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

                                   FORM 10-KSB

              Annual Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                    For the fiscal year ended August 31, 1999

                           Commission File No. 0-24506


                         DELTA-OMEGA TECHNOLOGIES, INC.
              ---------------------------------------------------
             (Exact name of Registrant as specified in its charter)

           Colorado                                             84-1100774
 ------------------------------                           ---------------------
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                           Identification Number)

              119 Ida Road
         Broussard, Louisiana                                     70518
 --------------------------------------                           -----
(Address of principal executive offices)                       (Zip code)

                                 (318) 837-3011
               --------------------------------------------------
              (Registrant's telephone number, including area code)

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

           Securities registered pursuant to Section 12(g) of the Act:
                          $.001 par value common stock

Indicate by check mark whether the Company (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 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 there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form, and no disclosure
will be contained, to the best of the Company's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form
10-KSB or any amendments to the Form 10-KSB. [X]

Company's revenues for its most recent fiscal year. $1,451,754

As of November 30,1999, 15,918,319 shares of common stock, $.001 par value, were
outstanding, and the aggregate market value of the common stock held by
non-affiliates of Delta-Omega Technologies, Inc. was approximately $1,481,889 on
that date.

Documents incorporated by reference:
The definitive proxy statement for the annual meeting of shareholders which will
be filed with the Commission within 120 days after the close of the fiscal year
is incorporated by reference into Part III.

Please see item 13 for the exhibit index.




<PAGE>
                                     PART I.
Item 1. Business
----------------

GENERAL
-------

Delta-Omega Technologies, Inc. (Delta-Omega) was organized under the laws of the
state of Colorado on December 22, 1988 as Barclay's West, Inc. In November 1989,
the Company acquired, via a share exchange agreement, all of the outstanding
securities of Delta-Omega Technologies, Ltd. and on December 22, 1989, changed
its name from Barclay's West, Inc. to Delta-Omega Technologies, Inc. to reflect
the acquisition.

Prior to fiscal 1993, Delta-Omega was a development stage company whose main
objective was to conduct research and development. Commencing in fiscal 1993 the
Company had essentially completed a majority of the research, development and
testing of its primary products and commenced its marketing efforts. The Company
continues to incur research and development costs to further develop its primary
products into different markets.

SPECIALTY CHEMICALS
-------------------

Delta-Omega Technologies, Ltd. is engaged in the development, manufacture and
marketing of environmentally safe specialty chemicals for use in a variety of
consumer, industrial and military applications. These products are deemed to be
environmentally safe because they are water-based, non-toxic and biodegradable.
These products replace hazardous, flammable, toxic and ozone depleting chemicals
in a broad range of cleaning and emergency response applications. Delta-Omega is
developing proprietary products and processes that address large markets where
there is limited environmentally safe competition or few or no existing products
that provide effective performance.

     SafeScience
     -----------

     On September 1, 1999, the Company and SafeScience entered into an exclusive
     License Agreement concerning certain proprietary formulations developed by
     the Company and produced exclusively for SafeScience. Terms of the License
     Agreement provide for SafeScience to provide confidential access to these
     formulations to third party manufacturers for the purpose of manufacturing
     large volumes of finished goods for resale. This arrangement allows
     SafeSciecne to outsource much greater product blending capacities than the
     Company can provide with its existing facilities. A provision of the
     License Agreement grants a royalty to the Company based upon net sales of
     SafeScience products. Through this channel, the Company has developed a
     consumer market for All Purpose, Bathroom, Floor, and Window Cleaners and a
     dish washing liquid.

     The SafeScience mission is to "Make Chemical Safety a Lifestyle Choice." To
     achieve this goal,  SafeScience  leverages  technology  to  comprehensively
     address the issue of health and chemical safety,  with safe and efficacious
     commercial and consumer  products.  SafeScience  consumer  products are the
     first cleaning products that combine high performance with chemical safety,
     at competitive prices.

     SafeScience cleaners offer effective, non-hazardous alternatives to
     petroleum-distillate based, chlorinated, caustic and high-VOC content
     products. Products benefits include non-hazardous for worker and client
     safety, environmentally benign and biodegradable, non-flammable, generate
     less wastewater and require no special disposal procedures.

     Solvent Replacement Products
     ----------------------------

     DOT 111/113(TM) is a water-based, non-toxic, biodegradable, patented
     cleaning solution for use on metal and other hard surfaces. The product can
     replace chlorinated solvents scheduled for elimination under the U.S. Clean
     Air Act and other environmentally objectionable cleaning solvents in
     specific cleaning applications. It is used to remove hydrocarbon and other
     organic residue as well as inorganic material from surfaces and is
     non-corrosive to a wide array of metals, plastics, rubber and other
     materials. DOT 111/113(TM) conforms to the requirements of MIL-PRF-87937C,
     Type II which establishes the requirements for environmentally safe
     cleaning for aircraft and aerospace equipment for the U.S. Air Force. It
     conforms to NASA test protocol for use in cleaning liquid oxygen systems
     and is accepted by the U.S. Navy as a pre-cleaner for oxygen systems. It is
     also used to clean outer surfaces of aircraft and bare metal prior to
     painting among many other general uses.

                                       1

<PAGE>


     With the expiration on May 31, 1999 of the Company's three year contract
     with the Defense Supply Center-Richmond, the United Air Force sent out a
     request for quotations for a new three year supply contract. The Company
     has qualified its aircraft cleaning compound to the upgraded performance
     standards required in the bid solicitation and has submitted a formal bid
     package to Richmond, the depot in charge of purchasing and distributing
     cleaning products to Air Force installations worldwide. The Company feels
     its bid was very competitive and is awaiting a decision by the U.S. Air
     Force regarding the announcement of the successful bidder. Management
     is hopeful the contract will be awarded in the next quarter. The previous
     contract generated sales in excess of $700,000 during its term, with
     $250,000 worth of product being delivered in the last three months of the
     contract.

     ATTAR(TM) is a newly developed series of water-based products designed to
     address the needs of the metalworking and the aviation industries for a
     heavy-duty, biodegradable, environmentally safe cleaner/degreaser. This
     product is designed to complement the light to medium duty cleaner, DOT
     111/113(TM), and is designed to be a safe alternative to ozone-depleting
     chemicals and flammable, hazardous solvents used to remove heavy baked-on
     oils, synthetic lubricants and carbon deposits. The product is
     non-corrosive to a wide variety of metals, metal alloys, painted surfaces,
     plastics and other similar materials. The base formulation is highly
     versatile and can be modified to meet specific cleaning requirements.

     Omni-Clean(TM)Renew is a product developed for cleaning concrete and marble
     monuments, statues and building edifices. Omni-Clean(TM)Renew works like
     the petroleum based or acid based products that it is designed to replace,
     but is safe for use by cleaning personnel and is biodegradable. Early
     indications from customers in the cemetery maintenance business are
     positive and the Company expects this niche market to develop with more
     exposure to this specialized cleaning segment. No revenue estimates are
     possible at this stage of initial introduction.

     Institutional and Industrial Products
     -------------------------------------

     Omni-Clean(TM) SD is a multi-use product that is water-based, non-toxic and
     biodegradable and designed to address the specific needs of the
     institutional and industrial markets. It creates no adverse health effects
     for users. Its uses include cleaning pots and pans, floors, laundry as well
     as general purpose cleaning. Omni-Clean(TM)SD can reduce chemical use
     hazards (including associated liability) and increase safety and efficiency
     while reducing costs. This product has been USDA accepted for certain uses
     and is presently being sold to hotels, restaurants, fast food chains,
     laundry services, oilfield and janitorial service companies.

     Omni-Clean(TM)SD is also used by the barge and tank industry to clean
     various residuals from storage vessels. It significantly reduces the amount
     of washwater used in the cleaning process. Its unique cleaning properties
     displace the contaminant from the vessel wall and phase separate them
     allowing the waste to be skimmed from the surface and the product to be
     reused. This product has no constituents reportable under federal
     guidelines.

     DOT Degreaser was developed to compete with low-end oilfield cleaners and
     degreasers. DOT Degreaser contains no reportable quantities of regulated
     chemicals and does not produce oily residues that dissolve into water,
     creating potential discharge problems. It is biodegradable, non-flammable
     and has a high tolerance for metals usually found in oilfield production
     water. It is clean-rinsing and is not harmful to personnel or equipment
     (painted or unpainted). DOT Degreaser can be applied in a broad spectrum of
     oilfield and maritime uses, including removal of American Petroleum
     Institute modified pipe dope used in drilling operations.

                                       2

<PAGE>


     Firefighting and Spill Response
     -------------------------------

     Vulcan(TM) is a foam concentrate product line used to combat flammable
     liquid and petroleum fires. These products are non-toxic and non-corrosive
     and are successful in mitigating the threat of fire and explosion while
     introducing no new contaminants to the local environment. This is
     accomplished through the formation of a lasting, stable, heat resistant
     foam blanket which excludes oxygen from the burning flammable liquids. The
     products have a low surface tension, which allows them to penetrate into
     cracks and crevices and cling to surfaces, forming a thick foam blanket on
     vertical, curved and horizontal surfaces. These products can be used
     effectively on petroleum, alcohol, and other flammable liquid fires. Many,
     if not all, of the commercially available firefighting foams dissolve
     significant amounts of hydrocarbons into water, thereby enhancing the
     spread of contaminants into the local environment, which must then be
     remediated at significant costs. Vulcan(TM) foams encapsulate hydrocarbons
     thus preventing their spread. Most of the fire fighting foams currently
     used today contain chemicals which are reportable under federal guidelines,
     while the Vulcan(TM) products do not. Two (2) Vulcan(TM) firefighting foam
     concentrates earned Underwriters Laboratories (UL) listings in December of
     1995. In May of 1998, the Company earned UL listings for six (6) more
     products in the Vulcan(TM) line. With the issuance of the new listings, the
     Company now offers a complete selection of firefighting foam concentrates
     to the emergency response community.

     HazClean(TM)-ER is a patented formulation listed on the U.S. Environmental
     Protection Agency's National Contingency Plan. It is accepted for use by
     the Louisiana Department of Environmental Quality in responding to
     hydrocarbon spills and contamination. The product mixes with hydrocarbons
     when applied with water and suppresses dangerous vapors thus mitigating the
     threat of fire and explosion. HazClean(TM)-ER enhances the bioremediation
     of contacted hydrocarbon contaminants; which is generally the most cost
     effective remediation practice for the low levels of hydrocarbons typically
     encountered in post spill scenarios. The use of emergency response agents
     such as HazClean(TM)-ER introduce no new contamination while promoting the
     natural biological decay of hydrocarbons which lowers cleanup costs.

