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


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

                       FOR THE QUARTER ENDED MAY 31, 1998

                                       OR

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

                         COMMISSION FILE NUMBER 0-22720

                              CYCLO3PSS CORPORATION
           (Name of Small Business Issuer as specified in its charter)

                Delaware                              87-0455642
    (State or other jurisdiction of                (I.R.S. Employer
    Incorporation or organization)                  Identification No.)

          3646 West 2100 South
           Salt Lake City, Utah                        84120-1202
 (Address of principal executive offices)              (Zip Code)


            Issuer's telephone number, including area code: (801) 972-9090

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

Securities  registered pursuant to Section 12(g) of the Exchange Act: $.001
Par Value Common Stock

     Check whether the Issuer (1) has filed all reports  required to be filed by
Section 13 or 15(d) of the Exchange  Act during the  preceding 12 months (or for
such shorter period that the registrant was required to file such reports),  and
(2) has been subject to such filing requirements for the past 90 days.Yes x/ No.

Common Stock outstanding at June 30, 1998 - 16,452,008 shares of $.001 par value
Common Stock.


                    DOCUMENTS INCORPORATED BY REFERENCE: NONE

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




<PAGE>




                                   FORM 10-QSB

                       Financial Statements and Schedules
                              Cyclo3pss Corporation

                       For Three Months Ended May 31, 1998

       The following  financial  statements  and schedules of the registrant and
   its consolidated subsidiaries are submitted herewith:

                               PART I - FINANCIAL INFORMATION

                                                               Page of
                                                             Form 10-QSB
   Item 1. Financial  Statements

           Condensed Consolidated Balance Sheets.......................3
           Condensed Consolidated Statements of Operations.............5
           Condensed Consolidated Statements of Cash Flow..............6
           Notes to Condensed Consolidated Financial Statements........7

   Item 2. Management's Discussion and Analysis or
           Plan of Operations.........................................11

                            PART II - OTHER INFORMATION

   Item 1. Legal Proceedings .........................................15

      Item 2Changes in Securities.....................................15

      Item 3Defaults Upon Senior Securities...........................15

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

      Item 5Other Information.........................................15

      Item 6(a).Exhibits..............................................15

      Item 6(b).Reports on Form 8-K...................................15


   CYCLO3PSS CORPORATION


                                      - 2 -

<PAGE>



Cyclo3pss Coroporation
Condensed Consolidated Balance Sheets
(UNAUDITED)
-------------------------------------------------------------------------------





                                                       May 31      February 28
                                                        1998          1998
                                                    ------------ --------------
  Assets

   Current assets:

      Cash                                            $650,704       $573,161
      Accounts receivable                              232,099        113,090
      Inventories                                      149,513        152,026
      Prepaid expenses                                  95,796         75,526
                                                     ----------- --------------
  Total current assets                               1,128,112        913,803

  Property and equipment, net                          224,399        236,780

  Other assets:
      Goodwill, net                                    254,766        311,887
      Acquired patents, net                            358,380        368,941
      Developed patents and other, net                 131,394        128,730
                                                    ------------ --------------
                                                     $2,097,051    $1,960,141
                                                    ============ ==============







                                      - 3 -

<PAGE>




   CYCLO3PSS CORPORATION
   Condensed Consolidated Balance Sheets (continued)
   (UNAUDITED)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                       May 31       February 28
                                                                        1998           1998 
                                                                   ------------------------------
  <S>                                                                 <C>            <C>

  Liabilities and stockholders' equity

  Current liabilities:
      Accounts payable                                                $245,759       $668,834
      Accrued liabilities                                              108,561        112,789
      Current portion of capital lease obligations                      21,165         24,663
                                                                   ------------------------------
  Total current liabilities                                            375,485        806,286


   Long-term portion of capital lease obligations                        9,735         13,278


