SECURITIES AND EXCHANGE COMMISSION

                              Washington DC 20549

                                  FORM 10-QSB

  Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
                                      1934

For Quarter Ended August 31, 1999                   Commission File No. 0-5920

                           LANCER ORTHODONTICS, INC.
       (Exact Name of Small Business Issuer as Specified in its Charter)

          CALIFORNIA                                         95-2497155
(State or Other Jurisdiction of                           (I.R.S. Employer
  Incorporation or Organization)                       Identification No.)

                253 Pawnee Street, San Marcos, California 92069
                    (Address of Principal Executive Offices)

Issuer's telephone number, including area code:                 (760) 744-5585

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

            Yes       X                               No


<PAGE>

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:  2,076,420

Traditional small business disclosure format (check one):

            Yes       X                               No


PART I.     FINANCIAL INFORMATION

Item 1.     SUMMARIZED FINANCIAL INFORMATION

                           LANCER ORTHODONTICS, INC.
                      CONDENSED BALANCE SHEET (UNAUDITED)
                                    8/31/99

                                     ASSETS

CURRENT ASSETS:
     Cash                                                          $  214,082
     Accounts Receivable, less allowances for sales
        returns and doubtful receivables of $169,600                1,201,777
     Inventories                                                    2,284,662
     Prepaid Expenses                                                  33,637
        Total Current Assets                                        3,734,158

PROPERTY AND EQUIPMENT, at cost                                     2,396,227
     Less:  Accumulated depreciation                               (2,228,343)
                                                                      167,884
INTANGIBLE ASSETS:
     Marketing and Distribution Rights, net                           128,650
     Technology Use Rights, net                                       162,294
<PAGE>

                                                                      290,944
OTHER ASSETS                                                            6,560
        Total Assets                                               $4,199,546

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts Payable and Accrued Liabilities                      $  675,639
     Line of Credit                                                   180,000
        Total Current Liabilities                                     855,639

COMMITMENTS AND CONTINGENCIES                                              --

STOCKHOLDERS' EQUITY:
     Redeemable Convertible Preferred Stock, Series C,
       $.06 noncumulative annual dividend; $.75 par value:
       Authorized 250,000 shares; no shares issued and
       outstanding ($.75 liquidation preference)                           --
     Redeemable Convertible Preferred Stock, Series D,
       $.04 noncumulative annual dividend; $.50 par value:
       Authorized 500,000 shares; 370,483 issued and
       outstanding ($.50 liquidation preference:  aggregate
        liquidation preference of $185,242)                           185,242
     Common Stock, no par value: Authorized 50,000,000 shares;
       issued and outstanding 2,076,420                             4,661,575
     Accumulated Deficit                                           (1,502,910)
        Total Stockholders' Equity                                  3,343,907
        Total Liabilities and Stockholders' Equity                 $4,199,546


                           LANCER ORTHODONTICS, INC.
                 CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
<PAGE>



                                               FOR THE THREE MONTHS ENDED
                                                  8/31/99         8/31/98

NET SALES                                      $1,271,545        $1,540,302

COST OF SALES                                     901,083           941,277

     Gross Profit                                 370,462           599,025

OPERATING EXPENSES:
     Selling, General & Administrative            538,549           523,569
     Product Development                           56,665            32,322

TOTAL OPERATING EXPENSES                          595,214           555,891

(LOSS) INCOME FROM OPERATIONS                 (   224,752)           43,134

OTHER INCOME (EXPENSE):
     Interest Expense                         (     3,705)      (     1,979)
     Other Income (Expense), net                  170,403       (       132)

TOTAL OTHER INCOME (EXPENSE)                      166,698       (     2,111)

(LOSS) INCOME BEFORE INCOME TAXES             (    58,054)           41,023

INCOME TAXES                                          800               800

NET (LOSS) INCOME                             $(   58,854)      $    40,223


<PAGE>

PER SHARE DATA:

