SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

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


    For Quarter Ended June 30, 2000             Commission File No. 0-24866


                             ISOLYSER COMPANY, INC.
                             ----------------------
             (Exact name of Registrant as specified in its charter)


          Georgia                                               58-1746149
          -------                                               ----------
(State or other jurisdiction of                               (IRS Employer
 incorporation or organization)                             Identification No.)

                           4320 International Blvd NW
                             Norcross, Georgia 30093
                    (Address of principal executive offices)

                                 (770) 806-9898
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for at least the past 90 days.

Yes   X     No
    -----      -----

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

Class                                             Outstanding at August 11, 2000
-----                                             ------------------------------

Common Stock, $.001 par value                              41,558,264




<PAGE>
                             ISOLYSER COMPANY, INC.
                      Condensed Consolidated Balance Sheets
                                 (in thousands)
<TABLE>
<CAPTION>
<S>                                                       <C>                    <C>

                                                             (unaudited)
                             ASSETS                         JUNE 30, 2000         DECEMBER 31, 1999
                             ------
                                                          --------------------------------------
Current assets
       Cash and cash equivalents                          $        15,733        $    17,006
       Accounts receivable, net                                    14,510             13,773
       Disposition escrow account                                   4,330              3,130
       Inventories, net                                            22,002             24,036
       Prepaid expenses and other assets                            2,017              1,298
                                                          ------------------------------------
              Total current assets                                 58,592             59,243
                                                          ------------------------------------

Property, plant and equipment                                      22,256             21,583
       Less accumulated depreciation                              (14,154)           (12,990)
                                                          -----------------------------------
              Property, plant, and equipment, net                   8,102              8,593
                                                          -----------------------------------

Investment in equity securities                                     4,198              3,605
Intangibles and other assets, net                                  22,547             23,898
                                                          -----------------------------------
              Total assets                                $        93,439        $    95,339
                                                          ===================================

              LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
       Accounts payable                                   $         3,510        $     4,340
       Bank overdraft                                                 208                565
       Current installments of long term debt                       2,503              2,615
       Current portion of deferred licensing revenue                3,019              3,000
       Current portion of product financing arrangement               520                520
       Accrued expenses                                             2,108              2,653
                                                          ----------------------------------
              Total current liabilities                            11,868             13,693
                                                          ----------------------------------

Long term deferred licensing revenue                                4,500              6,000
Other liabilities                                                     671                924
                                                          ----------------------------------
              Total liabilities                                    17,039             20,617
                                                          ----------------------------------

Shareholders' equity
       Common stock                                                    41                 41
       Additional paid in capital                                 208,276            206,600
       Accumulated deficit                                       (131,171)          (131,283)
       Unrealized gain on available for sale securities               344                  -
       Cumulative translation adjustment                             (140)               (22)
       Unearned shares restricted to employee stock
              ownership plan                                         (180)              (180)
                                                          ----------------------------------
                                                                   77,170             75,156
Treasury shares, at cost                                             (770)              (434)
                                                          ----------------------------------
                                                          ----------------------------------
       Total shareholders' equity
                                                                   76,400             74,722
                                                          ----------------------------------

              Total liabilities and shareholders' equity  $        93,439        $    95,339
                                                          ==================================

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                        ISOLYSER COMPANY, INC.
                            Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
                                                (in thousands, except per share data)
                                                             (unaudited)
<S>                                                    <C>               <C>                <C>               <C>
                                                       THREE MONTHS      THREE MONTHS        SIX MONTHS         SIX MONTHS
                                                           ENDED             ENDED              ENDED             ENDED
                                                       JUNE 30, 2000     JUNE 30, 1999      JUNE 30, 2000     JUNE 30, 1999
                                                       -------------     -------------      -------------     -------------

Net product sales                                      $      13,678     $      32,251      $    26,943       $    67,020
Licensing revenue                                                750                  -           1,500                 -
                Total revenues                                14,428            32,251           28,443            67,020

Cost of products sold                                          7,770            19,424           15,673            43,223
                                                       -------------     -------------      ------------      -------------
                Gross profit                                   6,658            12,827           12,770            23,797