  Commitments and contingencies

   Stockholders' equity:
    Preferred stock:
      Preferred stock issuable in series: par value $.01,
          4,500,000 authorized:
          Series "A" convertible preferred stock; 356,638
            shares authorized; 356,638 shares issued and
            outstanding                                                    356           356
          Series "B" convertible preferred stock; 30,000
            shares authorized; 1,932 shares issued and
            outstanding                                                     19            19
      Class "A" preferred stock, par value $.01; 500,000
        shares authorized; none issued or outstanding                      ---           ---
      Common stock, par value $.001; 55,000,000 shares
       authorized; 15,145,868 shares issued at February 28,
      1998 and 16,452,008 shares issued at May 31, 1998                 16,452        15,146
      Additional paid-in capital                                    17,440,283    16,034,785
      Accumulated deficit                                          (15,243,734)  (14,408,184)
      Less treasury stock, 264,000 common shares at cost              (501,545)     (501,545)
                                                                 ------------------------------
      Total stockholders' equity                                     1,711,831     1,140,577
                                                                 ------------------------------
                                                                    $2,097,051    $1,960,141
                                                                 ==============================

</TABLE>


   See accompanying notes to condensed consolidated financial statements


                                      - 4 -

<PAGE>




CYCLO3PSS CORPORATION
Condensed Consolidated Statements of Operations
-----------------------------------------------------------------------------
(UNAUDITED)


                                                    For the three months ended
                                                              May 31,
                                                        1998           1997
                                                  -------------- --------------

   Net revenues                                        $323,391       $302,391

   Costs and expenses:
      Cost of sales                                     278,106        245,191
      Research and development                          114,822         77,865
      Selling and marketing                             110,159         47,452
      General and administrative                        553,064        271,107
      Depreciation and amortization                     103,671        108,830
                                                  -----------------------------
                Total expenses                        1,159,822        750,445

  Loss from operations                                (836,431)      (448,054)
  Interest income                                        2,305         14,212
  Interest expense                                      (1,424)       (58,206)
                                                  -----------------------------

  Net loss                                            (835,550)      (492,048)
   Preferred stock dividends                           (38,958)       (38,958)
                                                 -----------------------------
   Net loss applicable to common stock               $(874,508)     $(531,006)
                                                 =============================

   Net loss per common share                              (.05)          (.04)
                                                 -----------------------------
    Weighted average number of common shares
     issued and outstanding                         16,013,295     12,821,875
                                                 =============================




See accompanying notes to condensed consolidated financial statements





                                      - 5 -

<PAGE>





CYCLO3PSS CORPORATION
Condensed Consolidated Statements of Cash Flow
(UNAUDITED)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                              For the three months ended
                                                                                        May 31,
                                                                                 1998            1997
                                                                           --------------------------------
  <S>                                                                         <C>              <C> 

  Cash flows from operating activities:
      Net loss                                                                $(835,550)       $(492,048)
      Adjustments to reconcile net loss to net cash used in operating
            activities:
     Depreciation and amortization                                              103,671          108,830
     Accrued interest on convertible debt issuance                                  ---           34,680
     Issuance of warrant with convertible debt                                      ---           21,193
             Common stock issued for services                                       ---          184,000
     Changes in assets and liabilities:
       (Increase) decrease in accounts receivable                              (119,009)        (122,158)
       (Increase) decrease in inventories                                         2,513          (14,698)
       (Increase) decrease in prepaid expense                                   (20,270)         (51,926)
       Decrease in accounts payable and accrued liabilities                    (427,303)         (12,149)
                                                                           --------------------------------
  Net cash used in operating activities                                      (1,295,948)        (444,276)
                                                                           --------------------------------

  Cash flows from investing activities:
      Purchase of property and equipment                                        (20,455)          (3,988)
      Addition to developed patents and other                                    (5,817)            ----
                                                                           --------------------------------
  Net cash used in investing activities                                         (26,272)          (3,988)
                                                                           --------------------------------
  Cash flows from financing activities:
      Proceeds from issuance of common stock                                  1,395,004             ----
      Proceeds from exercise of stock options                                    11,800             ----
      Principal payments under capital lease obligations                         (7,041)          (6,017)
                                                                           --------------------------------
  Net cash provided by (used in) financing activities                         1,399,763           (6,017)
                                                                           --------------------------------

