<PAGE>
                               United States
                     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 the Quarter Ended                                Commission File Number
---------------------                                ----------------------
   March 31, 2000                                          0-23812

                          THE QUANTUM GROUP, INC.
                          ------------------------
           (Exact name of registrant as specified in its charter)

                                   NEVADA
                                  -------
       (State or other jurisdiction of incorporation or organization)

                                 95-4255962
                                ------------
                    (I.R.S. Employer Identification No.)

         Park Irvine Business Center, 14771 Myford Road, Building B
       -------------------------------------------------------------
                              Tustin, CA 92780
                            --------------------
                  (Address of principal executive offices)

                               (714) 508-1470
                              ---------------
            (Registrant's telephone number, including area code)

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

                                    None
                                   ------

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.

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

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

        Common stock, par value $.001; 10,384,672 shares outstanding
                            as of April 30, 2000

</Page>
<PAGE>

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

ITEM 1.   FINANCIAL STATEMENTS
-------   -------------------
          See Page F-1 to F-12 attached.

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS
-------   ------------------------------------------------------------

     This Form 10-QSB contains certain forward-looking statements.  For
this purpose any statements contained in this Form 10-QSB that are not
statements of historical fact may be deemed to be forward-looking
statements.  Without limiting the foregoing, words such as "may," "will,"
"expect," "believe," "anticipate," "estimate" or "continue" or comparable
terminology are intended to identify forward-looking statements.  These
statements by their nature involve substantial risks and uncertainties, and
actual results may differ materially depending on a variety of factors.

General
-------
     The Quantum Group, Inc., (the "Company"), is in the business of
developing innovative products and technologies in the environmental and
recycling industries for tire rubber recycling and aftermarket product
producing plants.

     The business of the Company and its subsidiaries is focused in three
primary areas.  First, the Company manufactures and sells its own equipment
and equipment manufactured by others which produces recycled rubber from
automobile and truck tires, commonly known as "crumb rubber."  The Company
also manufactures and sells its own equipment and equipment of others that
makes aftermarket products from crumb rubber.  Second, the Company owns and
operates tire recycling facilities, through joint venture agreements, which
manufacture crumb rubber and aftermarket products.  Third, the Company
operates in the construction industry, primarily in the area of crumb
rubber modified asphalt paving, commonly known as "CRM" asphalt.

     The Company has developed a website that can be viewed at
http://www.tqginc.com.  The website allows visitors to access an overview
of the Company's activities, obtain market information for the Company's
trading stock and view the Company's EDGAR filings.  The Company has a main
portal website, http://www.tirerecycling.com that provides links to all of
the Company's subsidiaries' websites:  QEST  http://www.qest-quantum.com;
QCAL   http://www.qcal-quantum.com; and QMAX   http://www.qmax-quantum.com.
A Poseidon web site has also been established and may be viewed at
http://www.poseidon-products.com.  The web site, which is in German and
English, provides a platform for showcasing the Poseidon joint venture and
promoting an awareness of the Company.


Liquidity and Capital Resources
-------------------------------
     At March 31, 1999, the Company had cash of $136,667 on hand.

     The Company does not currently have any outstanding debt and
management believes that proceeds from current equipment and aftermarket
product sales, license fees, pending sales and the current Regulation S
offering proceeds will provide sufficient capital and liquidity to meet the
Company's requirements for the next twelve months.  The Company has begun
receiving proceeds from a new Regulation S offering. This offering
commenced during the first quarter of 2000.
                                     2
</Page>
<PAGE>
     The Company does not currently have any capital commitments for 2000.
However, at such time the Company initiates Phase two of the QCAL project,
it will have a capital commitment for approximately $1,500,000 for
equipment needs.  The Company anticipates initiating Phase two during the
third quarter of 2000.

     The Company is emphasizing product and services sales via the Internet
and trade show participation as well as direct marketing efforts.
Additionally, the Company is vigorously pursuing joint venture arrangements
similar to that of the Poseidon Project.  The Company anticipates it will
experience continued growth during 2000 through these efforts pursuant to
the Company's strategic plan.

Results Of Operations
---------------------

Comparison of the three months ended March 31, 2000 and the three months
ended March 31, 1999.
-------------------------------------------------------------------------

     During the three months ended March 31, 2000, the Company's net cash
used in operations was $550,442, compared to cash used in operations of
$891,915 during the comparable 1999 quarter.  The year 2000 cash
utilization comes primarily from the operating loss of $662,410 and the
increase in both Accounts Receivable and Inventory of $89,863 and $36,521
respectively.  The funds were provided by the sale of Common stock in the
Company's QCAL subsidiary of $428,475, an increase in Customer Deposits of
$190,714 and from Company cash on hand, which decreased by $106,267 during
the three months ended March 31, 2000.  During 1999 the Company's cash
utilization was primarily from an operating loss of $303,968, an increase
in deposits on inventory of $393,199 and an increase in the costs of the
Prototype Impact 500 of $172,050.

     The Company generated revenues of $101,332 from the sale of floor mats
and similar products.  The Company believes that this is the beginnings of
a continuous revenue stream from its QCAL operations.  The QCAL sales mark
a change in the Company's historic revenue generation model because the
QCAL sales were of products produced from crumb rubber rather than the sale
of tire recycling equipment.  While the QCAL sales are significantly
smaller in dollar amount, the Company believes they will be of a frequent
and recurring basis.  The Company believes that the frequency of these
sales will change the nature of the Company's revenue stream and cash flows
as they increase in volume.

                                     3
</Page>

<PAGE>

     Depreciation expense for the three months ended March 31, 2000 was
$68,830 compared to $2,503 in the 1999 quarter.  This $66,327 increase is
due to the operation of the QCAL facility at the Richard J. Donovan
Correctional Facility, which was not open during the 1999 quarter.

