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

                                    FORM 10-Q


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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997

                         Commission File Number 0-21703


                         STYLING TECHNOLOGY CORPORATION
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)


          DELAWARE                                               75-2665378
------------------------------                               -------------------
(State or Other Jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)


2390 East Camelback Road, Suite 435 Phoenix, Arizona               85016
----------------------------------------------------             ----------
     (address of principal executive offices)                    (zip code)


                                 (972) 296-2887
              ----------------------------------------------------
              (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 the past 90 days. Yes [X] No [ ]

The number of shares of the  issuer's  class of  capital  stock as of the latest
practicable  date, is as follows:

   3,948,703 shares of Common Stock, $.0001 par value, as of August 14, 1997.
   --------------------------------------------------------------------------
<PAGE>


                         STYLING TECHNOLOGY CORPORATION

                          QUARTERLY REPORT ON FORM 10-Q
                       FOR THE QUARTER ENDED JUNE 30, 1997

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

         Condensed Consolidated Balance Sheets -
           December 31, 1996 and June 30, 1997 .............................. 3

         Condensed Consolidated Statements of Operations -
           Three Months ended June 30, 1996 (Predecessors)
            and Three Months ended June 30, 1997............................. 4

         Condensed Consolidated Statements of Operations -
           Six Months ended June 30, 1996 (Predecessors) 
           and June 30, 1997................................................. 5

         Condensed Consolidated Statements of Cash Flows (Predecessors) -
           Six Months ended June 30, 1996.................................... 6

         Condensed Consolidated Statement of Cash Flows -
           Six Months ended June 30, 1997.................................... 7

         Notes to Condensed Consolidated Financial Statements................ 8

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations............................... 10

PART II. OTHER INFORMATION................................................... 14



                                       2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS

                         STYLING TECHNOLOGY CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    AS OF JUNE 30, 1997 AND DECEMBER 31, 1996

                                                                       June 30,
                                                       December 31,     1997
                                                           1996      (Unaudited)
                                                       -----------   -----------
                                     ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                           $ 4,492,000   $ 1,679,000
  Accounts receivable, net of allowance for doubtful
    accounts of $427,000 at December 31, 1996 and
    June 30, 1997                                       1,640,000     5,667,000
  Inventories, net                                      2,635,000     4,854,000
  Prepaid expenses and other current assets               292,000       820,000
                                                      -----------   -----------
        Total current assets                            9,059,000    13,020,000
                                                      -----------   -----------

PROPERTY AND EQUIPMENT, net                             1,125,000     1,457,000

GOODWILL AND OTHER                                     22,050,000    43,943,000
                                                      -----------   -----------
        Total assets                                  $32,234,000   $58,420,000
                                                      ===========   ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                    $ 3,000,000   $ 2,045,000
  Accrued liabilities                                   1,518,000     2,810,000
  Current portion of long-term debt                        83,000     1,600,000
                                                      -----------   -----------
        Total current liabilities                       4,601,000     6,455,000
                                                      -----------   -----------

LONG-TERM DEBT, less current portion                    2,316,000    24,152,000
                                                      -----------   -----------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock, $.0001 par value, 1,000,000
     shares authorized, no shares issued
     and outstanding                                           --            --
   Common stock, $.0001 par value, 10,000,000
     shares authorized, 4,756,554 shares issued
     and 3,948,703 outstanding at December 31, 1996
     and June 30, 1997                                      1,000         1,000
   Additional paid-in capital                          27,455,000    27,866,000
   Retained earnings (deficit)                           (339,000)    1,746,000
   Treasury stock                                      (1,800,000)   (1,800,000)
                                                      -----------   -----------
        Total stockholders' equity                     25,317,000    27,813,000
                                                      -----------   -----------
        Total liabilities and stockholders' equity    $32,234,000   $58,420,000
                                                      ===========   ===========

              The accompanying notes are an integral part of these
                     condensed consolidated balance sheets.

