QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS
                 SUBJECT TO THE 1934 ACT REPORTING REQUIREMENTS

                                   FORM 10-QSB

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

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

                  For the quarterly period ended September 30, 1999

                                       OR

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

                       Commission File Number: 001-14005

                            FRISBY TECHNOLOGIES, INC.
             (Exact Name of Registrant as Specified in its Charter)

                Delaware                                62-1411534
        (State or other Jurisdiction of              (I.R.S. Employer
        Incorporation or Organization)               Identification Number)

                               77 East Main Street
                                   Suite 2000
                            Bay Shore, New York 11706
              (Address of Principal Executive Offices and Zip Code)
                                 (516) 969-8570
              (Registrant's telephone number, including area code)



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  ________

Number of shares  outstanding of the issuer's Common Stock,  par value $.001 per
share, as of October 31, 1999, 5,748,113 shares.



<PAGE>


                            FRISBY TECHNOLOGIES, INC.


                                      INDEX

                                                                        PAGE NO.

Part I     Financial Information

Item 1.    Financial Statements

           Balance Sheets - September 30, 1999
           (unaudited) and December 31, 1998                               3

           Statements of Operations - Three Month and
           Nine Month Periods Ended
           September 30, 1999 (unaudited) and
           September 30, 1998
           (unaudited)                                                     4

           Statement of Stockholders' Equity -
           Nine Month Period Ended September 30, 1999
           (unaudited)                                                     5

           Statements of Cash Flows - Nine Month
           Period Ended September 30, 1999 (unaudited)
           and September 30, 1998 (unaudited)                              6

           Notes to Financial Statements -
           September 30, 1999 (unaudited)                                  7

Item 2.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations                   8

Part II    Other Information                                              14

           Signatures                                                     15



<PAGE>


                         PART I - FINANCIAL INFORMATION
                          Item 1. Financial Statements

                            Frisby Technologies, Inc.
                                 Balance Sheets

                                         September 30,            December 31,
                                            1999                      1998
                                         (unaudited)
Assets
Current assets:
Cash and cash equivalents                  $2,922,533               $6,516,138
Marketable securities                               -                1,555,683
Accounts receivable                         1,753,352                1,104,134
Inventory                                     684,298                  671,569
Prepaid and other current assets              147,502                  595,998
                                           ----------               ----------
Total current assets                        5,507,685               10,443,522
Property and equipment, net                   529,006                  277,494
Intangible assets, less
accumulated amortization                    1,934,800                2,000,700
Other assets                                  288,976                  391,516
                                           ----------               ----------
                                           $8,260,467              $13,113,232
                                           ==========              ===========

Liabilities and stockholders'
equity
Current liabilities:
   Accounts payable                          $809,586                 $868,649
   Accrued expenses and
   other current liabilities                  143,642                  385,533
   Payable to Triangle Research and
   Development Corporation                          -                  400,000
   License fees payable                       194,474                  189,726
   Deferred license revenues                   42,503                   85,000
                                            ---------               ----------
Total current liabilities                   1,190,205                1,928,908
Accrued license agreement costs               120,250                  120,250
Deferred license revenues                      50,000                   46,250
Other liability                             1,300,000                1,300,000
                                            ---------               ----------
Total liabilities                           2,660,455                3,395,408
Commitments
Stockholders' equity:
Preferred Stock, 1,000,000 shares
    authorized; shares issued
    and outstanding: 0 in 1999 and
    587,500 in 1998                                 -                2,479,000
Common Stock, $.001 par value;
    10,000,000 shares authorized;
    shares issued and outstanding:
    5,708,113 in 1999 and 5,120,613
    in 1998                                     5,708                     5,121
Additional paid-in capital                 14,678,241                12,199,828
Accumulated other
comprehensive income                                -                    21,000
Accumulated deficit                       (9,083,937)               (4,987,125)
                                          -----------             -------------
Total stockholders' equity                  5,600,012                 9,717,824
                                          -----------             -------------
Total liabilities and
stockholders' equity                       $8,260,467               $13,113,232
                                          ===========             =============
                             See accompanying notes.