  Net increase (decrease) in cash                                                77,543         (454,281)

  Cash at beginning of period                                                   573,161        1,275,636
                                                                           --------------------------------

  Cash at end of period                                                         650,704         $821,355
                                                                           ================================


</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                             - 6 -

<PAGE>





CYCLO3PSS CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
------------------------------------------------------------------------------


   1.  Summary of Significant Accounting Policies

   Financial Statements

   The accompanying interim consolidated financial statements have been prepared
   in accordance  with  generally  accepted  accounting  principles  for interim
   financial information and with the instructions to Form 10-QSB and Regulation
   S-B. The balance sheet at February 28, 1998 represents the Company's  audited
   consolidated balance sheet at that date.

   In  the  opinion  of  management,  the  accompanying  condensed  consolidated
   financial  statements contain all normal recurring  adjustments  necessary to
   present fairly the financial position of Cyclo3pss Corporation ("Company") as
   of May 31, 1998, and the results of its operations and its cash flows for the
   interim  periods ended May 31, 1998 and May 31, 1997.  The operating  results
   for the interim periods are not  necessarily  indicative of the results for a
   full year. These financial  statements should be read in conjunction with the
   Company's  audited  consolidated   financial  statements  and  notes  thereto
   included in the Company's  Annual Report to  Stockholders  for the year ended
   February 28, 1998.

   Organization

   The  Corporation was formed in Delaware in 1927. In 1990, the Corporation was
   reorganized as Cyclo3pss  Medical Systems,  Inc. In 1995, the Company changed
   its name to Cyclo3pss  Corporation.  The Company is primarily  engaged in the
   design, manufacturing,  assembly, sales and installation of ozone application
   technologies and processes.  The Company's  principal  technology provides an
   alternative  to address  food safety  concerns and laundry  disinfection  and
   efficiency. Cyclopss also markets sorting and counting systems to the laundry
   industry and  manufactures and sells specialty  chemicals.  The Company holds
   patents for medical sterilization  processes and plans to resume research and
   development activities in this field by the fiscal year 2000.

   Principles of Consolidation

   The consolidated financial statements include the accounts of the Company and
   its wholly-owned  subsidiaries.  All  intercompany  balances and transactions
   have been eliminated.

   Use of Estimates

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





                                    - 7 -

<PAGE>





CYCLO3PSS CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
------------------------------------------------------------------------------


   1.  Summary of Significant Accounting Policies (continued)

   Net Loss per Common Share

   Net loss per common share is calculated  after  deduction of preferred  stock
   dividends  divided by the weighted  average  number of shares of common stock
   issued and outstanding during the period. Loss per common share for preferred
   stock dividends was immaterial (less than one cent per share).  The Company
   excluded  2,556,249  options and  2,296,140  warrants  from the weighted
   average  shares  outstanding  computation  as their effect would be anti-
   dilutive.

   New Accounting Standard

   As of January 1, 1998, the Company adopted Statement of Financial  Accounting
   Standards ("SFAS") No. 130,  "Reporting  Comprehensive  Income".  SFAS No.130
   establishes new rules for the reporting and display of  comprehensive  income
   and its components; however, the adoption of this Statements has no impact on
   the Company's net income (loss) or stockholders' equity.

   For the first quarter of 1998 and 1997, total  comprehensive loss amounted to
   $874,508 and $531,006, respectively.

   SFAS No. 131  establishes  standards for reporting  financial and descriptive
   information  about its reportable  operating  segments.  SFAS No. 131 changes
   current  practice  under SFAS No. 14,  Financial  Reporting for Segments of a
   Business Enterprise, by establishing a new framework on which to base segment
   reporting (referred to as the management  approach) and also requires interim
   reporting  of  segment  information.  The  Company  has  elected to apply the
   Statement to its interim financial statements in the current year.

   2.  Basis of Presentation

   The accompanying  financial  statements have been prepared  assuming that the
   Company will continue as a going concern,  which contemplates the realization
   of assets and  satisfaction  of liabilities in the normal course of business.
   The Company has  sustained  significant  net losses which have resulted in an
   accumulated  deficit at February 28, 1998 of $14,408,184  and  $15,243,734 at
   May 31,  1998,  and  periodic  cash  flow  difficulties,  all of which  raise
   substantial doubt of the Company's ability to continue as a going concern.

