CONFORMED
-------------------------------------------------------------------------------

                       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 August 31, 1999

                                          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 October 14, 1999 - 18,847,817  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 August 31, 1999

       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..............7
           Notes to Condensed Consolidated Financial Statements........8

   Item 2. Management's Discussion and Analysis or
           Plan of Operations.........................................12

                            PART II - OTHER INFORMATION

   Item 1. Legal Proceedings .........................................18

   Item 2. Changes in Securities......................................18

   Item 3. Defaults Upon Senior Securities............................18

   Item 4. Submission of Matters to a Vote of Security Holders........18

   Item 5. Other Information..........................................19

   Item 6. Exhibits...................................................19









                                      - 2 -

<PAGE>

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





                                                       August 31,  February 28,
                                                          1999         1999
                                                    ------------ --------------
  Assets

   Current assets:

      Cash                                             $46,284        $36,018
      Accounts receivable                              136,255         47,578
      Inventories                                       53,480         65,348
      Prepaid expenses                                  52,715         45,128
                                                    ------------ --------------
  Total current assets                                 288,734        194,072

  Property and equipment, net                          184,954        232,935

  Other assets:
      Acquired patents, net                             97,810        109,210
      Developed patents and other, net                  61,529         57,390
                                                    ------------ --------------
                                                      $633,027       $593,607
                                                    ============ ==============







                                      - 3 -

<PAGE>




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


<TABLE>
<CAPTION>
                                                                     Aug 31,    February 28,
                                                                      1999          1999
                                                                -----------------------------
<S>                                                                 <C>          <C>

   Liabilities and stockholders' equity

  Current liabilities:
      Accounts payable                                              $277,589     $239,140
      Accrued liabilities                                            135,190      149,033
      Current portion of capital lease obligations                     3,858        9,505
                                                                -----------------------------
  Total current liabilities                                          416,637      397,678


   Long-term portion of capital lease obligations                       --         3,778


  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; 1,190 shares issued and
            outstanding                                                 12           12
         Series "C" convertible preferred stock; 550 shares
            authorized; 363 and 206 shares issued and
            outstanding at August 31, 1999 and February 28,
            1999, respectively                                          4            2
      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;  17,779,482 shares issued at August 31,
       1999 and 17,599,482 shares issued at February 28, 1999         17,779       17,599
      Additional paid-in capital                                  18,035,601   17,860,958
      Accumulated deficit                                        (17,335,817) (17,185,231)
      Less treasury stock, 264,000 common shares at cost            (501,545)    (501,545)
                                                                 ---------------------------
      Total stockholders' equity                                     216,390      192,151
                                                                 ---------------------------
                                                                    $633,027     $593,607
                                                                 ===========================

</TABLE>


   See accompanying notes to condensed consolidated financial statements


                                      - 4 -

<PAGE>






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





                                                    For the three months ended
                                                            August 31,
                                                        1999           1998
                                                  -------------- --------------

   Net revenues                                        $169,203       $265,273

   Costs and expenses:
      Cost of sales                                     118,108        182,591
      Research and development                               --         91,716
      Selling and marketing                                  --         93,490
      General and administrative                        234,978        482,634
      Depreciation and amortization                      29,896        104,250
                                                  -------------- --------------
                Total expenses                          382,982        954,681

  Loss from operations                                 (213,779)      (689,408)
   Legal settlement expense                            (853,000)           --
  Interest income                                             3          1,624
  Interest expense                                         (229)        (1,077)
                                                  -------------- --------------

  Net loss                                           (1,067,005)      (688,861)
   Preferred stock dividends                             (8,499)       (38,958)
                                                  -------------- --------------
   Net loss applicable to common stock              $(1,075,504)    $(727,819)
                                                  ============== ==============
   Net loss per common share                              (.06)          (.04)
                                                  -------------- --------------
    Weighted average number of common shares
     issued and outstanding                         17,779,482     16,584,659
                                                  ============== ==============



