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

                                   FORM 10-QSB

(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

     For the quarterly period ended June 30, 2000

[ ] Transition Report Pursuant to 13 or 15(d) of the Securities
    Exchange Act of 1934

    For the transition period from __________ to __________

                         Commission file number 0-27839


                            EMPYREAN BIOSCIENCE, INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)


           Wyoming                                               86-0973095
(State or Other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                             Identification No.)


23800 Commerce Park Road, Suite A, Cleveland, Ohio                 44122
    (Address of Principal Executive Offices)                     (Zip Code)


                    Issuer's telephone number (216) 360-7900

              (Former Name, Former Address and Former Fiscal Year,
                          If Changed Since Last Report)

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

As of July 28,  2000,  the  Registrant  had  36,325,741  shares of common  stock
outstanding.

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]

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<PAGE>
                          PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                            EMPYREAN BIOSCIENCE, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       (IN THOUSANDS EXCEPT SHARE AMOUNTS)


                                                       June 30,     December 31,
                                                         2000          1999
                                                       --------      --------
                                                      (unaudited)    (audited)
                                     ASSETS
CURRENT ASSETS:
  Cash and cash equivalents .........................  $  1,015       $    286
  Accounts receivable ...............................        25              7
  Prepaid expenses and deposits .....................        50             49
  Inventory .........................................       207            284
  Other..............................................        --              3
                                                       --------       --------

       Total current assets .........................     1,297            629

EQUIPMENT AND IMPROVEMENTS ..........................        40             52
                                                       --------       --------

       Total assets .................................  $  1,337       $    681
                                                       ========       ========

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
  Accounts payable and accrued liabilities ..........  $  1,846       $  2,045
  Deferred revenue ..................................       100            100
  Short-term note payable ...........................        --            198
                                                       --------       --------

       Total current liabilities ....................     1,946          2,343

COMMITMENTS AND CONTINGENCIES .......................        --             --

STOCKHOLDERS' EQUITY (DEFICIT)
  Common stock, authorized 100,000,000 shares,
   without par value; issued and outstanding
   (2000: 36,325,741; 1999: 31,522,109) .............    24,011         21,494
  Accumulated deficit ...............................   (24,620)       (23,156)
                                                       --------       --------

       Total stockholders' equity (deficit) .........      (609)        (1,662)
                                                       --------       --------

       Total liabilities and stockholders'
        equity (deficit) ............................  $  1,337       $    681
                                                       ========       ========

                 See accompanying notes to financial statements

                                        2
<PAGE>
                            EMPYREAN BIOSCIENCE, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands except per share amounts)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                          Three months ended              Six months ended
                                                     ----------------------------    ----------------------------
                                                       June 30,        June 30,        June 30,        June 30,
                                                         2000            1999            2000            1999
                                                     ------------    ------------    ------------    ------------
<S>                                                  <C>             <C>             <C>             <C>
Net revenues .....................................   $        106    $        534    $        458    $        587
Cost of sales ....................................             61               5             252              22
                                                     ------------    ------------    ------------    ------------

    Gross profit .................................             45             529             206             565

Selling, general and administrative ..............            906           1,456           1,662           2,563
                                                     ------------    ------------    ------------    ------------


    Loss from operations .........................           (861)           (927)         (1,456)         (1,998)

Other, net .......................................             --               3             (25)             (1)
Interest expense .................................             --             (79)             (6)           (112)
Interest income ..................................             16               2              23               2
                                                     ------------    ------------    ------------    ------------

Other income (expense) ...........................             16             (74)             (8)           (111)
                                                     ------------    ------------    ------------    ------------

Net loss .........................................   $       (845)   $     (1,001)   $     (1,464)   $     (2,109)
                                                     ============    ============    ============    ============

Basic and diluted loss per share .................   $      (0.02)   $      (0.04)   $      (0.04)   $      (0.08)
                                                     ============    ============    ============    ============

Weighted average number of shares outstanding.....         36,305          27,679          34,849          26,838
                                                     ============    ============    ============    ============
</TABLE>

                 See accompanying notes to financial statements

                                       3
<PAGE>
                            EMPYREAN BIOSCIENCE, INC.
       CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                 (in thousands)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                        Common Stock
                                                    ---------------------     Accumulated
                                                     Shares       Amount       Deficit        Total
                                                    --------     --------      --------      --------
<S>                                                 <C>          <C>           <C>           <C>
Balances, January 1, 2000 .......................     31,522     $ 21,494      $(23,156)     $ (1,662)