<PAGE>


                            Frisby Technologies, Inc.
                            Statements of Operations
                                   (Unaudited)



                               Three month                  Nine month
                               period ended                period ended
                               September 30,               September 30,
                        ---------------------------  ---------------------------
                             1999          1998          1999           1998
                        -------------  -----------   ------------    -----------

Revenues:
  Product sales          $1,341,497      $599,791     $3,840,443      $1,417,931
  Research and
  development projects       52,725        43,577        198,975         172,269
  Licenses and royalties     45,249        61,780        302,529         136,448
                        -------------  -----------   ------------    -----------
Total revenues            1,439,471       705,148      4,341,947       1,726,648

Cost of sales:
  Product sales           1,126,655       715,486      3,055,896       1,468,185
  Research and
  development projects       30,300        39,407        199,142         138,388
  Licenses and  royalties    58,800        22,505        296,057          29,809
                        -------------  -----------   ------------    -----------
Total cost of sales       1,215,755       777,398      3,551,095       1,636,382
                        -------------  -----------   ------------    -----------
Gross profit                223,716      (72,250)        790,852          90,266
Selling and
marketing expense           506,877       718,849      2,003,060       1,437,673
General and
administrative expense    1,158,922       992,806      3,051,063       1,761,395
                        -------------  -----------  ------------     -----------
Loss from operations    (1,442,083)   (1,783,905)    (4,263,271)     (3,108,802)


Interest income              33,894       129,106        166,459         243,125


                        -------------  -----------  ------------      ----------
Net loss               $(1,408,189)  $(1,654,799)   $(4,096,812)    $(2,865,677)
                        =============  ===========  ============      ==========



Net loss per
common share -
basic
and diluted                 $(0.25)      $(0.32)        $(0.74)          $(0.62)
                        =============  ===========  ============      ==========



                             See accompanying notes.


<PAGE>


                            Frisby Technologies, Inc.
                   Statement of Stockholders' Equity (Deficit)
                                   (Unaudited)
<TABLE>
<S>         <C>

                                                                                              Accumu-
                                                                                              lated
                                                                                              Other
                                                                              Additional      Compre-         Accumu-
                      Preferred Stock                Common Stock             Paid-In         hensive         lated
                    Shares       Amount          Shares         Amount        Capital         Income          Deficit       Total

Balance
at
December
31, 1998           587,500     $2,479,000       5,120,613       $5,121       $12,199,828     $21,000       $(4,987,125)   $9,717,824

Conversion
of
Preferred
Stock            (587,500)    (2,479,000)         587,500          587         2,478,413         ---               ---           ---

Net loss               ---            ---             ---          ---               ---         ---       (4,096,812)   (4,096,812)

Sale of
marketable
securities             ---            ---             ---          ---               ---    (21,000)               ---      (21,000)



                 _________    ___________       _________       ______       ___________    ________       ___________    __________
Balance at
September
30, 1999                 -      $       -       5,708,113       $5,708       $14,678,241    $      -      $(9,083,937)    $5,600,012
                    ======      =========       =========       ======       ===========    ========      ============    ==========

</TABLE>





                             See accompanying notes.