                                       3
<PAGE>
                         STYLING TECHNOLOGY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                        Predecessor's Three Months Ended June 30, 1996   Three Months
                                        -----------------------------------------------     Ended
                                                       Body                                June 30,
                                          Gena        Drench         JDS         KII         1997
                                        ----------   ---------     --------   ---------   ----------
<S>                                     <C>         <C>           <C>         <C>         <C>       
NET SALES                               $2,304,000  $ 3,747,000   $ 764,000   $ 291,000   $7,437,000

COST OF SALES                            1,328,000    2,159,000     305,000     134,000    3,246,000
                                        ----------  -----------   ---------   ---------   ----------

         Gross profit                      976,000    1,588,000     459,000     157,000    4,191,000

SELLING, GENERAL AND
   ADMINISTRATIVE EXPENSES                 656,000    1,235,000     462,000     147,000    2,333,000
                                        ----------  -----------   ---------   ---------   ----------

         Income (loss) from operations     320,000      353,000          (3)     10,000    1,858,000

INTEREST EXPENSE (INCOME) AND
   OTHER, NET                                6,000      (41,000)      9,000      18,000      114,000
                                        ----------  -----------   ---------   ---------   ----------

         Income (loss) before income       314,000      394,000         (12)     (8,000)   1,744,000
         taxes

PROVISION FOR INCOME TAXES                 109,000      150,000          --          --      713,000
                                        ----------  -----------   ---------   ---------   ----------

         Net income (loss)              $  205,000  $   244,000   $     (12)  $  (8,000)  $1,031,000
                                        ==========  ===========   =========   =========   ==========
WEIGHTED AVERAGE SHARES
   OUTSTANDING                                                                             4,129,000
                                                                                          ==========
NET INCOME PER COMMON SHARE:

   Primary                                                                                $      .25
                                                                                          ==========

   Fully diluted                                                                          $      .25
                                                                                          ==========
</TABLE>

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

                                       4
<PAGE>

                         STYLING TECHNOLOGY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                          Predecessor's Six Months Ended June 30, 1996    Six Months
                                        -----------------------------------------------     Ended
                                                       Body                                June 30,
                                          Gena        Drench         JDS         KII         1997
                                        ----------   ---------     --------   ---------   ----------
<S>                                    <C>          <C>          <C>          <C>        <C>        
NET SALES                              $4,352,000   $6,586,000   $1,665,000   $736,000   $14,916,000

COST OF SALES                           2,536,000    3,465,000      675,000    343,000     6,480,000
                                       ----------   ----------   ----------   --------   -----------

         Gross profit                   1,816,000    3,121,000      990,000    393,000     8,436,000

SELLING, GENERAL AND
   ADMINISTRATIVE EXPENSES              1,378,000    2,402,000      928,000    329,000     4,731,000
                                       ----------   ----------   ----------   --------   -----------

         Income from operations           438,000      719,000       62,000     64,000     3,705,000

INTEREST EXPENSE AND OTHER, NET            30,000        9,000       19,000     39,000       174,000
                                       ----------   ----------   ----------   --------   -----------

         Income  before income taxes      408,000      710,000       43,000     25,000     3,531,000

PROVISION FOR INCOME TAXES                144,000      270,000       17,000         --     1,446,000
                                       ----------   ----------   ----------   --------   -----------

         Net income                    $  264,000   $  440,000   $   26,000   $ 25,000   $ 2,085,000
                                       ==========   ==========   ==========   ========   ===========
WEIGHTED AVERAGE SHARES
   OUTSTANDING                                                                             4,124,000
                                                                                         ===========
NET INCOME PER COMMON SHARE:

   Primary                                                                               $       .51
                                                                                         ===========

   Fully diluted                                                                         $       .51
                                                                                         ===========
</TABLE>

