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


                     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 NOVEMBER 30, 1997

                                       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 January 14, 1998 - 15,145,868  shares of $.001 par
value Common Stock.


                    DOCUMENTS INCORPORATED BY REFERENCE: NONE

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



<PAGE>












                           (This page intentionally left blank)






























                                          - 2 -

<PAGE>




                                   FORM 10-QSB

                       Financial Statements and Schedules
                              CyclO3PSS Corporation

                For Three and Nine Months Ended November 30, 1997

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

                         PART I - FINANCIAL INFORMATION

                                     Page of
                                                               Form 10-QSB
Item 1. Condensed Financial  Statements

Condensed Consolidated Balance Sheets -
 November 30, 1997 and February 28, 1997 ...........................4
Condensed Consolidated Statements of Operations --
 for the three and nine months ended November 30, 1997 and 1996.....6
Condensed Consolidated Statements of Cash Flows --
 for the nine months ended November 30, 1997 and 1996...............8
Notes to Condensed Consolidated Financial Statements..........................9

Item 2. Management's Discussion and Analysis of
        Financial Condition and Results of Operations...............12


                            PART II - OTHER INFORMATION

Item 1. Legal Proceedings ..........................................17

Item 2. Changes in Securities.......................................17

Item 3. Defaults Upon Senior Securities.............................17

Item 4. Submission of Matters to a Vote of Security Holders.........17

Item 5. Other Information...........................................17

Item 6. Exhibits....................................................17





                                      - 3 -

<PAGE>




   CYCLO3PSS CORPORATION
   Condensed Consolidated Balance Sheets
------------------------------------------------------------------------------




                                                  November 30    February 28
                                                     1997           1997
                                                 ------------- --------------
  Assets                                          (Unaudited)

   Current assets:

      Cash and cash equivalents                    $973,599     $1,275,636
      Accounts receivable, less allowance for 
        doubtful accounts of $2,000 at 
        November 30, 1997 and  February 28, 1997    460,812         97,605
      Inventories                                   198,659        100,584
      Prepaid expenses                               46,863        102,815
                                                ------------  --------------
  Total current assets                            1,679,933      1,576,640

  Property and equipment, net                       258,313        370,994

  Other assets:
      Goodwill, net                                 421,010        540,375
      Acquired patents, net                         379,502        411,187
      Developed patents and other, net              124,666        125,650
                                                ------------  --------------
                                                 $2,863,424     $3,024,846
                                                ============= ==============











   See accompanying notes to condensed consolidated financial statements







                                      - 4 -

<PAGE>




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


                                                  November 30   February 28
                                                     1997           1997
                                               ----------------------------
                                                  (Unaudited)
  Liabilities and stockholders' equity

  Current liabilities:
      Accounts payable                              $464,726       $108,619
      Accrued liabilities                             83,792        135,190
      Current portion of capital lease obligations    25,531         26,120
                                                  --------------------------
  Total current liabilities                          574,049        269,929

   Long-term debt obligations                         33,764      1,156,000
   Long-term portion of capital lease obligations     19,175         37,356

   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 issued at 
        Nov. 30, 1997 
      12,793,340 shares issued at February 28, 
        1997                                          15,145         12,793
      Additional paid-in capital                  16,088,857     13,546,195
      Accumulated deficit                        (13,366,396)   (11,479,987)
      Deferred compensation                               --       (168,000)
      Less treasury stock, 264,000 common shares
        at cost                                     (501,545)      (501,545)
                                                 ----------------------------
      Total stockholders' equity                   2,236,436      1,409,831
                                                 ----------------------------
                                                  $2,863,424     $3,024,846
                                                =============================

   See accompanying notes to condensed consolidated financial statements




                                      - 5 -

<PAGE>





   CYCLO3PSS CORPORATION
   Condensed Consolidated Statements of Operations
   (UNAUDITED)

-----------------------------------------------------------------------------
                                                  For the three months ended
                                                       November 30, ed
                                                      1997           1996
                                                -----------------------------

