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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  FORM 10-KSB

                                                                     [5/3/1999]

(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED) 
For the fiscal year ended: June 30, 1998.
OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934 (NO FEE REQUIRED)
For the transition period from ________ to ________.
Commission file number 33-12613-NY

                         CELESTIAL VENTURES CORPORATION
             (Exact name of registrant as specified in its charter)

          NEVADA                                      22-2814206
          ------                                      ----------
(State or other jurisdiction of                (I.R.S. Employer  I.D. Number)
incorporation or organization)

    382 Route 59, Section 310, Monsey, New York                  10952
    -------------------------------------------                ---------
      (Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code:  (914) 369-0132

         Securities registered pursuant to Section 12(b) of the Act:

   Title of each class                     Name of exchange on which registered
   -------------------                     ------------------------------------
Common Stock, par value $.001 per share                 None
Preferred Stock, par value $.001 per share              None

        Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant has: (1) 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. [X] Yes No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

The aggregate market value of the voting stock of the registrant held by
non-affiliates of the registrant June 30, 1998, based on the average bid and
asked price on such date, was approximately $15,062,314.

Number of shares of Common Stock outstanding as of June 30, 1998:  2,763,199.
Number of shares of Preferred Stock outstanding as of June 30, 1998:  258,853

No annual reports to security holders, proxy or information statements, or
prospectuses filed pursuant. Rule 424(b) or (c) have been incorporated by
reference in this report.

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 When used in this Annual Report on Form 10-KSB, the words "estimate",
"project", "intend", "expect" and similar expressions are intended to identify
forward-looking statements regarding events and financial trends which may
affect the Company's future operating results and financial position. Such
statements are subject to risks and uncertainties that could cause the
Company's actual results and financial position to differ materially. Such
factors are described in detail elsewhere under "Business" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations".
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to release publicly the result of any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.

PART I

Item I.   Business

         Celestial Ventures Corporation, a Nevada corporation (the "Company"),
was incorporated on January 28, 1987. The Company's initial business was the
acquisition of real estate and real estate development. The Company is no
longer involved in real estate investment or development. Since 1993, the
Company has primarily been engaged in the acquisition of businesses, divisions
of businesses, or the assets of businesses, that the Company's management
identified as having significant potential for business success. These
businesses have included valve coating and direct mail subsidiaries in the
past. As of June 30, 1997, all of the operating divisions of the Company have
been sold. In August 1997, the Company entered into an agreement in principle
to merge with a high performance materials company. In March 1998, the Company
entered into a definitive agreement under which its proposed merger partner
will merge with and into the Company. (See "Recent Developments" below.) As of
June 30, 1998, the merger has not yet been consummated.

         The Company currently employees two persons neither of whom are full
time.

Direct Mail Business Acquisitions

         On August 29, 1995, the Company purchased, effective as of July 1,
1995, all of the issued and outstanding common stock of Success Direct, Inc., a
New Jersey corporation, a mail order business products company ("Success"), for
total consideration of 1,000,000 restricted shares of common stock of the
Company. The principal stockholder of Success, Mr. Irwin Schneidmill, became
the President of the Company on August 1, 1995. 415,000 of such shares were
paid to Mr. Irwin Schneidmill, who was the 41.5% owner of the capital stock of
Success. See "Certain Relationships and Related Transactions."

         Simultaneously with the acquisition of Success, Success assigned to
the Company its rights under an agreement to purchase certain business assets
from Re-Prod, Inc., including the name "Remarkable Products", and the Company
consummated the transaction with Re-Prod, Inc. The assets purchased from
Re-Prod, Inc. are related to the direct mail industry. See "Certain
Relationships and Related Transactions".

         In connection with the acquisition of certain assets of Re-Prod, Inc.,
the Company paid total consideration consisting of the following; (i) $315,000
in cash, (ii) a promissory note in the amount of $250,000 payment of which was
guaranteed by Mr. Schneidmill and Mr. John Formicola, a shareholder of the
Company, and (iii) 750,000 shares of the common stock of the Company, as to
which Mr. Schneidmill and Mr. Formicola have agreed to pay the difference
between the actual and estimated market price of the shares on a future date.
See "Certain Relationships and Related Transactions".

                                       2

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         From August to December, 1995, the Company operated Success as a
wholly owned subsidiary under the tradename "Remarkable Products". On December
7, 1995, Success changed its corporate name to Remarkable Office Products, Inc.
("Remarkable"), but has continued to use the tradename "Remarkable Products".
Remarkable was incorporated in the State of New Jersey in September, 1994 and
from its inception through its acquisition by the Company in 1995 has been
engaged in the distribution of office products.

         The Company, through its wholly-owned subsidiary, Remarkable, sold
specialized office products featuring time management and organizational tools
to small and medium-sized businesses nationwide through innovative, aggressive
direct marketing catalogs and programs. Remarkable's products include dry erase
boards and calendars with markers which can be wiped clean after use and
re-used. Remarkable also specializes in calendars and laminated products such
as large geographic wall maps, and federal law posters which many businesses
are required to post in the workplace (e.g., minimum wage posters, equal
opportunity and sexual harassment notices).

Disposition of Direct Mail Business.

         On November 21, 1996, the Company, effective October 1, 1996, sold all
of the issued and outstanding capital stock (the "Shares") of Remarkable to
Dynamic Products Corp. ("Dynamic"), for $1,406,250.00. The assets of Remarkable
included equipment, inventory, and accounts receivable. The consideration paid
to the Company was as follows: (i) repayment of intercompany balance due to
Remarkable as of November 20, 1996 of $106,450.85; (ii) payment on November 21,
1996, of $43,539.15 in cash; (iii) a promissory note for $450,000.00 due
February 21, 1997, payment of which was extended until March 21, 1997; and (iv)
assumption of certain liabilities of the Registrant totaling $806,250.00. The
Company realized a gain of $431,512 on the sale. The purchase price of
Remarkable was determined in the manner of an arms length transaction. The
principles followed by the parties in determining the consideration were as
follows: Shares of Remarkable were valued at book value, and the repayment of
intercompany balance on November 20, 1996, the cash payment on November 21,
1996, the note payable due on March 21, 1997, and the assumption of certain
liabilities of the Company were each calculated at cash value. An officer,
director, and stockholder of the Purchaser is also the President, director and
stockholder of the Company. See "Certain Relationships and Related
Transactions." The transaction was unanimously approved and ratified by the
Company's Board of Directors in accordance with Nevada corporate law.

         Pursuant to an agreement dated June 20, 1997, the Company agreed to
transfer to Mr. John L. Patten, a significant shareholder of the Company, its
rights under the remaining past due $300,000 subordinated note receivable from
the purchaser in exchange for Mr. Patten's assumption of the Company's
obligations for the U.S. Powder Coaters, Inc. note payable of $170,000 to R.M.
Engineering. See "Certain Relationships and Related Transactions." To date,
R.M. Engineering has not released the Company from its obligation under the
note payable; accordingly, the liability remained recorded at June 30, 1998.
See "Notes to Consolidated Financials." The transaction was unanimously
approved and ratified by the Registrant's Board of Directors in accordance with
Nevada corporate law.


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Termination of Medical Device Production Acquisitions

         In September, 1995, the Company executed a letter of intent to
purchase all of the issued and outstanding stock of Nexim Corp., a Nevada
Corporation, ("Nexim"), 100% of which was owned by Mr. Andrew Jaloza, who
became a director of the Company in January, 1996. Upon the execution of the
letter of intent, the Company paid Mr. Jaloza $100,000 as a down payment for
the purchase of Nexim. Nexim owns a technology known as Medphone, a medical
device product. The Company also invested, approximately, an additional $62,000
toward development of this product. Nexim has had no revenues and is not an
operating company. In April, 1996, the Company decided not to pursue the
acquisition of Nexim. The ultimate recovery of the invested funds is uncertain.
During the year ended June 30, 1996, the Company wrote off its entire
investment in this venture, which is included in general and administrative
expenses.


Valve and Powder Coating Operations Acquisitions

         Pursuant to an Agreement and Plan of Reorganization dated August 12,
1993, the Company acquired all of the issued and outstanding common stock of
Valves International, Inc. ("VII"), an Oklahoma corporation, in exchange for
850,000 shares of the Company's restricted common stock. As a result of this
reorganization, the Company also acquired Central Valve Services, Inc., Alloy
Valves International, Inc. and CVC International, Inc., which were wholly owned
subsidiaries of VII. VII and its subsidiaries were operating companies engaged
in the business of valve manufacturing and sales in both Oklahoma and Texas.

         On October 31, 1993, the Company acquired U.S. Powder Coaters, Inc., a
corporation whose principal business consisted of treating and coating metal
and non-metal materials, in exchange for 300,000 shares of the Company's common
stock. In 1993 the Company also acquired Gulf Coast Powder Coatings, Inc. As
part of the Company's reorganization, the Company discontinued operations of
U.S. Powder Coatings, Inc. in June 1994, and management renegotiated a 50%
reduction of its debt related to its acquisition.