     Soil Remediation Chemicals
     --------------------------

     CreoSolv(TM) is a product designed to remove polynuclear aromatic
     hydrocarbons (like creosote) and other similar hydrocarbons from most
     surfaces, especially soil, and is used in conjunction with a mechanical
     soil washing process. The CreoSolv(TM) solution is mixed with the
     contaminated soil which solubilizes the contaminant into the liquid
     solution. The liquid is separated from the soil and the contaminant is
     recovered from the liquid solution by chemical and physical means for
     disposal or in some cases recycling. The cleaned soil can be returned to
     the site.

     HazClean(TM)-SR can be used in conjunction with a mechanical soil washing
     process or in land farming techniques. Currently, efforts to remediate
     hydrocarbon contamination from soil include, among others, removal of
     polluted materials to a "less sensitive" location and/or incineration.
     These methods do not always eliminate pollution permanently, may not be
     cost effective and may result in undesirable side effects and potential
     future liability.

     HazClean(TM)-SR can be applied directly to the ground or tilled soil. The
     product encapsulates the hydrocarbons thus preventing their spread. The
     product contains nutrients that enhance natural biodegradation. The
     Company's process is designed for remediation of hydrocarbon contamination
     from soil, limestone, gravel or other materials used in parking lots,
     access roads and storage yards.

                                       3

<PAGE>


SPECIAL SERVICES
----------------

The Company supplies Petroleum Chemicals, Inc. (P.C.I.), a Gulf coast oil
industry supply company, with custom blending and packaging services. The
relationship began in fiscal year 1999 and generated over $75,000 in revenues.
Management feels that P.C.I. will continue to expand its presence in the active
drilling areas of coastal Louisiana and Texas, resulting in increased sales.

MARKET SEGMENT DATA
-------------------

Total product sales for the year ended August 31, 1999 were $1,451,754 as
compared with total product sales for the year ended August 31, 1998 of
$1,177,505.
<TABLE>
<CAPTION>

                         Product Sales For the Fiscal Years Ended August, 1995 through 1999

                                        1999              1998              1997             1996               1995
                                     ----------        ----------        ----------        ----------        ----------
<S>                                  <C>               <C>               <C>               <C>               <C>
Solvents & Cleaners                  $  633,921        $  569,085        $1,243,657        $  738,909        $  307,769
Firefighting & Spill Response           385,022               779           203,276           106,688            82,099
Oilfield Products                       254,857           328,641             9,589             1,594            36,309
SafeScience                             177,954              --                --                --                --
                                     ----------        ----------        ----------        ----------        ----------
Total                                $1,451,754        $1,177,505        $1,456,522        $  847,191        $  426,177
                                     ==========        ==========        ==========        ==========        ==========

</TABLE>

MARKETS
-------

     Specialty Chemicals
     -------------------

     The Company's products are marketed as safe and economical replacements for
     hazardous chemicals. Industries targeted are aviation, electronics,
     automotive, marine, metal fabrication, food processing, janitorial,
     oilfield, barge and tank cleaning, firefighting, hazardous spill response
     and soil remediation.

     The Company markets its products through regional or nationally recognized
     distribution organizations, via private label arrangements and through
     direct customer contact with its own sales force.

     The Company prices its products competitively and, in some cases, below the
     price of existing products and methods. The products are also promoted as
     cost savers through the reduction of current and future environmental
     liabilities and reducing, or in some cases eliminating the health hazards
     to employees.

     The Company's products have been gaining acceptance in markets where
     governmental policy, public safety and economics are mandating changes from
     presently used products and services. By gaining regulatory agency
     acceptance for the use of the Company's products in specialized fields
     where available products and technology are limited and sometimes costly,
     the Company's products and their uses are becoming more attractive to
     end-users and to distributors for sales to end-users.

                                       4

<PAGE>


     SafeScience
     -----------

     On September 1, 1999, the Company and SafeScience entered into an exclusive
     License Agreement concerning certain proprietary formulations developed by
     the Company and produced exclusively for SafeScience. Terms of the License
     Agreement provide for SafeScience to provide confidential access to these
     formulations to third party manufacturers for the purpose of manufacturing
     large volumes of finished goods for resale. This arrangement allows
     SafeSciecne to outsource much greater product blending capacities than the
     Company can provide with its existing facilities. A provision of the
     License Agreement grants a royalty to the Company based upon net sales of
     SafeScience products. Through this channel, the Company has developed a
     consumer market for All Purpose, Bathroom, Floor, and Window Cleaners and a
     dish washing liquid.

     The Company has been contracted to furnish products to a corporation,
     SafeScience, Inc., that is entering the I&I and household goods markets.
     With the installation of a high-speed bottling unit provided by SafeScience
     in April 1999, immediate revenues totaling approximately $75,000 were
     generated by sales to SafeScience. The Company has purchase orders to
     furnish an additional $300,000 of products for the household goods and I&I
     lines. The SafeScience product line now encompasses over twenty (20)
     products for use in both marketplaces. The Company anticipates a steady
     increase in the amount of revenues generated by this contract as
     SafeScience, Inc. enters the industrial market in a focused manner, while
     continuing to develop and expand existing consumer product distribution
     accounts.

     Oilfield Products
     -----------------

     The Company recently introduced a line of products to serve the needs of
     the oil, gas exploration and production industries. This line of products
     includes degreasers, paraffin cutters, downhole tubing and casing cleaners
     and marine transportation storage vessel cleaning compounds. The
     multi-functional properties of these products allow the customer greater
     flexibility by reducing cleaning time, minimizing storage requirements,
     enhancing worker safety and lessening environmental liabilities.

     The Company furnishes specialized cleaning and treatment chemicals to
     Environmental Concepts, Inc. (E.C.I.), a company that provides cleaning
     equipment, products and services to the oil and gas industry. Initial sales
     of the Company's products totaling approximately $30,000 have been made to
     E.C.I., with increasing volumes anticipated when E.C.I. begins full service
     cleaning, which is scheduled to begin in the next quarter.

     Drilling Mud Recycling Process (MRP)
     ------------------------------------

     The Company has successfully field tested a unique technology for
     recovering barite and oil from spent drilling muds. The mud recycling
     process (MRP) offers significant cost savings over current management
     practices involving spent drilling muds. The market value of the recovered
     barite and oils is expected to more than offset processing costs. The
     Company, working on location in Colombia with M-I Drilling Fluids, L.L.C.,
     has successfully completed the first phase of a version of its MRP process,
     Base Fluid Upgrade (BFU). The process was able to retrieve high purity
     diesel, 99.5% pure based on laboratory analysis, from spent oil based muds.
     Conditions prevalent in the oil and gas industry have caused delays in the
     implementation of advanced management practices involving spent drilling
     muds. The Company anticipates additional business in South America and
     other active drilling locations. No estimate of revenues is possible at
     this stage of development because long term results of this technology have
     yet to be commercially determined.

                                       5

<PAGE>


     DeMilitarization
     ----------------

     The Company signed a License Agreement in December of 1997 with Gradient
     Technology, Inc. (G.T.I.) for the development and construction of a mobile
     system capable of producing higher order commercial products from ammonium
     picrate, a form of explosive. The license agreement became the subject of
     arbitration with both parties filing claims with the American Arbitration
     Association relating to the amount of capital required to fulfill a U.S.
     government contract and the timing of the fund raising.

     On September 30, 1999, the Company and G.T.I. signed a Termination of
     License Agreement and Notice of Dismissal of Arbitration Action so that
     neither party retains any interest the other party may have conveyed to it
     by the license agreement and neither has any financial obligations to the
     other party under the license agreement. The Company and G.T.I. also agreed
     to dismiss the underlying arbitration case described above and agreed to
     terminate the relationship as it related to the U.S. government contract.

     Industrial and Institutional Markets
     ------------------------------------

     The Company continues to expand its industrial and institutional cleaning
     market. Specifically, the Company has entered the fleet maintenance market
     and is now supplying products to Ryder-ATE, Houston Metro, Nalco Fleet
     Lines and TexGas. Also the Company entered the concrete cleaning and stone
     restoration markets. These products have been accepted by FMB Property
     Management Company, the Texas Medical Center and several cemetery
     organizations. These materials are also being evaluated by other property
     management companies as well as several international organizations and
     cemetery conglomerates. The Company's materials offer safe, effective
     alternatives to the solvent, caustic and acid based materials currently
     being utilized in the marketplace.

RAW MATERIALS
-------------

Basic raw materials used by the Company in the formulation of finished products
include a wide variety of surfactants, acids, alkalines, salts and solvents.
Approximately sixty compounds are purchased from manufacturers or distributors
that supply the chemical industry. All raw materials used by the Company are
available on a worldwide basis and are not subject to shortage. Raw materials
and finished products are typically transported via truck and rail.

BLENDING FACILITIES
-------------------

The Company's blending facilities are located in a dedicated building, housing
raw material storage and blending tanks used in the mixing process. The blending
vessels are vats where the raw materials are pumped at the proper weights to
complete a blended compound. The Company presently has three blending units with
electric motor driven paddles. The largest unit is capable of blending 1,100
gallons at one time, and the other two are 660 gallon capacity. The blending
units and associated piping are common sizes used by many industries and are
relatively inexpensive to procure, install and operate. The Company performs
100% of its product blending, and no use of outside manufacturing service is
contemplated.

MAJOR CUSTOMERS
---------------

During fiscal years 1999 and 1998, one customer, the U.S. Air Force, accounted
for twenty-four percent (24%) and fourteen (14%) percent of the Company's net
sales, respectively. In addition, one customer accounted for sixteen (16%)
percent of the Company's fiscal 1999 net sales.


                                       6

<PAGE>


GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS
-----------------------------------------

Any required government or military approvals related to principal products have
been submitted and obtained in accordance with written protocols.

PATENTS, TRADEMARKS AND LICENSES
--------------------------------

The Company owns all rights to HazClean(TM)-EFFF for which U.S. Patent No.
5,061,383 was granted in October 1991. The Company owns all rights to DOT
111/113(TM) for which U.S. Patent No. 5,308,550 was granted in May 1994.

The Company has filed two patents with the United States Patent and Trademark
Office, a base fluid upgrading (BFU) application (Serial No. 918,597) and a mud
recycling process (MRP) (Serial No. 788,993). Both patent pending applications
are for treating drilling fluids used in the oil and gas industry.

The Company is also in the process of filing two more patents, a wellbore
chemical cleaner and a continuation-in-part of co-pending MRP application Serial
No. 788,993.

There are no ongoing royalty requirements borne by the Company in the
exploitation of its patents.

