U.S. Securities and Exchange Commission
                             Washington D. C., 20549

                                   Form 10-QSB

(Mark One)

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

     For the quarterly period ended September 30, 1999

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

     For the transition period from__________ to ___________.


                         Commission file number 0-20924
                                                -------

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

               ARIZONA                                       86-0576290
     -------------------------------                    -------------------
     (State or other jurisdiction of                       (IRS Employer
     incorporation or organization)                     Identification No.)

                     444 WEST FAIRMONT, TEMPE, ARIZONA 85282
                    ----------------------------------------
                    (Address of principal executive offices)

                                  480-968-1772
                           --------------------------
                           (Issuer's telephone number)

              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ].

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: as of November 9, 1999, the number of
shares outstanding of the Registrant's common stock was 1,348,031.

Transitional Small Business Disclosure Format.  Yes [ ] No [X].

<PAGE>

ITEM 1





                          PART 1 - FINANCIAL STATEMENTS


                           RECONDITIONED SYSTEMS, INC.


                         UNAUDITED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1999



                                       2
<PAGE>

                           RECONDITIONED SYSTEMS, INC.
                                 BALANCE SHEETS
                           September 30, 1999 and 1998
                                   (Unaudited)

                                                        1999            1998
                                                        ----            ----
                                     ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                         $ 1,523,570     $   836,411
  Accounts receivable - trade, net of allowance
    for doubtful accounts of $35,000 and
    $27,250, respectively                             1,391,598       1,426,217
  Inventory                                             857,161         793,735
  Prepaid expenses and other current assets              79,620          57,065
                                                    -----------     -----------
          TOTAL CURRENT ASSETS                        3,851,949       3,113,428
                                                    -----------     -----------
PROPERTY AND EQUIPMENT, NET:                            220,661         152,945
                                                    -----------     -----------
OTHER ASSETS:
  Notes receivable - officers                            75,000         150,000
  Refundable deposits                                    13,036          13,930
  Other                                                  37,190          24,661
                                                    -----------     -----------
                                                        125,226         188,591
                                                    -----------     -----------
          TOTAL ASSETS                              $ 4,197,836     $ 3,454,964
                                                    ===========     ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current maturities of long-term debt              $         0     $    13,248
  Accounts payable                                      425,516         422,477
  Customer deposits                                     103,411          38,356
  Accrued severance charges                             292,984               0
  Accrued expenses and other current liabilities        332,193         276,552
                                                    -----------     -----------
          Total current liabilities                   1,154,104         750,633
                                                    -----------     -----------
STOCKHOLDERS' EQUITY:
  Common stock, no par value; 20,000,000 shares
    shares authorized                               $ 4,587,586     $ 4,586,982
  Accumulated deficit                                (1,224,532)     (1,882,651)
                                                    -----------     -----------
                                                      3,363,054       2,704,331
  Less: treasury stock, 125,785 and 0 shares
        respectively, at cost                          (319,322)              0
                                                    -----------     -----------
                                                      3,043,732       2,704,331
                                                    -----------     -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $ 4,197,836     $ 3,454,964
                                                    ===========     ===========


                                       3

<PAGE>

                           RECONDITIONED SYSTEMS, INC.
                            STATEMENTS OF OPERATIONS
      For the Three and Six Month Periods Ended September 30, 1999 and 1998
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                      Three Months Ended              Six Months Ended
                                                         September 30,                  September 30,
                                                ---------------------------     --------------------------
                                                     1999           1998            1999           1998
                                                     ----           ----            ----           ----
<S>                                             <C>             <C>             <C>            <C>
Sales                                           $ 2,458,090     $ 3,121,374     $ 4,755,886    $ 5,774,466

Cost of sales                                     1,834,247       2,451,134       3,551,262      4,479,916
                                                -----------     -----------     -----------    -----------

Gross profit                                        623,843         670,240       1,204,624      1,294,550

Selling & administrative expenses                   427,823         435,879         850,962        828,763
Severance charge (Note 3)                           292,984               0         292,984              0
                                                -----------     -----------     -----------    -----------

