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 June 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 August 4, 1999, the number of
shares outstanding of the Registrant's common stock was 1,401,816.

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

<PAGE>

ITEM 1





                          PART 1 - FINANCIAL STATEMENTS


                           RECONDITIONED SYSTEMS, INC.


                         UNAUDITED FINANCIAL STATEMENTS

                                  JUNE 30, 1999



                                       2
<PAGE>

                           RECONDITIONED SYSTEMS, INC.
                                 BALANCE SHEETS
                             JUNE 30, 1999 AND 1998
                                   (UNAUDITED)

                                                           1999         1998
                                                           ----         ----
                                     ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                            $1,279,252   $  695,781
   Accounts receivable - trade, net of allowance for
     doubtful accounts of $37,500 and 27,250,
     respectively                                        1,308,726    1,254,644
   Inventory                                               918,941      942,360
   Prepaid expenses and other current assets                80,210       44,170
                                                        ----------   ----------
           TOTAL CURRENT ASSETS                          3,587,129    2,936,955
                                                        ----------   ----------
PROPERTY AND EQUIPMENT, NET:                               199,102      136,522
                                                        ----------   ----------
OTHER ASSETS:
   Notes receivable - officers                             150,000      150,000
   Refundable deposits                                      13,036       13,930
   Other                                                    29,995       15,220
                                                        ----------   ----------
                                                           193,031      179,150
                                                        ----------   ----------
TOTAL ASSETS                                            $3,979,262   $3,252,627
                                                        ==========   ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current maturities of long-term debt                 $        0   $   23,160
   Accounts payable                                        455,568      436,973
   Customer deposits                                        30,016      136,195
   Accrued expenses and other current liabilities          224,748      198,198
                                                        ----------   ----------
           TOTAL CURRENT LIABILITIES                       710,332      794,526
                                                        ----------   ----------
STOCKHOLDERS' EQUITY:
   Common stock, no par value; 20,000,000 shares
     shares authorized                                  $4,586,982   $4,586,982
   Accumulated deficit                                  (1,146,802)  (2,125,127)
                                                        ----------   ----------
                                                         3,440,180    2,461,855
   Less: treasury stock, 72,000 and 134 shares
         respectively, at cost                            (171,250)      (3,754)
                                                        ----------   ----------
                                                         3,268,930    2,458,101
                                                        ----------   ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              $3,979,262   $3,252,627
                                                        ==========   ==========


                                       3
<PAGE>

                           RECONDITIONED SYSTEMS, INC.
                            STATEMENTS OF OPERATIONS
            FOR THE THREE MONTH PERIODS ENDED JUNE 30, 1999 AND 1998
                                   (UNAUDITED)


                                                           1999         1998
                                                           ----         ----

Sales                                                   $2,297,796   $2,653,092

Cost of sales                                            1,717,015    2,028,782
                                                        ----------   ----------

Gross profit                                               580,781      624,310

Selling & administrative expenses                          423,139      392,884
                                                        ----------   ----------

Income from operations                                     157,642      231,426

Other income (expense):
   Interest income                                          16,168       10,441
   Interest expense                                              0         (639)
   Other                                                         0        1,319
                                                        ----------   ----------

                                                            16,168       11,121
                                                        ----------   ----------

Net income                                              $  173,810   $  242,547
                                                        ==========   ==========

Basic earnings per share (Notes 1 and 3)                $     0.12   $     0.16
                                                        ==========   ==========
Basic weighted average number
    of shares outstanding                                1,458,232    1,473,950
                                                        ==========   ==========
Diluted earnings per common
   and common equivalent share (Notes 1 and 3)          $     0.10   $     0.14
                                                        ==========   ==========
Diluted weighted average number
   of shares outstanding                                 1,668,463    1,691,411
                                                        ==========   ==========


