<PAGE>

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                   FORM 10-Q



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


                 For the Quarterly Period Ended March 31, 2000

                         Commission File Number 0-18044

                              PROCYTE CORPORATION
           (Exact name of the registrant as specified in its charter)



Washington                                                            91-1307460
(State of incorporation)                    (I.R.S. Employer Identification No.)

8511 154th Avenue N.E., Redmond, WA                                        98052
(Address of principal executive offices)                              (Zip code)

Registrant's telephone number, including area code:               (425) 869-1239


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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


As of April 21, 2000, there were issued and outstanding 15,452,970 shares of
common stock, par value $.01 per share.

<PAGE>

                              ProCyte Corporation

                                     INDEX
<TABLE>
<S>                                                                                     <C>
Part I  - Financial Information.......................................................   3
 Item 1. Condensed Financial Statements...............................................   3
   Balance Sheets - as of March 31, 2000 and December 31, 1999 (unaudited)............   3
   Statements of Operations - three months ended March 31, 2000 and 1999 (unaudited)..   4
   Statements of Cash Flows - three months ended March 31, 2000 and 1999 (unaudited)..   5
   Statements of Stockholders' Equity - three months ended March 31, 2000 and 1999
   (unaudited)........................................................................   6
   Notes to Financial Statements (unaudited)..........................................   7
 Item 2 - Management's Discussion and Analysis of Financial Condition and
 Results of Operations................................................................  10
 Item 3 - Quantitative and Qualitative Disclosures About Market Risk..................  18

Part II - Other Information...........................................................  18
 Item 1.  Legal Proceedings...........................................................  18
 Item 2.  Changes in Securities and Use of Proceeds...................................  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 and Reports on Form 8-K............................................  20
Signatures............................................................................  20
EXHIBIT INDEX.........................................................................  21
</TABLE>

                                       2
<PAGE>

                        Part I  - Financial Information

Item 1. Condensed Financial Statements

    Balance Sheets - as of March 31, 2000 and December 31, 1999 (unaudited)

<TABLE>
<CAPTION>
                                                                 -------------------------------------------------
                                                                       March 31, 2000          December 31, 1999
                                                                 -------------------------------------------------
<S>                                                                <C>                      <C>
Assets

  Cash and cash equivalents......................................            $  3,584,888             $  3,883,187
  Accounts receivable, net.......................................                 717,377                  757,343
  Other current assets...........................................                 785,394                  813,756
                                                                 -------------------------------------------------
    Total current assets.........................................               5,087,659                5,454,286

  Raw materials and work in process, net.........................               1,517,008                1,572,655

  Property and equipment, net....................................               2,589,636                2,746,373

  Intangible assets, net.........................................               3,375,827                3,441,088

  Other assets...................................................                 182,107                  232,226
                                                                 -------------------------------------------------
    Total Assets                                                             $ 12,752,237             $ 13,446,628
                                                                 =================================================

Liabilities and Stockholders' Equity

  Total current liabilities......................................            $    345,838             $    416,056
  Other liabilities..............................................                 146,067                  142,035
                                                                 -------------------------------------------------
    Total liabilities............................................                 491,905                  558,091

  Common stock and additional paid in capital....................              85,010,433               84,989,929
  Accumulated deficit............................................             (72,750,101)             (72,101,392)
    Stockholders' equity.........................................              12,260,332               12,888,537
                                                                 -------------------------------------------------
    Total Liabilities and Stockholders' Equity                               $ 12,752,237             $ 13,446,628
                                                                 =================================================
</TABLE>

                       See notes to financial statements

                                       3
<PAGE>

     Statements of Operations - three months ended March 31, 2000 and 1999
                                  (unaudited)

<TABLE>
<CAPTION>
                                         -----------------------------------------
                                                    Three months ended March 31
                                                       2000                 1999
                                         -----------------------------------------
<S>                                        <C>                  <C>
Revenues
 Product sales...........................         $ 1,092,399          $   949,581
 Contract manufacturing..................             302,443              104,320
 Licenses, royalties and other...........              68,216               83,397
                                         -----------------------------------------
 Total revenue...........................           1,463,058            1,137,298

 Cost of product sales...................             276,623              398,121
                                         -----------------------------------------
                                                    1,186,435              739,177

Operating Expenses
 Selling, general and administrative.....           1,514,611            1,300,610
 Research and development................             375,241              479,684
                                         -----------------------------------------
 Total expenses..........................           1,889,852            1,780,294
                                         -----------------------------------------
 Operating Loss..........................            (703,417)          (1,041,117)

 Interest Income.........................              54,708               82,978

 Net loss................................         $  (648,709)         $  (958,139)
                                         =========================================

Net loss per common share................              ($0.04)              ($0.07)

Weighted average number of common shares
 used in computing net loss per common
 share...................................          15,435,833           14,522,198
</TABLE>

                       See notes to financial statements

                                       4
<PAGE>

     Statements of Cash Flows - three months ended March 31, 2000 and 1999
                                  (unaudited)