   Net Revenues                                    $561,474        $48,101

   Costs and expenses:
      Cost of sales                                 505,465         47,524
      Research and development                       51,895        236,850
      Selling and marketing                          77,658         50,631
      General and administrative                    566,960        330,330
      Depreciation and amortization                 116,467        115,845
                                                 ----------------------------
                Total expenses                    1,318,445        781,180

  Loss from operations                             (756,969)      (733,079)

  Interest income                                    19,775         18,540
  Interest expense                                   (8,567)       (95,993)
                                                 ----------------------------

  Net loss                                         (745,761)      (810,532)
   Preferred stock dividends                        (38,534)          -
                                                 ----------------------------
                         
                                                  
   Net loss applicable to common stock            $(784,295)      $(810,532)
                                                 ============================

   Net loss per common share                          $(.06)         $(.07)
    Weighted average number of common shares     ============================

     issued and outstanding                       14,335,587     12,243,607
                                                 ============================










   See accompanying notes to condensed consolidated financial statements







                                      - 6 -

<PAGE>




   CYCLO3PSS CORPORATION
   Condensed Consolidated Statements of Operations
   (UNAUDITED)

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

                                                     For the nine months ended
                                                         November 30, nded
                                                        1997           1996
                                                 ------------------------------

   Net Revenues                                      $1,113,093       $264,080

   Costs and expenses:
      Cost of sales                                     928,839        213,329
      Research and development                          203,918        637,798
      Selling and marketing                             241,932        135,034
      General and administrative                      1,224,828        901,514
      Depreciation and amortization                     333,626        350,217
                                                    ---------------------------
                Total expenses                        2,933,143      2,237,892

  Loss from operations                              (1,820,050)    (1,973,812)

  Interest income                                        43,266        30,154
  Interest expense                                    (109,625)      (189,285)
                                                    ---------------------------

  Net loss                                           (1,886,409)    (2,132,943)
   Preferred stock dividends                                                 
   Net loss applicable to common stock                (116,450)             -
                                                    ---------------------------
                                                    $(2,002,859)   $(2,132,943)
                                                    ===========================


   Net loss per common share                             $(.15)         $(.19)
                                                    ===========================
                                                                             

    Weighted average number of common shares
      issued and outstanding                         13,491,875     11,232,931
                                                    ===========================












   See accompanying notes to condensed consolidated financial statements




                                      - 7 -

<PAGE>




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

                                                                       For the nine months ended
                                                                                  November  30,
                                                                       1997             1996
                                                                 ----------------------------------
<S>                                                              <C>               <C> 

  Cash flows from operating activities
      Net loss                                                     $(1,886,409)      $(2,132,943)
      Adjustments to reconcile net loss to net cash used in 
        operating activities:
     Depreciation and amortization                                     333,626           350,217
     Accrued interest on convertible debt issuance                     105,833           108,267
     Accretion of convertible debt warrant                              27,380            72,873
             Common stock issued for services                          168,000                 -
     Changes in assets and liabilities:
       (Increase) decrease in accounts receivable                     (363,207)              508
       (Increase) decrease in inventories                              (98,075)          151,424
       (Increase) decrease in prepaid expense                           55,952           (31,211)
        Increase (decrease) in accounts payable and accrued 
         liabilities                                                   338,473          (102,112)
       Increase in deferred revenue                                          -           120,000
                                                                 --------------------------------
  Net cash used in operating activities                             (1,318,427)       (1,462,977)
                                                                 --------------------------------

  Cash flows from investing activities
      Purchase of property and equipment and other assets              (29,840)          (10,483)
       Purchase of marketable securities              -        (1,306,815)
                                                                 --------------------------------
   Net cash used in investing activities                              (29,840)       (1,317,298)
                                                                 --------------------------------


