UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                   Form 10-QSB

  [X] QUARTERLY REPORT UNDER SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934

                    For the Quarter Ended September 30, 1999

                                       OR

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

              For the transition period from ________ to _________

                         Commission File Number 1-14004

                                XENOMETRIX, INC.
                                ----------------
        (Exact name of small business issuer as specified in its charter)

            Delaware                                             04-3166089
            --------                                             ----------
(State or other jurisdiction of                                (IRS employer
 incorporation or organization)                           identification number)



                             2425 North 55th Street
                                Boulder, CO 80301
                                -----------------
                    (Address of principal executive offices)


                                 (303) 447-1773
                                 --------------
                           (Issuers telephone number)


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

                                Yes  X   No
                                    ---     ---

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practicable date.

    Common Stock, $0.001 par value              2,950,247 Common Shares
                (Class)                   Outstanding at September 30, 1999



           Transitional Small Business Disclosure Format Yes     No  X
                                                             ---    ---

<PAGE>


                                 XENOMETRIX, INC
                                   FORM 10-QSB
                     FOR THE PERIOD ENDED SEPTEMBER 30, 1999

                                      INDEX


PART I - FINANCIAL INFORMATION
------------------------------

Item 1.  Financial Statements

         Balance Sheet - September 30, 1999..............................Page  3

         Statement of Operations -
            Quarters ended September 30, 1999 and 1998...................Page  4

         Statement of Cash Flows -
            Quarters ended September 30, 1999 and 1998...................Page  5

         Notes to Financial Statements...................................Page  6

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



PART II - OTHER INFORMATION
---------------------------


Item 6.  Exhibits and Reports on Form 8-K................................Page 11

Signatures...............................................................Page 12






                                       2

<PAGE>


Part One--Financial Information


                                Xenometrix, Inc.
                                  Balance Sheet
                               September 30, 1999
                                   (Unaudited)

                                     Assets

Current Assets:

     Cash                                                          $    114,000
     Accounts receivable, net                                            24,000
     Inventory                                                           35,000
     Prepaid insurance                                                   55,000
     Other current assets                                                39,000
                                                                   ------------
            Total current assets                                        267,000


Property and equipment, net                                             410,000
Patents, net                                                            350,000
                                                                   ------------
            Total assets                                           $  1,027,000
                                                                   ============


                      Liabilities and Stockholders' Equity

Current Liabilities:

     Accounts payable                                              $    315,000
     Accrued salaries and wages                                         137,000
     Other accrued liabilities                                          388,000
                                                                   ------------
            Total current liabilities                                   840,000
                                                                   ------------


Stockholders' Equity:

Preferred stock--$.001 par value; 5,000,000 shares authorized;
     no shares issued and outstanding                                      --
Common stock--$.001 par value; 20,000,000 shares authorized;
     2,950,000 shares issued and outstanding                              3,000
Additional paid-in capital                                           16,093,000
Accumulated deficit                                                 (15,909,000)
            Total stockholders' equity                                  187,000
                                                                   ------------
            Total liabilities and stockholders' equity             $  1,027,000
                                                                   ============


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

                                       3

<PAGE>


                                Xenometrix, Inc.
                             Statement of Operations
                               September 30, 1999
                                   (Unaudited)


                                                           Quarter Ended
                                                           September 30,
                                                    ---------------------------
                                                        1999            1998
                                                    -----------     -----------
Revenue:
     Products and services                          $    67,000     $    33,000
     Licensing revenue                                  575,000         300,000
                                                    -----------     -----------
     Total revenue                                      642,000         333,000

Cost of revenue:
     Cost of products and services                       85,000          38,000
     Cost of licensing revenue                          132,000          68,000
                                                    -----------     -----------

     Total cost of revenue                              217,000         106,000
                                                    -----------     -----------

         Gross profit                                   425,000         227,000
                                                    -----------     -----------