<TABLE>
<CAPTION>
                                                              -------------------------------------------------
                                                                               Three months ended March 31,
                                                                               2000                     1999
                                                              -------------------------------------------------
<S>                                                             <C>                      <C>
Operating Activities
 Net loss.....................................................             $  (648,709)             $  (958,139)
 Adjustments to reconcile net loss to net cash used in
  operating activities:
  Depreciation and amortization...............................                 221,998                  208,556
  Loss on sale of securities..................................                       -                    2,158
  Stock issued in payment of expenses.........................                  12,000                   15,000
 Changes in assets and liabilities:
  Decrease in accounts receivable.............................                  39,966                   36,529
  Decrease (increase) in other current assets.................                  28,362                  (45,373)
  Decrease in raw materials and work in process...............                  55,647                   20,966
  Increase in other non-current assets........................                  (1,184)                  (1,170)
  (Decrease) increase in current liabilities..................                 (70,218)                 168,509
  Increase in other liabilities...............................                   4,032                    4,722
                                                              -------------------------------------------------
    Net cash used in operating activities.....................                (349,602)                (548,852)

Financing Activities
 Proceeds from issunce of stock...............................                   8,504                        -
                                                              -------------------------------------------------
    Net cash provided by investing activities.................                   8,504                        -

Investing Activities
 Purchase of property and equipment...........................                       -                  (15,176)
 Purchase of securities.......................................                       -                     (908)
 Proceeds from sale or maturity of securities.................                       -                3,131,685
 Decrease in security deposit.................................                  51,303                        -
                                                              -------------------------------------------------
    Net cash provided by investing activities.................                  51,303                3,115,601
                                                              -------------------------------------------------
    Net Increase in cash and cash equivalents.................                (298,299)               2,566,749

Cash and Cash Equivalents:
    At beginning of period....................................               3,883,187                2,003,896
                                                              -------------------------------------------------
    At end of period..........................................             $ 3,584,888              $ 4,570,645
                                                              =================================================
</TABLE>

                      See notes to  financial statements

                                       5
<PAGE>

Statements of Stockholders' Equity - three months ended March 31, 2000 and 1999
                                  (unaudited)

<TABLE>
<CAPTION>
                                               Common Stock                Additional
                                    ----------------------------------      paid-in          Accumulated
                                         Shares          Par Value          Capital            Deficit             Total
                                  -------------------------------------------------------------------------------------------
<S>                                 <C>               <C>               <C>               <C>                <C>
 Balance - January 1, 1999........        14,489,803          $144,898       $84,320,582      $(66,785,930)       $17,679,550

 Shares issued under non-employee
  director stock plan.............            32,395               324            14,676                               15,000


 Net loss for three months ended
  March 31, 1999..................                                                                (958,139)          (958,139)
                                  -------------------------------------------------------------------------------------------
 Balance - March 31, 1999.........        14,522,198          $145,222       $84,335,258      $(67,744,069)       $16,736,411
                                  ===========================================================================================


 Balance - January 1, 2000........        15,418,722          $154,187       $84,835,742      $(72,101,392)       $12,888,537

 Shares issued under non-employee
  director  stock plan............            16,632               166            11,834                               12,000


 Shares issued upon exercise of
  options.........................            11,600               116             8,388                                8,504


 Net loss for three months ended
  March 31, 2000..................                                                                (648,709)          (648,709)
                                  -------------------------------------------------------------------------------------------
 Balance - March 31, 2000.........        15,446,954          $154,470       $84,855,963      $(72,750,101)       $12,260,332
                                  ===========================================================================================
</TABLE>

                       See notes to financial statements

                                       6
<PAGE>

                              ProCyte Corporation
                   Notes to Financial Statements (unaudited)

1.  Basis of presentation

     The accompanying unaudited condensed financial statements of ProCyte
Corporation ("ProCyte" or the "Company") for the three-month periods ended March
31, 2000 and 1999 have been prepared by the Company in accordance with generally
accepted accounting principles for interim financial information and the
instructions to Form 10-Q and Article 10 of Regulation S-X.  Pursuant to such
rules and regulations, the condensed financial statements do not include all of
the information and footnotes required by generally accepted accounting
principles for audited financial statements.  Accordingly, this financial
information should be read in conjunction with the complete audited financial
statements, including the notes thereto, which are included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999.  In the opinion
of management, all material adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Interim results are not necessarily indicative of the results that may be
expected for the year ending December 31, 2000.

2. Sale of manufacturing operation

  During 1999 the Company retained a financial advisor to assist it with the
sale or spin-off of its manufacturing operation in order to tighten the
Company's focus on its core business.  On March 29, 2000 ProCyte agreed to sell
the assets and liabilities related to the manufacturing operation for $2.5
million to a group including a member of ProCyte management.  The transaction is
expected to close by May 30, 2000 and is subject to negotiation of a definitive
agreement and contingent upon availability of financing and ratification by the
ProCyte Board of Directors.  A provision of $1.9 million was recorded at
December 31, 1999 as an estimate of the loss to be realized upon consummation of
this transaction.  The manufacturing operation includes the substantial majority
of the fixed assets of the Company and the lease obligation for the Company's
facility.  The manufacturing operation generated contract revenues of $762,320,
$436,167 and $705,706 in 1999, 1998 and 1997, respectively.  Expenses related to
the manufacturing operation were approximately $1,800,000 in 1999, $2,050,000 in
1998, and $2,850,000, in 1997.  During the quarter ended March 31, 2000 such
revenues and expenses amounted to $302,443 and approximately $470,000,
respectively.