Operating expenses:
       Selling, general and administrative                     5,336             8,357           10,336            17,764
       Research and development                                  836               712            1,652             1,412
       Amortization                                              279               446              559               897
       Impairment loss                                             -             1,590                -             1,590
                                                       -------------     -------------      ------------      -------------
         Total operating expenses                              6,451            11,105           12,547            21,663
                                                       -------------     -------------      ------------      -------------
Income from operations                                           207             1,722              223             2,134

Interest and other income                                        190                32              363                82
Interest expense                                                (204)             (588)            (350)           (1,212)
                                                       -------------     -------------      ------------      -------------
Income (loss) before income tax expense                          193             1,166              236             1,004
Income tax expense                                                82               182              123                387
                                                       -------------     -------------      ------------      -------------
Net income (loss)                                      $         111       $       984       $      113         $      617
                                                       =============     =============      ============      =============
Other comprehensive income (loss)
    Foreign currency translation gain (loss)                     (96)              (37)            (118)               15
    Unrealized gain (loss) on available for sale
    securities                                                  (292)                -              344                 -
                                                       -------------     -------------      ------------      -------------

Comprehensive income (loss)                            $        (277)      $        947       $     339                 -
                                                       =============     ==============     ============      =============
Net income (loss) per common share  - basic
   and diluted                                         $        0.00       $       0.02       $    0.00         $    0.02
                                                       =============     ==============     ============      =============
Basic weighted average number of common
  shares outstanding                                          41,362             40,126          41,129            40,040
                                                       =============     ==============     ============      =============
Diluted weighted average number of common
  shares outstanding                                          44,224             41,221          44,024            40,555
                                                       =============     ==============     ============      =============
</TABLE>
<PAGE>
<TABLE>
                                                                   ISOLYSER COMPANY, INC.
                                                       Condensed Consolidated Statements of Cash Flows
                                                                       (in thousands)
                                                                        (unaudited)


<CAPTION>
<S>                                                                                 <C>                    <C>

                                                                                      Six months            Six months
                                                                                        ended                  ended
                                                                                    June 30, 2000          June 30, 1999


Cash flows from operating activities:

         Net income (loss)                                                          $            113       $      617

Adjustments  to  reconcile  net  income  (loss)  to net cash  used in  operating
activities:

         Depreciation                                                                          1,164            2,013
         Amortization                                                                            781              886
         Provision for doubtful accounts                                                          60              124
         Licensing revenue                                                                    (1,482)               -
         Provision for obsolete and slow moving inventory                                        126            1,590
         Changes in assets and liabilities, net of effects from disposed businesses           (1,723)          (4,952)
                                                                                      ---------------------------------
NET CASH USED IN OPERATING ACTIVITIES                                                           (961)             278
                                                                                      ---------------------------------

Cash flows from investing activities:

         Purchase of and deposits for property, plant and equipment                             (673)          (1,037)
         Investment in available for sale securities                                            (249)               -
         Investment in other securities                                                          (41)
         Disposition proceeds                                                                     -             8,012
                                                                                      ---------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                             (963)           6,975
                                                                                      ---------------------------------

Cash flows from financing activities:

         Net repayments under credit agreements                                                    -          (11,728)
         Changes in bank overdraft                                                              (357)             482
         Net repayments under notes payable                                                     (214)               -
         Proceeds from exercise of stock options                                               1,676              591
         Purchase of treasury stock                                                             (337)               -
         Proceeds from issuance of common stock                                                    1              403
                                                                                      ---------------------------------
                                                                                                 769           10,252
                                                                                      ---------------------------------

Effect of exchange rate changes on cash                                                         (118)              15
Net decrease in cash and cash equivalents                                                     (1,273)          (2,984)
Cash and cash equivalents at beginning of period                                              17,006            7,325
                                                                                      ---------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                          $         15,733       $    4,341
                                                                                      ================================
</TABLE>
<PAGE>

                             ISOLYSER COMPANY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1) In  the  opinion  of  management,  the  information  furnished  reflects  all
adjustments  (consisting only of normal recurring  adjustments)  necessary for a
fair  presentation  of the financial  position,  results of operations  and cash
flows for the interim periods presented. Results for the interim periods are not
necessarily  indicative  of  results  to be  expected  for the  full  year.  The
consolidated  financial statements herein should be read in conjunction with the
consolidated  financial  statements and notes thereto contained in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999.