Research and development                                 19,000         117,000
Selling, general and administrative                     162,000         395,000
                                                    -----------     -----------

     Total operating expense                            181,000         512,000
                                                    -----------     -----------

Operating income (loss)                                 244,000        (285,000)
     Interest expense, net                               (4,000)       (131,000)
                                                    -----------     -----------

Net income (loss)                                   $   240,000     $  (416,000)
                                                    ===========     ===========


Income (loss) per common share-basic                $      0.08     $     (0.14)
                                                    ===========     ===========


Income (loss) per common share-diluted              $      0.07     $     (0.14)
                                                    ===========     ===========


Weighted average shares outstanding                   2,950,000       2,948,000
                                                    ===========     ===========


Weighted & dilutive potential average shares          3,238,000       2,948,000
                                                    ===========     ===========


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

                                       4

<PAGE>
<TABLE>
<CAPTION>

                                 Statement of Cash Flows
                                       (Unaudited)


                                                                       Quarter Ended
                                                                        September 30
                                                                   ----------------------
                                                                      1999         1998
                                                                   ---------    ---------
Cash Flows from Operating Activities:
<S>                                                                <C>          <C>
       Net  income (loss)                                          $ 240,000    $(416,000)
       Adjustments to reconcile net loss to net cash
       used in operating activities:
             Depreciation and amortization                            81,000       91,000
             Amortization of discount on senior promissory notes        --         83,000
             Provision for doubtful accounts                            --         (5,000)
             Changes in assets and liabilities:
                   Accounts receivable                                56,000     (107,000)
                   Inventory                                          11,000      (98,000)
                   Prepaid insurance                                  28,000       65,000
                   Deposits and prepaid expense                       11,000       12,000
                   Accounts payable and accrued liabilities         (194,000)     298,000
                                                                   ---------    ---------
             Net cash provided by (used in) operating activities     233,000      (77,000)
                                                                   ---------    ---------

Cash Flows from Investing Activities:
       Patent acquisition cost                                       (14,000)    (164,000)
                                                                   ---------    ---------
             Net cash used in investing activities                   (14,000)    (164,000)
                                                                   ---------    ---------


Cash Flows from Financing Activities:
       Repayment of senior promissory notes                         (242,000)        --
                                                                   ---------    ---------
             Net cash provided by financing activities              (242,000)        --
                                                                   ---------    ---------


Net increase (decrease) in cash                                      (23,000)    (241,000)


Cash and cash equivalents at beginning of period                     137,000      341,000
                                                                   ---------    ---------

Cash and cash equivalents at end of period                         $ 114,000    $ 100,000
                                                                   =========    =========


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

                                       5

</TABLE>
<PAGE>

                                XENOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                    FOR THE PERIOD ENDING SEPTEMBER 30, 1999
                                   (Unaudited)

1.   Basis of Presentation

The accompanying financial statements are unaudited.  However, in the opinion of
management,  the  accompanying  financial  statements  reflect all  adjustments,
consisting   of  only  normal   recurring   adjustments,   necessary   for  fair
presentation.  Interim results of operations are not  necessarily  indicative of
results  for  the  full  year.  These  financial  statements  should  be read in
conjunction with the Xenometrix  Annual Report on Form 10-KSB for the year ended
June 30, 1999.

Except for the historical  information  contained in this Form 10-QSB, this Form
contains  forward-looking  statements  that  involve  risks  and  uncertainties.
Xenometrix's actual results could differ materially from those discussed in this
Report.  Factors that could cause or contribute to such differences include, but
are  not  limited  to,  those   discussed  in  this  Report  and  any  documents
incorporated herein by reference,  as well as in the Xenometrix Annual Report on
Form 10-KSB for the year ended June 30, 1999.