3.  Accounts receivable

     At March 31, 2000 accounts receivable are shown net of a reserve for
uncollectable accounts of $65,421.

4.  Inventory

     At March 31, 2000, other current assets included finished goods inventory
valued at $704,638, net of a reserve for obsolete and excess finished goods of
$80,000. The value of raw materials was $550,789 and the value of work in
process was $1,266,241 at March 31, 2000. The reserve for obsolete and excess
raw materials and work in process amounted to $300,000 at that date.

                                       7
<PAGE>

5.  Property and equipment

     At March 31, 2000 property and equipment consisted of the following:

<TABLE>
<S>                                             <C>
Equipment..........................................  $ 2,518,151
Leasehold improvements.............................    5,513,850
Less reserve for loss on disposition of
 manufacturing operation...........................   (1,900,000)

Less accumulated depreciation and amortization.....   (3,542,365)
Property and equipment, net........................  $ 2,589,636
                                                     ===========
</TABLE>

6.  Intangible assets

     At March 31, 2000 intangible assets are shown net of $590,615 of
accumulated amortization.

7.  Stockholders' equity

     Information relating to stock options granted, exercised, canceled and
currently exercisable is as follows:

<TABLE>
<CAPTION>
                                                      Shares subject to        Weighted average
                                                            option              exercise price
                                                    ----------------------  -----------------------
<S>                                                 <C>                     <C>
Balance - January 1, 1999.........................        1,618,061                  $2.18
 Granted..........................................          265,500                  $0.93
 Exercised........................................                -                      -
 Canceled.........................................          (59,334)                 $1.09
                                                  -------------------------------------------------
Balance - March 31, 1999..........................        1,824,227                  $2.03
                                                  =================================================
</TABLE>

<TABLE>
<CAPTION>
                                                      Shares subject to        Weighted average
                                                            option              exercise price
                                                    ----------------------  -----------------------
<S>                                                 <C>                     <C>
Balance - January 1, 2000.........................        1,861,727                  $1.71
 Granted..........................................           43,000                  $1.68
 Exercised........................................          (11,667)                 $0.65
 Canceled.........................................          (31,997)                 $0.86
                                                  -------------------------------------------------
Balance - March 31, 2000..........................        1,861,063                  $1.73
                                                  =================================================

Currently exercisable.............................          881,747                  $2.65
                                                  =================================================
</TABLE>

                                       8
<PAGE>

     At March 31, 2000 there remained 263,500 shares of the Company's common
stock reserved for issuance under the Company's 1996 Stock Option Plan.

     At March 31, 2000 there were 100,000 shares of the Company's common stock
reserved for issuance under the common stock warrants issued on May 26, 1999.
The warrants oblige the Company to issue 33,334 shares at $0.6875 per share, the
market price on the grant date, 33,333 shares at $1.6875 and 33,333 shares at
$2.6875.  Each of the three warrants has a five year life and vests one-third on
the grant date, one-third six months after the grant date, and one-third twelve
months after the grant date.

                                       9
<PAGE>

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

     The entire discussion in this report, as well as other management
discussion of the Company's goals and expectations, contains Forward-Looking
statements that are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected.  The words "believe",
"expect", "intend", "anticipate", variations of such words and similar
expressions identify Forward-Looking statements, but their absence does not mean
that the statement is not Forward-Looking.  These statements are not guaranties
of future performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict.  Factors that could affect the
Company's actual results include, among other things, the availability of
adequate funding, the sale of the manufacturing operation, relationships with
corporate collaborators, the rate of market acceptance of the Company's
products, the status of competing products, and the Company's ability to obtain
and defend patent and intellectual property rights and to successfully develop
and market the Company's existing and future products.  See "Important Factors
Regarding Forward-Looking Statements." Readers are cautioned not to place undue
reliance on these Forward-Looking statements, which speak only as of the date of
this report.  ProCyte undertakes no obligation to update publicly any Forward-
Looking statement to reflect new information, events or circumstances after the
date of this report or to reflect the occurrence of unanticipated events.  The
entire discussion in this report should be read in conjunction with the
Company's annual report on Form 10-K.

Corporate Overview

ProCyte develops and markets skin health and hair care products, focusing its
direct efforts on the specialty skin health sector and marketing its products
primarily to dermatologists, plastic surgeons and cosmetic surgeons. On April
19, 2000 ProCyte announced a long-term worldwide license agreement with
Neutrogena Corporation, a Johnson & Johnson company, for worldwide use of its
patented copper peptide complexes in consumer products for skin health. The
agreement provides ProCyte with milestone and royalty payments and specifies
minimum payment levels.

The Company markets its Neova(TM) Therapy line of copper peptide based anti-
aging products directly to physicians.  The Company also markets its Complex
Cu3(TM) Intensive Repair Creme, Cleanser and Hydrating Gel products used to
treat patients following chemical peels, microdermabrasion and laser treatments,
as a complement to its line of prescription and over-the-counter topical drugs,
sun protection and other skin care products.  The Complex Cu3(TM) and Neova(TM)
Therapy products allow the Company to differentiate its comprehensive line of
skin care products on the basis of its proprietary copper peptide technology.
These products are distributed using the Company's own sales force.