   The net loss for the year ended February 28, 1998 was $2,928,197 and $874,508
   for the three months ended May 31, 1998. To date,  the Company has funded its
   operations through the issuances of common and preferred stock. The Company's
   ability  to  accomplish  its  business  strategy  and to  ultimately  achieve
   profitable  operations  is  dependent  upon its  ability to raise  additional
   financing.

   The Company  believes that these  conditions  have resulted from the inherent
   risks associated with small technology companies. Such risks include, but are
   not limited to, the ability to (a) generate


                                    - 8 -

<PAGE>




CYCLO3PSS CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
------------------------------------------------------------------------------



   2.  Basis of Presentation (continued)

   sales of its  product at levels  sufficient  to cover its costs and provide a
   return for  investors,  (b)  attract  additional  capital in order to finance
   growth, (c) further develop and successfully  market commercial  products and
   (d) successfully  compete with other technology  companies having  financial,
   production and marketing  resources  significantly  greater than those of the
   Company.

   The Company is  attempting  to improve  these  conditions by way of financial
   assistance  through  collaborative   partnering   agreements,   issuances  of
   additional  equity,  debt  arrangements,  and product  sales.  Management  is
   confident that appropriate funding will be generated and future product sales
   will  result from these  opportunities  and that the  Company  will  continue
   operations through the next fiscal year.


   3. Contingencies

   The Company is involved in certain  legal  actions and claims  arising in the
   ordinary course of business.  Management  believes,  based on advice of legal
   counsel,  that such litigation and claims will be resolved  without  material
   effect  on  the  Company's  consolidated   financial  position,   results  of
   operations or cash flows.  These matters are described in the Company's  Form
   10-KSB for the year ended February 28, 1998.

























                                    - 9 -

<PAGE>







   CYCLO3PSS CORPORATION
   Notes to Condensed Consolidated Financial Statements (Unaudited)
------------------------------------------------------------------------------



   4. Segment Information

   During the three  months ended May 31,  1998,  the Company  operated in three
   principal  industries;  development,  marketing and  installation of Eco-Pure
   Food Safety  Systems  for food  decontamination  in both  aqueous and gaseous
   forms ("food safety  products");  the  manufacture,  sale and installation of
   ozone washing and laundry  sorting and counting  systems for  commercial  and
   institutional laundries ("textile products"); and the manufacture and sale of
   specialty chemicals ("biochemical products").

   Operating profit is total revenue less operating expenses, excluding interest
   expense and general corporate expenses. Corporate assets consist primarily of
   cash and cash equivalents and property and equipment.


                                                  For three months ended
                                                        May 31, 1998
                                                  _______________________

   Net revenues
      Food Safety products                               $156.000
      Textile products                                    102,894
      Biochemical products                                 64,497
                                                        ----------

      Total Revenue                                      $323,391
                                                        ==========

   Operating loss (income)                             
      Food Safety products                               $(12,998)
      Textile products                                   (327,950)
      Biochemical products                                 (9,746)
                                                        ----------
      Total operating loss                               (350,694)

      Corporate expenses                                 (485,737)
      Interest income                                       2,305
      Interest expense                                     (1,424)
                                                        ----------
      Net loss                                          $(835,550)
                                                        ==========

   Identifiable assets
      Food Safety products                               $110,989
      Textile products                                    897,510
      Biochemical products                                270,808

      General corporate assets                            817,744
                                                       -----------
      Totals assets                                    $2,097,051
                                                       ===========




   

                                    - 10 -

<PAGE>





                                 PART I - ITEM 2

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                               OR PLAN OF OPERATION

   General

   Cyclopss  Corporation is primarily engaged in ozone application  technologies
   and processes.  The Company's main product lines offer an alternative to food
   safety,  particularly  microbial  reductions  on meat,  poultry,  fruits  and
   vegetables.  Additional products offered by the Company enable  manufacturers
   to eliminate  microbial build up in and on food processing  equipment,  while
   other  ozone-related  products  marketed  by the  Company to  commercial  and
   institutional  landry  markets enable users to reduce costs  associated  with
   labor, water, energy, chemicals, and wastewater disposal.