Disposition of Valve and Powder Coating Operations

         On August 31, 1995, effective as of April 30, 1995, the Company
entered into a purchase agreement whereby it sold all of its then wholly owned
subsidiaries with the exception of U.S. Powder Coatings, Inc. to Turkey DeLite
International, Inc., a Nevada Corporation, (d/b/a ATCO Corporation)
("Purchaser" or "Turkey DeLite") for $1,900,000 in cash, promissory notes and
common stock. Turkey DeLite's principal executive officer, Mr. Bob J. Sudderth,
also served as the Chairman of the Board of Directors of the Company. See
"Certain Relationships and Related Transactions". The subsidiaries referred to
herein include Valves International, Inc., Central Valve Services, Inc., Alloy
Valve International, Inc. and Gulf Coast Powder Coatings, Inc. The sales price
consisted of a combination of 1,550,000 shares of the Purchaser's common stock,
a $200,000 promissory note due and the payment of $150,000 contingent upon the
successful completion of a stock offering by the Purchaser. The assets of U.S.
Powder Coatings, Inc. are still owned by the Company although the subsidiary is
inactive.



                                       4
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Recent Developments - Pending Merger; and Private Placement

         On August 21, 1997, the Company announced that it had entered into a
letter of intent to merge with a high performance materials company which
management believes fits the Company's parameters for an acquisition candidate.
On October 30, 1997, the Company worked towards securing the acquisition, as
well as providing future operating revenue for the Company, by completing an
overseas private placement of common stock pursuant to the exemptions afforded
by Regulation S. The offering produced total proceeds of $4,059,000 from
investors in connection with the transaction, whereby a total of 1,353,000
common shares, par value $0.001, were issued for a purchase price of $3.00 per
share. Of the $4,042,960 of the proceeds received from the offering, after
payment of $16,040 in costs of the offering, $ 4,000,000 has been remitted to
the enterprise with which the Company intends to merge in exchange for
promissory notes totaling $4,000,000 originally due December 30, 1997, bearing
interest at an annualized rate of seven percent (7%). This maturity date was
later extended to April 30, 1998 by written agreement. However, the notes
remained unpaid, and the proposed acquisition unconsummated, at June 30, 1998,
and the Company has decided to reserve fully against the entire amount of the
notes as of that date. The Company will not recognize any interest income on
these notes, and will apply any payments received to reduce the principal. The
Company expects significant future growth in revenues and shareholder earnings
as a result of this potential acquisition and the related transactions (see
below).

         On March 18, 1998, the Company and Polymer Dynamics, Inc.("Polymer")
entered into a definitive Agreement and Plan of Merger (the "Merger Agreement")
providing for transactions that, if consummated, will result in Polymer being
merged with and into the Company. The Company will survive the merger, and will
continue to be governed by the laws of the state of Nevada, but will be renamed
"Polymer Dynamics, Inc." Completion of the merger is subject to, among other
things, the approval of the Company's and Polymer's stockholders. Under the
Merger Agreement each outstanding share of the Company's Common Stock shall
remain unchanged, and each outstanding share of the Company's Preferred Stock
will be converted into a into one-fifteenth (1/15th) of a share of the
surviving corporation's Common Stock. Each outstanding share of Polymer's
Common Stock and Series A Preferred Stock will be converted into a single share
of Common Stock and Series A Preferred Stock, respectively, of the surviving
corporation. Based on the current number of shares of the Company's and
Polymer's capital stock outstanding, upon completion of the merger, the former
stockholders of Polymer will own approximately 92% of the Common Stock of the
surviving corporation. The Company and Polymer jointly issued a press release
dated March 25, 1998 announcing that their boards of directors approved the
agreement to merge the two corporations.

         As of June 30, 1998, the proposed merger had not been consummated.


Item 2.  Properties


         The Company maintains its corporate headquarters at 382 Route 59,
Section 310, Monsey, New York, 10952. This facility is currently leased by
Remarkable Office Products, Inc., which expires on December 31, 2002 and
provides for an option to renew for two successive five-year periods. Although
there is no formal sublease agreement between the Company and Remarkable, the
Company has agreed to reimburse Remarkable for any use of the space by the
Company as well as for the use of Remarkable's personnel. Said agreement is to
terminate upon the closing of the transactions contemplated by the Merger
Agreement. Any future payments made by the Company to Remarkable for this
obligation will be determined by the fair market value for the use of the space
and personnel as if determined in an arms length transaction.



                                       5
<PAGE>



Item 3   Legal Proceedings


Celestial Ventures Corporation vs. Re-Prod, Inc. et. al., Case No. 96 Civ.
1274, United States District Court for the Southern District of New York.

         The Company filed on February 21, 1996 a complaint against Re-Prod,
Inc. and its stockholder Jacob Lahav in United States District Court for the
Southern District of New York, White Plains, New York, Case Number 96 civ.
1274, which sought a modification of the purchase price of the assets of
Re-Prod, Inc. The Company contends that certain assets, including accounts
receivable, which the Company purchased from Re-Prod, Inc. did not exist at the
time of the acquisition. As a result the Company suspended payments under a
$250,000 note payable to Re-Prod, Inc. and did not honor other terms of the
acquisition.

         On August 29, 1995, the Company purchased, as of July 1, 1995, all of
the issued and outstanding common stock of Success Direct, Inc., a mail order
business products company ("Success"). Mr. Irwin Schneidmill, who owned 41.5%
of Success, became the President and Chief Executive Officer of the Company on
August 1, 1995. Simultaneously with the acquisition of Success, Success
assigned to the Company its agreement to purchase certain business assets from
Re-Prod, Inc., including the name Remarkable Products, and the Company
consummated the transaction with Re-Prod, Inc. The assets purchased from
Re-Prod, Inc. are related to the direct mail industry.

         In connection with the acquisition of the certain assets of Re-Prod,
Inc., Mr. Schneidmill and Mr. John Formicola, a stockholder of the Company, had
personally guaranteed the payment by the Company of a $250,000 promissory note
payable to Re-Prod, Inc., which represents part of the consideration paid by
the Company to acquire the assets of Re-Prod, Inc. This note bears interest at
9% per annum and is to be paid monthly by the Company in varying amounts by
applying the income received from renting its mailing list on a monthly basis.
On November 20, 1995, the Company contends the principal amount remaining under
the note was $210,127.53.

         As part of the consideration for the acquisition, Re-Prod, Inc. also
received 750,000 shares of the restricted common stock of the Company. The
Agreement provided that Mr. Schneidmill would personally guarantee 375,000 of
such 750,000 shares payment of any difference between $393,750 ($1.05 per
share) and the fair market value of the shares on January 1, 1996. The value of
the common stock at February 1, 1996 was approximately $78,750. The Company and
Mr. Schneidmill and Formicola personally, have also executed a "Put Option
Agreement", whereby Re-Prod, Inc. can put these 375,000 shares to the Company
as of January 1, 1996 and demand payment of $393,750. Such demand was made on
January 31, 1996. Furthermore, Mr. Schneidmill and Mr. Formicola guaranteed
payment of the difference between $412,500 and the market value of the
remaining 375,000 shares (25,000 shares, adjusted to reflect a 1 for 15 share
reverse stock split, effective May 3, 1996) of the Company's common stock held
by Re-Prod, Inc. on July 1, 1996. The shares having a guaranteed value at July
1, 1996 are subject to an identical Put Option Agreement.

        The Company, together with Mr. Schneidmill and Mr. Formicola have
contended that the assets purchased from Re-Prod, Inc. were not as represented
in the purchase agreement, and are seeking a renegotiation of the consideration
paid for those assets, including a renegotiation of their personal guarantees.
The Company has agreed to indemnify Mr. Schneidmill and Mr. Formicola against
any liability resulting form these guarantees.

         On March 14, 1996, Re-Prod, Inc. and Jacob Lahav filed a counter claim
against the Company alleging specific performance on the $250,000 promissory
note, fraud and conversion, 


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breach of contract and securities fraud and against Mr. Irwin
Schneidmill and John Formicola for the enforcement of certain financial
guarantees as well as for common law fraud, securities fraud and fraud and
conversion. The total dollar amount claimed, approximately $1,050,000,
exclusive of interest equals the amount of the original purchase price of
Re-Prod, Inc. The Company and Mr. Schneidmill vigorously defended these claims
against them and pursued its claims against Re-Prod, Inc. and Mr. Lahav.

        On November 12, 1996, parties entered into, and the District Court
approved by order, a Stipulation of Settlement ("Settlement") of all claims and
counter claims. As a condition to entering into the Settlement, prior to its
execution, the Company paid to Re-Prod, Inc. the $6,039.55 balance of an escrow
account to be provided for in the purchase agreement. Under the Settlement, the
Company agreed to pay to Re-Prod, Inc. a balance of the purchase price of
$400,000, of which all has been paid. The Company was required to make
additional payments to Re-Prod, Inc. on September 1, 1997 of $300,000 plus that
amount equal to one half of the excess (if any) of the closing value of
Re-Prod, Inc.'s shares of the Company's common stock (based upon the mean
between the bid/asked price) on September 1, 1997 over $300,000 (payable upon
the tender of Re-Prod, Inc.'s certificates). (As a result of its May 1996 1 for
15 stock split, the Company issued to Re-Prod, Inc., certificates for 50,000
new shares in exchange for its existing certificate for 750,000 pre-split
shares of common stock.) Under the Settlement, the counter claim against Mr.
Formicola was dismissed, and Mr. John L. Patten, a stockholder of the Company,
was named as an additional guarantor. Mr. Schneidmill and Mr. Patten have
unconditionally guaranteed the prompt and full payment and performance of all
of the Company's obligation under the Settlement. Mr. Patten has since agreed
to assume the obligation and hold the Company harmless against the payment
which was due to Re-Prod, Inc. on September 1, 1997 of $300,000 plus that
amount equal to one half of the excess (if any) of the closing value of the
50,000 shares of the Company's common stock as described above. Mr. Patten has
demonstrated to the Company's satisfaction his financial ability to assume such
obligation. In consideration of this as well as other assumptions of various
liabilities of the Company as well as for other services rendered to the
Company, the Company issued 93,316 shares of common stock to Mr. Patten in
June, 1997. See "Certain Relationships and Related Transactions".