Income (Loss) from operations                       (96,964)        234,361          60,678        465,787

Other income (expense):
  Interest income                                    19,078          11,153          35,246         21,594
  Interest expense                                        0            (408)              0         (1,047)
  Other                                                 156           1,124             156          2,443
                                                -----------     -----------     -----------    -----------

Net income (loss)                               $   (77,730)    $   246,230     $    96,080    $   488,777
                                                ===========     ===========     ===========    ===========
Basic earnings (loss) per share (Notes 1
 and 2)                                         $     (0.06)    $      0.17     $      0.07    $      0.33
                                                ===========     ===========     ===========    ===========
Basic weighted average number
  of shares outstanding                           1,399,441       1,473,950       1,428,837      1,473,950
                                                ===========     ===========     ===========    ===========
Diluted earnings (loss) per common
  and common equivalent share
  (Notes 1 and 2)                               $     (0.06)    $      0.14     $      0.06    $      0.29
                                                ===========     ===========     ===========    ===========
Diluted weighted average number
         of shares outstanding                    1,399,441       1,700,481       1,632,524      1,696,210
                                                ===========     ===========     ===========    ===========
</TABLE>


                                       4

<PAGE>

                           RECONDITIONED SYSTEMS, INC.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
        For the Year Ended March 31, 1999 and the Six Month Period Ended
                               September 30, 1999
                                   (Unaudited)
<TABLE>
<CAPTION>
                           |      COMMON        COMMON
                           |       STOCK         STOCK        COMMON        RETAINED
                           |      SHARES        SHARES         STOCK        EARNINGS       TREASURY
                           |      ISSUED   OUTSTANDING        AMOUNT       (DEFICIT)          STOCK          TOTAL
------------------------------------------------------------------------------------------------------------------
<S>                            <C>          <C>           <C>           <C>             <C>            <C>
                           |
BALANCE AT                 |
MARCH 31, 1998             |   1,473,950     1,473,950    $4,586,982    $(2,367,674)    $   (3,754)    $2,215,554
                           |
RETIREMENT OF              |
TREASURY SHARES            |        (134)         (134)           --         (3,754)         3,754             --
                           |
NET INCOME                 |          --            --            --      1,050,816             --      1,050,816
                           |--------------------------------------------------------------------------------------
                           |
BALANCE AT                 |
MARCH 31, 1999             |   1,473,816     1,473,816    $4,586,982    $(1,320,612)     $      --     $3,266,370
                           |
PURCHASE OF                |
TREASURY SHARES            |          --      (127,000)           --             --       (322,212)      (322,212)
                           |
TRANSFER OF                |
SHARES TO ESOP             |
PLAN                       |          --         1,215           604             --          2,890          3,494
                           |
NET INCOME                 |          --            --            --         96,080             --         96,080
                           |--------------------------------------------------------------------------------------
                           |
BALANCE AT                 |
SEPTEMBER 30, 1999         |   1,473,816     1,348,031    $4,587,586    $(1,224,532)     $(319,322)    $3,043,732
                           |======================================================================================

</TABLE>


                                       5

<PAGE>

                           RECONDITIONED SYSTEMS, INC.
                            STATEMENTS OF CASH FLOWS
      For the Three and Six Month Periods Ended September 30, 1999 and 1998
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                     Three Months Ended              Six Months Ended
                                                        September 30,                  September 30,
                                               ---------------------------     --------------------------
                                                    1999           1998            1999           1998
                                                    ----           ----            ----           ----
<S>                                            <C>             <C>             <C>            <C>
Cash and cash equivalents provided by
operating activities                           $   294,171     $   183,102     $   665,451     $   168,601

Cash and cash equivalents used by investing
activities                                         (39,885)        (32,560)        (63,988)        (45,577)

Cash and cash equivalents used by financing
activities                                          (9,968)         (9,912)       (181,218)        (19,644)
                                               -----------     -----------     -----------     -----------

Increase in cash and cash equivalents              244,318         140,630         420,245         103,380

Cash and cash equivalents at beginning of
period                                           1,279,252         695,781       1,103,325         733,031
                                               -----------     -----------     -----------     -----------

Cash and cash equivalents at end of period     $ 1,523,570     $   836,411     $ 1,523,570     $   836,411
                                               ===========     ===========     ===========     ===========
</TABLE>



Non-cash Investing and Financing Activities:

During the quarter ended  September 30, 1999, the Company  recognized  investing
and financing activities that affected its assets, liabilities and stockholders'
equity, but did not result in cash receipts or payments.
These non-cash activities are as follows:

     The  Company  relieved a note  receivable  and  accrued  interest  totaling
     $80,484 as part of a severance  agreement with its former President and CEO
     (see Note 3).