2.   Senior Promissory Notes

Between  June 20, 1997 and January 12, 1998,  the Company  entered into a Senior
Line of Credit Agreement (the  "Agreement") with the Aries Domestic Fund LP (the
"Fund") and the Aries Fund, a Cayman  Islands Trust (the  "Trust").  Dr. Lindsay
Rosenwald,  a former  director of the  Company,  is the  Chairman  of  Paramount
Capital  Asset  Management,  LLC,  the  investment  advisor  to the Fund and the
General Partner of the Trust. The Agreement provided for a line of credit for up
to $1,500,000 and Xenometrix issued senior promissory notes (the "Notes") in the
total amount of $1,500,000 to serve as bridge financing.  The Company repaid the
Notes in full in this quarter,  thereby removing any security  interests against
the assets of the Company.  In connection with the issuance of these Notes,  the
Xenometrix granted warrants to purchase 499,995 shares of common stock. The Note
holders agreed,  that in the event that the Company or substantially  all of its
assets is acquired  by a third  party at a price per share that is greater  than
the exercise  price of the warrants  ($0.125),  to surrender the warrants at the
closing of such a  transaction  in exchange  for either cash or freely  tradable
common stock of the third party in an aggregate  amount equal to the  difference
between the acquisition  price per share and the exercise price per share of the
warrants, multiplied by the total number of warrants held by the Note holders.

3.   Earnings (Loss) Per Common Share

Net income (loss) per common share is computed  using the  Financial  Accounting
Standards  Board's Statement of Financial  Accounting  Standards (SFAS) No. 128,
"Earnings Per Share" (EPS).

                                       6
<PAGE>


Basic  income or loss per common share is computed by dividing the net income or
loss by the  weighted-average  number of common  shares  outstanding  during the
period.

Diluted  income or loss per share is computed  using the treasury  stock method,
based upon the weighted-average  number of common shares,  dilutive common stock
equivalent  shares  and  the  assumed  conversion  of any  dilutive  convertible
securities outstanding during the period.

4.   Subsequent Events.

The  Company  continues  to offer  non-exclusive  licenses  of its  intellectual
property and to explore opportunities for strategic alliances. Xenometrix shares
ownership of some of the patents in the Company's  intellectual  property estate
with Harvard University  ("Harvard"),  and has an exclusive worldwide license to
Harvard's interests in the intellectual property. The Company is in disagreement
with Harvard on a section of the Company's  license  agreement  from Harvard and
filed a Demand for Arbitration with American Arbitration Association in December
1998.  Arbitration  proceedings were suspended in April 1999 by mutual agreement
between the Company and Harvard  University in favor of settling the differences
directly.  The  parties are  negotiating  in good faith and expect to come to an
agreement,  although either party has the right to resume binding arbitration at
any time. The nature and the date of the settlement  are  unpredictable  at this
time.







                                       7

<PAGE>


Item 2.
                                XENOMETRIX, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following  discussion of the results of operations  and financial  condition
should be read in  conjunction  with the financial  statements and notes thereto
appearing  elsewhere  in this  Report.  Except  for the  historical  information
contained herein, this Report contains  forward-looking  statements that involve
risks and  uncertainties.  Xenometrix's  actual results could differ  materially
from those  discussed in this Report.  Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in this Report
and any documents incorporated herein by reference, as well as in the Xenometrix
Annual Report on Form 10-KSB for the fiscal year ended June 30, 1999.

Overview

     The Company  continues to focus its efforts on  non-exclusive  licensing of
its intellectual  property and exploring strategic alliances.  In November 1997,
the  Company  was  granted  a  European  patent  claiming  methods  and kits for
generating gene profiles resulting from exposure of eukaryotic cells, (including
human, animal and yeast cells) to compounds.  In September 1998, the Company was
issued a patent covering similar subject matter in the U.S. In January 1998, the
Company was granted a European patent  claiming  methods and kits for generating
gene profiles resulting from the exposure of prokaryotic cells to compounds.  In
addition to the gene profiling  patents,  Xenometrix has an exclusive  worldwide
license to the bacterial  strains used in the family of Ames II* Assays from the
University of  California,  Berkeley and an exclusive  license for yeast strains
used in Yeast DEL*. The U.S. patent for the Ames II bacterial strains was issued
October 1997 and its European equivalent was issued July 1998.

