protection, potential cross border shipment delays,
changes in political climate, difficulties in coordinating and managing foreign
operations, foreign labor union issues, increases in employee turnover and
potentially adverse tax consequences. Any of the foregoing could have a material
adverse effect on the Company's business, financial condition, results of
operations and cash flows. While the Company transacts business predominately in
U.S. Dollars and most of its net sales are collected in U.S. Dollars, a portion
of its sales and expenses are denominated in foreign currencies. 


                                       11
<PAGE>   12
Changes in the relation of foreign currencies to the U.S. Dollar will affect the
Company's cost of goods sold and operating margins and could result in exchange
gains or losses. To reduce the impact of certain foreign currency fluctuations,
the Company enters into short-term forward foreign currency exchange contracts
(hedges) in the regular course of business to manage its exposure. The forward
exchange contracts generally require the Company to exchange U.S. Dollars for
foreign currencies at maturity, at rates agreed to at inception of the
contracts. The gains or losses on hedges of transaction exposure are included in
income in the period in which the exchange rates change. The gains and losses on
unhedged foreign currency transactions are included in income. No assurance can
be given that the Company's hedging strategies will prevent future currency
fluctuations from adversely affecting the Company's business, financial
condition, results of operations and cash flows.

         Expansion of Thailand Operations

         In April 1998, the Company commenced expansion of its Thailand
operations with the construction of a new plant. The expansion will initially
provide 100,000 square feet of manufacturing space - 65,000 feet for flex
fabrication and 35,000 feet for assembly - bringing the total size of the
facility to 140,000 square feet. The expanded facility, which will increase the
total assembly area by nearly 50%, includes state-of-the-art clean rooms and the
production capability to process up to 750,000 circuit assemblies per week. The
new flex fabrication area will feature advanced surface finishing, laser
processing and automated optical profiling technologies. The total estimated
cost of the expansion is approximately $9.0 million and is expected to be
operational by the second quarter of 1999, including customer qualification and
ramp into volume production. The Company anticipates that the new Thailand
facility will enable it to attain significant cost reductions that are crucial
to mitigating competitive price pressures in Asia and help sustain the Company's
implementation of a complete flexible circuit interconnect solution including
design, fabrication, assembly and testing. No assurance can be given that the
Thailand expansion will be completed at the time anticipated or that the
Company's expansion strategies will not have a material, adverse effect on the
Company's business, financial condition, results of operations and cash flows.

         Environmental Regulations

         The Company is subject to a variety of environmental laws relating to
the storage, discharge, handling, emission, generation, manufacture, use and
disposal of chemicals, solid and hazardous waste and other toxic and hazardous
materials used to manufacture the Company's products. The Company has conducted
environmental studies of its facility in Chandler, Arizona, which revealed a
limited amount of soil contamination that may require remediation. Based on
these studies, the Company believes that the costs associated with remediation
will not have a material adverse effect on its operations or financial
condition. However, given the uncertainties associated with environmental
contamination, there can be no assurance that such costs will not have a
material adverse impact on the Company. Pursuant to the agreements governing the
Rogers Corporation (Rogers) acquisition, Rogers has retained all environmental
liabilities relating to the purchased assets prior to the closing date of the
acquisition. While Rogers currently has sufficient assets to fulfill its
obligations under the acquisition agreements, if environmental liabilities
requiring remediation are discovered and the Company was unable to enforce the
acquisition agreement against Rogers, the Company could become subject to costs
and damages relating to such environmental liabilities. Any such costs and
damages imposed on the Company could materially adversely affect the Company's
business, financial condition, results of operations and cash flows.

         In mid 1995, the Company acquired a manufacturing facility located in
Agua Prieta, Mexico. In connection with this acquisition, the Company conducted
an environmental study of the facility which indicated the contamination by
hazardous materials in the soil and groundwater. Pursuant to the purchase
agreement, the seller submitted a remediation plan to the appropriate Mexican
authorities, which was approved in May 1997. Subsequent remediation was
completed in December 1997. The seller is awaiting acknowledgement that the
remediation plan has been approved and no further action is required by the
Mexican authorities. The seller's obligation for cost of remediation is limited
to $2.5 million. A total of $1.0 million was originally held in escrow pending
the seller's performance of its environmental obligations under the agreement.
One third of the escrow balance was used to conduct the remediation, one third
was released to the seller according to the agreement and one third remains in
escrow and will be released to the seller upon closure of the issue by the
Mexican authorities with certification that no further action is required.