The Company maintains the formulations for its various products as a trade
secret and no one has access to the formulations who is not subject to a trade
secret and non-disclosure agreement.

REGULATION
----------

Many chemicals used as solvents, cleaners and degreasers as well as firefighting
foams and spill response agents have been considered hazardous to the
environment by new federal and state guidelines. Regulations fueled by a public
awareness of the environment and the resulting political involvement are causing
most of these chemicals to be phased out.

The Company's chemical products are biodegradable, non-hazardous, and therefore,
non-reportable. Should the guidelines be amended to affect the Company's
products, Management believes the Company has the capability to substitute the
affected constituent. While this may temporarily affect the "environmentally
safe" marketing aspect of the affected product, Management does not believe it
will have any adverse long term impact.

COMPETITION
-----------

Competition in the specialty chemical industry is provided by numerous
companies. Most of these companies have substantially greater resources and
marketing capabilities than Delta-Omega. As a result, the Company's strategy is
not to compete directly in the marketplace against these large companies, but to
do so through distributors with large established markets. Other competitive
factors include price, performance and safety in use with which the Company can
effectively compete.

                                       7

<PAGE>


RESEARCH AND DEVELOPMENT
------------------------

In fiscal year 1999, the Company focused primarily on the development of a line
of products for SafeScience, Inc. The selection of household cleaning products
chosen by SAFS for introduction to the U.S. consumer market was identified,
products were custom formulated, performance testing was accomplished by
accepted testing labs and product safety was verified by toxicological experts.
This line of efficacious consumer products has been marketed on a regional basis
with positive results and consumer response indicates that the safe,
ready-to-use cleaners will achieve nationwide acceptance.

The Company also worked on development of an Institutional and Industrial (I&I)
product line for itself and SAFS. The heavy-duty cleaners and degreasers
designed for use by commercial industries and municipal government agencies have
attained initial success on a regional basis as evidenced by re-orders.

EMPLOYEES
---------

The Company currently has 11 full-time non-union employees at the corporate
headquarters in Broussard, Louisiana. The Company periodically retains the
services of qualified consultants relative to marketing projects, technical
support and product development.

ENVIRONMENTAL COMPLIANCE AND ENVIRONMENTAL MATTERS
--------------------------------------------------

The Company's chemical business is subject to federal and state requirements
regulating the discharge of materials into the open environment. These
regulations affect the Company's competition as well. Few of the Company's raw
materials and none of the Company's finished products are reportable under
federal or state guidelines. The cost of compliance with these regulations is
not considered material and no capital expenditures are anticipated for
compliance with regulations.

The soil washing and MRP operations, in most cases, require sub-contract
services to separate contaminants from soil or drilling mud and do not provide
for the disposal of those contaminants. The Company is therefore not exposed to
liabilities with respect to hazardous waste handling or disposal. Hazardous
waste handling is usually handled by the prime contractor.

Item 2. Properties
------------------

The Company's consolidated executive office, blending and warehouse facilities
are located at 119 Ida Road, Broussard, Louisiana 70518. The Company leases
approximately 16,000 square feet under a non-cancelable five year lease from
Crossroads Investments, L.L.C. at $6,000 per month with an option to renew for
an additional five years at an increase of $1,200 per month.

Item 3. Legal Proceedings.
--------------------------

There is no material, pending litigation significant to the business to which
the Company is a party or against any of its Officers or Directors as a result
of their capacities with the Corporation.

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

No matters were submitted to a vote of security holders of the Company during
the quarter ending August 31, 1998. Annual meetings of the shareholders of the
Company are held in accordance with Colorado law.


                                       8
<PAGE>


                                     PART II

Item 5. Market for Company's Common Equity and Related Stockholder Matters.
---------------------------------------------------------------------------

PRINCIPAL MARKET OR MARKETS
---------------------------

The Company's common stock is quoted in the "OTC Bulletin Board" maintained by
National Quotation Bureau, Inc. On October 31, 1999, there were 13 market makers
in the Company's securities and the closing bid quotation was $.110. The
following table sets forth the high and low bid quotations for the Company's
Shares, as reported in the "OTC Bulletin Board."

                                                       BID
                                             -------------------------
          QUARTER
           ENDED                              LOW               HIGH
           -----                              ---               ----

      August 31, 1997                        $ .51            $   .75
      November 30, 1997                      $ .66            $   .844
      February 29, 1998                      $ .375           $   .75
      May 31, 1998                           $ .4375          $   .75
      August 31, 1998                        $ .25            $   .51
      November 30, 1998                      $ .25            $   .4375
      February 28, 1999                      $ .18            $   .25
      May 31, 1999                           $ .29            $   .23
      August 31, 1999                        $ .24            $   .31

These quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commissions and may not represent actual transactions.

APPROXIMATE NUMBER OF HOLDERS OF THE COMPANY'S SECURITIES
---------------------------------------------------------

On October 31, 1999, there were 242 registered holders and approximately 1,100
beneficial owners of the Company's common stock held in street name at brokerage
houses. As of October 31, 1999, there were 17 holders of the Company's series B
preferred stock and 22 holders of the Company's series C preferred stock.

DIVIDENDS
---------

Holders of common stock are entitled to receive dividends declared by the
Company's Board of Directors. The Company has not yet paid any dividends on the
Company's common stock and the Board of Directors of the Company presently
intend to pursue a policy of retaining earnings, if any, for use in the
Company's operations and to finance expansion of its business.

Holders of the Company's series B preferred stock are entitled to a dividend of
$.07 per share payable in cash or the Company's common stock payable on June 30
of each year until June 30, 2001.

Holders of the Company's series C preferred stock are entitled to a dividend of
$.0525 per share payable in cash or the Company's common stock payable on June
30 of each year until June 30, 2001.

                                       9

<PAGE>


Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations
-------------

This Annual Report on Form 10-KSB includes certain statements that may be deemed
to be "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. All statements, other than statements of historical
facts, included in this Form 10-KSB that address activities, events or
developments that the Company expects, believes or anticipates will or may occur
in the future, including such matters as future capital, research and
development expenditures (including the amount and nature thereof), repayment of
debt, business strategies, expansion and growth to the Company's operations and
other such matters are forward-looking statements. These statements are based on
certain assumptions and analyses made, by the Company in light of its experience
and its perception of historical trends, current conditions, expected future
developments and other factors it believes are appropriate in the circumstances.
Such statements are subject to a number of assumptions, risks and uncertainties,
including general economic and business opportunities (or lack thereof) that may
be presented to and pursued by the Company, the ability of the Company to fund
continuing operations from cash flow or funds raised through loans or equity
financings, changes in laws or regulations and other factors, many of which are
beyond the control of the Company. Readers are cautioned that any such
statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the forward-looking
statements.

RESULTS OF OPERATIONS
---------------------

Fiscal 1999 Compared to Fiscal 1998
-----------------------------------

Net sales increased $274,249 or 23%, to $1,451,754 from $1,177,505. The increase
was due primarily to an increase in solvent replacement and cleaning product
sales relative to the U.S. Air Force contract. The U.S. Air Force Mil. Spec.
MIL-C-87937B, Type II to which the Company is qualified is being phased out and
replaced with MIL-PRF-87937C, Type IV, a product that qualifies to a more rigid
cleaning efficiency test. In Fiscal 1999, the Company developed a product that
conformed to the Mil. Spec. MIL-PRF-87937C, Type IV and was awarded contracts
relative to the Type IV cleaning compound. Currently, the Company has an
outstanding formal bid package to the U.S. Air Force for a new three year
aircraft cleaning supply contract.

Net sales generated from the Company's oilfield line of products decreased to
$254,857 from $328,641 due to the then depressed conditions of the oil and gas
industry. However, management expects due to increased production and
exploration activities in the Gulf Coast that future sales of its oilfield
cleaners, degreasers and specialized chemicals will increase over the next two
quarters.

Net sales of firefighting and spill response agents increased 38% to $385,022
from $279,779. The increase in sales is directly related to the introduction of
the Company's U.L. listed environmentally safe fire foam products to
distribution networks in the eastern United States.

Cost of sales increased $157,855 or 19%, from $850,109 to $1,007,964. As a
percentage of sales, cost of sales decreased from 72% to 69%. The decrease in
cost of sales as a percentage of sales relates directly to the increased amount
of sales being generated from the Company's higher gross margin products. The
19% increase in cost of sales was due primarily to the increase in the Company's
net sales for Fiscal 1999.

                                       10

<PAGE>


Total operating expenses decreased from $1,121,353 to $866,927, or 23%. Total
operating expenses decreased due to eliminating outside consultants and
management's efforts to limit sales related expenses.

Research and Development costs decreased from $461,090 to $187,528. In fiscal
year 1999, the Company focused its efforts and funds on the development of a
line of products for SafeScience, Inc. All chemical development costs were borne
by the Company's technical staff, therefore no outside consultants, travel or
related expenses were necessary.

Net loss for fiscal 1999 was $646,087, a decrease of $729,445 from the net loss
of $1,375,532 incurred during fiscal 1998. The decreased net loss was due
primarily to the decrease in Research and Development costs and the commencement
of sales to SafeScience, Inc.

CAPITAL RESOURCES AND LIQUIDITY
-------------------------------

The Company considers cash and cash equivalents as its principal measure of
liquidity. These items total $4,858 at August 31, 1999. The Company's short term
debt totals $223,444 with total debt being $434,606. The Company's primary cash
requirements are for operating expenses, particularly Research and Development
expenses, raw material purchases and capital expenditures. Since the Company
commenced operations, it has incurred recurring losses and negative cash flows
from operations. The Company did not have sufficient working capital available
as of August 31, 1999, to maintain operations at their current levels. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. The Company's ability to continue as a going concern is dependent
upon obtaining additional capital investments or generation of adequate sales
revenue and profitability from operations.

To obtain additional capital, the Company has the option to sell 1 million
common shares at an undetermined price per share. These shares are remaining
from 2 million shares authorized for sale to accredited and sophisticated
investors by the Company's board of directors in January 1998. For immediate
capital requirements, the Company expects to negotiate loans from board of
director members and major shareholders until sufficient funds are generated
from operations or the financial instruments discussed above are implemented. As
of November 30, 1999, the Company had a cash balance of $3,100. The Company is
in the process of implementing a rights offering to raise approximately $600,000
to sustain operations until such time as sales generated revenues support
continuing operations.