                                       4
<PAGE>

                           RECONDITIONED SYSTEMS, INC.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
          FOR THE YEAR ENDED MARCH 31, 1999 AND THE THREE MONTH PERIOD
                              ENDED JUNE 30, 1999
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                           |      COMMON         COMMON         RETAINED
                           |      STOCK           STOCK         EARNINGS      TREASURY
                           |      SHARES         AMOUNT        (DEFICIT)         STOCK           TOTAL
-------------------------------------------------------------------------------------------------------
<S>                            <C>           <C>            <C>              <C>            <C>
                           |
BALANCE AT MARCH 31, 1998  |   1,473,950     $4,586,982     $(2,367,674)     $  (3,754)     $2,215,554
                           |
RETIREMENT OF TREASURY     |
   SHARES                  |        (134)             -          (3,754)         3,754               -
                           |
NET INCOME                 |           -              -       1,050,816              -       1,050,816
                           |---------------------------------------------------------------------------
                           |
BALANCE AT MARCH 31, 1999  |   1,473,816     $4,586,982     $(1,320,612)     $       -      $3,266,370
                           |
PURCHASE OF TREASURY       |
   SHARES                  |     (72,000)             -               -       (171,250)       (171,250)
                           |
NET INCOME                 |                                    173,810                        173,810
                           |---------------------------------------------------------------------------
                           |
BALANCE AT JUNE 30, 1999   |   1,401,816     $4,586,982     $(1,146,802)     $(171,250)     $3,268,930
                           |===========================================================================

</TABLE>



                                       5
<PAGE>

                           RECONDITIONED SYSTEMS, INC.
                            STATEMENTS OF CASH FLOWS
            FOR THE THREE MONTH PERIODS ENDED JUNE 30, 1999 AND 1998
                                   (UNAUDITED)


                                                           1999         1998
                                                           ----         ----

Cash and cash equivalents provided (used) by
operating activities                                    $  371,280   $  (14,501)

Cash and cash equivalents used by investing
activities
                                                           (24,103)     (13,017)

Cash and cash equivalents used by financing
activities
                                                          (171,250)      (9,732)
                                                        ----------   ----------

Increase (decrease) in cash and cash equivalents           175,927      (37,250)

Cash and cash equivalents at beginning of period         1,103,325      733,031
                                                        ----------   ----------

Cash and cash equivalents at end of period              $1,279,252   $  695,781
                                                        ==========   ==========



                                       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 months ended June 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 per share  include no dilution and are computed by dividing
     income  available to common  stockholders by the weighted average number of
     shares outstanding for the period.

     Diluted  earnings  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.

--------------------------------------------------------------------------------

                                     NOTE 2.
                            REVOLVING LINE OF CREDIT

--------------------------------------------------------------------------------

Effective  July 31,  1999,  the Company  renewed its  $1,000,000  line of credit
agreement with M&I Thunderbird Bank. Under the terms of the agreement,  interest
is  payable at the bank's  base rate.  Borrowings  on the line of credit may not
exceed 75% of eligible accounts receivable,  inventory,  property and equipment,
and  intangibles.  The  agreement  contains  various  covenants  by the Company,
including  covenants that the Company will maintain certain net worth thresholds
and ratios,  will meet certain debt service coverage ratios,  and will not enter
into or engage in various  types of agreements  or business  activities  without
approval  from M&I  Thunderbird  Bank.  As of June 30, 1999,  the Company had no
outstanding borrowings against this line of credit.




                                       7
<PAGE>


                           RECONDITIONED SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

--------------------------------------------------------------------------------

                                     NOTE 3.
                               EARNINGS PER SHARE

--------------------------------------------------------------------------------


                                                          THREE MONTHS ENDED
                                                                JUNE 30,
                                                          1999          1998
                                                          ----          ----
BASIC EPS

Net Income                                              $  173,810   $  242,547
                                                        ==========   ==========

Weighted average number of shares outstanding            1,458,232    1,473,950

Basic earnings per share                                $     0.12   $     0.16
                                                        ==========   ==========

DILUTED EPS

Net Income                                                 173,810   $  242,547
                                                        ==========   ==========

Weighted average number of shares outstanding            1,458,232    1,473,950

Effect of dilutive securities:
  Stock options                                            210,231      217,461
                                                        ----------   ----------