2)  Inventories  are stated at the lower of cost or market and are summarized as
follows:

         (in thousands)             June 30, 2000              December 31, 1999

Raw materials and supplies          $    11,321                 $      12,056
Work in process                             996                         1,389
Finished goods                           10,837                        12,199
                                    -----------                 -------------
         Total                           23,154                        25,644

Reserve for excess, slow moving
     and obsolete inventory
                                         (1,152)                       (1,608)
                                   -------------                --------------
         Total                      $    22,002                 $       24,036
                                   =============                ==============

At June 30, 2000 and December 31, 1999 the net OREX  inventory is  approximately
$6.9 million and $7.2 million, respectively.

3) The remaining net assets of the MedSurg  subsidiary at December 31, 1999 were
classified as held for sale in the accompanying condensed consolidated financial
statements. Title to these assets transferred to Allegiance on January 31, 2000.
They were comprised of the following:

        (in thousands)                   December 31, 1999
                                         -----------------
Assets:
         Inventory                       $         4,846
                                         -----------------
                   Total Assets                    4,846
Liabilities:
         Accounts payable                          3,211
         Accrued liabilities                       1,635
                                         -----------------
                   Total Liabilities               4,846

         Net assets held for sale        $             -
                                         =================

On March 31, 1999, the Company disposed of its former corporate headquarters for
proceeds of  approximately  $1.9 million.  Effective  May 31, 1999,  the Company

<PAGE>

disposed  of the stock of its  White  Knight  subsidiary  ("White  Knight")  for
proceeds of  approximately  $8.2  million.  These  proceeds  were used to reduce
outstanding borrowings under the Company's Credit Agreement.

On July 12, 1999, the Company disposed of substantially all of the assets of its
MedSurg  subsidiary  and entered into an OREX License and Supply  Agreement (the
"License Agreement") with Allegiance Healthcare  Corporation  ("Allegiance") for
net proceeds of $28.6  million,  consisting  of $25.5 million in cash and a $3.1
million escrow receivable (the "Disposition Escrow Account"). A portion of these
proceeds  was used to pay-off  the  remaining  balance of the  Company's  Credit
Agreement.  As part of the sale of  MedSurg  assets,  title to  certain  MedSurg
assets and  liabilities  transferred  to  Allegiance  on January  31,  2000.  On
February 16, 2000,  Allegiance  deposited  an  additional  $1.2 million into the
Disposition  Escrow  Account  related to costs the  Company  incurred in 2000 on
Allegiance's behalf.

On July 21, 2000, the Company  completed a settlement  agreement with Allegiance
and  disbursed  the entire  proceeds  of the  Disposition  Escrow  Account.  The
settlement  called for the  disbursement  to Allegiance of $2.5 million from the
escrow  funds  with  the  balance  returned  to the  Company.  Amounts  paid  to
Allegiance  as a result of the  settlement  will be recorded  as a reduction  to
deferred  royalties.  On July 21, 2000,  the Company  received the proceeds from
this settlement of $1.8 million plus accumulated interest.

The following  represents  the results of operations of the above noted disposed
entities for the three months and six months ended June 30, 1999:

                                        THREE MONTHS ENDED     SIX MONTHS ENDED
(in thousands, except per share data)     JUNE 30, 1999          JUNE 30, 1999
                                          -------------          -------------
Net revenues                                 $ 16,802              $  37,137
Net profit (loss)                                 233                  (474)
Net profit (loss) per share - basic          $    .01              $  (0.01)

4) Basic per share earnings (loss) is computed using the weighted average number
of common shares  outstanding for the period.  Diluted per share earnings (loss)
is computed  including the dilutive effect of all contingently  issuable shares.
The difference between basic and diluted weighted average shares is attributable
to 2.9 million  stock options for the three months and six months ended June 30,
2000. There were 1.1 million and 110,000 dilutive stock options  outstanding for
the three months and six months ended June 30, 1999, respectively.