During the last two years, the Company invested funds in a unique technology for
recovering barite and oil from spent drilling mud. The Company, working on
location in Colombia with M-I Overseas Limited, successfully completed the first
phase of its oil based mud processing application. "Base Fluid Destruction"
(BFD) is a version of MRP, a proprietary process for recovering barite and oil
from spent drilling muds. BFD was demonstrated for a major oil exploration and
production company. Based upon the success of this application, the Company was
requested to expand its process to include the treatment of the water/solids
phase that remains after initial processing. No estimate of revenues is possible
at this stage of development because the results of this technology have to be
commercially explored.

The Company's current acquisition of six (6) additional UL listings for its fire
foam products gives the Company an opportunity to gain a significant market
share in the municipal fire sector and airport fire fighting markets. The
Company also developed a Class "A" foam used for extinguishing wildland and
structural fires. The Company plans to obtain approval for use in the forestry
service market.

                                       11

<PAGE>


The Company has been contracted to furnish products to a corporation,
SafeScience, Inc., that has entered the I&I and household goods markets. With
the installation of a high-speed bottling unit provided by SafeScience in April
1999, immediate revenues totaling approximately $75,000 were generated by sales
to SafeScience. The Company has received purchase orders to furnish an
additional $300,000 of products for the household goods and I&I lines. The
SafeScience product line now encompasses over twenty (20) products for use in
both marketplaces. The Company anticipates a steady increase in the amount of
revenues generated by this contract as SafeScience, Inc. enters the industrial
market in a focused manner, while continuing to develop and expand existing
consumer product distribution accounts.

On September 1, 1999, the Company and SafeScience entered into an exclusive
License Agreement concerning certain proprietary formulations developed by the
Company and produced exclusively for SafeScience. Terms of the License Agreement
provide for SafeScience to provide confidential access to these formulations to
third party manufacturers for the purpose of manufacturing large volumes of
finished goods for resale. This arrangement allows SafeSciecne to outsource much
greater product blending capacities than the Company can provide with its
existing facilities. A provision of the License Agreement grants a royalty to
the Company based upon net sales of SafeScience products.

Management believes that the sources of funds and anticipated increases in sales
volume discussed above will enable the Company to sustain its current operations
and meet its short term obligations in fiscal 2000. As sales volumes of the
Company's fire foam product line and industrial chemicals increase, the Company
expects cash flow from operations in fiscal 1999 to improve, although no
assurances can be made.

During 1998, the Company developed a plan to upgrade its primary information
systems to be Year 2000 compliant. The Company does not expect the cost of the
upgrade to be material to its financial condition or business operations.
Through August 31, 1999, the Company has not incurred significant costs
associated with the Year 2000. The Company anticipates that the necessary
upgrades will be in place by December 15, 1999.

The Company is in the process of evaluating compliance with the Year 2000 by its
primary suppliers and customers; however the Company does not believe its
business or operations would be adversely impacted if its suppliers or customers
were not Year 2000 compliant.

Item 7. Financial Statements and Supplementary Data.
----------------------------------------------------

The financial statements and schedules are filed as part of this annual report
beginning on page F-1.

Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
--------------------

On November 8,1999, Delta-Omega Technologies, Ltd. (the "Company")engaged
Broussard, Poche, Lewis & Breaux, L.L.P. to replace Arthur Andersen LLP ("Arthur
Andersen") as the Company's independent accountants to audit the Company's
consolidated financial statements for the year ended August 31, 1999. Arthur
Andersen was dismissed as the Company's independent accountants on the same
date. The Company's Board of Directors approved the change in the Company's
independent accountants.

                                       12

<PAGE>


The Arthur Andersen  reports on the Company's  financial  statements for the two
fiscal years ended August 31, 1998 and 1997 were modified as to the  uncertainty
of the Company's ability to continue as a going concern.

 In connection with its audits for the two most recent fiscal years ended August
31, 1998 and 1997 and through November 8, 1999, there have been no disagreements
with  Arthur  Andersen  on any matter of  accounting  principles  or  practices,
financial  statement   disclosure,   or  auditing  scope  or  procedure,   which
disagreements,  if not resolved to the  satisfaction of Arthur  Andersen,  would
have  caused them to make  reference  thereto in their  report on the  financial
statements for the years ended August 31, 1998 and 1997.

During the Company's two most recent fiscal years ended August 31, 1998 and 1997
and through November 8, 1999, there have been no "reportable events" (as defined
in Regulation S-K Item 304(a)(1)(v)).

                                       13
<PAGE>


                                    Part III

Item 9. Directors, Executive Officers, Promoters and Control Persons of the
Company
-------

Information concerning the Directors and Executive Officers of the Company is
hereby incorporated by reference to the Company's definitive proxy statement
which will be filed with the Commission within 120 days after the close of the
fiscal year.

Item 10. Executive Compensation
-------------------------------

Information concerning management remuneration is hereby incorporated by
reference to the Company's definitive proxy statement which will be filed with
the Commission within 120 days after the close of the fiscal year.

Item 11. Security Ownership of Certain Beneficial Owners and Management.
------------------------------------------------------------------------

Information concerning security ownership of certain beneficial owners and
management is hereby incorporated by reference to the Company's definitive proxy
statement which will be filed with the Commission within 120 days after the
close of the fiscal year.

Item 12. Certain Relationships and Related Party Transactions
-------------------------------------------------------------

Information concerning certain relationships and related party transactions is
hereby incorporated by reference to the Company's definitive proxy statement
which will be filed with the Commission within 120 days after the close of the
fiscal year.

                                       14
<PAGE>


                                     PART IV

Item 13. Exhibits
-----------------

     (a) The following documents are filed as part of this report:

        1. Financial Statements

            The consolidated  financial  statements filed as part of this report
            are as listed in the Index to Financial Statements on page F-1 which
            immediately precedes such statements.

        2. Listing of Exhibits.
<TABLE>
<CAPTION>

                  Exhibit
                    No.                 Description                                 Location
                  -------               -----------                                 --------

                 <S>                  <C>                                       <C>
                     3              Articles of Incorporation                   Incorporated by
                                    and Bylaws                                  reference to Exhibit
                                                                                No. 3 to the Company's
                                                                                Registration Statement
                                                                                (No. 0-24506)

                     4.1            Designation of Series B                     Incorporated by Reference
                                    Convertible Preferred Stock                 Ex. 4.2 to Registration
                                                                                Statement S-2 (no. 33-90604)

                     4.2            Designation of Series C                     Filed herewith
                                    Convertible Preferred Stock

                    10              SafeScience License Agreement               Filed herewith

</TABLE>

     (b) No Reports on Form 8-K were filed during the last quarter of the period
covered by this Report.

                                       15

<PAGE>


                  Delta-Omega Technologies, Inc. and Subsidiary
                  ---------------------------------------------
                   Index to Consolidated Financial Statements



Independent Auditors' Report.................................................F-2

Consolidated Balance Sheet, August 31, 1999..................................F-3

Consolidated Statements of Operations for the years
ended August 31, 1999 and 1998...............................................F-4

Consolidated Statements of Changes in
Shareholders' Equity for the years ended
August 31,1999 and 1998......................................................F-5

Consolidated Statements of Cash Flows for the years
ended August 31, 1999 and 1998...............................................F-6

Notes to Consolidated Financial Statements...................................F-7
<PAGE>


                          INDEPENDENT AUDITOR'S REPORT



To the Board of Directors and Stockholders of Delta-Omega Technologies, Inc.:

We have audited the balance sheet of Delta-Omega Technologies, Inc. (a Colorado
corporation) and subsidiary as of August 31, 1999, and the related statements of
income, retained earnings and cash flows for each of the year then ended. 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 audit. The financial statements of Delta-Omega Technologies, Inc. as of
August 31, 1998, were audited by other auditors whose report dated October 22,
19998, on those statements included an explanatory paragraph that described the
going concern issues relative to recurring losses and negative cash flows which
have continued since commencement of operations discussed in Note A to the
financial statements.

We conducted our audit 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 1999 financial statements referred to above present fairly,
in all material respects, the financial position of Delta-Omega Technologies,
Inc. as of August 31, 1999, and the results of its operations and cash flows for
the year then ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A to the
financial statements, the Company has experienced recurring losses and negative
cash flows since commencement of operations. As of August 31, 1999, the Company
does not have adequate working capital in place to support its current level of
operations. Those conditions raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans to secure additional working
capital and improve operating results are also described in Note A. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

                                     Broussard, Poche, Lewis and Breaux LLP

                                    /s/  Broussard, Poche, Lewis and Breaux LLP

Lafayette, Louisiana
November 21, 1999


                                       F-2


<PAGE>

                  Delta-Omega Technologies, Inc. and Subsidiary
                  ---------------------------------------------
                           Consolidated Balance Sheet


                                     ASSETS
                                     ------

                                                                    August 31,
                                                                       1999
                                                                   ------------
Current assets
 Cash and equivalents                                              $      4,858
  Accounts receivable
     Trade, net of allowance for doubtful accounts                      184,942
     Accounts Receivable - factored                                     162,248
     Employees                                                            4,186
  Inventories                                                           223,693
  Prepaid expenses                                                       25,595
     Total current assets                                               605,522
Property and equipment, net of accumulated depreciation                 215,516
Intangible assets, net of accumulated amortization                       98,956
Other assets                                                             10,490
                                                                   ------------
     Total assets                                                  $    930,484
                                                                   ============


                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------

Current liabilities
  Accounts payable
     Trade creditors                                                    289,736
     Others                                                              19,996
  Customer prepayments                                                   32,046
  Current maturities of long-term debt and leases                        26,444
  Advance from factor                                                   226,619
  Notes payable-board of director loans                                 197,000
  Accrued expenses                                                       35,126
                                                                   ------------
    Total current liabilities                                           826,967
Long-term debt and leases, net of current maturities                    211,162
    Total liabilities                                                 1,038,129
Shareholders' equity
  Convertible, 7 percent cumulative,
    non-participating  preferred stock, $.001
    par value, shares authorized, 40,000,000;
    issued and outstanding 1,335,000 series B,
    2,396,667 series C                                                    3,732
  Common stock, $.001 par value,
    shares authorized, 100,000,000;
    issued and outstanding, 15,918,319                                   15,918
  Additional paid-in capital                                         11,804,875
  Retained deficit                                                  (11,932,170)
                                                                   ------------
     Total shareholders' equity                                        (107,645)
                                                                   ------------
        Total liabilities and shareholders' equity                 $    930,484
                                                                   ============






           See accompanying notes to consolidated financial statements

                                      F-3

<PAGE>


                  Delta-Omega Technologies, Inc. and Subsidiary
                  ---------------------------------------------
                      Consolidated Statements of Operations


                                                       Years ended August 31,
                                                   ----------------------------
                                                       1999            1998
                                                   ------------    ------------

Net product sales                                  $  1,451,754    $  1,177,505

Cost of sales                                         1,007,964         850,109
                                                   ------------    ------------

        Gross profit                                    443,790         327,396

Costs and expenses
    Selling, general and administrative                 866,927       1,121,353
    Research and development                            187,528         461,090
    Impairment of Long-Lived Assets                         -0-         121,757
                                                   ------------    ------------
                                                      1,054,455       1,704,200
                                                   ------------    ------------
        Operating loss                                 (610,665)     (1,376,804)

Other operating income, net                              14,727           8,545
Interest expense                                        (50,149)         (7,273)
                                                   ------------    ------------
    Net loss                                           (646,087)     (1,375,532)

Preferred dividend declared                            (219,275)       (234,112)
                                                   ------------    ------------

Net loss available to common shareholders          $   (865,362)   $ (1,609,644)
                                                   ============    ============

Weighted average shares outstanding                  15,150,211      13,798,653

Basic and diluted earnings per common share        $       (.06)   $       (.12)
                                                   ============    ============







          See accompanying notes to consolidated financial statements.

