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

                                     FORM 10-QSB/A

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

                          FOR THE QUARTER ENDED MAY 31, 1998

                                          OR

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

                            COMMISSION FILE NUMBER 0-22720

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

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

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

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

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

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

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

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


                      DOCUMENTS INCORPORATED BY REFERENCE: NONE

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

<PAGE>




                                   FORM 10-QSB/A

                       Financial Statements and Schedules
                              Cyclo3pss Corporation

                       For Three Months Ended May 31, 1998

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

                               PART I - FINANCIAL INFORMATION

                                                                    Page of
                                                                 Form 10-QSB
   Item 1. Financial  Statements

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

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

                            PART II - OTHER INFORMATION

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

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

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

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

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

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

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





                                      - 2 -

<PAGE>



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

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

   Current assets:

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

  Property and equipment, net                         224,399        236,780

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







                                      - 3 -

<PAGE>




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

<TABLE>
<CAPTION>
                                                                       May 31     February 28
                                                                        1998         1998

                                                                    -------------------------
  <S>                                                                 <C>            <C>

   Liabilities and stockholders' equity

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


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


  Commitments and contingencies

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

</TABLE>

   See accompanying notes to condensed consolidated financial statements


                                      - 4 -

<PAGE>




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


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

   Net revenues                                        $323,391       $302,391

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

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

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

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




 ---------------------------------------------------------------------------
   See accompanying notes to condensed consolidated financial statements





                                      - 5 -

<PAGE>




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

<TABLE>
<CAPTION>
                                                                                 For the three months ended
                                                                                          May 31,
                                                                                   1998            1997
                                                                              --------------------------------
  <S>                                                                            <C>              <C>    
  Cash flows from operating activities:
      Net loss                                                                   $(835,550)       $(492,048)
      Adjustments to reconcile net loss to net cash used in operating
            activities:
     Depreciation and amortization                                                 103,671          108,830
     Accrued interest on convertible debt issuance                                     ---           34,680
     Issuance of warrant with convertible debt                                         ---           21,193
             Common stock issued for services                                          ---          184,000
     Changes in assets and liabilities:
       (Increase) decrease in accounts receivable                                 (119,009)        (122,158)
       (Increase) decrease in inventories                                            2,513          (14,698)
       (Increase) decrease in prepaid expense                                      (20,270)         (51,926)
       Decrease in accounts payable and accrued liabilities                       (427,303)         (12,149)
                                                                                ------------------------------
  Net cash used in operating activities                                         (1,295,948)        (444,276)
                                                                                ------------------------------
  Cash flows from investing activities:
      Purchase of property and equipment                                           (20,455)          (3,988)
      Addition to developed patents and other                                       (5,817)            ----
                                                                                ------------------------------
  Net cash used in investing activities                                            (26,272)          (3,988)
                                                                                ------------------------------
  Cash flows from financing activities:
      Proceeds from issuance of common stock                                     1,395,004             ----
      Proceeds from exercise of stock options                                       11,800             ----
      Principal payments under capital lease obligations                            (7,041)          (6,017)
                                                                                ------------------------------
  Net cash provided by (used in) financing activities                            1,399,763           (6,017)
                                                                                ------------------------------

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

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

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

</TABLE>








   ----------------------------------------------------------------------------
   See accompanying notes to condensed consolidated financial statements.



                                             - 6 -

<PAGE>




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


   1.  Summary of Significant Accounting Policies

   Financial Statements

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

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

   Organization

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

   Principles of Consolidation

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

   Use of Estimates

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






                                    - 7 -

<PAGE>




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


   1.  Summary of Significant Accounting Policies (continued)

   Net Loss per Common Share

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

   New Accounting Standard

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

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

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

   2.  Basis of Presentation

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

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

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


                                    - 8 -

<PAGE>




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



   2.  Basis of Presentation (continued)

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

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


   3. Contingencies

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

























                                    - 9 -

<PAGE>







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



   4. Segment Information

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

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

                                                 For three months ended
                                                       May 31, 1998
                                                 _______________________

   Net revenues                                        
      Food Safety products                             $156,000
      Textile products                                  102,894
      Biochemical products                               64,497
                                                      -----------

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

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

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

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

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




                                    - 10 -

<PAGE>





                                 PART I - ITEM 2

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                               OR PLAN OF OPERATION

General

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

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

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

Results of Operations

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

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

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




                                    - 11 -

<PAGE>


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

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

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

Liquidity and Capital Resources

     As of the date of this filing,  the Company has insufficient  funds on hand
to continue its operations for the entire  upcoming  fiscal year ending February
28, 1999 and meet the new  quantitive  maintenance  requirements  for  continued
listing on Nasdaq Stock  Market,  unless  significantly  increased  revenues and
gross  profits are achieved or  additional  financing  is  obtained.  Should the
Company be  unsuccessful  in achieving the increased level of revenues and gross
profits required to pay its operating expenses,  which approximate  $250,000 per
month,  or in acquiring  adequate  additional  financing,  the Company will seek
direction  from  the  Board of  Directors  as to  whether  operation  should  be
curtailed, other financing arrangments can be achieved, 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  and  render  the  Company  unable  to  meet  the  new  quantitive
maintenance  requirements  for  continued  listing on Nasdaq Stock  Market.  The
Company does not currently meet the continued listing requirements of the Nasdaq
Small-Cap  Market.  The Company has  requested  an  exception  to the  continued
listing  requirements  however,  such  request  was  denied by a Nasdaq  Listing
Qualification  Panel.  The Panel  determined to delist the Company's  securities
effective June 16, 1998. The Company was entitled to appeal, and did appeal such
determination.  The Company's  appeal will be heard by a new Listing Panel.  The
Company  anticipates  that its common  stock will  continue  to be listed on the
Nasdaq Small-Cap Market.  The Company has funded its operations through the sale
of its  securities.  The  failure to be listed on Nasdaq  would  likely  have an
adverse effect on the ability of the Company to raise additional capital to fund
its operations.

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



                                    - 12 -

<PAGE>




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

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

     Total  assets  increased to  $2,097,051  for the three months ended May 31,
1998 from  $1,960,141  for the year ended February 28, 1998, due to the increase
in the Company's cash position and a significant increase in accounts receivable
from $113,090 at February 28, 1998 to $232,099 at May 31, 1998.

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

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

Plan of Operation

Food Safety Systems

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

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




                                    - 13 -

<PAGE>




Laundry Systems

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

*  Competitive  laundry  markets  will create a need for cost  reduction  and
   increased  productivity;

*  Further  environmental  restrictions  placed  on discharge water quality;

* Increased emphasis on sanitation and disinfection in the laundry  industry;
  and

* Increased  concern  regarding  environmental issues associated with the 
  laundry industry.


Specialty Chemicals

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

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

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

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

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


                                    - 14 -

<PAGE>


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.  None.

      Item 2.     Changes in Securities.  None.

      Item 3.     Defaults Upon Senior Securities. None.

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

      Item 5.     Other Information.

      Item 6.     Exhibits and Reports on Form 8K.  None.







                                    - 15 -

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



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


                                    - 16 -