     The Company sells its products and services to pharmaceutical, chemical and
biotechnology  companies for testing,  evaluation and optimization of their lead
compounds. The timing and amount of revenues from sales of products and services
to the drug  discovery and  development  market and chemical  markets  cannot be
predicted with certainty. Similarly, the Company's ability to enter into license
agreements and  meaningful  collaborative  arrangements  with customers or other
potential  collaborators and licensees cannot be predicted with a high degree of
accuracy. Accordingly,  results of operations for any period may be unrelated to
results of operations for any other period and are likely to fluctuate  sharply.
In addition,  historical  results  should not be viewed as  indicative of future
operating results.

     As Of October 29, 1999, the Company had cash of approximately  $92,000. The
Company estimates that its current resources together with projected collections
on accounts  receivable  from customers will be sufficient to meet its operating
needs through the end of December  1999.  Xenometrix is currently in discussions
with  several  companies  regarding  licensing  of  the  Company's  intellectual


--------
* Ames II(TM) and Yeast Del(TM) are trademarks of Xenometrix, Inc

                                       8

<PAGE>



property,  and is hopeful that  additional  revenue  will be obtained  from such
agreements.  The Company  continues to sublease a portion of its  facilities  to
another   company,   which   enabled   the   Company  to  retain   its   modern,
state-of-the-art  facility while reducing its monthly expenditures.  The Company
has no debt remaining  from  $1,500,000 of the Notes that were due September 15,
1999.

Results of Operations

Comparison of quarters ended September 30, 1999 and 1998
--------------------------------------------------------

     Revenue. For the quarter ended September 30, 1999, revenue increased 93% to
approximately  $642,421 from $333,000 reported in the comparable  quarter of the
prior year.  The  increase  was  substantially  attributable  to revenue from an
increase in up-front  licensing fees. Sales of products and service revenue from
the Company's Client Research  Laboratory were also increased by 103% to $67,000
from $33,000 reported in the prior year.

     Gross  Profit.  For the quarter  ended  September  30,  1999,  gross profit
increased  by 87% to $425,000  from  $227,000  reported  in the prior year.  The
increase  in  gross  profit  was  primarily  due  to an  increase  in  licensing
activities  compared to the same quarter of the prior year.  The cost of revenue
of approximately $217,000 represents,  in part, a portion of the amortization of
the costs  associated  with the patents and legal  expenses in  prosecuting  the
patents  and  royalties  paid to the  Universities  of Harvard  and  California,
Berkeley under the Company's existing licensing agreements. Gross profit margins
on revenue from sales of products and services were  decreased by  approximately
27%. This negative  gross profit margin is due to the small volume sales and the
fixed overhead costs.

     Research and Development Expenses (R&D). R&D expenses for the quarter ended
September 30, 1999,  decreased 84% to $19,000 from $117,000 reported in the same
quarter of the prior year.  This decrease was primarily  attributable to reduced
personnel and activity in the R&D department. Consequently,  laboratory supplies
and most other expenses in the R&D department were also decreased in the current
quarter, as compared to the comparable quarter of the prior year.

     Selling,  General and Administrative Expenses (SG&A). For the quarter ended
September 30, 1999,  SG&A expenses were $162,000,  down 59% from $395,000 in the
prior  year.  This  decrease  was  primarily  attributable  to lower  executive,
administrative,  finance,  legal and business  development  costs resulting from
personnel reductions in February 1999.

