<PAGE>

                                    FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)
[ x ]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended:  May 31, 1999
Commission file number 0-12395

                                       OR
[   ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ___________________ to ____________________
Commission file number 0-12395

                                ALCIDE CORPORATION
             (Exact name of registrant as specified in its charter)
Delaware                                                     22-2445061
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)
                   8561 154th Avenue NE, Redmond, Washington 98052
                      (Address of principal executive offices)
Registrant's telephone number, including Area Code (425) 882-2555

Securities Registered Pursuant to Section 12(b) of the Act:

                                                        Name of each exchange on
Title of each class                                         which registered
-------------------                                     ------------------------

None                                                    None

           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock - $.01 par value
                                (Title of Class)

        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
                                                                    ---   ---
        Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( X )
                              ---
        The aggregate market value of voting stock held by non-affiliates of the
Registrant on August 1, 1999 was approximately $32,895,461. On that date, there
were 2,527,830 shares of common stock outstanding, net of Treasury Stock.
        Certain sections of Registrant's definitive Proxy Statement for its 1999
Annual Meeting of Shareholders are incorporated by reference into Items 11, 12
and 13 of Part III hereof. Certain sections of Part I of this Form 10-K Annual
Report are incorporated by reference into the Registrant's definitive Proxy
Statement for its 1999 Annual Meeting of Stockholders.

                               Page 1 of 39 pages
                            Exhibit Index on Page 24

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                              TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                     Page
<C>             <C>           <S>                                                                    <C>
PART I          Item 1.       Business                                                                  3
                              A.  Introduction                                                          3
                              B.  Sales Development                                                     3
                              C.  Research and Product Development                                      5
                              D.  Patents and Trademarks                                                7
                              E.  Raw Materials                                                         9
                              F.  Competition                                                          10
                              G.  Government Regulation                                                10
                              H.  Employees                                                            11
                              I.  Advertising and Promotion                                            12
                              J.  Manufacturing                                                        12

                Item 2.       Properties                                                               12

                Item 3.       Legal Proceeding                                                         12

                Item 4.       Submission of Matters to a Vote of Security Holders                      12

PART II         Item 5.       Market for the Registrant's Common Stock and Related
                              Stockholder Matters                                                      13

                Item 6.       Selected Financial Data                                                  14

                Item 7.       Management's Discussion and Analysis of Financial
                              Condition and Results of Operations                                      15

                Item 8.       Financial Statements and Supplementary Data                              19

                Item 9.       Changes in and Disagreements with Accountants on
                              Accounting and Financial Disclosures                                     19

PART III        Item 10.      Directors and Executive Officers                                         20

                Item 11.      Executive Compensation                                                   22

                Item 12.      Security Ownership of Certain Beneficial Owners and
                              Management                                                               22

                Item 13.      Certain Relationships and Related Transactions                           22

PART IV         Item 14.      Exhibits, Financial Statement Schedules and Reports
                              on Form 8-K                                                              22

</TABLE>


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                                     PART I

ITEM 1.      BUSINESS

A.      INTRODUCTION

        Alcide-Registered Trademark- Corporation (the "Company") is a
Delaware Corporation organized in 1983 which has its executive offices and
research laboratories at 8561 154th Avenue, N.E., Redmond, Washington 98052.

        Alcide is engaged in the research, development and commercialization of
unique chemical compounds having intense microbiocidal activity. The Company
holds substantial worldwide rights to its discoveries through various patents,
patent applications, trademarks and other intellectual property, technology, and
know-how.

        This report includes forward-looking statements which involve risk
and uncertainty including, without limitation, risk of dependence on patents
and trademarks, third party suppliers, market acceptance of and demand for
the Company's products, distribution capabilities, development of technology
and governmental regulatory approval thereof. Sentences or phrases that use
the words such as "believes," "anticipates," "hopes," "plans," "may," "can,"
"will," "expects," and others, are often used to flag such forward-looking
statements, but their absence does not mean a statement is not
forward-looking. Such statements reflect management's current opinion and are
designed to help readers understand management's thinking. By their very
nature, however, such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date hereof. The
Company undertakes no obligation to release publicly any revisions to these
forward-looking statements that may be made to reflect events or
circumstances after the date hereof, or to reflect the occurrence of
unanticipated events.

B.      SALES DEVELOPMENT

        The Company presently sells products to the dairy, health care,
poultry processing and automotive industries. Its products include:
UDDERgold-Registered Trademark- Plus and UDDERgold-Registered Trademark-
Germicidal Barrier Teat Dips, Pre-Gold-Registered Trademark- Germicidal
Pre-Milking Teat Dip, and 4XLA-Registered Trademark- Pre- and Post-Milking
Teat Dip to the dairy industry; Exspor-Registered Trademark-
Sterilant-Disinfectant and LD-Registered Trademark- Disinfectant to the
health care industry; Sanova-Registered Trademark- antimicrobial intervention
to the poultry processing industry; and RenNew-Registered Trademark--A/C Air
Conditioning System Disinfectant to the automotive industry. The Company's
sales to date have primarily been derived from UDDERgold Plus, UDDERgold and
4XLA teat dips, and Sanova food antimicrobial.

        Total product sales for the fiscal year ended May 31, 1999 were
$11,220,528. Export sales to international distributors, plus product
exported by U.S. distributors to international markets accounted for
$4,180,038, 37% of total sales.

        1.   DAIRY INDUSTRY

        Worldwide sales of dairy line products during fiscal year 1999 were
$9,189,063 as compared with $10,114,845 in FY 1998. In FY 1999 sales to the
dairy industry accounted for 82% of the


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Company's total sales. Should there be a loss of the sales generated by dairy
line products, it would have a material adverse effect on the Company.

        U.S. DAIRY INDUSTRY
        In fiscal 1999, dairy industry sales in the United States were
$5,009,025, 55% of total Alcide sales to the dairy industry.

        INTERNATIONAL DAIRY INDUSTRY
        Alcide products are sold to the dairy industry in Canada, Latin America
and Europe through a network of five distributors. Sales to the international
dairy industry were $4,180,038 in fiscal 1999, 45% of total sales to the dairy
industry.

        DISTRIBUTOR ARRANGEMENTS
        All Alcide sales to the dairy industry are to distributors who have
contracted with the Company to provide sales and marketing services to
distribute the Company's products. In each case the distributor purchases
product from Alcide for resale to the end user. Loss of any of the Company's
distributors can have a material impact on the Company's sales and earnings.

        The Company's distribution agreements with ABS Global, Inc. for the
United States and several international markets expired on October 31, 1998
and were not renewed. On November 1, 1998 Alcide entered into a new four year
contract with IBA, Inc. to expand the IBA territory to cover the entire
United States. Simultaneously, the Universal Marketing Services, Inc.
contract, which had covered the territories of the United Kingdom, Republic
of Ireland and Spain, was amended to include the additional territories of
Canada, Italy, Portugal and the Czech Republic as exclusive UMS territories,
and the United States as a nonexclusive UMS territory.

        2.   POULTRY PROCESSING INDUSTRY

        In May, 1997 the Company entered into an agreement with Novus
International, Inc. for Novus' introduction and distribution of Sanova
antimicrobial to the poultry industry. Under the terms of the agreement Novus
was obligated to pay Alcide the higher of 50% of Sanova profits or at least
$500,000 per quarter for fiscal 1998, and $1 million per quarter thereafter. In
August, 1998, Novus gave notice to Alcide that it intended to terminate the
agreement effective November 30, 1998. During fiscal 1999 Alcide sales to the
poultry industry were $1,538,887, of which $1,204,593 were contractual minimum
payments by Novus. During fiscal 1998 sales to the poultry processing industry
were $2,445,106, all of which was derived from contractual minimum payments by
Novus.

        Effective December 1, 1998, Alcide assumed direct responsibility for
distribution of Sanova to the poultry processing industry. On May 31, 1999
five poultry processing plants were using Sanova under contract with Alcide.
In addition, Alcide has entered into contractual agreements for startup of
seven additional poultry processing plants during the period June through
October, 1999.

        3.   HEALTH CARE INDUSTRY

        The Company markets a line of hard surface sterilants and
disinfectants which kill harmful microorganisms and help reduce the potential
for disease transmission via contaminated surfaces. The Company's LD
Disinfectant and Exspor Sterilant-Disinfectant offer users a combination of
broad spectrum efficacy, speed and relative safety.


                                       4
<PAGE>

        Fiscal year 1999 sales of hard surface sterilants and disinfectants were
$440,672, or 4% of total sales, as compared with $390,178 in fiscal year 1998.

        4.   AUTOMOTIVE INDUSTRY

        Fiscal year 1999 sales of RenNew-A/C Air Conditioning System
Disinfectant were $51,906 as compared with $48,823 in fiscal year 1998. All
RenNew-A/C Air Conditioning System Disinfectant sales in both fiscal year
1999 and fiscal year 1998 were to a supplier for the General Motors
Corporation.

        5.   INDUSTRY PRACTICES AND BACKLOG ORDERS

        The Company's invoice terms for the dairy, health care and automotive
industries conform to those in the chemical industry in general, which are:
domestic-30 days, export-60 days.

        Alcide had $1,138,270 of firm orders on May 31, 1999 for future
delivery to the dairy industry as compared to orders for future delivery at
May 31, 1998 of $2,062,834. The Company's distributors typically place orders
one to four months in advance.

        The Company's invoice terms, product pricing and delivery to the
poultry processing industry are based on contracts with each processor which
typically cover two to four years. Under the terms of the agreements Alcide
provides inventory to the poultry processors. The inventory is used on demand
and billing by Alcide is determined at the end of each month based on the
previous month's amount of poultry product processed. Payment is due 15 days
after billing.

C.       RESEARCH AND PRODUCT DEVELOPMENT

         During fiscal year 1999 the Company's efforts continued to focus on
the development of products for which its technology provides clear
advantages in the marketplace and for which weaknesses pose minimal
impediment or competitive disadvantage. Major strengths of the Company's
patented technology are broad spectrum of antimicrobial activity, rapidity of
cidal activity, safe residues and nonexistent resistant strains. Primary
weaknesses are the inconvenience of a two-part system and potential for
corrosive oxidation.

         Additions and improvements to existing business units are expected
to be funded primarily by the Company. Programs for the new food
antimicrobial business area may be funded jointly by the Company and its
distributors. Other development areas may require initial Company investment
followed by major financial support from corporate partners who would
ultimately introduce the products into the marketplace.

         While many of the research and development programs undertaken by
the Company, and described hereafter, give evidence of possible success, the
nature of research, coupled with the necessity for regulatory approval, is
such that there can be no assurance of ultimate program success or that any
resulting product will be commercially successful.