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

                                       5
<PAGE>

                         STYLING TECHNOLOGY CORPORATION
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - PREDECESSORS
                         SIX MONTHS ENDED JUNE 30, 1997
                                 (UNAUDITED)
<TABLE>
<CAPTION>
                                                               Body
                                                   Gena       Drench        JDS        KII
                                                   ----       ------        ---        ---
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                             <C>         <C>         <C>         <C>      
  Net income                                    $ 264,000   $ 440,000   $  26,000   $  25,000
  Adjustments to reconcile net income to net
   cash used in operating activities-
    Depreciation and amortization                  72,000      66,000       7,000      11,000
  Changes in assets and liabilities-
    Accounts receivable                           (13,000)   (643,000)     66,000      43,000
    Inventory                                     258,000     997,000     (58,000)    146,000
    Prepaid expenses and other assets              85,000     141,000       9,000      (4,000)
    Accounts payable and
      accrued liabilities                        (112,000)   (242,000)     79,000     (33,000)
                                                ---------   ---------   ---------   ---------
         Net cash provided by operating
           activities                             554,000     759,000     129,000     188,000
                                                ---------   ---------   ---------   ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property, plant and equipment       (10,000)     (3,000)         --          --
                                                ---------   ---------   ---------   ---------

         Net cash used in investing activities    (10,000)     (3,000)         --          --
                                                ---------   ---------   ---------   ---------


CASH FLOWS FROM FINANCING ACTIVITIES:
 Note Payable                                    (146,000)         --          --          --
 Bank overdraft                                        --     127,000     (90,000)         --
 Payments of long-term debt                        60,000          --          --    (105,000)
 Net payments to parent                           (37,000)   (883,000)         --          --
                                                ---------   ---------   ---------   ---------

         Net cash used in financing activities   (123,000)   (756,000)    (90,000)   (105,000)
                                                ---------   ---------   ---------   ---------

INCREASE IN CASH                                  421,000          --      39,000      83,000

CASH AND CASH EQUIVALENTS, beginning of
  period                                          198,000          --      27,000      96,000
                                                ---------   ---------   ---------   ---------

CASH AND CASH EQUIVALENTS, end of period        $ 619,000   $      --   $  66,000   $ 179,000
                                                =========   =========   =========   =========
</TABLE>


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

                                       6
<PAGE>
                         STYLING TECHNOLOGY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                         SIX MONTHS ENDED JUNE 30, 1997
                                   (UNAUDITED)


CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                                        $  2,085,000
 Adjustments to reconcile net income to net cash used in
   operating activities -
     Depreciation and amortization                                      578,000
     Interest accretion on note payable                                  85,000
   Changes in assets and liabilities -
     Accounts receivable                                             (2,829,000)
     Inventory                                                           40,000
     Prepaid expenses and other assets                                 (161,000)
     Accounts payable and accrued liabilities                        (1,635,000)
                                                                   ------------

         Net cash used in operating activities                       (1,837,000)
                                                                   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of acquired businesses, net of cash acquired              (21,816,000)
 Purchases of property, plant and equipment                            (160,000)

         Net cash used in investing activities                      (21,976,000)
                                                                   ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Repayment of notes payable                                            (454,000)
 Proceeds from credit facility, net of financing costs               21,454,000

         Net cash provided by financing activities                   21,000,000
                                                                   ------------

DECREASE IN CASH AND CASH EQUIVALENTS                                (2,813,000)

CASH AND CASH EQUIVALENTS, beginning of period                        4,492,000
                                                                   ------------

CASH AND CASH EQUIVALENTS, end of period                           $  1,679,000
                                                                   ============

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

                                       7
<PAGE>
                         STYLING TECHNOLOGY CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. FORMATION OF THE COMPANY:

        ACQUISITIONS AND INITIAL PUBLIC OFFERING

Styling Technology  Corporation (the Company) was formed in June 1995. From June
1995 through November 26, 1996, the Company conducted no operations and its only
activities  related to negotiating  acquisitions and related  financing.  During
November 1996, the Company  completed an initial public  offering (the Offering)
of 3,115,852 shares of its common stock. Simultaneously with the consummation of
the Offering, the Company acquired in separate transactions four businesses that
develop,  produce,  and market  professional salon products  (collectively,  the
Acquired Businesses).