  Cash flows from financing activities
      Proceeds from issuance of common stock                        1,065,000               277
       Proceeds from issuance of preferred stock                            -         2,755,000
       Proceeds from issuance of convertible debt obligations               -           351,000
       Principal payments under capital lease obligations             (18,770)           (9,802)
                                                                 --------------------------------
  Net cash provided by financing activities                         1,046,230         3,096,475
                                                                 --------------------------------

  Net (increase) decrease in cash and cash equivalents               (302,037)          316,200

  Cash and cash equivalents at beginning of period                  1,275,636           252,113
                                                                 --------------------------------

  Cash and cash equivalents at end of period                         $973,599          $568,313
                                                                 ================================

   Supplemental schedule of non-cash financing activities:
      Conversion of long term debt obligations to common stock      1,156,000              -
        Conversion of interest payable on long term debt 
          obligation to common stock                                  257,563              -
      Capital lease obligations incurred for acquisition of 
          property and equipment                                                         8,350
                                                                 ================================

</TABLE>



See accompanying notes to condensed consolidated financial statements




                                             - 8 -

<PAGE>



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



   1.  Summary of Significant Accounting Policies


   Financial Statements

     The accompanying interim condensed  consolidated  financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim  financial  information  and with the  instructions  to Form  10-QSB and
Regulation  S-B. The balance sheet at February 28, 1997 represents the Company's
audited consolidated balance sheet at that date.

     In the  opinion of  management,  the  accompanying  consolidated  financial
statements contain all normal recurring  adjustments necessary to present fairly
the financial position of CyclO3PSS  Corporation  ("Company") as of November 30,
1997,  and the  results of its  operations  and its cash flows for the three and
nine month periods ended November 30, 1997 and 1996.  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 condensed financial statements for the year ended February 28,
1997.

   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).  The Company is engaged in the
manufacture,  sale and  installation  of ozone food processing  products,  ozone
washing  and  laundry   sorting  and  counting   systems  for   commercial   and
institutional  laundries,  the manufacture  and sale of specialty  compounds and
chemicals,  and research and development of technologies  for the  sterilization
and/or disinfection of surgical and medical instruments.


   New Accounting Pronouncements

     In  1997,  the  Financial  Accounting  Standards  Board  issued  three  new
Statements:  Statement No. 128, Earnings per Share, Statement No. 130, Reporting
Comprehensive  Income and Statement No. 131,  Disclosures  about  Segments of an
Enterprise and Related  Information.  As of November 30, 1997,  these  standards
were either not effective or not yet required to be adopted by the Company. Upon
adoption of these standards, the impact is not expected to be material.










                                    - 9 -

<PAGE>




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


   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, 1997 and  November 30, 1997 of  $11,479,987
and  $13,366,396  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, 1997 and for the nine months
ended November 30, 1997 was $2,957,744 and $1,886,409 respectively. 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  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  believes  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. Long-Term Debt

     During the year ended February 29, 1996,  the Company's  Board of Directors
authorized  the  issuance  of  $3,000,000  in  convertible  debt  to  individual
investors.  Principal and interest are payable in full three years from the date
of execution  of each note.  Interest  accrues at 12% per year on the  principal
balance.  The debt is secured by all the assets of the  Company.  The lender can
convert all or a portion of its  outstanding  principal and interest into shares
of common stock at $3.50 per share. Under the terms of the loan agreements,  the
Company  will  issue  each  lender a warrant  to  purchase  1,000  shares of the
Company's  common stock at a price of $4.00 per share for each $3,500  principal
amount  loaned to the  Company.  Each warrant is  exercisable  for a period of 5
years from the date of the closing of each loan. The Company  issued  $1,226,000
in  convertible  debt  (described  above) to the  Company's  directors  or major
stockholders, with maturities between December 1998 and February 1999. 