         Significant highlights of programs active during fiscal year 1999 are
described below:


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<PAGE>

         1.  FOOD DISINFECTION

         USDA approval to recommence the Continuous On-line Processing (COP)
concept was achieved in January, 1999. This approval provides added value to
the Sanova System and is of interest to the entire U.S. poultry processing
industry. Significant effort has been directed to the completion of a series
of COP studies in order to successfully validate to USDA that the Sanova
System can deliver significant improvements in the overall quality of
processed poultry. Additional research for the optimization of the Sanova
process will continue throughout fiscal 2000. This research will continue to
focus on improvements in performance (microbial reduction) as well as
reductions in product cost.

         Testing to establish the application parameters for Sanova on beef
were completed during the final quarter of fiscal 1999 and those for pork
will be completed in the first quarter of fiscal 2000. It is expected that
all of the requirements for USDA approval for beef will be met by the end of
calendar 1999 permitting commercial expansion into this area during the
latter half of fiscal 2000. A Food Additive Petition requesting the use of
Sanova on red meat parts (in addition to whole carcass disinfection) was
submitted during the first quarter of fiscal 2000.

         Verbal notice was received from the Canadian regulatory authorities
in early August that their review of the Sanova chemistry had been completed.
Final written approval is expected by September 1, 1999, which will permit
both the importation of Sanova treated carcasses into Canada and the use of
Sanova within Canada.

         The Food Additive Petition for the use of Sanova on Raw Agricultural
Commodities (intact fruits and vegetables) was successfully completed during
fiscal 1999. It is expected that the final FDA notice of approval for use
will issue during fiscal 2000. The degree to which the Environmental
Protection Agency (EPA) will exert regulatory authority over this field has,
during the past 60 days, become uncertain. The respective roles of FDA and
EPA have been clouded by the 1997 Food Quality Protection Act, and the
agencies themselves have been unable to specifically define their regulatory
authority and criteria for approval for antimicrobial products directed at
pathogen reduction such as Sanova. Given this environment, Alcide has pursued
a course through FDA which the Company believes has the strongest likelihood
of exerting control over treatment of Raw Agricultural Commodities in
processing plants. EPA involvement, if required, could delay
commercialization of Sanova for disinfection of Raw Agricultural Commodities.

         2.  UDDER CARE BUSINESS

         Significant new formulation developments for potential new market
sectors and for patent extension opportunities were completed during fiscal
1999. It is believed that this effort will result in new product introduction
in fiscal 2000. Additional new products will continue to undergo "proof of
principle" testing during fiscal 2000 as well as field efficacy and
toleration testing prior to market introduction. A longer term development is
in process for the creation of a "next generation" of udder care products.
Field testing of the first of the new product opportunities in this area is
expected to begin during the second half of fiscal 2000.

         3.  PREOPERATIVE SKIN ANTISEPTIC

         During fiscal 1999, continued delays were experienced in the
finalization of the Company's New Drug Application (NDA) arising from the
process of identifying and certifying a Good


                                       6
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Manufacturing Practices (GMP) compliant supplier of the active material. As
of the end of fiscal 1999, this process remains unfinished. In lieu of the
qualification of a GMP compliant primary supplier of mandelic acid, a
proposal was submitted to FDA in early fiscal 2000 to request the
qualification of a secondary processor for the process of purification
through re-crystallization of non-GMP compliant mandelic acid. This proposal
has now been accepted paving the way for the completion of our GMP production
requirements and the completion of the CMC package for FDA submission. Timing
to completion of this process remains uncertain. Completion of the CMC
(pharmaceutical) section of the NDA is a pre-requisite to the finalization of
the NDA for this product.

         Further testing of the preoperative skin antiseptic product to
evaluate the potential use of the same formulation as an antiseptic for
injection site or in-dwelling catheter site uses continues on hold pending
responses to and final resolution of the preoperative skin antiseptic NDA
submission. It is still the Company's intention that an addendum to the
original NDA to cover this expanded use will be submitted to FDA and this is
now targeted for late in fiscal 2000.

         Wherever possible, it is the Company's strategy to further the
development of new use areas for the skin disinfectant range by the
development and submission of addenda to the original NDA.

         4.  ANTI-INFECTIVE ORAL RINSE

         Testing of the Company's candidate product for potential Rx or OTC
use in the oral care field continued during fiscal 1999 in cooperation with a
major international pharmaceutical marketer. This cooperative testing will
continue into fiscal 2000 with the expectation that if the results prove
successful, a licensing agreement for future development and marketing may
eventuate. As part of the fiscal 1999 testing it has been demonstrated that
optimal therapeutic product formulations may not necessarily prove to be the
most appropriate for OTC use. It is therefore expected that a parallel
development strategy for these two potential use areas will be followed in
fiscal 2000.

         5.  INTRAMAMMARY INFUSION

         It was established during fiscal 1999 that modern analytical methods
for residues are able to detect the presence of unacceptable levels of
product degradants in the milk of cows treated with the candidate product.
Since these residues completely alter the market potential of this product,
it was decided in late fiscal 1999 to terminate the research program.

D.       PATENTS AND TRADEMARKS

         The Company considers protection of its technologies by United
States and foreign patents to be an important aspect of its business. No
assurance can be given, however, as to the validity, enforceability or scope
of its patent protection. Should the patents be held invalid, become
ineffective against competition or expire prior to the Company's successful
development of a market for its products, there may be a material adverse
impact on the Company's business. Furthermore, the possibility of patent
infringement by third parties cannot be entirely eliminated. In the event of
such infringement by third parties, if the Company is not successful in
terminating such infringement, the viability of the Company could be severely
and adversely affected.

         Conversely, no assurances can be given that the manufacture, use or
sale of the Company's products will not infringe the patent rights of others. In
the event of infringement or alleged


                                       7
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infringement, the Company's ability to market its products could be adversely
affected and the viability of the Company could be severely and adversely
affected.

         PATENTS -- The Company owns the following fifteen issued United States
         patents:

<TABLE>

         <C>      <S>
         1)       U.S. Patent No. 4,891,216
                  "Disinfecting Compositions and Methods Therefor"

         2)       U.S. Patent No. 4,956,184
                  "Topical Treatment of Genital Herpes Lesions"

         3)       U.S. Patent No. 4,986,990
                  "Disinfection Method and Composition Therefor"

         4)       U.S. Patent No. 5,019,402
                  "Composition and Procedure for Disinfecting Blood and Blood Components"

         5)       U.S. Patent No. 5,100,652
                  "Disinfecting Oral Hygiene Compositions and Process for Using the Same"

         6)       U.S. Patent No. Re. 36,064
                  "Disinfection Method and Composition Therefor"

         7)       U.S. Patent No. 5,252,343
                  "Method and Composition for Preventing and Treatment of Bacterial Infections"

         8)       U.S. Patent No. 5,384,134
                  "Anti-Inflammatory Formulations for Inflammatory Diseases"

         9)       U.S. Patent No. 5,389,390
                  "Process for Removing Bacteria from Poultry and Other Meats"

         10)      U.S. Patent No. 5,597,561
                  "Adherent Disinfecting Compositions and Method of Use in Skin Disinfection"

         11)      U.S. Patent No. 5,622,725
                  "Wound Disinfection and Repair"

         12)      U.S. Patent No. 5,628,959
                  "Composition and Method for Sterilizing Dialyzers"

         13)      U.S. Patent No. 5,651,977
                  "Adherent Disinfecting Compositions and Methods Related Thereto"

         14)      U.S. Patent No. 5,667,817
                  "Method and Composition for the Prevention and Treatment of Female Lower Genital Tract
                  Microbial Infections"


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<PAGE>

         15)      U.S. Patent No. 5,772,985
                  "Composition and Methods for Treatment of Skin Lesions"

</TABLE>

         One new U.S.  patent  application  was  filed  during  fiscal  year
1999.  Five  additional  U.S.  patent applications  are  pending,  as  well
as one  reissue  application  corresponding  to  patent  8)  above.  Numerous
corresponding foreign applications are issued or pending.

         The Company's  original  patent,  U.S.  Patent No. Re.  31,779,
expired in the United States on April 18, 1995. That patent was directed to
disinfecting a substrate using a lactic  acid/sodium  chlorite  composition.
The Company's  second  patent,  U.S.  Patent  No.  4,330,531,  expired in the
United  States on May 18,  1999,  and was directed to a lactic acid/sodium
chlorite gel formulation.

         TRADEMARKS -- The Company has sought to acquire trademark
protection, primarily by the filing of applications for registration of its
marks in a large number of countries. There can be no assurances that a filed
application will result in a registration, that the issuance of a trademark
registration to the Company or the acquisition of rights through use will
provide the Company with adequate protection against infringement in a
selected territory, that the Company will be able to expand its product line
under a registered mark in some territories or that the Company's trademark
rights cannot be terminated in some territories, such as by petition by
others claiming superior rights.

         No assurances can be given that the Company's use of the marks and
business name will not infringe the rights of others in some territories
resulting in the exposure of the Company to liability to the holder of the
rights and a possible obligation to terminate use in such territory.

         If rights to trademarks selected by the Company were unavailable in
a territory, if a Company trademark registration were to become invalid, or
if the Company's business name or trademarks were to infringe the rights of
another in a territory, there would be an adverse impact on the Company.

         In addition to the Company's mark Alcide-Registered Trademark-, the
other Company marks registered in the U.S. are Sanova-Registered Trademark-,
Exspor-Registered Trademark-, LD-Registered Trademark-, UDDERgold-Registered
Trademark-, 4XLA-Registered Trademark-, Pre-Gold-Registered Trademark-,
DIPPINgold-Registered Trademark- silverQUICK-Registered Trademark- and
RenNew-Registered Trademark-.

         These same marks have been registered outside of the U.S. in markets
where the Company has determined that there is a commercial opportunity for
the appropriate product area. For translation reasons, the mark
DIPPINguld-Registered Trademark- has been determined to be more appropriate
than DIPPINgold-Registered Trademark- in certain foreign countries.
Therefore, the spelling variant DIPPINguld-Registered Trademark- has been
registered in Denmark, Norway, Finland and Sweden.

E.       RAW MATERIALS

         Various Alcide products include in their formulations chemical
components available from few (and in some cases only one) suppliers.
Formulation alternatives exist for each single-sourced material; however,
changing formulations could result in higher raw material costs and/or the
necessity to obtain regulatory clearance for the modified formulation.


                                       9
<PAGE>

F.       COMPETITION

         The Company competes in substantially all of its markets on the
basis of quality and technical innovation. A number of companies have
announced their intention to introduce, or are believed to be in the process
of developing, a variety of products designed to perform some of the
functions of Alcide products. Additionally, there exist in the marketplace
products that are known to be competitive with the Company's products.

         The dairy hygiene market into which UDDERgold Plus, UDDERgold,
Pre-Gold and 4XLA teat dips are sold is a highly fragmented worldwide market
in which major specialty chemical companies compete. The major classes of
products sold in this market are iodophors and chlorhexidines. The expiration
on May 18, 1999 of the Company's U.S. Patent 4,330,531, which covered
Alcide's UDDERgold formulation, allows competing lactic acid based acidified
sodium chlorite products to enter the marketplace. ABS Global, Inc., the
Company's former distributor, has introduced one such product. Management
believes, however, that the expired patent's technology is inferior to that
represented by Alcide's more recent patents.

