SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                  For the six month period ended June 30, 1999

                         Commission file number 0-28572

                             OPTIMAL ROBOTICS CORP.
             (Exact name of registrant as specified in its charter)

CANADA                                                98-0160833
(State or Other Jurisdiction of                       (I.R.S. Employer
Incorporation or Organization)                        Identification No.)

         4700 de la Savane, Suite 101, Montreal, Quebec, Canada H4P 1T7

                                 (514) 738-8885
              (Registrant's Telephone Number, including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes  |X|    No |_|

At July 23,  1999,  the  registrant  had  10,701,549  Class "A" shares  (without
nominal or par value) outstanding.

<PAGE>

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


                                                                               2
<PAGE>

Optimal Robotics Corp.

INTERIM
FINANCIAL STATEMENTS
(stated in United States dollars)
June 30, 1999


                                                                               3
<PAGE>

OPTIMAL ROBOTICS CORP.

INTERIM BALANCE SHEET
(stated in United States dollars, unless otherwise noted)

                                                     December 31     June 30
                                                        1998           1999
                                                   ----------------------------
                                                                    (unaudited)
Assets

Current assets
   Cash                                            $       --      $  3,238,784
   U.S. Treasury bill, at cost                          538,490         549,578
   Short-term investments                             5,524,819      24,126,282
   Accounts receivable, net of allowance for          1,219,716       5,991,547
     doubtful accounts of nil
   Inventory                                          1,401,049       1,977,755
   Tax credits receivable                               114,494         194,216
   Prepaid expenses                                       2,935          46,975
                                                   ----------------------------
                                                      8,801,503      36,125,137

Loans receivable                                        161,807         168,319

Capital assets                                          365,869         613,913
                                                   ----------------------------
                                                   $  9,329,179    $ 36,907,369
                                                   ============================
Liabilities

Current liabilities
   Accounts payable and accrued liabilities        $  1,233,014    $  3,419,788
   Deferred revenue                                     124,784         846,960
   Current portion of contract advance                  125,000            --
                                                   ----------------------------
                                                      1,482,798       4,266,748

Contract advance                                        250,000         250,000
                                                   ----------------------------
                                                      1,732,798       4,516,748

Shareholders' Equity

Share capital                                        16,850,531      41,562,155

Other capital                                            23,240          23,240

Cumulative translation adjustment                          --           229,080

Deficit                                              (9,277,390)     (9,423,854)
                                                   ----------------------------
                                                      7,596,381      32,390,621
                                                   ----------------------------

                                                   $  9,329,179    $ 36,907,369
                                                   ============================


                                                                               4
<PAGE>

OPTIMAL ROBOTICS CORP.

INTERIM STATEMENT OF OPERATIONS
(unaudited)
(stated in United States dollars, unless otherwise noted)

<TABLE>
<CAPTION>
                                         Three months    Six months ended  Three months ended  Six months ended
                                        ended June 30         June 30            June 30           June 30
                                             1998              1998               1999               1999
                                        =====================================================================
                                          (Note 2)          (Note 2)
<S>                                     <C>             <C>                   <C>                <C>
Revenues
    Systems                             $    517,036    $    985,939          $  6,748,348       $ 11,674,070
    Development                               45,906          90,091                81,287            149,350
    Hardware and software maintenance         15,098          27,043               193,624            290,104
    Other                                    118,286         118,286                    --                 --
                                        ---------------------------------------------------------------------
                                             696,326       1,221,359             7,023,259         12,113,524
Cost of sales
    Systems                                  471,115         818,209             5,295,951          9,491,626
    Development                               19,152          36,736                31,443             54,245
    Hardware and software maintenance             --           8,757               208,455            333,989
    Other                                     92,267          92,267                    --                 --
                                        ---------------------------------------------------------------------
                                             582,534         955,969             5,535,849          9,879,860
                                        ---------------------------------------------------------------------
Gross margin                                 113,792         265,390             1,487,410          2,233,664

Research and development, net of tax
    credits                                   83,703         116,686                50,884            110,956
Selling, general, administrative and
    other expenses                         1,398,162       2,320,068             1,005,674          2,156,770
Amortization of capital assets                34,268          68,156                71,933            121,352
                                        ---------------------------------------------------------------------
Earnings (loss) before undernoted
    items                                 (1,402,341)     (2,239,520)              358,919           (155,414)