Common stock issued for cash ....................      2,904        1,452            --         1,452
Stock options and warrants exercised for cash....        740          405            --           405
Common stock issued for royalties ...............        476          238            --           238
Common stock issued for debt and services........        683          345            --           345
Fair value of options and warrant grants.........         --           77            --            77
Net loss ........................................         --           --        (1,464)       (1,464)
                                                    --------     --------      --------      --------
Balances, June 30, 2000 .........................     36,325     $ 24,011      $(24,620)     $   (609)
                                                    ========     ========      ========      ========
</TABLE>

                 See accompanying notes to financial statements

                                       4
<PAGE>
                            EMPYREAN BIOSCIENCE, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (UNAUDITED)


                                                             Six months ended
                                                           --------------------
                                                           June 30,     June 30,
                                                            2000         1999
                                                           -------      -------
Cash flows from operating activities:
  Net cash used by operating activities ..............     $(1,220)     $(1,325)

Cash flows from investing activities:
  Proceeds from sales of fixed assets ................           5           --
  Purchase of capital assets .........................         (13)          (9)
                                                           -------      -------

      Net cash used by investing activities ..........          (8)          (9)

Cash flows from financing activities:
  Issuance of common stock ...........................       1,857          661
  Proceeds of short-term notes payable ...............         250          800
  Payments of short-term note payable ................        (150)          --
                                                           -------      -------

      Net cash provided by financing activities ......       1,957        1,461
                                                           -------      -------

      Net increase in cash and cash equivalents ......         729          127

Cash and cash equivalents at beginning of period .....         286           63
                                                           -------      -------

Cash and cash equivalents at end of period ...........     $ 1,015      $   190
                                                           =======      =======

                 See accompanying notes to financial statements

                                       5
<PAGE>
                            EMPYREAN BIOSCIENCE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


NOTE 1 - BASIS OF PRESENTATION

     The financial information included herein for the six months ended June 30,
     2000 and  1999,  and the  financial  information  as of June 30,  2000,  is
     unaudited.  However, such information reflects all adjustments,  consisting
     of normal recurring  adjustments,  which are, in the opinion of management,
     necessary for the fair presentation of the financial  position,  results of
     operations and cash flows for the interim  periods.  The interim  financial
     statements  and the notes thereto  should be read in  conjunction  with the
     annual audited financial statements as of December 31, 1999. The results of
     operations for the interim periods presented are not necessarily indicative
     of the results to be expected for the full year.

     The  accompanying   condensed  consolidated  financial  statements  include
     Empyrean  Bioscience,  Inc.  and  its  wholly-owned  subsidiary,   Empyrean
     Diagnostics,  Inc. All significant  intercompany  balances and transactions
     have been eliminated in consolidation.

NOTE 2 - GOING CONCERN

     We  incurred  net losses in 1998 and 1999 and expect to incur net losses at
     least  through 2000.  We expect  operations to generate  negative cash flow
     through at least 2000 and we currently have no credit line available to us.
     We do not have existing  capital  resources or credit lines  available that
     are sufficient to fund our operations and capital requirements as presently
     planned over the next twelve  months.  We plan to pursue a working  capital
     line of credit to be secured by our accounts  receivable and inventory.  We
     plan to  raise  funds  through  the  issuance  of  either  debt  or  equity
     instruments. However, such funds may not be available on favorable terms or
     at all. These factors raise doubts about our ability to continue as a going
     concern and our audit report  contained  in our 1999 annual  report on Form
     10-KSB filed with the U.S.  Securities and Exchange Commission on March 30,
     2000 contains an explanatory paragraph with respect to this matter.

NOTE 3 - SHORT-TERM NOTES PAYABLE

     In February 2000, the Company  entered into  promissory  note agreements in
     the  aggregate  amount of $250 with  various  officers and  directors.  The
     promissory notes were due and payable six months from the loan date and had
     a fixed  interest  rate of 10%,  payable  monthly.  On February  23,  2000,
     promissory  notes in the amount of $298,  including $198 due and payable as
     of December 31, 1999,  were  converted into 596,000 shares of common stock.
     The  remaining  promissory  note in the  amount of $150 was paid in full in
     March 2000. The Company has no promissory  notes due and payable as of June
     30, 2000.