         Under the purchase agreement, the Company granted Re-Prod, Inc. a
security interest in certain of the Company's assets. The Settlement provides
that Re-Prod, Inc. will subordinate its security interest to that of any third
party which lends the Company funds to repay its obligations to Re-Prod, Inc.
under the Settlement. Except as provided above, the rights and obligations of
the parties under the purchase agreement remain unchanged until fully
performed. In the event Re-Prod, Inc. alleges that the Company is in default in
making any payment due or performing any obligation required under the
Settlement, Re-Prod, Inc. will have the right (upon ten days written notice) to
apply to the Court for entry of judgment against the Company, and Messers.
Schneidmill and Patten, jointly and severally, for $1,100,000, less any sums
previously paid to Re-Prod, Inc. under the Settlement if Re-Prod, Inc.
certifies to the Court that the Company is in default and has received notice
thereof, and such alleged default has remained uncured for ten days; the Court
can enter judgment against the Company. Mr. Patten has paid the final
installment due to Re-Prod, Inc., in full satisfaction by the Company of its
obligations under the Settlement and the Asset Purchase Agreement, Re-Prod,
Inc.'s counterclaim was dismissed with prejudice and the Company and Messers.
Formicola, Patten and Schneidmill were released from all claims under the
Re-Prod, Inc. counterclaim.


Johnson vs. Central Valve Services, Inc., et. al., No. 96-42066, In the
District Court of Harris County, Texas, 80th Judicial District.

         The Plaintiffs' First Amended Original Petition was served upon the
Company (one of many defendants) on April 23, 1997. The Plaintiffs allege that
they were injured as a result of 



                                       7
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certain misrepresentations made by Tony Heuermann (a Texas investment
manager unconnected to the Company) which induced the Plaintiffs into investing
monies into the Company and its wholly owned subsidiary, Central Valve
Services, Inc. ("Central"). The alleged investment includes payment for 25,343
(prior to the 1 for 15 reverse split) shares of the Company common stock as
well as numerous promissory notes issued by Central in which Bob Sudderth
(former President of the Company) also signed on behalf of the Company as
Guarantor. The Plaintiffs claim that these notes are in default and the shares
are trading below the promised value. Accordingly, the Plaintiffs now seek
damages from the Company (as well as Central, Sudderth and Heuermann) to recoup
those monies lost as a result of these alleged false representations and
violations of Texas Deceptive Trade Practices Act in the amount of $62,092 plus
interest, costs and punitive damages.

         The Company has not yet appeared in the matter. The other parties to
the litigation have agreed to address this matter in non-binding mediation.
Should the parties fail to resolve this matter by such mediation, and the court
schedules a hearing for this matter, the Company intend to defend this action
vigorously.

         Although the Company has not yet appeared in the matter, John L.
Patten, a stockholder of the Company, pursuant to an agreement dated August 25,
1997, has agreed to indemnify the Company and hold it harmless for any costs
incurred by the Company or for any potential award or settlement that might
arise in the future. Mr. Patten has demonstrated to the Company's satisfaction
his financial ability to assume such obligation. In consideration of this as
well as other assumptions of various liabilities of the Company as well as for
other services rendered to the Company, the Company issued 93,316 shares of
common stock to Mr. Patten in June, 1997. See "Certain Relationships and
Related Transactions".

        Sirco Systems, LLC vs. Gold Coast Powder Coatings, Inc., Celestial
Ventures Corporation, Custom Coatings, Inc., W. G. Dodson, William V. Reynolds,
Herbert W. Reynolds, et al., Civil Action No. CV 98-2215, In the Circuit Court
of Jefferson County, Alabama.

         The Plaintiff brought suit in 1998, concerning a contractual dispute
with a former subsidiary of the Company, and obtained a judgment against all
defendants in the amount of $122,000. The Company is vigorously contesting
responsibility for any portion of the judgment through local counsel, and has
recently reached an agreement in principle with plaintiff to settle any alleged
liabilities for approximately $10,000.

Item 4            Submission of Matters to a Vote of Security Holders


         There have been no matters submitted to a vote of security holders for
the period covered by this Report.



                                       8
<PAGE>


         PART II


Item 5.  Market for the Registrant's Common Stock and Related 
         Stockholder Matters

         The Company's common stock is currently traded on the NASDAQ
Electronic Bulletin Board under the symbol "CVNR", and has several market
makers. The high and low bid (price which a market maker is willing to pay for
the shares) quotations for the Company's Shares, as reported to the Company's
management by brokerage firms listed on the specified dates by the National
Daily Quotation System, Inc.'s "Pink Sheets" as making markets in the Company's
securities are listed in the following chart. These quotations are between
dealers, do not include retail mark-ups, mark-downs or other fees and
commissions, and may not represent actual transactions. (On May 3, 1996, the
Company adopted a 1 for 15 reverse stock split.)

Date                                High Bid *                Low Bid *

Fiscal 1997
September 30, 1996                  $4.13                     $3.31
December 31, 1996                   $5.00                     $4.25
March 31, 1997                      $5.00                     $3.75
June 30, 1997                       $3.75                     $3.00

Fiscal 1998
September 30, 1997                  $6.25                     $6.00
December 31, 1997                   $6.50                     $6.50
March 31, 1998                      $5.25                     $5.25
June 30, 1998                       $5.75                     $5.75

    *Prices reflect the 1 for 15 reverse stock split effective May 3, 1996.

         There were approximately 1,663 shareholders of record of the Company's
common stock on June 30, 1998.

         The Company has not paid dividends on its Common Stock. The Company
intends to retain any future earnings to finance its growth.

         On October 30, 1997, the Company completed an overseas private
placement of common stock pursuant to the exemptions afforded by Regulation S.
Such private sales were authorized to be made under either Rule 903 of
Regulation S and/or Section 4(2) of the Act. Although the buyers were
introduced to the securities by Pennsylvania Merchant Group, Ltd., no
underwriting discounts or commissions were paid by the Company to any
underwriter. Based upon its review of documentation certified by each buyer,
the Company determined that each of the buyers to date was (i) sophisticated
(based upon net worth and investment experience), (ii) an institutional
investor, and/or (iii) not a U.S. person (as defined in Regulation S). Of the
total proceeds of the offering of $4,059,000, the Company has received
$4,042,960, from investors, after offering costs of $16,040, in connection with
the transaction, whereby a total of 1,353,000 common shares, par value $0.0001,
were issued for a purchase price of $3.00 per share. Of those amounts received
from the offering, $4,000,000 has been remitted to the enterprise with which
the Company intends to merge in exchange for Convertible Subordinated Notes
(the "Notes") totaling $4,000,000. The Notes provided for a Maturity Date of
December 30, 1997, and bear interest at an annualized rate of seven percent
(7%). This Maturity Date was later extended by written agreement until April
30, 1998. However, the Notes remained unpaid at June 30, 1998, and the Company
has decided to reserve fully against the entire amount of the Notes as of that
date. The Company will not recognize any interest income on these Notes, and
will apply any payments 



                                       9
<PAGE>

received to reduce the principal. The Company remains confident that
the merger will be completed.


Item 6.  Management's Plan of Operation

         The Company's financial condition at June 30, 1998 compared to June
30, 1997 primarily reflects activities undertaken to position the Company for
future growth through a proposed acquisition. The Company's financial condition
at June 30, 1997 compared to June 30, 1996 changed dramatically. These latter
changes occurred as a result of the sale of the Company's Direct Mail
subsidiary in November 1996.

         Management believes that the sale of its principal operating
subsidiary has had a positive effect on the Company as it has positioned the
Company to seek out new acquisition candidates as it has done in the past.

         During the last two fiscal years, the Company has made an effort to
dispose of all operating subsidiaries as well as to remove all non-de minimis
liabilities from the Company's financials in order to attract a single, large,
profitable or potentially profitable, private company with which to merge. On
August 21, 1997, the Company announced that it had entered into a letter of
intent to merge with a high performance materials company which, while not
currently profitable, management believes fits the Company's parameters for an
acquisition candidate. On March 18, 1998, the Company and Polymer Dynamics,
Inc. entered into a definitive Agreement providing for the transaction which,
if consummated, will result in Polymer being merged with and into the Company.
See "Business - Recent Developments"

         In order to secure the acquisition as well as provide future operating
revenue for the Company, in October 1997 the Company received approximately
$4,042,960 from investors in an overseas private-placement of 1,353,000 shares
of common stock, at a purchase price of $3.00 per share. Of those amounts
received, $4,000,000 has been remitted to the enterprise with which the Company
intends to merge in exchange for promissory notes totaling $4,000,000
originally due December 30, 1997, bearing interest and an annualized rate of
seven percent (7%). The notes' maturity date was later extended to April 30,
1998 by written agreement; however, the notes remained unpaid at June 30, 1998,
and the Company decided to reserve fully against the entire amount of the notes
as of that date. The Company will not recognize any interest income on these
notes, and will apply any payments received to reduce principal. The proposed
merger remained unconsummated at June 30, 1998. The Company expects significant
growth in revenues and shareholder earnings as a result of this potential
acquisition and the related transactions.