The Company positions its Tricomin(R) line of triamino copper complex containing
hair care products as a therapeutic approach to the maintenance of thinning hair
in both men and women. These products are marketed to physicians using the
Company's own sales force and directly to consumers through specialty
distributors and through the Company's web site at www.tricomin.com.

Additionally, ProCyte believes that it is the only company providing a line of
products that address the importance of wound care in the hair transplant
procedure.  The Company's GraftCyte(TM) line of copper peptide containing wound
care products for use following hair restoration surgery are promoted through
its own sales force and specialty distributors.

                                       10
<PAGE>

The Company's other wound care products, including Iamin(R) Hydrating Gel,
Iamin(R) Wound Cleanser and OsmoCyte(R) Pillow Dressings, are marketed in the
hospital, nursing home and extended care markets in the United States directly
and through an agreement with a distribution partner.  Similar agreements have
been concluded, with product registrations in place or in process, for Latin
America, Europe, and the Far East.

Operating Losses

The Company has incurred operating losses since its inception due to the
marketing expense of product launches and the costs of supporting research and
development of its proprietary technology at a time when sales of the Company's
product and other revenues do not yet exceed operating expenses.  At March 31,
2000, the Company's accumulated deficit was approximately $72.8 million.  The
Company expects to incur additional operating losses until its product lines
have been further expanded and have achieved market acceptance.

Revenue

During the quarter ended March 31, 2000, ProCyte generated total operating
revenue of $1,463,058 from product sales, contract manufacturing and royalties.
Comparable revenues were $1,137,298 for the quarter ended March 31, 1999.

Revenue from product sales was $1,092,399 during the quarter ended March 31,
2000, up $142,818 or 15% from $949,581 during the comparable period in 1999.
The increase was primarily a result of additional sales of the skin care product
line and the introduction of new products incorporating the Company's
proprietary copper peptide technology.

Revenue from contract manufacturing services was $302,443 during the quarter
ended March 31, 2000, an increase of $198,123 or 190% from $104,320 during the
comparable period in 1999. The increase reflects the timing of projects
undertaken for customers.  The Company has agreed to sell its contract
manufacturing operations and the facility used for such purposes.  See
"Important Factors Regarding Forward-Looking Statements - Uncertainties related
to the Sale of the Manufacturing Operation."

Revenue from royalties and licenses in 2000 includes a milestone payment due
from E. Merck as a result of wound care product registration in Brazil and
royalties from a license agreement with Osmotics Corporation.  The comparable
amount in 1999 includes initial fees from an agreement with Neutrogena and
royalties from Osmotics.

Interest income was $54,708 during the quarter ended March 31, 2000, down
$28,270 or 34% from $82,978 during the comparable period in 1999. The decrease
in interest income was primarily a result of reduced funds available for
investment.

Expenses

The cost of product sales was $276,623 (25.3% of product sales) for the quarter
ended March 31, 2000, a decrease of $121,498 or 30.5% from $398,121 (41.9% of
product sales) during the comparable period in 1999.  Cost of products sold
during the first quarter of 1999 included an adjustment related to manufacturing
variances.  Additionally, higher margin products based on proprietary technology
represent a greater percentage of total product sales during the quarter ended

                                       11
<PAGE>

March 31, 2000 than during the quarter ended Mach 31, 1999.

Selling, general and administrative expenses were $1,514,611 during the quarter
ended March 31, 2000, an increase of $214,001 or 16.5% from $1,300,610 during
the comparable period in 1999. The increase reflects the higher level of sales
support provided for certain products and the cost of the expanded sales force.

Research and development expenses were $375,241 during the quarter ended March
31, 2000, down $104,443 or 21.8% from $479,684 during the comparable period in
1999.  The decrease resulted from the continuing conversion of research
activities into a more conventional product development program.

Liquidity and Capital Resources

Historically, the Company has relied on equity financing, product sales,
contract manufacturing, interest income and corporate partnerships to fund its
operations and capital expenditures.  At March 31, 2000, the Company had
approximately $3.6 million in cash and cash equivalents, compared to $3.9
million at December 31, 1999.  The $300,000 decrease in cash represents the cash
outflow from operations.  The Company expects that its operating cash needs will
continue at similar, progressively decreasing, levels in future periods until
revenues exceed operating expenses.

The Company believes that its existing cash and cash equivalents and interest
thereon, will be sufficient to meet its working capital requirements for at
least the next twelve months.  However, there can be no assurance that the
underlying assumed levels of revenue and expense will prove accurate.  On or
about May 30, 2000 the Company expects to receive $2.5 million from the sale of
its contract manufacturing operations.  See "Important Factors Regarding
Forward-Looking Statements - Uncertainties related to the Sale of the
Manufacturing Operation."  Although the Company believes that its existing and
potential products are promising, it does not know whether any of such products
will prove commercially viable.  In any event, substantial additional funds
could be needed to commercialize existing products and to continue development
of potential products.  The Company will depend upon product revenues, interest
income, equity financing, and funding from corporate partnerships to meet its
future capital needs.  There can be no assurance that additional funds will be
available as needed or on terms that are acceptable to the Company.  If the
Company is unable to obtain sufficient funds to satisfy its cash requirements,
the Company will be required to delay, reduce or eliminate some or all of its
research and development activities and administrative programs, or dispose of
additional assets or technology.  See "Important Factors Regarding Forward-
Looking Statements - Need for Additional Capital".