NOTE 4 - LEGAL PROCEEDINGS

     We are a defendant in an action which was filed by Optima Holding Co., Ltd.
     and Mercury  Technology  Corp. on July 28, 1998 in the Circuit Court of the
     Eleventh Judicial District,  Dade County, Florida. This action alleges that
     we tortiously interfered with Optima and Mercury's contractual relationship
     with International Bioscience Corporation ("IBC"). Optima and Mercury claim
     that they had prior rights to the IBC  formulation and products and that we
     induced IBC to breach that agreement.  Optima and Mercury have requested an
     unspecified amount of damages against us. In a separate action that has now
     been  consolidated  with  the  first  action  in the  same  court,  IBC has
     requested  a  declaratory   judgment  that  IBC  properly   terminated  its

                                       6
<PAGE>
     development and distribution  contract with Optima and Mercury.  Plaintiffs
     also seek  injunctive  relief to prevent IBC and its managers and directors
     from  allowing  IBC to  have  further  dealings  with  us.  If we  are  not
     successful  in this  action,  we could  lose the right to  market,  sell or
     manufacture  worldwide  our  hand  sanitizer  product  and  other  products
     currently under development. This would materially and adversely affect the
     Company. The discovery in this action is proceeding.

     On April 10, 2000,  we filed suit in U.S.  District  Court for the Southern
     District  of  Florida  against  IBC  alleging  breach  and  default  on its
     exclusive  license  agreement  with us and seeking a  declaration  that the
     exclusive  license  agreement  is in  full  force  and  effect  as  well as
     compensatory  damages.  Additionally,  we  asked  the  Court  to  issue  an
     injunction which would, if granted,  require IBC to maintain the status quo
     while the discovery process and litigation proceeds.  Following our request
     for a  preliminary  injunction,  IBC  purported to terminate  the exclusive
     license  agreement.  Through our license  agreement,  we have the exclusive
     right to  manufacture,  sell and  distribute  products  based on a  formula
     developed  by IBC. We believe IBC has  disregarded  key  provisions  in our
     exclusive license agreement.

     On  May  2,  2000,  the  U.S.  District  Court  denied  our  request  for a
     preliminary injunction.  The Court's decision does not affect the merits of
     the case nor our claim for money damages  against IBC, but defers them to a
     full trial,  which we expect to be held later this year.  Our claim for the
     full rights accorded to us under the exclusive license agreement,  which is
     the center of our dispute with IBC, will not impact our current operations.
     The Court  observed in its Order,  and IBC  acknowledged  in its  pleadings
     filed with the Court,  that our  rights to sell the hand  sanitizer  in the
     United States and Canada arise from different and separate  agreements with
     IBC, and such rights are not affected by this lawsuit.

     If an  unfavorable  decision  were to be  rendered  against  us at the full
     trial, our business could be materially and adversely  affected.  The trial
     has been scheduled for June 2001.

NOTE 5 - NET REVENUES

     Net revenues are comprised of the following:

                                    Three months            Six months
                                   ended June 30,          ended June 30,
                                 -----------------      ------------------
                                 2000         1999       2000          1999
                                 ----         ----       ----          ----
     Distribution rights         $  --        $ 517      $  --        $ 517
     Product sales                 106           17        458           70
                                 -----        -----      -----        -----
          Net revenues             106          534        458          587
                                 =====        =====      =====        =====

NOTE 6 - STOCKHOLDERS' EQUITY

     The Company has granted options to employees,  directors and others as well
     as  warrants  to  debt  holders  and   investors.   For  option  grants  to
     non-employees,  the Company recognizes consulting or interest expense equal
     to the fair value of the grant.  At June 30,  2000,  7,973,000  options and
     warrants were exerciseable at a weighted average price of $0.64 per share.

                                       7
<PAGE>

     A summary of the status of stock  options and warrants as of June 30, 2000,
     and changes during the six months ended on that date is presented below.

<TABLE>
<CAPTION>
                                                Options                    Warrants
                                          ---------------------      ---------------------
                                                        Weighted                   Weighted
                                                        Average                    Average
                                                        Exercise                   Exercise
                                            Number       Price         Number       Price
                                          ----------     ------      ----------     ------
<S>                                      <C>           <C>          <C>           <C>
        Outstanding at January 1, 2000     6,633,000     $  .70       2,405,000     $  .67
           Granted                           650,000        .55       1,538,000        .50
           Exercised                        (285,000)       .54        (455,000)       .55
           Expired                          (185,000)       .81              --         --
                                          ----------     ------      ----------     ------

        Outstanding at June 30, 2000       6,813,000     $  .69       3,488,000     $  .64
                                          ==========     ======      ==========     ======
</TABLE>

     Stock options and warrants were not included in the  computation of diluted
     loss per share for the periods  presented  because to do so would have been
     antidilutive.