<PAGE>




                            Frisby Technologies, Inc.
                            Statements of Cash Flows
                                   (Unaudited)
                                                Nine month period ended
                                                     September 30,
                                      ------------------------------------------
                                            1999                      1998
                                            ----                      ----
Operating activities
Net loss                                $(4,096,812)               $(2,865,677)
Adjustments to reconcile
net loss to net cash used
in operating
  activities:
    Depreciation and
    amortization                            129,635                      17,955
    Non cash consulting
    expense                                  70,000                     120,000
    Amortization of intangibles             153,900                          --
    Changes in assets and
    liabilities, prior to
    effect of acquisition:
       Accounts receivable                (643,614)                   (256,946)
       Inventory                             15,794                   (473,259)
       Other current assets                 378,496                   (550,818)
       Other non-current assets              99,522                      53,619
       Accounts payable                    (77,343)                    (33,697)
       Accrued expenses and other
       current liabilities                (241,891)                     413,886
       Licenses fees payable                  4,748                   (126,936)
       Deferred licenses                   (38,747)                    (41,944)
       revenues                      ---------------             --------------
Net cash used in
operating activities                    (4,246,312)                 (3,743,817)
                                     ---------------             --------------


Investing activities
Purchases of property and
equipment                                (381,147)                     (55,268)
Purchases of short-term investments             --                  (9,956,255)
Proceeds from sale of
short-term investments                   1,534,684                    2,534,000
Purchase of intangible assets            (400,000)                           --
Purchase of business,
net of cash acquired                     (100,830)                           --
                                     ---------------              -------------
Net cash provided by (used in)
investing activities                       652,707                  (7,477,523)
                                     ---------------              -------------


Financing activities
Net proceeds from exercise of
convertible preferred stock option             --                     2,479,000
Net proceds from initial public offering       --                    10,396,592
Net proceeds from private placement            --                            --
Payment of transaction costs                   --                            --
                                     ---------------              -------------

Net cash provided by
financing activities                           --                    12,875,592
                                     ---------------              -------------

Net (decrease) increase in
cash and cash equivalents             (3,593,605)                     1,654,252
Cash and cash equivalents -
beginning of period                     6,516,138                       375,222
                                     ---------------              -------------

Cash and cash equivalents -
end of period                          $2,922,533                    $2,029,474
                                     ===============              =============


                             See accompanying notes





                            Frisby Technologies, Inc.
                          Notes to Financial Statements
                         September 30, 1999 (Unaudited)

1.  Basis of Presentation

         The accompanying  unaudited financial  statements have been prepared in
conformity  with  generally  accepted  accounting  principles  and  reflect  all
adjustments  consisting of normal recurring adjustments which, in the opinion of
management, are necessary for a fair presentation of the results for the periods
shown. The results of operations for such periods are not necessarily indicative
of the results  expected for the full fiscal year or for any future period.  The
preparation  of financial  statements  in  conformity  with  generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates and assumptions.

         The  accompanying  financial  statements  should be read in conjunction
with  the  audited  financial  statements  of  Frisby  Technologies,  Inc.  (the
"Company") for the year ended December 31, 1998 and the notes thereto  contained
in the Company's  Annual Report on Form 10-KSB,  filed with the  Securities  and
Exchange Commission on March 31, 1999, as amended.

2.  Summary of Significant Accounting Policies

Net Loss Per Share

         Net loss per share for the three and nine month periods ended September
30,  1999 and 1998 are based on the  weighted  average  number of common  shares
outstanding  during the period in  accordance  with the  Statement  of Financial
Accounting Standard ("SFAS") No. 128 "Earnings Per Share."

         Shares used in the  computation of net loss per share for the three and
nine month  periods  ended  September  30, 1999 were  5,708,113  and  5,512,345,
respectively. Shares used in the computation of net loss per share for the three
and nine month  periods ended  September  30, 1998 were  5,120,613 and 4,605,854
respectively. The number of shares used in the calculation of net loss per share
on a basic and diluted basis is the same.

Comprehensive Loss

          The comprehensive loss for the three month periods ended September 30,
1999 and 1998 were $1,429,947 and $1,654,799, respectively.  The comprehensive
loss for the nine month periods ended September 30, 1999 and 1998 were
$4,117,812 and $2,865,677, respectively.  The only difference between the 1999
comprehensive loss amounts and the net loss recorded on the Statements of
Operations was the unrealized gain on marketable securities.