BASIC                                         $(      .03)      $       .02

DILUTED                                       $(      .03)      $       .02










                           LANCER ORTHODONTICS, INC.
                 CONDENSED STATEMENTS OF CASH FLOWS(UNAUDITED)


                                                    FOR THE THREE MONTHS ENDED
                                                     8/31/99          8/31/98

CASH FLOWS FROM OPERATING ACTIVITIES:
     Net (loss) income                             $( 58,854)        $ 40,223
     Adjustments to reconcile net income to
       net cash provided by (used in)operating
       activities:
          Depreciation and amortization               37,705           40,719
          Provision for losses on accounts
            receivable                              (  6,386)          20,175
          Provision for losses on inventory           12,000            9,000
          Common stock issued for services to
<PAGE>

            directors                                 23,170               --
          Net change in operating assets and
            liabilities:
           Accounts receivable                       156,329         ( 50,834)
           Inventories                              ( 89,508)        (289,161)
           Prepaid expenses                           18,208           33,525
           Insurance claim receivable                110,000               --
           Accounts payable and accrued liabilities ( 33,181)        (  2,764)

Net cash provided by (used in) operating activities  169,483         (199,117)


CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment             (  2,983)        (  8,615)

Net cash (used in) investing activities             (  2,983)        (  8,615)


CASH FLOWS FROM FINANCING ACTIVITIES:
     Repurchase of common stock                     ( 58,710)        (  4,488)

Net cash (used in) financing activities             ( 58,710)        (  4,488)


NET CHANGE IN CASH                                   107,790         (212,220)

CASH, beginning of period                            106,292          321,036

CASH, end of period                                 $214,082         $108,816



<PAGE>



                           LANCER ORTHODONTICS, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

(A) BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared in
accordance with the instructions to Form 10-QSB and therefore do not include all
information and notes necessary for a fair presentation of financial position,
results of operations, and cash flows in conformity with generally accepted
accounting principles.  The unaudited condensed financial statements include the
accounts of Lancer Orthodontics, Inc. (the "Company").  The operating results
for interim periods are unaudited and are not necessarily an indication of the
results to be expected for the full fiscal year.  In the opinion of management,
the results of operations as reported for the interim periods reflect all
adjustments which are necessary for a fair presentation of operating results.

(B) ORGANIZATION

The Company was incorporated on August 25, 1967, in the state of California, for
the purpose of engaging in the design, manufacture, and distribution of
orthodontic products.  The Company has a manufacturing facility in Mexico where
a majority of its inventory is manufactured (Note G).  The Company also
purchases certain orthodontic and dental products for purposes of resale.  Sales
are made directly to orthodontists world-wide through Company representatives
and independent distributors.  The Company also sells certain of its products on
a private label basis.

(C) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

<PAGE>

The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP"), requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period.  Significant estimates made by the Company's management
include, but are not limited to, allowances for doubtful accounts, allowances
for sales returns, the valuation of inventories, and the realizeability of
property and equipment through future operations.  Actual results could
materially differ from those estimates.

(D) STOCK BASED COMPENSATION

The Company accounts for stock based compensation under Statement of Financial
Accounting Standards No. 123 ("SFAS 123").  SFAS 123 defines a fair value based
method of accounting for stock based compensation.  However, SFAS 123 allows an
entity to continue to measure compensation cost related to stock and stock
options issued to employees using the intrinsic method of accounting prescribed
by Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock
Issued to Employees".  Entities electing to remain with the accounting method of
APB 25 must make pro forma disclosures of net income and earnings per share, as
if the fair value method of accounting defined in SFAS 123 had been applied.
The Company has elected to account for its stock based compensation to employees
under APB 25.