NOTE 7 - RESTRUCTURING CHARGE

     The Company  recorded a restructuring  charge of $345 in 1999 consisting of
     involuntary  termination benefits of $263 and other related  reorganization
     costs of $82. This charge resulted from a business  reorganization approved
     by the Board of  Directors  in  December  1999  that  included  a  facility
     closure,  relocation  of  the  corporate  headquarters  into  a  more  cost
     effective location, severance costs for two Arizona based personnel and the
     write down of abandoned  fixed assets to estimated  fair value less cost to
     sell.  As of December 31, 1999,  both  employees  had been  terminated  and
     severance  payments and  benefits  are payable to December 31, 2000.  As of
     June 30,  2000,  $140 in  reorganization  costs have been paid and  applied
     against the  restructuring  accrual.  The  remaining  reorganization  costs
     consist of severance payments and are expected to be paid prior to December
     31, 2000.

                                       8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

SPECIAL NOTE CONCERNING FORWARD LOOKING STATEMENTS

     THIS  FORM  10-QSB,  INCLUDING  THE  NOTES  TO THE  CONDENSED  CONSOLIDATED
FINANCIAL STATEMENTS AND THIS "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS,"  CONTAINS FORWARD LOOKING  STATEMENTS.  WE
MAY MAKE  ADDITIONAL  WRITTEN AND ORAL FORWARD  LOOKING  STATEMENTS FROM TIME TO
TIME IN  FILINGS  WITH THE  SECURITIES  AND  EXCHANGE  COMMISSION,  IN OUR PRESS
RELEASES, OR OTHERWISE.  THE WORDS "BELIEVE," "EXPECT," "ANTICIPATE," "INTENDS,"
"FORECAST,"   "PROJECT,"  AND  SIMILAR  EXPRESSIONS   IDENTIFY  FORWARD  LOOKING
STATEMENTS.   THESE  STATEMENTS  MAY  INCLUDE,  BUT  ARE  NOT  LIMITED  TO,  THE
ANTICIPATED  OUTCOME OF  CONTINGENT  EVENTS,  INCLUDING  LITIGATION,  REGULATORY
PROCEEDINGS OR RULEMAKING,  PROJECTIONS  OF REVENUES,  INCOME,  LOSS, OR CAPITAL
EXPENDITURES,  PLANS FOR FUTURE OPERATIONS,  GROWTH AND ACQUISITIONS,  FINANCING
NEEDS OR PLANS AND THE AVAILABILITY OF FINANCING, AND PLANS RELATING TO PRODUCTS
OR PRODUCT DEVELOPMENT AS WELL AS ASSUMPTIONS RELATING TO THE ABOVE SUBJECTS.

     FORWARD  LOOKING  STATEMENTS  REFLECT OUR CURRENT VIEWS  CONCERNING  FUTURE
EVENTS AND FINANCIAL  PERFORMANCE  AND SPEAK ONLY AS OF THE DATE THE  STATEMENTS
ARE  MADE.   THESE  FORWARD   LOOKING   STATEMENTS  ARE  SUBJECT  TO  RISKS  AND
UNCERTAINTIES, SOME OF WHICH CANNOT BE PREDICTED OR QUANTIFIED, THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH IN, CONTEMPLATED BY, OR
UNDERLYING  THE FORWARD  LOOKING  STATEMENTS.  STATEMENTS  IN THIS FORM  10-QSB,
INCLUDING  THE  NOTES  TO  THE  CONSOLIDATED   FINANCIAL   STATEMENTS  AND  THIS
"MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS,"  DESCRIBE FACTORS,  AMONG OTHERS, THAT COULD CONTRIBUTE TO OR CAUSE
SUCH DIFFERENCES.  SUCH FACTORS INCLUDE,  AMONG OTHER FACTORS, THE ACCEPTABILITY
OF EXISTING AND  POTENTIAL  PRODUCTS IN THE  MARKETPLACE,  THE ABILITY TO OBTAIN
SUFFICIENT CAPITAL TO FUND OPERATIONS AND THE OUTCOME OF POTENTIAL LITIGATION.

     The following  discussion and analysis provides  information  regarding our
financial  condition  and  results of  operations  for the periods  shown.  This
discussion   should  be  read  in  conjunction  with  our  Unaudited   Condensed
Consolidated  Financial  Statements and related Notes thereto included elsewhere
in this document.

INTRODUCTION

     In 1998, we discontinued  the  distribution and marketing of our diagnostic
test kits.  This shift in focus coincided with our acquisition of certain rights
to use a  microbicide  formulation  from  IBC,  which  is  utilized  in our hand
sanitizer and proposed  products.  The decision to discontinue  marketing of our
prior line of  diagnostic  products  and the limited  revenues  and  substantial
start-up costs associated with introducing our new line of preventative products
have  significantly  affected our current  financial  condition and  operations.