Total common shares + assumed conversions                1,668,463    1,691,411
                                                        ==========   ==========

Per Share Amount                                        $     0.10   $     0.14
                                                        ==========   ==========


                                       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  that the  Company  may not be able to  successfully
diversify its operations,  the risk that the Company may not see increased sales
and  profitability,  the risk  that  the  Company  may not be able to bring  its
computer systems into year 2000 compliance  before January 1, 2000, 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

Reconditioned Systems, Inc. (the "Company" or "RSI") reported net income for the
three month period ended June 30, 1999  (hereinafter the "reporting  period") of
$173,810 as compared to $242,547  for the three month period ended June 30, 1998
(hereinafter  the  "comparable  period").  This  $68,737  or 28.3%  decrease  is
primarily a result of decreased sales volume.

The Company reported sales for the reporting period of $2,297,796 as compared to
$2,653,092  for the  comparable  period,  resulting in a decrease of $355,296 or
13.4%.  Wholesale sales totaled  $1,315,844 for the reporting period, a decrease
of $322,740 or 19.7% over the comparable period. This decrease was primarily due
to increased  pressure from "budget" newly  manufactured  product-lines.  Retail
sales in the Phoenix market remained  relatively constant at $981,952 during the
reporting period, a decrease of $32,556 or 3.2% over the comparable period.

The  Company's  gross  profit  margin for the  reporting  period  was 25.2%,  as
compared to a gross profit margin of 23.5% for the comparable period.  This 1.7%
improvement was primarily  attributable to the increased percentage of retail to
wholesale sales. Retail sales comprised  approximately 43% of total sales in the
reporting period as compared to 38% of total sales in the comparable period.

The Company's selling and administrative  expenses increased from 14.8% of sales
in the comparable  period to 18.4% for the reporting  period.  The 3.6% increase
was primarily a result of fixed costs and lower sales volume.  In addition,  the
Company  increased  marketing  expenditures  during the  reporting  period in an
effort to bolster sales.

The Company's  other income and expenses,  which consists  primarily of interest
income  and  expense,  improved  by  $5,047  from the  comparable  period to the
reporting  period.  This  improvement  was primarily  due to increased  interest
income generated from the Company's current cash reserves.


                                       9
<PAGE>

FORWARD LOOKING STATEMENTS

The Company is facing  increasing  competition with "budget" newly  manufactured
product-lines.  These product-lines have had a significant impact on the Company
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 expand 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.

In an  effort to  counter  the  effects  of deeper  wholesale  discounts  on the
Company's  gross  margin  and  pursue  long-term  growth,  management  has begun
implementing a new retail marketing  program.  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  registered  the trade name of Total Office  Interiors with the State of
Arizona and is  scheduled to begin doing  retail  business  under this new trade
name on or about October 1, 1999. Along with the new trade name, the Company has
contracted  to build a new retail  sales  showroom  and remodel the office space
within its  existing  Tempe  facility.  This  space will be used to display  and
market the Company's  refurbished systems furniture,  as well as an expanded new
product-line,  including files,  chairs,  desks and newly  manufactured  systems
furniture.  Management  believes this name change and expanded product line will
help potential customers to identify the Company's line of business and position
the  Company as a source  for all  office  furniture  needs.  However,  the full
service  office  furniture  market  is highly  competitive,  and there can be no
assurance that the new retail marketing program will lead to improved margins or
long-term growth.

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 also plans to
increase its retail sales staff from six to nine over the next 12 - 18 months.

Management hopes to use the knowledge gained from this new marketing  program in
the development of other satellite offices as opportunities become available.

INCOME TAXES

During the  periods  ended June 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 June 30, 1999, the Company's cash and cash equivalents totaled $1,279,252.
In addition,  the Company's net worth and working capital totaled $3,268,930 and
$2,876,797,  respectively.  The Company  has no  long-term  debt and  $1,000,000
available on its line of credit through M&I Thunderbird Bank.