         Management has the ability to fund its operations through the
following year.

Effects of Inflation

         The impact of inflation on the Company's plan of operation has not
been significant.


Item 7.  Financial Statements


         The response to this Item is submitted as a separate section of this
report commencing on page F-1

Item 8.  Changes in and Disagreements with Accountants on Accounting and 
         Financial Disclosure

         Not Applicable.


                                      10
<PAGE>


PART III


Item 9   Directors and Executive Officers of the Registrant


                  The current executive offices and directors of the Company
are set forth below:

         Name              Age     Position

Irwin Schneidmill          45      CEO, President, Chief Financial Officer and
Director (1)

Robert W. Trause           56      Director

Mark Wolchock              46      Director

(1) Mr. Schneidmill was elected President, Chief Financial Officer, and a
    Director of the Company on August 1, 1995.

         Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have qualified.
Directors have received shares of the Company's common stock as remuneration
for their services as such and may be reimbursed for expenses incurred in
connection therewith, such as the cost of travel to Board meetings. Officers
serve at the pleasure of the Board of Directors until their successors have
been elected and have qualified.

                  Irwin Schneidmill has been the President, Chief Executive
Officer and the Director of the Company since August 1, 1995. From January 1991
to July 1993, Mr. Schneidmill had been a partner at Cataino & Schneidmill,
CPAs, a public accounting firm. From July 1993 to October 1994, Mr. Schneidmill
had been the sole stockholder of Irwin Schneidmill, P.C., a public accounting
firm. Mr. Schneidmill formed Success Direct, Inc., a New Jersey corporation in
October 1995 and remains as the President of that Company. See "Certain
Relationships and Related Transactions".

                  Robert W. Trause has served as a Director since March 4,
1996. He has twenty-five years of professional experience in administration,
management, marketing and sales within small to mid-size companies. Mr. Trause
has served as a Professional Insurance Broker since 1991 with Professional
Insurance Associates, Inc., Carlsdadt, New Jersey, as well as a consultant on
employee benefits for Employer Solutions, Farmingdale, New York, in 1990-1991.
From 1988-1990 he was Senior Vice President of Administration for J.T. Moran &
Company, Incorporated, an investment banking firm where he directed
administration for the New York corporate headquarters and 26 branches (in
excess of 1000 employees).

                  Mark Wolchock has served as a Director since January 8, 1997.
He has also been employed as Regional Sales Manager for the Cannon Corporation,
a publicly held corporation from 1985 until 1991. Currently, Mr. Wolchock is
acting as Regional Sales Manager of Baxter Health Care, a public corporation
and President of Majestic Solutions Inc., a privately held corporation.



                                      11
<PAGE>

Item 10. Executive Compensation


         Mr. Irwin Schneidmill became the President and Chief Executive Officer
of the Company in August, 1995 at an annual salary of $140,000 per annum. In
consideration of his employment by the Company, Mr. Schneidmill also received
and beneficially owned 66,665 options of the Company which are immediately
exercisable at $3.00 per share pursuant to a Stock Option Certificate and
Agreement dated September 15, 1995. Certain of these options were exercised,
and the remainder of the unexercised options expired in September 1998. In
addition, during fiscal years 1997 and 1996, but not 1998, the Company paid
$570 per month for the lease on Mr. Schneidmill's car plus automobile
insurance. Mr. Schneidmill has forgone large portions of his salary and other
benefits during fiscal years 1998, 1997 and 1996 in order to assist the Company
in meeting its cash flow needs and to support its capital expenditures. Mr.
Schneidmill also participates in the Company's group health insurance plan.

         The following table discloses for the fiscal years ended June 30,
1998, 1997 and 1996, individual compensation information relating to the chief
executive officer of the Company and the executive officers of the Company who
earned in excess of $100,000 during fiscal year 1998 (the "Named Executive
Officers").


                           Summary Compensation Table

<TABLE>
<CAPTION>
                                     Annual Compensation                           Long Term Compensation
Name and                   Salary    Bonus         Other Annual   Restricted      Options   LTIP       All Other
Principal Position                                 Compensation   Stock Awards    /SARS     Payouts    Compensation
                           ($)/(1)   ($)           ($)            ($)             ($)       ($)        0
<S>                        <C>       <C>           <C>            <C>              <C>       <C>       <C>       
Irwin Schneidmill
Chief Executive Officer &
President (2)
1998                       140,000   0             -              0               0         0          318,500(3)
1997                       140,000   0             -              0               0         0          0
1996                       140,000   0             -              0               0         0          0
</TABLE>


(1) Mr. Schneidmill has forgone large portions of his salary and other benefits
    during fiscal years 1998, 1997 and 1996 in order to assist the Company in
    meeting its cash flow needs and to support its capital expenditures.
    However, in fiscal 1998, he received $71,667 in salary. None of the amounts
    forgone has been accrued, nor has any forgone amount be treated as deferred
    compensation.

(2) Mr. Schneidmill became President and Chief Executive Officer of the Company
    in August 1995.

(3) Based upon the closing price of the Company's Common Stock on September 29,
    1997, the date of the grant of 49,000 shares of the Company's Common Stock
    to Mr. Schneidmill.



                     Option/SAR Grants In Last Fiscal Year
                     -------------------------------------

No option grants were made during fiscal year 1998 to the Executive Officers.



                                      12
<PAGE>



        Aggregated Option/SAR Exercises In Last fiscal Year and F/Y End
        ---------------------------------------------------------------
                               Option/SAR Values
                               -----------------

The following table sets forth information with respect to option exercises and
fiscal year-end option values for the Named Executive Officers.
<TABLE>
<CAPTION>
                                                                  Number of Unexercised       Value of Unexercised
                                Shares           Value            Options/SARs                in-the-money Options/SARs at
                                Acquired On      Realized         at FY-End                   FY-End (1)(4)
Name                            Exercise (#)     ($) (1)          Exercisable/Unexercisable   Exercisable/Unexercisable
----                            ------------     -------          -------------------------   -------------------------
<S>                             <C>              <C>              <C>                         <C>
Irwin Schneidmill               29,165           87,495           37,500 (2)                              $0.00/0
</TABLE>

(1) Based upon the bid price of the Company's Common Stock on June 30, 1998 of
    $3.00. 
(2) 37,500, adjusted to reflect a 1 for 15 share reverse stock split,
    effective May, 1996. 
(3) No stock appreciation rights ("SAR") were granted in the fiscal year ended 
    June 30, 1998. (4) The remainder of Mr. Schneidmill's options expired in 
    September 1998.



Employment and Consulting Agreements

                  Mr. Schneidmill has entered into a five-year employment
agreement dated March 1, 1996 with the Company to act as President and Chief
Executive Officer; which provides for an initial annual base salary of
$140,000. Mr. Schneidmill has forgone large portions of his compensation and
other benefits from the Company during fiscal years 1998, 1997 and 1996 in
order to assist the Company in meeting its cash flow needs and to support its
capital expenditures. However, during fiscal 1998, he received $71,669 in
salary. Under the employment agreement, Mr. Schneidmill also receives
disability insurance, hospitalization, major medical, vacation and other
employee benefits, reimbursement of reasonable business expenses incurred on
behalf of the Company, and use of Company-owned vehicles.




                                      13
<PAGE>


Item 11. Security Ownership of Certain Beneficial Owners and Management

         The following table sets forth, as of March 26, 1999, the record and
beneficial ownership of Common Stock of the Company by each officer and
director, all officers and directors as a group, and each person known to the
Company to own beneficially or of record five percent or more of the
outstanding shares of the Company:

                                         Number of                Percentage
                                         Shares Owned             of Shares
Name and Address                         Beneficially(1)   (2)    Outstanding
----------------                         ---------------------    -----------

Five-Percent Stockholders

Ware & Co.                                    700,000             23.84%
c/o Morgan Guaranty Trust
9 West 57th Street 11th Floor
New York, NY 10019

Coutts (Jersey) Ltd.                           170,000             5.79%
JY798967
c/o Brown Bros Harriman
59 Wall Street
New  York, NY 10005

Directors & Executive Officers

Irwin Schneidmill                              201,832             6.88%
20 Roble Road
Suffern, NY 10901

Cathy Santo **                                   4,334             0.15%

Robert Trause **                                75,000             2.56%

Mark Wolchock **                                 5,000             0.17%

Officers and directors                         286,166             9.75%
as a group (4 persons) **

---------------------

**  Unless otherwise specified, the address of each named person is c/o 382 
        Route 59, Section 310, Monsey, NY  10952.