5) On February  11, 2000 the  Company  paid  $249,000  for  approximately  13.0%
interest in Consolidated Ecoprogress Technology, Inc. ("CES"). CES is a Canadian
environmental  technology  company  focused on being a leader in developing  and
selling  biodegradable  and  disposable  absorbent  products  such  as  diapers,
feminine  hygiene,  adult  incontinence  and other products.  This investment is
classified  in  accordance  with  Statement  of Financial  Accounting  Standards
("SFAS") 115,  Accounting for Certain  Investments in Debt and Equity Securities
as available for sale  securities  and is stated at market value.  Any change in

<PAGE>

market value between periods is included as a component of shareholders' equity.
The value of this investment as of June 30, 2000 was $593,000.


ITEM 2.

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS

RESULTS OF OPERATIONS

Net revenues for the three months ended June 30, 2000 (the "2000  Quarter") were
$14.4 million compared to $32.3 million for the three months ended June 30, 1999
(the "1999 Quarter").  Net revenues for the six month period ended June 30, 2000
(the "2000  Period")  were $28.4  million  compared to $67.0 million for the six
month period ended June 30, 1999 (the "1999 Period").  Excluding revenues of the
healthcare division of White Knight ("White Knight Healthcare"),  which was sold
as of May 31, 1999,  and MedSurg,  which was sold on July 12, 2000, net revenues
for the 2000  Quarter  and  Period  decreased  6.6% and 4.8%,  respectively,  as
compared  to the 1999  Quarter  and  Period.  Revenues  from  Microtek  products
decreased  15.2%  during the 2000  Quarter as compared  to the 1999  Quarter and
decreased 14.6% in the 2000 Period as compared to the 1999 Period. This decrease
was a result of sales  during  the 1999  Quarter  and Period  from a  short-term
manufacturing  contract  arrangement  with a customer with no  comparable  sales
during the 2000  Quarter and Period.  Sales of safety  products  increased  5.7%
during the 2000  Quarter as compared  to the 1999  Quarter  and  increased  7.9%
during the 2000 Period as compared to the 1999 Period.

Included in the foregoing  revenue figures are $1.1 million in revenue from OREX
Degradables  and  Enviroguard  products during the 2000 Quarter and $2.4 million
during the 2000 Period as compared to $353,000 and $1.0 million  during the 1999
Quarter and Period,  respectively.  Sales of OREX Degradables did not contribute
any  gross  profits  to  the  Company's  operating  results.  During  1997,  and
continuing  through March, 1999, the Company  substantially  reduced selling and
marketing  efforts to increase sales of OREX  Degradables  and began focusing on
preserving its existing base of hospitals  purchasing the product and evaluating
means to exploit  the market  position  of OREX  Degradables  within its various
potential markets.  During 1998, the Company  substantially revised its strategy
to commercialize its OREX products. As a result of these efforts, in April 1999,
the Company introduced new degradable  products to the healthcare industry under
the mark Enviroguard  which uses a  hydroentanglement  manufacturing  process to
produce a spunlaced  fabric.  The Company's future  performance will depend to a
substantial  degree  upon  market  acceptance  of and the  Company's  ability to
successfully  manufacture,  market,  deliver and expand its OREX Degradables and
Enviroguard  line of products at acceptable  profit margins.  In connection with
the July 12, 1999,  sale by the Company of the assets of MedSurg to  Allegiance,
the Company  granted to Allegiance a worldwide  exclusive  license to Isolyser's
OREX and  Enviroguard  proprietary  technologies  to make, use and sell products
made from  material  which can be  dissolved  and disposed of through a sanitary
sewer system for healthcare applications.  Net revenues for the 2000 Quarter and
Period include $750,000 and $1.5 million,  respectively,  of licensing  revenues
attributable  to the License  Agreement.  Licensing  revenues  will  decrease to
$500,000 per quarter in future periods due to the payment to Allegiance from the
Disposition  Escrow Account  established in connection with the sale of MedSurg.

<PAGE>

There can be no assurances  that OREX  Degradables or Enviroguard  products will
achieve or maintain  substantial  acceptance  in their target  markets.  See the
risks described under "Risk Factors" in the Company's Annual Report on Form 10-K
for the period ending  December 31, 1999 (the "1999 Annual  Report")  including,
without  limitation,  "Risk Factors- History of Net Losses,"  "-Risks  Affecting
OREX  Products" and  "-Manufacturing  and Supply  Risks" in the  Company's  1999
Annual Report.