                                       6

<PAGE>

                           RECONDITIONED SYSTEMS, INC.
                          Notes to Financial Statements
                                   (Unaudited)

--------------------------------------------------------------------------------
                                     NOTE 1.
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------

BASIS OF PRESENTATION:

          The  unaudited  financial  statements  include  only the  accounts and
          transactions of the Company.

INTERIM FINANCIAL STATEMENTS:

          The unaudited  interim  financial  statements  include all adjustments
          (consisting of normal  recurring  accruals)  which,  in the opinion of
          management,  are necessary in order to make the  financial  statements
          not misleading.  Operating  results for the three and six months ended
          September 30, 1999 are not necessarily  indicative of the results that
          may be  expected  for the entire  year ending  March 31,  2000.  These
          financial  statements  have  been  prepared  in  accordance  with  the
          instructions  to Form  10-QSB and do not contain  certain  information
          required by generally accepted accounting principles. These statements
          should be read in conjunction with the financial  statements and notes
          thereto included in the Company's Form 10-KSB for the year ended March
          31, 1999.

EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:

          Basic  earnings  (loss) per share include no dilution and are computed
          by dividing  income  (loss)  available to common  stockholders  by the
          weighted average number of shares outstanding for the period.

          Diluted  earnings  (loss) per share amounts are computed  based on the
          weighted average number of shares actually outstanding plus the shares
          that would be  outstanding  assuming  the  exercise of dilutive  stock
          options,  all of which are considered to be common stock  equivalents.
          The number of shares that would be issued  from the  exercise of stock
          options has been  reduced by the number of shares that could have been
          purchased  from  the  proceeds  at the  average  market  price  of the
          Company's stock.  Diluted loss per common and common  equivalent share
          for the three month period ended  September  30, 1999 is not presented
          as it is antidilutive.


                                       7
<PAGE>

                           RECONDITIONED SYSTEMS, INC.
                          Notes to Financial Statements
                                   (Unaudited)

--------------------------------------------------------------------------------
                                     NOTE 2.
                            EARNINGS (LOSS) PER SHARE
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                       Three Months Ended              Six Months Ended
                                                          September 30,                  September 30,
                                                 ---------------------------     --------------------------
                                                      1999           1998            1999           1998
                                                      ----           ----            ----           ----
<S>                                              <C>             <C>             <C>            <C>
BASIC EPS

Net Income (Loss)                                $   (77,730)    $   246,230    $    96,080    $   488,777
                                                 ===========     ===========    ===========    ===========
Weighted average number of shares outstanding      1,399,441       1,473,950      1,428,837      1,473,950

Basic earnings (loss) per share                  $     (0.06)    $      0.17    $      0.07    $      0.33
                                                 ===========     ===========    ===========    ===========

DILUTED EPS

Net Income (Loss)                                $   (77,730)    $   246,230    $    96,080    $   488,777
                                                 ===========     ===========    ===========    ===========
Weighted average number of shares outstanding      1,399,441       1,473,950      1,428,837      1,473,950

Effect of dilutive securities:
  Stock options                                            0         226,531        203,687        222,260
                                                 -----------     -----------    -----------    -----------
Total common shares + assumed conversions          1,399,441       1,700,481      1,632,524      1,696,210
                                                 ===========     ===========    ===========    ===========
Per Share Amount                                 $     (0.06)    $      0.14    $      0.06    $      0.29
                                                 ===========     ===========    ===========    ===========
</TABLE>