         The market for disinfection of poultry and other food products is
dynamic and rapidly emerging as a result of consumer concern and U.S.
Government regulatory activity. A number of technologies are directed at
reduction of food borne pathogens. Of these, trisodium phosphate is used
within the poultry processing industry in a manner similar to the Company's
product, Sanova. Chlorine dioxide and ozone have been tested in poultry
chiller waters but have not been broadly accepted by the industry.
Irradiation technology has been approved by USDA and FDA but is not broadly
used by the poultry industry and, in the limited cases where irradiation is
used, the process involves a secondary treatment outside the poultry
processing plant. Market conditions within the food processing industry are
such that additional competition is likely.

G.       GOVERNMENT REGULATION

         1.  DAIRY INDUSTRY

         The Company's products sold to the dairy industry require
registration for sale in a number of international markets. UDDERgold Teat
Dip has been registered in Canada, the United Kingdom, Republic of Ireland,
Denmark, The Netherlands, Italy, Spain, Portugal, Belgium, New Zealand,
Brazil, France, Chile, Argentina and India. The product is legally sold
without formal registration in the United States, Greece, Hungary and Mexico.
Registrations are pending in Poland, South Africa and Switzerland.

         In West Germany, a New Drug Application for UDDERgold Teat Dip was
filed in February, 1989 and rejected by the West German regulatory
authorities in March, 1997. A new registration application was filed in
March, 1999 and is presently under review by the German authorities. The
Company's distributor in The Netherlands had been selling UDDERgold to German
customers who bought the product in The Netherlands until May, 1999, at which
time the distributor was ordered to discontinue the practice of across border
shipment of UDDERgold. The distributor reports that 70% of its former German
UDDERgold customers have converted to Alcide's 4XLA Teat Dip.

         4XLA Teat Dip has been registered in New Zealand, Chile, Argentina,
Canada and Denmark. The product is sold without registration in France, The
Netherlands, Belgium, Italy, Germany and the United States.


                                      10
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         In the event the Company employs distributors in other countries,
registration documents will be filed either directly by the Company or by the
specific distributor.

         It is expected that substantially all new products presently under
development by Alcide Corporation will require regulatory approval.

         2.  FOOD PROCESSING ANTIMICROBIALS:

             a.   Poultry

                  The Company's Food Additive Petition was approved by FDA in
April, 1996 and by USDA in January, 1998. The product is now actively
marketed and is being utilized by a number of major poultry processing
companies.

             b.   Red Meats

                  The Company's Food Additive Petition was approved by FDA in
March, 1998. Alcide plans to begin conducting a commercial plant test under
supervision of the USDA in August 1999, as a necessary step in obtaining the
agency's required approval.

             c.   Fruits and Vegetables

                  In December, 1998 Alcide submitted a Food Additive Petition
to the Food and Drug Administration for the use of Sanova on raw agricultural
commodities. Approval of the petition is expected in fiscal 2000.

         3.  PREOPERATIVE SKIN ANTISEPTIC

         A New Drug Application for the Company's preoperative skin
antiseptic was submitted to the FDA in September, 1994. In October, 1995, the
FDA requested substantial supplemental testing and additional support for the
NDA. Such testing and support was completed in FY 1997 and submitted to the
FDA after May, 1997. The product cannot be marketed without FDA approval.
Completion of the pharmaceutical manufacturing section of the NDA is a
necessary final step in the approval process.

         4.  STERILANTS/DISINFECTANTS

         The Company's line of hard surface sterilants and disinfectants are
regulated in the U.S. by the EPA and FDA. Appropriate EPA and FDA approvals
for sale and manufacturing have been obtained.

H.       EMPLOYEES

         The corporate office and laboratory staff of 15 employees occupy a
6,751 square foot facility in Redmond, Washington. In addition there are 2
Sanova technical service representatives located in the southeastern U.S.


                                      11
<PAGE>

         The Company has relationships with, and from time to time engages
the services of, university professors and other qualified consultants to
assist it in technological research and development.

         The Company is not a party to any collective bargaining agreement
and considers its employee relations to be excellent.

I.       ADVERTISING AND PROMOTION

         The Company's advertising and promotion activities consist of
cooperative advertising of dairy line products with its distributors and the
publication of product, financial and corporate literature.

J.       MANUFACTURING

         All manufacturing of the Company's products is performed by contract
manufacturers having appropriate FDA registration approval for such
manufacturing. Product release for sale is dependent on quality control
testing by Alcide. The Company is not dependent on any one manufacturer. Many
qualified manufacturers regularly compete in the contract packaging
marketplace.

ITEM 2.  PROPERTIES

         The Company's Sanova food antimicrobial is stored, mixed and applied
on site at each poultry processing plant under contract by means of equipment
owned by Alcide. The historical cost of such equipment for the five poultry
processing plants in operation and three plants being prepared for startup
was $2,496,503 on May 31, 1999. Each new plant utilizing the Sanova System
will require an investment estimated at between $350,000 and $500,000,
depending on plant size.

ITEM 3.  LEGAL PROCEEDING

         Following termination of its agreement with Alcide, ABS Global, Inc.
introduced a new family of teat dips developed by Ecolab which Alcide asserts
infringes one of Alcide's patents. On December 18, 1998 the Company filed a
patent infringement suit against ABS in U.S. District Court for the Western
District of Wisconsin. Subsequently, in March, 1999, Alcide submitted a
motion to amend its complaint to add Ecolab and certain ABS independent
representatives as additional defendants in the suit. The lawsuit is expected
to go to trial in November, 1999.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.


                                      12
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS

         The Company's common stock ("Common Stock") has been publicly traded
since May 26, 1983 in the over-the-counter market on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") under the symbol
ALCD.

         The following table sets forth the range of the Common Stock on
NASDAQ for the fiscal quarters indicated, as reported by NASDAQ.

<TABLE>
<CAPTION>
                                                      HIGH          LOW
                                                      ----          ---

                      COMMON STOCK
                      ------------

                      <S>                             <C>           <C>
                      YEAR ENDED MAY 31, 1998
                      First quarter                   59 1/2        30
                      Second Quarter                  67 3/4        49 7/8
                      Third Quarter                   65            46 1/2
                      Fourth Quarter                  60 1/8        33 1/4


                      YEAR ENDED MAY 31, 1999
                      First Quarter                   48            17 1/4
                      Second Quarter                  22            13
                      Third Quarter                   25 1/2        12 1/16
                      Fourth Quarter                  19 1/4        11 3/4

</TABLE>

    No dividends were declared or paid for these periods.
    Prices represent final daily transactions between dealers without retail
    mark-up, mark-down or commissions, and may not represent actual
    transactions.
    On August 1, 1999, there were approximately 1,648 Common stockholders of
    record.


                                      13
<PAGE>

ITEM 6.          SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

                                                              FISCAL YEARS ENDED
                                                              ------------------

                             MAY 31, 1995        MAY 31, 1996         MAY 31, 1997       MAY 31, 1998        MAY 31, 1999
<S>                          <C>                 <C>                  <C>                <C>                 <C>

Net sales                      $9,153,104         $11,145,826          $11,768,504        $12,998,952         $11,220,528

Net income (loss)               1,663,213           2,325,062            2,881,295          3,222,723           (974,463)


Diluted earnings
(loss) per common
share and equivalents                 .60                 .82                 1.04               1.16               (.38)


Total assets                   11,910,992          13,768,614           15,113,672         16,369,337          15,619,987

Long term debt                        ---                 ---                  ---                ---                 ---

Redeemable Preferred
Stock                             261,022             249,380              233,105            212,936             190,377

</TABLE>


SELECTED QUARTERLY FINANCIAL DATA FOR THE YEARS ENDED MAY 31, 1998 AND
MAY 31, 1999

<TABLE>
<CAPTION>


                                Net Sales   Gross Profit    Net Income  Net Income (Loss)
                                                              (Loss)         per Share
<S>                           <C>            <C>            <C>         <C>
Year Ended
May 31, 1998
1st Quarter                   $ 3,192,396    $ 2,089,395    $   723,050     $       .26
2nd Quarter                     3,231,276      2,206,822        795,155             .28
3rd Quarter                     3,189,789      2,149,403        891,025             .31
4th Quarter                     3,385,491      2,234,090        813,493             .29
                              -----------    -----------    -----------     -----------
Total for Year                $12,998,952    $ 8,679,710    $ 3,222,723     $      1.16
                              -----------    -----------    -----------     -----------
                              -----------    -----------    -----------     -----------


Year Ended
May 31, 1999
1st Quarter                   $ 3,781,279    $ 2,669,272    $ 1,033,738     $       .38
2nd Quarter                     2,668,869      1,487,877         38,675             .01
3rd Quarter                     2,280,135      1,211,675     (1,531,108)           (.60)
4th Quarter                     2,490,245        947,932       (515,768)           (.20)
                              -----------    -----------    -----------     -----------
Total for Year                $11,220,528    $ 6,316,756    $  (974,463)    $      (.38)
                              -----------    -----------    -----------     -----------
                              -----------    -----------    -----------     -----------

</TABLE>

                                      14
<PAGE>

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

FISCAL YEAR 1999 AS COMPARED WITH 1998

         Net sales for the twelve month period ended May 31, 1999 were
$11,220,528, a 14% decrease from the $12,998,952 sales for the equivalent
twelve month period in the preceding fiscal year. The net sales decrease and
the $974,463 net loss for the fiscal year ended May 31, 1999 reflect the
negative impact of several unusual events which occurred during the twelve
month period, including:

        -       The decision by Novus International, Inc. to terminate its
                distribution agreement with Alcide pertaining to Alcide's Sanova
                antimicrobial for the poultry industry. Under the terms of the
                agreement Alcide was entitled to minimum quarterly revenue
                payments from Novus. Such payments resulted in Alcide net sales
                of $1,204,593 and gross margin of $927,890 during fiscal 1999,
                as compared to net sales of $2,445,106 and gross margin of
                $2,000,000 in the preceding fiscal year.

        -       Negotiated settlement costs of $354,000 relating to the
                termination of the distribution agreement with Novus
                International.

        -       Operating expenses, testing, development costs and startup
                expenses totaling $950,000 related to the support for expansion
                of the Sanova business under Alcide control.

        -       Alcide's decision not to ship product ordered by its former
                distributor, ABS Global, Inc. for the month of October. The
                order had a sales value of $718,031 and a gross margin value of
                $466,720.

        -       Agreement with royalty rights holders to settle their suit filed
                in February, 1996 for a one-time payment totaling $2,212,512.
                The entire payment has been reflected as an expense in fiscal
                1999.