The Company  acquired all of the outstanding  stock of Gena  Laboratories,  Inc.
(Gena) and JDS Manufacturing  Co., Inc. (JDS) and certain assets and liabilities
of the Body  Drench  Division  of Designs by  Norvell,  Inc.  (Body  Drench) and
Kotchammer  Investments,  Inc.  (KII).  The  cost  of the  Acquired  Businesses,
including direct acquisition costs, was approximately $22,900,000.  The combined
purchase  price was funded with  approximately  $20,800,000 in cash from the net
proceeds of the  Offering,  and  approximately  $2,100,000  of seller  carryback
financing  and issuance of common stock.  The  acquisitions  were  accounted for
using the purchase method of accounting. The historical financial results of the
individual  Acquired  Businesses are presented for  comparative  purposes as the
Predecessors of the Company.

Immediately  following  the  purchase of the  Acquired  Businesses,  the Company
commenced operations on November 27, 1996. After the purchase, the Company began
consolidating its operations,  negotiated a new  manufacturing  agreement with a
major  supplier,  met with major  customers to discuss its new marketing  plans,
strengthened its distribution  network,  and established its  infrastructure and
organization  for the  future  growth  of  existing  operations  and for  future
acquisitions.

During March 1997, the Company acquired inventory and other assets of the Utopia
line  of  high-end  tanning  products  from  Creative  Laboratories,   Inc.  for
approximately $350,000.  Effective June 26, 1997, the Company acquired U.K. ABBA
Products,  Inc., a producer and marketer of an  aromatherapy  based line of hair
care products, for $20,000,000 (see Note 3).

NOTE 2.  BASIS OF PRESENTATION:

The  consolidated  financial  statements  included  herein  have  been  prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
The statements  presented do not include all information and footnotes  required
to be in conformity with generally accepted  accounting  principles for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring  adjustments)  considered  necessary for a fair presentation
have been included. Results of operations in interim periods are not necessarily
indicative of results for a full year. These consolidated  financial  statements
and notes thereto should be read in conjunction with the Company's  consolidated
financial  statements and notes thereto  included in the Company's annual report
on Form 10-K for the year ended December 31, 1996. The  preparation of financial
statements in accordance with generally accepted accounting  principles requires
management to make estimates and  assumptions.  Such  estimates and  assumptions
affect the reported  amounts of assets and  liabilities as well as disclosure of
contingent  assets and liabilities at the date of the accompanying  consolidated
financial  statements,  and the  reported  amounts of the  revenues and expenses
during the reporting periods. Actual results could differ from those estimates.

                                       8
<PAGE>

NOTE 3.  ACQUISITION OF U.K. ABBA PRODUCTS, INC.

Effective June 26, 1997, the Company  acquired all of the issued and outstanding
capital stock of U.K. ABBA Products,  Inc.,  (ABBA), a producer of a proprietary
line of aromatherapy-based  professional hair care products.  The Company paid a
purchase  price of $20  million  for the  stock of ABBA.  This  transaction  was
accounted for using the purchase method of accounting.

The  following  unaudited  pro forma  summary  includes the combined  results of
operations  of  Company  and  ABBA as if the  acquisition  had  occurred  at the
beginning  of 1997,  after  giving  effect  to  certain  pro  forma  adjustments
permitted by the disclosure  requirements of Accounting Principles Board Opinion
No. 16,  BUSINESS  COMBINATIONS.  These  adjustments  include only the effect of
amortization  of goodwill,  interest  expense  that would have been  incurred to
finance the purchase and the estimated related income tax effects. The pro forma
financial  data  is for  informational  purposes  only,  and is not  necessarily
indicative  of the  results  of  operations  as they  would  have  been  had the
transactions  been  effected  on January 1,  1997,  and is also not  necessarily
indicative of future operating results.

For the six months June 30, 1997  ended,  pro forma net sales were  $20,658,000,
income from  operations  $3,724,000,  net income was $1,297,000 and earnings per
share was $0.32.