   See accompanying notes to condensed consolidated financial statements



                                      - 5 -

<PAGE>


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


                                                     For the six months ended
                                                            August 31,
                                                        1999           1998
                                                  -------------- --------------

   Net revenues                                        $485,935       $588,664

   Costs and expenses:
      Cost of sales                                     248,107        460,696
      Research and development                               --        206,538
      Selling and marketing                                  --        203,650
      General and administrative                        321,897      1,035,698
      Depreciation and amortization                      65,957        207,921
                                                  -------------- --------------
                Total expenses                          635,961      2,114,503

  Loss from operations                                (150,026)    (1,525,839)
   Legal settlement expense                           (853,000)             --
  Interest income                                            18          3,929
  Interest expense                                        (577)        (2,501)

  Net loss                                          (1,003,585)    (1,524,411)
   Preferred stock dividends                           (16,998)       (77,916)
                                                 -------------- --------------
   Net loss applicable to common stock              $(1,020,583)   $(1,602,327)
                                                 ============== ==============
   Net loss per common share                              (.06)          (.10)
                                                 -------------- --------------
    Weighted average number of common shares
     issued and outstanding                         17,709,482      16,298,977
                                                 ============== ==============











   See accompanying notes to condensed consolidated financial statement


                                      - 6 -

<PAGE>






   CYCLO3PSS CORPORATION
   Condensed Consolidated Statements of Cash Flow
   (UNAUDITED)
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                               For the six months ended
                                                                      August 31,
                                                                  1999            1998
                                                           --------------------------------
  <S>                                                       <C>            <C>

  Cash flows from operating activities:
      Net loss                                              $(150,585)     $(1,524,411)
      Adjustments to reconcile net loss to net cash
          used in operating activities:
     Depreciation and amortization                             65,957          207,921
             Changes in assets and liabilities:
       Decrease in accounts receivable                        (88,677)          37,210
       Increase in inventories                                 11,868           (6,604)
       Decrease in prepaid expense                             (7,587)          13,588
       Decrease in accounts payable and accrued liabilities    24,606         (599,656)
                                                           --------------------------------
  Net cash used in operating activities                      (144,418)      (1,871,952)
                                                           --------------------------------

  Cash flows from investing activities:
      Purchase of property and equipment                         (802)         (39,944)
      Addition to developed patents and other                  (9,914)         (10,824)
                                                           --------------------------------
  Net cash used in investing activities                       (10,716)         (50,768)
                                                           --------------------------------
  Cash flows from financing activities:
      Proceeds from issuance of preferred and common stock    156,825        1,500,820
      Proceeds from issuance and exercise of stock options     18,000           11,800
      Principal payments under capital lease obligations       (9,425)         (13,100)
                                                           --------------------------------
  Net cash provided by financing activities                   165,400        1,499,520
                                                           --------------------------------
  Net increase (decrease) in cash                              10,266         (423,200)

  Cash at beginning of period                                  36,018          573,161
                                                           --------------------------------
  Cash at end of period                                       $46,284         $149,961
                                                           ================================

</TABLE>





See accompanying notes to condensed consolidated financial statements.




                                             - 7 -

<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, 1999 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 August 31, 1999,  and the results of its operations and its cash flows for
   the interim  periods ended August 31, 1999 and August 31, 1998. 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, 1999.

   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 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   sterilization   and/or
   disinfection of surgical, medical and other instruments.

   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


                                    - 8 -

<PAGE>






   from those estimates.
   CYCLO3PSS CORPORATION
   Notes to Condensed Consolidated Financial Statements (Unaudited)
------------------------------------------------------------------------------


   1.  Summary of Significant Accounting Policies (continued)

   Net Income (Loss) per Common Share

     Net  income  (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.  Income (loss) per common
share for preferred stock dividends was not significant  (less than one cent per
share).  The Company excluded  5,551,451 and 5,519,173 options and warrants from
the  weighted  average  shares  outstanding  computation  at August 31, 1999 and
February 28, 1999, respectively as their effect would be anti-dilutive.