Important Factors Regarding Forward-Looking Statements

History of Operating Losses; Accumulated Deficit; Fluctuations in Future
Earnings

The Company launched its first product based on its proprietary copper peptide
technology in 1996. To date, however, the Company has generated relatively minor
revenues from sales of products based on its proprietary technology, and there
can be no assurance that the Company will be able to generate sufficient product
sales from those products to achieve a profitable level of operations.  As of
March 31, 2000 the Company's accumulated deficit was approximately $72.8
million.  The Company expects to incur additional operating losses at least
through 2000.  In addition to sales of products based on its proprietary copper
peptide technology, the Company's revenues have historically included sales of
non-proprietary products, license fees and royalties, revenue from

                                       12
<PAGE>

contract research and manufacturing and interest income. The Company's ability
to achieve a consistent, profitable level of operations is dependent in large
part on successfully marketing its products, entering into agreements with
corporate partners for distribution and commercialization of the Company's
products and out-licensing of the Company's products and technology, of which
there can be no assurance. In addition, payments under corporate partnerships
and licensing arrangements, if any, may be subject to significant fluctuations
in both timing and amounts. The time required to reach sustained profitability
is highly uncertain, and there can be no assurance that the Company will be able
to achieve profitability on a sustained basis, if at all. Moreover, if
profitability is achieved, the level of profitability cannot be predicted and
may vary significantly from quarter to quarter.

Need for Additional Capital

The Company's future capital requirements will depend on numerous factors,
including: its efforts, and the efforts of its collaborative partners, to
commercialize its products; continued progress in the Company's research and
development programs; the results of research and development activities;
relationships with existing and future corporate collaborators, if any;
competing technological and market developments; the costs involved in filing,
prosecuting and enforcing patent claims; the time and costs of commercialization
activities; and other factors.  At March 31, 2000, the Company had cash and cash
equivalents of $3.6 million. The Company has agreed to sell its contract
manufacturing operations and the facility used for such purposes for $2.5
million in a transaction expected to close by May 30, 2000.  See "Important
Factors Regarding Forward-Looking Statements - Uncertainties related to the Sale
of the Manufacturing Operation."  The Company estimates that at its planned rate
of spending, its existing cash and cash equivalents and the interest income
thereon will be sufficient to meet its capital requirements at least for the
next twelve months. There can be no assurance that the underlying assumed levels
of revenue and expense will prove accurate.  Whether or not these assumptions
prove to be accurate, the Company may need to raise additional capital to expand
or enhance its sales and marketing activities and to continue product
development.  The Company may be required to seek additional funding through
public or private financing, including equity financing, or through
collaborative arrangements.  Adequate funds for these purposes, whether obtained
through financial markets or from collaborative or other arrangements with
corporate partners or other sources, may not be available when needed or may not
be available on terms favorable to the Company, if at all.  If issuing equity
securities raises additional funds, dilution to existing shareholders will
result.  In addition, in the event that additional funds are obtained through
arrangements with collaborative partners, such arrangements may require the
Company to relinquish rights to certain of its technologies or potential
products that it would otherwise seek to develop or commercialize itself.  If
funding is insufficient at any time in the future, the Company may be required
to delay, scale back or eliminate some or all of its marketing and research and
development programs, to sell additional assets, or to license third parties to
commercialize products or technologies that the Company would otherwise seek to
develop itself.  Furthermore, the terms of any such license agreements or asset
sales might be less favorable than if the Company were negotiating from a
stronger position.  Moreover, if funding is insufficient at any time in the
future, and the Company's existing funds are depleted, the Company may be
required to cease operations.

Uncertainties Related to the Sale of the Manufacturing Operation

Since inception, a substantial portion of the Company's revenues have been
derived from contract manufacturing as the Company has sought to more fully
utilize its existing facility's capacity while its own products were under
development.  During 1999 the Company retained a financial advisor to assist it
with the sale or spin-off of the manufacturing operation in order to tighten the
Company's focus on its core business. On March 29, 2000 ProCyte agreed to sell
the assets and liabilities related

                                       13
<PAGE>

to its manufacturing operation for $2.5 million to a group including a member of
ProCyte management. The transaction is expected to close by May 30, 2000 and is
subject to negotiation of a definitive agreement and contingent upon
availability of financing and ratification by the ProCyte Board of Directors. A
provision of $1.9 million was recorded at December 31, 1999 as an estimate of
the loss to be realized upon consummation of this transaction. The manufacturing
operation includes the substantial majority of the fixed assets of the Company
and the lease obligation for the Company's facility. The manufacturing operation
generated contract revenues of $762,320, $436,167 and $705,706 in 1999, 1998 and
1997, respectively. Expenses related to the manufacturing operation were
approximately $1,800,000 in 1999, $2,050,000 in 1998, and $2,850,000, in 1997.
During the quarter ended March 31, 2000 such revenues and expenses amounted to
$302,443 and approximately $470,000, respectively. Such a transaction may not be
feasible on a timely basis or may not be feasible with terms acceptable to the
Company, and there can be no assurance that such a transaction will ever be
successfully completed.