                                    - 10 -

<PAGE>

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


   Long-Term Debt (continued)

     On  August  29,  1997  the  Company  gave  all  holders  of  the  Company's
Convertible  Promissory Notes an option to convert the outstanding principal and
interest of outstanding  notes into the Company's  restricted  common stock at a
conversion  price  which is the  higher of a) $1.00 per share or b) the  average
closing  price  for the ten  days  prior  to date of conversion.  Note  holders
continue  to own the  options  which  were  received  as  part  of the  original
purchase,  but the option  exercise price was reduced to $2.00 per share for the
Note Holders that converted.  As of November 30, 1997, all of the long term debt
obligations  and the interest  payable on long term debt  obligations  have been
converted to 1,305,852 shares of the Company's restricted common stock, which is
restricted  from sale for a period of 120 days from the date of conversion.  The
majority of the  conversions  took place  between  August 26, 1997 to August 31,
1997.

   4. Stockholders' Equity

   Preferred Stock

     During the nine months  ended  November  30,  1997,  3 shares of Series "B"
convertible preferred stock were converted to approximately 4,900 common shares.

     Common  stock in the  amount of  $336,000  was issued to a  consultant  for
services to be performed.  As such services related to one half of the agreement
had not been  performed as of February 28, 1997. The remaining cost was recorded
as deferred  compensation.  Subsequently,  upon performance of the service,  the
cost were  recorded to general and  administratie  expense in the  statement  of
operations for the nine months ended November 30, 1997.

   5. 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-KB for the
year ended February 28, 1997.

   6. Other Events

     Effective  September 1, 1997 the Company entered into an Agreement and Plan
of Merger with Textile  Strategies,  Inc. (TSI), a Florida  Corporation and with
its sole shareholder James A. Gross wherein TSI became a wholly-owned subsidiary
of  the  Company.  Pursuant  to the  Agreement  the  Company  issued  41,667  of
restricted  common  stock to  Gross  in  exchange  for  100% of the  issued  and
outstanding shares of TSI.

     On  October  2,  1997 the  Company's  wholly  owned  subsidiary,  Cyclo3pss
Biochemical  Corporation and Foster Miller,  Inc. a technology  development firm
based in Waltham, Massachusetts,  entered into an operating agreement and formed
a Massachusetts Limited Liability Corporation ("LLC"),  named Pyrogonn,  Inc. to
commercialize  a  proprietary   high-performance   polymer,   which  is  a  new,
lightweight material that can be economically  processed and is extremely strong
and heat resistant.  The partners believe the material will have applications in
the aerospace industry.




                                    - 11 -

<PAGE>






                                 PART I - ITEM 2

                       MANAGEMENTS DISCUSSION AND ANALYSIS
                 OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   General

     The Company has been  involved in research and  development  and  marketing
several  products since 1987,  including the Eco-PureTM food processing  system,
Ozo3-CleanTM  System  2000  ozone  washing  system,  VAC Soil  Counting  System,
specialty  organic  chemicals  and  custom  synthesis.  From  the  period  since
reactivation  (March 2, 1987) to November 30,  1997,  the Company had incurred a
cumulative  net loss of  $13,366,396.  The Company  expects to continue to incur
losses into the next fiscal year.  The Company's  current cash assets may not be
sufficient  to fund its long term  operations  and accordingly the Company will
need to either generate  positive cash flow from operations or raise  additional
debt or equity  capital  in order to fund its future  operation  and to meet the
requirements  to maintain its listing on the NASDAQ Small Cap market.  There can
be no assurance  that the Company will be able to obtain  additional  capital to
fund  operations  or maintain its NASDAQ  listing in the future.  The  Company's
financial  position is discussed  further below.  

     The  Company's  future  operating  results  will  depend  on many  factors,
including  acceptance of the Company's  food  processing  technologies,  laundry
technologies,  systems,  equipment and attendant products in the various markets
for the  Company's  products  and the  timing  of FDA  marketing  clearance,  if
received,  for the Company's medical  sterilization  and disinfection  products,
which  require such  clearance,  and the demand for such  products at that time.
Additional  factors include the Company's  ability to manufacture and market its
products on a cost-effective basis, the level of competition which it encounters
in its  various  marketplaces,  the  ability of the  Company to develop  product
enhancements and new products in order to achieve and maintain market share, and
its ability to obtain adequate financing.