         Interest income of $557,669 for the twelve month period ended May
31, 1999 was $80,347 lower than the equivalent twelve month period last year.
Approximately $46,500 of the year-to-year decrease is due to 8% lower
investable cash resources. The balance of the decrease is due to lower
prevailing interest rates.

         Cost of goods as a percentage of net sales was 44% for the twelve
month period ended May 31, 1999, an increase of 11 points over the 33% of net
sales for the same period last year. Sanova cost of goods during the second,
third and fourth quarters with no corresponding minimum profit as occurred in
the prior year account for 6 percentage points of the difference. The balance
is due primarily to increased warehousing, freight and handling costs
incurred in building inventory to support the transition to two new
distributors for the Company's mastitis prevention products.


                                      15
<PAGE>

    ROYALTY OBLIGATIONS

         Prior to May, 1999, the Company had an obligation pursuant to
certain royalty and consolidation agreements to pay patent holders, some of
whom were early investors in the Company, a royalty of 50% of its license
revenues and 8% of its net cash sales of products subject to such agreements.
In fiscal 1998, net sales of $4,161,018 were covered by the royalty and
consolidation agreements, resulting in royalties of $332,881. During the
first nine months of FY 1999 net sales of $2,505,926 were covered by the
royalty and consolidation agreements, resulting in royalties of $200,482. In
May, 1999, the Company reached agreement with royalty rights holders to
settle their claim to all past and future royalties for a one-time payment of
$2,212,512, resulting in total royalty expense for the year of $2,412,994.

    RESEARCH AND DEVELOPMENT

        Research and development expenses of $2,240,509 for the twelve month
period ended May 31, 1999 were $606,584 higher than for the twelve months
last year. This increase is due to reimbursement to Novus of $317,000 in
research and development costs associated with the settlement negotiated at
the termination of the Novus contract and increased salary, consulting,
testing and travel costs incurred in connection with food safety related
projects.

    SELLING AND ADMINISTRATIVE EXPENSE

        Other selling, general and administrative expenses of $3,349,434 for
the twelve months ended May 31, 1999 were $1,200,485 higher than for the
equivalent period last year. The increase reflects costs incurred to manage
the Sanova projects following termination of the Novus agreement of
approximately $628,000, $193,460 of expenses incurred in connection with the
debt collection and patent infringement lawsuits against ABS Global, Inc. and
$298,000 for increases in salaries and executive bonuses.

    INCOME TAXES

        Income tax benefit during fiscal 1999 was $320,316 compared to an
income tax expense in fiscal 1998 of $1,848,358. The difference between the
effective tax rate of 24.7% in fiscal 1999, compared to 36.4% in fiscal 1998,
is primarily due to state taxes paid and expenses in 1999 related to
settlement of prior year's liabilities. The Company expects its effective
rate in the future to be approximately 36.5%.

    LIQUIDITY

        The Company's cash, cash equivalents, short term investments and U.S.
Treasury investments totaled $6,895,126 on May 31, 1999, an amount $5,236,103
lower than at the end of the previous fiscal year. The reduction is due
primarily to:

-       Inventory increases of $710,617 to support the Sanova
        expansion/transition from Novus International, Inc., and to support the
        transition from ABS to two new U.S. animal health distributors.
-       Investment in Sanova plant equipment, components and replacement parts
        of $2,631,195.
-       Cash payment in fiscal 1999 of $2,208,399 related to royalty rights
        holders' settlement; the balance of the settlement, $4,113, was paid in
        the first quarter of fiscal 2000.


                                      16
<PAGE>


    OUTLOOK

-        Sanova Food Quality System Distribution
         On October 8, 1998, the Company and Novus International, Inc. announced
         the termination of their May 21, 1997 agreement to market the Sanova
         Food Quality System. As a result of this decision Alcide is now selling
         and distributing Sanova directly to the poultry processing industry.

         Management has announced its goal for the utilization of Sanova by at
         least 20 poultry processing plants by the end of fiscal 2000. On August
         1, 1999, seven poultry processing plants were utilizing Sanova and an
         additional five plants had contracted with the Company for Sanova use.
         Each new plant startup requires process validation testing, engineering
         support and other startup expenses. In total, such startup related
         expenses are estimated at between $30,000 and $75,000 per plant,
         depending on plant size and complexity. Management anticipates that,
         initially, startup expenses related to expansion of the Sanova business
         base will eclipse profit generated by systems already in operation.

         It is further expected that substantial expense will be necessary
         during the early part of fiscal 2000 to optimize the Sanova delivery
         system and chemistry in the interest of long term cost reduction.
         Lastly, it is expected that each new plant will require a capital
         investment of $350,000 to $500,000.

-        Udder Care Product Distribution
         The Company's distribution agreements with ABS Global, Inc. expired on
         October 31, 1998 and were not renewed. Effective November 1, 1998
         Alcide entered into a new four year agreement with IBA, Inc. to expand
         IBA's territory to cover the entire United States. In addition, the
         present Universal Marketing Services, Inc. contract has been amended to
         include the additional territories of Canada, Italy, Portugal and the
         Czech Republic as exclusive UMS territories and the United States as a
         non-exclusive territory.

         Management believes that the combined distribution coverage provided by
         IBA and UMS has the potential to equal or surpass that previously
         provided by ABS for the territories of the United States, Canada,
         Italy, Portugal and the Czech Republic.

         The transition from ABS to the two expanded distributors, IBA and UMS,
         coupled with ABS's infringement, has had an impact on Alcide's fiscal
         1999 financial performance and is expected to have an impact on
         Alcide's fiscal 2000 financial performance, although the magnitude of
         such cannot be determined at this time.

      YEAR 2000 ISSUES

         The Company has developed and is implementing a comprehensive plan
to address issues related to Year 2000. The organizational simplicity of
Alcide's business structure, which relies heavily on third party
manufacturers and a network of third party distributors, limits the direct
financial impact on the Company to become Year 2000 compliant.

         It has been necessary to upgrade the Company's accounting software
which controls internal and external reporting, sales order and billing records,
cost accounting inventory records, accounts


                                      17
<PAGE>

payable and cash management processes. The costs incurred to accomplish the
upgrade were approximately $10,000 and were recorded as an expense during
fiscal 1998. All such upgrades have been completed.

         Further, the Company identified a need to upgrade computer software
which controls certain laboratory analytical instruments. The upgrade was
completed during the Company's fiscal 1999 third quarter at a cost of $12,297.

         Lastly, the Company has surveyed each of its raw material suppliers,
manufacturing resources and distributors to assure their Year 2000 readiness.

         All business related computer systems are fully Year 2000 compatible.
Critical raw materials and manufacturing requirements are available from
multiple sources and the Company can serve its distributors without reliance on
computers.

FISCAL YEAR 1998 AS COMPARED WITH 1997

        Fiscal year 1998 sales of $12,998,952 were 10% higher than fiscal
year 1997 sales of $11,768,504. The sales increase was caused primarily by
the $2,445,106 sales of Sanova food antimicrobial to Novus International,
Inc. During fiscal 1997, sales to Novus were $1 million, representing an
up-front, one time purchase by Novus of Alcide's prototype application
equipment and inventory at the time that Novus entered into a distribution
agreement with Alcide.

        Interest income for fiscal 1998 was $638,016, a 49% increase over
fiscal 1997 interest income of $427,316. The increase is due entirely to an
increase of funds available for investment.

        Cost of goods sold was $4,319,242 in fiscal year 1998, or 33% of net
sales as compared to $3,853,875 in fiscal year 1997, which was also 33% of
net sales. During the fiscal year there were no material changes in the unit
cost components of cost of goods, nor did Alcide change its selling prices
during the year, and therefore, on balance, cost of goods as a percentage of
sales remained essentially unchanged.

    ROYALTY OBLIGATIONS

        Prior to May, 1999, the Company had an obligation pursuant to certain
royalty and consolidation agreements to pay patent holders, some of whom were
early investors in the Company, a royalty of 50% of its license revenues and
8% of its net cash sales of products subject to such agreements. In fiscal
1998, net sales of $4,161,018 were covered by the royalty and consolidation
agreements compared to $4,248,923 in fiscal 1997.

    RESEARCH AND DEVELOPMENT

        Research and Development expenses in fiscal year 1998 were $1,633,925
as compared to $1,546,285 in fiscal 1997. The 6% increase over fiscal 1997
was caused primarily by inflationary increases for salaries and laboratory
supplies and by the testing required to support USDA approval of Sanova for
poultry processing plants.


                                      18
<PAGE>

    SELLING AND ADMINISTRATIVE EXPENSE

        Other selling, general and administrative expenses were $2,148,949 in
fiscal 1998, a 6% increase over fiscal 1997 expenses of $2,026,284. The
difference was primarily due to an increase in marketing and promotion
expense and an increase in legal fees due to product litigation, offset by a
$185,415 reduction in executive bonus expense.

    INCOME TAX

        The Company's Statements of Operations for fiscal 1998 includes a
provision for income taxes of $1,848,358 which is a tax rate of 36.4% of
income before provision for income taxes. The provision for income taxes in
fiscal 1997 was $1,423,698, or a tax rate of 33.1%. The difference in tax
rates is due primarily to a 2.4% provision for state taxes in fiscal 1998,
while no such provision was made in fiscal 1997.

    NET INCOME

        Net income for fiscal 1998 was $3,222,723, an increase of $341,428 or
12% over the previous fiscal year. The increase was achieved as a result of
the net sales increase and interest income increases noted above, offset by
an increase in operating expenses and the income tax provision.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        Reference is made to pages 14 and 26 through 37 of Form 10-K.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURES

        None.


                                      19
<PAGE>

                                                                PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS

        Pursuant to the Company's by-laws, Directors are elected to a one-year
term of office by the shareholders of the Company at its Annual Meeting.

        Information regarding the Directors and Executive Officers of the
Company as of May 31, 1999 is listed in the following table:

<TABLE>
<CAPTION>

                                        POSITIONS WITH THE COMPANY AND PRINCIPAL OCCUPATION OR       DIRECTOR OR EXECUTIVE OFFICER
NAME                           AGE      EMPLOYMENT DURING THE PAST FIVE YEARS                        SINCE

<C>                            <C>      <S>                                                          <C>
Thomas L. Kempner              72       Director and Chairman of the Board of the Company;                       1983
                                        Chairman and Chief Executive Officer of Loeb Partners
                                        Corporation, a private investment banking firm, since
                                        1979.   Presently serves on the Boards of Directors of
                                        Energy Research Corporation; IGENE Biotechnology, Inc.;
                                        Roper Starch Worldwide, Inc.; Intermagnetics General
                                        Corporation; Northwest Airlines, Inc. (Emeritus); CCC
                                        Information Services Group, Inc.; Evercel, Inc.; and
                                        Insight Communications Company, Inc.