                           LANCER ORTHODONTICS, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued

(E) INSURANCE CLAIM


<PAGE>

Management of the Company completed an assessment of a theft of inventory
located at its facility in Mexicali, Mexico on April 6, 1999.  The carrying
value of the inventory stolen approximated $110,000, valued at standard cost,
which was reflected in the May 31, 1999 financial statements as a reduction in
inventories and an addition to insurance claim receivable.  In July 1999, the
Company settled the claim with the insurance carrier and received $279,672; the
value of the stolen inventory at net average selling price, less commissions and
royalties.  The Company recorded other income of $169,672 from the proceeds
received in excess of standard cost.

(F) LINE OF CREDIT

At August 31, 1999, the Company had a $1,000,000 line of credit with a bank.
Borrowings are made at prime plus .75% (9.0% at August 31, 1999) and are limited
to specified percentages of eligible accounts receivable.  The unused portion
available under the line of credit at August 31, 1999 was $182,442.  The line of
credit expires on November 3, 1999.

The line of credit is collateralized by substantially all the assets of the
Company, including inventories, receivables, and equipment.  The lending
agreement for the line of credit requires, among other things, that the Company
maintain a tangible net worth of $2,500,000, and a debt to tangible net worth
ratio of no more than 1 to 1.  The Company is not required to maintain
compensating balances in connection with this lending agreement.

(G) COMMITMENTS AND CONTINGENCIES

MANUFACTURING AGREEMENT - The Company has entered into a manufacturing
subcontractor agreement whereby, the subcontractor agreed to provide
manufacturing services to the Company through its affiliated entities located in
Mexicali, B.C., Mexico.  The Company has moved the majority of its manufacturing
operations to Mexico.  In December 1992, the Company renegotiated the agreement
<PAGE>

changing from an hourly rate per employee to a pass through of actual costs plus
a weekly administrative fee.  The amended agreement gives the Company greater
control over all costs associated with the manufacturing operation.  In July
1994, the Company again renegotiated the agreement, reducing the administrative
fee.  Effective April 1, 1996, the Company leased  the Mexicali  facility  under
a  separate  arrangement.  In November  1998, the  Company extended the
Manufacturing Agreement through December 2003.  The Company has retained the
option to convert the manufacturing operation to a wholly-owned subsidiary at
any time.  Should the Company discontinue operations in Mexico, it is
responsible for the accumulated employee seniority obligation as prescribed by
Mexican law.  At August 31, 1999, this obligation was approximately $258,000.
Such obligation is contingent in nature and accordingly has not been accrued in
the accompanying balance sheet.





                           LANCER ORTHODONTICS, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued

(G) COMMITMENTS AND CONTINGENCIES - continued

LEASES - The Company leases its main facility under a non-cancelable operating
lease expiring December 31, 2003, which requires monthly rental payments that
increase annually, from $2,900 per month in 1994 to $6,317 per month in 2003.
The Company also leases its Mexico facility under a non-cancelable operating
lease expiring October 2003, which requires average monthly rentals of
approximately $6,040.  The rentals are subject to annual increases based on the
United States Consumer Price Index.  Future aggregate minimum annual cash lease
payments are as follows:
<PAGE>

                     Years ending
                     May 31, 2000                      $138,362
                     May 31, 2001                       140,994
                     May 31, 2002                       143,733
                     May 31, 2003                       146,587
                     Thereafter                          74,884
                          Total                        $644,560

YEAR 2000 ISSUES _ Certain computerized systems use only two digits to record
the year in date fields.  Such systems may not be able to accurately process
dates ending in the year 2000 and after.  The effects of this issue will vary
from system to system and may adversely affect an entity's operations as well as
its ability to prepare financial statements.  The accounting and MRP software
for the Company'' main frame computer system has been upgraded to the year 2000
compliant and is actively supported by the developer.  The Company does not
anticipate to incur significant additional costs to be completely year 2000
compliant.