         The Company believes it has been operating its facilities in
substantial compliance in all material respects with existing environmental
laws. However, the Company cannot predict the nature, scope or effect of
legislation or regulatory requirements that could be imposed or how existing or
future laws or regulations will be administered or interpreted with respect to
products or activities to which they have not previously been applied.
Compliance with 


                                       12
<PAGE>   13
more stringent laws or regulations, or more vigorous enforcement policies of
regulatory agencies, could require substantial expenditures by the Company and
could adversely affect the Company's business, financial condition, results of
operations and cash flows.

         Dependence on Electronics Industry

         The Company's principal customers are electronics original equipment
manufacturers and contract manufacturers. The electronics industry as a whole is
characterized by intense competition, relatively short product life-cycles and
significant fluctuations in product demand. In addition, the electronics
industry is generally subject to rapid technological change and product
obsolescence. Discontinuance of products or modifications developed in
connection with next generation products containing flexible circuit
interconnects manufactured by the Company could have a material adverse effect
on the Company's business, financial condition, results of operations and cash
flows. Further, various sectors of the electronics industry are subject to
economic cycles and have in the past experienced, and are likely in the future
to experience, periods of slowdown. A slowdown or any other event leading to
excess capacity or a downturn in the electronics industry would likely result in
intensified price competition, reduced gross margins and a decrease in unit
volume, all of which would have a material adverse effect on the Company's
business, financial condition, results of operations and cash flows.

         Fluctuations in Operating Results

         The Company has experienced substantial fluctuations in its quarterly
and annual operating results in the past, and the Company's future operating
results could vary substantially from quarter to quarter. The Company's
operating results for a particular quarter or longer periods can be materially
and adversely affected by numerous factors, such as the receipt and shipment of
large orders, plant utilization, product mix, manufacturing process yields, the
timing of expenditures in anticipation of future sales, raw material
availability, product and price competition, the length of sales cycles and
economic conditions in the electronics industry. Variations in orders and in the
mix of products sold by the Company have significantly impacted net sales and
gross profit. Many of these factors are outside the control of the Company.

         Concentration Risk

         The Company provides flexible interconnect products to a diverse group
of markets. Through ongoing diversification and new market expansion efforts,
primarily directed toward the communications and consumer markets, the Company
is continuing its efforts to reduce its dependence on the HDD market. Sales to
the HDD market accounted for 36% of net sales and 45% of net sales for the nine
month periods ended September 30, 1998 and 1997, respectively. Though the
Company is continuing its efforts to reduce its dependence on the HDD industry,
net sales attributable to this market are expected to continue to represent the
largest portion of net sales for the foreseeable future and could return to a
majority of the Company's net sales. The loss of any HDD customer, or a
substantial reduction in orders by any significant customer, including
reductions due to market, competitive or economic conditions, would have a
material adverse effect on the Company's business, financial condition, results
of operations and cash flows.

            Competition

           The flexible circuit interconnect market is differentiated by
customers, applications and geography, with each niche having its own
combination of complex packaging and interconnection requirements. The Company
believes that it competes principally on the basis of design capability, price,
quality and response time to design changes and technological advancements in
underlying applications and the ability to offer a total flexible circuit
interconnect solution. During periods of economic slowdown in the electronics
industry and other periods when excess capacity exists, electronic OEMs become
more price sensitive. During the second and third quarters of 1998, there was a
slowdown in the electronics industry and many of the Company's primary foreign
competitors with lower cost structures decreased their prices to unprecedented
levels. This had a material adverse effect on the Company's pricing during those
periods. The Company believes that once a customer has selected a particular
vendor to design and manufacture a flexible circuit interconnect, the customer
generally relies upon that vendor's design for the life of that specific
application and, to the extent possible, subsequent generations of similar
applications. Accordingly, it is difficult to achieve significant sales to a
particular customer with respect to any application once another vendor has been
selected to design and manufacture the flexible circuit interconnect used in
that application. While this market paradigm may provide a barrier to the
Company's competitors in the markets served by the Company, it also may present
an obstacle to the Company's entry into other markets.