In connection with the acquisition of ABBA, the Company entered into a six-year,
$28 million senior credit  facility (The Credit  Facility) with a group of banks
for whom Credit Agricole  Indosuez acted as agent. The Credit Facility  consists
of Term Loan A, Term Loan B and a Revolving  Credit  Facility.  Term Loan A is a
$13.0  million  term loan  maturing  in June 2002 with  principal  and  interest
payable  quarterly,  at the  agent's  prime rate plus  1.50%  (10.0% at June 30,
1997).  Term  Loan B is a $10.0  million  term loan  maturing  in June 2003 with
principal  and interest  payable  quarterly at the agent's prime rate plus 2.00%
(10.5% at June 30, 1997). The Revolving  Credit Facility,  which matures in June
2002, provides for up to $5.0 million in borrowings that may be used for general
corporate  purposes,  including  working capital,  acquisitions and repayment of
existing  indebtedness.  Interest is payable quarterly at the agent's prime rate
plus 1.50%. As of June 30, 1997, there were no borrowings  outstanding under the
Revolving Credit Facility. Under the Credit Facility, the Company may prepay all
or part of the loan  amounts  at any  time,  without  penalty.  As a part of the
financing,  the Company has granted a security  interest in substantially all of
its assets to the agent, and recorded  approximately  $2.0 million in loan costs
(including the fair value of 150,000 market value warrants issued to the agent),
which are being amortized over the maturity period of the Credit Facility.

NOTE 4.  INVENTORY

Inventories consist of the following at:

                                       June 30, 1997       December 31,
                                        (Unaudited)           1996
                                        -----------        ---------- 
  Raw materials and work-in-process     $1,346,000         $1,325,000

  Finished goods                         3,508,000          1,310,000
                                        ----------         ----------
                                        $4,854,000         $2,635,000
                                        ==========         ==========

                                       9
<PAGE>
NOTE 5.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The  Financial  Accounting  Standards  Board has issued  Statement  of Financial
Accounting  Standard  No.  128,  (SFAS  No.  128),  EARNINGS  PER  SHARE,  which
established a new  accounting  principle for  accounting for earnings per share.
SFAS No. 128 is effective for the Company's fiscal year ended December 31, 1998.
When adopted, SFAS No. 128 will require restatement of prior years' earnings per
share.  The pro forma SFAS No.  128  earnings  per share is as  follows  for all
periods presented.

                             Three Months        Six Months
                                Ended              Ended
                               June 30,           June 30,
                                1997               1997
                             ------------        ----------
  Basic EPS                     $.26               $.53
  Diluted EPS                   .25                 .51

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

INTRODUCTION

         The Company develops, produces, and markets high-end professional salon
products,  including  hair care,  nail care,  and skin and body care products as
well as salon appliances and salonwear. The Company sells its products primarily
to beauty and tanning supply  distributors and, to a lesser extent,  directly to
spas, resorts, health and country clubs, beauty salon chains, and hair, nail and
tanning salons throughout the United States as well as in Canada,  Europe, South
America,  Australia,  and New Zealand.  The Company offers a diversified line of
well-established,  brand-name professional salon products that have been popular
in the professional salon products industry for more than 10 years.

         The  Company  was  founded  in June 1995 and  commenced  operations  on
November  26,  1996.  On that date,  simultaneous  with the  consummation  of an
initial public offering,  the Company acquired four professional  salon products
businesses  (the  "Acquired  Businesses")  that,  on a  combined  basis,  have a
diversified line of well-established,  brand-name salon products. In March 1997,
the Company  acquired the Utopia line of premium tanning  products from Creative
Laboratories,  Inc.  Effective  June 26, 1997,  the Company  acquired  U.K. ABBA
Products,  Inc., a producer and marketer of an  aromatherapy  based line of hair
care products, for $20,000,000.

         Except for the historical  information contained herein, the discussion
in this Report contains or may contain  forward-looking  statements that involve
risks and  uncertainties.  The Company's actual results could differ  materially
from those  discussed  here.  Factors  that could  cause or  contribute  to such
differences  include, but are not limited to, those discussed herein, as well as
those factors  discussed under "Special  Considerations"  contained in Item 1 of
the Company's Form 10-K for the fiscal year ended December 31, 1996.  Historical
Results are not  necessarily  indicative of trends in operating  results for any
future period.