                                      F-4



<PAGE>
<TABLE>
<CAPTION>

                                   Delta-Omega Technologies, Inc. and Subsidiary
                                   ---------------------------------------------
                            Consolidated Statements of Changes in Shareholders' Equity

                                                                                             Additional
                                                          Common          Preferred           Paid in           Retained
                                                           Stock            Stock             Capital            Deficit
                                                       ------------      ------------       ------------      ------------

<S>                                                     <C>               <C>                <C>               <C>
Balance at September 1, 1997                           $     13,230      $      4,062       $ 10,562,642      $ (9,457,164)

Issued dividend for Series B & C Preferred                      376              --              233,736          (234,112)

Issuance of common stock for services rendered                   73              --               45,318              --

Conversion of Convertible Preferred Stock                       330              (330)              --                --

Issuance of common stock for private                            987              --              738,826        (1,375,532)
placement memorandum

Net loss                                                       --                --                 --          (1,375,532)
                                                       ------------      ------------       ------------      ------------

Balance at August 31, 1998                                   14,996             3,732         11,580,522       (11,066,808)

Issuance of stock options for services rendered                --                --                6,000              --

Issued dividend for Series B & C Preferred                      922              --              218,353          (219,275)

Net loss                                                       --                --                 --            (646,087)
                                                       ------------      ------------       ------------      ------------

Balance at August 31, 1999                             $     15,918      $      3,732       $ 11,804,875      $(11,932,170)
                                                       ============      ============       ============      ============








                            See accompanying notes to consolidated financial statements


                                                        F-5


<PAGE>

                                     Delta-Omega Technologies, Inc. and Subsidiary
                                     ---------------------------------------------
                                         Consolidated Statements of Cash Flows


                                                                                       Years Ended August 31,
                                                                                 ---------------------------------
                                                                                    1999                  1998
                                                                                 -----------            ----------
Cash flows from operating activities:
  Net loss                                                                       $  (646,087)           $(1,375,532)
    Adjustment to reconcile net loss to net cash
    used in operating activities:
    Depreciation and amortization                                                    111,204                201,880
    (Gain)/Loss on sale and disposal of property & equipment                         (13,130)                 1,408
    Bad debt expense                                                                     -0-                  1,318
    Issuance of common stock for services                                              6,000                 45,391
    Asset impairment                                                                     -0-                121,757
    (Increase) decrease in:
    Accounts receivable                                                             (232,418)               204,320
    Inventories                                                                      (13,691)                 8,974
    Prepaid expenses                                                                     843                 (1,451)
    Other receivables                                                                  6,814                  4,041
    Other assets                                                                         128                   (175)
    Increase (decrease) in:
    Accounts payable                                                                 237,513                (88,623)
    Accrued liabilities                                                                   64                (10,265)
    Other liabilities                                                               (101,570)               (63,121)
                                                                                 -----------            -----------
          Total adjustments                                                            1,757                425,454
                                                                                 -----------            -----------
        Net cash used in operating activities                                       (644,330)              (950,078)

Cash flows from investing activities:
   Property acquisitions                                                             (50,832)               (53,333)
   Patent costs                                                                       (2,024)                (2,000)
   Proceeds from sale of property and equipment                                       15,850                  2,500
                                                                                 -----------            -----------
           Net cash used in investing activities                                     (37,006)               (52,833)


Cash flows from financing activities:                                                (63,896)                63,896
   Bank overdraft                                                                    470,654                 21,650
   Proceeds from borrowing                                                           (24,857)               (18,348)
   Principal payments of long-term debt and capital leases                               -0-                739,813
   Proceeds from issuance of preferred stock                                         (73,000)                   -0-
   Proceeds from factoring                                                       -----------            -----------
   Principal payments on related party notes                                         535,520                807,011

           Net cash (used in) provided by financing activities                      (145,816)              (195,900)
                                                                                 -----------            -----------

Net increase (decrease) in cash and cash equivalents                                 150,674                346,574
                                                                                 -----------            -----------

Cash and cash equivalents, beginning of period                                   $     4,858            $   150,674
                                                                                 ===========            ===========




                           See accompanying notes to consolidated financial statements.

                                                        F-6
</TABLE>



<PAGE>


                  Delta-Omega Technologies, Inc. and Subsidiary
                  ---------------------------------------------
                   Notes to Consolidated Financial Statements
                                 August 31, 1999

Note A: Summary of Significant Accounting Policies
        ------------------------------------------

          Nature of organization
          ----------------------
          The Company is involved in developing, manufacturing and marketing
          environmentally safe specialty chemicals for a variety of industrial
          and military uses. These patented, patent pending or proprietary
          products are deemed to be environmentally safe because they are
          biodegradable and formulated without chemicals considered hazardous
          under federal regulations. The Company's products replace hazardous,
          flammable, toxic and ozone-depleting chemicals in a broad range of
          applications serving Industrial, Institutional, Emergency Response and
          Soil Remediation markets. The Company recently added a patent pending
          product line of downhole chemicals for the cleaning of tubing and
          casing required in the drilling of oil and natural gas wells. The
          Company's sales are primarily concentrated in the southeastern United
          States.

          Basis of presentation
          ---------------------
          Since the Company commenced operations, it has incurred recurring
          losses and negative cash flows from operations. The Company does not
          have sufficient working capital available as of August 31, 1999, to
          maintain operations at their current levels. These factors raise
          substantial doubt about the Company's ability to continue as a going
          concern. The Company's ability to continue as a going concern is
          dependent upon obtaining additional capital investments or generation
          of adequate sales revenue and profitability from operations. The
          financial statements do not include any adjustments relating to the
          recoverability and classification of asset carrying amounts or the
          amount and classification of liabilities that might result should the
          Company be unable to continue as a going concern.

          To obtain additional capital, the Company has the option to sell 1
          million common shares at an undetermined price per share. These shares
          are remaining from 2 million shares authorized for sale to accredited
          and sophisticated investors by the Company's board of directors in
          January 1998. For immediate capital requirements, the Company expects
          to negotiate loans from board of director members until sufficient
          funds are generated from operations or the financial instruments
          discussed above are implemented. As of November 30, 1999, the Company
          had a cash balance of $3,100. The Company is in the process of
          implementing a rights offering to raise approximately $600,000 to
          sustain operations until such time as sales generated revenues support
          continuing operations.

          Management believes that the sources of funds discussed above will
          enable the Company to sustain its operations and meet its obligations,
          although there can be no assurance that this will be done.

          Revenue recognition
          -------------------
          Revenue for sales of specialty chemicals is recognized when title to
          the finished product has passed and billing for the product has
          occurred.

          Inventories
          -----------
          Inventories consist of raw materials, finished goods and containers
          and are stated at the lower of cost or market using the first-in,
          first-out (FIFO) method of accounting.

          Property, equipment and depreciation
          ------------------------------------
          Property and equipment is stated at cost and depreciated using the
          straight-line method over their useful lives which is 3 to 7 years for
          furniture and equipment and 5 years for vehicles.

          Intangible assets and amortization
          ----------------------------------
          The Company's policy is to amortize its licensing rights to its
          patented products over a 5-year period. Patent costs are capitalized
          and amortized over the life of the patent when granted. The Company

                                      F-7

<PAGE>


          periodically assesses the recoverability of the unamortized balance
          based on expected future profitability and undiscounted future cash
          flows related to the patents and their contribution to overall
          operations of the Company.

          Income taxes
          ------------
          Income taxes are accounted for in accordance with the provisions of
          SFAS No. 109 "Accounting for Income Taxes". Under this statement,
          deferred income taxes are provided for by the asset and liability
          method.

          Loss per common share
          ---------------------
          The net loss per common share has been computed on the basis of the
          weighted average number of shares outstanding during each period.
          Common stock equivalents outstanding were not considered in the
          computation of loss per share because their effect would be
          antidilutive.

          Cash equivalents
          ----------------
          The Company considers all highly liquid investments purchased with an
          original maturity of three months or less to be cash equivalents.

          The use of estimates
          --------------------
          The preparation of financial statements in conformity with generally
          accepted accounting principles requires management to make estimates
          and assumptions that affect the reported amounts of assets and
          liabilities and disclosure of contingent 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.

          Shares issued for non-cash consideration
          ----------------------------------------
          Stock and stock options issued for services are valued at the vendor's
          regular billing rates or at the value of the stock issued, whichever
          is more clearly determinable at date of issuance. Stock issued for
          property is valued at the fair market value of the stock issued or the
          fair market value of the property, whichever is more readily
          determinable.

          Credit concentration
          --------------------
          During fiscal years 1999 and 1998, one customer, the U.S. Air Force,
          accounted for twenty-four percent (24%) and fourteen (14%) percent of
          the Company's net sales, respectively. In addition, one customer
          accounted for sixteen (16%) percent of the Company's fiscal 1999 net
          sales

          Reclassifications
          -----------------
          Certain prior year balances have been reclassified to conform with
          current year presentation.

          Accounting pronouncement
          ------------------------
          During 1997, the Financial Accounting Standards Board issued Statement
          of Financial Accounting Standards (SFAS) No. 128, "Earnings per
          Share," SFAS No. 129, "Disclosure of Information about Capital
          Structure," SFAS No. 130, "Reporting Comprehensive Income," and SFAS
          No. 131, "Disclosures about Segments of an Enterprise and Related
          Information." SFAS No. 128, which is effective for reporting periods
          ending after December 15, 1997, has been adopted by the Company and
          the impact on the Company s earnings per share was not material. SFAS
          No. 129, SFAS No. 130 and SFAS No. 131, which are effective for
          reporting periods ending after December 15, 1997, have been adopted,
          and all required disclosures are presented in the Company's
          consolidated financial statements included herein. However, the
          Company had no comprehensive income during the year presented in these
          financial statements.

