U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-QSB

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

For the quarter ended  August 31, 1999
Commission file no.  0-26581

                            DERMATOLOGY SYSTEMS, INC.
          ------------------------------------------------------------
                 (Name of Small Business Issuer in its Charter)

         Florida                                           65-0844181
------------------------------------                   -----------------------
(State or other jurisdiction of                        (I.R.S.Employer
incorporation or organization)                         Identification No.)

222 Lakeview Avenue Suite 113
West Palm Beach, FL                                           33401
------------------------------------------             -----------------------
(Address of principal executive offices)                   (Zip Code)

Issuer's telephone number: (561) 832-5699


Securities to be registered under Section 12(b) of the Act:

     Title of each class                             Names of each exchange
                                                       on which registered
         None
---------------------------------                   ----------------------------

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

                    Common Stock, $.0001 par value per share
            --------------------------------------------------------
                                (Title of class)

Copies of Communications Sent to:
                              Donald F. Mintmire
                              Mintmire & Associates
                              265 Sunrise Avenue, Suite 204
                              Palm Beach, FL 33480
                              Tel.: (561) 832-5696 - Fax: (561) 659-5371


<PAGE>




Indicate by Check whether the issuer (1) filed all reports  required to be filed
by  Section  13 or 15(d) of the  Exchange  Act during the past 12 months (or for
such shorter periods that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

                                        Yes X       No
                                           ---         ---

         As of August 31, 1999,  there are  2,000,000  shares of voting stock of
the registrant issued and outstanding.




<PAGE>



PART I

Item 1.           Financial Statements







                          INDEX TO FINANCIAL STATEMENTS



Balance Sheets.......................................................F-2

Statements of Operations.............................................F-3

Statements of Changes in Stockholders' Equity........................F-4

Statements of Cash Flows.............................................F-5

Notes to Financial Statements........................................F-6






















                                       F-1

<PAGE>



<TABLE>
<CAPTION>
                            Dermatology Systems, Inc.
                        (A Development Stage Enterprise)
                                 Balance Sheets



                                 ASSETS                                  August 31, 1999
                                                                           (Unaudited)      February 28, 1999
                                                                        ------------------  ------------------
<S>                                                                     <C>                 <C>
CURRENT ASSETS
   Cash                                                                 $           37,912  $           43,832
                                                                        ------------------  ------------------

     Total current assets                                                           37,912              43,832
                                                                        ------------------  ------------------

Total Assets                                                            $           37,912  $           43,832
                                                                        ==================  ==================

                  LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accrued expenses                                                     $                0  $            4,500
   Accrued expenses - related party                                                  3,123               3,123
                                                                        ------------------  ------------------

     Total current liabilities                                                       3,123               7,623
                                                                        ------------------  ------------------

Total Liabilities                                                                    3,123               7,623
                                                                        ------------------  ------------------

STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value, authorized 10,000,000
                     shares, none issued                                                 0                   0
Common stock, $0.0001 par value, authorized 50,000,000
                     shares: 2,000,000 issued and outstanding                          200                 200
Additional paid-in capital                                                          49,900              49,900
Deficit accumulated during the development stage                                   (15,311)            (13,891)

                                                                        ------------------  ------------------
Total Stockholders' Equity                                                          34,789              36,209
                                                                        ------------------  ------------------

Total Liabilities and Stockholders' Equity                              $           37,912  $           43,832
                                                                        ==================  ==================
</TABLE>









               The accompanying notes are an integral part of the
                             financial statements.

                                       F-2

<PAGE>


<TABLE>
<CAPTION>
                            Dermatology Systems, Inc.
                        (A Development Stage Enterprise)
                            Statements of Operations
                                   (Unaudited)



                                                    For the Six Months     From May 21, 1998     From May 21, 1998
                                                           Ended          (Inception) Through   (Inception) Through
                                                      August 31, 1999       August 31, 1998       August 31, 1999
                                                   --------------------- --------------------- ----------------------
<S>                                                <C>                   <C>                   <C>
Revenues                                           $                   0 $                   0 $                    0
                                                   --------------------- --------------------- ----------------------

Expenses

    Bank charges                                                       0                     0                     10
    Consulting fees - related party                                    0                   100                    100
    Organizational fees                                                0                     0                    207
    Other operating expenses                                           0                     0                    134
    Professional fees                                              1,400                     0                 10,400
    Professional fees - related party                                  0                     0                  3,000
    Transfer agent fees                                               20                     0                  1,460
                                                   --------------------- --------------------- ----------------------

Total expenses                                                     1,420                   100                 15,311
                                                   --------------------- --------------------- ----------------------

Net loss                                           $              (1,420)$                (100)$              (15,311)
                                                   ===================== ===================== ======================

Net loss per weighted average share, basic         $                     $                     $
                                                   (.001)                (.000)                (0.008)
                                                   ===================== ===================== ======================

Weighted average number of shares                              2,000,000             1,844,343              1,971,270
                                                   ===================== ===================== ======================
</TABLE>
















               The accompanying notes are an integral part of the
                             financial statements.