                                       10
<PAGE>

RESULTS OF OPERATIONS - THREE MONTHS ENDED AND SIX MONTHS ENDED JUNE 30, 1997

         The Company  earned net income of $1,031,000,  or $0.25 per share,  for
the  three  months  ended  June 30,  1997.  The  Company  earned  net  income of
$2,085,000,  or $0.51 per share,  for the six months ended June 30, 1997.  These
results mark significant  improvement over the operating results of the Acquired
Businesses  during  the  same  period  in  1996.  The  Company   attributes  the
improvement  in net income  during the three and six months  ended June 30, 1997
primarily to the  successful  implementation  of a key component of its business
strategy, the enhancement of operating efficiencies of the Acquired Businesses.

         Net sales  amounted to  $7,437,000  for the three months ended June 30,
1997,  compared to combined net sales for the Acquired  Businesses of $7,106,000
for the three months ended June 30, 1996. Net sales amounted to $14,916,000  for
the six months  ended June 30,  1997,  compared  to  combined  net sales for the
Acquired  Businesses of $13,339,000  for the six months ended June 30, 1996. The
$1,577,000,  or 12%,  increase in sales was  primarily  the result of  increased
sales of the  Company's  Body Drench and Gena  product  lines as compared to the
sales achieved by the individual  Acquired Businesses in the same periods during
1997.  In  particular,  the  Company's  ability  to  satisfy  demand,  which had
previously  gone  unmet  with  respect  to the Body  Drench  line due to capital
constraints  of the prior owners,  resulted in  substantial  sales growth in the
periods.

         Cost of sales  amounted to  $3,246,000,  or 44% as a percentage  of net
sales, for the three months ended June 30, 1997, compared to $3,926,000,  or 55%
as a percentage  of the combined  net sales of the Acquired  Businesses  for the
three months ended June 30, 1996.  Cost of sales amounted to $6,480,000,  or 43%
as a percentage of net sales,  for the six months ended June 30, 1997,  compared
to $7,019,000,  or 53% as a percentage of the combined net sales of the Acquired
Businesses,  for  the six  months  ended  June  30,  1996.  As a  result  of the
foregoing, the Company realized gross profit for the three months and six months
ended June 30,1997, of $4,191,000, or 56%, and $8,436,000, or 57%, respectively,
compared to $3,180,000, or 45%, and $6,320,000,  or 47%, respectively,  realized
by the Acquired Businesses on a combined basis for the corresponding  periods in
1996. This improvement in gross margin  percentage is attributable  primarily to
the  negotiation  of reduced  product  costs in  December  1996 with the primary
supplier of the  Company's  Body Drench Line,  as well as the  consolidation  of
warehousing and production  functions of the Gena and Alpha 9/Omni product lines
at  the  Company's  Duncanville,  Texas  facility,  as  well  as  the  strategic
outsourcing of certain Alpha 9/Omni production functions.

         Selling, general, and administrative expenses were $2,333,000 or 31% as
a percentage of net sales, for the three months ended June 30, 1997, compared to
$2,500,000,  or 35% as a  percentage  of the  combined net sales of the Acquired
businesses,  for the three  months ended June 30, 1996.  Selling,  general,  and
administrative  expenses were  $4,731,000,  or 32% as a percentage of net sales,
for the six months  ended June 30,  1997,  compared to  $5,037,000,  or 38% as a
percentage  of the combined net sales of the  Acquired  Businesses,  for the six
months  ended  June  30,  1996.  This  improvement  in  selling,   general,  and
administrative  expenses as a percentage of net sales is primarily  attributable
to  the  elimination  of  duplicative   management  and  other  personnel,   the
consolidation of certain accounting,  human resources,  and other administrative
functions of the Acquired Businesses, partially offset by approximately $400,000
of non-cash  goodwill  amortization  resulting from  acquisitions  and increased
costs of operating as a public company.

                                       11
<PAGE>

         The  provision  for  income  taxes for the three  months and six months
ended June 30, 1997  amounted to $713,000 and  $1,446,000,  respectively,  which
represents an effective tax rate of approximately 41%.