   Comprehensive Income

     Statement of Financial  Accounting  Standards ("SFAS") No. 130,  "Reporting
Comprehensive  Income",  requires  that  all  items  that are  recognized  under
accounting  standards as  components  of  comprehensive  income be reported in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial statements. The items of other comprehensive income that are typically
required to be displayed are foreign currency items,  minimum pension  liability
adjustments,  and unrealized gains and losses on certain investments in debt and
equity  securities.  There have been no items of other  comprehensive  income to
date.

   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 August  31,  1999 of  $17,335,817  and  $17,185,231  at
February  28,  1999,  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, 1999 was  $3,232,857  and the
Company  recorded net loss of $150,026 for the six months ended August 31, 1999.
The current liabilities are in excess of current assets by $127,903 and $203,606
at August 31, 1999 and February 28, 1999 respectively.  To date, the Company has
funded its operations  through the issuances of common and preferred  stock. The
Company  anticipates a net loss for the year ended February 28, 2000, and with a
cash balance of $46,284 at August 31, 1999 and expected  cash  requirements  for
the year,  there is  substantial  doubt as to the Company's  ability to continue
operations.

     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




                                    - 9 -

<PAGE>

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


   2.  Basis of Presentation (continued)

   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;  however,  no assurance can be given that sales
   will be generated or that the additional necessary funding will be raised.

   3. Contingencies

   The Company recorded  $853,000 in August 1999 as Legal settlement  expense in
   connection  with the settlement  agreement it reached with Mifal Klita et al.
   in September  of 1999.  During the period from May through  August 1996,  the
   Company sold its series B preferred stock in a private placement  offering to
   certain  investors  pursuant to the  provisions of Regulation S. One of these
   investors,  Mifal Klita, a purported Canadian company, filed suit against the
   Company demanding the removal of the restrictive  investment legend which the
   Company  caused  to be  placed  on  common  shares  issued  pursuant  to  the
   conversion of series B preferred  shares.  The suit was filed in the Court of
   Chancery  in the State of  Delaware,  which  ruled in favor of the Company on
   April 8, 1997 and dismissed  Mifal Klita's  suit.  Subsequently,  Mifal Klita
   refiled an amended suit in the Superior  Court of the State of Delaware.  The
   final settlement  agreement reached by the parties  involved,  entitled Mifal
   Klita to the  conversion of his series B preferred  shares into  unrestricted
   common stock of the Company  plus shares for legal fees and other  provisions
   stated in the  original  agreement.  The  unrestricted  common  stock will be
   disbursed monthly over a two year period.  The Company is not involved in any
   other legal actions and claims at this time.

   4. Segment Information

   During the six months ended August 31, 1999 and 1998, the Company operated in
   three principal industries;  the manufacture,  sale and installation of ozone
   food processing products ("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, other receivables,  prepaid expenses, property and
   equipment and corporate payables.


                                    - 10 -

<PAGE>






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


   4. Segment Information (continued)

                                                  For six months ended
                                                Aug 31, 1999 Aug 31, 1998
                                              ----------------------------
   Net revenues
      Food Safety products                  $111,535               $274,436
      Textile products                       136,594                129,914
      Biochemical products                   237,806                184,314
                                            --------               --------
      Total Revenue                         $485,935               $588,664
                                            ========               ========

   Operating income (loss)                  $ 55,422               $(86,076)
      Food Safety products                   (85,726)              (673,084)
      Textile products                        76,809                 46,226
      Biochemical products                 -----------             ----------
      Total operating income (loss)           46,505               (712,934)

      Corporate expenses                    (196,531)             (812,905)
      Interest income                             18                 3,929
      Interest expense                          (577)               (2,501)
                                           -----------           -----------
      Net income (loss)                   $ (150,585)         $ (1,524,411)
                                          ============         =============
   Identifiable assets
      Food Safety products                   $63,515               $92,898
      Textile products                       324,319               730,486
      Biochemical products                   152,203               278,168