Uncertainties Related to Product Development

From the Company's inception in 1986 until it launched its first commercial
product in 1996, substantially all of its resources were dedicated to the
research and development of wound healing and hair health applications of its
topically administered copper peptide compounds.  To date, the Company has
generated relatively minor revenues from sales of products based on its
proprietary copper peptide technology.  There can be no assurance that the
Company's current products or potential products will be successfully
commercialized and accepted for use by physicians, healthcare providers and
consumers.

The Company is dependent upon the successful development of its current and
potential products.  Development of the Company's potential products is highly
uncertain, and unanticipated developments, clinical and regulatory delays,
adverse or unexpected side effects or inadequate therapeutic efficacy could slow
or prevent the successful completion of the Company's product and technology
development.  There can be no assurance that the Company will obtain regulatory
approval, that an approved product can be produced in commercial quantities at
reasonable costs or gain acceptance for use by physicians, healthcare providers
and consumers or that any potential products will be successfully marketed at
prices that would permit the Company to operate profitably.  The failure of any
of these would have a material adverse effect on the Company's business,
financial condition and results of operations.

Dependence on and Management of Existing and Future Corporate Alliances

The successful commercialization of the Company's existing and future products
will depend upon ProCyte's ability to enter into and effectively manage
corporate partnerships.  ProCyte currently promotes certain of its products
through specialty distributors.  Other products and technology are licensed for
incorporation into products sold by others.

There can be no assurance that any of the Company's collaborators will perform
their obligations under their agreements with the Company or that the Company's
products or the products of others that incorporate the Company's products or
technology, will be successfully commercialized, any of which could have a
material adverse effect on the Company's business, financial condition and
results of operations.

Furthermore, there can be no assurance that the Company will be successful in
establishing corporate

                                       14
<PAGE>

alliances in the future, or that it will be successful in maintaining existing
or any future corporate alliances. Moreover, there can be no assurance that the
interests and motivations of any corporate partner, distributor or licensee
would be or remain consistent with those of the Company, or that such partners,
distributors or licensees would successfully perform the necessary technology
transfer, clinical development, regulatory compliance, manufacturing, marketing
or other obligations. Failure of any of the foregoing could have a material
adverse effect on the Company's business, financial condition and results of
operations.

Uncertainty of Patent Position and Proprietary Rights

The patent positions of biotechnology, medical device and healthcare products
companies are often uncertain and involve complex legal and factual questions,
and the breadth of claims allowed in such patents cannot be predicted.  In
addition, there is a substantial backlog of patents at the US Patent and
Trademark Office that may delay the review and the potential issuance of
patents.  The Company's success will depend to a significant degree on its
ability to obtain patents and licenses to patent rights, to maintain trade
secrets and to operate without infringing on the proprietary rights of others,
both in the United States and in other countries.  The failure of the Company or
its licensors to obtain and maintain patent protection for the Company's
technology could have a material adverse effect on the Company.

ProCyte's success depends, in part, upon its ability to protect its products and
technology under intellectual property laws in the United States and abroad.  As
of April 21, 2000 the Company had 21 issued US patents expiring between 2005 and
2017 and numerous issued foreign patents and patent registrations.  The patents
relate to use of the Company's copper-based technology for a variety of
healthcare applications, and to the composition of certain biologically active,
synthesized compounds.  The Company's strategy has been to apply for patent
protection for certain compounds and their discovered uses that are believed to
have potential commercial value in countries that offer significant market
potential.  There can be no assurance that patent applications relating to the
technology used by the Company will result in patents being issued.  There can
be no assurance that any patent issued to the Company will not be subjected to
further proceedings limiting the scope of the rights under the patent or that
such patent will provide a competitive advantage, or will afford protection
against competitors with similar technology, or will not be successfully
challenged, invalidated or circumvented by competitors.

The Company's processes and potential products may conflict with patents that
have been or may be granted to competitors and others.  As the biotechnology,
medical device and healthcare industries expand and more patents are issued, the
risk increases that the Company's processes and potential products may give rise
to claims that they infringe the patents of others.  Such other persons could
bring legal actions against the Company claiming damages and seeking to enjoin
clinical testing, manufacturing and marketing of the affected product or use of
the affected process.  Litigation may be necessary to enforce patents issued to
the Company, to protect trade secrets or know-how owned by the Company or to
determine the enforceability, scope and validity of proprietary rights of
others.  If the Company becomes involved in such litigation, it could result in
substantial expense to the Company and significant diversion of effort by the
Company's technical and management personnel.  In addition to any potential
liability for significant damages, the Company could be required to obtain a
license to continue to manufacture or market the affected product or use the
affected process.  Costs associated with any licensing arrangement may be
substantial and could include ongoing royalties.  There can be no assurance that
any license required under any such patent would be made available to the
Company on acceptable terms, if at all.  If such licenses could not be obtained
on acceptable terms, the Company could be prevented from manufacturing and
marketing existing or potential products.  Accordingly, an adverse determination
in such litigation could have a

                                       15
<PAGE>

material adverse effect on the Company's business, financial condition and
results of operations.