Note B: Related party transactions
        --------------------------

          Accrued Expenses
          ----------------
          Accrued Expenses includes a $15,000 balance due to the Chairman of the
          Board for expenses incurred during fund raising efforts in fiscal
          1997. The $15,000 balance due will be paid in the form of common

                                      F-8

<PAGE>


          shares. The number of common shares to be issued will be calculated
          using the average stock price during the time that the expenses were
          incurred. The expenses incurred are reflected in the selling, general
          and administrative section in the accompanying consolidated statements
          of operations. ' Notes payable-Board of Director loans

          During fiscal year 1999, the Company negotiated nine (9) promissory
          notes totaling $270,000 with related parties, of which $225,000 were
          with members of the board of directors, in order to maintain its
          current level of operations. Each promissory note bears an interest
          rate of 8.25% per annum. These notes are short-term and were due
          during the fiscal year 1999. Extensions were negotiated on these notes
          which are included as current liabilities in the balance sheet.
          Related party notes totaled $197,000 as of August 31, 1999.

          The Company expects to repay these loans with funds generated from
          continuing operations or proceeds from the sale of common stock
          previously authorized by the board of directors; however these
          directors may elect to convert the debt into equity.

Note C: Accounts and notes receivable
        -----------------------------

          In February 1999, the Company entered into a factoring agreement with
          Texas Capital Funding, Inc. ("TCF"). The Company agreed to sell,
          assign, transfer, convey and deliver submitted accounts receivable
          with recourse to TCF and TCF agreed to purchase and accept delivery
          from the Company. TCF agreed to transfer funds to the Company equal to
          80% of the invoice amount submitted. The remaining 20% is retained by
          TCF until the submitted invoices are collected in full. Fees for the
          service rendered by TCF are based upon the collection period of each
          submitted invoice. Based upon the collection of submitted accounts
          receivable, fees incurred averaged between 3% and 20% of the invoiced
          amount with an average of 5% as of August 31, 1999. Fees incurred are
          classified as interest expense and reflected in the consolidated
          statements of operations. Interest expense related to the factoring of
          accounts receivable for the current fiscal year totaled $30,725.
          Repayment of any advances is guaranteed by two of the Company's
          directors.

          Accounts and Notes Receivable at the end of August 31, 1999 consists
          of the following:

                  Accounts Receivable, Trade                 $194,942
                  Accounts Receivable, Factored               162,248
                  Allowance for Doubtful Accounts             (10,000)
                                                             --------

                                          Total              $347,190
                                                             ========

          Trade receivables are shown net of an allowance for doubtful accounts
          of $10,000.


Note D: Inventories
        -----------

            Inventories at August 31, 1999 consisted of the following:

            Raw materials                                    $132,394
            Finished goods                                     50,227
            Containers                                         14,754
            Consigned inventory                                26,318
                                                             --------
                  Total                                      $223,693
                                                             ========

                                      F-9

<PAGE>


Note E: Property and equipment
        ----------------------

          Major classes of property and equipment at August 31, 1999 consisted
          of:

            Furniture and equipment                        $  637,749
            Leasehold improvements                             29,292
                                                           ----------
                     Total property and equipment             667,041
            Less:  accumulated depreciation                  (451,525)
                                                           ----------
                                                           $  251,516
                                                           ==========

          Depreciation expense was $102,284 and $168,957 for years ended August
          31, 1999 and 1998, respectively.

          During fiscal year ended August 31, 1998, the Company recorded a
          $121,757 impairment write-down of its soil washing equipment and fines
          treatment unit in accordance with Statement of Financial Accounting
          Standards (SFAS) No. 121. The Company wrote-down these pieces of
          equipment since they appeared to have no revenue generating potential
          based upon recent significant adverse changes in the environmental
          consulting and remediation business. Therefore, the Company estimated
          no future undiscounted cash flows from the soil washing equipment and
          fines treatment unit. Thus, as prescribed by SFAS 121, the carrying
          value of these pieces of equipment was reduced to the estimated
          discounted future cash flows which is zero.

          The charge for impairment is included in the selling, general and
          administrative expense section in the fiscal year 1998 accompanying
          consolidated statements of operations.

Note F: Intangible assets
        -----------------

          Intangible assets at August 31, 1999 consisted of the following:

            Patent costs                                   $  143,318
            Less:  accumulated amortization                   (44,362)
                                                           ----------
            Net Intangible assets                          $   98,956
                                                           ==========

          Amortization expense was $8,920 and $33,265 for the years ended August
          31, 1999 and 1998, respectively. Fiscal year 1998 amortization expense
          includes $22,556 of capitalized patent costs written off that relate
          to the Company's soil washing process.


Note G: Long-term debt and lease obligations
        ------------------------------------

          Long-term debt at August 31, 1999, consisted of the following:

             Note payable to a corporation;  principal
              due two years from the effective date of
              May 14, 1999; interest due in quarterly
              installments at an interest rate of 8.25%                $150,000
            Note payable to a bank; principal and interest
              due in monthly installments at interest
              rates varying from 7.75% to 9.95%                          32,615
            Notes and capital leases payable to a
             corporation; principal and interest due in
             monthly installments at interest rates
             varying from 8.70 % to 14.00%                               54,991
                                                                       --------
          Total debt                                                    237,606
          Less:  current portion                                        (26,444)
                                                                       --------
          Long-term debt                                               $211,162
                                                                       ========

                                      F-10
<PAGE>



          Principal repayments on notes payable and capital leases required for
          the next five years are as follows:


                           2000                            $  26,444
                           2001                              179,185
                           2002                               21,119
                           2003                                7,248
                           2004                                3,610
                                                           ---------
                                    Total debt             $ 237,606
                                                           =========

          As of August 31, 1999, equipment under capital lease and the related
          accumulated amortization totaled $77,624 and $25,339, respectively.
          Amortization of assets recorded is included in depreciation and
          amortization expense.

          During the end of the third quarter of Fiscal 1999, the Company
          negotiated a $150,000 loan agreement with SafeScience, Inc. (SFAS).
          The note bears interest at a rate of 8.25% per annum on the
          outstanding principal amount of the note, and the interest shall be
          payable quarterly in arrears commencing three months after the date of
          the first of twelve semi-monthly advances. The principal sum of the
          note shall be due and payable two years from the effective date of May
          14, 1999.

          Collateral on this note is grant of the right and license to the
          exclusive access and use of the Product Formulas to SFAS for the sole
          purpose of satisfying SAFS' production demand as set forth in the
          Supply & Distribution Agreement between the Company and SFAS.

          Interest expense as of August 31, 1999 totaled $50,149.

Note H: Shareholders' equity
        --------------------

          In April 1999, the board of directors authorized an extension for the
          Preferred "B" stock of the Company from June 30, 1999 to June 30,
          2001.

          In the first quarter of fiscal 1998, the Company issued Baer &
          Company, L.L.C. 39,996 shares of $.001 par value common stock for
          expenses incurred from July 1996 through November 1997 while raising
          funds on behalf of the Company. 27,370 shares were issued at a price
          of $.43775 per share. The remaining 12,626 shares were issued at a
          price of $.6661 per share. The prices per share are based on the
          average of the bid and last trade value of the Company's stock during
          the period in which the fund raising expenses were incurred. Expenses
          for the fair value of the services provided were expensed as incurred.

          In January 1998, the Company's board of directors authorized selling
          up to 2 million shares of common stock at the best negotiated price.
          In March 1998, the Company sold 986,413 shares of the common stock
          through a special private placement solely to accredited and
          sophisticated investors at an offering price of $.75 per share. The
          remaining balance of the common shares, 1,013,587, were outstanding at
          August 31, 1999.

          The Company issued 33,333 shares of common stock at the special
          private placement offering price of $.75 per share to Global Strategy
          & Associates, James A. Wylie, Jr. in lieu of cash for consulting
          services rendered during the months of January, February and March,
          1998.

          Stock-based Incentive Compensation Plans
          ----------------------------------------
          In October 1995, Statement of Financial Accounting Standards No. 123
          ("SFAS 123"), "Accounting for Stock Based Compensation," was issued
          effective in fiscal year 1997 for the Company. Under SFAS 123,
          companies could either adopt a "fair valued based method" of
          accounting for stock-based incentive compensation plans, as defined,
          or may continue to use accounting methods as prescribed by APB Opinion
          No. 25. The Company has elected to continue accounting for its plan
          under APB Opinion No. 25.

                                      F-11

<PAGE>


          The Company's policy is to grant options to purchase common stock to
          directors, officers or key employees as part of an incentive program.
          In addition to the grants under this program, the Company grants
          options to purchase common stock to individuals as compensation for
          services rendered in lieu of cash. On January 17, 1991, the Company
          established a non-qualified stock option plan (the 1991 Plan) under
          which 1 million options to purchase common stock were made available.
          In fiscal year 1994, the Company amended the 1991 non-qualified stock
          option plan to authorize the issuance of an additional 600,000
          options. All options are non-compensatory and are issued at or above
          the market price on the date the option is granted.

          The Company's Compensation and Options Committee determines the term
          of each grant and when it becomes exercisable. No compensation expense
          has been recorded in connection with stock options as the exercise
          price of all options granted exceeded market price of the shares on
          the dates of the grants. The options expire three years from the date
          of grant.

          The following table summarizes the activity related to stock options:
<TABLE>
<CAPTION>


---------------------------------------------------------------------------------------------------------------
                                 Number                Number of             Range of              Weighted
                               of Options            Options Issued          Exercise               Average
                              Issued under              outside               Prices               Exercise
                                the Plan               The Plan                                     Price
---------------------------------------------------------------------------------------------------------------

Outstanding at
<S>                              <C>                    <C>               <C>     <C>                <C>
August 31, 1997                  509,000                1,739,371         $ .34 - $3.00              $0.89
Granted                               --                       --               --                      --
Exercised                             --                       --               --                      --
Forfeited                             --                 (102,619)        $2.10 - $3.00              $2.46
                                --------                ---------
Outstanding at
August 31, 1998                  509,000                1,636,752         $ .34 - $2.50              $0.80
Granted                               --                   25,000            $2.00                   $2.00
Exercised                             --                       --               --                      --
Forfeited                             --                 (200,888)        $ .75 - $1.00              $0.98
                                --------                ---------
Outstanding at
August 31, 1999                  509,000                1,460,864         $ .34 - $2.50              $0.85
--------------------------------------------------------------------------------------------------------------


          The following table summarizes information about stock options
          outstanding at August 31, 1999:

---------------------------------------------------------------------------------------------------------------
                    Options Outstanding                                             Options Exercisable
---------------------------------------------------------------------------------------------------------------
                                             Wgtd. Avg.        Wgtd. Avg.
        Range of           Number            Remaining          Exercise          Number           Wgtd. Avg.
        Exercise         Outstanding        Contractual           Price         Exercisable         Exercise
         Prices          At 8/31/99             Life                            at 8/31/99           Price
         ------          ----------             ----          ----------        ------------       ---------
    $0.34 - $0.99        1,625,567            1.5 years          $0.59          1,450,567            $0.58
    $1.00 - $1.99          105,630            1.0 years          $1.19            105,630            $1.19
    $2.00 - $2.50          238,667            1.2 years          $2.11            238,667            $2.12
---------------------------------------------------------------------------------------------------------------
</TABLE>

          The options exercisable at August 31, 1999 and 1998, respectively,
          were 1,794,864 and 1,970,752 with weighted-average exercises prices of
          $.81 and $.82, respectively.