(1) Shares of Common Stock which are not outstanding but which a person has the
    right to acquire within sixty days pursuant to outstanding options are
    deemed outstanding for the purpose of computing such person's ownership of
    Common Stock owned by such person, but are not deemed to be outstanding for
    the purpose of computing number of shares or the percentage of Common Stock
    owned by any other person.


(2) Does not include 258,853 of Preferred Stock of the Company which is 
    currently excercisable into Common Stock.



                                      14
<PAGE>



Item 12.  Certain Relationships and Related Transactions


         On August 29, 1995 the Company purchased, as of July 1, 1995, all of
the issued and outstanding common stock of Success Direct, Inc., a mail order
business products company ("Success"). The principal stockholder of Success,
Mr. Irwin Schneidmill who owned 41.5% of Success, became the President and
Chief Executive Officer of the Company on August 1, 1995.

         Simultaneously with the acquisition of Success, Success assigned to
the Company its agreement to purchase certain business assets from Re-Prod,
Inc., including the name Remarkable Products, and the Company consummated the
transaction with Re-Prod, Inc. The assets purchased from Re-Prod, Inc. are
related to the direct mail industry.

         In connection with the above, the Company paid to Mr. Schneidmill
415,000 shares (27,667, post-split) of the restricted common stock of the
Company. Additionally, in connection with the acquisition of certain assets of
Re-Prod, Inc., Mr. Schneidmill and Mr. John Formicola a stockholder of the
Company, have personally guaranteed the payment by the Company of a $250,000
promissory note payable to Re-Prod, Inc. This note bears interest at 9% per
annum and is to be paid monthly by the Company in varying amounts by applying
the income received from renting its mailing list on a monthly basis. On
November 20, 1995, the Company contends there was $210,127.53 principal amount
remaining under the note.

         As part of the acquisition, Re-Prod, Inc., also received 750,000
shares (50,000 shares, post-split) of the restricted common stock of the
Company. 375,000 (25,000, post-split) of such 750,000 were personally
guaranteed by Mr. Schneidmill to have a market value of $393,750 ($1.05 per
share) on January 1, 1996. The value of the common stock at February 1, 1996
was approximately $78,750. The Company and Mr. Schneidmill and Formicola
personally, have also executed a "Put Option Agreement", whereby Re-Prod, Inc.
can put these 375,000 (25,000, post-split) shares to the Company as of January
1, 1996 and demand payment of $393,750. Such demand was made on January 31,
1996. Furthermore, Mr. Schneidmill and Mr. Formicola have guaranteed that the
remaining 375,000 (25,000, post-split) shares of the Company's common stock
held by Re-Prod, Inc. will have a market value of $412,500 on July 1, 1996. The
shares having a guaranteed value at July 1, 1996 are subject to an identical
Put Option Agreement.

         The Company, together with Mr. Schneidmill and Mr. Formicola have
contended that the assets purchased from Re-Prod, Inc. were not as represented
in the purchase agreement and are seeking a renegotiation of the consideration
paid for those assets, including a renegotiation of their personal guarantees.
See "Litigation".

         The Company has agreed to indemnify Mr. Schneidmill and Mr. Formicola
against any liability resulting from these guarantees.

         On November 21, 1996, the Company, effective October 1, 1996, sold all
of the issued and outstanding capital stock (the "Shares") of Remarkable to
Dynamic Products Corp. (the "Dynamic"), for $1,406,250.00. The assets of
Remarkable included equipment, inventory, and accounts receivable. The
consideration paid to the Company was as follows: (i) repayment of intercompany
balance due to Remarkable as of November 20, 1996 of $106,450.85; (ii) payment
on November 21, 1996, of $43,539.15 in cash; (iii) a promissory note for
$450,000.00 due February 21, 1997, payment of which was extended until March
21, 1997 and subsequently repaid; and (iv) assumption of certain liabilities of
the Registrant totaling $806,250.00. The Company realized a gain of $431,512 on
the sale. The purchase price of Remarkable was determined in the manner of an
arms length transaction. The principles followed by the parties in determining
the consideration were as follows: Shares of Remarkable were valued at book
value, and the repayment of intercompany balance on November 20, 1996, the cash
payment on 



                                      15
<PAGE>

November 21, 1996, the note payable due on March 21, 1997, and the
assumption of certain liabilities of the Company were each calculated at cash
value. An officer, director, and stockholder of the Purchaser is also the
President, director and stockholder of the Company. The transaction was
unanimously approved and ratified by the Company's Board of Directors in
accordance with Nevada corporate law. During the fiscal year ended June 30,
1998, the Company has reimbursed Remarkable for certain rental payments and
administrative expenses in the amount of $187,655. See ("Properties").

         Pursuant to an agreement dated June 20, 1997, the Company agreed to
transfer to Mr. John L. Patten, a significant shareholder of the Company, its
rights under the remaining past due $300,000 subordinated note receivable from
the Purchaser in exchange for Mr. Patten's assumption of the Company's
obligations for the U.S. Powder Coaters, Inc. note payable of $170,000 to R.M.
Engineering. To date, R.M. Engineering has not released the Company from its
obligation under the note payable; accordingly, the liability remains recorded
at June 30, 1998. See "Notes to Consolidated Financials." The transaction was
unanimously approved and ratified by the Registrant's Board of Directors in
accordance with Nevada corporate law.

         In consideration of Mr. Patten having assumed various liabilities of
the Company, indemnifying the Company in certain litigation matters as well as
for other services rendered to the Company, the Company issued 93,316 shares of
common stock to Mr. Patten in June, 1997. See "Litigation."

         Performance Capital Corporation which is partially owned by Mr. John
Formicola had lent Success $250,000 prior to its acquisition by the Company in
the form of five promissory notes in the amount of $50,000 each dated December
15, 1994 and January 15, February 15, March 15 and April 15, 1995. Each bearing
interest at the rate of 10% per annum. Performance Capital Corporation had
owned of the outstanding common stock 41.5% of Success at that time. The
Company assumed that debt upon the acquisition of Success and paid to
Performance Capital Corporation 415,000 shares of common stock of the Company.
The terms of that debt are as follows: all interest is to accrue through 1995
and payments on interest are to commence February 1, 1996 and accrued interest
shall be paid in six equal monthly installments. Payments on principal are to
commence February 1, 1997 and shall be paid monthly, together with interest,
for 60 months. Subsequent to the acquisition of Success by the Company, Mr.
Formicola and or Performance Capital have lent the Company an aggregate of
approximately $205,000 for working capital purposes. This $205,000 is subject
to an 11% demand promissory note dated August 1, 1995. As of June 30, 1998, the
Company has no remaining payment obligation to Performance Capital Corporation
or Mr. Formicola.

         On August 31, 1995, the Company entered into a purchase agreement
whereby it sold all of its wholly owned subsidiaries with the exception of U.S.
Powder Coatings, Inc. to ATCO Corporation ("Turkey DeLite" or "Purchaser") for
$1,900,000 in cash, promissory notes and common stock. Turkey DeLite's
principal executive officer, Mr. Bob J. Sudderth, is also the Chairman of the
Board of Directors of the Company. The subsidiaries referred to herein include
Valves International, Inc., Central Valve Services, Inc., Alloy Valve
International, Inc. and Gulf Coast Powder Coatings, Inc. The sales price
consisted of a combination of 1,550,000 shares of common stock of the
Purchaser, issuance of a $150,000 promissory note and the payment of $200,000
contingent upon the successful completion of a stock offering by the Purchaser.

         Mr. Sudderth had sold certain equipment and facilities to Central
Valve Services, Inc., which had been a subsidiary of the Company at the time of
such sale. Mr. Sudderth is owed approximately $600,000 from Central Valve
Services, Inc. as a result of such sale. The Company is not liable for such
debt.

         In September, 1995, the Company executed a letter of intent to
purchase all of the issued and outstanding stock of Nexim Corp., a Nevada
Corporation, ("Nexim"), 100% of which is 


                                      16
<PAGE>

owned by Mr. Andrew Jaloza who became a director of the Company in
January, 1996. Upon the execution of the letter of intent, the Company paid Mr.
Jaloza $100,000 as a down payment for the purchase of Nexim. Nexim owns a
technology known as Medphone, a medical device product. The Company also
invested, approximately, an additional $62,000 toward development of this
product. Nexim has had no revenues and is not an operating company. In April,
1996, the Company decided not to pursue the acquisition of Nexim. The ultimate
recovery of the invested funds is uncertain. During the year ended June 30,
1996, the Company wrote off its entire investment in this venture, which is
included in general and administrative expenses.


         PART IV


Item 13.          Exhibits and Reports on Form 8-K


         (a)      Exhibits (numbered in accordance with Item 601 of 
Regulation S-B).

Exhibit
Numbers           Description

++       2(a)     -        Copy of Agreement and Plan of Merger, dated as of
         March 18, 1998, between Celestial Ventures
                           Corporation and Polymer Dynamics, Inc.

*        3(a)     -        Certificate of Incorporation of the Company

*        3(b)     -        Bylaws of the Company

**       4(a)     -        Form of Common Stock Certificate

**       10(a)    -        Purchase Agreement between the Company and Gulf
         Coast Powder Coatings, Inc., and ATCO Corporation for the purchase of
         Gulf Coast Powder Coatings, Inc. by ATCO Corporation dated August 31,
         1995.