                                       13
<PAGE>   14
           The Company experiences competition worldwide from a number of
leading foreign and domestic providers, such as Nippon Mektron ("NOK"), Fujikura
Ltd. ("Fujikura"), Multi-Fineline Electronix, Inc. ("M-Flex"), Sheldahl, Inc.
("Sheldahl"), Parlex Corporation ("Parlex"). NOK and Fujikura are Japan-based
suppliers substantially larger than the Company with greater financial and other
resources. M-Flex, Sheldahl and Parlex are U.S.-based flexible circuit
manufacturers that have lower sales of polyimide flexible circuits than the
Company and have historically targeted suppliers of computers, communication and
automotive services, and the military, respectively. Expansion of the Company's
existing products or services could expose the Company to new competition.
Moreover, new developments in the electronics industry could render existing
technology obsolete or less competitive and could potentially introduce new
competition into the market. There can be no assurance that the Company's
competitors will not develop enhancements to, or future generations of,
competitive products or services that will offer superior price or performance
features to those of the Company or that new competitors will not enter the
Company's markets. Finally, as many of the Company's competitors are based in
foreign countries, they have cost structures and prices based on foreign
currencies. Accordingly, currency fluctuations could cause the Company's
dollar-priced products to be less competitive than its competitors' products
priced in other currencies.

           The Company also competes in assembly matters with leading flexible
circuit assembly providers such as Smartflex Systems, Inc. and Solectron Corp.
The Company believes that competition in assembly matters is primarily driven by
availability of assembly technology, price and cycle time. The Company believes
that it will compete favorably with these competitors because it offers its
customers a complete flexible circuit interconnect solution including design,
fabrication, assembly and testing (referred to as the one-stop-shop strategy).

         The Company's competitors can be expected to continue to improve the
design and performance of their products and to introduce new products with
competitive price/performance characteristics. Competitive pressures often
necessitate price reductions which can adversely affect operating results. The
Company will be required to make a continued high level of investment in product
development and research, sales and marketing and ongoing customer service and
support to remain competitive. There can be no assurance that the Company will
have sufficient resources to continue to make such investments or that the
Company will be able to make the technological advances necessary to maintain
its competitive position in the flexible circuit interconnect market. There can
be no assurance that existing or future competitors will not be able to
duplicate the Company's strategies, that the Company will be able to compete
successfully in the future, or that competitive pressures faced by the Company
will not have a material adverse effect on the Company's business, financial
condition, results of operations and cash flows.

         Volatility of Stock Price

         The trading price of the Company's Common Stock is expected to continue
to be subject to wide fluctuations in response to quarter-to-quarter variations
in operating results, announcements of technological innovations or new products
by the Company's customers, general conditions in the disk drive and computer
industries, and other events or factors. In addition, stock markets have
experienced extreme price volatility in recent years. This volatility has had a
substantial effect on the market price of securities issued by many high
technology companies, in many cases for reasons unrelated to the operating
performance of the specific companies, and the Company's Common Stock has
experienced volatility not necessarily related to announcements of Company
performance. Broad market fluctuations may adversely affect the market price of
the Company's Common Stock.

         Cancellation and Regrant of Stock Option Grants

         On June 22, 1998, the Compensation Committee of the Company's Board of
Directors approved the cancellation of all outstanding options granted on June
3, 1997, October 1, 1997 and April 7, 1998 (with an original exercise price of
$15.50, $22.063 and $17.063 per share, respectively) and the regrant and
replacement of these options with new options at an exercise price per share of
$8.50, the fair market value of the Company's Common Stock on the date of the
Committee's determination. Each optionee has the opportunity to elect to retain
his or her old options or accept a new option with an exercise price of $8.50
per share. Each new option has a term of ten years and becomes exerciseable for
25% of the option share on June 22, 1999 and for the balance of the shares in a
series of equal monthly installments over the 36-month period thereafter,
assuming continued employment with the Company or one of its subsidiaries. The
Compensation Committee elected not to reprice any other outstanding options at
that time.

         The Compensation Committee approved the cancellation-regrant program
because it believes that equity interests are a significant factor in the
Company's ability to attract and retain key employees who are critical to the


                                       14
<PAGE>   15
Company's long-range success. During the three and nine month period ended
September 30, 1998, the market value of the Common Stock had fallen, in part, as
a result of market factors that affected many stocks in the industry in which
the Company engaged including the stock of the Company's customers. As a result
of the decrease in the fair market value of the Common Stock, the Committee
believed that the Company's ability to retain existing employees was adversely
affected and to attract talented individuals in the future would be impaired.
Accordingly, the Committee approved the cancellation-regrant program as a means
to ensuring that optionees have a meaningful equity interest in the Company.