                                       F-3

<PAGE>


<TABLE>
<CAPTION>
                            Dermatology Systems, Inc.
                        (A Development Stage Enterprise)
                  Statements of Changes in Stockholders' Equity





                                                                                    Deficit
                                                                                  Accumulated
                                                                    Additional     During the         Total
                                             Number of    Common     Paid-in      Development     Stockholders'
                                               Shares      Stock     Capital         Stage            Equity
                                            ------------ --------- ------------ ---------------- ----------------
<S>                                         <C>          <C>       <C>          <C>              <C>
BEGINNING BALANCE,
   May 21, 1998 (inception)                            0 $       0 $          0 $              0 $              0
   May 1998 - services ($0.0001/sh)            1,000,000       100            0                0              100

   May 1998 - cash ($0.05/sh)                    565,000        57       28,193                0           28,250
   June 1998 - cash ($0.05/sh)                   371,000        37       18,513                0           18,550
   July 1998 - cash ($0.05/sh)                     4,000         0          200                0              200
   September 1998 - cash ($0.05/sh)               60,000         6        2,994                0            3,000

Net loss                                               0         0            0          (13,891)         (13,891)
                                            ------------ --------- ------------ ---------------- ----------------

BALANCE, February 28, 1999                     2,000,000 $     200 $     49,900 $        (13,891)$         36,209
                                            ------------ --------- ------------ ---------------- ----------------

Net loss                                               0         0            0           (1,420)          (1,420)
                                            ------------ --------- ------------ ---------------- ----------------

BALANCE, August, 1999                          2,000,000 $     200 $     49,900 $        (15,311)$         34,789
(Unaudited)
                                            ============ ========= ============ ================ ================
</TABLE>















               The accompanying notes are an integral part of the
                             financial statements.

                                       F-4

<PAGE>





<TABLE>
<CAPTION>
                            Dermatology Systems, Inc.
                        (A Development Stage Enterprise)
                            Statements of Cash Flows
                                   (Unaudited)



                                                            For the Six Months    From May 21,1998      From May 21, 1998
                                                                  Ended          (Inception) Through   (Inception) Through
                                                             August 31, 1999       August 31, 1998       August 31, 1999
                                                           -------------------- --------------------- ----------------------
<S>                                                        <C>                  <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                 $             (5,920)$              (1,027)$              (19,811)
  Adjustments to reconcile net loss to net cash used by
development             activities:
       Stock issued in lieu of cash - related party                           0                   100                    100
  Changes in assets and liabilities
       Increase in accrued expenses                                           0                     0                  4,500
       Increase in accrued expenses - related party                           0                     0                  3,123
                                                           -------------------- --------------------- ----------------------

Net cash used by operating activities                                    (5,920)                 (927)               (12,088)
                                                           -------------------- --------------------- ----------------------

CASH FLOW FROM FINANCING ACTIVITIES:
     Proceeds from issuance of common stock                                   0                50,000                 50,000
                                                           -------------------- --------------------- ----------------------

Net cash provided by financing activities                                     0                50,000                 50,000
                                                           -------------------- --------------------- ----------------------

Net increase (decrease) in cash                                          (5,920)               49,073                 37,912

CASH, beginning of period                                                43,832                     0                      0
                                                           -------------------- --------------------- ----------------------

CASH, end of period                                        $             37,912 $              49,073 $               37,912
                                                           ==================== ===================== ======================
</TABLE>














               The accompanying notes are an integral part of the
                             financial statements.

                                       F-5

<PAGE>



                            Dermatology Systems, Inc.
                        (A Development Stage Enterprise)
                          Notes to Financial Statements
 (Information with respect to the six months ended August 31, 1999 is unaudited)

(1) Summary of Significant Accounting Principles
      TheCompany Dermatology  Systems,  Inc. is a Florida chartered  development
         stage corporation which conducts business from its headquarters in West
         Palm Beach,  Florida. The Company was incorporated on May 21, 1998, and
         has elected February 28 as its fiscal year end.