     Travel expense declined by $48,695 to $35,375 during the three months
ended March 31,2000 compared to the three months ended March 31, 1999 level
of $84,070.  This reduction is due to concentration of effort on domestic
operations and timing.  The Company believes that travel expenses will
continue to be less than 1999 levels but not to the extent of the first
quarter changes.

     The Company incurred higher Office and Administrative Expenses in the
First Quarter 2000 compared to 1999.  Office Expense of $47,602 in the
three months ended March 31, 2000 is $18,083 higher than the $29,519 in the
comparable 1999 period.  Administrative expenses of $273,973 in 2000 are
$167,027 above the 1999 expense of $106,946.  This increased level of
expenditure is expected to continue throughout the year.  The increase is
due primarily to production and sales efforts and staffing of the QCAL
facility.

     Management believes that the sales level of QCAL products will
increase significantly. The efforts in late 1999 and the current quarter
have been in preparation for the beginning of production, which commenced
at year end 1999.

     Consulting fees increased during the quarter ended March 31, 2000 to
$171,777. This increase is due to the increased use of consultants to
review equipment configurations and concerns regarding prior sales of CISAP
equipment and the acquisition of Modified Asphalt Technologies, Inc.

     During the three months ending March 31, 2000 the Company issued
options on 200,000 shares of the Company's stock under the 2000 Employee
Stock Option program.  The Company recognized an expense of $35,000 on the
issuance of the options.  The Company issued similar options and incurred
an expense of $39,067 in 1999, however the quarters of the year were
different (4th Quarter 1999, 1st Quarter 2000), thus there is no comparable
expense in the three months ended March 31, 1999.

Comparison of the three months ended March 31, 1999 and the three months
ended March 31, 1998
-------------------------------------------------------------------------
     During the first quarter of 1999, the Company's net cash used in
operations was $891,915, compared to cash used in operations of $182,040
during the first quarter of 1998.  The 1999 cash utilization is a result of
an operating loss of $303,968 and the payment of $393,199 of deposits on
inventory and $172,050 of increased investment in the Impact 500 prototype.
The Company realized net proceeds of $937,863, after commissions, legal and
accounting fees on its regulation S offering concluded during the three
months ended March 31, 1998.  No such activity was conducted during the
comparable quarter in 1999.

                                     4

</Page>
<PAGE>

     The Company generated $70,699 of revenue.  The majority of this income
is from feasibility studies for future projects.  $9787 of the other income
was Interest Income.

     Travel expense in the three months ended March 31, 1999 of $84,070
exceed the prior period expense of $34,811 by 49,259 because of the
Installation and sales activities of a number of foreign transactions and a
general increase in the Company's marketing activities, as well as the
German joint venture project.  Administrative expense increased from
$32,569 to $106,9469 from the first quarter of 1997 to the first quarter of
1999.  This increase is also due to the increases in advertising and public
marketing activities during the 1999 period.

     Depreciation expense decreased from $12,253 in the first quarter of
1998 to $2,503 in the quarter ended March 31, 1999.  This decrease is due
to the sale of the press in the last quarter of 1998.  Amortization expense
increased from $12,439 in the quarter ended March 31, 1998 to $16,189 in
the quarter ended March 31, 1999 due to the addition of the Faru license
during 1999.

     Professional fees increased to $33, 671 in the quarter ended March 31,
1999 from $1,424 in the comparable 1998 quarter.  This increase is
primarily due to the legal expenses of the 1999 Regulation S offering and
the issuance of the 1998 Form 10K-SB.  Consultant fees decreased by $6,151
to $ 87,876 in the three months ended March 31, 1999 compared to the
$94,027 incurred in the comparable three-month period in 1998.  This
decrease is due to timing differences in the utilization of consultants and
is not indicative to a trend to reduce the utilization of consultants.

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

Item 1.   Legal Proceedings
-------   -----------------
     On or about April 23, 1999, Eurectec was named as a defendant in a
complaint filed in the Court in Pistoia, Italy by Tyre's Ecology S.r.l.,
("Tyre") formerly known as CISAP Ecology S.r.l. ("CISAP Ecology").  Tyre
succeeded to the interest of CISAP Spa ("CISAP") as a party to the
marketing agreement between Eurectec and CISAP.  Under the marketing
agreement Eurectec was granted the exclusive rights to market certain tire
granulating equipment manufactured by CISAP.  The agreement required a
minimum number of granulating systems to be sold by Eurectec to maintain
the exclusive rights.  Due to the poor performance of CISAP and its
equipment Eurectec has not met its minimum sales quota.  As part of the
lawsuit, Tyre is seeking to terminate the marketing agreement.

     The Company is not concerned with the threatened loss of the marketing
rights held by Eurectec because it believes those marketing rights hold
limited value given the manufacturers' consistent failure to deliver
commercially viable equipment to purchasers.  Moreover, the Company is now
doing business with other manufacturers of shredding and granulating
equipment that the Company believes is superior to the CISAP equipment.


     Tyre is also seeking to recover damages in the approximate amount of
$520,000 arising from alleged misstatements by Eurectec as to the
manufacturers' represented through-put capacity of equipment and alleged
defamation by Eurectec and Marco Morbidelli, a former Tyre engineer who has
performed work for Eurectec and purchasers of CISAP and Tyre equipment in
Saudi Arabia and Mexico.
                                     5
</Page>
<PAGE>

     The Company intends to vigorously defend itself on the basis that none
of the CISAP or Tyre equipment sold to any of the purchasers introduced by
Eurectec has been capable of operating as represented.  Moreover, CISAP and
Tyre have failed to deliver purchased equipment, failed to properly install
equipment as required by contract and failed to provide warranty service to
the purchasers of the equipment.

