<PAGE>   1
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                               Washington DC 20549

                                   FORM 10-KSB

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the fiscal year ended August 31, 1999        Commission File Number  0-2331
                         -----------------                              --------


                               GLASSMASTER COMPANY
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


             South Carolina                                  57-0283724
----------------------------------------               ---------------------
        (State of incorporation)                       (IRS Employer ID No.)

        PO Box 788, Lexington SC                               29071
----------------------------------------               ---------------------
(Address of principal executive offices)                     (Zip Code)

Issuer's telephone number, including area code:         803-359-2594
                                                  ----------------------------

Securities registered pursuant to Section 12 (b) of the Exchange Act:    None
                                                                      ----------
Securities registered pursuant to Section 12 (g) of the Exchange Act:
  Title of Class:    Common Stock, par value $.03 per share
                  --------------------------------------------------------------

Indicate by an "X" whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days. YES  [X]  NO [ ]

Indicate by an "X" if disclosure of delinquent filers in response to Item 405 of
regulation S-B 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]

State issuer's revenues for its most recent fiscal year.     $21,024,882   .
                                                          ------------------

The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $725,977 as of October 31, 1999, based on the
average high and low sales price of $1.125 per share.

The number of shares outstanding of the registrant's common stock, as of October
31, 1999 was 1,630,696 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

The information set forth under items 9, 10, 11, and 12 of Part III of this
report is incorporated by reference from the issuer's definitive proxy statement
for the 2000 annual meeting of stockholders that will be filed no later than
December 31, 1999.


<PAGE>   2





                                     PART I

Item 1.  Business

    (a)(b) General Development and Narrative Description of Business

           Glassmaster Company (the "Company") is a diversified manufacturer of
thermoplastic and thermoset plastic materials, industrial controls, and
electronics which produces a variety of product lines to supply customers
throughout multiple industries. The Company classifies its business into two
operating segments: Industrial Products, consisting of extruded synthetic
monofilaments, pultruded fiberglass products, and composites and; Controls and
Electronics, consisting of mechanical and electronic controls and electronic
test equipment. For segment and geographic information, see Note 13 of Notes to
Financial Statements.

           The Company was founded in 1946 and incorporated under the laws of
the State of South Carolina. The Company manufactured only fiberglass pleasure
boats until 1982 when, due to the cyclical nature of the pleasure boat business,
the Company began to diversify into industrial-related manufacturing. During
1982 and 1983 the Company developed from within manufacturing facilities to
produce extruded monofilaments and fiberglass antennas. In 1988, the Company
purchased the industrial controls business to further diversify and expand its
line of industrial-related products, and Glassmaster Controls Company, Inc. was
formed. In 1989, the company discontinued the manufacture and sale of fiberglass
boats.

           In recent years, the Company has expanded its product offerings to
include electronic test equipment (the Amtest line of test equipment was
acquired by Glassmaster Controls Company, Inc. in October, 1997) and has
internally developed the capability to provide contract manufacturing services
that produce customized electronic products, including circuit boards utilizing
surface mount and through-hole technologies. Management believes the addition of
electronic capabilities will leverage its ability to provide its existing
customer base with more complete product solutions as well as entice new
customers by offering vertically integrated, mechanical and electronic contract
manufacturing.

           During 1998 and 1999 the Company developed and introduced the
Glassmaster Composite Modular Building System(TM), which is a t-slotted
framework system used in a wide variety of industrial applications, including
machine frames, guarding and enclosures, workstations and tables, and shelving
for storage.

           During the fourth quarter of 1999, the Company announced its decision
to discontinue the manufacture and sale of its marine antennas and other low
margin product lines and in October, 1999 completed the sale of certain related
assets. See Note 12 of Notes to Financial Statements for further discussion.

           There have been no bankruptcy, receivership, or similar proceedings
against the company since its inception. During the last three years there has
been no material acquisition or disposition of any significant amount of assets
other than that described above or in the ordinary course of business.

           The Company's common stock was first offered to the public in 1959
and currently has approximately 1,200 stockholders. During the last several
years the Company's common stock was listed and traded on the Nasdaq SmallCap
Market, however, on November 8, 1999, the common stock of the company was
de-listed from Nasdaq due to minimum market value of public float requirements.
The Company's common stock is currently traded on the Over-the-Counter Bulletin
Board (symbol: GLMA.OB).

INDUSTRIAL PRODUCTS

           The Company's Monofilament Division extrudes monofilaments from
nylon, polyester, polyolefins and other engineering resins for use in a wide
array of markets and applications including textiles (sewing thread), lawn and
garden care (trimmer line), recreational products (fish line), and industrial
weaving and industrial filtration. Monofilament, as produced by the Company,
begins with a thermoplastic resin which is processed through a melting device
(extruder) and subsequently oriented to form single strand fibers of various
diameters, tensile strengths and moduli. Specialized monofilaments for
industrial applications are manufactured for use in other major industries
including paper machine clothing for the paper industry and abrasive bristles
for brushes used in metal and wood finishing. The Company markets its
monofilament products primarily on a private brand basis, which are sold by
company salesmen to original equipment manufacturers and distributors throughout
North America and, to a lesser degree, Europe, South America, and the Pacific
Rim.


<PAGE>   3



Item 1.  Business (Cont'd)

           The Company's Composites Division manufactures pultruded fiberglass
(thermoset) and composite profiles that are used in the assembly of the
Glassmaster Composites Modular Building System(TM). This division previously
manufactured a line of fiberglass marine and CB antennas as well as specialty
fiberglass rod stock. These product lines were discontinued in 1999. This
division is currently establishing a network of regional distributors throughout
North America to sell the Composite Modular Building System(TM) product line.

CONTROLS AND ELECTRONICS

           The Company, through its wholly-owned subsidiary, Glassmaster
Controls Company, Inc., located in Kalamazoo, Michigan, manufactures and
assembles a wide range of industrial controls, including mechanical cable and
wire assemblies, mechanical and electronic HVAC instrument panels, and circuit
board-based electronic controls and modules. Industrial controls are used
primarily in medium and large capacity trucks and to a lesser degree,
automobiles, farm equipment, and recreational boats and are sold to original
equipment manufacturers throughout North America by in-house sales efforts and
commissioned manufacturers sales representatives. The Company also manufactures
and assembles the Amtest line of vehicle test equipment used by mechanics,
rebuilders, fleets, and garages to analyze and repair automotive and truck
engines and their related electronic devices. Amtest vehicle test equipment is
sold by in-house sales efforts to distributors throughout North America. The
company also offers custom electronic products utilizing surface mount (SMT) and
through hole circuit board contract assembly that are sold by in-house sales
efforts and manufacturers sales representatives.

           The names "Glassmaster", "CompCore", "NYBRAD", and "Glassmaster
Composite Modular Building System" are registered trademarks of the Company. The
Company has applied for a U.S. Patent for its recently introduced product, the
"Glassmaster Composite Modular Building System".

           The Company believes it is a significant competitor in the United
States market for specialty monofilament products. While firm price competition
can be experienced within some lines of the monofilament and flexible wire
control products, overall, the Company produces products which center on
performance, engineering and customer service and it is these product lines
which provide the Company with a stable revenue base. Sales and profitability
growth are dependent to varying degrees upon favorable economic conditions and
penetration into the industrial textile, paper machine clothing, and domestic
truck manufacturing industries, as well as acceptance of recently introduced
electronics and composites products. Unfavorable weather conditions can have an
impact on monofilament trimmer line sales.

           Sales of the Company's industrial products are somewhat seasonal with
sales to the lawn and garden care markets concentrated in the second and third
quarters of the fiscal year (December - May). While some fluctuations in
inventory levels will occur from time to time, the Company is not required to
carry significant amounts of inventory to meet delivery requirements or to carry
unusually large amounts of materials and supplies to insure itself of a
continuous allotment of goods from suppliers. The Company does not provide
extended payment terms to its customers in excess of those normally offered for
these industries. Other than as described in Note 13 of Notes to Financial
Statements, the dependence upon any one customer or small group of customers is
not material. The Company currently offers no product or service requiring
government approval and the effect of existing or probable government
regulations on the operations of the Company is considered to be immaterial.