         The  Company  has not  yet  engaged  in its  expected  operations.  The
         Company's future  operations will be to provide certain  treatments for
         skin diseases. Current activities include raising additional equity and
         negotiating  with potential key personnel and  facilities.  There is no
         assurance  that any  benefit  will  result  from such  activities.  The
         Company will not receive any operating  revenues until the commencement
         of operations,  but will nevertheless  continue to incur expenses until
         then.

         The  financial   statements  have  been  prepared  in  conformity  with
         generally accepted accounting principles.  The financial statements for
         the six months  ended  August 31,  1999 and for the period from May 21,
         1998 (Inception)  through August 31, 1998 include all adjustments which
         in the opinion of management  are necessary for fair  presentation.  In
         preparing  the  financial  statements,  management  is required to make
         estimates and  assumptions  that affect the reported  amounts of assets
         and liabilities as of the date of the statements of financial condition
         and revenues and expenses for the period then ended. Actual results may
         differ significantly from those estimates.

         The following  summarize the more significant  accounting and reporting
policies and practices of the Company:

         a) Start-up costs Costs of start-up activities,  including organization
         costs,  are  expensed as  incurred,  in  accordance  with  Statement of
         Position (SOP) 98-5.

         b) Net loss per share  Basic  net loss per  weighted  average  share is
         computed by dividing  the net loss by the  weighted  average  number of
         common shares outstanding during the period.

              c) Stock  compensation  for services  rendered The Company  issues
         shares of common stock in exchange for services rendered . The costs of
         the services are valued  according  to  generally  accepted  accounting
         principles and have been charged to operations.

(2)      Stockholders'  Equity The Company has authorized  50,000,000  shares of
         $0.0001 par value common stock,  and  10,000,000  shares of $0.0001 par
         value  preferred  stock. On May 21, 1998, the Company issued a total of
         1,000,000  restricted  shares to its  President  and  Treasurer for the
         value of services  rendered in connection with the  organization of the
         Company.  In May 1998,  the Company sold 565,000 shares of common stock
         for $28,250 in cash. In June 1998,  the Company sold 371,000  shares of
         common stock for cash of $18,550.  In July 1998, the Company sold 4,000
         shares of common stock for cash of $200. In September 1998, the Company
         sold 60,000 shares of common stock for cash of $3,000.

(3)      Income Taxes Deferred income taxes  (benefits) are provided for certain
         income and expenses which are  recognized in different  periods for tax
         and financial  reporting  purposes.  The Company has net operating loss
         carry-forwards for income tax purposes of $15,311, with $13,891expiring
         in 2019, and $1,420, expiring in 2020.

         The amount  recorded  as  deferred  tax assets as of August 31, 1999 is
         $3,012,  which  represents  the  amount  of tax  benefit  of  the  loss
         carryforward.  The Company has  established a 100% valuation  allowance
         against  this  deferred  tax asset,  as the  Company  has no history of
         profitable operations.
                                       F-6


<PAGE>



                            Dermatology Systems, Inc.
                        (A Development Stage Enterprise)
                          Notes to Financial Statements

(4)      Going Concern The accompanying  financial statements have been prepared
         assuming  that  the  Company  will  continue  as a going  concern.  The
         Company's  financial  position and operating  results raise substantial
         doubt about its ability to continue as a going concern, as reflected by
         the net  loss of  $15,311  accumulated  from May 21,  1998  (inception)
         through  August 31,  1999.  The ability of the Company to continue as a
         going concern is dependent upon commencement of operations,  developing
         sales, and obtaining  additional  capital and financing.  The financial
         statements  do not include any  adjustments  that might be necessary if
         the Company is unable to continue  as a going  concern.  The Company is
         currently seeking  additional  capital to allow it to begin its planned
         operations.

(5)      Related parties Counsel to the Company indirectly owns 80,000 shares of
         the  Company's  common stock  through the sole  ownership of the common
         stock of another company which invested in the Company. Also, counsel's
         adult son owns 80,000 shares in the Company.  The  Company's  president
         owns a 42.5% interest in the Company, consisting of 850,000 shares, and
         the treasurer owns a 7.5% interest, consisting in 150,000 shares.

         During the period since  inception,  the Company incurred certain legal
         and  consulting  fees from  related  parties,  in the amount of $3,100.
         Professional  services  rendered  by the  Company's  legal  counsel and
         shareholder  amounted to $3,000 and is presented in Professional fees -
         related party.  Consulting services rendered by the Company's secretary
         and treasurer  amounted to $100 and is presented in  Consulting  fees -
         related  party.  Legal counsel paid certain  miscellaneous  expenses on
         behalf of the Company,  amounting to $123. Unpaid amounts at August 31,
         1999 are $3,123 and are presented in Accrued expenses - related party.