     The Company has incurred substantial costs attempting to obtain
performance for its clients and has suffered substantial damages to its
business as a result of the plaintiff's unwillingness and inability to
perform under its sales agreements.

     Because of these excessive costs the Company filed a counterclaim
against Tyre in the Court in Pistoia, on January 11, 2000.  The Company
seeks to recover damages in the amount of U.S.$4,366,154.

     Marco Morbidelli, and the purchasers of the equipment in Saudi Arabia
and Mexico have told the Company that they will support and cooperate with
the Company in its defense against Tyre's claims and its efforts to
establish CISAP's and Tyre's breaches of various equipment purchase
agreements.

Item 2.   Changes in Securities
-------   ---------------------

     No instruments defining the rights of the holders of any class of
registered securities have been materially modified, limited or qualified.

     The following securities, which are not registered under the
Securities Act of 1933, were issued since the Company's last quarterly
report for the quarter ended September 31, 1999.

                                     6

</Page>
<PAGE>

Recent Sales of Unregistered Securities
---------------------------------------

     a)   Securities sold.
---------------------
<TABLE>
<CAPTION>
    1.  Regulation S offering

    Date                   Title            Price Per Share   Amount
    ------------------     --------------   ----------------  -----------
    <S>                    <C>              <C>               <C>
    First Quarter 1998     Common           $1.50             1,200,000
    Second Quarter 1998    Common           $2.00               300,000
    Third Quarter 1998     Common           $2.25             1,000,000

    Date                   Title            Price Per Share   Amount
    ------------------     --------------   ----------------  -----------
    Second Quarter 1999    Common           $1.75                 7,285
    Third Quarter 1999     Common           $1.75                57,003
    Fourth Quarter 1999    Common           $1.75               205,582
</TABLE>
    2.  Option Exercise

    In June, 1998, an option for 50,000 shares of common stock, issued
pursuant to the Company's 1997 Stock Option Plan, was exercised at a price
of $0.062 per share.

    In July, 1998, an option for 200,000 shares of common stock, issued
pursuant to the Company's 1997 Stock Option Plan, was exercised at a price
of $0.062 per share.

    In November, 1998 an option for 66,666 shares of common stock, issued
pursuant to the Company's 1997 Stock Option Plan, was exercised at a price
of $0.062 per share.

    3.  Shares for Services Rendered
<TABLE>
<CAPTION>
    Date                   Title            Price Per Share   Amount
    ------------------     --------------   ----------------  -----------
    <S>                    <C>              <C>               <C>

    Second Quarter 1999    Common           $1.75               63,767
    Second Quarter 1999    Common           $1.75              102,000
    Second Quarter 1999    Common           $1.75               93,429
    Third Quarter 1999     Common           $1.75               43,714
    Fourth Quarter 1999    Common           $1.75               60,268

    4.  Acquisition of Modified Asphalt Technologies, Inc.

    Date                   Title            Price Per Share   Amount
    ------------------     --------------   ----------------  -----------
    First Quarter 2000     Common           Share Exchange      51,549
</TABLE>

(b) Underwriters and other purchasers.
--------------------------------------
     1.  Regulation S Offering
     -------------------------
     All securities sold during 1998 were sold to non U.S. persons.  All
shares of common stock were sold in Germany to Beteiligungs Fonds, GBR.
                                     7
</Page>
<PAGE>
     All securities sold during 1999 were sold to non U.S. persons.  All
shares of common stock were sold in Germany.

     2.  Option Exercise
     -------------------
     The June option was exercised by RMC International, a consultant to
the Company.

     The July option was exercised by Johann Brendgens, a consultant to the
Company.

     The November option was exercised by Keith Fryer, an officer and
director of the Company.

     3.   Shares for Services Rendered
     ---------------------------------
     In the second and third quarters of 1999, the Company issued 102,000
and 43,714 common shares, respectively, as commission for the sales of
securities pursuant to the Regulation S offering made in 1998.  All of
these shares were delivered to non U.S. persons.

     In the second quarter 1999, the Company issued 93,469 common shares
for consulting services rendered to the Company by an outside firm.

     In the second quarter 1999, the Company issued 63,767 common shares as
a finder's fee to a non U.S. person.

     In the fourth quarter 1999, the Company issued 60,268 common shares as
commission for the sales of securities pursuant to the Regulation S
offering made in 1999.  All of these shares were delivered to non U.S.
persons.

     4.   Acquisition of Modified Asphalt Technologies, Inc.
     -------------------------------------------------------
     On January 21, 2000, 51,549 common shares were issued to acquire 1,000
common shares of Modified Asphalt Technologies, Inc. ("MAT"), a privately
held Arizona corporation.  The 1,000 shares represented all of the issued
and outstanding shares of MAT.

(c) Consideration.
------------------
     1.   Regulation S Offering
     --------------------------

     The aggregate offering price for sales made during 1998 was
$4,650,000.  The Company paid  commissions of $254,999.50 by delivering to
the broker a total of 145,714 common shares valued at $1.75 per share.
These shares were not delivered to the broker until the second and third
quarters of 1999.

     The aggregate offering price for sales made during 1999 was $472,274.
The Company paid commissions of $105,469 by delivering to the broker a
total of 60,268 common shares valued at $1.75 per share.  These shares were
not delivered to the broker until the fourth quarter 1999.


                                     8
</Page>
<PAGE>
     2.   Option Exercise
     --------------------

     The Company realized $3,100 from the exercise of the option in June,
1998.

     The Company realized $12,400 from the exercise of the option in July,
1998.