          Stock Options Granted, Exercised and Forfeited
          ----------------------------------------------

          1999
          ----

          During fiscal year 1999, 200,888 stock options outside of the
          Company's Stock Option Plan expired. The exercise prices for these
          options range from $.75 to $1.00 per share. Additionally, the Company
          granted 25,000 stock options outside the Company's Stock Option Plan
          for consulting services rendered. The exercise price for these options
          is $2.00 per share.

                                      F-12

<PAGE>


          The Company's Board of Directors extended the expiration dates for
          7,500 stock options at $1.00 per share and 103,667 stock options at
          $2.00 per share for an additional three years from the original option
          expiration date.

          The fair value of each option grant is estimated on the date of grant
          using the Black-Scholes option-pricing model with the following
          weighted-average assumptions used for grants in 1999: a) no dividend
          yield, b) risk-free interest rate of 4.63%, c) expected contractual
          life of 3.4 years, d) expected volatility of 100%.

          Based on the above assumptions, the weighted-average grant-date fair
          value of each option granted during fiscal 1999 was $0.088.

          No employee options were granted in fiscal year 1999.

          1998
          ----

          During fiscal year 1998, 102,619 stock options outside of the
          Company's Stock Option Plan expired. The exercise prices for these
          options ranged from $2.10 to $3.00 per share.

          In December 1997, the Company's Board of Directors extended the
          expiration date for 40,000 stock options granted in April 1991 to a
          financial consultant for services rendered. The exercise period was
          extended for an additional three (3) years from the expiration date.

          No assumptions were necessary in fiscal year 1998 to calculate the
          fair value of each option grant as no options were granted.

          No employee options were granted in fiscal year 1998.

          1997
          ----

          The Company granted to employees 158,130 common stock options with
          exercise prices equal to or greater than the market price of the stock
          on the grant date. These options were issued in accordance with
          agreements entered into by the Company and each employee.

          The Company granted 53,130 stock options currently exercisable with an
          exercise price of $1.00 per share for technical services rendered
          during the period May 1, 1996 through June 30, 1997. These options
          expire during the period from January 31, 2000 through June 30, 2000.

          The Company granted 5,000 stock options currently exercisable with an
          exercise price of $1.00 per share in accordance with the terms of
          certain employment agreements. These options expire March 10, 2000.

          The Company granted 100,000 stock options not currently exercisable
          with an exercise price of $0.75 per share in accordance with the terms
          of certain employment agreements. The stock options become exercisable
          when certain performance parameters are met. The options expire June
          30, 2001.

                                      F-13

<PAGE>


          No compensation expense was recorded upon issuance of the 158,130
          options to employees in fiscal 1997 because the exercise price
          exceeded the market prices of the Company's common stock on the
          measurement date.

          The Company granted to non-employees 171,567 common stock options with
          exercise prices equal to or greater than the market price of the stock
          on the grant date.

          The Company granted 100,000 stock options, of which 25,000 are
          currently exercisable, with an exercise price of $0.51 per share
          pursuant to the terms of a consulting agreement. The 75,000 stock
          options currently non-exercisable become exercisable when certain
          performance milestones are achieved. None of the milestones in
          accordance with the terms of the agreement were achieved in fiscal
          1998. These options expire June 30, 2001.

          The Company granted 66,667 stock options currently exercisable with an
          exercise price of $0.65 in lieu of cash for consulting services
          rendered in accordance with the terms of a settlement agreement dated
          April 10, 1997. In connection with this grant, one director forfeited
          33,333 options with an exercise price of $2.00 per share previously
          granted to him. The options expire July 28, 2000.

          The Company granted 4,900 stock options currently exercisable with an
          exercise price of $0.75 in lieu of cash for marketing services
          rendered. The options expire January 31, 2000.

          The Company will continue to use stock option arrangements when
          possible to conserve its cash. The compensation costs for the related
          awards have been recognized in the period for which they were granted.
          Accordingly, since no instruments were issued, there is no pro forma
          information below.

          Had compensation cost for the Company's 1997 grants for stock-based
          employee compensation plans been determined consistent with SFAS 123,
          the Company's net loss, net loss applicable to common share owners,
          and net loss per common share for 1997 would approximate the pro forma
          amounts below:

                                                                       1997
            -------------------------------------------------------------------
                                                As Reported          Pro forma
                                                -----------          ---------
            Net  loss                           $(1,106,149)        $(1,169,793)

            Net loss applicable to
                 common share owners            $(1,345,197)        $(1,408,841)

            Net loss per common share           $      (.10)        $      (.11)
            -------------------------------------------------------------------

          The fair value of each option grant is estimated on the date of grant
          using the Black-Scholes option-pricing model with the following
          weighted-average assumptions used for grants in 1997: a) no dividend
          yield, b) risk-free interest rate of 6.39%, c) expected contractual
          life of 3.4 years, d) expected volatility of 101%. No assumptions were
          necessary in 1998 as no options were granted.

          Based on the above assumptions, the weighted-average grant-date fair
          value of each option granted during fiscal 1997 was $.40.

          1996
          ----

          The Company granted 757,555 common stock options with exercise prices
          that exceeds the market price of the stock on the grant date. These
          options were issued in accordance with terms of three agreements
          entered into by the Company. The first of these agreements granted the
          Company's Chairman of the Board a option to purchase 600,000 shares of
          common stock at an exercise price of $.34 per share in lieu cash
          compensation for services to be rendered. In connection with this
          agreement, 536,000 options with an exercise price of $.75 per share
          and 160,000 options with an exercise price of $2.00 per share were
          forfeited to the Company's 1991 non-qualified stock option plan.
          Another option agreement granted 150,055 stock options with an
          exercise price of $1.00 per share for technical consulting services
          rendered in lieu of cash compensation. The third option agreement
          granted 7,500 stock options with an exercise price of $1.00 per share
          in accordance with the terms an employment agreement. There was no
          compensation expense recorded upon issuance of these options in fiscal
          1996 because the exercise prices exceeded the market prices of the
          Company's common shares on the measurement date.

                                      F-14

<PAGE>


          1995
          ----

          The Company granted 497,000 common stock options with exercise prices
          that exceeds the market price of the stock on the grant date. These
          options were issued in accordance with terms of agreements entered by
          the Company and the Company's 1991 non qualified stock option plan.
          The Company granted an affiliate, controlled by a member of the
          Company's Board of Directors, options to purchase 137,000 shares of
          common stock at an exercise price of $2.00 per share in lieu cash for
          the first two (2) years of a lease for the Company's facility. In
          another agreement the Company granted options to purchase 155,000
          shares of common stock at exercise prices ranging from $.65 to $2.00
          per share in lieu of cash compensation for professional consulting
          services rendered. The Company also granted 205,000 stock options with
          exercise prices ranging from $.65 to $2.00 in accordance with the
          Company's 1991 Stock Option Plan. There was no compensation expense
          recorded upon issuance of these options in fiscal 1995 because the
          exercise prices exceeded the market prices of the Company's common
          shares on the measurement date.

          1994, 1993, 1992 and 1991
          -------------------------

          The Company granted 1,333,452 common stock options with exercise
          prices that exceeds the market price of the stock on the grant date.
          These options were issued in accordance with terms of agreements
          entered by the Company and the Company's 1991 non qualified stock
          option plan. The Company granted options to purchase 333,452 shares of
          common stock at exercise prices ranging from $.90 to $3.00 per share
          in lieu cash compensation for professional consulting services
          rendered. The Company also granted 1,000,000 stock options with an
          exercise price of $.75 per share in accordance with the Company's 1991
          Stock Option Plan. There was no compensation expense recorded upon
          issuance of these options because the exercise prices exceeded the
          market prices of the Company's common shares on the measurement date.

          Common Stock Purchase Warrants
          ------------------------------

          In the fourth quarter of Fiscal 1999, the Company issued warrants to
          purchase 380,000 shares of common stock at an exercise price ranging
          from $.25 to $.75 per share. The warrants were issued in connection
          with loan agreements negotiated by the Company in order to meet
          immediate cash requirements. The holders of these loan agreements were
          issued four warrants for each dollar loaned to the Company. The
          warrants expire three years from the effective date of the loan
          agreement.

          The Company's Class D Common Stock Purchase Warrants expired on
          December 15, 1993. The Company issued Class E Common Stock Purchase
          Warrants for every two Class D warrants that were outstanding on
          December 15, 1993. 1,062,917 Class E Common Stock Purchase Warrants
          were outstanding at August 31, 1997, each exercisable at $1.50 into
          one share of Common Stock until June 15, 1999. The Class E Common
          Stock Purchase Warrants are callable by the Company upon 30 days
          written notice to the holders. On January 8, 1998, the Company's board
          of directors authorized lowering the exercise price of the Class "E"
          Warrants to $.75 per share, and that a Warrant call be issued
          effective immediately. The holders had 30 days to respond and if the
          holders did not convert, the warrants expired after the 30 day period.
          None of the Class "E" Warrants were exercised during the conversion
          period, and the warrants expired on February 14, 1998.

          The Company issued 100,000 Placement Agent Common Stock Purchase
          Warrants to Gilford Securities, Inc. and 100,000 Placement Agent
          Common Stock Purchase Warrants to FBB Corp pursuant to Warrant
          Agreements dated December 2, 1994. Each Placement Agent Common Stock

                                      F-15

<PAGE>

          Purchase Warrant entitles the holder to purchase one share of the
          Company's common stock at the price of $1.00 per share, at any time
          until October 15, 1999. There is no provision for the call or
          redemption of the Placement Agent Common Stock Purchase Warrants.