     Interest  Expense,  Net.  During the quarter ended  September 30, 1999, the
Company  incurred  net  interest  expense of $4,000  compared to $131,000 in the
comparable  quarter of the prior fiscal year. The net interest  expense incurred
included  interest  accrued  on the  Notes at 12% per  annum.  The net  interest
expense  decreased  approximately  97% from the comparable  quarter in the prior
year because the Notes had been substantially repaid before this quarter.

                                       9
<PAGE>


     Net Income (Loss).  For the quarter ended  September 30, 1999,  there was a
net income of  $240,000  or $0.08 per share  compared  to a loss of  $416,000 or
$0.14 per share,  reported for the  comparable  quarter of fiscal year 1998. The
earnings would have been $0.07 per diluted share.

Impact of Year 2000 Issues

     The Year 2000 issue is related to computer  software  utilizing  two digits
rather  than four to  define  the  appropriate  year.  As a  result,  any of the
Company's  computer  programs or any of the Company's  suppliers or vendors that
have date  sensitive  software may incur system  failures or generate  incorrect
data if "00" is recognized as 1900 rather than 2000.

     The Company has  evaluated  its  proprietary  software  used to  facilitate
performing,  analyzing  and  interpreting  the  results of its  assays,  and the
proprietary software used in conjunction with its bioinformatics  database,  and
found them to address  appropriately  the date issues  associated  with the year
2000. The Company believes that all dates in its proprietary software are stored
with either a minimum of four digits for the year or as a text  string,  thereby
preventing  inappropriate  sequencing of date sensitive  information.  While the
Company  believes  that its  proprietary  software will not produce any material
problems,  erroneous  calculations  or degradation of performance as a result of
Year 2000 issues,  users are advised that the Company's  software must be run on
Year 2000 compliant platforms.

     The Company has verified that its major  suppliers,  service  providers and
financial  institutions  are  Year  2000  compliant,  however  there  can  be no
assurance  that the systems and networks of its key suppliers and customers will
not be affected by Year 2000 issues,  which could have an adverse  effect on the
Company's  business,  operating  results and  financial  condition.  The Company
believes, based upon the evaluations performed upon its proprietary software and
the claims of Year 2000  compliance  made by the  providers  of  non-proprietary
software used by the Company, that the impact of Year 2000 will not be material.
However,  to the extent the Company or third parties upon which it relies do not
timely achieve Year 2000 readiness,  the Company's  results of operations may be
adversely affected.

Liquidity and Capital Resources

     At  September  30,  1999,  the  Company  had cash and cash  equivalents  of
$114,000.  During the three month period ended September 30, 1999,  $233,000 was
provided by the Company's activities and $14,000 was invested in patents.  There
were no cash resources generated from financing activities and $242,000 was used
to complete repayment of senior promissory Notes.

     As Of October  29,  1999,  the Company  had cash of  approximately  $92,000
compared to $137,000 at the end of June 30,  1999.  The Company is  currently in
discussions  with  several  companies   regarding  licensing  of  the  Company's
intellectual  property,  and strategic  alliances and is hopeful that additional
revenue from these  licenses will be sufficient to fund the Company's  operating
needs through March, 2000.

                                       10
<PAGE>


                           PART II--OTHER INFORMATION


Item 6. Exhibits and Reports on Form 8-K.


(a)  Exhibits

     27.1      Summary Financial Information Schedule


Reports on Form 8-K

     On June 30,  1998,  Registrant  filed a Form 8-K and on July 9,  1999,  the
     amendment  Form 8-K/A  reporting  a change in the  Registrant's  certifying
     accountant  from  PricewaterhouseCoopers,  LLP to Gordon  Hughes and Banks,
     LLP.

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




                                       11
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this Report to be signed on its behalf.

                                             XENOMETRIX, INC.



                                             /s/ Pauline Gee
                                             ---------------
November 15, 1999                            Pauline Gee
                                             President, Chief Scientific Officer







                                       12
<PAGE>


                                  EXHIBIT INDEX


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


27.1            Summary Financial Information Schedule