           At August 31, 1999, the order backlog was $1,868,155 compared to
$2,344,844 at August 31, 1998.

           The Company has no full-time employees engaged in research and
development activities, however, certain employees at each of the Company's
manufacturing locations spend a portion of their time in new product development
and process improvement. Expenditures for research and development were
approximately $912,000 in 1999 and $854,000 in 1998.

           No material effects have resulted from compliance with federal,
state, and local provisions regulating the discharge of materials into the
environment, or any other regulations protecting the environment. The Company
does not expect to make any material capital expenditures for environmental
control facilities for the current or succeeding fiscal year.

           The Company and its subsidiary furnished employment for approximately
207 persons at August 31, 1999 and 218 persons at August 31, 1998.



<PAGE>   4



Item 2.  Properties

           General corporate offices, the monofilament manufacturing facilities
(Plant I & II), and the Monofilament Division offices are located at 126
Glassmaster Road in Lexington, South Carolina. The total facility is composed of
170,000 square feet, and is owned by the Company in fee simple.

           The Company operates its Composites Division offices and
manufacturing plant at 71 Industrial Park Road in Newberry, South Carolina. The
total facility is composed of 31,000 square feet and is owned by the Company in
fee simple.

           Glassmaster Controls Co., Inc. operates its industrial controls
business at 831 Cobb Ave. in Kalamazoo, Michigan. The total facility is composed
of 109,000 square feet and is owned by the Company in fee simple.

           The Company believes that facilities are adequate for the immediate
future, and that the machinery and equipment used in these facilities are well
maintained and in good operating condition. Estimated percentage utilization
capacities during the year ended August 31, 1999 were as follows: Monofilament
Plant - 70%; Composites Plant - 25%; Controls Plant - 50%.

Item 3.  Legal Proceedings

           There are no material pending legal proceedings.

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

           There were no matters submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders through the
solicitation of proxies or otherwise.

Item 5.  Market for Registrants Common Equity and Related Stockholder Matters

(a)(1) The Company's common stock traded on The Nasdaq SmallCap Market tier of
the Nasdaq Stock Market under the symbol GLMA. On November 8, 1999 the Company's
common stock was de-listed from Nasdaq due to minimum market value of public
float requirements. As of November 8, 1999 the Company's common stock trades on
the Over-the-Counter market Bulletin Board under the symbol GLMA.OB.

(a)(1)(ii)The table below sets forth the high and low sales price per share
during each quarter in the last two years as quoted on the Small Cap Market tier
of the Nasdaq Stock Market.

<TABLE>
<CAPTION>
          Quarter Ending                    High              Low
          --------------                    ----              ---

<S>                                         <C>              <C>
          August 31, 1997                    .875             .750
          December 1, 1997                  4.750            2.875
          March 2, 1998                     4.125            3.500
          June 1, 1998                      3.875            2.563
          August 31, 1998                   2.500            1.500
          November 30, 1998                 1.750            1.750
          March 1, 1999                     2.500            1.000
          May 31, 1999                      1.375             .938
          August 31, 1999                   1.094            1.094
</TABLE>


Since September 1, 1999 and to the date of this report, the high and low sales
price per share was $1.156 and $.813, respectively.

   (b) There were 1,185 shareholders of record at October 31, 1999.

(c)(1) On October 24, 1997, Directors of the Company declared a cash dividend of
$.03 per common share payable on or about January 30, 1998 to stockholders of
record on January 9, 1998. No other dividends have been declared or paid in the
last three years.

(c)(2) According to the terms of a financing agreement, the Company is
restricted from paying cash dividends unless approved by the lending
institution.


<PAGE>   5


                                     PART II

Item 6.  Management's Discussion and Analysis

Review of Operations

                           Comparison of 1999 to 1998

           Consolidated sales for the fiscal year ended August 31, 1999 were
$21.0 million compared to $24.6 million last year, a decrease in sales of 14.3%.
The net loss for the year was $995,984, or $.61 per share. The loss includes
non-recurring, after-tax charges of $459,000, or $.28 per share, that were
associated with the Company's decision to discontinue certain product lines. Net
income last year was $119,434, or $.07 per share.

           NET SALES. In the industrial products segment, sales declined 20% to
$14.6 million from $18.1 million in 1998. Sales of monofilament products
decreased 18% compared with the prior year, due to declines in shipments of
textile related weaving filaments and sewing thread, and nylon trimmer line.
Difficult market conditions in the North American textile industry caused by
competitive pressures from Asian imports impacted demand from Monofilament
Division customers doing business in these markets. Sales of nylon trimmer line
were lower primarily due to the decision by a key customer, involved in the
re-packaging of bulk trimmer line for sale into the retail market, to
discontinue their re-packaging division because of pricing pressures from the
large retailers. The decline in sales of bulk line to this customer was
partially offset by expanded internal winding and packaging capabilities that
enabled sales of re-packaged line directly to the retail distribution chain.
Sales of monofilament are expected to improve as textile-related markets slowly
recover and current and potential customers complete the product evaluation
process of recently developed specialty monofilaments.

           At the Composites Division, sales declined approximately 44% from the
prior year due to discontinued product lines, lower sales of marine antennas,
and disappointing sales of the recently introduced product, The Glassmaster
Composite Modular Building System(TM). At the end of the 1998 fiscal year, this
division discontinued the manufacture and sale of pultruded fiberglass handles,
used primarily in lawn, garden, and home tools, which accounted for
approximately half of the 44% decline in sales. The lower sales of marine and CB
antennas accounted for the remainder of the decrease in Composites division
sales. Due to declining sales and changing technologies, and to concentrate its
full efforts on the new Glassmaster Composite Modular Building System(TM), the
Composites Division announced during the 1999 fourth quarter that the
manufacture and sale of fiberglass marine and CB antennas would be discontinued.
Certain assets related to this product line were sold in October, 1999 (refer to
Note 12 of Notes to Financial Statements for further information). While sales
of the new product line, the Glassmaster Composite Modular Building System(TM),
have been modest to date during customer product evaluation, new distributor
agreements have been formulated and additional sales and design support is now
available. Improved results for this product line are expected in the 2000
fiscal year.

           In the controls and electronics segment, Glassmaster Controls Company
("Controls") sales increased 1.5% to $6.5 million, compared to last year's $6.4
million, due to improved electronic product sales and steady demand from its
base of heavy truck manufacturing customers that offset slow sales to farm
equipment manufacturers. Expanded circuit-board manufacturing capacity and new
product engineering and development efforts should allow further sales growth in
the electronics product line as the 2000 fiscal year progresses.

           GROSS PROFIT. Total gross profit declined from $3.9 million last year
to $2.0 million this year, due to the decrease in sales at Monofilament and
non-recurring charges at Composites. When expressed as a percent of sales, gross
profit was 9.6% of sales this year, down from 16.1% of sales in the prior year.
As discussed more fully in Note 12 of Notes to Financial Statements, $599,260
was charged to Composites cost of goods sold to write down inventories
associated with discontinued product lines. Absent this change, gross profit was
$2.6 million, or 12.4% of sales this year, still well below the prior year's
16.1% of sales and primarily due to the costs associated with maintaining a
trained, technical workforce at Monofilament, notwithstanding lower sales and
reduced production requirements. Gross profit margins, expressed in dollars and
as a percentage of sales, will improve as sales and related manufacturing
throughput increase at Monofilament and new product sales at Composites and
Controls begin to contribute higher margin revenue.

           EXPENSES. Total expenses were down from $3.1 million last year to
$3.0 million this year. Included in the current year total was a $114,297 loss
on the sale of assets related to the discontinued marine antenna product line.
Net of this amount, total expenses declined by approximately $180,000, primarily
due to lower variable selling expenses, which decreased in tandem with the lower
industrial products sales volumes.


<PAGE>   6

Item 6.  Management's Discussion and Analysis (Cont'd)

                       Comparison of 1999 to 1998 (Cont'd)

           INCOME FROM OPERATIONS. Income (Loss) from Operations was
($1,020,619) in the current year versus an operating profit of $826,948 last
year. Lower sales and gross profit at Monofilament and non-recurring charges at
Composites caused a loss from operations at the industrial products segment of
$681,654 this year compared with operating income of $1.2 million last year.
Income from operations at the controls and electronics segment declined to
$397,000 this year compared to $434,000 last year, due to higher fixed costs
associated with the expanded electronics product line.