--------------------------------------------------------------------------------
                                     NOTE 3.
                                SEVERANCE CHARGES
--------------------------------------------------------------------------------

Effective  September 30, 1999,  the Board of Directors  entered into a Severance
Agreement with and accepted the resignation of Wayne R. Collignon, the Company's
President and Chief Executive Officer (CEO).  Under the terms of this agreement,
the Company agreed to pay Mr.  Collignon  $430,484 in exchange for 50,000 shares
of the  Company's  Common  Stock and options to purchase  100,000  shares of the
Company's  Common Stock held by Mr.  Collignon.  The agreement is payable in one
installment of $260,000 due November 10, 1999, a final payment of $90,000 due on
January 3, 2000 and through the relief of a note and interest receivable owed by
Mr.  Collignon to the  Company.  In addition,  Mr.  Collignon  has the option to
remain a consultant to the Company  through January 3, 2000 for which he will be
paid $3,846.15 bi-weekly.


                                       8
<PAGE>

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

The  statements  contained  in this  report  that are not  historical  facts may
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended,  and Section 21E of the Securities  Exchange
Act of 1934, as amended,  and are subject to the safe harbors  created  thereby.
These forward-looking statements involve risks and uncertainties, including, but
not  limited  to,  the  risk  of  increased   competition  from  "budget"  newly
manufactured  product-lines,  the  risk  that  the  Company  may  not be able to
successfully  diversify  its  operations,  the risk that the Company may not see
increased  sales and  profitability,  and the risk that the stock market may not
recognize  the  Company's  positive  financial  results and potential for future
prospects.  In  addition,  the  Company's  business,  operations  and  financial
condition are subject to  substantial  risks that are described in the Company's
reports and statements  filed from time to time with the Securities and Exchange
Commission,  including the Company's Annual Report on Form 10-KSB for the fiscal
year ended March 31, 1999.

RESULTS OF OPERATIONS

SALES REVENUE
Sales for the three month  period  ended  September  30, 1999  (hereinafter  the
"reporting  quarter") were $2,458,090,  a decrease of $663,284 or 21.3% over the
three month  period  ended  September  30,  1998  (hereinafter  the  "comparable
quarter").  Sales for the six months ended September 30, 1999  (hereinafter  the
"reporting  period") totaled  $4,755,886,  down $1,018,580 or 17.6% over the six
month period ended September 30, 1998  (hereinafter  the  "comparable  period").
These decreases were primarily due to lower wholesale sales.

Wholesale  sales for the  reporting  quarter were down  $526,397 or 26% over the
comparable  quarter  and down  $849,137  or 23.2%  for the  reporting  period in
contrast to the comparable period. Management has responded to these lower sales
by  implementing  a new  wholesale  pricing  structure  designed to increase the
Company's  competitive  position  against the new  "budget"  newly  manufactured
product-lines. Initial response to this new pricing structure has been positive.

Sales within the Phoenix  retail market during the reporting  quarter  decreased
12.5% or $136,887 over the  comparable  quarter.  The Company  experienced an 8%
decrease in retail sales for the reporting  period as compared to the comparable
period.  These  decreases  were  primarily  due to fewer sales  personnel in the
reporting period versus during the comparable  period.  In addition,  demolition
and remodeling of the Company's  retail  showroom  during the reporting  quarter
presented certain challenges to the retail sales staff and may have had a slight
impact on retail sales.

GROSS MARGIN
The  Company's  gross  profit  margin for the  reporting  quarter was 25.4%,  as
compared to 21.5% for the  comparable  quarter,  a 3.9%  improvement.  The gross
margin for the reporting period was 25.3% versus 22.4% in the comparable period,
a  2.9%  improvement.  These  improvements  were  primarily  attributable  to an
increased  percentage of retail versus  wholesale sales and lower product costs.
Retail sales  comprised 39% of total sales during the reporting  quarter and 41%
during the reporting  period,  up 4% from the comparable  quarter and comparable
period, respectively.  As retail margins are typically higher than those charged
on  wholesale  sales,  this change in the  retail/wholesale  mix  accounts for a
portion of the improved margins.  In addition,  increased supply of used Haworth
product  available on the  aftermarket  has driven the  Company's  product costs
down, further improving gross margins.