**       10(b)    -        Purchase Agreement between the Company and Valves
         International, Inc., Central Valve Services, Inc, Alloy Valve
         International, Inc. (d/b/a CVC International and/or T.J. Lingle
         International) (collectively, the "Subsidiaries") and ATCO Corporation
         for the purchase of the Subsidiaries by ATCO Corporation, dated August
         31, 1995.

**       10(c)    -        Purchase Agreement between Success Direct, Inc.,
         Irwin Schneidmill, Performance Capital Corporation, Martin Ewenstein,
         Brian Ugles, John Ecke and Cathy Santo ("Sellers") and the Company,
         for the purchase by the Company of Success Direct, Inc.

**       10(d)    -       Assignment of contract between Success Direct, Inc.
         and the Company for the rights to purchase assets of Re-Prod, Inc.,
         dated August 31, 1995.

**       10(e)    -       Purchase Agreement between the Company and Re-Prod
         Inc., for the purchase of certain assets of Re-Prod, Inc., dated
         August 31, 1995.

***      10(f)    -        Promissory Note in the principal amount of $205,000
         bearing interest at 11% per annum between the Company as borrower and
         Performance Corporation as lender, dated August 1, 1995.

                                      17
<PAGE>

***      10(g)    -        Promissory Notes dated December 15, 1994 through
         April 15, 1995 in the aggregate amount of $250,000 ($50,000) bearing
         interest at 10% per annum between Success Direct, Inc. as borrower and
         Performance Capital Corporation as lender.

***      10(h)    -        Employment Agreement between Irwin Schneidmill and
         the Company dated March 1, 1996.

***      10(i)    -        Supply contracts between the Company and V.W.
         Eimicke, Ltd. each dated September 6th, 1990.

***      10(j)    -        Indemnity Agreement between the Company and Irwin
         Schneidmill and John Formicola, indemnifying them against liabilities
         arising from the acquisition of assets of Re-Prod, Inc.

***      10(k)    -        Stock Option Certificate and Agreement between the
         Company and Irwin Schneidmill dated September 15, 1995.

         10(l)    -        Assumption Agreement between John Patten and the
         Company for the R. M. Engineering note and the Dynamic subordinated
         note.

         10(m)    -        Indemnification Agreement between John Patten and
         the Company for the Johnson vs. Central Valve Services, Inc., et al.,
         litigation.

         10(n)    -        Informal lease agreement between Remarkable and 
         the Company.

++       99       -        Celestial Ventures  Corporation and Polymer 
         Dynamics,  Inc. Press Release date March 25, 1998.

         In accordance with Item 601 (b) (2) of Regulation S-B, the exhibits
         described in the Table of Contents of Exhibit (2) have not been filed.
         The Registrant hereby agrees to furnish supplementary copies of such
         exhibits to the Commission upon request.

(b)      Reports on Form 8-K - The Registrant did not file any reports on Form
         8-K during the last quarter of the fiscal year ended June 30, 1997.

*        Incorporated by reference to the Company's Registration Statement on
         Form S-8 dated September 18, 1995.

**       Incorporated by reference to the Company's Report on Form 8-K dated 
         August 31, 1995.

***      Incorporated by reference to the Company's Report on Form 10-KSB for 
         the period ended June 30, 1995.

+        Incorporated by reference to the Company's Report on Form 10-KSB for 
         the period ended June 30, 1997.

++       Incorporated by reference to the Company's Report on Form 8-K dated 
         March 30, 1998.


                                      18
<PAGE>


Exhibit 10(n)

                                                                March 13, 1998


                                LETTER AGREEMENT

Contracts and Leases:
---------------------

The Company maintains its corporate headquarters at 382 Route 59, Section 310,
Monsey, New York, 10952. This facility is currently leased by Remarkable Office
Products, Inc. which expires on October 31, 1998 and provides for an option to
renew for two successive five-year periods. Although there is no formal
sublease agreement between the Company and Remarkable, the Company has agreed
to reimburse Remarkable for any use of the space by the Company as well as for
the use of Remarkable's personnel.

This letter agreement will confirm that the aforementioned sublease agreement
between Remarkable Products ("Lessor" and Celestial Ventures corporation
("Lessee"), whereby Lessee pays Lessor the sum of $3,795.00 as rent and fees
payable monthly under the terms of said lease, shall terminate at the Closing
of the transactions contemplated by the plan entered into between Celestial and
Polymer Dynamics, Inc. dated March 1998.

Lessor and Lessee further agree that as of the date of Closing, Lessee, its
assigns and successors shall be released from any and all future liability for
the payment of rent. In addition, Remarkable, individually, and if applicable,
on behalf of assignors or overtenants from which it obtained an interest in the
lease, does hereby convenant and agree to forever refrain and desist from
instituting, asserting or continuing any claim, demand, action or suit of
whatever kind or nature, either directly or indirectly, for the payment of any
rents previously or subsequently sought from the date of Closing.


REMARKABLE OFFICE PROCUCTS, INC.





BY:  /s/  Cathy Santo
     ------------------------------
          Cathy Santo



CELESTIAL VENTURES CORPORATION


BY:  /s/  Irwin Schneidmill
     ------------------------------
         Irwin Schneidmill



                                      19
<PAGE>



                                   SIGNATURES


         Pursuant to the requirements of Section 13 or 15(d) 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.

                         CELESTIAL VENTURES CORPORATION

                         By: /s/IRWIN SCHNEIDMILL
                            ------------------------
                            Irwin Schneidmill
                            President, Chief Executive, and
                            Financial Officer and a Director

         Dated: May 7, 1999

         Pursuant to the requirement of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons, which include the
Chief Executive Officer, the Chief Financial Officer and a majority of the
Board of Directors, on behalf of the Registrant and in the capacities and on
the dates indicated:


<TABLE>
<CAPTION>
Name                                     Title                                       Date
<S>                                 <C>                                         <C> 
/s/ Irwin Schneidmill               President Chief Executive                   May 7, 1999
---------------------               and Financial Officer, and
Irwin Schneidmill                   a Director (Principal
                                    Executive and Financial Officer)


/s/Robert Trause                    Director                                    May 7, 1999
----------------
Robert Trause


/s/Mark Wolchock                    Director                                    May 7, 1999
----------------
Mark Wolchock
</TABLE>


















                                      20

<PAGE>

                    CELESTIAL VENTURES CORPORATION
                      AND SUBSIDIARIES
                    Consolidated Financial Statements
                    June 30, 1998 and 1997


<PAGE>


CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
Table of Contents
-------------------------------------------------------------------------------




                                                                  Page

     Independent Auditors' Report                                   F-2


     Consolidated Financial Statements

         Balance Sheet
             June 30, 1998                                          F-3

         Statements of Operations
             For the Years Ended June 30, 1998 and 1997             F-4

         Statements of Stockholders' (Deficit)
             For the Years Ended June 30, 1998 and 1997             F-5

         Statements of Cash Flows
             For the Years Ended June 30, 1998 and 1997             F-6 - F-7


     Notes to Consolidated Financial Statements                     F-8 - F-12


<PAGE>




                         Independent Auditor's Report




 To the Board of Directors and Stockholders
 Celestial Ventures Corporation and Subsidiaries


 We have audited the accompanying consolidated balance sheet of Celestial
 Ventures Corporation and Subsidiaries as of June 30, 1998, and the related
 consolidated statements of operations, stockholders' (deficit), and cash flows
 for the years ended June 30, 1998 and 1997. These financial statements are the
 responsibility of the Company's management. Our responsibility is to express
 an opinion on these financial statements based on our audits.

 We conducted our audits in accordance with generally accepted auditing
 standards. Those standards require that we plan and perform the audits to
 obtain reasonable assurance about whether the financial statements are free of
 material misstatement. An audit includes examining, on a test basis, evidence
 supporting the amounts and disclosures in the financial statements. An audit
 also includes assessing the accounting principles used and significant
 estimates made by management, as well as evaluating the overall financial
 statement presentation. We believe that our audits provide a reasonable basis
 for our opinion.

 In our opinion, the financial statements referred to above present fairly, in
 all material respects, the consolidated financial position of Celestial
 Ventures Corporation and Subsidiaries as of June 30, 1998, and the results of
 its operations and its cash flows for the years ended June 30, 1998 and 1997
 in conformity with generally accepted accounting principles.




 RAICH ENDE MALTER LERNER & CO.
 East Meadow, New York
 February 12, 1999



                                      F-2
<PAGE>


CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet                                        June 30, 1998
-------------------------------------------------------------------------------



<TABLE>
<S>                                                                                          <C> 
Assets
Current assets
  Cash                                                                                       $           654
  Notes receivable - Polymer Dynamics, Inc. - net of allowance
    for uncollectible amounts of $4,000,000                                                                -
  Other receivable                                                                                     3,795
                                                                                             ---------------


                                                                                             $         4,449
Liabilities and Stockholders' (Deficit)
  Current Liabilities   
    Accounts payable                                                                         $           747
  Loans payable to officer                                                                            22,500
                                                                                             ---------------

                                                                                                      23,247
                                                                                             ---------------
     Other Liabilities
       Net liabilities of discontinued operations                                                    170,000
                                                                                             ---------------
                                                                                                     193,247
                                                                                             ---------------

     Stockholders' (Deficit)
       Convertible Preferred Stock - $.001 par value; authorized 500,000,000
         shares, issued and outstanding 258,853
         shares                                                                                          259
       Common Stock - $.001 par value; authorized 500,000,000
         shares, issued and outstanding 2,763,199 shares                                               2,764
       Additional paid-in capital                                                                 10,027,372
       Accumulated (deficit)                                                                     (10,219,193)
                                                                                             ---------------

                                                                                                    (188,798)
                                                                                             ---------------
                                                                                             $         4,449
                                                                                             ---------------
</TABLE>

See notes to consolidated financial statements.