         New Accounting Standards

         In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-1, Accounting for the Costs of Computer
Software Developed for or Obtained for Internal-Use, which requires the
capitalization of certain costs incurred in connection with developing or
obtaining computer software. The Company elected to adopt SOP 98-1 effective
January 1, 1998 in connection with the purchase of a manufacturing cost control
system. Capitalized costs are being amortized on a straight-line basis over a
period of five years upon completion of the project in October 1998.

         Income Taxes

         The Company's effective tax rate of 28% for the three and nine month
period ended September 30, 1998 is an estimated annual rate based upon projected
profit levels at each of the Company's entities. As the actual tax rate for each
entity varies in accordance with the taxing authority in whose jurisdiction they
reside, a significant change in operating income at any one location can result
in a change in the overall effective tax rate for the Company. The Company
monitors the effective tax rate on a continuous basis and makes adjustments as
conditions warrant. The Company's effective tax rate increased from 28% to 32%
for the third quarter of 1997 in order to reach an estimated annual rate of 30%
based upon projected profit levels at each of the Company's entities.

         The Internal Revenue Service (IRS) has concluded a field audit of the
Company's income tax returns for the tax year 1993. In connection with this
audit, the IRS issued a 90-day letter in January of 1998 proposing adjustments
to the Company's income and tax credits for the year, which would result in an
additional assessment of $1.6 million, excluding interest. The major proposed
adjustment, which relates to the allocation of the purchase price of assets
obtained from Rogers Corporation (Rogers) pursuant to acquisition agreements
between the Company and Rogers, would extend the period over which the tax
benefit for the purchase price would be recovered. The Company disagrees with
the proposed adjustments and has timely filed a petition in the United States
Tax Court for a judicial determination of these issues. In the opinion of the
Company's management, the final disposition of these matters will not have a
material adverse effect on the Company's business, financial condition, results
of operations and cash flows.

         Impact of Year 2000

         The Year 2000 Issue is a result of computer programs being written
using two digits rather than four to define the applicable year which, if left
uncorrected, could result in a system failure or miscalculations causing
disruptions of operations. With the complete implementation of the SAP R/3
software system in October 1998, the Company's manufacturing/cost control system
functions properly with respect to dates in the year 2000 and beyond. The
software replaced the Company's previous manufacturing/cost control system. In
addition, the Company is in the process of implementing a formal remediation
plan to ensure the Company is compliant with respect to Year 2000 issues. The
plan includes five phases representing a major Year 2000 activity or segment
awareness, assessment, renovation, validation and implementation. To date, the
costs associated with addressing the Company's Year 2000 issues have been
immaterial.

Awareness. All year 2000 projects with regards to internal systems will be
approved at the Board of Directors level and evaluated and reviewed by a Senior
Management Steering Committee on a monthly basis. The Company's plan of action
will apply to all geographic locations where products and services are provided
to customers and project managers will be assigned to each location to
coordinate Year 2000 projects worldwide.

Assessment and Renovation. The Company has completed a detailed inventory of
processes, applications, hardware, operating systems and databases where Year
2000 issues may exist. To date, an assessment of all information technology
(IT)-related systems (e.g. hardware and software systems) has been fully carried
out. With the complete implementation of SAP finalized in October 1998, all
worldwide application-driven processes for the Company are Year 2000 compliant.
For example, processes required to support production and fulfillment of
customer orders 


                                       15
<PAGE>   16
(order entry, receiving/warehousing, procurement/materials, manufacturing,
product test, distribution/shipping and invoicing) are in compliance with the
Year 2000 issue after complete implementation of SAP in October 1998. In
addition, 90% of internal network hardware and software systems are Year 2000
compliant to date. The scope of the Company's full assessment also includes
non-IT areas such as facilities/plant equipment, manufacturing process and
testing equipment, lab equipment and telephone communications systems which will
be analyzed and, if necessary, a plan for renovation will be approved by the
steering committee in March 1999. In addition, the Company has also implemented
programs with outside suppliers to ensure their readiness with Year 2000 issues.
The Company is currently tracking and managing this through periodic
questionnaires to suppliers.