      General corporate assets                92,990               234,042
                                           ----------           ----------
      Totals assets                         $633,027            $1,335,594
                                          ===========           ==========



                                    - 11 -

<PAGE>




                                 PART I - ITEM 2

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                               OR PLAN OF OPERATION

   General

     Cyclopss  Corporation  is primarily  engaged in the design,  manufacturing,
assembly,   sales  and  installation  of  ozone  application   technologies  and
processes. The Company's main product lines offer an alternative to address food
safety  concerns and laundry  disinfection  and efficiency.  Ozone  disinfectant
technology is proven to reduce  microbial  counts on food  products  without the
potential  for the  development  of  immunity  or  resistance  by the  microbial
organism and build up of chemicals on the final product.  Ozone laundry  systems
enable users to reduce costs  associated with labor,  water,  energy,  chemical,
textile replacement and wastewater.

     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  holds
patents for medical  sterilization  processes  and plans to resume  research and
development  activities in this field within the next few years, when sufficient
funds are available. . Results of Operations

     The Company's  revenues were $169,203 for the three months ended August 31,
1999  compared to $265,273  for the three  months  ended  August 31,  1998.  The
revenues  were  $485,935 for the six months  ended  August 31, 1999  compared to
$588,664 for the six months ended August 31, 1998. 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 August 31, 1999 was $51,095 compared to $82,682 for the three
months ended  August 31, 1998.  The gross margin for the six months ended August
31, 1999 was  $237,828  compared to $127,968 for the six months ended August 31,
1998.  The  Company  has  taken  steps to  control  cost of  sales  by  reducing
management,  employees, production space, and any other unnecessary expense. The
Company expects revenue to increase in the upcoming quarters, due to managements
efforts to locate new  customers.  The  Company  also  expects  cost of sales to
increase at a relative  proportion to the revenue.  If revenues do not increase,
the Company will not continue to operate unless  additional  funds are available
from other sources.

     Research  and  development  expenses  decreased to $0 for the three and six
months  ended  August 31, 1999 from  $91,716 and  $206,538 for the three and six
months ended August 31, 1998, respectively.  The Company eliminated all research
and  development  costs during the six months ended August 31, 1999, due to lack
of necessary funds for this function.  The Company  believes it is necessary and
intends to resume its research and development  efforts in the current year when
more funds are available or if it can locate strategic partners that are able to
fund research and development efforts.

     Selling and marketing expenses decreased to $0 for the three and six months
ended  August 31, 1999 from  $93,490 and  $203,650  for the three and six months
ended  August 31,  1998,  respectively.  The  Company  took  steps to  eliminate
marketing staff and eliminated all advertising in order to help


                                    - 12 -

<PAGE>






conserve  cash.  Management  believes  that it is critical to  periodically
support and supplement its sales efforts through  advertising,  public relations
and trade-show participation when sufficient funds are available.

     General and  administrative  expenses  decreased  to $234,978 for the three
months ended August 31, 1999 from $482,634 for the three months ended August 31,
1998,  due to a decrease in  management  employment,  shareholder  relations and
legal fees.  General and  administrative  expenses decreased to $321,897 for the
six months ended August 31, 1999 from $1,035,698 for the six months ended August
31,  1998.  Management  has taken  steps to reduce  these costs in order to help
conserve  the limited cash  available.  Management  will  continue to review and
control these costs,  but believes  general and  administrative  expenses in the
coming  quarters  of  fiscal  2000 will  increase  due to  management  and human
resource  requirements  for  the  Company  should  sales  and  other  commercial
activities increase, and should more funds become available.