     The Company realized $4,167 from the exercise of the option in
November, 1998.

     3.   Shares for Services Rendered
     ---------------------------------

     As discussed above, 205,982 of the 363,178 common shares issued during
1999 for services rendered were issued as commission for sales of
securities pursuant to Regulation S.  The shares were valued at $1.75 per
share.

     During the second quarter 1999, the Company issued 63,767 common
shares to an outside consultant as a finder's fee.  The shares were valued
at $1.75 per share.

     During the second quarter 1999 the Company issued 93,429 common shares
to an outside consultant for services rendered.  The shares were valued at
$1.75 per share.

     4.   Acquisition of Modified Asphalt Technologies, Inc. ("MAT")
     ---------------------------------------------------------------
     During the first quarter 2000, the Company exchanged 51,549 common
shares for 1,000 shares of MAT common stock, which represented all of the
issued and outstanding common shares of MAT.  No cash was received by the
Company.

(d) Exemption from registration claimed.
----------------------------------------

     1.   Regulation S Offering
     ---------------------------

     The securities were sold in 1998 and 1999 pursuant to Regulation S as
promulgated by the Securities and Exchange Commission under the Securities
Act of 1933, as amended.  The Company did not offer the securities to any
person in the United States, any identifiable groups of U.S. citizens
abroad, or to any U.S. Person as that term is defined in Regulation S.  At
the time the buy orders were originated, the Company reasonably believed
the Buyers were outside of the United States and were not U.S. Persons.
The Company reasonably believed that the transaction had not been
pre-arranged with a buyer in the United States.  The Company has not nor
will engage in any "Directed Selling Efforts" and reasonably believes the
Buyers have not nor will engage in any "Directed Selling Efforts."  The
Company reasonably believed the Buyers purchased the securities for their
own accounts and for investment purposes and not with the view towards
distribution or for the account of a U.S. Person.


                                     8
</Page>
<PAGE>
     2.   Option Exercise
     --------------------

     The June option was exercised pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933.

     The July option was exercised pursuant to Regulation S.

     The November option was exercised pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933.

     3.  Shares for Services Rendered
     --------------------------------
     The 93,429 common shares issued during the second quarter 1999 for
services rendered, were issued pursuant to an exemption from registration
under Section 4(2) of the Securities Act of 1933.

     The 63,767 common shares delivered issued during the second quarter
1999 as a finder's fee were issued pursuant to Regulation S as promulgated
by the Securities and Exchange Commission under the Securities Act of 1933,
as amended.  The Company did not offer the securities to any person in the
United States, any identifiable groups of U.S. citizens abroad, or to any
U.S. Person as that term is defined in Regulation S.  At the time the
Company agreed to pay the finder's fee, the Company reasonably believed the
individual was outside of the United States and was not a U.S. Person.  The
Company reasonably believed that the transaction had not been pre-arranged
with a buyer in the United States.  The Company has not nor will engage in
any "Directed Selling Efforts" and reasonably believes the recipient has
not nor will engage in any "Directed Selling Efforts."  The Company
reasonably believed the individual received the securities for its own
account and for investment purposes and not with the view towards
distribution or for the account of a U.S. Person.

     The 205,982 common shares delivered to the broker as commission during
the second, third and fourth quarters of 1999, were issued pursuant to
Regulation S as promulgated by the Securities and Exchange Commission under
the Securities Act of 1933, as amended.  The Company did not offer the
securities to any person in the United States, any identifiable groups of
U.S. citizens abroad, or to any U.S. Person as that term is defined in
Regulation S.  At the time the shares were issued for commissions, the
Company reasonably believed the broker was outside of the United States and
was not a U.S. Person.  The Company has not nor will engage in any
"Directed Selling Efforts" and reasonably believes the broker has not nor
will engage in any "Directed Selling Efforts."  The Company reasonably
believed the broker purchased the securities for its own account and for
investment purposes and not with the view towards distribution or for the
account of a U.S. Person.

     4.  Acquisition of Modified Asphalt Technologies, Inc.
     ------------------------------------------------------

     The 51,549 Company common shares exchanged for all of the issued and
outstanding common shares of MAT were issued pursuant to an exemption from
registration under section 4(2) of the Securities Act of 1933.  No cash was
received by the Company.

(e) Terms of conversion or exercise.
------------------------------------
     1.   Regulation S Offering
     --------------------------

          Not applicable.
                                     10
</Page>
<PAGE>
     2.   Option Exercise
     --------------------

     The June option was granted pursuant to the Company's 1997 Stock
Option Plan.  The exercise price per share was $.062 and the option, which
is for a total of 50,000 shares, may be exercised over a period of two
years from October 23, 1997, the date of the grant.

     The July option was granted pursuant to the Company's 1997 Stock
Option Plan.  The exercise price per share was $.062 and the option, which
is for a total of 200,000 shares, may be exercised over a period of two
years from October 23, 1997, the date of the grant.

     The November option was granted pursuant to the Company's 1997 Stock
Option Plan.  The exercise price per share was $.062 and the option, which
is for a total of 33,334 shares, may be exercised over a period of five
years from October 23, 1997, the date of the grant.

     3.   Shares for Services Rendered
     ---------------------------------
     Not applicable.

     4.   Acquisition of Modified Asphalt Technologies, Inc.
     -------------------------------------------------------

     Not applicable.

Item 3.  Defaults upon Senior Securities
----------------------------------------

     None

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

     None

Item 5.  Other Information
--------------------------

     Acquisition of Modified Asphalt Technologies, Inc.

     During the first quarter 2000 the Company finalized the acquisition of
MAT, which will operate as a subsidiary or Quantum Modified Asphalt
Xcetera, Inc., ("QMAX").  The Company also entered into an employment
agreement with Jeff Smith, the president and founder of MAT.