                                       9
<PAGE>

OPERATING EXPENSES
The Company's selling and administrative expenses increased from 14% of sales in
the comparable quarter to 17.4% for the reporting quarter and from 14.35% in the
comparable  period  to 17.9%  for the  reporting  period.  These  increases  are
primarily a result of fixed costs and lower sales volume, and the development of
the Company's new retail sales program.

Beginning  July 1, 1999, the Company  instituted its new retail sales  expansion
program. The Company hired a sales manager, added additional sales personnel and
began tenant improvements to its existing facility which included remodeling and
expansion of the Company's  showroom and office space.  Following the completion
of the showroom in October, 1999, the retail unit began doing business under the
new name of "Total  Office  Interiors."  The new retail  showroom  features  the
Company's   remanufactured   Haworth  workstations,   as  well  as  an  expanded
product-line,  including new workstations manufactured by Teknion and a complete
line of new chairs,  desks, filing and other case products.  Management believes
the new d.b.a. will attract a larger group of consumers and position the Company
as a complete office furniture dealer.

SEVERANCE CHARGES
Effective  September 30, 1999,  the Board of Directors  entered into a Severance
Agreement with and accepted the resignation of Wayne R. Collignon, the Company's
President and Chief Executive Officer (CEO).  Under the terms of this agreement,
the Company  agreed to pay Mr.  Collignon  $430,484  in exchange  for all of the
Company's  Common  Stock and options  held by Mr.  Collignon.  The  agreement is
payable in one installment of $260,000 due November 10, 1999, a final payment of
$90,000  due on January 3, 2000 and  through  the relief of a note and  interest
receivable owed by Mr. Collignon to the Company. In addition,  Mr. Collignon has
the option to remain a  consultant  to the Company  through  January 3, 2000 for
which he will be paid $3,846.15 bi-weekly.

Scott W.  Ryan,  Chairman  of the  Board,  assumed  the role of Chief  Executive
Officer and Dirk D.  Anderson,  Chief  Financial  Officer,  was also named Chief
Operating  Officer.  While Mr.  Collignon  was  instrumental  in  effecting  the
turn-around of the Company,  his  resignation is not expected to have a material
negative impact on the current business operations of the Company.

OTHER INCOME AND EXPENSES
The  Company's  other income and expenses,  which consist  primarily of interest
income  and  expense,  improved  by $7,365  from the  comparable  quarter to the
reporting  quarter and by $12,412 from the  comparable  period to the  reporting
period.  These  improvements were primarily  attributable to increased  interest
income generated from the Company's current cash reserves.

FORWARD LOOKING STATEMENTS
The  Company  continues  to face  increasing  competition  with  "budget"  newly
manufactured product-lines. These product-lines have had a significant impact on
the Company's  wholesale  sales.  Management  has responded to this  competitive
pressure by  implementing  a new pricing  structure  for the  wholesale  market.
Beginning July 1, 1999, the Company's wholesale department began offering deeper
discounts and  implemented a new freight  policy  modeled after those offered by
new furniture manufacturers.  In addition, wholesale marketing efforts have been
intensified  in an attempt to maintain and  strengthen  our existing  network of
dealers.  However,  there can be no assurance that the new pricing structure and
increased  wholesale  marketing  efforts  will  enable  the  Company  to compete
successfully with the "budget" newly  manufactured  product-lines on a wholesale
level.

                                       10
<PAGE>

While lower  product  costs have  partially  offset the negative  effects of the
deeper wholesale discounts on the Company's gross margins, management intends to
focus its efforts on  developing  and  pursuing  long-term  growth in the retail
market. The Company began implementing a new retail marketing program during the
reporting  period.  The primary focus of this program is to change the Company's
image in the Phoenix  marketplace  from that of a used furniture  refurbisher to
that of a full service  office  furniture  dealership.  The Company  began doing
business under the new trade name of "Total Office Interiors" in October,  1999.
Along with the new trade name,  the  Company's  new retail  sales  showroom  and
remodeled  office space within its existing Tempe facility were completed during
October,   1999.  In  addition  to   showcasing   and  marketing  the  Company's
remanufactured  systems  furniture,  the space now  features the  Company's  new
expanded  product-line,  including files,  chairs,  desks and newly manufactured
systems   furniture.   Management   believes   this  name  change  and  expanded
product-line  will broaden the Company's  customer-base and position the Company
as a source for all office furniture needs.