     We have had limited  revenues and have  sustained  substantial  losses from
operations in recent years and have an accumulated deficit.

     We  incurred  net losses in 1998 and 1999 and expect to incur net losses at
least through 2000. We expect operations to generate negative cash flow at least
through 2000 and we currently have no credit line available to us. These factors
raise  doubts  about our ability to  continue  as a going  concern and our audit
report in our annual  report on Form 10-KSB filed with the SEC on March 30, 2000
contained an explanatory paragraph with respect to this matter.

                                       9
<PAGE>
     We expect to generate  substantially all of our revenues in the future from
increased  sales of our  current  line of  preventative  products.  Prior to the
initiation  of our suit  against IBC on April 10, 2000 for breach and default on
its  exclusive  licensing  agreement  with  us,  we  relied  on IBC  to  develop
additional  preventative  products  for our  Company.  We now  intend to develop
additional  preventative  products on our own that we can market  utilizing  the
formulation  used in our hand  sanitizer.  See Note 4. Legal  Proceedings in our
notes to our June 30, 2000 condensed consolidated financial statements.

     In  addition  to cost of goods  sold,  which  we  expect  to vary  somewhat
proportionately with sales over time, significant cost and expense items include
salaries and benefits,  consulting fees, royalties,  distribution rights, office
and  administration,  advertising,  and legal and  accounting,  all of which, in
total,  significantly exceeded our total revenues for 1999 and the first half of
2000. Accordingly, we do not believe comparing costs as a percentage of revenues
from year to year is meaningful.

RESULTS OF OPERATIONS

COMPARISON OF THREE MONTHS ENDED JUNE 30, 2000 AND 1999

     Our total  revenues in the three months  ended June 30, 2000 were  $106,000
compared  with  $534,000 in the three months ended June 30, 1999.  Product sales
increased in the three months  ending June 30, 2000 to $106,000  from $17,000 in
the three  months  ending June 30, 1999 due  primarily  to reorder  shipments to
Wal-Mart Stores, Inc., which represented approximately 68% of total revenues for
the three months ended June 30, 2000.  However,  total revenues decreased due to
receiving  Southeast Asia distribution  right payments in the amount of $517,000
in the second quarter of 1999 compared to $0 in the second quarter of 2000.

     Our gross margin from product sales decreased to 42.5% in the quarter ended
June 30, 2000 from 70.6% in the quarter  ended June 30,  1999  primarily  due to
lower selling prices of the hand sanitizer in a higher volume retail environment
during the quarter ended June 30, 2000.

     Selling,  general and administrative  expenses decreased to $906,000 in the
three months ended June 30, 2000 from  $1,456,000 in the three months ended June
30, 1999 primarily due to the following:

*    Consulting expenses decreased to $77,000 in the three months ended June 30,
     2000 from  $725,000  in the three  months  ended June 30,  1999 due to less
     expense  recorded for stock option grants to consultants  and less reliance
     on paid  consultants  in the three months ended June 30, 2000.  Included in
     consulting  services  for the three  months ended June 30, 1999 is $330,000
     incurred in connection with our Southeast Asia distribution agreement.

*    Fees relating to third party  distribution of our hand sanitizer  decreased
     to $15,000 in the three months ended June 30, 2000  compared  with $111,000
     in the three months ended June 30, 1999. We reduced  distribution  costs by
     changing to an Ohio-based third party distributor in March 2000, which also
     provides  infrastructure  services  including  distribution,  order  entry,
     warehousing, customer service and billing services.

*    Expenses for royalties increased to $199,000 in the three months ended June
     30, 2000 from  $124,000 in the three months  ended June 30, 1999  primarily
     due to a guaranteed minimum royalty accrual of $184,000 in the three months
     ended June 30, 2000  compared  with  $123,000 in 1999 and an increase  from
     sub-license  royalty  expenses  associated with increased sales of our hand
     sanitizer  in the three  months ended June 30, 2000 versus the three months
     ended June 30, 1999.  Our agreement  with IBC,  under which we acquired the
     rights to market and distribute our current line of preventative  products,
     provides for future minimum guaranteed payments that increase significantly
     in each year of the contract.  See Note 9. Commitments and Contingencies in
     our Annual Consolidated Financial Statements contained in our annual report

                                       10
<PAGE>
     on Form 10-KSB filed with the SEC on March 30, 2000. As a result, we expect
     our expenses for  royalties to increase  significantly  on an annual basis.
     Unless we are successful in generating  substantial additional sales of our
     preventative   products,  we  are  also  likely  to  continue  to  generate
     substantial  losses from  operations.  Our agreement with IBC is subject to
     significant  litigation risk. See Note 4. Legal Proceedings in our notes to
     our June 30, 2000  condensed  consolidated  financial  statements  included
     elsewhere in this document.