     The Company acquired all of the issued and outstanding shares of MAT
in exchange for 51,549 shares of restricted Company common stock.  MAT had
limited assets and was primarily acquired for its expertise and name
recognition within the CRM asphalt paving industry.  MAT and Mr. Smith have
expertise in the areas of technology transfer, equipment manufacturing,
material specifications and supply, quality assurance, personnel training,
asphalt rubber binder production and application and implementation of
asphalt rubber usage.  The Company believes this acquisition will
compliment the products and services QMAX currently offers and enables it
to expand its operations in the CRM asphalt paving industry.


                                     11
</Page>
<PAGE>
     Agreement in Principle
     ----------------------

     The Company has reached an agreement in principle to purchase from
Fonds Concepts GmbH & Co. ("Fonds") the tire recycling facilities it owns
in Coswig, Germany and Atzendorf, Germany.   The Company has a pre-existing
relationship with Fonds and is familiar with these facilities because the
Company sold the equipment being used in these facilities.  It is
anticipated that the Company will take ownership of and assume
responsibility for the operations of one of the facilities sometime in late
2000, and for the other sometime in 2001.

     Pursuant to the agreement in principle to purchase the Coswig plant,
the Company will pay Fonds 3,250,000 DM (German Marks) by no later than
January 31, 2001.  Fonds will have discretion to decide, by no later than
January 10, 2001, whether the sum is to be paid in cash or in Company
common stock valued at $1.75 per share.

     Similarly, to acquire the Atzendorf plant, the Company will pay Fonds
a total of 1,200,000 DM by no later than February 15, 2001.  Fonds will
have discretion to decide, by no later than September 1, 2000, whether the
sum is to be paid in cash or in Company common stock valued at $1.75 per
share.

     The Company anticipates a Definitive Agreement will be negotiated and
entered into and the transaction will be closed within 90 days of the date
of this Form 10-QSB.

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

     (A)  Reports on Form 8-K

     No reports on Form 8-K were filed or required to be filed during the
quarter ended March 31, 2000.

     (B)  Exhibits.  The following exhibits are included as part of this
report:

<TABLE>
<CAPTION>

     Exhibit        SEC Exhibit
     Number         Ref. Number    Title of Document             Location
     ----------     ------------   ----------------------------  ---------
     <S>            <C>            <C>                           <C>
     10.01          10             The Quantum Group, Inc.,      Attached
                                   2000 Stock Option Plan

     27.01          27             Financial Data Schedule       Attached


</TABLE>
                                     12

</Page>

<PAGE>

                                 SIGNATURES

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


                                   The Quantum Group, Inc.


May 12, 2000                       /s/Ehrenfried Liebich
                                   -------------------------
                                   Ehrenfried Liebich
                                   Chairman of the Board, President and
                                   Chief Executive Officer



May 12, 2000                       /s/John F. Pope
                                   -------------------------
                                   John F. Pope
                                   Vice President, Finance
                                   Chief Accounting Officer


                                     13

</Page>

<PAGE>
                                                                        F-1











                 The Quantum Group, Inc., and Subsidiaries

                            Financial Statements

                        March 31, 2000 (Unaudited) &
                             December 31, 1999













</Page>
<PAGE>
                                                                        F-2
[Letterhead]


                           Schvaneveldt & Company
                        Certified Public Accountant
                     275 East South Temple, Suite #300
                         Salt Lake City, Utah 84111
                               (801) 521-2392


Darrell T. Schvaneveldt, C.P.A.


Board of Directors
The Quantum Group, Inc., and Subsidiaries


I have reviewed the accompanying balance sheets, of The Quantum Group,
Inc., and Subsidiaries, as of March 31, 2000, and for the three months
periods then ended.  These financial statements are the responsibility of
the Company's management.

I conducted my review in accordance with standards established by the
American Institute of Certified Public Accountants.  A review of interim
financial consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial
and accounting matters.  It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole.  Accordingly, I do not express such an
opinion.

Based on my review, I am not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.


/S/ Schvaneveldt & Company
Salt Lake City, Utah 84111
May 19, 2000


</Page>
<PAGE>
                                                                        F-3
                  The Quantum Group, Inc. and Subsidiaries
                               Balance Sheets
                          March 31, 2000 and 1999
                                (UNAUDITED)
<TABLE>
<CAPTION>

                                                   March         March      December
                                                31, 2000      31, 1999      31, 1999
                                             ------------  ------------  ------------
<S>                                          <C>          <C>           <C>
   ASSETS
Current Assets
--------------

Cash                                         $   136,667   $   890,029   $   242,934
Accounts Receivable                              407,327     3,065,040       317,464
Inventory                                        175,990        33,025       139,469
Deposit                                          317,003       696,220       317,003
Note & Interest Receivable - Officer              71,347        46,607        69,253
Prepaid Expenses                                  26,944           440        26,944
                                             ------------  ------------  ------------
   Total Current Assets                        1,135,278     4,731,361     1,113,067

Property & Equipment
--------------------

Furniture and Fixtures                            52,596             -        55,547
Equipment                                      1,231,719        29,464     1,292,764
Vehicles                                          66,323        39,378        70,397
Land                                             157,753       179,309       157,753
Web Sites                                          9,168             -         9,650
                                             ------------  ------------  ------------
   Total Property and Equipment                1,517,559       248,151     1,586,111