Gross  profit for the 2000  Quarter was $6.7  million or 46.1% of net revenue as
compared $12.8 million or 39.8% of net revenue in the 1999 Quarter. Gross profit
for the 2000 Period was $12.8 million,  or 44.9% of net revenue,  as compared to
$23.8  million,  or 35.5% of net  revenue  for the 1999  Period.  Included  as a
reduction  of cost of sales  during the 1999 Quarter and Period was $1.6 million
of excess OREX inventory  reserve  primarily due to anticipated  usage under the
aforementioned  Allegiance  supply  agreement,  which  increased  gross  profit.
Exclusive  of this  adjustment,  gross profit was 34.8% and 33.1% of net revenue
for the 1999 Quarter and Period,  respectively.  The improvement in gross profit
is attributable to the divestiture of White Knight Healthcare and MedSurg, which
were lower margin businesses,  revenue from the License Agreement,  and improved
gross  profit  at the  Company's  Microtek  subsidiary  as a result  of  reduced
manufacturing costs.

Selling,  general and administrative  expenses were $5.3 million or 37.0% of net
revenue in the 2000  Quarter as compared to $8.4 million or 25.9% of net revenue
in the 1999 Quarter.  Selling,  general and  administrative  expenses were $10.3
million or 36.3% of net revenue in the 2000 Period as compared to $17.8  million
or 26.5% of net revenue in the 1999  Period.  Included  in selling,  general and
administrative  expenses  for the 2000  Quarter  and Period  were  approximately
$700,000 in charges  associated with overhead carried by Microtek which remained
unabsorbed due to a loss of  non-recurring  revenue from a customer's  fire loss
temporary capacity  replacement.  The overall reduction in selling,  general and
administrative  expense is primarily  attributable  to the  divestiture of White
Knight Healthcare and MedSurg, and the implementation of the Company's operating
plan  which  focused  on  reorganizing  marketing  and sales  efforts to achieve
reductions in selling and marketing expenses.

Research and  development  expenses  were $836,000 or 5.8% of net revenue in the
2000 Quarter as compared to $712,000 or 2.2% of net revenue in the 1999 Quarter.
Research and  development  expenses  were $1.7 million or 5.8% of net revenue in
the 2000 Period as  compared to $1.4  million or 2.1% of net revenue in the 1999
Period. The increase in research and development expense is primarily related to
the  additional  commitment  to the  development  and  commercialization  of the
Company's automotive and nuclear market OREX products.

Effective  May 31, 1999,  the Company  disposed of the stock of White Knight for
proceeds of $8.2 million in cash.  In  conjunction  with this  disposition,  the
Company recorded impairment charges of $1.6 million.

Amortization  of  intangibles  was $279,000 and $559,000 in the 2000 Quarter and
Period, respectively,  as compared to $446,000 and $897,000 in the corresponding
periods of 1999.  The decline in  amortization  expenses  was due to the sale of
White Knight Healthcare and MedSurg during 1999.


<PAGE>

The  resulting  income from  operations  was  $207,000 and $223,000 for the 2000
Quarter and Period,  respectively,  as compared to $1.7 million and $2.1 million
for the 1999 Quarter and Period, respectively.

Net  interest  income/expense  was $14,000 net expense and $13,000 net income in
the 2000 Quarter and Period,  respectively,  as compared to net interest expense
of $556,000 and $1.1 million in the  corresponding  periods of 1999. The decline
in  interest  expense  is  attributable  to reduced  borrowings  during the 2000
Quarter and  Period.  The  Company  paid off the balance of its credit  facility
borrowings from Chase Manhattan Bank during the 1999 Period.

Provisions for income taxes reflect expenses of $82,000 and $123,000 in the 2000
Quarter and Period,  respectively,  as compared to $182,000  and $387,000 in the
corresponding periods of 1999.

The resulting net income was $111,000 and $113,000 for the 2000 Quarter and 2000
Period, respectively,  as compared to net income of $984,000 and $617,000 in the
corresponding periods of 1999.


LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2000, the Company's cash and  equivalents  totaled $15.7 as compared
to $17.0 million at December 31, 1999.

During the 2000 Period,  the Company  applied  $961,000 of cash to its operating
activities as compared to $278,000 in the 1999 Period.  The reduction of cash in
the 2000 Period is  primarily  attributable  to an  increase in working  capital
investment of $1.2 million. In the 2000 Period, the Company invested $673,000 in
capital equipment and $290,000 in technology  businesses.  The Company generated
$7.0  million  from  investing  activities  during  the 1999  Period  consisting
primarily of $8.2 million from the disposition of White Knight and the Company's
former headquarters.  These amounts were offset by approximately $1.0 million in
capital expenditures during the 1999 Period. During the 2000 Period, the Company
generated  approximately  $769,000 in cash from financing activities compared to
the  application  of funds to financing  activities of $10.3 million in the 1999
Period. In the 1999 Period, the Company utilized cash proceeds from dispositions
to reduce amounts  outstanding under its Credit  Agreement.  The cash generation
from  financing  activities  in the 2000 Period was due to the proceeds from the
issuance of capital stock ($1.7 million)  attributable  to the exercise of stock
options,  partially  offset by the  purchases of treasury  stock under the stock
repurchase  program  approved by the  Company's  Board of Directors in December,
1999.

As more fully  described  in the  Company's  1999  Annual  Report,  the  Company
maintained  a $15 million  credit  agreement  (as  amended to date,  the "Credit
Agreement")  consisting of a revolving credit facility which matured on June 30,
2000.  There were no outstanding  borrowings under the revolving credit facility
at June 30,  2000.  The Credit  Agreement  provides for the issuance of up to $1
million in letters of  credit.  There were no  outstanding  letters of credit at
June 30,  2000.  On July 10, 2000,  the Bank and the Company  amended the Credit
Agreement  to reduce the  credit  facility  to $10.0  million,  revised  certain

<PAGE>

covenants  and extended  the term of the facility to June 30, 2001.  At June 30,
2000, the Company was in compliance  with the covenants  contained in its Credit
Agreement.

On March 31, 1999, the Company disposed of its former corporate headquarters for
proceeds of $1.9 million in cash.  Effective May 31, 1999, the Company  disposed
of the stock of White  Knight  Healthcare  for proceeds of $8.2 million in cash.
These proceeds were subsequently used to reduce outstanding borrowings under the
Company's  Credit  Agreement.  On July 12,  1999,  the  Company  disposed of its
MedSurg  subsidiary  and entered into an OREX License and Supply  Agreement with
Allegiance for net cash proceeds of $28.6  million.  A portion of these proceeds
were  subsequently  used to repay the remaining  balance of the Company's Credit
Agreement.  A $2.5 million  portion of these  proceeds was paid to Allegiance in
connection  with  the  July  21,  2000  settlement  of  certain  claims  made by
Allegiance.

Based upon its current  business plan, the Company  currently  expects that cash
equivalents  and short term  investments on hand, the Company's  existing credit
facility and funds budgeted to be generated from  operations will be adequate to
meet its liquidity and capital  requirements through at least 2000. Although the
Company  has no plans to  initiate  additional  debt  financing  or  issuance of
additional capital stock,  unforeseen future  developments and increased working
capital  requirements  could require  additional  debt  financing or issuance of
common stock in 2000 and subsequent years.


FORWARD LOOKING STATEMENTS

Statements  made in this  Management's  Discussion  and  Analysis  of  Financial
Condition  and Results of Operations  include  forward-looking  statements  made
under the  provisions  of the Private  Securities  Litigation  Reform  Act.  The
Company's  actual  results  could differ  materially  from such  forward-looking
statements and such results will be affected by risks described in the Company's
1999 Annual Report including,  without  limitation,  those described under "Risk
Factors - History of Net Losses,"  "-Marketing  Risks  Affecting OREX Products,"
"-Manufacturing  &  Supply  Risks,"  "-Regulatory  Risks,"  "-Competition,"  and
"-Claims Arising from Divestitures."


ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's greatest  sensitivity with respect to market risk is to changes in
the  general  level of U.S.  interest  rates and its effect  upon the  Company's
interest  expense.  At June 30, 2000, the Company has no long-term or short-term
debt that bears interest at floating  rates.  However,  should the Company incur
borrowings  under its Credit  Agreement,  such borrowings would bear interest at
variable rates. Because these rates are variable,  an increase in interest rates
would result in additional  interest  expense and a reduction in interest  rates
would result in reduced interest expense.



<PAGE>


                                     PART II

                                OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

Not applicable.


ITEM 2.

CHANGES IN SECURITIES AND USE OF PROCEEDS

During the  quarter  for which  this  report is filed,  there  were no  material
modifications in the instruments defining the rights of shareholders. During the
quarter  for which this  report is filed,  none of the rights  evidenced  by the
shares of the Company's common stock were materially limited or qualified by the
issuance or  modification  of any other class of securities.  During the quarter
for which this report is filed,  the Company  sold no equity  securities  of the
Company that were not registered under the Securities Act of 1933, as amended.


ITEM 3.

DEFAULT UPON SENIOR SECURITIES

Not applicable.


ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

During the period covered by this report,  the Company filed with the Securities
and Exchange Commission (the "Commission") and delivered to its shareholders the
Company's Proxy  Statement for its Annual Meeting of  Shareholders  held May 18,
2000 (the "Proxy Statement").

(a)  The Company's  annual meeting of shareholders was held on May 18, 2000.

(b)  The  nominees  for the Board of  Directors  of the Company  are  identified
     below.

(c)  With  respect to the  election  of  directors,  the  inspector  of election
     tabulated the following votes:


<PAGE>

           Election of Directors

                                                         Number of Votes
           Nominees for Office    Number of Votes For        Withheld
           -------------------    -------------------        --------
           Gene R. McGrevin           36,601,891              174,829
           Migirdic Nalbantyan        36,629,300              147,420
           Travis W. Honeycutt        36,559,054              217,666
           Rosdon Hendrix             36,581,444              195,276
           Dan R. Lee                 36,623,780              152,940
           Kenneth F. Davis           36,606,027              170,693
           John E. McKinley           36,619,883              156,837
           Ronald L. Smorada          36,627,022              149,698


ITEM 5.

OTHER INFORMATION

None.


ITEM 6.

EXHIBITS AND REPORTS ON FORM 8-K

(a)               Exhibits:

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

3.1(1)       Articles of Incorporation of Isolyser Company, Inc.

3.2(2)       Articles of Amendment to Articles of Incorporation of Isolyser
             Company, Inc.

3.3(1)       Amended and Restated Bylaws of Isolyser Company, Inc.

3.4(3)       First Amendment to Amended and Restated Bylaws of Isolyser
             Company, Inc.

3.5(4)       Second Amendment to Amended and Restated Bylaws of Isolyser
             Company, Inc.

4.1(1)       Specimen Certificate of Common Stock

27.1         Financial Data Schedule

------------------
(1)  Incorporated by reference to the Company's  Registration  Statement on Form
     S-1 (File No. 33-83474).

(2)  Incorporated by reference to Exhibit 3.2 of the Company's  Annual Report on
     Form 10-K for the year ended December 31, 1996.

(3)  Incorporated by reference to Exhibit 3.1 to the Company's Current Report on
     Form 8-K filed July 29, 1996.

(4)  Incorporated by reference to Exhibit 3.1 to the Company's Current Report on
     Form 8-K filed December 20, 1996.



(b)  No current reports on Form 8-K were filed during the quarter for which this
     report is filed.





<PAGE>


                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has caused  this  quarterly  report on Form 10-Q to be signed on its
behalf by the undersigned thereunto duly authorized on August 14, 2000.


                                  ISOLYSER COMPANY, INC.


                                  By:   s/Migirdic Nalbantyan
                                        ----------------------------------
                                        Migirdic Nalbantyan
                                        President & CEO
                                        (principal executive officer)


                                  By:   s/J. C. Rushing, III
                                        -----------------------------------
                                        J. C. Rushing, III
                                        Chief Financial Officer
                                        (principal financial officer)