The Company does not place orders electronically nor does it make disbursements
to vendors or employees in that medium.  The Company has a broad base of
customers and suppliers and therefore is not heavily reliant on any one outside
company.  However, the Company has no way of completely knowing how the year
2000 may affect its various vendors or customers if such conversions are not
completed on a timely basis by them, and thus it cannot estimate with certainty
the impact the year 2000 may have on the Company.

(H) INCOME TAXES

At May 31, 1999, the Company had net tax operating loss carryforwards of
approximately $1,850,000 and business tax credits of approximately $150,000
available to offset future Federal taxable income and tax liabilities,
respectively.  The Federal carryforwards expire in varying amounts from 1999 to
<PAGE>

2012.  As of May 31, 1999, the Company had business tax credits of approximately
$23,000 available to offset future state income tax liabilities.  The Company's
state net operating loss carryforward totaling approximately $255,000 expired
during the year ended May 31, 1998.





                           LANCER ORTHODONTICS, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued

(I) NET (LOSS) INCOME PER COMMON SHARE AND DIVIDENDS

The Company calculates earnings per share in accordance with Statement of
Financial Accounting Standards ("SFAS 128").  SFAS 128 replaces the presentation
of primary and fully diluted earnings per share with the presentation of basic
and diluted earnings per share.  Basic earnings per share excludes dilution and
is calculated by dividing income available to common stockholders  by  the
weighted-average  number  of  common  shares  outstanding for the period.

Diluted earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity.

                                                EARNINGS PER SHARE (UNAUDITED)
                                                  FOR THE THREE  MONTHS ENDED
                                                  8/31/99           8/31/98
      BASIC (LOSS) EARNINGS PER SHARE:

<PAGE>

Net (loss) income                             $(   58,854       $   40,223

Net (loss) income applicable to common
   shareholders                               $(   58,854)       $   40,223

Weighted average number of common shares        2,075,799         2,118,280

Basic (Loss) Earnings per Share               $(      .03)       $      .02

      DILUTED (LOSS) EARNINGS PER SHARE:

Net (loss) income from primary income
   per common share                           $(   58,854)       $   40,223

Net (loss) income for diluted earnings
   per share                                  $(   58,854)       $   40,223

Weighted average number of shares used in
   Calculation of basic earnings
   per common share                             2,075,799         2,118,280

Add:  Common equivalent shares                     52,926            52,926

Weighted average number of shares used in
      calculation of diluted earnings
      per share                                 2,128,725         2,171,206

Diluted (loss) earnings per share             $(      .03)       $      .02




<PAGE>



                           LANCER ORTHODONTICS, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) _ continued

(J) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

                                              FOR THE THREE MONTHS ENDED
                                                 8/31/99            8/31/98
   Sales to unaffiliated customers:
         United States                         $  836,392        $  871,154
         Europe                                   224,799           348,766
         South America                             98,150           185,549
         Other Foreign                            112,204           134,833
                                               $1,271,545        $1,540,302

   No other geographic concentrations exist where net sales exceed 10% of total
net sales.

   Sales or transfers between geographic areas       none              none

   Operating (loss) profit:
         United States                        $( 144,749)        $   64,001
         Europe                                (  41,329)         (  10,875)
         South America                         (  18,045)         (   5,784)
         Other Foreign                         (  20,629)         (   4,208)
                                              $( 224,752)        $   43,134

(K) STOCKHOLDERS' EQUITY


<PAGE>

In March 1998, the Company's Board of Directors approved the repurchase of up to
4% of the Company's outstanding common stock over twelve months.  In June 1999,
the repurchase was extended until May 2000.  During the three months ended
August 31, 1999, the Company repurchased and retired 56,840 shares of its common
stock for an aggregate consideration of $58,706.

The Company issued 27,295 new shares of its common stock valued at $23,170 for
directors fees previously outstanding and included in accrued liabilities as of
May 31, 1999.


                           LANCER ORTHODONTICS, INC.