*    Advertising  and  promotional  expenses  increased to $175,000 in the three
     months  ended June 30, 2000 from $94,000 in the three months ended June 30,
     1999 due to the  development of promotional  enhancements  including a new,
     unique-to-the-category  packaging  specifically designed to re-energize the
     hand  sanitizer  category  for  health  and  beauty  retailers  and  a  new
     multi-purpose, ready-for-retail merchandiser for Preventx(R) Hand Sanitizer
     & First-Aid  Antiseptic.  Additionally,  we have initiated  radio and print
     advertisements in the quarter ended June 30, 2000.

     Interest  expense  decreased  to $0 in the three months ended June 30, 2000
from  $79,000  in the  three  months  ended  June 30,  1999,  which  represented
amortization of the fair value of warrants issued to promissory note holders and
interest on loans in 1999.

     We incurred a net loss in the three  months ended June 30, 2000 of $845,000
compared to a net loss of  $1,001,000  in the three  months ended June 30, 1999.
The losses in the second quarters of 2000 and 1999 were due primarily to limited
revenues that were  substantially  exceeded by our costs of  operation.  Our net
loss per share for the three months ended June 30, 2000 was $0.02  compared to a
net loss per share of $0.04 in the three months  ended June 30,  1999.  The loss
per share  decreased  primarily as a result of the decrease in selling,  general
and  administrative  expenses and an increase in the weighted  average number of
shares  outstanding  to  36,305,000 in the three months ended June 30, 2000 from
27,679,000 in the three months ended June 30, 1999.

COMPARISON OF SIX MONTHS ENDED JUNE 30, 2000 AND 1999

     Our total  revenues  in the six months  ended June 30,  2000 were  $458,000
compared  with  $587,000 in the six months  ended June 30, 1999.  Product  sales
increased in the six months ending June 30, 2000 to $458,000 from $70,000 in the
six months ending June 30, 1999 due to initial and reorder shipments to Wal-Mart
Stores, Inc. in 2000, which represented  approximately 92% of total revenues for
the six months then ended.  However,  total revenues  decreased due to receiving
Southeast  Asia  distribution  right  payments  in the amount of $517,000 in the
first half of 1999 as compared to $0 in the first half of 2000.

     Our gross  margin from product  sales  decreased to 45.0% in the six months
ended June 30, 2000 from 68.6% in the six months  ended June 30, 1999  primarily
due to lower  selling  prices of the hand  sanitizer in a higher  volume  retail
environment during the six months ended June 30, 2000.

     We incurred a net loss in the six months ended June 30, 2000 of  $1,464,000
compared to a net loss of $2,109,000 in the six months ended June 30, 1999.  The
losses in the first half of 2000 and 1999 were due primarily to limited revenues
that were  substantially  exceeded by our costs of  operation.  Our net loss per
share for the six months  ended June 30,  2000 was $0.04  compared to a net loss
per share of $0.08 in the six  months  ended June 30,  1999.  The loss per share
decreased  primarily  as a  result  of the  decrease  in  selling,  general  and
administrative expenses and an increase in the weighted average number of shares
outstanding to 35,598,000 in the six months ended June 30, 2000 from  26,838,000
in the six months ended June 30, 1999.

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<PAGE>
     Selling, general and administrative expenses decreased to $1,662,000 in the
six months ended June 30, 2000 from  $2,563,000 in the six months ended June 30,
1999 primarily due to the following:

*    Consulting  expenses decreased to $138,000 in the six months ended June 30,
     2000 from  $969,000 in the six months ended June 30, 1999  primarily due to
     less  expense  recorded  for stock option  grants to  consultants  and less
     reliance  on paid  consultants  in the six  months  ended  June  30,  2000.
     Additionally,   we  incurred,   in  connection   with  our  Southeast  Asia
     distribution  agreement,  consulting  services in the amount of $330,000 in
     the six months  ended  June 30,  1999 as  compared  to $0 in the six months
     ended June 30, 2000.

*    Fees relating to third party  distribution of our hand sanitizer  decreased
     to $69,000 in the six months ended June 30, 2000  compared with $270,000 in
     the six  months  ended June 30,  1999.  We  reduced  distribution  costs by
     changing to an Ohio-based third party distributor in March 2000, which also
     provides  infrastructure  services  including  distribution,  order  entry,
     warehousing, customer service and billing services.