Kenneth N. May                 68       Director of the Company; Retired in August, 1989 as                       1995
                                        Chairman, Chief Executive Officer and a director of Holly
                                        Farms Foods, Inc., completing 19 years with that company.
                                        Previously held positions as Professor of Poultry Science
                                        at Mississippi State University and the University of
                                        Georgia.  Former technical advisor and consultant to the
                                        National Chicken Council on food safety matters.  Serves
                                        on the Board of Directors of Embrex, Inc.  Dr. May has
                                        been active in the Poultry Science Association and the
                                        National Chicken Council, and has served on various
                                        committees for the USDA.


                                      20
<PAGE>

Joseph A. Sasenick             59       Director of the Company; President and Chief Executive                    1991
                                        Officer of the Company since February 1992; President and
                                        Chief Operating Officer of the Company from February 1991
                                        to February 1992.  Presently serves on the Executive
                                        Committee and Board of Directors of the Washington
                                        Biotechnology and Biomedical Association and on the Board
                                        of Directors of the Technology Alliance, a special program
                                        of the Greater Seattle Chamber of Commerce. Previously
                                        held senior management positions at Abbott Laboratories
                                        and The Gillette Company.


William G. Spears              61       Director of the Company; Chairman of Key Asset Management,                1989
                                        the investment advisory subsidiary of KeyCorp, since 1996;
                                        Principal of W. G. Spears, Grisanti & Brown LLC since July
                                        1, 1999.  Presently serves on the Board of Directors of
                                        United HealthCare Corp.; Avatar Holdings, Inc.; Chairman,
                                        HealthCare Chaplaincy Board of Trustees and Vice Chairman
                                        of Quinnipiac College Board of Trustees.


John P. Richards               57       Executive Vice President, Chief Financial Officer and                     1991
                                        Secretary of the Company since 1991; President, Alcide
                                        Food Safety, Inc., a wholly owned subsidiary of the
                                        Company, since January, 1999.


G. Kere Kemp                   49       Executive Vice President, Chief Scientific Officer of the                 1992
                                        Company; previously Director, Animal Health Research and
                                        Vice President, Clinical Research.  Prior to employment at
                                        Alcide, worked for Pfizer, Inc. animal health group for
                                        sixteen years in various research and management positions.

</TABLE>


                                      21
<PAGE>



ITEM 11.   EXECUTIVE COMPENSATION

        This information is incorporated by reference from the Section
captioned "Executive Compensation" contained in the Company's definitive
Proxy Statement for its 1999 Annual Meeting of Shareholders.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        This information is incorporated by reference from the Section
captioned "Share Ownership by Directors, Executive Officers and Certain
Beneficial Owners" contained in the Company's definitive Proxy Statement for
its 1999 Annual Meeting of Shareholders.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        This information is incorporated by reference from the Section
captioned "Certain Transactions" contained in the Company's definitive Proxy
Statement for its 1999 Annual Meeting of Shareholders.

                                     PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

             (a)  Documents filed with Report:

                 1.   FINANCIAL STATEMENTS

                      Independent Auditors' Report.
                      Balance Sheets as of May 31, 1998 and May 31, 1999.
                      Statements of Operations for each of the years ended May
                      31, 1997, May 31, 1998 and May 31, 1999.
                      Statements of Changes in Shareholders' Equity for each of
                      the years ended May 31, 1997, May 31, 1998 and
                      May 31, 1999.
                      Statements of Cash Flows for each of the years ended May
                      31, 1997, May 31, 1998 and May 31, 1999.

                 2.   FINANCIAL STATEMENT SCHEDULE

                      Notes to Financial Statements.
                      Selected Quarterly Financial Data for the Years Ended May
                      31, 1998 and May 31, 1999, on Page 14.

                 3.   EXHIBITS

                      See Index to Exhibits on Page 24.

             (b) Reports on Form 8-K.

                      None


                                      22
<PAGE>

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.

                           ALCIDE CORPORATION
                          (Registrant)

                          By /s/Joseph A. Sasenick
                          -----------------------------------------------------
                          Joseph A. Sasenick, President
                          Chief Executive Officer

                          By /s/John P. Richards
                          -----------------------------------------------------
                          John P. Richards, Executive Vice President
                          Chief Financial Officer (Principal Accounting Officer)
Date:  August 17, 1999

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:


/s/Thomas L. Kempner         Director                        August 17, 1999
--------------------------
Thomas L. Kempner




/s/Kenneth N. May            Director                        August 17, 1999
--------------------------
Kenneth N. May




/s/Joseph A. Sasenick        Director, President,            August 17, 1999
--------------------------   Chief Executive Officer
Joseph A. Sasenick




/s/William G. Spears         Director                        August 17, 1999
--------------------------
William G. Spears


                                      23
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C>          <S>
3.1          Certificate of Incorporation (previously filed as an exhibit to
             Registration Statement No. 2-79954 on Form S-1 filed October 22,
             1982, and incorporated herein by reference).

3.2          By-Laws (previously filed as an exhibit to Form 10-K of the
             Registrant for the fiscal year ended May 31, 1984, and incorporated
             herein by reference).

10.3         1983 Incentive Stock Option Plan as amended (previously filed as an
             exhibit to Form 10-K of the Registrant for the fiscal year ended
             May 31, 1984, and incorporated herein by reference).

10.14        Agreement by and between the Company and Holstein Genetika KFT
             dated May 1, 1992 (previously filed as an exhibit to Form 10-K of
             the Registrant for the fiscal year ended May 31,1992, and
             incorporated herein by reference).

10.16        Second amendment dated April 8, 1993 to employment agreement for
             Joseph A. Sasenick dated February 11, 1991 and first amendment to
             employment agreement dated February 4, 1992 (previously filed as
             exhibits to Form 10-K of the Registrant for the fiscal years ended
             May 31, 1991 and 1992, respectively and incorporated herein by
             reference).

10.19        1993 Incentive Stock Option Plan (previously filed as an Exhibit to
             Proxy Statement for meeting held December 7, 1993, and incorporated
             herein by reference).

10.24        Distributor Agreement by and between the Company and
             Ingenieursbureau lr. P.C. Heemskerk b.v., dated June 1,1997,
             covering territories of The Netherlands, Denmark, Belgium, Germany,
             Luxembourg, Sweden and Finland (previously filed as an exhibit to
             Form 10-Q of the Registrant for the quarter ended February 28,
             1998, and incorporated herein by reference).

10.25        Distributor Agreement by and between the Company and
             Ingenieursbureau lr. P.C. Heemskerk b.v., dated September 4, 1997,
             covering the territory of France (previously filed as an exhibit to
             Form 10-Q of the Registrant for the quarter ended February 28,
             1998, and incorporated herein by reference).

10.26        Distributor Agreement by and between the Company and Universal
             Marketing Services, Inc., dated January 30, 1998, covering
             territories of the United Kingdom, Spain and the Republic of
             Ireland (previously filed as an exhibit to Form 10-Q of the
             Registrant for the quarter ended February 28, 1998, and
             incorporated herein by reference).

10.27        Amendment dated August 3, 1998 to Distributor Agreement by and
             between the Company and Novus International, Inc., dated May 21,
             1997 (previously filed on Form 8-K of the Registrant on August 11,
             1998, and incorporated herein by reference).

10.28        Distributor Agreement by and between the Company and Merial Societe
             Par Actions Simplifiee, dated September 1, 1998, covering the
             territory of France (previously filed as an exhibit to Form 10-Q of
             the Registrant for the quarter ended August 31, 1998, and
             incorporated herein by reference).

10.29        Distributor Agreement by and between the Company and IBA, Inc.,
             dated November 1, 1998, covering the United States (previously
             filed as an exhibit to Form 10-Q of the Registrant for the quarter
             ended November 30, 1998, and incorporated herein by reference).

10.30        Transfer of Assets and Assignment of Contracts by and between the
             Company and Novus International, Inc., dated November 11, 1998
             (previously filed as an exhibit to Form 10-Q of the Registrant for
             the quarter ended November 30, 1998, and incorporated herein by
             reference).

23.1         Consent of Independent Public Accountants.
</TABLE>
                                      24
<PAGE>

                               ARTHUR ANDERSEN LLP




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



    To the Board of Directors and Shareholders of Alcide Corporation:

    We have audited the accompanying consolidated balance sheets of Alcide
    Corporation (a Delaware corporation) and subsidiary as of May 31, 1999 and
    1998, and the related consolidated statements of operations, changes in
    shareholders' equity and cash flows for each of the three years ended May
    31, 1999. These financial statements are the responsibility of the Company's
    management. Our responsibility is to express an opinion on these financial
    statements based on our audits.

    We conducted our audits in accordance with generally accepted auditing
    standards. Those standards require that we plan and perform the audit to
    obtain reasonable assurance about whether the financial statements are free
    of material misstatement. An audit includes examining, on a test basis,
    evidence supporting the amounts and disclosures in the financial statements.
    An audit also includes assessing the accounting principles used and
    significant estimates made by management, as well as evaluating the overall
    financial statement presentation. We believe that our audits provide a
    reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly,
    in all material aspects, the financial position of Alcide Corporation and
    subsidiary as of May 31, 1999 and 1998, and the results of their operations
    and their cash flows for each of the three years ended May 31, 1999 in
    conformity with generally accepted accounting principles.



                                                          /s/Arthur Andersen LLP


    Seattle, Washington
    June 25, 1999


                                      25
<PAGE>

                 ALCIDE CORPORATION CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                                      May 31,
                                                                                          ------------------------------
                                                                                               1998                 1999
                                                                                               ----                 ----
      <S>                                                                               <C>                  <C>
      ASSETS:
         Current assets:
              Cash and cash equivalents                                                 $ 7,844,217          $ 6,391,868
              Short term investments                                                      3,782,752                  ---
              Accounts receivable - trade                                                 2,268,264            2,259,917
              Inventory                                                                   1,353,870            2,064,487
              Prepaid income taxes                                                              ---              615,000
              Prepaid expenses and other current assets                                     213,269              311,406
                                                                                        -----------          -----------
                                      Total current assets                               15,462,372           11,642,678
                                                                                        -----------          -----------
          Equipment and leasehold improvements:
              Sanova plant assets                                                               ---            2,496,503
              Office equipment                                                              112,280              172,857
              Laboratory and manufacturing equipment                                        145,292              160,028
              Leasehold improvements                                                         56,152               70,520
          Less:  Accumulated depreciation and amortization                                (202,318)            (407,817)
                                                                                        -----------          -----------
          Total equipment and leasehold improvements, net                                   111,406            2,492,091
          Deferred income tax asset                                                         285,618              862,298
          Long term investments and other assets                                            509,941              622,920
                                                                                        -----------          -----------

      TOTAL ASSETS                                                                      $16,369,337          $15,619,987
                                                                                        -----------          -----------
                                                                                        -----------          -----------
      LIABILITIES AND SHAREHOLDERS' EQUITY
          Current liabilities:
              Accounts payable                                                          $   269,801          $   797,934
              Accrued expenses                                                              157,812              412,150
              Income taxes payable                                                          125,000                  ---
                                                                                        -----------          -----------
                                      Total current liabilities                             552,613            1,210,084
          Long term payable to Novus                                                            ---              316,000
                                                                                        -----------          -----------
                                      Total liabilities                                     552,613            1,526,084
                                                                                        -----------          -----------

          Commitments and Contingencies
          Redeemable Class "B" Preferred Stock - noncumulative convertible $.01
          par value; authorized 10,000,000 shares;
              issued and outstanding:
              May 31, 1998 - 81,119
              May 31, 1999 - 72,525                                                         212,936              190,377
                                                                                        -----------          -----------
          Shareholders' equity:
          Class "A" Preferred Stock - no par value;
              authorized 1,000 shares; issued and outstanding:
              May 31, 1998 - 1,000
              May 31, 1999 -   594                                                          135,307               80,437
          Common Stock $.01 par value;
              authorized 100,000,000 shares;
              Issued and outstanding:
              May 31, 1998 - 2,872,313
              May 31, 1999 - 2,888,968                                                       28,723               28,889
          Treasury stock at cost                                                        (6,125,794)          (6,939,750)
          Additional paid-in capital                                                     19,559,369           19,702,230
          Retained Earnings                                                               2,006,183            1,031,720
                                                                                        -----------          -----------
                                      Total Shareholders' Equity                         15,603,788           13,903,526
                                                                                        -----------          -----------

      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                        $16,369,337          $15,619,987
                                                                                        -----------          -----------
                                                                                        -----------          -----------
</TABLE>

              See notes to financial statements.