3.   Shareholders' Equity

         On April 6, 1999, the Company  received  notice from the  shareholder
of the  Convertible  Preferred  Stock of its decision to convert  the 587,500
shares of  Convertible  Preferred  Stock  shares into Common  Stock.  This
transaction  increased  the number of outstanding common stock to 5,708,113.

4.   Subsequent Event

          On October 12, 1999 the Company entered into an agreement to acqure
100% of the outstanding shares of Extreme Comfort, Inc.  This transaction will
be accounted for using the purchase accounting method.


<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.


Results of Operations  for the three and nine month periods ended  September 30,
1999 compared with the three and nine month periods ended September 30, 1998

         Revenues.  The Company generates revenue from four primary sources: (i)
sales of its Thermasorb(R)  additives and ComforTemp(R) foam products for use in
its  strategic  partners'  products;  (ii) sales of its  SteeleVest(R)  personal
cooling systems;  (iii) revenue from research and development  contracts related
to the United States government and private companies; and (iv) license fees and
royalties  from the use of the  Thermasorb(R)  and  ComforTemp(R)  trademarks by
strategic  partners  in  end-use  products,  as well as  other  fees  earned  in
connection with its agreements with strategic  partners.  Total revenues for the
three month period ended  September 30, 1999 increased by $734,323 to $1,439,471
from  $705,148  for the three month  period  ended  September  30,  1998.  Total
revenues  for the nine month  period  ended  September  30,  1999  increased  by
$2,615,299  to  $4,341,947  from  $1,726,648  for the nine  month  period  ended
September 30, 1998.

     Product sales. Product sales for the three month period ended September 30,
     1999 increased by $741,706 to $1,341,497  from $599,791 for the three month
     period ended  September  30, 1998.  Product sales for the nine month period
     ended  September  30, 1999  increased  by  $2,422,512  to  $3,840,443  from
     $1,417,931  for the nine month  period  ended  September  30,  1998.  These
     increases  reflect  the large  increase  in the number of  licensees  using
     Frisby's  products in the current  year.  Specifically,  sales to licensees
     signed after  September  30, 1998 such as  Schoeller  Textil AG and Pacific
     Coast Feather Company  resulted in increased  product sales.  Additionally,
     Titleist and Footjoy  Worldwide's  launch of DRY I.C.E.(R),  a new footwear
     product line featuring  ComforTemp(R),  and SteeleVest(R) sales contributed
     to these increases.

     Research and development  projects.  Revenues from research and development
     projects  for the three month  period ended  September  30, 1999  increased
     $9,148 to $52,725 from  $43,577 for the three month period ended  September
     30, 1998.  Revenues  from  research and  development  projects for the nine
     month period ended September 30, 1999 increased by $26,706 to $198,975 from
     $172,269  for the  nine  month  period  ended  September  30,  1998.  These
     variances  reflect the timing of work  performed  on funded  United  States
     government  research and  development  contracts  and  undisclosed  private
     companies for potential  applications  incorporating  the Company's thermal
     management products.

     Licenses and  royalties.  Revenues  from license fees and royalties for the
     three month period ended September 30, 1999 decreased by $16,531 to $45,249
     from  $61,780 for the three month  period ended  September  30,  1998.  The
     decrease  for the third  quarter  is  partially  indicative  of the  retail
     industry  trend to delay  shipment of cold weather  apparel  products until
     later in the year.  This trend is  causing  delays in the  purchase  of end
     products from several of Frisby's  licensees as is therefore  affecting the
     timing of royalty income.  Revenues from license fees and royalties for the
     nine month  period  ended  September  30,  1999  increased  by  $166,081 to
     $302,529 from  $136,448.  This increase  reflects the  recognition  of fees
     received from strategic  partners for license agreements entered into after
     the third quarter 1998. License fees are recognized as revenue ratably over
     the life of the license  agreement.  Additionally,  the  increase is due to
     royalty income received from a third party as a result of the assignment of
     a license agreement from Triangle Research Development Corporation ("TRDC")
     to the Company in September 1998.