   Results of Operations

     The Company's  revenues were  $1,113,093 for the nine months ended November
30, 1997,  and $264,080 for the nine months ended November 30, 1996, an increase
of 421.4%.  The  revenues  for the three  months  ended  November  30, 1997 were
$561,474  compared to $48,101 for the three months ended  November 30, 1996,  an
increase  of  1,167.2%.  Two of the  Company's  wholly  owned  subsidiaries  are
currently  contributing to the Company's  revenues,  CyclO3PSS  Textile Systems,
Inc. ("CTS") and CyclO3PSS  Biochemical  Corporation  (CBC). The Company's gross
margin for the nine months  ended  November  30, 1997 was  $184,254  compared to
$50,751 for the nine months ended November 30, 1996. This  significant  increase
in gross  margin is  attributable  to increased  sales of CTS due to  increasing
acceptance of its technologies by its customers,  and increased sales of CBC due
to  increasing  interest  in and use of its  products  and  services  by medical
researchers and chemical suppliers and CBC's reputation for quality.

     In fact,  Research and development  expenditures were $203,918 for the nine
months ended  November 30, 1997, and $637,798 for the nine months ended November
30, 1996. Research and development


                                    - 12 -

<PAGE>




expenditures were $51,895 for the three months ended November 30, 1997, and
$236,850 for the three months ended November 30, 1996.  The Company  anticipates
the research and development  cost will continue to decrease,  as ;more products
are brought to market.

     The Company incurred general and administrative  expenses of $1,224,827 for
the nine months  ended  November  30,  1997,  compared to $901,514  for the nine
months  ended  November 30, 1996.  General and  administrative  expenses for the
three  months ended  November 30, 1997 were  $566,958 and $330,330 for the three
months  ended  November  30,  1996.  This  increase  is  due  primarily  to  the
recognition of $168,000 in deferred compensation expense for consulting fees for
the nine months ended  November 30, 1997. At quarter end November 30, 1997,  the
Company  had 24 full  time  employees,  compared  to 19 full time  employees  at
quarter end November 30, 1996. As the Company  completes  development of certain
products and prepares for commercialization,  the human resource requirements of
the Company will increase.

     The Company  incurred  selling and  marketing  expenses of $241,932 for the
nine months ended  November  30, 1997,  compared to $135,034 for the nine months
ended November 30, 1996. The selling and marketing expenses for the three months
ended  November 30, 1997 were  $77,658  compared to $50,631 for the three months
ended November 30, 1996. This increased  expense is due to additional  marketing
and sales  efforts for the textiles  operations  (CTS) and the  attendant  costs
related to trade  shows such as the Clean Show 97 for the textile  industry  and
AAMI for medical and health care industries.

     For the nine months  ended  November  30,  1997,  the Company had  interest
income of $43,266 compared to interest income for the nine months ended November
30, 1996, of $30,154.  The interest  income for the three months ended  November
30, 1997 was $19,775 compared to $18,540 for the three months ended November 30,
1996. This increase was due to an increase in the amount of cash on hand for the
nine months  ended  November  30, 1997  compared to 1996.  The Company  incurred
$109,625  in  interest  expense  for the nine  months  ended  November  30, 1997
including $33,599  attributable to equipment leasing arrangements and $76,026 in
interest on long-term debt. The Company  anticipates  that interest expense will
decrease due to the conversion of the convertible debt to common stock.

     The  Company's  net loss for the nine months  ended  November  30, 1997 was
$1,886,409  as compared to  $2,132,943  for the nine months  ended  November 30,
1996.  The Company's  net loss for the three months ended  November 30, 1997 was
$745,762 as compared to $810,532 for the three  months ended  November 30, 1996.
The  Company  anticipates  that it will  operate  at a loss for the  year  ended
February  28, 1998.  However,  it is  anticipated  that the losses will start to
decrease as the revenues of CTS and CBC continue to increase.