   The  Company  also  markets an  automated  sorting  and  counting  system for
   commercial  laundries.  Other  non-ozone  based products offer by the Company
   include more than 350 specialty chemicals and compounds.

   The Company has developed but not marketed two medical sterilization products
   to date.  Due to the demand for  alternative  disinfection  systems  for food
   safety and cost saving  equipment for the  commercial  laundry  markets,  the
   Company shifted its focus from medical sterilization, to more immediate, less
   or non-encumbered target markets -- food, laundry and chemical compounds.

   Results of Operations

   The Company's  revenues were $323,391 for the three months ended May 31, 1998
   compared to $302,391 for the three  months  ended May 31, 1997.  Three of the
   Company's  wholly owned  subsidiaries  currently  contribute to the Company's
   gross revenues,  Eco-Pure Food Safety Systems, Inc. (EPFS),  Cyclopss Laundry
   Systems, Inc. (CLS) and Cyclopss Biochemical Corporation (CBC). The Company's
   gross margin for the three months ended May 31, 1998 was $45,285  compared to
   $57,200 for the three months ended May 31, 1997. The Company  expects revenue
   to continue to increase.

   Research and development  expenses increased to $114,822 for the three months
   ended May 31, 1998 from $77,865 for the three months ended May 31, 1997.  The
   Company  believes it is  necessary  and intends to increase  its research and
   development  efforts in the current year in order to complete the development
   process of food  processing  systems  and to comply  with USDA  protocols  to
   validate these systems.

   Selling and  marketing  expenses  increased  to $110,159 for the three months
   ended May 31, 1998 from $47,452 for the three months ended May 31, 1997.  The
   Company began to place its  advertising in a variety of general  business and
   food-related  trade  publications,  to maximize its  exposure  during what is
   continuing  to be a period of  increased  scrutiny  over food safety  issues.
   Management  believes  that  it  is  critical  to  periodically   support  and
   supplement its sales efforts through advertising,  public relations campaigns
   and trade-show participation.




                                    - 11 -

<PAGE>





   General and  administrative  expenses  increased  to  $553,064  for the three
   months  ended May 31, 1998 from  $271,107  for the three months ended May 31,
   1997, due to an increase in management employment,  shareholder relations and
   legal  fees.  Management  believes  general  and  administrative  costs  will
   continue to increase as more products are developed and commercialized.

   Interest  expense  declined to $1,424 for the three months ended May 31, 1998
   compared  to $58,206  for the three  months  ended May 31,  1997,  due to the
   conversion of long-term debt to common stock.

   The Company believes that three of its divisions, namely Eco-Pure Food Safety
   Systems, Inc., Cyclopss Laundry Systems, Inc., and Cyclopss Biochemical, Inc.
   will be the major  contributors to the Company's  future revenue  stream.  In
   order to achieve  sales growth  acceptable  to  management,  the Company will
   primarily focus on these three areas of the Company.

   Liquidity and Capital Resources

   As of the date of this filing,  the Company has insufficient funds on hand to
   continue its operations for the entire  upcoming  fiscal year ending February
   28, 1999 and meet the new quantitive  maintenance  requirements for continued
   listing on Nasdaq Stock Market,  unless significantly  increased revenues and
   gross  profits are achieved or additional  financing is obtained.  Should the
   Company be  unsuccessful  in achieving  the  increased  level of revenues and
   gross profits required to pay its operating expenses or in acquiring adequate
   additional  financing,  the  Company  will seek  direction  from the Board of
   Directors  as to what  action  must be taken to create a safe  harbor for the
   Company's limited operations and assets. Management is aggressively exploring
   additional financing for the ongoing operations of the Company.  There are no
   assurances that the efforts to locate and secure additional financing will be
   successful,  and the failure to secure  this  financing  would  substantially
   alter management's  assumptions as presented  heretofore and in the remainder
   of this  section  and render the  Company  unable to meet the new  quantitive
   maintenance requirements for continued listing on Nasdaq Stock Market

   Cash used in operating  activities  was $1,295,948 for the three months ended
   May 31, 1998  compared to $444,276  for the three  months ended May 31, 1997.
   The Company's use of cash has been more  aggressive this year, as the Company
   experienced  significant  general and  administrative  and marketing expenses
   asscoiated  with the  development  and  promotion of its Eco-Pure Food Safety
   Systems.