Cost of Sales.  The Company's cost of sales consists of: (i) direct and indirect
costs incurred in connection with product sales, including  SteeleVest(R);  (ii)
direct and indirect costs incurred in connection  with revenue from research and
development  contracts for the United States  government and private  companies;
(iii)  royalty  payments  required  to be made to the  inventor  of the  thermal
management  technology or another party  licensed by the inventor;  and (iv) the
amortization  expense  associated with the September 1998  transaction  with the
inventor to lower the royalty  rates.  Costs of sales for the three month period
ended  September  30,  1999  increased  by $438,357  to  $1,215,755  compared to
$777,398 for the three month period ended  September 30, 1998. The cost of sales
related to products for the nine month period ended September 30, 1999 increased
by  $1,914,713 to  $3,551,095  compared to $1,636,382  for the nine month period
ended September 30, 1998.

     Cost of sales - Products.  The cost of sales  related to  products  for the
     three  month  period  ended  September  30, 1999  increased  by $411,169 to
     $1,126,655  from  $715,486 for the three month period ended  September  30,
     1998. The cost of sales related to products for the nine month period ended
     September 30, 1999  increased by $1,587,711 to $3,055,896  from  $1,468,185
     for the nine month period ended September 30, 1998. These increases reflect
     the higher volume of product sales and the  corresponding  costs related to
     such  product  sales in the  three  month  and  nine  month  periods  ended
     September  30, 1999 as compared to the  corresponding  periods in the prior
     year.  Product  margins in the current  quarter and year have been improved
     over 1998 due to  cost-effective  supply  agreements for  Thermasorb(R) and
     ComforTemp(R)   for  1999   production  as  well  as  high  margin  on  the
     SteeleVest(R) product line.

     Cost of sales  --  Research  and  development  projects.  The cost of sales
     related to research  and  development  projects  for the three month period
     ended  September  30, 1999  decreased by $9,107 to $30,300 from $39,407 for
     the three month period ended  September 30, 1998. The cost of sales related
     to  research  and  development  projects  for the nine month  period  ended
     September  30, 1999  increased by $60,754 to $199,142 from $138,388 for the
     nine month period ended  September  30, 1998.  This  increase  reflects the
     higher  research  and  development  revenues in the nine month period ended
     September  30, 1999 as compared  to the  corresponding  period in the prior
     year.

     Cost of Sales --  Licenses  and  royalties.  The cost of sales  related  to
     licenses and royalties for the three month period ended  September 30, 1999
     increased  by $36,295 to $58,800  from  $22,505 for the three month  period
     ended  September  30,  1998.  The cost of sales  related  to  licenses  and
     royalties for the nine month period ended  September 30, 1999  increased by
     $266,248 to $296,057 from $29,809 for the nine month period ended September
     30, 1998.  These  increases are primarily due to amortization of intangible
     and royalties expense related to the September 1998 transaction with TRDC.

Selling and marketing expense. Selling and marketing expense for the three month
period ended  September 30, 1999 decreased by $211,972 to $506,877 from $718,849
for the three month period ended  September 30, 1998.  This decrease  reflects a
shift  from  trade  and  consumer  print  advertising  placements  towards  more
cost-effective cooperative advertising and point of purchase displays in support
of certain  licensees and retailers.  Selling and marketing expense for the nine
month  period  ended  September  30, 1999  increased  by $565,387 to  $2,003,060
compared to $1,437,673 for the nine month period ended  September 30, 1998. This
increase  occurred in the first two quarters  and  primarily  resulted  from the
Company's increased  marketing and advertising  activity in order to build brand
name recognition of its Thermasorb(R) and ComforTemp(R) products and trademarks.
These activities included the hiring of additional sales personnel,  advertising
placements  in many  national  trade and  consumer  publications  and  tradeshow
participation.  Additionally,  selling expense related to the SteeleVest(R) unit
contributed to these increases.