   Liquidity and Capital Resources

     The Company has successfully completed a private placement of $1,250,000 of
units of common  stock and  redeemable  warrants to purchase  common  stock with
First Financial Investment




                                    - 13 -

<PAGE>




Securities,  Inc., a registered  broker dealer firm with headquarters in Austin,
Texas,  resulting  in net  proceeds to the Company of  $1,065,000.  This private
placement was for a total of 1,000,000 units, at a price of $1.25 per unit. Each
unit consists of one share of the Company's  common stock,  one redeemable class
"A"  Warrant  entitling  the holder to purchase  one share of common  stock at a
price of $2.60 per share and one  redeemable  Class "B"  Warrant  entitling  the
holder to  purchase  one share of  common  stock at a price of $2.75 per  share.
Class "A" Warrants are redeemable by the Company at $.005 per Redeemable Warrant
on 10 days prior written notice,  provided that the average closing bid price of
the Common Stock equals or exceeds  $2.85 per share for 10  consecutive  trading
days ending within 10 days prior to the notice of redemption. Class "B" Warrants
are redeemable by the Company at $.005 per  Redeemable  Warrant on 30 days prior
written notice,  provided that the average closing bid price of the Common Stock
equals or exceeds $3.25 per share for 10 consecutive  trading days ending within
10 days prior to the notice of redemption. 

     Cash used in operating  activities was $1,318,427 for the nine months ended
November 30, 1997, compared to $1,462,977 for the nine months ended November 30,
1996.  Cash used for the nine months ended  November  30, 1997 was  comprised of
cash on hand and collections of accounts  receivable,  which is comprised of VAC
soil counting  sales,  health care and ozone  washing  systems sales and service
from  CyclO3PSS  Textile  Systems,  Inc. and contract  development  and chemical
compound sales from CyclO3PSS Biochemical Corporation.

     The Company  received  $1,065,000  in cash from  issuance  of common  stock
during the nine months ended November 30, 1997, as described above,  compared to
$277 from issuance of common stock,  $2,755,000 from issuance of preferred stock
and  $351,000  from  issuance  of  convertible  debt for the nine  months  ended
November 30, 1996.

     Total assets  decreased to $2,863,424 at November 30, 1997 from  $3,024,846
at February 28, 1997, primarily due to the decrease in the Company's cash, which
was the result of continued losses from operations.


   Plan of Operation

   The plan of operation during the next 12 months includes the following:

     1.  Aggressively  market the Company's Ozone Food Processing  Systems,  the
ECO-PureTM , to the food processing market.

     2.  Continue to market the Company's  Ozone  Laundry  Systems to the Health
care market and the commercial and Industrial Laundry marketplaces.

     3. Continue research and development,  testing and  implementation of ozone
systems for the food processing industries.  Ozone was recently given the status
of "generally regarded as safe" or "GRAS" by the FDA.

     4. Continue  testing and validation and initiate sales and  installation of
the Company's  Health care Ozone Laundry  Systems with Health care  providers in
the United States and Internationally.


                                    - 14 -

<PAGE>
 

     5.  Complete  design and  development  and  embark  upon  marketing  of the
Company's Ozone Laundry Systems for institutional users such as hotels, resorts,
prisons, etc.

     6. Continue to increase marketing,  sales and installation of the Company's
VAC  laundry   counting   and  sorting   systems  to   commercial,   industrial,
institutional and Health care customers.

     7. Complete  validation testing of the Company's liquid chemical sterilant,
SterOxTM, preparatory to completion of a licensing agreement with an established
medical   product   manufacturing/marketing   company  and/or   preparation  and
submission of a 510(k) Pre market Notification to the FDA.