           INTEREST EXPENSE. Interest expense increased to $669,000 this year
compared with $628,000 in the previous fiscal year. The increased interest
expense is primarily due to higher average short-term borrowings required to
support working capital.

           PROVISION FOR INCOME TAXES. The Company has recognized a total
benefit from income taxes in the current year totaling $693,641. The current
portion of the income tax benefit ($83,515) is due to a federal net operating
loss carryback, for which the Company will receive a cash refund of prior taxes
paid. The deferred portion of the income tax benefit relates primarily to
federal and state net operating loss carry-forwards that will be used to offset
future taxable income. Income tax expense in the last fiscal year was $79,108.

                           Comparison of 1998 to 1997
                      (Excerpted from the 1998 Form 10-KSB)

           Consolidated sales increased 15% to $24.6 million during the fiscal
year ended August 31, 1998 compared to prior year sales of $21.3 million. Net
Income for the year declined to $119,434, or $.07 per share from $234,699, or
$.14 per share in 1997.

           NET SALES. Sales by the Monofilament Division increased 12.9% to
$16.5 million from $14.6 million in 1997. Shipments of monofilament improved
across the product line, particularly sewing thread and nylon weaving and
trimmer line products. Sales of recently developed specialty filaments also
contributed to the year over year increase in monofilament sales.

           Sales by the Composites Division improved 15% to $1.5 million this
year compared to $1.3 million in the prior year. The increase was primarily due
to new specialty pultruded products introduced during the year. This division
also introduced the Glassmaster Composites Modular Building System(TM) during
1998. This new product is a corrosive-resistant, non-conductive composite
building framework system that offers an alternative to competitive products
made out of aluminum, steel, or plastics. To date this product has been
purchased primarily for product evaluation by potential customers, and therefore
did not contribute significantly to 1998 sales.

           Glassmaster Controls Company ("Controls") sales increased 22.6% to
$6.4 million from $5.2 million last year. The increase in sales was fueled
primarily by growth in the heavy-duty truck manufacturing business. This segment
of customers comprises approximately 65% of Controls' annual sales and their
production volumes, which began improving during 1997, continued to expand
throughout most of this fiscal year. Investments in surface mount and through
hole circuit-board assembly equipment and the acquisition of Amtest, Inc., a
small Michigan corporation, specializing in the development, manufacture, and
sale of automotive related electronic testing equipment has allowed Controls to
offer products with electronic characteristics that will complement its full
range of mechanical cable and wire assemblies and control panels. While these
new product offerings contributed modestly to 1998 sales, additional engineering
and marketing efforts are underway that will potentially enable this product
line to generate significant revenue growth during the 1999 fiscal year.

           GROSS PROFIT. Total gross profit increased 4% compared to the prior
year due to the expansion in sales. However, when expressed as a percent of
sales, gross profit declined to 16.1% of sales during the 1998 fiscal year
compared with 17% in 1997. The decline in gross profit percent is attributable
to product development costs and related manufacturing inefficiencies as well as
an unfavorable mix of products sold at Composites.

           EXPENSES. Total expenses increased by $260,000 primarily due to
higher variable selling expenses associated with the increased sales volumes and
additional advertising expense at Composites. As a percentage of sales, total
expenses declined to 12.7% in 1998, compared with 13.4% of sales in 1997.


<PAGE>   7

Item 6.  Management's Discussion and Analysis (Cont'd)

                       Comparison of 1998 to 1997 (Cont'd)
                      (Excerpted from the 1998 Form 10-KSB)

           INCOME FROM OPERATIONS. Operating income declined 11% to $827,000
this year from $933,000 last year despite the increase in sales. The decline in
operating income is due to the decline in gross profit at Composites which more
than offset improvements in operating income at both Monofilament and Controls.

           INTEREST EXPENSE. Interest expense declined slightly from the prior
year and was 2.6% of sales this year compared to 3.0% of sales during 1997.
While average debt levels were higher this year versus the prior year due to
increased capital expenditures and reduced cash flow generated from operations,
the company took advantage of lower long-term interest rates and refinanced a
significant percentage of its short-term debt thereby realizing interest cost
savings.

           PROVISION FOR INCOME TAXES. The effective income tax rate increased
over the 1997 rate due to a decrease in the tax benefit resulting from
accelerated depreciation methods utilized for tax purposes and an increase in
taxable income associated with life insurance not deductible for tax purposes.

Liquidity and Capital Resources

           Cash provided by operating activities declined to $56,653 this year
compared with $680,191 in the 1998 fiscal year. The decline in cash provided was
primarily due to a pre-tax loss of $1,689,625 in the current year versus pre-tax
income of $198,542 last year. Decreases in accounts receivable and inventories
totaling $1,015,687 mitigated the impact that the pre-tax loss had on cash
provided by operating activities in the current year.

           Cash used by investing activities declined to $640,140 this year
compared to $1,233,489 in the prior year primarily due to a reduced investment
in fixed assets. Capital spending by the industrial products segment was
dramatically reduced in the current year compared to 1998 due to lower sales and
operating profits. Capital spending at the controls and electronics segment was
little changed in 1999 compared with 1998 as spending on equipment to expand
electronics capabilities and capacity has occurred over the two-year period. In
August, 1999, Glassmaster Controls Company, Inc. committed to acquire additional
circuit board assembly equipment at a cost of approximately $200,000. This
equipment will be acquired during the first and second quarter of the 2000
fiscal year and will be funded by five-year term debt previously committed. No
other material commitments for capital expenditures existed at fiscal year-end.

           Net cash provided by financing activities was $566,978 this year
compared with $577,032 last year. In the prior year period, the Company
restructured its debt by refinancing approximately $2.4 million of existing
long-term debt and converting $2.6 million of existing short-term lines of
credit into a single $5.0 million ten-year term loan. The 1998 debt
consolidation and restructuring provided additional cash to finance capital
additions and the Company renewed its $2.5 million short-term revolving line of
credit for an additional three-year period, which now continues until July,
2001. In 1999, net cash provided by financing activities primarily resulted from
borrowings against the revolving lines of credit and additional term-loan
financing for equipment purchases at Controls.

           Due to disappointing operating results and non-recurring charges
incurred by the industrial products segment, resulting in a current year
consolidated net loss of $995,984, the Company is in violation of certain
financial covenants contained in its primary lending agreements. These lending
agreements currently provide a revolving working capital line of credit and
long-term equipment and real estate financing for the industrial products
segment in South Carolina. Because the Company is in violation of these loan
covenants, the Company is in technical default of the lending agreements and
under the terms thereof, the lending institution(s) can impose additional
restrictions and penalties on the Company, including terminating the
agreement(s) and demanding full payment of all outstanding obligations under the
loan(s). If this demand for payment would occur, the Company would be forced to
locate alternative sources of funding to continue normal operations at the
industrial products segment. There is no assurance that new sources of funding
could be arranged under such circumstances or that revised financing agreements
would contain terms as favorable to the Company as the current agreement(s). The
Company has requested temporary waivers for the loan covenant violations from
the lending institutions involved. As of the date of this report, the Company
has not yet received a written waiver notice from the lenders, but has been
verbally assured the written waiver is forthcoming.

           The Company currently anticipates that its cash requirements during
the 2000 fiscal year will be provided from operations and from borrowings under
existing and committed credit lines.


<PAGE>   8



Item 6.  Management's Discussion and Analysis (Cont'd)

                  YEAR 2000 DISCLOSURE. The Company began working on the Year
2000 Compliance Issue in early 1998. The plan was divided into three separate
phases: (1) The Internal Assessment Phase, whereby the Company's internal
information systems were analyzed and non-Year 2000 compliant hardware and
software identified and scheduled for upgrade or replacement. (2) The Vendor
Assessment Phase, which involved contacting all strategic suppliers, service
providers, and trading partners to inquire and subsequently receive assurances
(or intentions) regarding their Year 2000 compliance. (3) The Upgrade,
Implementation, & Testing Phase, whereby all non-compliant hardware and software
systems were upgraded or replaced, then implemented into normal business
operations, and subsequently tested for Year 2000 compatibility.