Other Assets
------------

Cash Pledged                                           -         5,329             -
License Rights                                   426,422       491,179       442,611
Deposit                                          687,487     1,807,789       687,487
Prototype Impact 500                                   -       235,253             -
Goodwill                                          81,200             -             -
                                             ------------  ------------  ------------
   Total Other Assets                          1,951,109     2,539,550     1,130,098
                                             ------------  ------------  ------------
   TOTAL ASSETS                              $ 3,847,946   $ 7,519,062   $ 3,829,276
                                             ============  ============  ============

</TABLE>

           See accountant's review report and accompanying notes

</Page>
<PAGE>
                                                                        F-4
                 The Quantum Group, Inc., and Subsidiaries
                         Balance Sheets -Continued-
                          March 31, 2000 and 1999
                                (UNAUDITED)
<TABLE>
<CAPTION>

                                                   March         March      December
                                                31, 2000      31, 1999      31, 1999
                                             ------------  ------------  ------------
<S>                                          <C>          <C>           <C>

   LIABILITIES & STOCKHOLDER' EQUITY

Current Liabilities
-------------------

Accrued Expenses                             $    66,506   $   447,095   $    84,043
Accounts Payable                                 602,153       716,075       653,517
Notes Payable                                    272,240             -       272,240
Customer Deposits                                485,897     2,192,962       295,183
Franchise Tax Payable                            103,548       103,548       103,548
Payroll Taxes Payable                             22,437             -             -
Sales Tax Payable                                  2,375             -             -
Current Maturities                                16,925             -        16,925
                                             ------------  ------------  ------------
   Total Current Liabilities                   1,572,081     3,459,680     1,425,456

Long Term Liabilities
---------------------

Capital Lease                                     81,089        25,503        67,631
Notes Payable                                     12,720             -        10,198
Less Current Maturities                      (    16,925)            -  (     16,925)
                                             ------------  ------------  ------------
   Total Long Term Liabilities                    76,884        25,503        60,904

Minority Interest in Subsidiary                  428,475         9,464             -

Stockholders' Equity
--------------------

Common Stock 50,000,000 Shares
  Authorized; No Par Value of $0.001
  Per Share;
9,084,672; 8,400,755 & 9,033,123 Shares
 Issued Retroactively Restated Respectively        9,085         8,400         9,033
Paid In Capital                                6,782,724     6,018,287     6,692,776
Accumulated Deficit                          ( 5,021,303) (  2,020,471) (  4,358,893)
                                             ------------  ------------  ------------
   Total Stockholders' Equity                  1,770,506     4,006,216     2,342,916
                                             ------------  ------------  ------------
   TOTAL LIABILITIES &
   STOCKHOLDERS' EQUITY                      $ 3,847,946   $ 7,500,863   $ 3,829,276
                                             ============  ============  ============

</TABLE>

           See accountant's review report and accompanying notes

</Page>

<PAGE>
                                                                        F-5
                 The Quantum Group, Inc., and Subsidiaries
                          Statement of Operations
             For the Three Months Ended March 31, 2000 and 1999
                                (UNAUDITED)
<TABLE>
<CAPTION>

                                                   Three         Three        Twelve
                                                  Months        Months        Months
                                                   March         March      December
                                                31, 2000      31, 1999      31, 1998
                                             ------------  ------------  ------------
<S>                                          <C>          <C>           <C>

Revenues
--------

Product Sales                                $   101,332  $          -  $          -
Other Income                                       6,882        70,699        17,821
                                             ------------  ------------  ------------
   Total Revenues                                108,214        70,699        17,821

   Cost of Sales                                  59,091             -           348
                                             ------------  ------------  ------------
   Gross Profit                                   49,123        70,699        17,473
                                             ------------  ------------  ------------
Expenses
--------

Depreciation                                      68,830         2,503       144,222
Amortization                                      16,189        16,189        64,756
Travel                                            35,375        84,070       167,274
Professional Fees                                 31,860        33,671       210,483
Office                                            47,602        29,519        97,356
Rent & Utilities                                  30,927        13,893        71,242
Administrative Expenses                          273,973       106,946       814,361
Consultant Fees                                  171,777        87,876       715,663
Interest                                               -             -        19,504
Accounts Receivable Written Off                        -             -       347,220
Options Issued Expense                            35,000             -        39,067
                                             ------------  ------------  ------------
   Total Expenses                                711,533       374,667     2,691,148

   Net Income (Loss) from Operations         (   662,410) (    303,968) (  2,673,675)

</TABLE>

           See accountant's review report and accompanying notes

</Page>
<PAGE>
                                                                        F-6
                 The Quantum Group, Inc., and Subsidiaries
                          Statements of Operations
             For the Three Months Ended March 31, 2000 and 1999
                                (UNAUDITED)
<TABLE>
<CAPTION>

                                                   March         March      December
                                                31, 2000      31, 1999      31, 1999
                                             ------------  ------------  ------------
<S>                                          <C>          <C>           <C>
Other Income (Expenses)
-----------------------

Interest Income                                        -             -        21,822
                                             ------------  ------------  ------------
   Total Other Income (Expenses)                       -             -        21,822

Taxes & Minority Interest
-------------------------

Minority Interest                                      -             -  (      9,463)
Provisions for Taxes - Current                         -             -             -
                                             ------------  ------------  ------------
   Total Taxes & Minority Interest                     -             -  (      9,463)
                                             ------------  ------------  ------------
   Net Income (Loss)                         (   662,410) (    303,968) (  2,642,390)
                                             ============  ============  ============

   Net Income (Loss) Per Share               (      0.07) (       0.04)         0.30

   Weighted Average Shares Outstanding         9,061,897     8,400,075     8,670,366

   Diluted Net Profit Per Share                      N/A           N/A           N/A