Effective July 1, 1999, the Company promoted one of its sales representatives to
sales manager to lead the  Company's  sales force and assist in the creation and
development  of the  Company's  new  marketing  program.  The  Company  plans to
increase  its retail  sales  staff from six to nine over the next 12 - 18 months
and intends to use the Tempe  retail  operation  as a prototype  for  developing
other retail sales offices  throughout  the Western region of the United States.
In addition, management is currently conducting test marketing in the Las Vegas,
Nevada area in hopes of possible expansion into that market.

INCOME TAXES
During the periods ended September 30, 1999 and 1998, the Company's  taxable net
income was fully offset by net operating loss  carryforwards.  As a result,  the
Company incurred no income tax expense during these periods.

FINANCIAL CONDITION AND LIQUIDITY
As of September  30,  1999,  the  Company's  cash and cash  equivalents  totaled
$1,523,570.  In addition,  the Company's net worth and working  capital  totaled
$3,043,732 and $2,697,845, respectively. The Company has no long-term debt.

The Company reported cash flows from operations of $665,451 during the reporting
period.   This  was  primarily  a  result  of  operating  income  and  increased
collections of accounts  receivable.  The Company used approximately  $64,000 of
these funds for investment  activities  primarily for the purchase of a delivery
truck,  production  machinery and fixed asset additions related to the Year 2000
compliance program,  and it used approximately  $181,000 to finance the purchase
of  treasury  shares.  The  remaining  funds  were added to the  Company's  cash
reserves.

Management believes current cash reserves and cash flows from operations will be
adequate  to fund all  projected  expenditures  without  the  need  for  outside
financing.  In  addition,  the Company has  $1,000,000  available on its line of
credit with M&I Thunderbird Bank.

YEAR 2000 COMPLIANCE
The "Year 2000 problem" arose because many existing  computer  programs use only
the last two digits to refer to a year.  Therefore,  these computer  programs do
not  properly  recognize a year that begins  with "20"  instead of the  familiar
"19."  If not  corrected,  many  computer  applications  could  fail  or  create
erroneous results when the year 2000 begins.

                                       11
<PAGE>

The Company  implemented  a program to assess and  monitor  the  progress of its
material customers, suppliers and other material third parties in resolving Year
2000  compliance  issues.  Although the Company has taken,  and will continue to
take,  reasonable  efforts  to gather  information  to  determine  the Year 2000
readiness of material third parties,  the Year 2000  compliance of third parties
is substantially  beyond the Company's knowledge and control.  While the Company
does not anticipate any negative impact  associated with the Year 2000 readiness
of material third parties,  there can be no assurances that the Company will not
be adversely affected by the failure of a third party to adequately address Year
2000 compliance.

The Company has evaluated its existing systems, including information technology
and non-information  technology systems,  for Year 2000 compliance and has taken
certain  corrective  actions.  At this time,  the  Company  believes  all of its
computer hardware,  software,  telephone and manufacturing equipment are in Year
2000 compliance.

The Company replaced its previous computer hardware with new Year 2000 compliant
equipment.  The replacement cost totaled  approximately  $35,000.  The Company's
existing  accounting  software  program has been  upgraded to bring it into Year
2000 compliance.  In addition,  the existing accounting software program will be
replaced with a new  accounting/manufacturing  software program. The anticipated
cost of this program,  including implementation and training, is estimated to be
approximately  $75,000.  Implementation  began May 13, 1999 and is scheduled for
completion  on November 30, 1999.  These  capital  expenditures  are expected to
improve administrative  efficiency.  As of September 30, 1999, the total capital
expenditures  related to the Year 2000  project,  including  both  hardware  and
software,  were approximately  $90,000. All remaining costs associated with this
project will be funded from current cash reserves and are not expected to have a
material effect on the Company's operating results.