*    Expenses for  royalties  increased to $408,000 in the six months ended June
     30, 2000 from $248,000 in the six months ended June 30, 1999  primarily due
     to a guaranteed minimum royalty accrual of $367,000 in the six months ended
     June  30,  2000  compared  with  $245,000  in  1999  and an  increase  from
     sub-license  royalty  expenses  associated with increased sales of our hand
     sanitizer in the six months ended June 30, 2000 versus the six months ended
     June 30, 1999.  Our agreement  with IBC, under which we acquired the rights
     to  market  and  distribute  our  current  line of  preventative  products,
     provides for future minimum guaranteed payments that increase significantly
     in  each  year  of the  contract.  See  Note 9 to our  Annual  Consolidated
     Financial  Statements  contained in our annual  report on Form 10-KSB filed
     with the SEC on March 30,  2000.  As a result,  we expect our  expenses for
     royalties  to  increase  significantly  on an annual  basis.  Unless we are
     successful in generating  substantial  additional sales of our preventative
     products,  we are also likely to continue  to generate  substantial  losses
     from  operations.   Our  agreement  with  IBC  is  subject  to  significant
     litigation risk. See Note 4. Legal Proceedings in our notes to our June 30,
     2000 condensed consolidated financial statements included elsewhere in this
     document.

*    Expenses for  distribution  rights  decreased to $0 in the six months ended
     June 30, 2000 from  $70,000 in the six months ended June 30, 1999 because a
     1999 payment for the Canadian  distribution  rights to the IBC  formulation
     was not required in 2000.

     Interest expense  decreased to $6,000 in the six months ended June 30, 2000
from $112,000 in the six months ended June 30, 1999 due to greater  amortization
of the fair value of warrants  issued to promissory note holders and interest on
loans in 1999.

LIQUIDITY AND FINANCIAL POSITION

     To date,  we have been unable to generate  significant  cash flows from our
business operations. As a result, we have funded our operations through investor
financing,  including  sales of common stock,  convertible  debentures,  and the
exercise of  warrants  and  options.  Until such time as we are able to generate
significant cash flow from operations  through  increased sales of our products,
we will be required to continue our  reliance on investor  financing to fund our
operations.  At June 30, 2000, cash and cash equivalents totaled $1,015,000,  an
increase of $825,000 from June 30, 1999.  Current  liabilities at June 30, 2000,
consisting  primarily  of accounts  payable and  accrued  liabilities,  exceeded
current assets by $649,000.

     During  the six  months  ended June 30,  2000,  net cash used in  operating
activities was $1,220,000 primarily due to a net loss from continuing operations
of $1,459,000.

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<PAGE>
     In the six  months  ended  June 30,  2000,  net cash  flow  from  financing
activities  was  $1,957,000  resulting  from the sale of  common  stock  and the
exercise  of  options  and  warrants  in the amount of  $1,857,000  and from the
issuance of short-term  promissory  notes  totaling  $250,000,  with  offsetting
payments of the notes in the amount of $150,000.

     On February 23, 2000, we completed a private  placement of 6,151,050 shares
of common stock that generated gross proceeds of $3,076,000, of which $1,452,000
was received in the six months  ended June 30,  2000.  These funds were used for
the  payment  of  royalties,  outstanding  short-term  promissory  notes and for
working capital.  As of June 30, 2000, we have paid all of our debt with cash or
by converting  promissory notes into the Company's common stock and have reduced
past due accounts payable.

     Our  future  minimum  royalty   requirements  will   significantly   affect
liquidity.  For example,  the minimum  guaranteed royalty of $735,000 for fiscal
year 2000 is due to IBC by January  2001.  Additionally,  we are required to pay
royalties  to various  licensors  including  IBC,  depending  on the product and
country of sale, of up to 14% of net sales.

     As of  June  30,  2000,  we have no debt  service  or  capital  expenditure
obligations.

     We  anticipate  a  substantial  increase in cash  outlays  associated  with
increased  marketing  and sales of our  Preventx(R)  preventative  product line.
Further, we will incur additional  expenditures  associated with the development
of additional preventative products that we can market utilizing the formulation
used in our hand  sanitizer.  These  cash  outlays  could  include,  but are not
limited to, product testing, product registration costs, advertising,  inventory
purchases and a sales and marketing  campaign.  To maintain our current expenses
of approximately $3 million to $4 million per year and meet the costs associated
with our increased  marketing,  sales and development  efforts,  we will need to
raise  additional  capital  during  fiscal year 2000 or secure a line of credit.
Also,  unless the FDA  issues  final  regulations  that are  different  than its
current  proposed  regulations  with  respect  to  our  hand  sanitizer,  we may
experience  an  adverse  affect on  liquidity.  In those  cases,  our  financial
condition  and results of  operations  will  deteriorate  and our  business  may
ultimately fail.