                                       F-7




<PAGE>



Item 2.    Management's Discussion and Analysis or Plan of Operation

General

     Since its  inception,  the  Company(and/or  "DSI")  has  conducted  minimal
business  operations except for organizational  and capital raising  activities.
The Company has not realized significant revenues since its inception due to the
fact  that  it  has  generally  been  inactive,  having  conducted  no  business
operations  except   organizational   and  fund  raising  activities  since  its
inception.  As a result,  from inception (May 21, 1998) through August 31, 1999,
the Company had no income.  Cumulative  operating expenses as of August 31, 1999
were $15,311.00.  The Company proposes to participate in the recent trend in the
medical/cosmetic   removal  of  blemishes  through  the  use  of  Photo  Therapy
Resonance("PTR")  technology  and,  specifically  in the  removal  of  unsightly
blemishes  including  birthmarks,  discolorations,  age  spots,  and other  skin
discolorations as well as unwanted body and facial hair.

     Dr. Haouzi decided to pursue the cosmetic application of PTR technology due
to his  specialized  medical  background and knowledge as to the  application of
this  technology.  Dr.  Haouzi is assisted in his efforts by Alan Hileman as the
Company's Secretary/Treasurer. It is expected that the Company will benefit from
the synergy  expected to result from the combination of the specialized  medical
background and experience of Dr. Haouzi and Mr. Hileman's  medical and cinematic
interests.  The time required to be devoted to manage the day-to-day  affairs of
the Company is  presently  estimated to be  approximately  five to ten hours per
week.  This time  commitment  on the part of these  individuals  is  expected to
increase at such time, if ever, as the Company obtains  sufficient  funding with
which to commence the medical/cosmetic blemish removal business.

     The Company  will be dependent  upon Dr.  Haouzi to develop the client base
with  whom to  arrange  treatment.  Dr.  Haouzi  has  extensive  experience  and
knowledge  regarding the application of Photo Therapy  Resonance  technology and
presently holds the title of Medical  Director of Lasertec of France's  research
and development of laser therapy for the specialized  treatment of cancer. While
Dr. Haouzi is an experienced medical  professional with extensive experience and
knowledge of Photo Therapy Resonance Technology,  there can be no assurance that
he will be successful in building the client base  necessary for the  successful
operation of the Company.

Plan of Operation

     If the Company is unable to generate  sufficient revenue from operations to
implement  its  business  plans,  management  intends to explore  all  available
alternatives  for debt and/or  equity  financing,  including  but not limited to
private and public securities

     Dr. Haouzi, at least initially,  will be solely  responsible for developing
the  Company 's client  base.  However,  at such time,  if ever,  as  sufficient
operating  capital becomes  available,  Dr. Haouzi will hire additional  medical
staffing  and  marketing  personnel.   In  addition,   the  Company  expects  to
continuously  engage in market  research in order to monitor new market  trends,
seasonality  factors and other  critical  information  deemed  relevant to DSI's
business.

                                        3

<PAGE>





     The  Company's  objective  is  to  become  a  dominant  provider  of  laser
technology  to  remove  cosmetic   blemishes,   skin   abnormalities  and  other
applications at first in a select  geographic area,  beginning in Palm Beach and
Broward County,  Florida,  and then to contiguous counties in South Florida and,
eventually  throughout the State of Florida.  The Company will thereafter expand
into selected  areas  nationwide and  eventually  worldwide  provided it has the
financial  resources to do so. To achieve  this  objective,  and  assuming  that
sufficient  operating  capital  becomes  available,  the Company intends to: (i)
obtain a license to PTR and then to  aggressively  sell and  distribute  it and,
(ii)  focus at first on the Palm  Beach  and  Broward  County  cosmetic  surgery
markets which have high growth opportunities.

     The Company  anticipates  that its initial  marketing  efforts  will be via
direct sales of services. Initially, Dr. Haouzi will secure the Company's client
base. He will visit  clients and  prospective  clients on a regular  schedule to
allow  for the  necessary  lead  time to  unfold  to  permit  clients  to  build
confidence in the effectiveness of PTR.

     Due to the limited  capital  available to the Company,  the principal risks
during this phase are that the Company is dependent upon Dr.  Haouzi's  efforts,
that Dr. Haouzi lacks  experience in running a company and that the Company will
not be able to establish a sufficiently  profitable client base to establish the
business.

     For the period from May 21, 1998 through  August 31, 1999,  the Company had
no income from operations and operating expenses aggregating $15,311.00.