     Interest  expense  declined to $229 for the three  months  ended August 31,
1999  compared  with $1,077 for the three months  ended August 31, 1998,  and it
declined to $577 for the six months ended August 31, 1999  compared  with $2,501
for the six months ended August 31, 1998 due to the  conversion of all long-term
debt to common stock and lower lease payments. The Company is not in a financial
position to borrow from traditional sources and anticipates low interest expense
in fiscal 2000.  The Company has minimum debt and intends to fund its operations
through non-interest bearing capital sources, but there can be no assurance that
such  funding  will be available  and if it is not  available,  the Company will
likely not be able to continue in operations.

     The Company  recorded  net loss  applicable  to common  stock for the three
months  ended August 31, 1998 of  $1,075,504  compared to $727,819 for the three
months ended August 31, 1998.  Net loss  applicable  to common stock for the six
months ended August 31, 1998 of $1,020,583  compared to  $1,602,327  for the six
months ended August 31, 1998.  The Company  recorded  $853,000 in August 1999 as
loss on legal settlement in connection with the settlement  agreement it reached
with Mifal Klita et al. in September of 1999. During the period from May through
August  1996,  the  Company  sold its  series  B  preferred  stock in a  private
placement offering to certain investors pursuant to the provisions of Regulation
S. One of these investors, Mifal Klita, a purported Canadian company, filed suit
against the Company  demanding the removal of the restrictive  investment legend
which the Company  caused to be placed on common shares  issued  pursuant to the
conversion  of  series B  preferred  shares.  The suit was filed in the Court of
Chancery in the State of Delaware,  which ruled in favor of the Company on April
8, 1997 and dismissed Mifal Klita's suit.  Subsequently,  Mifal Klita refiled an
amended  suit  in the  Superior  Court  of the  State  of  Delaware.  The  final
settlement  agreement reached by the parties  involved,  entitled Mifal Klita to
the conversion of his series B preferred shares into  unrestricted  common stock
of the  Company  plus shares for legal fees and other  provisions  stated in the
original agreement. The unrestricted common stock will be disbursed monthly over
a two year period.  In order to help conserve  cash, the Company has taken steps
to control  costs by reducing  management,  promotional  and  investor  relation
activities.  The Company anticipates that it will operate at a loss for the year
ending February 28, 2000. However, if revenues of CLS, EFS and CBC increase,  it
is anticipated that losses will begin to diminish.

   The Company believes that three of its divisions, namely Eco-Pure Food Safety
Systems, Inc.,


                                    - 13 -

<PAGE>


     Cyclopss  Laundry  Systems,  Inc.,  and  Cyclopss  Biochemical,  Inc.  will
contribute to the Company's future revenue stream.

   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 fiscal year ending  February 28, 2000
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  additional  equity  financing  to pay the
shortfall,  the Company  will seek  direction  from the Board of Directors as to
what  action  must be taken,  or what  action  should be taken to  preserve  the
Company's  limited  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.

     Cash used in  operating  activities  was  $144,419 for the six months ended
August 31, 1999 compared to $1,871,952 for the six months ended August 31, 1998.
The Company has  significantly  reduced its cash use rate in fiscal 2000, due to
the necessity of having to conserve available cash.

     Cash  expenditures  for property and equipment and patents were $10,715 for
the six months  ended  August 31,  1999  compared  to $50,768 for the six months
ended August 31, 1998. This decrease is also the result of the Company's attempt
to help conserve cash and reduce expenses.

     Net cash provided by financing  activities  for the six months ended August
31, 1999 was  $165,400,  due mainly to issuance of 157 shares of  preferred  "C"
shares,  as  described  further in this  section.  Cash  provided  by  financing
activities for the six months ended August 31, 1998 was  $1,499,520,  due to the
issuance of  1,296,140  shares of common stock in a private  placement  offering
through  First  Financial   Investment   Securities,   which  raised  $1,620,175
($1,395,004 in net proceeds).

     Total assets increased to $633,027 for the six months ended August 31, 1999
from $593,607 for the year ended February 28, 1999, due to a slight  increase in
the Company's  cash position and a significant  increase in accounts  receivable
from $47,578 at February 28, 1999 to $136,255 at August 31, 1999.  This increase
in accounts receivable is mainly due to the recording of sales since year end.