The Company's  reconditioning  and sale of  workstations  in not dependent  upon
computer operations. Accordingly, management does not believe there is a risk of
interruption  in its supply of  workstations  to its  customers or lost revenues
with any potential Year 2000  compliance  issues.  Further,  management does not
believe that the Company  faces any  potential  liability  to third  parties for
breach of contract or other harm if its systems are not Year 2000 compliant.


                                       12

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
The  Company is not party to any pending  legal  proceeding  other than  routine
litigation incidental to the business.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS
None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting was held on August 6, 1999.  Shareholders  voted on
the  appointment of the Company's  auditors,  election of the Company's Board of
Directors  and the adoption of the  Reconditioned  Systems,  Inc.  1999 Employee
Stock Purchase Plan.

<TABLE>
<CAPTION>
                           Shares
Proposal                   Eligible     Voted For    Voted Against    Abstentions    Broker Non-Votes
--------                   --------     ---------    -------------    -----------    ----------------
<S>                        <C>          <C>          <C>              <C>            <C>
1 - Election of
    directors:

    Wayne Collignon        1,401,816    1,051,712                0         23,710                   0
    Dirk Anderson          1,401,816    1,054,054                0         21,368                   0
    Scott Ryan             1,401,816    1,074,422                0          1,000                   0
    Warren Palitz          1,401,816    1,069,603                0          5,819                   0

2 - Ratification of
    Employee Stock
    Purchase Plan          1,401,816      574,304           12,030            200             488,888

3 - Appointment of
    auditors               1,401,816    1,074,422                0              0                   0
</TABLE>


ITEM  5. OTHER INFORMATION
None.


                                       13

<PAGE>

Item 6.  Exhibits and Reports on Form 8-K
(a) The following exhibits are filed herewith pursuant to Regulation S-B:

No.               Description                                          Reference
---               -----------                                          ---------
3.1      Articles of Incorporation of the Registrant,
         as amended and restated                                           3
3.2      Bylaws of Registrant, as amended and restated                     3
4.1      Form of Common Stock Certificate                                  1
4.5      Registration Rights Agreements                                    2
*4.9     Options issued to Wayne R. Collignon                              4
*4.10    Options issued to Dirk D. Anderson                                4
*4.11    Amendment to Options issued to Wayne Collignon                    5
*4.12    Amendment to Options issued to Dirk D. Anderson                   5
*4.13    Options issued to Wayne R. Collignon                              5
*4.14    Options issued to Dirk D. Anderson                                5
*4.15    Options issued to Scott W. Ryan                                   5
*4.16    Options issued to Scott W. Ryan                                   5
10.1     Lease Agreement, dated April 12, 1990 between Boston
         Safe Deposit and Trust Company, as Lessor, and Registrant
         as Lessee                                                         1
10.33    Loan document between M&I Thunderbird Bank and the Registrant     6
*10.34   Severance Agreement between Wayne R. Collignon and Registrant     7

          (1)  Filed with Registration Statement on Form S-18, No.
               33-51980-LA, under the Securities Act of 1933, as
               declared effective on December 17, 1992
          (2)  Filed with Form  10-KSB on July 13, 1995
          (3)  Filed with Form 10-KSB on July 2, 1996
          (4)  Filed with Form 10-QSB on November 14, 1996
          (5)  Filed with 10-KSB on September 26, 1997
          (6)  Filed with 10-QSB on August 11, 1999
          (7)  Filed herein
          (*)  Indicates a compensatory plan or arrangement


(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter ended September 30, 1999.


                                       14

<PAGE>

                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


RECONDITIONED SYSTEMS, INC.


Date:    November 15, 1999             /s/ Scott W. Ryan
                                       -----------------------------------------
                                       Scott W. Ryan, Chief Executive Officer


Date:    November 15, 1999             /s/ Dirk D. Anderson
                                       -----------------------------------------
                                       Dirk D. Anderson, Chief Financial Officer



                                       15