Financial Condition, Capital Resources and Liquidity

     At August  31,  1999,  the  Company  had  assets  totaling  $37,912.00  and
liabilities of $3,123  attributable  to accrued  expenses.  On May 21, 1998, the
Company issued  850,000 shares of restricted  Common Stock to Dr. Pierre Haouzi,
the  President  and Director of the Company and record and  beneficial  owner of
approximately 42.5% of the Company's  outstanding Common Stock, in consideration
and exchange  therefore for services in connection with the  organization of DSI
performed for the Company by him.

     On May 21, 1998,  the Company  issued and sold 150,000 shares of restricted
Common Stock to Mr.  Barrett Alan  Hileman,  the  Secretary and Treasurer of the
Company and record and beneficial owner of  approximately  7.5% of the Company's
outstanding  Common Stock, in consideration and exchange  therefore for services
in connection with the organization of DSI performed for the Company by him.

     The Company has no potential  capital resources from any outside sources at
the current time. It is  anticipated  that the Company will require only nominal
capital to maintain  the  corporate  viability of the  Company.  Any  additional
capital  needed  will  most  likely  be  provided  by  the  Company's   existing
shareholders or its officers and directors.


                                        4


<PAGE>



     The ability of the Company to continue as a going concern is dependent upon
the  availability  of  obtaining  additional  capital  and  financing  from such
shareholders and directors.

Net Operating Losses

     The Company has net operating loss carryforwards of $15,311.00 which expire
in the years 2019 through 2020.  The company has a $3,012.00  deferred tax asset
resulting  from the loss  carryforwards,  for  which it has  established  a 100%
valuation  allowance.  Until the Company's  current  operations begin to produce
earnings, it is unclear whether the Company can utilize such carryforwards.

Year 2000 Compliance

     The Company is  currently  in the  process of  evaluating  its  information
technology for Year 2000  compliance.  The Company does not expect that the cost
to modify its information  technology  infrastructure  to be Year 2000 compliant
will be  material  to its  financial  condition  or results of  operations.  The
Company does not  anticipate  any material  disruption  in its  operations  as a
result of any failure by the Company to be in compliance.

Forward-Looking Statements

     This Form 10-QSB includes  "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 or  incorporated by reference in this
Form 10-QSB which address  activities,  events or developments which the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures  (including the amount and nature thereof),  finding
suitable merger or acquisition candidates, expansion and growth of the Company's
business and 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 and expected future  developments as well as other factors it
believes are appropriate in the circumstances.  However,  whether actual results
or developments will conform with the Company's  expectations and predictions is
subject  to a number of risks and  uncertainties,  general  economic  market and
business  conditions;  the business  opportunities (or lack thereof) that may be
presented  to and pursued by the  Company;  changes in laws or  regulation;  and
other   factors,   most  of  which  are  beyond  the  control  of  the  Company.
Consequently, all of the forward-looking statements made in this Form 10-QSB are
qualified by these cautionary  statements and there can be no assurance that the
actual results or  developments  anticipated by the Company will be realized or,
even if substantially  realized, that they will have the expected consequence to
or effects on the Company or its business or operations.  The Company assumes no
obligations to update any such forward-looking statements.

PART II

Item 1. Legal Proceedings.


                                        5


<PAGE>



     The  Company  knows  of no legal  proceedings  to which it is a party or to
which any of its  property  is the  subject  which are  pending,  threatened  or
contemplated or any unsatisfied judgments against the Company.

Item 2.   Changes in Securities and Use of Proceeds

         None

Item 3.   Defaults in Senior Securities

         None

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

     No matter was submitted during the quarter ending August 31, 1999,  covered
by this report to a vote of the Company's shareholders, through the solicitation
of proxies or otherwise.

Item 5.           Other Information

         None

Item 6.    Exhibits and Reports on Form 8-K

     (a) The exhibits  required to be filed  herewith by Item 601 of  Regulation
         S-B, as described in the following index of exhibits,  are incorporated
         herein by reference, as follows:






Exhibit No.             Description
----------------------------------------------------------------------
3(i).1       Articles of Incorporation of DSI filed May 21, 1998(1)

3(ii).1      By-laws (1)

27       *   Financial Data Schedule

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

(1) Incorporated herein by reference to the Company's  Registration Statement on
Form 10-SB.

*        Filed herewith

     (b) No Reports on Form 8-K were filed  during the quarter  ended August 31,
1999.

                                        6


<PAGE>





                                   SIGNATURES
                                   ----------

     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,  hereunto duly
authorized.

                           DERMATOLOGY SYSTEMS, INC..


Date: October 15, 1999     By: /s/ Dr.  Pierre Haouzi
                             -------------------------
                          Dr. Pierre Haouzi, President














[signature page Dermatology Systems, Inc. 10Q 8.31.99]

                                        7