</TABLE>
           See accountant's review report and accompanying notes

</Page>
<PAGE>
                                                                        F-7
                 The Quantum Group, Inc., and Subsidiaries
                     Statement of Stockholders' Equity
                   From January 1, 1998 to March 31, 2000
                                (UNAUDITED)
<TABLE>
<CAPTION>

                                         Common Stock          Paid In   Accumulated
                                     Stock        Amount       Capital       Deficit
                                -----------------------------------------------------
<S>                            <C>           <C>          <C>           <C>
Balance, January 1, 1998         4,853,409         4,853     1,932,968  (  1,615,812)

Shares Issued Regulation
S for Cash                       1,200,000         1,200     1,798,800

Shares Issued Regulation
S for Cash                         300,000           300       599,700

Shares Issued Regulation
S for Cash                       1,000,000         1,000     2,249,000

Cost of Shares Sold Pursuant
to Regulation S Offering                                  (    694,964)

Shares Issued on Exercise
of Options                         396,666           397        24,177

Shares Issued to Minority
Interest Shareholders to
Acquire 100% of Subsidiary
Stock                              650,000           650       108,606

Net Loss for the Year Ended
December 31, 1998                                                       (    100,691)
                                -----------------------------------------------------
Balance, December 31, 1998       8,400,075         8,400     6,018,287  (  1,716,503)

Shares Issued for Services
at $1.75 Per Share                 363,178           363       635,480

Shares Issued for Cash at
$1.75 Per Share                    269,870           270       472,004

Cost of Shares Issued                                     (    472,062)

Options Issued                                                  39,067

Net Loss for the Year Ended
December 31, 1999                                                       (  2,642,390)
                                -----------------------------------------------------
Balance, December 31, 1999       9,033,123         9,033     6,692,776  (  4,358,893)

Options Issued                                                  35,000

</TABLE>

           See accountant's review report and accompanying notes
</Page>



<PAGE>
                                                                        F-8
                 The Quantum Group, Inc., and Subsidiaries
               Statement of Stockholders' Equity -Continued-
                   From January 1, 1998 to March 31, 2000
                                (UNAUDITED)
<TABLE>
<CAPTION>

                                             Common Stock                    Paid In         Accumulated
                                     Stock        Amount       Capital       Deficit
                                -----------------------------------------------------
<S>                            <C>           <C>          <C>           <C>
Shares Issued to Acquire
Modified Asphalt Technology,
Inc.                                51,549            52        89,948

Net Loss for the Three Months
Ended March 31, 2000                                                    (    662,410)
                                -----------------------------------------------------
Balance, March 31, 2000          9,084,672   $     9,085  $  6,817,724  ($ 5,021,303)
                                =====================================================

</TABLE>

           See accountant's review report and accompanying notes

</Page>



<PAGE>
                                                                        F-9
                 The Quantum Group, Inc., and Subsidiaries
                          Statement of Cash Flows
             For the Three Months Ended March 31, 2000 and 1999
                                (UNAUDITED)

<TABLE>
<CAPTION>


                                                   March         March      December
                                                31, 2000      31, 1999      31, 1998
                                             ------------  ------------  ------------
<S>                                          <C>          <C>           <C>
Cash Flows from Operating Activities
------------------------------------

Net Loss                                     ($  662,410) ($   303,968) ($ 2,642,390)
Adjustments to Reconcile Net Loss to
Net Cash;
 Write Off Accounts Receivable                         -             -       347,220
 Options Issued                                        -             -        39,067
 Amortization and Depreciation                    85,019        18,692       208,978
 Non Cash Expenses                                     -             -       163,500
 Minority Interest                                     -             -         9,463
Changes in Operating Assets & Liabilities;
 (Increase) Decrease in Accounts Receivable  (    89,863)            -     2,747,576
 (Increase) Decrease in Inventory            (    36,521)            -  (    120,044)
 (Increase) Decrease in Deposit on
  Inventory                                            -  (     13,600) (     13,982)
 (Increase) Decrease in Prototype Impact
  500                                                  -  (    393,199)       63,203
 (Increase) Decrease in Notes Receivable     (     2,092) (    172,050) (     38,321)
 (Increase) Decrease in Prepaid Expenses               -  (     15,675) (     26,504)
 (Increase) Decrease in Deposits                       -             -       755,717
 Increase (Decrease) in Accrued Expenses     (    17,537) (      2,989) (    366,041)
 Increase (Decrease) in Accounts Payable     (    51,364) (      9,126) (     71,684)
 Increase (Decrease) in Customer Pledges         190,714             -  (  1,897,779)
 Increase (Decrease) in Cash Pledged                   -             -         5,329
 Increase (Decrease) in Payroll Taxes
  Payable                                         22,437             -             -
 Increase (Decrease) in Sales Taxes Payable        2,375             -             -
                                             ------------  ------------  ------------
   Net Cash Provided (Used) by
   Operating Activities                      (   559,242) (    891,915) (    836,692)


</TABLE>
           See accountant's review report and accompanying notes

</Page>
<PAGE>
                                                                       F-10
                 The Quantum Group, Inc., and Subsidiaries
                    Statement of Cash Flows -Continued-
             For the Three Months Ended March 31, 2000 and 1999
                                (UNAUDITED)
<TABLE>
<CAPTION>

                                                   March         March      December
                                                31, 2000      31, 1999      31, 1998
                                             ------------  ------------  ------------
<S>                                          <C>          <C>           <C>
Cash Flows from Investing Activities
------------------------------------

Purchase of Vehicles                                   -             -  (     39,401)
Purchase of Equipment                        (       280)            -  (  1,414,664)
Purchase of Furniture                                  -             -  (     35,443)
Purchase of Websites                                   -             -  (      9,650)
(Increase) Decrease in Goodwill              (    81,200)            -             -
                                             ------------  ------------  ------------
   Net Cash Provided (Used) by
   Investing Activities                      (    81,480)            -  (  1,499,158)