General and administrative  expense.  General and administrative expense for the
three month period ended  September 30, 1999 increased by $166,116 to $1,158,922
from $992,806 for the three month period ended  September 30, 1998.  General and
administrative  expense  for the nine month  period  ended  September  30,  1999
increased by $1,289,668 to $3,051,063  compared to $1,761,395 for the nine month
period  ended  September  30,  1998.  These  increases  reflect the  increase in
personnel and personnel-related expenses, including travel, and recruiting costs
of new employees.  Additionally, fees and expenses paid to consultants have also
increased over the comparable  period for the prior year. These increases are in
connection with the expansion of the Company's operations and  commercialization
of its thermal management products.

Net  interest  income/expense.  Net  interest  income for the three month period
ended  September 30, 1999  decreased by $95,212 to $33,894 from $129,106 for the
three month period ended  September 30, 1998.  Net interest  income for the nine
month  period ended  September  30, 1999  decreased by $76,666 to $166,459  from
$243,125 for the nine month period ended  September  30, 1998.  These  decreases
reflect  the higher cash and  investment  balances,  in the prior  year,  due to
receipts of proceeds from the Initial Public Offering ("IPO") in April, 1998.

Net loss. As a result of the foregoing,  the net loss for the three month period
ended  September 30, 1999 decreased to $1,408,189  from $1,654,799 for the three
month period ended September 30, 1998.  Additionally,  the net loss for the nine
month period ended  September 30, 1999 increased to $4,096,811  from  $2,865,677
for the nine month period ended September 30, 1998.

Liquidity and capital resources.  From its inception through September 30, 1999,
the Company has incurred  cumulative  losses of  approximately  $9,084,000.  The
Company has financed its  operations  to date through  research and  development
contracts  relating to United States  government  programs,  bank borrowings and
issuance of common stock and convertible preferred stock.

At September 30, 1999, the Company had working capital of $4,317,000,  including
cash and  marketable  securities of  $2,923,000  accounts  receivable  billed of
$1,753,000 and inventory of $684,000, offset by accounts payable of $810,000 and
license fees payable of $194,000.

Cash used by operating  activities was $4,246,000 and  $3,744,000,  for the nine
month period ended  September  30, 1999 and 1998,  respectively.  The  principal
factor contributing to the cash used in operating  activities for the nine month
period  ended  September  30,  1999  and  1998 was the net loss for each of the
respective periods.  Cash provided by investing  activities was $653,000 for the
nine month period ended September 30, 1999. The principal investing  activities
for 1999 were: a sales of marketable securities offset in part by an installment
payment to TRDC for the agreement  signed in September 1998, the purchase of the
assets of Steele Incorporated, and the purchase of equipment for the development
facility in North  Carolina.  Cash  provided  used in investing  activities  was
$7,478,000  for the nine month periods ended  September 30, 1998.  The principal
investing  activity for 1998 was the purchase of  short-term  investments.  Cash
provided by financing activities was $12,876,000 for the nine month period ended
September 30, 1998. The principal financing activities for the nine month period
ended September 30, 1998 were the receipt of the net proceeds of $2,479,000 from
the exercise of the  Convertible  Preferred Stock Option by one holder of record
and of $10,397,000 from the Company's IPO.

The  Company  is  consolidating  its  North  Carolina   operations  to  a  newly
constructed  facility located in Winston-Salem,  North Carolina during the first
quarter of fiscal  2000.  The  remaining  cash  requirements  with  respect to
that relocation  will be expended in the fourth quarter of 1999 and the first
quarter of 2000. The total 1999 capital expenditures,  including certain assets
that may not be placed into service until the building  completion in early
2000, are not expected to exceed $1,000,000.