     Total current liabilities slightly increased to $416,637 at August 31, 1999
from $397,678 at February 28, 1999,  mainly due to a slight increase in accounts
payable. Long term liabilities decreased to $0 for the three months ended August
31, 1999 from $3,778 for the year ended February 28, 1999. This decrease was due
to the repayment of certain lease  liabilities and the  reclassification  of the
remaining lease obligations to current obligations.

     During the  period of  September  28,  1998 to April 15,  1999 the  Company
authorized and offered its Series "C" preferred  shares to accredited  investors
in an offering made pursuant to Regulation S of the Securities Exchange Act, and
a Board  Resolution on September  10, 1998.  By the end of the  offering,  seven
subscribers  purchased such shares in this offering for a total of $362,825 that
were accepted  under the  subscription  plan.  Series "C"  preferred  shares are
convertible to common shares at $.10 (ten cents) per share.


                                    - 14 -

<PAGE>


   Year 2000 or Y2K Issue

     The Year 2000 or Y2K issue refers to some  computer  systems'  inability to
recognize  the date field as the year 2000.  As a result of these  shortcomings,
some  computers may be unable to process  year-date data  accurately  beyond the
year 1999.  There is  substantial  concern  that if the Year 2000 problem is not
adequately   addressed,   there  may  be   widespread   problems  with  computer
applications in all areas of use, potentially affecting the global economy.

     If the Company's  internal systems and products do not correctly  recognize
date information when the year changes to 2000, there could be an adverse impact
on the Company's operations. Additionally, if the Company's supplier, customers,
and other parties  experience Y2K  difficulties,  the Company could be adversely
affected.  The Company is  continuing  the process of assessing  and  correcting
potential Year 2000 problems with the Company's operations.

     The Company has assessed the potential impact of this issue on its business
and  operations  as  being  minor.  With  regard  to  its  information   systems
(financial,  supply,  inventory,  order,  office support,  etc.) the Company has
developed and begun  implementing a plan to convert all necessary  systems to be
ready for the year 2000.  The Company  does not believe the Year 2000 issue will
have a material  effect on the Company's  internal  accounting  and  information
systems, most of which consist of relatively inexpensive  off-the-shelf software
packages.  Costs incurred to date to modify systems have been  insignificant and
remaining costs to modify IT systems are expected to be less than $5,000.

     With regard to its non-information system operations, the Company is in the
process of  reviewing  and  correcting  Y2K  problems  in the  following  areas:
products currently manufactured by the Company and manufacturing and engineering
systems. This review is approximately 95% complete and the Company has been able
to correct or plans to correct prior to 2000 each material Y2K issue  identified
in the review.

     With  regard to  potential  Y2K issues  for the  Company's  major  material
suppliers,  the Company is in the process of  communicating  with such  parties.
Although  not all major  suppliers  have  indicated  their Y2K  compliance,  the
Company  has not yet  identified  any major  supplier  that  believes it will be
unable to operate  due to Y2K  problems  in 2000.  Generally,  the  Company  has
alternative  sources  for  supplies  in the event a  supplier  experiences  such
difficulties and the Company does not presently anticipate material difficulties
in obtaining materials due to suppliers' Y2K problems.

     With regard to major  customers,  the Company has had  communications  with
such parties and is reviewing  responses regarding the Companies Y2K compliance.
To date, the Company has insufficient information from such parties to determine
the potential impact on the Company if such parties experience Y2K difficulties.

     With regard to third-party  utilities and services (for example,  telephone
electrical, bankcard processing and shipping services), the Company has no plans
to evaluate the Y2K readiness of such providers.




                                    - 15 -

<PAGE>


     The Company  anticipates that the material risks related to its information
and non-  information  systems will be timely mitigated by current efforts being
made by the Company to identify  and correct  internal  Y2K  problems.  However,
there is no guarantee that the Company will successfully identify or correct all
Y2K problems in a timely manner. In some cases, problems may be unforeseen,  and
occur regardless of the testing and review that is done.