     We do not have existing  capital  resources or credit lines  available that
are  sufficient to fund our  operations  and capital  requirements  as presently
planned over the next twelve months. We plan to pursue a working capital line of
credit to be secured by our accounts receivable and inventory. We may also raise
funds through the issuance of either debt or equity instruments.  However,  such
funds may not be available on favorable terms or at all.

     During  2000,  in excess of $400,000  has been raised from the  exercise of
outstanding stock options and warrants.  However,  this will not negate the need
to raise  additional  funds through  issuance of debt and equity  instruments or
with credit lines.

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<PAGE>
                            PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     We are a defendant in an action which was filed by Optima Holding Co., Ltd.
and  Mercury  Technology  Corp.  on July 28,  1998 in the  Circuit  Court of the
Eleventh Judicial District,  Dade County,  Florida.  This action alleges that we
tortiously  interfered with Optima and Mercury's  contractual  relationship with
International Bioscience Corporation ("IBC"). Optima and Mercury claim that they
had prior rights to the IBC  formulation and products and that we induced IBC to
breach that agreement.  Optima and Mercury have requested an unspecified  amount
of damages against us. In a separate action that has now been  consolidated with
the first action in the same court,  IBC has  requested a  declaratory  judgment
that IBC properly  terminated its  development  and  distribution  contract with
Optima and Mercury.  Plaintiffs also seek  injunctive  relief to prevent IBC and
its managers and directors  from allowing IBC to have further  dealings with us.
If we are not successful in this action, we could lose the right to market, sell
or manufacture worldwide our hand sanitizer product and other products currently
under development.  This would materially and adversely affect the Company.  The
discovery in this action is proceeding.

     On April 10, 2000,  we filed suit in U.S.  District  Court for the Southern
District of Florida  against IBC  alleging  breach and default on its  exclusive
license  agreement with us and seeking a declaration that the exclusive  license
agreement  is in  full  force  and  effect  as  well  as  compensatory  damages.
Additionally, we asked the Court to issue an injunction which would, if granted,
require  IBC to  maintain  the  status  quo  while  the  discovery  process  and
litigation  proceeds.  Following our request for a preliminary  injunction,  IBC
purported to terminate  the  exclusive  license  agreement.  Through our license
agreement,  we have the  exclusive  right to  manufacture,  sell and  distribute
products based on a formula developed by IBC. We believe IBC has disregarded key
provisions in our exclusive license agreement.

     On  May  2,  2000,  the  U.S.  District  Court  denied  our  request  for a
preliminary  injunction.  The Court's decision does not affect the merits of the
case nor our claim for money  damages  against  IBC,  but defers  them to a full
trial. Our claim for the full rights accorded to us under the exclusive  license
agreement,  which is the  center of our  dispute  with IBC,  will not impact our
current operations. The Court observed in its Order, and IBC acknowledged in its
pleadings  filed with the Court,  that our rights to sell the hand  sanitizer in
the United States and Canada arise from different and separate  agreements  with
IBC, and such rights are not affected by this lawsuit.

     If an  unfavorable  decision  were to be  rendered  against  us at the full
trial,  our  business  could be  materially  and  adversely  affected.  While no
assurance can be given on the ultimate outcome, we believe we will be successful
should a full trial occur. The trial has been scheduled for June 2001.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibit 27 - Financial Data Schedule

     (b)  A report on Form 8-K was filed on April 18, 2000 to report the suit we
          filed  against  IBC for breach and  default on its  exclusive  license
          agreement with us.

          A report  on Form 8-K was  filed on May 10,  2000 to  report  that our
          lawsuit against IBC in U.S.  District Court for the Southern  District
          of Florida will continue despite the Court's denial of our request for
          a  preliminary  injunction  that would have  enjoined IBC from certain
          anticipatory breaches of its exclusive license agreement with us.

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<PAGE>
                                   SIGNATURES

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

                                        EMPYREAN BIOSCIENCE, INC.
                                        (Registrant)


8/9/00                                  /s/ Richard C. Adamany
------                                  ----------------------------------------
(Date)                                  (Signature)
                                        Richard C. Adamany
                                        President, Chief Executive Officer
                                        and Chief Financial Officer

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