Cash Flows from Financing Activities
------------------------------------

 Sales of Common Stock                            90,000             -       472,274
 Sale of Subsidiary Common Stock                 428,475             -             -
 Increase (Decrease) in Notes Payable             15,980             -       324,566
                                             ------------  ------------  ------------
   Net Cash Provided (Used) by
   Financing Activities                          534,455             -       796,840
                                             ------------  ------------  ------------
   Increase (Decrease) In Cash               (   106,267) (    891,915) (  1,539,010)

   Cash at Beginning of Period                   242,934     1,781,944     1,781,944
                                             ------------  ------------  ------------
   Cash at End of Period                     $   136,667  $    890,029  $    242,934
                                             ============  ============  ============
Disclosures from Operating Activities
-------------------------------------

 Interest                                    $       -0-  $        -0-  $     19,504
 Taxes                                               -0-           -0-           -0-

Significant Non Cash Transactions
---------------------------------

 363,178 Shares of Common Stock Issued
  for Services Rendered                              -0-           -0-       685,843
 51,549 Shares Issued for the Acquisition of
  Modified Asphalt Technologies, Inc.             90,000           -0-           -0-

</TABLE>

           See accountant's review report and accompanying notes

</Page>
<PAGE>
                                                                       F-11
                 The Quantum Group, Inc., and Subsidiaries
                       Notes to Financial Statements

NOTE #1 - Corporate History
---------------------------

The Company was organized on December 2, 1968, under the laws of the state
of California as Acquatic Systems, Inc.  On June 27, 1989, the Company
merged with Country Maid, Inc., a Nevada Corporation, the Corporate
domicile was changed to the state of Nevada.  On September 18, 1992, the
name of the Company was changed to The Quantum Group, Inc.

In 1992, the Company acquired rights to import and market equipment used in
the tire recycling industry.  The tire recycling operation is the thrust of
the Company's operations at December 31, 1999.

NOTE #2 - Significant Accounting Policies
-----------------------------------------

A.   The Company uses the accrual method of accounting.
B.   Revenues and directly related expenses are recognized in the period
     when the goods are shipped to the customer.
C.   The Company considers all short term, highly liquid investments that
     are readily convertible, within three months, to known amounts as cash
     equivalents.  The Company currently has no cash equivalents.
D.   Primary Earnings Per Share amounts are based on the weighted average
     number of shares outstanding at the dates of the financial statements.
     Fully Diluted Earnings Per Shares shall be shown on stock options and
     other convertible issues that may be exercised within ten years of the
     financial statement dates.
E.   The inventory is stated at the lower of cost or market.  The inventory
     is a single recycling system that the Company intends to sell as a
     system.  The Company is currently pursuing several prospects to sell
     the system.
F.   Consolidation Policies:    The accompanying consolidated financial
     statements include the accounts of the company and its majority -
     owned subsidiary. Intercompany transactions and balances have been
     eliminated in consolidation.
G.   Foreign Currency Translation / Remeasurement Policy:   Assets and
     liabilities that occur in foreign countries are recorded at historical
     cost and translated at exchange rates in effect at the end of the
     year.  Income Statement accounts are translated at the average
     exchange rates for the year. Translation gains and losses shall be
     recorded as a separate line item in the equity section of the
     financial statements.
H.   Depreciation:   The cost of property and equipment is depreciated over
     the estimated useful lives of the related assets. The cost of
     leasehold improvements is depreciated (amortized) over the lesser of
     the length of the related assets or the estimated lives of the assets.
     Depreciation is computed on the straight line method for reporting
     purposes and for tax purposes.
I.   Issuance of Subsidiary's Stock: The Company has elected to accounts
     for shares issued by its subsidiary as an equity transactions.

</Page>
<PAGE>
                                                                       F-12
                 The Quantum Group, Inc., and Subsidiaries
                 Notes to Financial Statements -Continued-

NOTE #2 - Significant Accounting Policies -Continued-
-----------------------------------------------------

J.   Use of Estimates: The preparation of financial statements in
     conformity with generally accepted accounting principals requires
     management to make estimates and assumptions that affect the reported
     amounts of assets and liabilities and disclosure of contingent assets
     and liabilities at the date of the financial statements and reported
     amounts of revenues and expenses during the reporting period.  Actual
     results could differ from those estimates.
K.   New Technical Pronouncements:
     In 1997, SFAS No. 129, "Disclosure of Information about Capital
     Structure" was issued effective for periods ending after December 15,
     1997.  The Company has adopted the disclosure provisions of SFAS No.
     129 effective with the fiscal year ended December 31, 1998.

     In June 1997, SFAS No. 130, "Reporting Comprehensive Income" was
     issued effective for fiscal years beginning after December 31, 1997,
     with earlier application permitted.  The Company has elected to adopt
     SFAS No. 130 effective with the fiscal year ended December 31, 1998.

     In June 1997, SFAS No. 131, "Disclosures about Segments of an
     Enterprise and Related Information" was issued for fiscal year
     beginning after December 31, 1997, with earlier application permitted.
     The Company has elected to adopt SFAS No. 131, effective with the
     fiscal years ended December 31, 1998.

     In February 1998, SFAS No. 132, "Employer's Disclosure about Pensions
     and Other Post-Retirement Benefits" was issued for fiscal years
     beginning after December 15, 1998.  Adoption of SFAS 132 did not have
     a material impact on the Company financial statements.

     In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
     Hedging Activities" was issued for fiscal years beginning after June
     15, 1999.  It is anticipated that SFAS No. 133, will have no effect
     upon the Company's financial statements.


</Page>