The Internal Assessment Phase was completed in the first quarter of 1998. This
assessment produced several areas of vulnerability, including network operating
systems, the Company's basic accounting package, and various desktop software
applications. In addition, minor hardware issues with personal computers and
certain peripherals, as well as some non-IT related hardware concerns were
exposed.

Although the Vendor Assessment Phase was completed in the fourth quarter of
1998, the Company continuously monitors the status of all critical suppliers and
service providers, to insure they are on schedule to complete their own
compliance efforts. Concerns regarding utilities fall within this ongoing
assessment phase, in that, the inability of utility companies to supply
uninterrupted power, fuel, and water on and after January 1, 2000 is critical to
the Company's ability to maintain operations. In addition, financial
institutions fall within this scope, as their inability to provide basic
services would also have a material impact on the Company's operations. To date,
the company is not aware of any external agent with Year 2000 issues that would
materially impact the Company's results of operations. However, the Company has
no way of ensuring that external agents will be Year 2000 ready. Furthermore,
the inability of external agents to complete Year 2000 initiatives in a timely
fashion could have material impact on the Company. Other than utility providers
and financial institutions as outlined above, the effect of non-compliance by
external agents can not be determined. The Company is currently establishing
contingency plans to mitigate any risks posed by the non-compliance of external
agents. These plans will be continuously reviewed and modified as needed
throughout the end of 1999 and into the first quarter of 2000.

The Upgrade, Implementation, & Testing Phase, which was begun in the second
quarter of 1998, is approximately 95% complete as of October 31, 1999. In fact,
all mission-critical IT and non-IT systems are currently compliant, pending
final enterprise-wide testing for compatibility and interoperability, scheduled
to be completed by December 15, 1999. This includes the Company's basic
accounting system, including customer order management, purchasing and
procurement, inventory management, accounting and finance, product
manufacturing, distribution and logistics, budgeting and planning, and
personnel/payroll. All critical network system hardware and software has been
upgraded and implemented into daily operations. All desktop PC hardware and
software has been upgraded and implemented. All essential manufacturing and
warehousing operations are currently compliant, including process control,
material handling, quality control, diagnostic & testing, and health & safety.
This assessment is based on manufacturers test results and vendor
certifications. The company can not be certain that information provided by
these sources is accurate. Therefore, the Company is formalizing contingency
plans to preclude any problems arising from non-compliant hardware or software
in both IT and non-IT systems. These plans are currently under development and
should be finalized by December 15, 1999. Enterprise-wide testing of critical
systems for compatibility and interoperability is ongoing, and will be completed
by December 15, 1999.

The Company is unable to determine at this time whether the consequences of Year
2000 failures will have a material impact on the Company's results of
operations, liquidity, or financial condition due to the general uncertainty
inherent in the Year 2000 problem. The Company's Year 2000 compliance plan is
expected to significantly reduce this level of uncertainty. The Company believes
that, with the implementation of new business systems, Year 2000 readiness of
its primary vendors and service providers, and completion of the Year
2000-compliance plan as scheduled, it will maintain normal operations. Although
there is no reason to question the compliance plans presented by the Company's
utility providers or financial institutions, the inability of either of these to
provide basic services for an extended period would have a significant impact on
the Company's operations presenting a "worst case scenario" that could be
potentially damaging.


<PAGE>   9



Item 7.  Financial Statements

           Financial Statements of Glassmaster Company and the Notes to
Financial Statements for the fiscal years ended August 31, 1999 and 1998 appear
on pages 12 through 22, the Index to the Exhibits and Exhibits appear on pages
24 through 26, and the Report of Independent Auditors appears on page 23 of this
report.

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

           There have been no changes in or disagreements with accountants on
accounting financial disclosures.

                                    PART III

Items 9, 10, 11, and 12. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16 (a) of the Exchange Act; Executive
Compensation; Security Ownership of Certain Beneficial Owners and Management;
and Certain Relationships and Related Transactions.

           Information for items 9-12 of this report appears in the Proxy
Statement for the 2000 Annual Meeting of Shareholders to be held on January 21,
2000 and is incorporated herein by reference.

                                     PART IV

Item 13.  Exhibits and Reports on Form 8-K

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

<TABLE>
<CAPTION>
        Exhibit No.                        Exhibit
        -----------                        -------
       <S>            <C>
           3.1        Amended and Restated Certificate of Incorporation of the
                      Company, filed as Exhibit 3.1 to Form 10-K for the year
                      ended August 31, 1991 and incorporated herein by
                      reference.

           3.2        Amended and Restated Bylaws of the Company, filed as
                      exhibit 3.2 to Form 10-K for the year ended August 31,
                      1991 and incorporated herein by reference.

           10         Amended and restated Glassmaster Company 1992 Incentive
                      Stock Option Plan, filed as exhibit 10 to Form 10-KSB for
                      the year ended August 31, 1993 and incorporated herein by
                      reference.

           11         Statement re Computation of Per Share Earnings

           21         Subsidiaries of the Registrant

           27         Financial Data Schedule (SEC use only)
</TABLE>

    (b)    Reports on Form 8-K

           No reports on Form 8-K were filed during the fourth quarter of the
           fiscal year ended August 31, 1999.


<PAGE>   10

                                   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.


GLASSMASTER COMPANY



<TABLE>
<S>                                         <C>
By   /s/ Raymond M. Trewhella               By   /s/ Steven R. Menchinger
   ---------------------------------            ----------------------------------
    Raymond M. Trewhella, President               Steven R. Menchinger, Corporate
     (Principal Executive Officer)                   Controller and Treasurer
                                                   (Principal Financial Officer)
                                                   (Principal Accounting Officer)

Date      November 29, 1999                 Date       November 29, 1999
     -------------------------------             ---------------------------------
</TABLE>



                  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant, and in the capacities, and on the dates indicated.

<TABLE>
<S>                                         <C>
By   /s/ Stephen W. Trewhella               By    /s/ Raymond M. Trewhella
   ---------------------------------            ----------------------------------
     Stephen W. Trewhella, Director             Raymond M. Trewhella, Director

Date      November 29, 1999                 Date       November 29, 1999
     -------------------------------             ---------------------------------



By     /s/ H. D. Harrelson                  By     /s/ Melvin L. Chavis
   ---------------------------------            ----------------------------------
       H. D. Harrelson, Director                  Melvin L. Chavis, Director

Date      November 29, 1999                 Date       November 29, 1999
     -------------------------------             ---------------------------------



By       /s/ James F. Kane                  By         /s/ John Taylor
   ---------------------------------            ----------------------------------
        James F. Kane, Director                      John Taylor, Director

Date      November 29, 1999                 Date       November 29, 1999
     -------------------------------             ---------------------------------
</TABLE>






<PAGE>   11







                               GLASSMASTER COMPANY

                                  LEXINGTON, SC

                              FINANCIAL STATEMENTS

                   FISCAL YEARS ENDED AUGUST 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                Page No.
                                                                --------
<S>                                                             <C>
            Balance Sheet .................................         12
            Statement of Stockholders Equity ..............         13
            Income Statement ..............................         14
            Statement of Cash Flows .......................         15
            Notes to Financial Statements .................      16-22

            Independent Auditor's Report ..................         23
</TABLE>



<PAGE>   12


                               GLASSMASTER COMPANY
                                  LEXINGTON SC
                                  BALANCE SHEET
                            AUGUST 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                       August 31, 1999                 August 31, 1998
                                                  -------------------------        ------------------------
<S>                                                <C>             <C>              <C>             <C>
Assets
Cash                                                               $  126,297                       $  142,806
Accounts Receivable - Trade                        $2,737,998                       $3,433,186
Less:  Allowance for Doubtful Accts                    61,643       2,676,355           59,844       3,373,342
                                                   ----------                       ----------
Accounts Receivable - Other                                           144,884                            6,876
Inventories                                                         2,832,108                        3,150,406
Prepaid Expenses                                                       70,110                           58,322
Income Tax Refund Receivable                                           83,515                                0
Deferred Income Taxes                                                  15,878                           22,107
                                                                  -----------                      -----------
Current Assets                                                      5,949,147                        6,753,859
Fixed Assets (Net of Depreciation)
   Manufacturing Property                                           5,696,875                        6,184,946