The Company also relies upon unpatented proprietary technology.  There can be no
assurance that the Company can meaningfully protect its rights in such
unpatented technology, that any obligation to maintain the confidentiality of
such proprietary technology will not be breached by employees, consultants,
collaborators or others or that others will not independently develop or acquire
substantially equivalent technology.  To the extent that corporate partners or
consultants apply Company technological information independently developed by
them or by others to Company projects or apply Company technology or know-how to
other projects, disputes may arise as to the ownership of proprietary rights to
such information.  Any failure to protect unpatented proprietary technology or
any breach of obligations designed to protect such technology or development of
equivalent technology may have a material adverse effect on the Company's
business, financial condition and results of operations.

Uncertainty of Government Regulatory Requirements

The manufacture and marketing of ProCyte's products and its research and
development activities in general are subject to extensive regulation in the
United States by the federal government, principally by the FDA, and in other
countries by similar health and regulatory authorities.  The Federal Food, Drug
and Cosmetic Act, and the regulations promulgated thereunder, and other federal
and state statutes govern, among other things, the testing, manufacture, safety,
labeling, storage, record-keeping, advertising and promotion of cosmetic
products and medical devices.  Product development and approval or clearance
within the regulatory framework requires a number of years and involves the
expenditure of substantial resources.

In order to obtain FDA clearance to market a new device in the United States for
use in humans, it is necessary to proceed through several stages of product
testing, including research and development, clinical trials, and the filing of
a product 510(k) medical device application with the FDA to obtain authorization
to market a product.  The Company's products and product candidates may be
regulated by any of a number of divisions of the FDA.  The process of obtaining
and maintaining regulatory approvals for the manufacturing or marketing of the
Company's existing and potential products is costly and time-consuming and is
subject to unanticipated delays.  Accordingly delays, rejections or unexpected
costs based on changes in the policy or regulations of the FDA or foreign
governmental authorities during the period of product development and regulatory
review, which changes may result in limitations or restrictions on the Company's
ability to utilize its technology or develop product candidates.  Regulatory
requirements ultimately imposed could also adversely affect the ability of the
Company to clinically test, manufacture or market products.  Even if regulatory
approval of a potential product is obtained, such approval may entail
limitations on the indicated uses for which such product may be marketed, which
may restrict the patient population for which any product may be prescribed.  In
addition, a marketed product is subject to continual FDA review.  Later
discovery of previously unknown problems or failure to comply with the
applicable regulatory requirements may result in restrictions on marketing a
product or withdrawal of the product from the market, as well as possible
criminal or civil sanctions.

In the United States, products that do not seek to make effectiveness claims
based on human clinical evaluation may be subject to review and regulation under
the FDA's cosmetic or 510(k) medical device guidelines.  Similar guidelines
exist for such products in other countries.  Such products, which include wound
care dressings and certain ointments and gels, must show safety and substantial
equivalency with predicate products already cleared to be marketed by the FDA.
There can be no assurance that such product applications submitted to the FDA or
similar agencies in other countries

                                       16
<PAGE>

will receive clearance to be marketed, or that the labeling claims sought will
be approved, or that, if cleared, such products will be commercially successful.

In addition to obtaining approval or clearance from the FDA or foreign
regulatory bodies to market a product, the prospective manufacturer's quality
control and manufacturing procedures must conform to current good manufacturing
practices ("cGMP") guidelines, or ISO 9000 standards, when appropriate.  In
complying with these regulations, which are subject to change at any time
without notice to the Company, ProCyte must continue to expend time, effort and
financial resources in production and quality control.  In addition, ProCyte's
manufacturing plant is subject to the regulations of and inspections by other
foreign, federal, state or local agencies, such as local and regional water and
waste treatment agencies, and state and federal safety and health agencies.
There can be no assurance that the Company's manufacturing facility or its
manufacturing operations will meet or continue to meet all appropriate
guidelines or to pass inspections by any government agency.

The Company also is or may become subject to various other federal, state, local
and foreign laws, regulations and policies relating to, among other things, safe
working conditions, good laboratory practices, and the use and disposal of
hazardous or potentially hazardous substances used in connection with research,
development and manufacturing.

Failure to obtain regulatory approvals for its product candidates or to attain
or maintain compliance with cGMP or other manufacturing requirements would have
a material adverse effect on the Company's business, financial condition and
results of operations.

Intense Competition

Competition in the wound care, skin health and hair care markets is intense.
The Company's competitors include well-established pharmaceutical, cosmetic and
healthcare companies such as Bristol Myers Squibb's ConvaTec and BioMatrix
divisions, Johnson and Johnson, Obagi and Allergan.  These competitors have
substantially more financial and other resources, larger research and
development staffs, and more experience and capabilities in researching,
developing and testing products in clinical trials, in obtaining FDA and other
regulatory approvals and in manufacturing, marketing and distribution than the
Company.  In addition, a number of smaller companies are developing or marketing
competitive products, some of which may have an entirely different approach than
products being marketed or developed by the Company.  The Company's competitors
may succeed in developing and commercializing products or obtaining patent
protection or other regulatory approvals for products more rapidly than the
Company.  If the Company is successful in commercializing its products, it will
be required to be competitive with respect to manufacturing efficiency and
marketing capabilities, areas in which it has very limited experience.  The
Company's competitors may develop new technologies and products that are
available for sale prior to the Company's potential products or that are more
effective than the Company's existing or potential products.  In addition,
competitive products may be manufactured and marketed more successfully than the
Company's potential products.  Such developments could render the Company's
existing or potential products less competitive or obsolete and could have a
material adverse effect on the Company's business, financial condition and
results of operations.