                                      F-3
<PAGE>


CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                              For the Years Ended 
                                                                                   June 30,
                                                                              ------------------------------
                                                                                        1998            1997
                                                                              ------------------------------
<S>                                                                           <C>               <C>
                                                                              $            -    $          -

Cost of Sales                                                                              -               -
                                                                              --------------    ------------

Gross Profit                                                                               -               -
                                                                              --------------    ------------

Operating (Income) and Expenses
   Selling, general and administrative                                               802,829         316,940
   Other expense                                                                           -         320,074
   Other income                                                                            -          (5,000)
   Write-off of advance to Polymer Dynamics, Inc.                                  4,000,000               -
                                                                              --------------    ------------

                                                                                   4,802,829         632,014

(Loss) from Continuing Operations                                                 (4,802,829)       (632,014)

Discontinued Operations - (loss) from operations of
discontinued subsidiaries - net of taxes                                                   -         (13,375)
                                                                              --------------    ------------

(Loss) before Extraordinary Item                                                  (4,802,829)       (645,389)

Extraordinary Item  - gain on sale of subsidiary -
net of taxes                                                                               -         431,512
                                                                              --------------    ------------

Net (Loss)                                                                    $   (4,802,829)   $   (213,877)
                                                                              ===============   =============



Weighted Average Common Shares Outstanding                                         2,406,072       1,140,741


Basic and Diluted (Loss) Per Share from
   Continuing Operations                                                     $        (2.00)    $       (.55)
                                                                             ==============     ============

Basic and Diluted (Loss) Per Share Before
   Extraordinary Item                                                        $    (2.00)        $      (.57)
                                                                             ==============     ============

Basic and Diluted Net (Loss) Per Share                                       $    (2.00)        $      (.19)
                                                                             ==============     ============
</TABLE>


See notes to consolidated financial statements.


                                      F-4
<PAGE>

<TABLE>
<CAPTION>
CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity                                         For the Years Ended June 30, 1998 and 1997
-----------------------------------------------------------------------------------------------------------------------------------


                                                   Convertible                                             
                                                 Preferred Stock            Common Stock                   Additional          
                                                 ---------------            ------------                    Paid-In         
Amount                                           Shares          Amount        Shares         Amount        Capital        


<S>                                              <C>            <C>         <C>             <C>          <C>              
Balance - July 1, 1997                               271,853    $   272       1,076,186     $  1,076     $    4,817,498   
   Stock issued for director's fees                        -          -          17,500           18             60,007   
   Stock issued for financing fee                          -          -          10,000           10             42,490   
   Stock issued for loan guarantees                        -          -          93,316           93            319,981   
   Reclass of redeemable common
     stock                                                 -          -          50,000           50                (50)  
   Conversion of preferred stock                     (13,000)       (13)            867            1                 12   
   Net (loss)                                              -          -               -            -                  -   
                                                 -----------    -------    ------------     --------     --------------   

Balance  - June 30, 1997                             258,853        259       1,247,869        1,248          5,239,938   
   Stock issued in overseas offering                       -          -       1,353,000        1,353          4,041,607   
   Exercise of warrants                                    -          -          31,665           32             94,963   
   Exercise of options                                     -          -          56,665           57            169,938   
   Stock issued for directors' fees                        -          -          74,000           74            480,926   
   Net (loss)                                              -          -               -            -                  -   
                                                 -----------    -------    ------------     --------     --------------   

Balance - June 30, 1998                              258,853    $   259       2,763,199     $  2,764     $   10,027,372   
                                                 ----=======----=======----============-----========     ==============   


<CAPTION>


                                                
                                                    Accumulated
                                                 -----------------
                                                     (Deficit)              Total
                                                 -----------------    ----------------

<S>                                                <C>                <C>             
Balance - July 1, 1997                             $    (5,202,487)   $      (383,641)
   Stock issued for director's fees                              -             60,025
   Stock issued for financing fee                                -             42,500
   Stock issued for loan guarantees                              -            320,074
   Reclass of redeemable common
     stock                                                       -                  -
   Conversion of preferred stock                                 -                  -
   Net (loss)                                             (213,877)          (213,877)
                                                   ---------------    ---------------

Balance  - June 30, 1997                                (5,416,364)          (174,919)
   Stock issued in overseas offering                             -          4,042,960
   Exercise of warrants                                          -             94,995
   Exercise of options                                           -            169,995
   Stock issued for directors' fees                              -            481,000
   Net (loss)                                           (4,802,829)        (4,802,829)
                                                   ---------------    ---------------

Balance - June 30, 1998                            $   (10,219,193)   $      (188,798)
                                                   ================   ================


</TABLE>


See notes to consolidated financial statements.


                                      F-5
<PAGE>



CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows                               Page 1 of 2
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                          For the Years Ended
                                                                                                June 30,
                                                                                   ---------------------------------
                                                                                          1998             1997

                                                                                   ---------------------------------
<S>                                                                                <C>               <C>           
Cash Flows from Operating Activities
   Net (loss)                                                                      $   (4,802,829)   $    (213,877)
   Adjustments to reconcile net (loss) to net cash
     (used for) operating activities:
       (Gain) on sale of subsidiary                                                             -         (731,512)
       Write-off of advance to Polymer Dynamics, Inc.                                   4,000,000                -
       Loss from discontinued operations                                                        -           13,375
       Transfer of notes receivable                                                             -          300,000
       Expenses paid through the issuance of common stock                                 481,000          422,599
       (Increase) decrease in:
         Other receivables                                                                  1,205           (5,000)
       Increase (decrease) in:
         Accounts payable                                                                     747           (5,726)
         Accrued expenses                                                                 (16,354)          (3,271)
                                                                                   --------------    -------------

       Net cash used in continuing operations                                            (336,231)        (223,412)

       Net cash provided by discontinued operations                                             -           21,298
                                                                                   --------------    -------------

                                                                                         (336,231)        (202,114)
                                                                                   --------------    -------------

Cash Flows from Investing Activities
   Advances to Polymer Dynamics, Inc.                                                  (4,000,000)               -
   Deposits returned                                                                            -           15,000
   Proceeds from sale of subsidiary                                                             -          193,549
                                                                                   --------------    -------------

                                                                                       (4,000,000)         208,549
                                                                                   --------------    -------------

Cash Flows from Financing Activities
   Proceeds from issuance of common stock                                               4,307,950                -
   Proceeds of loans from stockholders                                                     22,500                -
                                                                                   --------------    -------------

                                                                                        4,330,450                -
                                                                                   --------------    -------------

Net Increase (Decrease) in Cash                                                            (5,781)           6,435

Cash - beginning of period                                                                  6,435                -
                                                                                   --------------    -------------

Cash - end of period                                                               $          654    $       6,435
                                                                                   ==============    =============

See notes to consolidated financial statements.



                                      F-6
<PAGE>

CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows                              Page 2 of 2
-------------------------------------------------------------------------------

</TABLE>
<TABLE>
<CAPTION>

                                                                                   For the Years Ended
                                                                                         June 30,
                                                                                   -------------------------------
                                                                                         1998              1997

                                                                                   -------------------------------

<S>                                                                                <C>               <C>          
Supplemental Disclosures
     Non-cash investing and financing transactions:
       Note received upon sale of subsidiary                                       $            -    $     450,000


       Common stock issued for debt guarantees and
         other services                                                            $            -    $     320,074


       Intercompany payable extinguished through sale
         of subsidiary                                                             $            -    $     106,451
</TABLE>



See notes to consolidated financial statements.


                                      F-7
<PAGE>


CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES             For the Years Ended
Notes to Consolidated Financial Statements               June 30, 1998 and 1997
-------------------------------------------------------------------------------




1 - Business and Summary of Significant Accounting Policies

    Celestial Ventures Corporation ("CVC") was organized under the laws of the
    State of Nevada on January 28, 1987. CVC purchased a wholly-owned
    subsidiary on July 1, 1995, Success Direct, Inc., which is in the business
    of Business to Business direct mail marketing in the United States and
    Canada. In December, 1995, the corporate name of Success Direct, Inc. was
    changed to Remarkable Office Products, Inc. ("Remarkable"). Effective
    October 1, 1996, CVC sold Remarkable to Dynamic Products Corp. ("DPC"). As
    of June 30, 1997, all of the operating divisions of the Company have been
    sold.