          The Company issued Class Z Common Stock Purchase Warrants on September
          11, 1996 as part of the June 1996 private stock offering made solely
          to accredited investors. 2,471,667 Class Z warrants are outstanding at
          August 31, 1997, each exercisable at $.75 into one share of $.001
          Common Stock until June 30, 2001. The Class Z Common Stock Purchase
          Warrants are callable by the company upon thirty days written notice
          at any time on or after July 1, 2000 and at any time, notwithstanding
          the date, that the common stock of the company has a closing bid price
          on ten consecutive trading days of $2.00 per share or more.

          In January 1996, the Company issued a Warrant to purchase 600,000
          shares of common stock to the Chairman of the Board as remuneration
          for services rendered while holding that position. This Warrant may be
          exercised any time on or after January 2, 1996 but prior to the
          earlier to occur of (I) December 31, 2000, or (ii) a sale of
          substantially all of the stock or assets of the Company in a
          transaction in which it is not the surviving corporation. The exercise
          price is $2.00per share of common stock.

          The Company assigns no value to the Common Stock Purchase Warrants in
          the consolidated financial statements due to the immaterial value
          associated therewith.

          Stock Dividends - Series B and C
          --------------------------------
          The Series B and C Convertible Exchangeable Preferred Stock $.001 par
          per share has an established declared dividend of $.07 per annum per
          share, due on the 30th day of June of each year. The dividend
          accumulates if not paid when due. The dividend may be paid in cash or
          in stock at the sole discretion of the Board of Directors. If paid in
          stock, the common shares issued will be valued at the average bid
          price for the 30 days preceding the June 30 payment date. Once the
          price per share of common stock is determined, a number of common
          shares equal to the dollar value of the dividend which was to be paid
          on June 30, will be issued with any fractional shares of the common
          stock dividend rounded up.

Note I: Income taxes
        ------------

          At August 31, 1999, deferred taxes consisted of the following:

             Deferred tax assets, net operating
               loss carry forward                          $3,647,665
             Deferred tax liabilities, excess
               of book over tax depreciation                      558
             Valuation allowance                            3,648,223
                                                           ----------
             Net deferred taxes                            $        0
                                                           ==========
          The valuation allowance for deferred tax assets as of September 1,
          1998 was $3,404,964. The net change in the valuation allowance for the
          year ended August 31, 1999 was an increase of $243,259. The Company
          has net operating loss carryforwards of $10,708,379 available for
          federal income tax purposes which are available to offset taxable
          income through 2011. The Company has alternative minimum tax net
          operating loss credit carryforwards of approximately $4 million
          available for future periods. A valuation allowance of 100% of net
          operating loss carryforwards is maintained due to uncertainty in the
          Company's ability to generate income.

Note J: Employee compensation plan
        ---------------------------

          The Company presently offers no post-employment/post-retirement
          benefits which would be required to be reflected in its financial
          statements by SFAS No. 112 and SFAS No. 106, respectively.

          The Board of Directors has approved a management bonus pool which is
          based upon 12 percent of gross profits before taxes in excess of
          $500,000 annually. Bonuses are to be paid to persons filling
          designated positions. As of August 31, 1999, no bonuses had been paid
          under this plan.

                                      F-16

<PAGE>


Note K: Commitments
-------------------

          The Company is committed to renting its office space under a
          non-cancelable operating lease until February 28, 2001. Rental expense
          for the leased premise is $6,000 per month payable in cash from March
          1, 1996 through February 28, 2001 with a renewal option for five
          additional years at $7,200 per month. The facility is rented from a
          company controlled by a former member of the Company's board of
          directors. This rental agreement supersedes the original agreement
          dated October 1, 1993 that was amended November 19, 1993 and October
          15, 1994.

          Future minimum rental payments, payable in cash, under the lease are
          as follows:

                       Year ending                      Payable in
                        August 31,                         Cash
                        ----------                         ----

                           2000                          $ 72,000
                           2001*                           36,000
                                                         --------
                                                         $108,000
                                                         ========


          *The term of the operating lease expires February 28, 2001.

          Rent expense under this agreement during the fiscal year ended 1999
          totaled $72,000.

Note L: Contingencies
        -------------

          The Company signed a License Agreement in December of 1997 with
          Gradient Technology, Inc. (G.T.I.) for the development and
          construction of a mobile system capable of producing higher order
          commercial products from ammonium picrate, a form of explosive. The
          license agreement became the subject of arbitration with both parties
          filing claims with the American Arbitration Association relating to
          the amount of capital required to fulfill a U.S. government contract
          and the timing of the fund raising.

          On September 30, 1999, the Company and G.T.I. signed a Termination of
          License Agreement and Notice of Dismissal of Arbitration Action so
          that neither party retains any interest the other party may have
          conveyed to it by the license agreement and neither has any financial
          obligations to the other party under the license agreement. The
          Company and G.T.I. also agreed to dismiss the underlying arbitration
          case described above and agreed to terminate the relationship as it
          related to the U.S. government contract.

Note M: Disclosures about Reportable Segments
        -------------------------------------

          Delta-Omega Technologies, Ltd. has four reportable segments: solvents
          and cleaners, firefighting and spill response, oilfield and
          SafeScience. The solvents and cleaners division produce products to
          serve the aviation market and institutional and industrial markets.
          The firefighting and spill response division produce U.L. listed fire
          foam products that are non-toxic, non-hazardous and non-reportable.
          The oilfield division product products that cater to the needs of the
          oil and gas industry. The SafeScience line of products serves the
          consumer with products that are defined exclusively for safety-for
          human health and the environment.

          The accounting policies of the segments are the same as those
          described in the summary of significant accounting policies.
          Delta-Omega Technologies evaluates performance base on profit or loss
          from operations before income taxes and interest expense not including
          nonrecurring gains and losses.

          Delta-Omega Technologies' reportable segments are business units that
          offer different products. Each reportable segment is allocated a
          percentage of administrative costs not attributable to a particular
          segment according to the percentage of gallons sold by the segment.
          The reportable segments are managed separately because each business
          unit requires different technology and marketing strategies.

                                      F-17

<PAGE>
<TABLE>
<CAPTION>

                                    Delta-Omega Technologies, Inc.
                  Disclosure of Reported Segment Profit or Loss, and Segmented Assets
                                   Fiscal Year Ended August 31, 1999



                               Solvents &     Firefighting &      Oilfield         SafeScience          All
                               Cleaners       Spill Response                                           Other

<S>                             <C>           <C>                  <C>              <C>               <C>
Revenues from external
  Customers                    $ 633,921        $ 385,022         $ 254,857         $ 177,954         $    --
Intersegment revenues               --               --                --                --                --
Interest Revenue                    --               --                --                --                 851
Interest expense                    --               --                --                --              50,149
Depreciation and
    Amortization                  33,995           20,555            14,130            10,277            23,326
Segment Profit                    11,708          (32,593)          (72,700)          (57,922)         (494,582)
Segment Assets                      --               --                --                --             930,484
Expenditures for segment
   Assets                           --               --                --                --              50,832





                                    Delta-Omega Technologies, Inc.
                  Disclosure of Reported Segment Profit or Loss, and Segmented Assets
                                   Fiscal Year Ended August 31, 1998


                               Solvents &      Firefighting &     Oilfield       SafeScience           All
                               Cleaners        Spill Response                                         Other


Revenues from external
  Customers                   $ 419,085         $ 279,779         $ 328,641         $  --          $ 150,000
Intersegment revenues              --                --                --              --               --
Interest Revenue                   --                --                --              --              9,953
Interest expense                   --                --                --              --              7,273
Depreciation and
    Amortization                 59,135            40,550            54,066            --             15,206
Segment Profit                 (111,313)         (216,007)          (66,527)           --           (860,227)
Segment Assets                     --                --                --              --            899,044
Expenditures for segment
   Assets                          --                --                --              --             53,333


                                                       F-18
</TABLE>


<PAGE>

                         Delta-Omega Technologies, Inc.
                 Reconciliations of Reportable Segment Revenues
                           Profit or Loss, and Assets


                                                      Fiscal Year   Fiscal Year
                                                         1999          1998

Revenues
Total revenues for reportable segments               $ 1,451,754    $ 1,177,505
                                                     -----------


Profit or Loss
Total profit or loss for reportable segments         ($  151,507)   ($  393,847)
Other profit or loss                                    (494,582)      (860,227)
                                                     -----------    -----------
Income before income taxes and extraordinary items   ($  646,089)   ($1,254,074
                                                     ===========    ===========

Assets
Other assets                                         $   930,484    $   899,044
Total assets for reportable segments                        --             --
                                                     -----------    -----------
    Consolidated total                               $   930,484    $   899,044
                                                     ===========    ===========

Other significant Items

Research and Development Expenses                    $   153,081    $   369,757
Depreciation Expense-R&D Equipment                        35,519         36,681


*Research and Development expenses not directly accounted for in the totals of a
specific  reporting  segment is included in the  classification  "All Other" for
fiscal year 1999 and 1998.


Delta-Omega Technologies, Inc. - Disclosures of Geographic Information and
 Major Customers
--------------------------------------------------------------------------------

Products sales for each reportable segment are concentrated in the continental
United States. Revenues from one customer of the Delta-Omega Technologies'
solvents and cleaners segment represents approximately twenty-four (24%) percent
and fourteen (14%) of the Company's total consolidated revenues for fiscal 1999
and 1998, respectively.




                                      F-19






<PAGE>

SIGNATURES


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

                                   DELTA-OMEGA TECHNOLOGIES, INC.

Dated:  December 13, 1999          By: /s/ Marian A. Bourque
                                       -----------------------------------------
                                   Marian A. Bourque
                                   Chief Financial Officer
                                   (Principal Financial and Accounting Officer)


Pursuant to the requirements of the Securities Act of 1934, this Report has been
signed below by the following persons on behalf of the Company and in the
capacities and on the dates indicated.

 Signatures                        Titles                         Date
 ----------                        ------                         ----

 /s/ Larry G. Schafran             Chairman of the Board       December 13, 1999
---------------------------
 Larry G. Schafran

 /s/ James V. Janes, III           Chief Executive Officer,    December  13 1999
---------------------------        President
 James V. Janes, III

 /s/ Marian A. Bourque             Chief Financial Officer,    December 13, 1999
---------------------------        Secretary and Treasurer
 Marian A. Bourque

 /s/ Richard A. Brown              Director                    December 13, 1999
---------------------------
 Richard A. Brown

/s/ David H. Peipers               Director                    December 13, 1999
---------------------------
 David H. Peipers