The Company  has a  $2,000,000  line of credit  with a bank.  The line of credit
bears  interest  at the lower of the  bank's  prime  rate or a two point  spread
versus the London Interbank Overnight Rate ("LIBOR") and will expire on June 30,
2000. The full amount of the line is currently available and uncommitted.  It is
the  Company's  intent  to  renew or  replace  the  line of  credit  in order to
accommodate possible future funding requirements.

The Company has incurred  cumulative losses since its inception and,  therefore,
has not been subject to significant federal income taxes.  Through September 30,
1999,   the  Company  has  generated  net  operating   loss   carryforwards   of
approximately  $9,080,000,  which may be  available to reduce  future  available
taxable income and future tax liabilities.  These  carryforwards  expire in year
2018. The Tax Reform Act of 1986 provides for an annual limitation on the use of
net operating loss  carryforwards  (following  certain  ownership  changes) that
could significantly limit the Company's ability to utilize these  carryforwards.
Due to the cumulative  effect of the IPO and the subsequent  exercise of options
or warrants in  connection  with other  future  sales of equity,  the  Company's
ability  to  utilize   the   aforementioned   carryforwards   may  be   limited.
Additionally,  because the United  States tax laws limit the time  during  which
these  carryforwards may be applied against future taxes, the Company may not be
able to take full advantage of these attributes for federal tax purposes.

Based on the Company's  current  operating  plan, the Company  believes that its
available cash, cash flow from operations and available line of credit,  will be
sufficient to satisfy its  operational  and capital  requirements  through March
2000.  Such  belief  is based  upon  certain  assumptions,  and  there can be no
assurance  that such  assumptions  are correct.  In the event that the Company's
plans change,  or its available  cash,  cash flow from  operations and available
line of credit are insufficient to fund operations due to unanticipated  delays,
problems,  expenses  or  otherwise,  the  Company  would  be  required  to  seek
additional  financing  sooner  than  anticipated.   Further,  depending  on  the
Company's  progress in marketing  its product  line,  gaining  acceptance of its
thermal  management  technology  and its other  products and services  among the
business community or the  identification of strategic  acquisition or licensing
opportunities,  the  Company  may  determine  that  it  is  advisable  to  raise
additional capital sooner than was anticipated.


The Company has been evaluating various financing  alternatives to increase cash
available to fund operations during fiscal year 2000, including potential
private equity sources.


Inflation

The impact of general inflation on the Company's business has been insignificant
to date and the Company believes that it will continue to be  insignificant  for
the foreseeable future.

Year 2000

         The Year 2000 Issue is the result of computer  programs  being  written
using two digits  rather  than four to define the  applicable  year.  Any of the
Company's  computer programs that have  date-sensitive  software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a  system  failure  or  miscalculations   causing   disruptions  of  operations,
including,  among other things, a temporary  inability to process  transactions,
send invoices, or engage in similar normal business activities.

         Based on recent  assessments,  the Company  determined that it will not
require  significant  modifications  of its  hardware  or software so that those
systems  will  properly  utilize  dates beyond  December  31, 1999.  The Company
presently believes that with  modifications of its existing  software,  the Year
2000 Issue can be mitigated.

         The  Company's  plan to  resolve  the  Year  2000  Issue  involves  the
following four phases: assessment,  remediation, testing, and implementation. As
of April 30,  1999,  the  Company  has fully  completed  its  assessment  of all
internal  systems  that could be  significantly  affected by the Year 2000.  The
completed   assessment   indicated  that  most  of  the  Company's   significant
information technology systems will not be significantly affected,  particularly
the general ledger, billing, and inventory systems. The Company does not believe
that the Year 2000  presents a material  exposure as it relates to the Company's
products.  In addition,  the Company has begun to gather  information  about the
Year 2000  compliance  status of its  external  agents and  continues to monitor
their compliance. To date, the Company is not aware of any external agent with a
Year  2000  issue  that  would  materially   impact  the  Company's  results  of
operations,  liquidity, or capital resources. The Company has requested from its
bank an  assessment  of the extent of the bank's  Year 2000  compliance.  In the
event the bank is not Year 2000  compliant  in a timely  manner,  the Company is
prepared to change  banks.  However,  the Company has no means of ensuring  that
external  agents will be Year 2000 ready.  The  inability of external  agents to
complete their Year 2000 resolution process in a timely fashion could materially
and  adversely  impact the  Company.  The effect of  non-compliance  by external
agents is not determinable.