   Cash  expenditures  for  property  and  equipment  were $26,272 for the three
   months  ended May 31, 1998  compared to $3,988 for the three months ended May
   31, 1997. This increase was the result of the Company increasing purchases of
   research equipment and certain leasehold improvements.

   Net cash provided by financing  activities for the three months ended May 31,
   1998 was $1,399,763  compared to cash used in financing  activities of $6,017
   for the three months ended May 31, 1997.  This increase was due to the 
   issuance of 1,296,140 shares of common stock in a private placement offering 
   through First Financial  Investment  Securities.  This financing raised 
   $1,620,175 ($1,395,004 in net proceeds).

   Total assets  increased to $2,097,051 for the three months ended May 31, 1998
   from  $1,960,141 for the year ended February 28, 1998, due to the increase in
   the Company's cash position and a


                                    - 12 -

<PAGE>




   significant increase in accounts receivable from $113,090 at  February 28, 
   1998  to $232,099 at May 31, 1998.

   Total current liabilities decreased to $375,485 at May 31, 1998 from $806,286
   at February 28, 1998, a decrease of $430,801.  The decrease in the  Company's
   current  liabilities at May 31, 1998 was primarily  attributed to decrease of
   $423,075  in  accounts  payable as a result of the  Company's  ability to pay
   obligations when they became due. Long term  liabilities  decreased to $9,735
   for the three  months  ended May 31,  1998 from  $13,278  for the year  ended
   February 28, 1998.  This  decrease was due to  reclassification  of long term
   lease obligations to current obligations.

   During the period of March 9, 1998 to April 15, 1998, the Company  authorized
   and  offered its  restricted  common  shares to  accredited  investors  in an
   offering  made  pursuant to a Board  Resolution  on February 27, 1998 through
   First Financial Investment Securities Inc. Subscribers purchased 1,296,140 of
   such shares in this offering for a total of  $1,620,175  or $1,395,004  after
   costs.  These  shares  were  sold for  $1.25  each and each  share  carries a
   warrant. This redeemable warrant entitles the holder to purchase one share of
   common stock at a price of $3.75 per share.

   Plan of Operation

   Food Safety Systems

   In June of 1997,  ozone was granted the status as  "generally  recognized  as
   safe" or "GRAS",  allowing food  processors to use ozone in the processing of
   certain food items.  This,  together with a period of increased  scutiny over
   food safety  issues,  created a groundswell  of demand for  alternative  food
   decontamination  technologies.  One Cyclo3pss  designed food safety system is
   already in the  process of being  installed  for a major  food  company.  The
   Company believes this sale will result in further opportunities with this and
   other food related companies.

   One major  challenge that the Company faces is that of educating  government,
   industry  and the end  consumer  about  the  benefits  of  ozone.  Ozone is a
   naturally-occurring  phenomenon that is usually associated with photochemical
   smog or an eroding level of protection in our atmosphere. It is the Company's
   intent to  provide  this  education  and show the  beneficial  side of ozone:
   decontamination.   For   industry,   ozone   is  a   cost   competitive   and
   environmentally-friendly  answer to microbial contaminates. For the consumer,
   ozone kills  harmful  microorganisms  quickly  and leaves  behind no chemical
   residue.