     Additionally,  a major  potential Y2K risk to the  Company's  operations is
service disruption from third-party providers that supply telephone, electrical,
banking and shipping  services.  Any disruption of these critical services would
hinder the Company's ability to receive, process and ship orders.

   Plan of Operation


     The  Company's  Plan of  Operation  is solely  subject to  availability  of
additional  capital,  of  which  there  can be no  assurance.  The  Company  has
insufficient  capital for  operations;  however,  the Company has entered into a
Letter of Intent with a large  strategic  partner and a long term  contract  for
product  development and royalties with a small appliance  manufacturer,  Otres,
Inc.

     The Otres Inc.,  provides  the  Company  with the first right of refusal to
develop new products in the future and a royalty  stream based on the units sold
of products that are jointly developed. For these considerations the Company has
assisted  Otres  Inc.  in the  development  and  marketing  of two new  consumer
products based on ozone technology.

     We are bound by stringent  Confidential  Disclosure  Agreements to both the
strategic  partner  and  Otres,  Inc.  to  protect  the  Company's  intellectual
properties.  The strategic  partner is a significant  worldwide  purveyor to the
target markets of the Company and the partner is funding ozone R&D projects with
the Company. Otres, Inc. has completed the design of two household products that
will be  introduced  to the  consumer  market  within the next few  months.  The
Company  anticipates  its  revenues  as well as the source of those  revenues to
change significantly through these two relationships.  However,  there can be no
assurance that a successful strategic partnership agreement can be negotiated as
a result  of the  Letter of  Intent  or that the new  Otres  products  will gain
significant market acceptance.

     During this last quarter,  The Company  successfully  demonstrated  the Eco
Wash system for the US Navy in San Diego at the Public Works Center.  The system
was able to  launder  industrial  wipe rags  achieving  higher  absorbency  than
produced with  conventional  laundry  formulas.  This result was achieved  while
reducing hot water costs by 100%, water consumption by 51%, sewer costs by 100%,
chemical costs by 77%, labor by 29%, and electricity  cost by 11%. These savings
resulted in a payback period of 10.7 months. From the successful  demonstration,
the Naval Facilities  Engineering  Service Center is recommending that the other
PWC sites convert their  operations to the Eco Wash system  (potentially a total
of 50 systems).  Since this  demonstration,  several new sites have been visited
and  several  more  visits  to new sites are  planned  for the third and  fourth
quarters.  Each site will average two Eco Wash 60 Laundry  Systems,  including a
washer and  dryer,  at  approximately  $75,000  each.  At this time there are no
additional  Eco Wash  systems  under  contract and there is no  assurances  that
additional contracts are forthcoming.


                                    - 16 -

<PAGE>


     In late 1997 the electrical Power Research  Institute (EPRI) declared ozone
as being Generally Regarded as Safe (GRAS) allowing food processors to use ozone
in the processing of certain food items.  Quoting from a September 2, 1999 ozone
industry solicitation on behalf of EPRI: "Recently, FDA discovered a troublesome
ruling in their 1982 bottled water regulation that accorded GRAS status to ozone
use in bottled water.  The 1982 bottled water ruling was issued  inappropriately
under 184.1(b) (2), which indicated that all other food uses require regulation.
Therefore,  although  FDA has elected  not to  challenge  the EPRI Expert  Panel
declaration, the FDA cannot officially sanction GRAS status for the use of ozone
in food  processing  because of the prior  184.1(b) (2) ruling.  To help resolve
this dilemma,  EPRI is preparing to petition the FDA for approval of ozone under
the food additive regulations. In view of the significant food safety protection
provided by the use of ozone,  FDA has agreed to receive this petition under the
new  Expedited  Review  rules,  which  appears to be the best way to resolve the
regulatory  problem." This  discovery and its  resolution  can adversely  affect
future sales and contracts for Eco Pure and others in the ozone industry.