Other Assets                                                          630,276                          532,788
                                                                  -----------                      -----------
Total Assets                                                      $12,276,298                      $13,471,593
                                                                  ===========                      ===========
Liabilities
Accounts Payable                                                    1,404,325                        1,601,630
Accrued Expenses                                                      297,787                          258,932
Accrued Income Taxes                                                        0                           16,915
Notes and Mortgages Payable - Current                               2,913,952                        1,882,092
                                                                  -----------                      -----------
Current Liabilities                                                 4,616,064                        3,759,569

Other Liabilities
   Notes and Mortgages Payable - Long Term          4,804,624                        5,272,306
   Deferred Income Taxes                                    0       4,804,624          590,924       5,863,230
                                                  -----------     -----------       ----------     -----------
Total Liabilities                                                   9,420,688                        9,622,799

Stockholders' Equity
Capital Stock (Authorized 5,000,000 Shares
   $.03 Par - 1,630,696 (1999), 1,627,896 (1998)
   Shares Issued and Outstanding)                      48,921                           48,837
Paid-In Capital                                     1,357,840                        1,355,124
Donated Capital                                       124,210                          124,210
Retained Earnings                                   1,324,639       2,855,610        2,320,623       3,848,794
                                                     --------     -----------       ----------     -----------
Total Liabilities and Equity                                      $12,276,298                      $13,471,593
                                                                  ===========                      ===========
</TABLE>







The accompanying notes to financial statements are an integral part of this
statement.


<PAGE>   13




                               GLASSMASTER COMPANY
                                  LEXINGTON SC
                        STATEMENT OF STOCKHOLDERS EQUITY
                   FISCAL YEARS ENDED AUGUST 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                      August 31, 1999     August 31, 1998
                                      ---------------     ---------------
<S>                                     <C>                  <C>
Capital Stock:
   Balance - September 1                $    48,837          $   48,603
   Proceeds from Sale of Shares
      Under Stock Option Plan                    84                 234
                                        -----------          ----------
   Balance - August 31                       48,921              48,837
                                        -----------          ----------
Additional Paid In Capital:
   Balance - September 1                  1,355,124           1,344,058
   Proceeds from Sale of Shares
      Under Stock Option Plan                 2,716              11,066
                                        -----------          ----------
   Balance - August 31                    1,357,840           1,355,124
                                        -----------          ----------
Donated Capital:                            124,210             124,210
                                        -----------          ----------
Retained Earnings:
   Balance - September 1                  2,320,623           2,250,026
   Net Income (Loss)                       (995,984)            119,434
   Common Stock Dividends Paid                                  (48,837)
                                        -----------          ----------
   Balance - August 31                    1,324,639           2,320,623
                                        -----------          ----------
Total Stockholders Equity               $ 2,855,610          $3,848,794
                                        ===========          ==========
</TABLE>




The accompanying notes to financial statements are an integral part of this
statement.


<PAGE>   14




                               GLASSMASTER COMPANY
                                  LEXINGTON SC
                                INCOME STATEMENT
                   FISCAL YEARS ENDED AUGUST 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                      August 31, 1999      August 31, 1998
                                                      ---------------      ---------------
<S>                                                    <C>                   <C>
Sales                                                  $ 21,024,882          $24,548,803
  Cost of Sales                                          18,998,635           20,609,145
                                                       ------------          -----------
Gross Profit on Sales                                     2,026,247            3,939,658

Expenses
  Selling Expense                                         1,131,315            1,234,059
  General and Administrative and Other Expense            1,889,672            1,834,293
  Provision for Doubtful Accounts                            25,879               44,358
                                                       ------------          -----------
      Total Expenses                                      3,046,866            3,112,710
                                                       ------------          -----------
Income (Loss) from Operations                            (1,020,619)             826,948

  Interest Expense                                          669,006              628,406
                                                       ------------          -----------
Income (Loss) Before Income Taxes                        (1,689,625)             198,542

Provision for Income Taxes
  Current                                                   (83,515)              35,094
  Deferred                                                 (610,126)              44,014
                                                       ------------          -----------
      Total - Provision for Income Taxes                   (693,641)              79,108
                                                       ------------          -----------
Net Income (Loss)                                      $   (995,984)         $   119,434
                                                       ============          ===========
Earnings (Loss) Per Common Share
  (Basic and Diluted)
  Income from Continuing Operations                    $       (.61)         $       .07
                                                       ============          ===========
      Net Income (Loss) Per Share                      $       (.61)         $       .07
                                                       ============          ===========
</TABLE>



The accompanying notes to financial statements are an integral part of this
statement.


<PAGE>   15


                               GLASSMASTER COMPANY
                                  LEXINGTON SC
                             STATEMENT OF CASH FLOWS
                   FISCAL YEARS ENDED AUGUST 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                               August 31, 1998     August 31, 1997
                                                               ---------------     ---------------
<S>                                                               <C>                <C>
Cash Flows From Operating Activities
   Net Income (Loss)                                              ($995,984)         $   119,434
   Adjustments to Reconcile Net Income to Net Cash
    Provided (Used) by Operating Activities:
      Depreciation & Amortization                                   910,324              808,689
      Increase (Decrease) in Deferred Income Taxes                 (610,126)              44,014
      (Loss) Gain on Sale of Assets                                 145,829              (16,655)
      Changes in Operating Assets and Liabilities:
         Accounts Receivable Decrease (Increase)                    696,987              (23,292)
         Accounts Receivable - Other Decrease (Increase)           (138,008)
         Inventories Decrease (Increase)                            318,700             (409,638)
         Prepaid Expenses Decrease (Increase)                       (12,190)             (47,032)
         Income Tax Refund Receivable Decrease (Increase)           (83,515)
         Accounts Payable Increase (Decrease)                      (199,746)             179,868
         Accrued Expenses Increase (Decrease)                        41,297               19,642
         Income Taxes Payable Increase (Decrease)                   (16,915)               5,161
                                                                  ---------          -----------
   Net Cash Provided (Used) by Operating Activities                  56,653              680,191
                                                                  ---------          -----------
Cash Flows From Investing Activities
   Cash Payments for the Purchase of Fixed Assets                  (524,589)          (1,183,642)
   Cash Payments for the Procurement of Patents                                          (11,999)
   Cash Received from Sale of Assets                                                      16,655
   Cash Surrender Value - Life Insurance                           (115,551)             (54,503)
                                                                  ---------          -----------
   Net Cash Provided (Used) by Investing Activities                (640,140)          (1,233,489)
                                                                  ---------          -----------
Cash Flows From Financing Activities
   Proceeds From Issuance of Common Stock                             2,800               11,300
   Proceeds From Issuance of Short-term Debt                        200,000              300,000
   Proceeds From Issuance of Long-Term Debt                         266,736            5,110,712
   Principal Payments on Short-Term Debt                                                (250,000)
   Principal Payments on Long-Term Debt                            (629,760)          (3,274,162)
   Dividends Paid                                                                        (48,837)
   Net Increase (Decrease) in Line of Credit                        727,202           (1,228,592)
   Cash Payments for Loan Closing Costs                                                  (43,389)
                                                                  ---------          -----------
   Net Cash Provided (Used) by Financing Activities                 566,978              577,032
                                                                  ---------          -----------
Net Increase (Decrease) in Cash                                     (16,509)              23,734

Cash at Beginning of Year                                           142,806              119,072
                                                                  ---------          -----------
Cash at End of Year                                               $ 126,297          $   142,806
                                                                  =========          ===========

Supplemental Disclosures of Cash Flow Information
   Cash Paid For:
     Interest (Net of Amount Capitalized)                         $ 675,880          $   616,895
     Income Taxes Paid                                               16,915               26,439
</TABLE>





The accompanying notes to financial statements are an integral part of this
statement.