                                      26
<PAGE>


                               ALCIDE CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                     FOR THE YEARS ENDED MAY 31,
                                                                                     ---------------------------
                                                                            1997                1998                 1999
                                                                            ----                ----                 ----

<S>                                                                  <C>                 <C>                  <C>
NET SALES                                                            $11,768,504         $12,998,952          $11,220,528


EXPENDITURES:
        Cost of goods sold                                             3,853,875           4,319,242            4,903,772
        Royalty expense                                                  437,877             332,881            2,412,994
        Research and development expense                               1,546,285           1,633,925            2,240,509
        Depreciation and amortization                                     57,022              58,714               66,267
        Consulting expense to related parties                             96,014              96,012              100,000
        Other selling, general/administrative                          2,026,284           2,148,949            3,349,434
                                                                     -----------         -----------          -----------
                                                                       8,017,357           8,589,723           13,072,976
                                                                     -----------         -----------          -----------

Operating income (loss)                                                3,751,147           4,409,229          (1,852,448)

Interest income                                                          427,316             638,016              557,669
Other income                                                             126,530              23,836                  ---
                                                                     -----------         -----------          -----------


Income (loss) before provision (benefit) for income taxes              4,304,993           5,071,081          (1,294,779)

Provision (benefit) for income taxes                                   1,423,698           1,848,358            (320,316)
                                                                     -----------         -----------          -----------

Net income (loss)                                                    $ 2,881,295         $ 3,222,723          $ (974,463)
                                                                     -----------         -----------          -----------
                                                                     -----------         -----------          -----------

Basic earnings (loss) per common share                               $      1.12          $     1.24          $     (.38)
                                                                     -----------         -----------          -----------
                                                                     -----------         -----------          -----------

Diluted earnings (loss) per common share and equivalents             $      1.04         $      1.16          $     (.38)
                                                                     -----------         -----------          -----------
                                                                     -----------         -----------          -----------

Weighted average common shares outstanding                             2,578,945           2,607,192            2,550,312
                                                                     -----------         -----------          -----------
                                                                     -----------         -----------          -----------

Weighted average common shares & common share equivalents              2,783,064           2,789,491            2,550,312
                                                                     -----------         -----------          -----------
                                                                     -----------         -----------          -----------


</TABLE>

         See notes to financial statements.


                                      27
<PAGE>

                               ALCIDE CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                             CLASS "A"                                            ADDITIONAL
                                          PREFERRED STOCK             COMMON STOCK                 PAID IN
                                                                                                   CAPITAL

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

                                         SHARES        AMOUNT       SHARES         AMOUNT
----------------------------------------------------------------------------------------------------------------
<S>                                      <C>         <C>         <C>              <C>            <C>
Balance May 31, 1996                      1,000      $135,307    2,791,538        $27,915        $18,209,412

Exercise of Stock Options                                            7,870             79             69,965

Purchase Treasury Stock, Net

Tax Benefit from Exercise of Stock
Options                                                                                               23,000

Net Income
----------------------------------------------------------------------------------------------------------------

Balance May 31, 1997                      1,000      $135,307    2,799,408        $27,994        $18,302,377

Exercise of Stock Options                                           72,905            729            394,617

Purchase Treasury Stock, Net

Tax Benefit from Exercise of Stock
Options                                                                                              862,375

Net Income
----------------------------------------------------------------------------------------------------------------

Balance May 31, 1998                      1,000      $135,307    2,872,313        $28,723        $19,559,369

Redeem Class "A" Preferred                (406)      (54,870)                                         13,913

Exercise of Stock Options                                           16,655            166            109,581

Purchase Treasury Stock, Net

Tax Benefit from Exercise of Stock
Options                                                                                               19,367

Net Loss
----------------------------------------------------------------------------------------------------------------

Balance May 31, 1999                        594       $80,437    2,888,968        $28,889        $19,702,230
                                            ---       -------    ---------        -------        -----------
                                            ---       -------    ---------        -------        -----------
<CAPTION>


                                             COMMON TREASURY STOCK        RETAINED         TOTAL
                                                                          EARNINGS     SHAREHOLDERS'
                                                                        (ACCUMULATED      EQUITY
                                                                          DEFICIT)
---------------------------------------------------------------------------------------------------
                                              SHARES         AMOUNT
---------------------------------------------------------------------------------------------------
<S>                                        <C>         <C>             <C>              <C>
Balance May 31, 1996                       (192,337)   ($2,213,845)    ($4,097,835)     $12,060,954

Exercise of Stock Options                                                                    70,044

Purchase Treasury Stock, Net                (48,382)      (977,580)                       (977,580)

Tax Benefit from Exercise of Stock
Options                                                                                      23,000

Net Income                                                                2,881,295       2,881,295
---------------------------------------------------------------------------------------------------

Balance May 31, 1997                       (240,719)   ($3,191,425)    ($1,216,540)     $14,057,713

Exercise of Stock Options                                                                   395,346

Purchase Treasury Stock, Net                (68,446)    (2,934,369)                     (2,934,369)

Tax Benefit from Exercise of Stock
Options                                                                                     862,375

Net Income                                                                3,222,723       3,222,723
---------------------------------------------------------------------------------------------------

Balance May 31, 1998                       (309,165)   ($6,125,794)      $2,006,183     $15,603,788

Redeem Class "A" Preferred                                                                 (40,957)

Exercise of Stock Options                                                                   109,747

Purchase Treasury Stock, Net                (51,973)      (813,956)                       (813,956)

Tax Benefit from Exercise of Stock
Options                                                                                      19,367

Net Loss                                                                  (974,463)       (974,463)
----------------------------------------------------------------------------------------------------

Balance May 31, 1999                       (361,138)   ($6,939,750)      $1,031,720     $13,903,526
                                           ---------   ------------      ----------     -----------
                                           ---------   ------------      ----------     -----------

</TABLE>

See notes to financial statements.


                                       28
<PAGE>

            ALCIDE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                          FOR THE YEARS ENDED MAY 31,
                                                                                          ---------------------------
                                                                                  1997                1998                 1999
                                                                                  ----                ----                 ----
<S>                                                                        <C>                <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                                       $ 2,881,295        $  3,222,723           $(974,463)
   Adjustments to reconcile net income to
       net cash provided by operating activities:
       Depreciation                                                             57,022              58,714              205,499
       Amortization of investment discounts/premiums                          (53,359)            (82,512)             (76,246)
       Common Stock issued to directors, consultants and the
       employee stock ownership plan                                            52,000              55,081               70,998
     Deferred income tax                                                     1,330,962             804,611            (557,313)

     Decrease (increase) in assets:
        Inventory                                                            (187,127)           (238,243)            (710,617)
        Accounts receivable - trade                                             86,446             230,717                8,347
        Prepaid income taxes                                                       ---                 ---            (615,000)
        Replacement parts and components                                           ---                 ---            (134,692)
        Prepaid expenses and other current assets                            (137,424)              72,702               36,555
        Long term investments and other assets                                (53,058)             657,907            (113,981)
     Increase (decrease) in liabilities:
        Accounts payable                                                      (44,632)            (60,007)              528,133
        Accrued expenses and taxes payable                                   (590,794)             652,141              129,338
        Other liabilities                                                          ---                 ---              316,000
                                                                           ------------       --------------         ------------

  Net cash provided by operating activities                                  3,341,331           5,373,834          (1,887,442)
                                                                           ------------       --------------         ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of investments                                               (2,050,907)         (3,720,340)                  ---
  Redemption of investments                                                  1,050,000           2,107,000            3,860,000
  Acquisition of equipment and leasehold improvements                          (7,354)            (25,158)          (2,586,184)
                                                                           ------------       --------------         ------------

  Net cash provided by (used in) investing activities                      (1,008,261)         (1,638,498)            1,273,816
                                                                           ------------       --------------         ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Purchase of Alcide Common Stock                                          (1,029,580)         (2,989,450)            (884,954)
  Redemption of Class "A" Preferred Stock                                          ---                 ---             (40,957)
  Redemption of Class "B" Preferred Stock                                     (16,275)            (20,169)             (22,559)
  Stock Options exercised                                                       70,044             395,346              109,747
                                                                           ------------       --------------         ------------

Net cash (used in) financing activities                                      (975,811)         (2,614,273)            (838,723)
                                                                           ------------       --------------         ------------

Net increase (decrease) in cash and cash equivalents                         1,357,259           1,121,063          (1,452,349)
Cash and cash equivalents at beginning of year                               5,365,895           6,723,154            7,844,217
                                                                           ------------       --------------         ------------

Cash and cash equivalents at end of year                                   $ 6,723,154        $  7,844,217           $6,391,868
                                                                           ------------       --------------         ------------
                                                                           ------------       --------------         ------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the year for interest                                           ---                 ---                  ---
  Cash paid during the year for income taxes                               $    41,000         $    71,625           $  976,997

</TABLE>

See notes to financial statements.


                            29
<PAGE>

                               ALCIDE CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.    GENERAL:

      Alcide Corporation (the "Company") is engaged in the research, development
      and commercialization of unique chemical compounds having intense
      microbiocidal activity. The Company holds substantial worldwide rights to
      its discoveries through various patents, patent applications, trademarks
      and other intellectual property, technology and know-how.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

      a. Revenue Recognition: Sales to the poultry industry are determined by
      the number of birds or pounds treated at each processor. Alcide owned
      inventory is maintained at each customer processing site. Sales are
      recognized during the month in which inventory is used to disinfect
      customer's product. All other sales are recorded at the time of shipment
      to end users or to distributors who take title to products at the time of
      shipment.