     The Company's expertise in ozone applications  combined with the aggressive
public  relations   activities   created   substantial   interest  in  the  food
decontamination   potential  of  the  Company's  technologies.   However,  those
interested parties anticipated proven turnkey solutions,  and were not initially
prepared  to  contribute  resources  toward the  development  work and  expenses
necessary to ultimately provide the solution.  The Company has been aggressively
seeking customers and strategic  partners who are sufficiently  convinced of the
potential to  pro-actively  participate  in necessary  research and  development
costs. These customers and strategic partners not only may provide revenues from
possible R&D contracts but also follow-on  revenues from the purchase of systems
and processes.  These installed systems will be used as demonstration sites, and
will further validate the technologies.

     The Company  currently has provided a major food  producer  with  prototype
ECO-PURE test systems that have been installed in wet produce processing plants,
long-term  produce  storage  facilities,  short term banana and tomato  ripening
rooms, and for use in treatment of herbal remedies and dietary supplements.

     The  Company  continues  to pursue  strategic  partners  who are willing to
advance  resources  and  expenses in contract  R&D  relationships  that not only
provide revenues and working capital for the Company but, if successful,  create
a captive customer for future products.

     Until such time as additional monies are raised and the Company can execute
its  broader  sales and  marketing  plan,  management  anticipates  its  primary
revenues,  if any, will be generated through the R&D contracts and the resulting
sale of systems  engineered  from, and sold to, the parties funding the specific
R&D activities.

     Even with sufficient  funds  available,  the ongoing  challenge  facing the
Company 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.




                                    - 17 -

<PAGE>



     The Biochem  products will  continue to be driven by customer  requests and
increased sales will be derived from contract product development. Current sales
activities  will be  evaluated  and  alternatives  looked for to improve  profit
margins.  Joint efforts will continue  with Foster  Miller,  Inc., in efforts to
create a market for Biochem's monomer to the aerospace industry.

     Given the Company's  generally  illiquid cash position and limited capital,
there can be no assurances that the Company will be able to effectively  execute
its plan of operations.

     The Company  had eleven  full time and one part time  employee as of August
31,  1999.  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.

   PART II - OTHER INFORMATION

     Item 1. Legal  Proceedings.

     A settlement  agreement was reached with Mifal Klita et al. in September of
1999.  During the period  from May through  August  1996,  the Company  sold its
series B preferred stock in a private  placement  offering to certain  investors
pursuant to the provisions of Regulation S. One of these investors, Mifal Klita,
a purported  Canadian  company,  filed suit  against the Company  demanding  the
removal of the  restrictive  investment  legend  which the Company  caused to be
placed on common shares issued  pursuant to the conversion of series B preferred
shares.  The suit was filed in the Court of Chancery  in the State of  Delaware,
which ruled in favor of the Company on April 8, 1997 and dismissed Mifal Klita's
suit. Subsequently, Mifal Klita refiled an amended suit in the Superior Court of
the State of Delaware.  The final  settlement  agreement  reached by the parties
involved,  entitled  Mifal  Klita to the  conversion  of his series B  preferred
shares into unrestricted  common stock of the Company plus shares for legal fees
and other provisions stated in the original  agreement.  The unrestricted common
stock will be disbursed monthly over a two year period.

      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(a).  Exhibits and Reports on Form 8None.

           6(b).  Exhibits  and  Reports  on Form  S-8.  To  register  Executive
                  Employee  Stock  Option  Agreements  and  grant of  shares  to
                  William R. Stoddard in Lieu of cash wages.


                                    - 18 -

<PAGE>

                                   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: October 14, 1999                 By/s/ William R. Stoddard
                                          -----------------------
                                           William R. Stoddard
                                           Chief Executive Officer
                                           Principal Executive Officer



   Date: October 14, 1999                 By/s/ Mondis Nkoy
                                   ----------------------------------
                                          Mondis Nkoy
                                          Controller, Corporate Secretary
                                          Principal Financial Officer





                                    - 19 -