  Significant accounting policies follow:

  a.  Principles of Consolidation - The consolidated financial statements
      include the accounts of CVC and its subsidiaries (the "Company"). All
      subsidiaries are included up until their date of disposition. All
      intercompany accounts and transactions are eliminated upon consolidation.

  b.  Income Taxes - Current income taxes are based on the taxable income for
      the year, as measured by the current year's tax returns. Deferred income
      taxes arise primarily due to various temporary differences between
      financial and income tax reporting. Valuation allowances are established
      when necessary to reduce deferred tax assets to the amount expected to be
      realized.

  c.  Earnings Per Share - The Company has adopted the provisions of Statement
      of Financial Accounting No. 128 Earnings Per Share. Basic earnings per
      share is computed by dividing the net loss by the weighted average number
      of shares outstanding during the year. Diluted earnings per share include
      securities which are convertible into common stock to the extent such
      inclusion would be dilutive. The Company has applied this standard
      retroactively for all periods presented. Such retroactive application had
      no effect on preciously reported earnings per share.

  d.  Estimates - The preparation of financial statements in conformity with
      generally accepted accounting principles requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the
      dates of the financial statements and the reported amounts of revenues
      and expenses during the reporting periods. Actual results could differ
      from those estimates.

  e.  Reclassifications - Various accounts in the prior year financial
      statements have been reclassified for comparative purposes to conform
      with the presentation in the current year's financial statements. These
      reclassifications had no impact on the results of operations.


                                                                      Continued

                                      F-8
<PAGE>


       f.  Stock-Based Compensation - In accordance with FAS 123, the Company 
           records its stock-based compensation at fair value.

       g.  Recently Issued Accounting Pronouncements - Recently issued
           accounting pronouncements, which the Company has not yet adopted,
           include: SFAS 130 - Reporting Comprehensive Income, effective for
           fiscal years beginning after December 15, 1997; SFAS 131 -
           Disclosures about Segments of an Enterprise, effective for periods
           beginning after December 15, 1997; SFAS 132 - Employer's Disclosure
           about Pensions and Other Postretirement Benefits, effective for
           fiscal year beginning after December 15, 1997; and SFAS 133 -
           Accounting for Derivative Instruments and Hedging Activities
           effective for periods beginning after June 15, 1999.

           The Company has not yet determined the effect, if any, that adoption
           of these standards will have on the Company's financial statements.


2 -    Income Taxes

       Deferred income taxes reflect the net tax effects of temporary
       differences between the carrying amounts of assets and liabilities
       recognized for financial reporting and the amounts recognized for income
       tax purposes. The significant components of the deferred tax asset are
       as follows:

                                                             June 30,

                                                  -----------------------------
                                                       1998            1997

           Assets
             Net operating loss carryforwards     $   2,200,000    $   306,000
             Less:  Valuation allowance               2,200,000        306,000
                                                  -------------    -----------

                                                  $           -              -


       The net deferred tax asset continues to be fully offset by a valuation
       allowance due to uncertainties surrounding the ultimate realization of
       those assets. At June 30, 1998, approximately $6,600,000 of net
       operating loss carryforwards, which expire in various periods through
       2012, are available to offset future taxable income. The valuation
       allowance increased by $1,894,000 as compared to June 30, 1997 due to
       increased net operating loss carryforwards.


3 -    Stock

       The Company's preferred stock is convertible into the Company's common
       stock at the rate of 15 shares of preferred for each share of common. No
       dividends have been declared and there is no dividend requirement. The
       holders of the preferred stock are entitled to a preference in the event
       of the Company's liquidation.

                                                                      Continued

                                      F-9
<PAGE>



4 -    Discontinued Operations, Sale of Subsidiary and
       Related Party Transactions

       On November 21, 1996, (effective October 1, 1996) the Company sold all
       of the issued and outstanding capital stock of a subsidiary, Remarkable
       Office Products ("Remarkable") to DPC, a company under common
       management, for $1,406,250. The president and chief executive officer of
       the Company is also the president, chief executive officer and principal
       stockholder of DPC. In connection with the disposal of this wholly-owned
       subsidiary, the Company realized a gain of approximately $731,512,
       calculated as the difference between the value received of $1,406,250
       and the net assets of $674,738 of Remarkable at October 1, 1996. On June
       20, 1997, the Company entered into an agreement with John Patten, a
       significant stockholder, whereby the Company transferred its rights
       under the remaining past due $300,000 note receivable from DPC in
       exchange for Mr. Patten's assumption of the Company's obligation for the
       USPC note payable of $170,000 to R.M. Engineering discussed below. To
       date, R.M. Engineering has not released the Company from its obligation
       under the note payable; accordingly, the liability remains recorded at
       June 30, 1998. The total gain calculated above has been reduced by this
       transfer resulting in a net gain on sale of subsidiary of $431,512.
       Since Remarkable was sold within two years of its acquisition, which was
       accounted for similar to a pooling of interest, the gain is shown as an
       extraordinary item. The prior period financial statements have been
       restated to reflect the discontinued operations of Remarkable.

       As of June 30, 1998, the Company's aggregate net liabilities relating to
       the discontinued operations of USPC amounted to $170,000, which
       represents a demand note obligation due to R.M. Engineering relating to
       a previous equipment purchase. The note is due on demand and bears
       interest at 4%. The obligation to pay this note has been assumed by Mr.
       Patten, as previously discussed.

       During the years ended June 30, 1998 and 1997, the Company's results
       from discontinued operations, excluding the gain on its disposal of
       Remarkable, consisted of the following:


                      1998
                          Income                      $         -
                          Expenses                              -
                                                      -----------

                                                      $         -


                      1997
                          Income                      $   205,192
                          Expenses                        218,567
                                                      -----------

                                                      $   (13,375)
                                                      -----------


                                     F-10
<PAGE>



  In connection with his guarantees of various liabilities of the Company and
  other services rendered, the Company issued 93,316 shares of common stock to
  Mr. Patten in June, 1997. The related expense of $320,074 is included in
  other expense.

  The Company leases office space from Remarkable and reimburses it for certain
  administrative expenses paid on the Company's behalf. During the fiscal year
  ended June 30, 1998, the Company paid Remarkable $187,655.


5 -    Litigation

  The Company is involved in two lawsuits: Johnson vs. Central Valve Services,
  et al., relates to shareholders claiming misrepresentations by their
  investment manager (unconnected to the Company), and Sirco Systems, L.L.C.
  claims that the Company became a guarantor of a debt of Gulf Coast Powder
  Coatings, Inc., a former subsidiary of the Company.

  In the opinion of management, the resolution of these matters will not have a
  material adverse effect on the Company's financial position or results of
  operations.


6 -    Warrants

  The following summarizes the Company's activity:


<TABLE>
<CAPTION>
                                                                     Exercise            Warrants
                                                     Shares          Price             Exercisable

                                                   -----------------------------------------------

<S>                                                <C>           <C>                   <C>  
        Balance - June 30, 1997                       408,330    $3.00 - $22.50          408,330

           Exercised                                  (88,330)   $3.00
                                                   ----------    --------------

        Balance - June 30, 1998                       320,000    $3.00 - $22.50          320,000
</TABLE>


7 -  Agreement for Merger

  On August 21, 1997, the Company formally announced that it had entered into a
  letter of intent to merge with Polymer Dynamics, Inc. ("PDI"), a high
  performance materials company. On October 30, 1997, the Company worked toward
  securing the merger by completing an overseas private placement of common
  stock pursuant to the exemptions afforded by Regulation S. The Company has
  received $4,042,960, net of $16,040 of issuance costs, from investors in
  connection with the transaction, whereby a total of 1,353,000 common shares,
  par value $.001, were issued for a purchase price of $3.00 per share. Of
  those amounts received from the offering, $4,000,000 has been remitted to PDI
  in exchange for unsecured Convertible Subordinated Notes (the "Notes")
  totaling $4,000,000. The Notes bear interest at an annualized rate of 7%, and
  originally bore a maturity date of December 30, 1997.


                                     F-11
<PAGE>


       On March 18, 1998, the Company and PDI entered into an Agreement and
       Plan of Merger (the "Merger Agreement") providing for transactions that
       will result in PDI being merged with and into the Company. The company
       surviving the merger will be a Nevada corporation that will be called
       Polymer Dynamics, Inc. ("Polymer"). Completion of the merger is subject
       to, among other things, the approval of the Registrant's and Polymer's
       stockholders. Under the Merger Agreement, each outstanding share of the
       Company's common stock shall remain unchanged, and each outstanding
       share of the Company's preferred stock will be converted into
       one-fifteenth of a share of the surviving corporation's common stock.
       Each outstanding share of Polymer's common stock and Series A preferred
       stock will be converted into a single share of common stock and Series A
       preferred stock, respectively, of the surviving corporation.

       Based on the Company's evaluation of the credit worthiness of PDI, the
       Company has decided to fully reserve against the Notes. The Company will
       not recognize interest income on these notes and will apply any payments
       received to reduce the principal. The Company is also contingently
       liable for approximately $25,000 in legal fees related to the proposed
       merger.

       If the merger is consummated, the transactions will be accounted for as
       a reverse acquisition whereby PDI will be treated as the acquirer for
       accounting purposes in a combination similar to a pooling-of-interests.
       The Notes totaling $4,000,000 will be added to the equity section of
       Polymer.

       The Company is contingently liable for approximately $25,000 in fees
       related to the merger.



                                     F-12