<PAGE>   16

                               GLASSMASTER COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 1999 AND 1998

Note 1.  Summary of Significant Accounting Policies

                  Description of Business

                     Glassmaster Company is a manufacturer and supplier of
                  extruded (thermoplastic) synthetic monofilament, pultruded
                  (thermoset) fiberglass products and composites. Glassmaster
                  Controls Company, Inc., its wholly owned subsidiary, designs,
                  manufactures, and assembles a wide range of electronic and
                  mechanical industrial controls and electronic testing
                  equipment. Information about the Company's business operating
                  segments is presented in more detail in Note 13.

                  Use of Estimates

                     The preparation of financial statements in conformity with
                  generally accepted accounting principles requires management
                  to make estimates and assumptions that affect certain reported
                  amounts and disclosures. Accordingly, actual results could
                  differ from those estimates.

                  Principles of Consolidation

                     The consolidated financial statements for the year ended
                  August 31, 1999 and 1998, include the accounts of Glassmaster
                  Company and its wholly owned subsidiary, Glassmaster Controls
                  Company, Inc. which was organized and incorporated under the
                  laws of the State of Michigan, on October 28, 1988. All
                  material intercompany transactions have been eliminated.

                  Revenue Recognition

                     The Company recognizes revenue from product sales upon
                  shipment to its customers.

                  Reclassifications

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

                  Cash and Cash Equivalents

                     For the purpose of the statement of cash flows, the company
                  considers all short-term debt securities purchased with a
                  maturity of three months or less to be cash equivalents.

                  Accounts Receivable and Allowances

                     Accounts receivable are the result of the Company's sales
                  activities. The company provides an allowance for losses on
                  trade receivables based on a review of its past collection
                  history. Accounts receivables have been reduced by an
                  allowance for doubtful accounts in the amount of $61,643 and
                  $59,844 for the years ended August 31, 1999 and 1998,
                  respectively.

                  Inventories

                     The method of determining the amount of inventories is the
                  lower of cost or market on a first-in, first-out basis.

                     Inventories as shown on the Balance Sheet are classified
                  below:

<TABLE>
<CAPTION>
                                             1999         1998
                                         ----------   ----------
<S>                                      <C>          <C>
                     Materials           $1,312,182   $1,714,351
                     Work in Process        513,101      478,137
                     Finished Products    1,006,825      957,918
                                         ----------   ----------
                     Total               $2,832,108   $3,150,406
                                         ==========   ==========
</TABLE>



<PAGE>   17



                               GLASSMASTER COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 1999 AND 1998

Note 1.  Summary of Significant Accounting Policies (Cont'd)

                  Advertising

                     The company follows the policy of charging the costs of
                  advertising to expense as incurred. Advertising expense was $
                  73,578 and $113,040 for the years ended August 31, 1999 and
                  1998, respectively.

                  Research and Development

                     Research and development costs are charged to expense as
                  incurred. The costs incurred for the years ended August 31,
                  1999 and 1998 were $912,173 and $854,301, respectively. These
                  costs have generally been charged to cost of goods sold.

                  Long-Lived Assets

                     The Company periodically evaluates long-lived assets for
                  impairment of value by assessing current and future cash flows
                  including the consideration of factors such as business
                  trends, prospects and market conditions.

                  Income Taxes

                     Income taxes are provided for in accordance with SFAS No.
                  109, "Accounting for Income Taxes" which requires that income
                  taxes be provided for using the liability method.

                  Newly Issued Accounting Standards

                     In June 1997, the Financial Accounting Standards Board
                  issued SFAS No. 131, "Disclosures about Segments of an
                  Enterprise and Related Information," which establishes
                  standards for the way that public business enterprises report
                  information about operating segments in annual and interim
                  financial statements. The Company has adopted SFAS No. 131 in
                  the 1999 fiscal year. See Note 13 for disclosures relative to
                  the Company's business segments.

Note 2.  Fixed Assets

                     The basis for determining the values of fixed assets is
                  cost. Included in land is property valued at $100,374 that was
                  donated to the Company by Lexington County, South Carolina.

                     The provision for depreciation charged against income for
                  the fiscal years ended August 31, 1999 and 1998, totaled
                  $877,437 and $801,286, respectively. The company computes
                  depreciation using the straight line method over the estimated
                  useful lives of the assets as indicated below. The company
                  utilizes applicable accelerated methods for tax purposes.

<TABLE>
<CAPTION>
                                                                              Estimated Useful
                                                   1999            1998            Lives
                                                -----------    ------------    --------------
<S>                                             <C>            <C>             <C>
                     Land                       $   190,274    $    190,274    N/A
                     Buildings                    3,820,989       3,819,937    30 to 40 years
                     Furniture and Fixtures         439,557         454,116    5 to 7 years
                     Automotive Equipment           272,443         312,419    3 to 5 years
                     Plant Equipment              6,635,805       6,566,489    7 to 10 years
                     Tooling & Dies                 637,566         908,885    3 to 5 years
                                                ---------------------------
                     Total                       11,996,634      12,252,120
                     Less:
                     Accumulated Depreciation    (6,299,759)     (6,067,174)
                                                ---------------------------
                     Fixed Assets, net          $ 5,696,875    $  6,184,946
                                                ===========================
</TABLE>



<PAGE>   18

                               GLASSMASTER COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 1999 AND 1998

Note 3.  Income Taxes

                     Components of the provision (benefit) for income taxes on
                  continuing operations are shown below:

<TABLE>
<CAPTION>
                                        1999                  1998
                               ---------------------    ------------------
                                Current     Deferred    Current   Deferred
                               ---------   ---------    -------   --------
<S>                            <C>         <C>          <C>       <C>
                     Federal   $(83,515)   $(504,075)   $35,094   $ 47,361
                     State                  (106,051)               (3,347)
                              ----------------------------------------------
                     Total     $(83,515)   $(610,126)   $35,094   $ 44,014
                              ==============================================
</TABLE>

                     The principal elements accounting for the difference
                  between the statutory federal income tax rate and the
                  effective rates are:

<TABLE>
<CAPTION>
                                                                       1999        1998
                                                                     --------    --------
<S>                                                                  <C>         <C>
                     Expected tax at statutory rates                             $ 67,504
                     Refund of tax due to NOL carryback              $(83,515)
                     Alternative Minimum Tax Credit                               (13,689)
                     Increase (decrease) resulting from effect of:
                         Depreciation                                             (13,394)
                         CSV Life Insurance over premiums paid                       (707)
                         Other                                                     (4,620)
                                                                    -----------------------
                     Current Tax Provision                           $(83,515)   $ 35,094
                                                                    =======================
</TABLE>


                     For South Carolina tax purposes a net operating loss
                  carry-forward of $2,402,150 is available for future periods.
                  The carry-forward will expire in the year ended August 31,
                  2014. For Federal tax purposes, the corporation sustained a
                  net operating loss of $1,805,825. A total of $ 162,421 was
                  used to carryback the NOL to tax years 1996 and 1997 resulting
                  in a refund of previously paid taxes of $83,515. The remaining
                  NOL of $1,643,404 is available for future periods and will
                  expire in the year ended August 31, 2019.

                     For income tax reporting, an Alternative Minimum Tax credit
                  of $16,446 is indefinitely available to reduce future regular
                  taxes. For financial statement reporting, the credit has been
                  recognized as a deferred tax asset.

                     The net deferred tax assets and liabilities consisted of
                  the following components as of August 31, 1999 and 1998.

<TABLE>
<CAPTION>
                                                                   1999         1998
                                                                ---------    ---------
<S>                                                             <C>          <C>
                     Deferred Tax Assets Relating to:
                         Allowance for Doubtful Accounts        $  15,878    $  22,107
                         Alternative Minimum Tax Credit            16,446       16,446
                         Federal and State NOL carryforwards      649,679       14,056
                     Deferred Tax Liabilities Relating to:
                         Property and Equipment                  (610,192)    (590,924)
                                                              ----------------------------
                     Net Deferred Tax Asset (Liability)         $  71,811    $(538,315)
                                                              ============================
</TABLE>

                     The components giving rise to the deferred tax assets and
                  liability described above have been included in the
                  accompanying balance sheet as of August 31, 1999 and 1998 as
                  follows:

<TABLE>
<CAPTION>
                                            1999       1998
                                         ---------    -------
<S>                                      <C>          <C>
                     Current Assets      $  15,878    $22,107
                     Other Assets           55,933     30,502
                     Other Liabilities               (590,924)
</TABLE>

Note 4.  Accounts Receivable - Other

                     Accounts Receivable - Other consists mainly of the
                  receivable due from the sale of certain assets related to the
                  discontinued antenna product line. This transaction is
                  discussed in more detail in Note 12.