           The Company provides a limited warranty to its distributors which
      limits the Company's obligation to replacement of defective product. Such
      replacements have for the past several years been less than .1% of net
      sales.

      b. Cash and cash equivalents consist of short-term interest-bearing
      instruments, primarily U.S. Treasury based money market accounts
      redeemable on demand. These investments are carried at amortized cost
      which approximates market.

      c. Royalties: Until May, 1999, Alcide was obligated to pay royalties to
      certain early investors in the Company at a rate of 8% of net cash sales
      of applicable products. In May, 1999, Alcide reached settlement of a
      lawsuit brought against it in February, 1996, by certain royalty rights
      holders. The cash settlement of $2,212,512 to royalty rights holders was
      accrued during Alcide's fiscal third quarter and paid in Alcide's fiscal
      fourth quarter. This payment satisfies all of Alcide's past and future
      obligations with respect to the royalty agreement.

      d. Litigation Expense: The expected costs to defend the Company in
      lawsuits filed against it are recorded in the period in which the Company
      becomes aware of the action. No such suits were filed against the Company
      in fiscal 1999.

      e. Depreciation and Amortization: Office, laboratory and computer
      equipment is depreciated over the five-year estimated useful life by the
      straight line method. Equipment provided by Alcide to poultry processing
      plants to mix and spray Sanova is depreciated over the five-year estimated
      useful life of the assets by the straight line method.

      Leasehold improvements are amortized over the lives of the leases by the
      straight-line method.

      f. Income Taxes: The Company accounts for income taxes using the liability
      method. Under this method, the Company computes deferred income taxes and
      tax credits based on the difference between the financial statement and
      tax basis of assets and liabilities using enacted tax rates in effect in
      the years in which the differences are expected to reverse.


                                       30
<PAGE>

      g. 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, the disclosure of contingent assets and liabilities at the
      date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period. Actual results could differ from
      those estimates.

      h. Certain reclassifications have been made to prior year financial
      statements to conform to the current year presentation.

      i. The consolidated financial statements include the accounts of the
      Company and its subsidiary. All significant inter-company accounts and
      balances have been eliminated.

3.    SEGMENT REPORTING:

      The Company has adopted Statement of Accounting Standard No. 131
      "Disclosures About Segments of an Enterprise and Related Information"
      (SFAS No. 131). SFAS No. 131 requires companies to disclose certain
      information about operating segments. Based on the criteria within SFAS
      No. 131, the Company has determined that it has one reportable segment,
      antimicrobial products.

      Sales of the Company's products by categories and amounts are as follows:

<TABLE>
<CAPTION>
                                                                         FISCAL YEAR ENDED MAY 31,
                                                                         -------------------------
                                                                   1997                 1998                1999
                                                                   ----                 ----                ----
               <S>                                          <C>                  <C>                  <C>
               Dairy industry                               $10,365,001          $10,114,845          $9,189,063
               Poultry processing industry                    1,000,996            2,445,106           1,538,887
               Healthcare industry                              364,869              390,178             440,672
               Automotive industry                               37,638               48,823              51,906
</TABLE>

4.    INVESTMENTS:

      Debt securities that the Company has both the intent and ability to hold
      to maturity are classified as "held-to-maturity" and are carried at
      amortized cost. Information regarding securities held at May 31, 1998 and
      May 31, 1999, is as follows:

<TABLE>
<CAPTION>
            INVESTMENT CLASSIFICATION                          AMORTIZED COST                         FAIR VALUE
            -------------------------                          --------------                         ----------
                                                          1998                1999               1998             1999
                                                          ----                ----               ----             ----
      <S>                                           <C>                  <C>               <C>                <C>
      Held-to-maturity:
      Current                                       $3,782,752                 ---         $3,783,746              ---
      Long term                                        504,259            $503,257            511,875         $508,750
                                                    ----------            --------         ----------         --------
                                                    $4,287,011            $503,257         $4,295,621         $508,750
                                                    ----------            --------         ----------         --------
                                                    ----------            --------         ----------         --------
</TABLE>

<TABLE>
<CAPTION>
            INVESTMENT CLASSIFICATION                      GROSS UNREALIZED GAINS                      MATURITY
            -------------------------                      ----------------------                      --------
                                                          1998                1999               1998             1999
                                                          ----                ----               ----             ----
      <S>                                               <C>                 <C>             <C>              <C>
      Held-to-maturity                                  $8,610              $5,493          1-5 years        3-4 years
</TABLE>

                                       31
<PAGE>

      Investments consist entirely of debt obligations of the United States.

5.    INVENTORY:

      Inventory is recorded at the lower of cost or market on a first-in,
      first-out basis, as follows:

<TABLE>
<CAPTION>
                                                                      MAY 31, 1998              MAY 31, 1999
                                                                      ------------              ------------
      <S>                                                             <C>                       <C>
      Raw materials                                                       $947,243                $1,100,808

      Finished products                                                    406,627                   792,733

      Sanova inventory at customer sites                                       ---                   170,946
                                                                      ------------              ------------

      Total                                                             $1,353,870                $2,064,487
                                                                      ------------              ------------
                                                                      ------------              ------------

</TABLE>

6.    ACCRUED EXPENSES:

      At May 31, accrued expenses were comprised of the following:
<TABLE>
<CAPTION>
                                                                                          1998                1999
                                                                                          ----                ----
            <S>                                                                       <C>                 <C>
            Accrued royalties                                                         $113,655             $ 4,113
            Accrued employee salaries, incentive and benefits                           29,147              38,330
            Payable to Novus                                                               -0-             158,000
            Accrued consulting and outside services                                        -0-              92,150
            Accrued patent, trademark and legal expenses                                   -0-              85,000
            Other accrued expenses                                                      15,010              34,557
                                                                                      --------            --------
                                                                                      $157,812            $412,150
                                                                                      --------            --------
                                                                                      --------            --------

</TABLE>

7.    COMMITMENTS AND CONTINGENCIES:

      a.  Leases:
      Effective June 1, 1999, the Company renewed its lease for office and
      laboratory space in Redmond, Washington. The Company has also leased 1,290
      adjoining square feet of space effective August 1, 1999. The
      noncancellable lease expires May 31, 2004. Insurance, utilities and
      maintenance expenses are borne by the Company.

      There are no contingent rentals or sublease rentals.

      The annual lease commitments for the Redmond, Washington facility are as
      follows:

<TABLE>

                                         <S>                         <C>
                                         FY 2000                     $96,016
                                         FY 2001                      99,216
                                         FY 2002                     100,752
                                         FY 2003                     100,752
                                         FY 2004                     111,192

</TABLE>

      Lease payments in FY 1999 were $62,256.


                                       32
<PAGE>

      b.  Employment Agreements:
      One officer has an employment agreement which obligates the Company to a
      salary of $220,614 per year. Bonus compensation of 100% of base pay can be
      earned at the discretion of the Board of Directors.

      c.  Distribution Agreements:
      The Company has entered into agreements with each of its distributors of
      products sold to the dairy industry. Such agreements describe the
      territories covered, product pricing, and expected product purchases
      during the term of the agreement. Each such agreement has been filed with
      the SEC and is incorporated herein by reference.

      The Company was party to an agreement with Novus International, Inc. for
      distribution of Sanova, its poultry processing antimicrobial. Under the
      terms of the agreement Novus was obligated to pay Alcide the greater of
      50% of the gross profits or $500,000 each fiscal quarter during fiscal
      1998 and $1 million for each fiscal quarter during fiscal 1999. In August,
      1998, Novus exercised its right to terminate the agreement and paid Alcide
      the $1 million minimum requirement during Alcide's fiscal first quarter.
      At the end of November, 1998, Alcide assumed direct responsibility for
      Sanova distribution and acquired certain Sanova related assets from Novus
      International.

8.    INCOME TAXES:

      A summary of the provision (benefit) for income taxes follows:
<TABLE>
<CAPTION>
                                                       FY 1997              FY 1998             FY 1999
                                                       -------              -------             -------
           <S>                                      <C>                  <C>                 <C>
           Current
              Federal                                  $93,166             $854,353          $(592,866)
              State and local                              ---              189,394             148,232
                                                    ----------           ----------          ----------
                                                       $93,166           $1,043,747          $(444,634)
                                                    ----------           ----------          ----------
           Deferred
              Federal                               $1,330,532             $804,611            $124,318
                                                    ----------           ----------          ----------
                                                    $1,423,698           $1,848,358          $(320,316)
                                                    ----------           ----------          ----------
                                                    ----------           ----------          ----------
</TABLE>

      A reconciliation between the statutory federal income tax rate and the
      effective income tax rate is as follows:
<TABLE>
<CAPTION>
                                                                      FY 1997            FY 1998        FY 1999
                                                                      -------            -------        -------
                      <S>                                             <C>                <C>            <C>
                      Statutory federal income tax rate                34.0%               34.0%          34.0%
                      State taxes                                       0.0%                2.4%         (9.3%)
                      Other                                            (0.9%)               0.0%           0.0%
                                                                       ------              -----          -----
                      Effective income tax rate                        33.1%               36.4%          24.7%
                                                                       ------              -----          -----
                                                                       ------              -----          -----
</TABLE>
      At May 31, 1998 and May 31, 1999, the deferred tax assets were comprised
of the following:
<TABLE>
<CAPTION>
                                                                                        1998               1999
                                                                                        ----               ----
           <S>                                                                       <C>               <C>
           Operating loss carry forward                                                  ---           $613,372
           Temporary differences                                                     $27,414           (51,816)
           Research & experimental credits carry forward                                 ---             42,538
           Alt. Minimum tax carry forward                                            258,204            258,204
                                                                                    --------           --------
           Total deferred tax asset                                                 $285,618           $862,298
                                                                                    --------           --------
                                                                                    --------           --------
</TABLE>

                                       33
<PAGE>

      The temporary differences result from the use of straight line
      depreciation for equipment in the financial statements versus use of
      accelerated depreciation for tax reporting. The Company has not
      established a valuation allowance against the deferred tax asset as
      management believes it is more likely than not that the tax benefits will
      be realized in the future based on historical levels of pre-tax income and
      expected future taxable income.