   Laundry Systems

   The Company will  continue to market its ozone  laundry  washing  systems,
   Eco-Wash.  The  Company  will also  continue to upgrade  existing  customers'
   sorting  and  counting  system,   (VAC  Soil  Counting  System)  with  recent
   technological  changes.  The Company  believes  the  products  developed  and
   marketed by this subsidiary will enjoy increased  market  potential in coming
   years due to:

   *  Competitive  laundry  markets  will create a need for cost reduction and
      increased  productivity;
   *  Further  environmental  restrictions  placed  on discharge water quality;
   *  Increased emphasis on sanitation and disinfection in the laundry industry;
      and
   *  Increased concern regarding environmental issues associated with the
      laundry industry.


                                    - 13 -

<PAGE>



   Specialty Chemicals

   The Company's Biochem  sibsidiary will be provided  additional  marketing and
   promotional  assistance in order to increase  sales and product  development.
   Current sales  activities  will be evaluated and  alternatives  looked for to
   improve profit margins. Joint efforts will continue with Foster Miller, Inc.,
   to market Biochem's monomer to the aerospace industry.


   The focus for the fiscal  year 1999 will be sales in the three  target  areas
   and the Company will apply the resources  necessary to accomplish  this.  The
   Company anticipates a spending level of approximately  $1,000,000 on research
   and development  activities  required to continue with product validation and
   food trials. Sales and marketing activities will be budgeted at $1,500,000 to
   allow  for  sales   staff,   advertising   and  trade   shows.   General  and
   administrative expenses should be in the $2,000,000 range for the year.

   The Company had 24 full time and 2 part-time  employees  as of May 31,  1998.
   The Company anticipates  additional employees will be required in engineering
   and sales  during  the next  twelve  months.  The impact of the above will be
   determined  by the market  demand for food  safety and  textile  systems  and
   specialty chemicals.

   The information  set forth herein as to anticipated  research and development
   costs,  equipment  purchases and increase in employees are management's  best
   estimates  based upon current plans.  Actual  expenditures  may be greater or
   less than such estimates depending on many factors including, but not limited
   to the availability of new technologies, the completion or lack of completion
   of certain strategic alliances,  and the timing and successful  completion of
   the Company's stated requirement to acquire  additional  operating and growth
   capital,  industry  initiatives,   success  of  the  Company's  research  and
   development efforts, and other factors.

   From  time to  time,  the  Company  may  publish  forward-looking  statements
   relating  to such  matters as  anticipated  financial  performance,  business
   prospects, technological developments, new products, research and development
   activities and similar matters. The private Securities  litigation Reform Act
   of 1995 provides a safe harbor for forward  looking  statements.  In order to
   comply with the terms of the safe harbor, the Company notes that a variety of
   factors could cause the  Company's  actual  results and  experience to differ
   materially from the anticipated  results or other  expectations  expressed in
   the Company's forward looking  statements.  The risks and uncertainties  that
   may  affect  the  operations,  performance,  development  and  results of the
   Company's business include, but are not limited to, the following:

   1.   Market acceptance of the Company's products;
   2.   Obtaining  sufficient  additional operating capital in the form of debt
        or equity;
   3.   The existence of an orderly market in the Company's securities; 
   4.   Increased sales of the various products of the Company;  
   5.   Continued success in the Company's research and development activities;
        and
   6.   Successful completion of strategic alliances.

                                    - 14 -

<PAGE>



   PART II - OTHER INFORMATION

      Item 1.     Legal Proceedings.None.

      Item 2.     Changes in Securities.  None.

      Item 3.     Defaults Upon Senior SecuritieNone.

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

      Item 5.     Other Information.

      Item 6.     Exhibits and Reports on Form 8None.



                                   SIGNATURES

      In accordance  with the  requirements  of the  Securities  Exchange Act of
1934,  as  amended,  the  Registrant  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



                                           CYCLO3PSS CORPORATION
 


 Date: July 14, 1998                       By/s/ Gary D. Bratcher
                                          -------------------------------
                                           Gary D. Bratcher
                                           Chief Executive Officer
                                           Principal Executive Officer



 Date: July 14, 1998                        By/s/ Mondis Nkoy
                                          -------------------------------
                                            Mondis Nkoy
                                            Controller, Corporate Secretary
                                            Principal Financial Officer





                                    - 15 -