Potential Volatility of Stock Price; Bulletin Board Listing

The market prices for securities of healthcare, medical dressings,
pharmaceutical and biotechnology companies are subject to volatility, and the
market has from time to time experienced significant fluctuations that are
unrelated to the operations of the Company.  ProCyte's market price has

                                       17
<PAGE>

fluctuated over a wide range since the Company's initial public offering in
1989, and since March 25, 1999 the Company's common stock has traded on the NASD
OTC bulletin board.  Because real-time price information may not be available
for bulletin board securities, an investor is likely to find it more difficult
to dispose of, or to obtain accurate quotations on the market value of, the
Company's securities than if they were listed on a national exchange.  In
addition, purchases and sales of the Company's securities may become subject to
Rule 15g-9 of the Exchange Act which imposes various sales practice requirements
on broker-dealers, or to the "penny stock" rules, either of which would likely
reduce the level of trading activity in the secondary market for the Company's
securities and make selling the securities more difficult for an investor.

Announcements concerning the Company or its competitors, including fluctuations
in operating results, research and development program direction, results of
clinical trials, addition or termination of corporate alliances, technology
licenses, clearance or approval to market products, announcements of
technological innovations or new products by the Company or its competitors,
changes in government regulations, healthcare reform, developments in patent or
other proprietary rights of the Company or its competitors, litigation
concerning business operations or intellectual property, or public concern as to
safety of products, as well as changes in general market conditions and mergers
and acquisitions, may have a significant effect on the market price of ProCyte's
common stock.


Item 3. - Quantitative and Qualitative Disclosures About Market Risk

     ProCyte did not own any derivative financial instruments as of March 31,
2000. The Company is debt-free and is exposed to interest rate risk only to the
extent that it has invested idle cash balances. At March 31, 2000 such balances
were invested in a United States Treasury money market fund. ProCyte employs
established policies and procedures to manage its exposure to changes in the
market risk of its investments. The Company believes that the market risk
arising from holdings of its financial instruments is not material.


Part II - Other Information

Item 1.  Legal Proceedings

     None.

Item 2.  Changes in Securities and Use of Proceeds

     None.

Item 3.  Defaults Upon Senior Securities

     None.

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

     None.

                                       18
<PAGE>

Item 5.  Other Information

     On April 19, 2000 the Company issued a press release with the following
text:


                  PROCYTE IN LICENSE AGREEMENT WITH NEUTROGENA
          Deal Introduces ProCyte's Copper Peptide Technology to the
                           Worldwide Consumer Market

REDMOND, WA -- April 19, 2000 -- ProCyte Corporation (OTC BB: PRCY), a leading
skin care and tissue repair company, today announced a long term worldwide
license agreement with Neutrogena, a Johnson & Johnson company, for worldwide
use of its patented Copper Peptide Complexes in products for skin health.  The
agreement provides ProCyte with milestone and royalty payments and includes
certain minimum payment levels.

The retail market for skin care products, including the food, drug and mass
market channels, was in excess of $3.5 Billion in the United States in 1999.  It
is a rapidly growing market segment, as the aging baby boomer population demands
products that prolong and improve the quality of life.  Clinical studies
indicate that the products sold by ProCyte in the medical marketplace
significantly improve skin tone and have high consumer appeal.

"We are excited to be able to make our proven Copper Peptide technology
available to a broader market base" said Jack Clifford, ProCyte Chairman and
CEO.  "ProCyte has established a growing position in the medical marketplace,
where demand for our Copper Peptide therapeutic and anti-aging products has
risen dramatically since their launch less than two years ago."

Neutrogena Corporation manufactures, develops and internationally markets
premium skin and hair care products.

About ProCyte:

ProCyte Corporation is a healthcare products company that develops,
manufactures, and markets products for tissue repair, skin health and hair care.
ProCyte's product portfolio includes comprehensive skin care lines for
therapeutic care, anti-aging products and products for thinning hair.  The
Company's products incorporate its patented copper peptide technology and are
marketed both directly and through distribution partners.

This report may contain forward-looking statements that are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those projected.  This report should be read in conjunction with the
Company's annual report on Form 10-K and it's quarterly reports on Form 10-Q.
The Company's results may vary significantly from quarter to quarter and will
depend, among other factors, on product launches and market acceptance,
manufacturing contracts, and distribution agreements.

                                       19
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

     10.18  License Agreement dated April 19, 2000 between ProCyte Corporation
            and Neutrogena Corporation.

     27     Financial Data Schedule

(b)  Reports on Form 8-K


     None.

Signatures

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                                     PROCYTE CORPORATION
                                                        (REGISTRANT)



Date:  May 2, 2000                        By:        /s/ John F. Clifford
                                             -----------------------------------
                                             John F. Clifford, Chairman and CEO



Date:  May 2, 2000                        By:           /s/ Jerry Scott
                                              ----------------------------------
                                              Jerry P. Scott, Vice President -
                                              Finance and CFO

                                       20
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
  Exhibit Number                              Title
  --------------                              -----
<S>                  <C>
    10.18            License Agreement dated April 19, 2000 between ProCyte
                     Corporation and Neutrogena Corporation

    27               Financial Data Schedule

</TABLE>

                                       21