         The Company will utilize its external  software and service provider to
reprogram,  test and  implement the software for the Year 2000  modification  as
needed,  the  cost of which  is not  expected  to be  significant.  The  Company
evaluated  the  status of  completion  of Year 2000  modifications  in the third
quarter and will undertake all remaining  necessary  steps to seek to ensure its
systems are Year 2000  compliant.  In the event the Company is unable to resolve
its Year 2000 modifications in a timely fashion, the business of the Company may
be materially and adversely impacted.

         In the event the Company's  computer  systems are materially  adversely
affected by the Year 2000 issue, the Company's  business and operations could be
materially adversely affected by disruptions in the operations of other entities
with which the Company  interacts.  However,  the Company believes that the most
likely worst case scenario is that there will be some  localized  disruptions of
systems that will affect individual processes,  facilities or service technology
providers  for a  short  time  rather  than  systematic  or  long-term  problems
affecting  its  business  operations  as a whole.  In such event the Company has
contingency plans for certain critical  applications and is working on plans for
others.   These   contingency  plans  involve,   among  other  actions,   manual
workarounds, increasing inventories, and adjusting staffing strategies.

Forward-Looking Statements
Certain  information   contained  in  this  Quarterly  Report  on  Form  10-QSB,
including,  without  limitation,  information  appearing  under  Part I, Item 2,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations," are  forward-looking  statements (within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities  Exchange Act of
1934).  Factors set forth in the Company's Prospectus filed April 1, 1998, or in
the Company's other Securities and Exchange Commission filings, could affect the
Company's  actual results and could cause the Company's actual results to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company in this Quarterly Report on Form 10-QSB.

         Those statements are subject to numerous risks and  uncertainties  that
could cause actual results,  performance and  achievements to differ  materially
from those described or implied in the forward-looking  statements, and reported
results  should not be considered an  indication  of future  performance.  Those
potential risks and uncertainties  include without limitation the uncertainty of
the economic  environment  for the remainder of this year,  the need for further
development  of certain of Frisby  Technologies'  products,  markets  and supply
chain partners,  the  development of alternative  technologies by third parties,
Year 2000 issues affecting the Company and its customers and suppliers,  and the
uncertainty of market  acceptance  and demand for the Company's  products in the
future.

<PAGE>

                            PART II-OTHER INFORMATION

Item 1.  Legal Proceedings

None.

Item 2.  Changes in Securities

         On April 6, 1999, the Company  received  notice from the shareholder of
the Convertible Preferred Stock of its decision to convert the 587,500 shares of
Convertible Preferred Stock shares into Common Stock. This transaction increases
the number of outstanding common stock to 5,708,113.


Item 3.  Defaults Upon Senior Securities

None.

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

None.

Item 5.  Other Information

None.






<PAGE>


Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  27.1     Financial Data Schedule

         (b)      Reports on Form 8-K

                  None.
                                   Signatures


         Pursuant to the  requirements  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.

         Dated:  November 15, 1999

                                          FRISBY TECHNOLOGIES, INC.



                                       By:/s/ Gregory S. Frisby
                                          -------------------------------------
                                          President and Chief Executive Officer



                                       By:/s/ Stephen P. Villa
                                          -----------------------
                                          Stephen P. Villa
                                          Chief Financial Officer