         Earnings  before   interest,   taxes,   depreciation  and  amortization
("EBITDA") was $2,184,000 for the three months ended June 30, 1997,  compared to
$870,000  on a  combined  basis for the  Acquired  Businesses.  Earnings  before
interest,  taxes,  depreciation,  and amortization ("EBITDA") was $4,284,000 for
the six months ended June 30, 1997,  compared to $1,439,000 on a combined  basis
for the Acquired  Businesses as a result of the factors described above.  EBITDA
is not  intended to  represent  net cash  provided by  operating  activities  as
defined by generally accepted accounting principles and should not be considered
as an alternative  to net income as an indicator of operating  performance or to
net cash provided by operating activities as a measure of liquidity. The Company
believes  EBITDA is a measure  commonly  reported  and widely used by  analysts,
investors,  and other  interested  parties who monitor  performance of companies
that employ a consolidation or "roll-up" strategy. Accordingly, this information
has been disclosed herein to permit a more complete  comparative analysis of the
Company's operating performance relative to other consolidators.

SEASONALITY

         Sales of the  Company's  indoor  tanning  products,  which  comprise  a
significant  portion of the Company's Body Drench and Utopia product lines,  are
expected to be lowest in the third calendar quarter  corresponding  with the end
of the  indoor  tanning  season in the  United  States.  The  Company  believes,
however,  that its  efforts  to  increase  its  distribution  of indoor  tanning
products in Europe and other international  locations will lessen the effects of
seasonal  fluctuations on its sales.  In addition,  the acquisition of U.K. ABBA
Products, Inc., which does not have a significant seasonal component,  will help
to lessen the seasonal effects described above on the consolidated operations of
the Company.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's working capital position  increased to $6,565,000 at June
30, 1997 from  $4,458,000  at December 31, 1996.  The increase of  $2,107,000 is
primarily  due to the Company's  results of operations  for the six months ended
June 30, 1997. The Company's  working capital at December 31, 1996 was primarily
the result of the  completion of an initial  public  offering in November  1996,
which  resulted in net  proceeds to the  Company of  approximately  $27,200,000,
reduced by the  simultaneous  distribution  of the cash  portion of the purchase
price of the Acquired Businesses of approximately $20,500,000 and the repurchase
of treasury shares from a founder of the Company for $1,800,000.

         During the six months ended June 30, 1997, the Company used  $1,837,000
of cash  in  operating  activities,  which  resulted  primarily  from  increased
investments  in accounts  receivable  and the reduction of accounts  payable and
accrued liabilities of $2,829,000 and $1,635,000,  respectively.  The investment
in accounts  receivable is directly  related to strong  customer  demand and the
resulting net sales  recorded in the period as well as an unusually low accounts
receivable  balance at December  31,  1996,  due to the  Company's  focus on the
consolidation   of  operations   following  its  initial  public   offering  and
simultaneous  acquisition  of the  Acquired  Businesses  in November  1996.  The
reduction of accounts payable and accrued  liabilities during the period relates
primarily  to the  payment  of  liabilities  assumed in the  acquisition  of the
Acquired Businesses as well as related accrued acquisition and offering costs.

                                       12
<PAGE>

Effective June 26, 1997, the Company  acquired all of the issued and outstanding
capital stock of U.K. ABBA Products,  Inc.,  (ABBA), a producer of a proprietary
line of aromatherapy-based  professional hair care products.  The Company paid a
purchase  price of $20  million  for the  stock of ABBA.  This  transaction  was
accounted for using the purchase method of accounting.

In connection with the acquisition of ABBA, the Company entered into a six-year,
$28 million senior credit  Facility (The Credit  Facility) with a group of banks
for whom Credit Agricole  Indosuez acted as agent. The Credit Facility  consists
of Term Loan A, Term Loan B and a Revolving  Credit  Facility.  Term Loan A is a
$13.0  million  term loan  maturing  in June 2002 with  principal  and  interest
payable  quarterly,  at the  agent's  prime rate plus  1.50%  (10.0% at June 30,
1997).  Term  Loan B is a $10.0  million  term loan  maturing  in June 2003 with
principal  and interest  payable  quarterly at the agent's prime rate plus 2.00%
(10.5% at June 30, 1997). The Revolving  Credit Facility,  which matures in June
2002,  provides for up to 5.0 million in borrowings that may be used for general
corporate  purposes,  including  working capital,  acquisitions and repayment of
existing  indebtedness.  Interest is payable quarterly at the agent's prime rate
plus 1.50%. As of June 30, 1997, there were no borrowings  outstanding under the
Revolving Credit Facility.