9.    EARNINGS (LOSS) PER SHARE:

      The Company has adopted Statement of Financial Accounting Standards 128
      ("SFAS 128"), "Earnings Per Share" which replaced the calculation of
      primary and fully diluted earnings per share with basic and diluted
      earnings per share. Basic earnings per share is computed by dividing net
      income by the weighted average number of common shares outstanding during
      the year. Diluted earnings per share is computed by dividing net income by
      the weighted average number of common shares and common stock equivalents
      outstanding during the year. Common stock equivalents of the Company
      include the dilutive effect of outstanding stock options.
      Basic and Diluted earnings per share were calculated as follows:


                                 COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE



<TABLE>
<CAPTION>
                                                                        FOR THE YEARS ENDED MAY 31,
                                                                        ---------------------------
                                                                  1997              1998               1999
                                                                  ----              ----               ----
       <S>                                                  <C>               <C>                <C>
       Net Income (Loss)                                    $2,881,295        $3,222,723         $(974,463)

       Weighted average number of common shares
       outstanding                                           2,578,945         2,607,192          2,550,312

       Basic Earnings (Loss) Per Share                          $ 1.12            $ 1.24            $ (.38)

       Assuming exercise of options reduced by
       the number of shares which could have been
       purchased with the proceeds from exercise
       of such options (0 if antidilutive)                     204,119           182,299                  0
                                                             ---------         ---------          ---------

       Weighted average common shares outstanding
       and common share equivalents                          2,783,064         2,789,491          2,550,312
                                                             ---------         ---------          ---------
                                                             ---------         ---------          ---------

       Diluted Earnings (Loss) Per Share                         $1.04             $1.16             $(.38)
                                                             ---------         ---------          ---------
                                                             ---------         ---------          ---------

</TABLE>

10.   SHAREHOLDERS' EQUITY AND REDEEMABLE PREFERRED STOCK:

      a.  Authorized Capital
      The authorized capital of the Company is 100,000,000 shares of $.01 par
      value Common Stock, 1,000 shares of no par value Class "A" Preferred Stock
      and 10,000,000 shares of $.01 par value Class "B" Preferred Stock.

      The Company has not declared dividends on any of its classes of stock.


                                       34
<PAGE>

      b.  Class "A" Preferred Stock
      The nonvoting Class "A" Preferred Stock has a preference with respect to
      both dividends and liquidation at its stated value of $135.30 per share.
      During fiscal 1999, Alcide offered to redeem Class "A" Preferred Stock at
      a price of $101.00 per share. Four hundred six shares were redeemed. The
      Company has the option to force redemption at any time by payment of
      $135.30 per share.

      c.  Redeemable Class "B" Preferred Stock - Series 1 and 2.
      On September 30, 1994, the Company issued to holders of any outstanding
      Series 1 Stock, in a recapitalization, one share of Class "B" Stock to be
      designated as Series 2 Redeemable Preferred Stock ("Series 2 Stock") and
      0.2 share of Common Stock. Commencing on September 30, 1994, the Company
      created a sinking fund to be funded, on that day and on the 30th day of
      September of each year thereafter, at a rate equal to 0.7% of the
      Company's prior fiscal year's net income, if any, at $2.625 per share plus
      declared and unpaid dividends in any amount equal to the sinking fund
      payment. On September 30, 1998 the Company redeemed 8,594 shares of Series
      2 stock for $22,559. As the Company incurred a loss in fiscal 1999, it has
      no obligation to redeem Series 2 stock on September 30, 1999. The Company
      may redeem any or all of the issued and outstanding Series 2 Stock at its
      option, at any time, at the redemption price of $2.625 per share.

11.   STOCK OPTIONS:

      The Company had an incentive stock option plan, which expired in May 1993.
      No additional grants may be issued under this plan. The Company replaced
      this plan with a new plan effective December, 1993, which includes both
      incentive stock options and nonstatutory stock options. Nonstatutory stock
      options may be granted to employees, directors, officers and consultants.
      The option exercise price for incentive stock options may not be less than
      the fair market value of the Common Stock on the date of the grant of the
      option. Non-qualified stock options are granted with an exercise price
      equal to 100% or greater of the fair market value of the Common Stock on
      the date of grant. Under this plan there are 96,750 options available for
      grant as of May 31, 1999.

      The Company also has a stock option plan for nonemployee directors.
      Options granted under the plan are granted with an exercise price equal to
      100% of the fair market value of the Common Stock on the date of grant.
      Under this plan there are 43,404 options available for grant as of May 31,
      1999.

      Options are exercisable within 10 years from the date the option was
      granted. Options will expire during the period July 2000 through March
      2009. The Company accounts for its stock option plans under the guidelines
      of Accounting Principles Board Opinion 25 ("APB 25"), under which no
      compensation cost has been recognized. In 1996, the Company adopted the
      disclosure provisions of Statement of Financial Accounting Standards 123
      ("SFAS 123"), "Accounting for Stock-Based Compensation," effective for
      years beginning after May 31, 1996. The Company has continued to measure
      compensation cost for employee stock compensation plans under the
      guidelines of APB 25, as allowed by SFAS 123.


                                       35
<PAGE>

  The status of the plans are as follows:
<TABLE>
<CAPTION>
                                                  FY 1997                      FY 1998                       FY 1999
                                                  -------                      -------                       -------
                                            No. of          Weighted       No. of        Weighted      No. of         Weighted
                                            Shares      Avg. Share $       Shares    Avg. Share $      Shares     Avg. Share $
                                            ------      ------------       ------    ------------      ------     ------------
<S>                                         <C>         <C>              <C>         <C>             <C>          <C>
Outstanding at beginning of year            337,634           $8.84       344,366           $9.22     289,188           $11.78
Granted                                      17,602           22.01        20,897           35.90      27,167            30.34
Exercised                                   (7,870)            8.90      (75,325)            6.87    (16,655)             6.59
Canceled                                    (3,000)           42.03         (750)           20.25     (1,500)            23.10
                                             -----                          -----                     -------
Outstanding at end of year                  344,366           $9.22       289,188          $11.78     298,200           $13.70
                                            -------                       -------                     -------
                                            -------                       -------                     -------

Exercisable at end of year                  286,338           $7.44       233,888           $8.76     237,899            $9.89
                                            -------           -----       -------           -----     -------            -----
                                            -------           -----       -------           -----     -------            -----
</TABLE>
      Information relating to stock options outstanding and stock options
      exercisable at May 31, 1999 is as follows:
<TABLE>
<CAPTION>
    RANGE OF EXERCISE
          PRICES                                  OPTIONS OUTSTANDING                                  OPTIONS EXERCISABLE
          ------                   ------------------------------------------------               -----------------------------
                             NO. OF SHARES      WEIGHTED AVG. LIFE          WTD AVG. $/SH.      NO. OF SHARES      WTD. AVG.$/SH.
                             -------------      ------------------          --------------      -------------      --------------
  <S>                        <C>                <C>                         <C>                 <C>                <C>
  $4.10 - $7.75                    126,547                    1.92                   $5.61            126,547               $5.61

  $8.63 - $11.93                    80,157                    4.69                   10.40             73,656                9.82

  $15.00 - $63.00                   91,496                    7.43                   28.98             37,696               23.60
                                    ------                                                             ------

                                   298,200                    4.36                  $13.70            237,899               $9.89
                                   -------                                                            -------
                                   -------                                                            -------
</TABLE>

      Had compensation cost for these stock option plans been determined in
      accordance with SFAS 123, the Company's "Net income" and "Net income per
      common share" would have decreased to the following pro forma amounts for
      the years ended May 31, 1997, 1998 and 1999:
<TABLE>
<CAPTION>
                                                                    FY 1997            FY 1998             FY 1999
                                                                    -------            -------             -------
<S>                                     <C>                      <C>                <C>               <C>
Net Income (loss)                       As reported              $2,881,295         $3,222,723          $(974,463)

                                        Pro forma                $2,780,416         $2,983,590        $(1,121,418)

Basic earnings (loss) per common share
                                        As reported                   $1.12              $1.24             $ (.38)

                                        Pro forma                     $1.08              $1.14             $ (.44)

Diluted earnings (loss) per common
share and equivalents                   As reported                   $1.04              $1.16             $ (.38)

                                        Pro forma                     $1.00              $1.07             $ (.44)

</TABLE>
      Because the SFAS 123 method of accounting has not been applied to stock
      options granted before January 1, 1995, the resulting pro forma
      compensation cost may not be representative of that to be expected in
      future years. The fair value of each stock option granted is valued on the
      date of grant using the Black-Scholes option pricing model. The weighted
      average grant-

                                       36
<PAGE>

      date fair value of stock options granted during 1999 was
      $20.60 per share using the assumptions of expected volatility of 61.7%,
      expected option lives of 7.5 years, risk-free rate of interest of 5.3% and
      no expected dividends. During 1998, the weighted average grant-date fair
      value of stock options granted was $26.99 per share using the assumptions
      of expected volatility of 72.2%, expected option lives of 7.5 years,
      risk-free rate of interest of 6.6% and no expected dividends. During 1997,
      the weighted average grant-date fair value of stock options granted was
      $14.05 per share using the assumptions of expected volatility of 51%,
      expected option lives of 7.5 years, risk-free rate of interest of 6.7% and
      no expected dividends.

12.   RELATED PARTY TRANSACTIONS:

      a.  Consulting Agreements
      LOEB PARTNERS CORPORATION. During the fiscal year ended May 31, 1999,
      the Company paid Loeb Partners Corporation $60,000 in cash for executive
      and management services provided by Mr. Kempner and Mr. Mintz. Mr.
      Kempner holds approximately 51% of the voting equity of Loeb Holding
      Corporation, of which Loeb Partners Corporation is a 100% wholly-owned
      operating subsidiary.

      KENNETH N. MAY. During the fiscal year ended May 31, 1999, the Company
      paid Dr. Kenneth N. May 275 shares of Alcide Common stock having an
      aggregate purchase price of $11,619, plus $18,381 cash for consulting
      services in the field of pathogen control on poultry and other food
      products.

      b.  Royalty and Consolidation Agreement
      In May, 1999, the Company settled the lawsuit brought against it in
      February, 1996, by certain persons who were parties to the Royalty and
      Consolidation Agreement with the Company. The settlement amount paid to
      royalty rights holders who were plaintiffs in the lawsuit was $2,038,081.
      A proportionate payment of $174,431 was made to royalty rights holders who
      were not plaintiffs in the suit against Alcide. Loeb Partners Corporation
      was a non-plaintiff royalty rights holder and, as part of the settlement
      agreement, Loeb V received payment from Alcide of $67,542 and Loeb VIII
      received $2,667. Loeb Partners Corporation was also a limited partner of
      Old Hill Associates, a plaintiff in the suit against the Company and
      received $17,007 in royalty settlement payments through Old Hill
      Associates. The settlement relieves Alcide of all past and future
      obligations under the Royalty and Consolidation Agreement. All of the
      Company's decisions relating to payment of royalties, the lawsuit and
      settlement thereof were made by disinterested members of the Board.

13.   EMPLOYEE STOCK OWNERSHIP PLAN:

      The Company has an employee stock ownership plan (the Plan). Employees who
      are at least age 21 and have completed one year of service are eligible to
      participate. The Company may make discretionary contributions to the Plan.
      The Company's contributions for fiscal years 1999, 1998 and 1997 were
      approximately $71,000, $67,000 and $60,500, respectively.


                                       37