Note 5.  Other Assets

                     Other assets are composed of the following:

<TABLE>
<CAPTION>
                                                        1999       1998
                                                      --------   --------
<S>                                                   <C>        <C>
                     CSV Life Insurance               $507,811   $392,261
                     Deferred Tax Assets                55,933     30,502
                     Loan Fees, net of Amortization     52,125     58,026
                     Other                              14,407     51,999
                                              --------------------------------
                     Total                            $630,276   $532,788
                                              ================================
</TABLE>



<PAGE>   19




                               GLASSMASTER COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 1999 AND 1998

Note 6.  Notes and Mortgages Payable

                     Substantially all property, plant and equipment and a
                  portion of CSV Life Insurance are pledged as collateral for
                  the scheduled borrowings. In addition, inventories and
                  customer receivables are pledged as collateral to provide the
                  company and it's subsidiary with revolving lines of credit for
                  working capital requirements. The amount available for
                  borrowings under these lines of credit varies with
                  fluctuations in the amount of inventories on hand and customer
                  receivables outstanding with maximum available credit lines of
                  $2,500,000 for the company and $650,000 for the company's
                  subsidiary. The balances as of August 31, 1999 were $1,388,598
                  and $440,000 and the balances as of August 31, 1998 were
                  $751,396 and $350,000. These credit agreements are subject to
                  renegotiation and renewal on a three-year basis. The current
                  contracts will expire July 1, 2001 and January 30, 2000,
                  respectively.

                     Special provisions of the loan agreements restrict payment
                  of cash dividends without the consent of the lender as well as
                  providing for minimum cash flow requirements and maximum debt
                  to net worth requirements in addition to providing for other
                  minimum financial ratio requirements. The company was in
                  violation of several of these loan covenants as of August 31,
                  1999. The company's lenders have indicated that temporary
                  waivers for these violations for a one year period will be
                  granted.

                     The following table sets forth the Company's indebtedness
                  at the end of fiscal years 1999 and 1998:

<TABLE>
<CAPTION>
                                                                         1999                     1998
                                                         --------------------------------------------------------
                                                                Current     Long-Term     Current     Long-Term
                                                               ----------   ----------   ----------   ----------
<S>                                                            <C>          <C>          <C>          <C>
                     Mortgages, interest from 8.15% to 8.8%
                     fixed, maturities to 2008                 $  434,624   $4,482,521   $  361,892   $4,906,783

                     Notes, interest from prime + .5% to
                     prime + 1.25%, due within 1 year           1,828,598                 1,101,396

                     Installment Notes, interest from 1.9%
                     to prime + 1%, maturities to 2002            198,630      161,473      160,511      202,793

                     Local Government 2nd Mortgage, interest
                     at 3% fixed, maturity Nov. 9, 2004             2,100      160,630        8,293      162,730

                     Notes from Individuals, interest
                     ranging from 7.75% to 8.5%, maturities
                     within 12 months                             350,000                   250,000

                     Note from Officer, interest 8.25% due
                     within 1 year                                100,000
                                                         --------------------------------------------------------
                     Total                                     $2,913,952   $4,804,624   $1,882,092   $5,272,306
                                                         ========================================================
</TABLE>


                     The Prime interest rate was 8.50% for the years ended
                  August 31, 1999 and 1998.

                     The principal maturities on the notes and mortgages payable
                  over the next five years is as follows:

<TABLE>
<CAPTION>
                       Fiscal Year Ending             Amount
                       ------------------             ------
                       <S>                          <C>
                              2000                  $2,913,952
                              2001                     766,567
                              2002                     522,583
                              2003                     537,994
                              2004                     543,443
                              After 2004             2,434,037
                                                    ----------
                              Total                 $7,718,576
                                                    ==========
</TABLE>


<PAGE>   20


                               GLASSMASTER COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 1999 AND 1998

Note 7.  Leases

                     The Company entered into an operating lease for various
                  pieces of equipment on August 19, 1997. The lease calls for
                  monthly payments of $11,171 for a period of sixty months.
                  Future minimum lease payments under the lease are as follows:

<TABLE>
<CAPTION>
                               Fiscal Year Ending       Amount
                               ------------------       ------
<S>                                                    <C>
                                       2000            $134,052
                                       2001             134,052
                                       2002             122,881
                                                      ---------
                                      Total             390,985
                                                      =========
</TABLE>


Note 8.  Stock Options

                     The Company has an incentive stock option plan. Under the
                  plan the Company may grant options for up to 260,000 shares of
                  common stock. Options granted under the plan become
                  exercisable at varying percentages from date of grant through
                  expiration, either at termination of employment or ten years
                  after date of grant. The exercise price of each option is
                  equal to the market price of the company's stock on the date
                  of grant. The exercise prices for the options range from $1 to
                  $4.

                     Following is a summary of the status of the incentive stock
                  options for the years ended August 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                               1999                     1998
                                                      ----------------------   --------------------
                                                                    Weighted               Weighted
                                                                     Average                Average
                                                      Number of     Exercise   Number of   Exercise
                                                        Shares        Price      Shares      Price
                                                      ---------     --------   ---------   --------
<S>                                                     <C>         <C>          <C>        <C>
                     Outstanding-Beginning of Year      36,500      $   3.34     49,700     $   2.74
                     Exercised                          (2,800)         1.00      7,800         1.45
                     Forfeited                                                   (5,400)        3.22
                                                     -------------------------------------------------
                     Outstanding-End of Year            33,700          3.54     36,500         3.34
                                                     =================================================
</TABLE>

                     Following is a summary of the status of the incentive
                  options outstanding at August 31, 1999:

<TABLE>
<CAPTION>
                                      Outstanding Options                     Exercisable Options
                       -----------------------------------------------       --------------------
                                               Weighted
                                                Average       Weighted
                                               Remaining       Average
                      Exercise                Contractual     Exercise                   Exercise
                        Price      Number         Life         Price         Number       Price
                        -----      ------         ----         -----         ------       -----
<S>                                <C>        <C>             <C>            <C>         <C>
                       $1.00        5,200       3 years        $1.00          5,200       $1.00
                        4.00       28,500       5 years         4.00         22,800        4.00
</TABLE>


Note 9.  Earnings Per Share

                      The weighted average number of shares used in the
                  computation of basic and diluted earnings per common share
                  were 1,629,354 in 1999 and 1,625,748 in 1998. Options on
                  33,700 and 36,500 shares of common stock as of August 31, 1999
                  and 1998 respectively were not included in computing diluted
                  earnings per share because their effects were antidilutive.


<PAGE>   21



                               GLASSMASTER COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 1999 AND 1998

Note 10. Defined Contribution Plan

                     The Company established a qualified 401(K) defined
                  contribution plan effective January 1, 1990. The plan year
                  ends on December 31. Participation in the plan is voluntary
                  and employees may contribute from 1% to 15% of eligible
                  compensation on a tax-deferred basis. The amount to be
                  contributed by the company will be determined each year prior
                  to December 1. The proposed match for the plan year 1998 is
                  $.25 cents for each $1.00 of employee contributions up to a
                  maximum 6% of eligible compensation.

                     The plan provides for the company to make a discretionary
                  contribution on behalf of all eligible employees (those with
                  one full year of active service) regardless of whether they
                  have elected to voluntarily participate in the plan. This
                  discretionary contribution will be allocated based on a ratio
                  of the employees total W-2 earnings to the total W-2 earnings
                  of all eligible employees. Any discretionary contribution will
                  be dependent upon the overall profitability of the corporation
                  and will be made with the approval of the Board of Directors.