         The Company's line of credit,  current cash resources and expected cash
flows from  operations  are  expected  to be  sufficient  to fund the  Company's
capital needs during the next twelve months at its current level of  operations,
apart from capital needs resulting from acquisitions.  However,  the Company may
be required to obtain additional capital to fund its planned growth. The Company
plans  to  pursue  strategic  acquisitions  to  capitalize  on  the  substantial
fragmentation and growth potential  existing in the professional  salon products
market  by  acquiring   professional   salon   products   companies   possessing
complementary  products with well-recognized brand names. The Company intends to
fund its future capital needs through a combination  of current cash  resources,
expected  cash flows from  operations,  bank  financing,  seller notes  payable,
issuance  of common  stock,  and  additional  public or  private  debt or equity
financing.  The availability of such capital  resources cannot be assured and is
dependent upon prevailing market  conditions,  interest rates, and the financial
condition of the Company.


                                       13
<PAGE>

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Not applicable.

ITEM 2.  CHANGES IN SECURITIES

         Pursuant  to  a  registration  exemption  under  Section  4(2)  of  the
Securities  Act of 1933,  the Company  granted  James A. Brooks,  Peter W. Burg,
Daniel Howell, and Sylvan Schefler,  each a director of the Company,  options to
purchase  2,500 shares of Common Stock at an exercise price of $10.875 per share
on June 2, 1997. The options vest and become exercisable in June 1998.  Pursuant
to the same exemption,  the Company granted Michael H. Feinstein,  a director of
the  Company,  options to purchase  5,000  shares of Common Stock at an exercise
price of $10.875 per share upon his  appointment  to the Board of  Directors  on
June 24, 1997. The options vest and become exercisable in June 1998. Pursuant to
the same exemption,  the Company  granted Credit Agricole  Indosuez a warrant to
purchase up to 150,000 shares of Common Stock at an exercise price of $10.18 per
share on June 25,1997, in connection  with the Company's  credit  facility with
Credit Agricole Indosuez. The warrants expire in June 2002.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Company's 1997 Annual Meeting of  Stockholders  was held on June 2,
1997. The following  nominees were elected to the Company's  Board of Directors,
to serve until their  successors  are elected or have been  qualified,  or until
their earlier registration or removal.

         Nominee              Votes in Favor       Withheld
         -------              --------------       --------
      Sam L. Leopold            2,790,829           39,000
      Thomas M. Clifford        2,790,829           39,000
      James A. Brooks           2,790,829           39,000
      Peter W. Burg             2,790,829           39,000
      Daniel Howell             2,790,829           39,000
      Sylvan Schefler           2,790,829           39,000

         The following item was voted upon by the Company's stockholders.

         Proposal  to  ratify  the  appointment  of Arthur  Andersen  LLP as the
independent  auditors of the Company  for the fiscal  year ending  December  31,
1997.

      Votes in Favor    Opposed      Abstained      Broker Non-Vote
      --------------    -------      ---------      ---------------
        2,778,729        40,000         500                0


                                       14
<PAGE>

ITEM 5.  OTHER INFORMATION

         Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  EXHIBITS.

         4.3    Form of Warrant issued to Credit Agricole Indosuez

         11.1   Statement regarding computation of primary earnings
                per share

         11.2   Statement regarding computation of fully diluted earnings
                per share

         27     Financial Data Schedule

         (b)  REPORT ON FORM 8-K.

         None.


                                       15
<PAGE>


                                   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.

                             STYLING TECHNOLOGY CORPORATION


Dated: August ___, 1997      By: /s/ Richard R. Ross
                                --------------------------------------
                                Richard R. Ross
                                Chief Financial Officer, Treasurer, and 
                                Secretary (Duly authorized officer of the 
                                registrant, principal financial and
                                accounting officer)




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