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

Except for historical information contained herein, the statements in this Form
10-QSB are forward-looking statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.  Forward-
looking statements involve known and unknown risks and uncertainties which may
cause the Company's actual results in future periods to differ materially from
forecasted results.  These risks and uncertainties include, among other things,
the continued demand for the Company's products, availability of raw materials
and the state of the economy.  These and other risks are described in the
Company's Annual Report on Form 10-KSB and in the Company's other filings with
the Securities and Exchange Commission.

RESULTS OF OPERATIONS

For the three months ended August 31, 1999, net income decreased $99,077 as
compared to the year earlier period.  The decrease in net income is primarily
attributable to the decrease in sales, offset by the insurance claim proceeds.
<PAGE>


For the three months ended August 31, 1999, net sales decreased $268,757 (17.4%)
as compared to the year earlier period.  International net sales decreased
$233,995, primarily in Europe and South America, attributable to economic
conditions and seasonal demand.  The decrease in domestic net sales of $34,762
is attributable to increased discounting due to competition pressures.

For the three months ended August 31, 1999, cost of sales as a percentage of
sales totaled 70.9%, a increase of 9.8% as compared to the year earlier period
which totaled 61.1%.  This increase is attributable to decreased production due
to demand, while costs remained fixed.  The Company is in the process of
automating several of its manufacturing processes which should reduce unit
costs.

For the three months ended August 31, 1999, selling and general and
administrative expenses increased $14,980 (2.9%) as compared to the year earlier
period.  The increase is primarily attributable to an increase in financial
personnel and professional fees.

For the three months ended August 31, 1999, product development expenses
increased $24,343 (75.3%) as compared to the year earlier period.  The increase
is primarily attributable to development costs of an innovative dental amalgum.

For the three months ended August 31, 1999, interest expense increased $1,726
(87.2%) as compared to the year earlier period.  The increase is attributable to
borrowings against the line of credit to finance development costs and an
increase in the prime rate.

For the three months ended August 31, 1999, other income of $169,672 was
realized from the insurance claim settlement of $279,672 for the theft of
inventory at the Company's Mexicali facility, less $110,000 insurance claim
receivable valued at cost.
<PAGE>




                           LANCER ORTHODONTICS, INC.

FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES

The Company's financial condition at August 31, 1999 and its previous two fiscal
year ends was as follows:
                                       08/31/99       05/31/99       05/31/98
Current Assets                       $3,734,158     $3,827,011     $3,488,437
Current Liabilities                     855,639        888,820        684,222
Working Capital                       2,878,519      2,938,191      2,804,215
Bank Debt                               180,000        180,000        100,000
Shareholder Equity                    3,343,907      3,438,301      3,404,548
Total Assets                          4,199,546      4,327,121      4,088,770

Cash increased $107,790 during the three months ended August 31, 1999, primarily
due to the insurance claim settlement.

Working capital decreased $59,672 during the three months ended August 31, 1999,
primarily attributable to a decrease in sales, partially offset by an increase
in inventories and cash.  The Company is currently considering investing from
$200,000 to $300,000 in replacement equipment.  Funds for this investment will
come from cash flow and new borrowings.  The Company expects to meet the rest of
its cash requirements out of its cash reserves, cash flow, and line of credit.

PART II.    OTHER INFORMATION

Item 1.     LEGAL PROCEEDINGS  Not Applicable

Item 2.     CHANGES IN SECURITIES  Not Applicable
<PAGE>


Item 3.     DEFAULTS UPON SENIOR SECURITIES  Not Applicable

Item 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            Not Applicable

Item 5.     OTHER INFORMATION  Not Applicable

Item 6.     EXHIBITS AND REPORTS ON FORM 8-K

            There were no Form 8-k reports filed during the quarter.











                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                LANCER ORTHODONTICS, INC.
                                                        Registrant

<PAGE>




Date October 15, 1999                     By /s/ Douglas D. Miller
                                               Douglas D. Miller,
                                              President and Chief Operating
                                              Officer

























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