Validation. Upon completion of the SAP software implementation, the Company
began its validation phase by testing, verifying and validating the performance,
functionality, and integration of the SAP manufacturing/cost control software
system in an operational environment. The Company anticipates this phase of
IT-related systems to continue throughout 1999.

Implementation. Upon completion of the validation phase of all IT as well as
non-IT areas for Year 2000 compliance, the Company plans to implement any
necessary contingency plans and modify existing disaster recovery plans
throughout 1999.

         In addition, the Company has evaluated software and hardware systems
associated with IT areas and concluded that there are no identified risks that
would have a material exposure to contingencies related to the Year 2000 Issue.
With respect to non-IT areas, it is uncertain what risks are associated with the
Year 2000 issue and any identified risks could have a material, adverse effect
on the Company's business, financial condition, results of operations and cash
flows. The Company plans to implement a full analysis of this area of
uncertainty by March 1999. There can be no assurances that the systems of
customers, suppliers and other companies on which the Company relies will be
timely converted and will not have an adverse effect of the Company's systems or
operations.



SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

         This report contains forward-looking statements that involve risks and
uncertainties, including but not limited to, the risks of concentration of sales
in markets, and in particular the HDD market, and customers, which have caused
and in the future could cause materially adverse fluctuations in operating
results; the risks of being a supplier to the electronics industry in general,
which is characterized by rapid technological change, product obsolescence and
price competition, which could materially adversely affect operating results;
the risk that growth in demand for products that use flex, and the corresponding
demand for flex, will not continue to increase as anticipated; the risk that the
Company's fully integrated one-stop-shop strategy will not continue to be
accepted by customers, and the risk that competitors may seek to duplicate this
strategy, which could materially adversely affect operating results; the risk
that the Company's expansion of manufacturing facilities in Thailand will not
result in sustainable, increased efficiencies, cost savings or improved margins
as anticipated or at the time anticipated; general risks inherent in
international operations, including currency fluctuations and
government-mandated wage increases; general manufacturing risks, including
environmental risks related to manufacturing operations and clean-up of the
Mexican manufacturing facility; uncertainty with respect to the Internal Revenue
Service report on the Company's 1993 tax return and the ultimate financial
impact, if any, thereof; the risk that other computer systems on which the
Company relies, such as suppliers and customers, will function properly with
respect to dates in the year 2000 and thereafter; the risk that all of the
foregoing factors or other factors could cause fluctuations in the price of the
Company's Common Stock; and other risks detailed herein, in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997 and Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998 and other
Securities and Exchange Commission filings. Actual results in the future could
differ materially from those described in forward-looking statements as a result
of such risks and uncertainties. The Company undertakes no obligation to
publicly release the results of any revisions to these forward-looking
statements that may be made to reflect any future events or circumstances.


                                       16
<PAGE>   17
PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

                  None

Item 2. Changes in Securities and Use of Proceeds

                  None

Item 3. Defaults upon Senior Securities

                  None

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

                  None

Item 5. Other Information

                  None

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits.

                  (10.56)  Third Amendment to Credit Agreement, dated October
                           30, 1998, among the Registrant, BankBoston, N.A. and
                           BankBoston, N.A. as agent for Lenders

                  (11.1)   Computation of Net Income per Share

                  (27.1)   Financial Data Schedule (filed only electronically
                           with the SEC)



         (b)      Reports on Form 8-K.

                  The registrant did not file any reports on Form 8-K during the
                  quarter ended September 30, 1998.


                                       17
<PAGE>   18
                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                  ADFlex Solutions, Inc.


Date: November 3, 1998            By /s/ Donald E. Frederick
      -----------------              -----------------------

                                     Donald E. Frederick
                                     Chief Financial Officer
                                     (Duly Authorized Officer and
                                     Principal Financial and Accounting Officer)


                                       18

<PAGE>   19
                               INDEX TO EXHIBITS
Exhibit
  No.            Description
-------          -----------
10.56            Third Amendment to Credit Agreement, dated October 30, 1998,
                 among the Registrant, BankBoston, N.S. and Bankboston, N.A. as
                 agent for Lenders

11.1             Computation of Net Income per Share

27.1             Financial Data Schedule (filed only electronically with the
                 SEC)