     8. Produce data and design  elements in support of desired  labeling claims
for FDA officials reviewing the Company's 510(k) Premarket  Notification for the
STER-O3- ZONE 100TM.

     9.  Continued  development of products and  enhancements  for the Company's
textile operations.

     10.  Increased  marketing  and  continued  growth of contract  research and
development  within the BioChemical group and the ongoing  manufacture and sales
of their current and future products.

     11.  Engage  brokerage  firms to assist  the  Company  in more  effectively
marketing its shares to the investing  public,  including the  preparation of an
analyst report on the Company and its technologies.

     12. Seek additional capital.  With additional financing in place, there may
be additional  diversification  of the  Company's  business  activities  through
future  acquisitions  or product  development.  The Company has entered  into an
engagement  agreement  with  First  Financial  Investment  Securities,  Inc.,  a
registered broker dealer firm with headquarters in Austin, Texas.

     Although the Company will be primarily  engaged in the aggressive sales and
support of its completed products,  it anticipates that research and development
expenses will be ongoing, and could range from $800,000 to $1,000,000 during the
next twelve months in support and completion of key future products.

     The Company currently  anticipates that its expenditures for equipment will
range from $200,000 - $400,000  during the next twelve months based upon current
manufacturing assumptions,  assuming that the required financing is obtained and
available.

     The Company had 24 full time and 2 part-time  employees  as of November 30,
1997. The Company anticipates that no more than six additional employees will be
hired during the next




                                    - 15 -

<PAGE>




twelve  months,  and then,  only as the market  acceptance of the Company's
food processing and textile systems accelerates.  It is anticipated that general
and  administrative  expenses  would not  increase  by more than  $200,000 on an
annualized basis as a result of any such increase in employees.

     The information set forth herein as to anticipated research and development
costs,  equipment  purchases  and increase in employees  are  management's  best
estimate 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  requirements  to  acquire  additional  operating  and  growth
capital.

     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  additional  operating  capital in the form of debt or equity; 

3.   The ability to achieve and maintain the requirements  necessary to continue
     listing its shares on the NASDAQ Small Cap market, where they are currently
     listed. A loss of such listing would negatively  impact the existence of an
     orderly market in the Company's  securities;  and 

4.   Increased sales of the various products of the Company.



















                                    - 16 -

<PAGE>


   PART II - OTHER INFORMATION

Item 1. Legal Proceedings.See 10-KB for the year ended February 28, 1997.

     Item 2.  Changes in  Securities.  On August 29, 1997 the  Company  gave all
holders of the Company's Convertible Promissory Notes an option to convert their
current outstanding  principal and interest into the Company's restricted common
stock at a conversion  price which is the higher of a) $1.00 per share or b) the
average closing price for the ten days prior to date of conversion. Note holders
continued  to own the  options  which  were  received  as  part of the  original
purchase,  but the  exercise  price was  reduced to $2.00 per share for the Note
Holders  that  converted.  As of November  30,  1997,  all of the long term debt
obligations  and  interest  payable  on long  term  debt  obligations  have been
converted to 1,305,852 shares of the Company's  restricted common stock which is
restricted from sale for a period of 120 days from the date of conversion.

Item 3. Defaults Upon Senior Securities.  None.

Item 4. Submission of Matters to a Vote of Security Holders.  None.

Item 5. Other Information.  None.

Item 6(a). Exhibits.   None.

Item 6(b).  Reports on Form 8-K On November 5, 1997 the Company filed a Form 8-K
     to  announce  the  closing of a private  offering  of its common  stock and
     resignation  of John M Williams as the  Chairman of the Board of  Directors
     and as a director of the Company.






















                                    - 17 -

<PAGE>



                                   SIGNATURES

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



                                          CYCLO3PSS CORPORATION


   Date: January 14, 1998                 By:  /s/ William R. Stoddard
                                          ---------------------------------
                                          William R. Stoddard
                                          Chief Executive Officer
                                          President
                                          Principal Executive Officer



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



                                    - 18 -