                     The amount of expense charged to operations was $40,471 for
                  the year ended August 31, 1999 and $82,285 for 1998.

Note 11. Financial Instruments

                  (A) Balance Sheet Financial Instruments

                     The carrying amount reported in the balance sheets for cash
                  and cash equivalents, accounts receivable and accounts payable
                  approximates fair value because of the immediate or short-term
                  maturity of these financial instruments. The carrying amount
                  for long-term debt approximates fair value because the
                  underlying instruments are primarily at current market rates.

                  (B) Concentration of Credit Risk

                     Financial instruments that potentially subject the Company
                  to concentrations of credit risk consist of accounts
                  receivable. All receivables originate from the Company's
                  normal business activities as described in note one. These
                  receivables are unsecured.

Note 12. Discontinued Product Lines and Charges Against Earnings

                     In the fourth quarter of 1999, the Company announced its
                  decision to discontinue the manufacture and sales of its
                  marine antennas and other low margin product lines included in
                  its Industrial Products operating segment. A pre-tax charge of
                  $713,557 was included in income from operations. Of this
                  amount, $599,260 was charged to cost of goods sold to
                  write-down certain inventories associated with the
                  discontinued product lines to estimated net realizable value.
                  Concurrently, the Company began the process of selling and
                  disposing of the related assets. On October 20, 1999, the
                  Company reached a final agreement to sell the inventory,
                  equipment and tooling, customer lists, and other assets
                  associated with the marine antenna product line for $170,000.
                  The sale resulted in a loss of $114,297, which has been
                  included in general, and administrative expenses and accounts
                  for the balance of the pre-tax charge. The Company had
                  received $32,056 of the sales price prior to year end. The
                  remaining $137,944 of the sales price has been recorded as an
                  other receivable.

Note 13. Business Segments

                     The company has adopted FASB No. 131 relating to
                  disclosures about segments of an enterprise and related
                  information effective for the year ended August 31, 1999. The
                  Company classifies its business into two segments based on
                  products offered and geographic location; Industrial Products
                  and Controls and Electronics. The Industrial Products segment
                  produces extruded synthetic monofilament line, pultruded
                  fiberglass products, and composites that are sold to original
                  equipment manufacturers and distributors for use in a variety
                  of industrial applications and markets. The Controls and
                  Electronics segment produces flexible cable controls,
                  mechanical and electronic HVAC controls, molded control
                  panels, and electronic testing equipment that is sold to
                  original equipment manufacturers and distributors in the heavy
                  truck, marine, and agricultural industries and is also a
                  contract manufacturer of custom electronic products, including
                  printed circuit boards.

                     The accounting policies of the segments are the same as
                  those described in the summary of significant accounting
                  policies. The Company evaluates performance based on profit or
                  loss from operations before income taxes not including
                  nonrecurring gains and losses. There are currently no
                  significant intersegment sales and transfers, therefore no
                  eliminations have been made to the information below.


<PAGE>   22



                               GLASSMASTER COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 1999 AND 1998

Note 13. Business Segments (Cont'd)

                   Included in the tables below is relevant financial data
                  provided by each reportable segment. The amounts shown in the
                  Other column are generally those expenses and assets which are
                  associated with the Company's corporate headquarters and other
                  entity wide expenses which have not been included in segment
                  information.

<TABLE>
<CAPTION>
                                                                 Year Ended August 31, 1999
                                                     -----------------------------------------------------
                                                     Industrial   Controls &
                                                      Products    Electronics     Other          Total
                                                     ----------   -----------   ----------     -----------
<S>                                                  <C>          <C>           <C>            <C>
                  Segment Assets                    $ 7,545,244   $3,554,726    $1,775,864    $ 12,875,834
                  Expenditures for  Segment
                    Assets                              291,320      207,916        25,353         524,589
                  Depreciation and
                    Amortization                        581,879      264,976        63,469         910,324
                  Research and  Development             865,153       47,020                       912,173
                  Revenues from
                    External Customers               14,563,196    6,461,686                    21,024,882
                  Segment Profit (Loss)                (681,654)     397,403      (736,367)     (1,020,618)
                  Interest Expense                                                                 669,006
                                                                                            ---------------
                  Income (Loss) Before Income
                    Taxes                                                                     $ (1,689,625)
                                                                                            ===============
</TABLE>

<TABLE>
<CAPTION>
                                                                 Year Ended August 31, 1998
                                                     -----------------------------------------------------
                                                     Industrial   Controls &
                                                      Products    Electronics     Other          Total
                                                     ----------   -----------   ----------     -----------
<S>                                                  <C>          <C>           <C>            <C>
                  Segment Assets                    $ 9,167,620   $3,277,619    $1,026,354    $ 13,471,593
                  Expenditures for Segment
                    Assets                              895,978      262,661        25,003       1,183,642
                  Depreciation and
                    Amortization                        507,020      252,419        49,250         808,689
                  Research and Development              828,163       26,138                       854,301
                  Revenues from
                    External Customers               18,181,241    6,367,562                    24,548,803
                  Segment Profit (Loss)               1,175,067      434,093      (782,212)        826,948
                  Interest Expense                                                                 628,406
                                                                                            ---------------
                  Income (Loss) Before Income
                   Taxes                                                                      $    198,542
                                                                                            ===============
</TABLE>

                  Geographic Information
<TABLE>
<CAPTION>
                                                                        Year Ended August 31, 1999
                                                              -------------------------------------------
                                                                                Total         Long-Lived
                                                               Revenues         Assets          Assets
                                                              -----------    ------------     -----------
<S>                                                           <C>            <C>              <C>
                  United States                               $17,745,967    $ 12,276,298     $ 5,696,875
                  Other Foreign Countries                       3,279,015               0               0
</TABLE>



<TABLE>
<CAPTION>
                                                                        Year Ended August 31, 1998
                                                              -------------------------------------------
                                                                                Total         Long-Lived
                                                               Revenues         Assets          Assets
                                                              -----------    ------------     -----------
<S>                                                           <C>            <C>              <C>
                  United States                                $20,975,967   $ 13,471,593     $ 6,184,946
                  Other Foreign Countries                        3,572,836              0               0
</TABLE>

                     Revenues in the above schedule are attributed to countries
                  based on the location of the customer.

                  Major Customer

                  Revenues from one customer of Glassmaster Company's Controls
                  and Electronics segment represent approximately $2,724,865 of
                  the Company's consolidated revenues for the year ended August
                  31, 1999. There were no major customers during the year ended
                  August 31, 1998.

                  .

<PAGE>   23



                          Independent Auditor's Report

To the Board of Directors and Stockholders
Glassmaster Company
Lexington, S.C.  29072

   We have audited the accompanying consolidated balance sheets of Glassmaster
Company and subsidiary as of August 31, 1999 and 1998, and the related
statements of income, stockholders' equity and cash flows for the years then
ended. 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. These standards require that we plan and perform the audit 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 Glassmaster
Company and subsidiary as of August 31, 1999 and 1998, and the consolidated
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.

Brittingham, Dial, and Jeffcoat
Certified Public Accountants
West Columbia, SC
November 3, 1999


<PAGE>   24


                                  Exhibit Index

<TABLE>
<CAPTION>
       Exhibit No.                         Exhibit                                       Sequential Page No.
       -----------                         -------                                       -------------------
<S>                   <C>                                                                <C>
           3.1        Amended and Restated Certificate of Incorporation of the
                      Company, filed as Exhibit 3.1 to Form 10-K for the year
                      ended August 31, 1991 and incorporated herein by
                      reference.

           3.2        Amended and Restated Bylaws of the company, filed as
                      Exhibit 3.2 to Form 10-K for the year ended August 31,
                      1991 and incorporated herein by reference.

           10         Amended and restated Glassmaster Company 1992 Incentive
                      Stock Option Plan, filed as exhibit 10 to Form 10-KSB for
                      the year ended August 31, 1993 and incorporated herein by
                      reference.

           11         Computation of Earnings Per Share for two years ended
                      August 31, 1998 and 1997.

           21         Subsidiaries of the Company.

           27         Financial Data Schedule (SEC use only).
</TABLE>