The Company reported cash flows from operations of $371,280 during the reporting
period.   This  was  primarily  a  result  of  operating  income  and  increased
collections of accounts  receivable.  The Company used approximately  $24,000 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  $171,125 to finance the  purchase of treasury
shares. The remaining funds were added to the Company's cash reserves.

Cash provided by operations in the near future should closely  follow  operating
income,  net of  expenditures  related  to the  Company's  Year 2000  compliance
program  and funds  used for  retail  sales  office  development  and  potential
acquisitions.  Management  believes  current  cash  reserves and cash flows from
operations  will be adequate to fund all of these programs  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.


                                       10
<PAGE>

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.

RSI has implemented a program to assess and monitor the progress of its material
customers,  suppliers and other significant third parties in resolving Year 2000
compliance  issues.  Questionnaires  have  been  sent to all  significant  third
parties to evaluate their Year 2000  readiness.  In addition,  all new suppliers
and  customers  will be  required to complete  the  questionnaires.  The initial
evaluation is completed; however, new third parties will be evaluated as needed.
All material third parties with potential unresolved Year 2000 compliance issues
which become  evident  through this  assessment  program will be monitored on an
individual  basis depending on the  significance of the  relationship to RSI and
the severity of the unresolved issues.  Based upon the evaluations  completed to
date, there are no material third parties with significant  unresolved Year 2000
compliance issues at this time.

The Company has evaluated its existing systems, including information technology
and non-information technology systems, for Year 2000 compliance. Following this
evaluation,  the Company believes all of its non-information  technology systems
are in compliance at this time.

The  Company's  computer  hardware  and  accounting  software  are not Year 2000
compliant.  The Company has developed the following  plan to bring these systems
into compliance:

The Company has begun to replace its existing  computer  hardware  with new Year
2000  compliant   equipment.   The  total   replacement  cost  is  estimated  at
approximately  $40,000 and is scheduled  for  completion  by August 31, 1999. In
addition,  the existing  accounting software program will be replaced with a new
accounting/manufacturing  software program.  The estimated cost of this program,
including implementation and training, is estimated to be approximately $70,000.
Implementation  began May 13, 1999 and is scheduled for  completion on September
30, 1999. The cost of the hardware and software  replacement will be funded from
current  cash  reserves  and is not  expected  to have a material  effect on the
Company's operating results.  These capital  expenditures will bring the Company
into Year 2000 compliance and are expected to improve administrative efficiency.
As of June 30, 1999,  the total  capital  expenditures  related to the Year 2000
project were approximately $62,000.

If there are  difficulties  implementing  the plan described  above, the Company
intends to upgrade  its current  software  programs to bring them into Year 2000
compliance.  The estimated cost of the software upgrade is  approximately  $500.
The Company would replace all  non-compliant  hardware as described  above.  The
costs of both the  software  and hardware  upgrades  and  replacements  would be
funded  from  current  cash  reserves.  This is not  expected to have a material
effect on the Company's  operations and the additions  could easily be completed
within 30 days.  These upgrades would bring the Company's  computer systems into
Year 2000 compliance.

The most likely worse case scenario regarding the Company's Year 2000 compliance
would be the Company's  inability to implement the new  accounting/manufacturing
package before December 31, 1999 or that the cost of implementation  will exceed
the  estimated  costs.  If for any  reason  the  conversion  process  cannot  be
completed  before January,  2000, the Company will resort to its backup plan. If
the cost of the conversion exceeds the estimated costs, the Company believes any
additional expense can be funded from cash reserves without a material effect on
operations.

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.


                                       11
<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

None.

ITEM  5. OTHER INFORMATION

None.



                                       12
<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

         (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 June 26, 1997
         (6)   Filed herein

(b) Reports on Form 8-K:

No reports were filed on Form 8-K during the quarter ended June 30, 1999.



                                       13
<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:    August 11, 1999                 /s/ Wayne R. Collignon
                                         --------------------------------------
                                         Wayne R. Collignon, President and CEO


Date:    August 11, 1999                 /s/ Dirk D. Anderson
                                         --------------------------------------
                                         Dirk D. Anderson, CFO





                                       14