Other
    Investment income                        134,374         245,239               200,712            229,925
    Foreign exchange gain (loss)             319,180         246,168              (131,269)          (220,975)
                                        ---------------------------------------------------------------------
                                             453,554         491,407                69,443              8,950
                                        ---------------------------------------------------------------------
Net earnings (loss) for the period      $   (948,787)   $ (1,748,113)         $    428,362       $   (146,464)
                                        =====================================================================
Weighted average number of common
     shares outstanding                    7,470,408       7,448,117             9,292,011          8,413,457
                                        =====================================================================
Net earnings (loss) per common share    $      (0.13)   $      (0.23)         $       0.05       $      (0.02)
                                        =====================================================================
</TABLE>


                                                                               5
<PAGE>

OPTIMAL ROBOTICS CORP.

INTERIM STATEMENT OF DEFICIT
(unaudited)
(stated in United States dollars, unless otherwise noted)

<TABLE>
<CAPTION>
                                      Three months     Six months    Three months    Six months
                                      ended June 30   ended June 30  ended June 30  ended June 30
                                          1998           1998            1999           1999
                                     -------------------------------------------------------------
                                        (Note 2)        (Note 2)
<S>                                  <C>              <C>             <C>             <C>
Deficit, beginning of period         $(6,165,952)     $(5,366,626)    $(9,852,216)    $(9,277,390)

Net earnings (loss) for the period      (948,787)      (1,748,113)        428,362        (146,464)
                                     -------------------------------------------------------------
Deficit, end of period               $(7,114,739)     $(7,114,739)    $(9,423,854)    $(9,423,854)
                                     =============================================================
</TABLE>


                                                                               6
<PAGE>

OPTIMAL ROBOTICS CORP.

INTERIM STATEMENT OF CASH FLOWS
(unaudited)
(stated in United States dollars, unless otherwise noted)

<TABLE>
<CAPTION>
                                                                 Six months ended June 30
                                                                    1998            1999
                                                               ============================
                                                                  (Note 2)
<S>                                                            <C>             <C>
Cash provided by (used in)
Operating activities
    Net loss for the period                                    $ (1,748,113)   $   (146,464)
    Items not affecting cash
        Amortization of capital assets                               68,156         121,352
        Unrealized foreign exchange gain on contract advance             --         (11,778)
    Change in non-cash operating working capital items
        Increase in accounts receivable                             (31,867)     (4,621,835)
        Increase in inventory                                       (14,496)       (499,448)
        Increase in tax credits receivable                          (58,685)        (72,773)
        Decrease (increase) in prepaid expenses                      10,322         (43,043)
        Increase in accounts payable and accrued liabilities        129,443       2,086,032
        Increase in deferred revenue                                     --         702,212
                                                               ----------------------------
                                                                 (1,645,240)     (2,485,745)
Financing activities
    Issuance of common shares                                       432,596      24,711,624
    Decrease in contract advance                                     33,327        (125,000)
                                                               ----------------------------
                                                                    465,923      24,586,624
Investing activities
    Purchase of capital assets                                      (17,909)       (347,026)
    Decrease (increase) in short-term investments                 9,977,461     (18,172,026)
    Repayment of loan receivable                                         --           1,239
                                                               ----------------------------
                                                                  9,959,552     (18,517,813)
                                                               ----------------------------
Increase in cash and cash equivalents
    during the period                                             8,780,235       3,583,066

Effect of foreign exchange fluctuations on cash                          --        (333,194)

Cash and cash equivalents at beginning of period                    269,793         538,490
                                                               ----------------------------
Cash and cash equivalents at end of period                     $  9,050,028    $  3,788,362
                                                               ============================

Cash and cash equivalents is comprised of:
    Cash                                                       $  8,545,879    $  3,238,784
    U.S. Treasury bill                                              504,149         549,578
                                                               ----------------------------
                                                               $  9,050,028    $  3,788,362
                                                               ============================
</TABLE>


                                                                               7
<PAGE>

OPTIMAL ROBOTICS CORP.

1.   Interim financial information

     The financial information as at June 30, 1999 and for the periods ended
     June 30, 1999 and 1998 is unaudited; however, in the opinion of management,
     all adjustments necessary to present fairly the results of the periods have
     been included. The adjustments made were of a normal, recurring nature.
     Interim results may not necessarily be indicative of results expected for
     the year.

2.   Accounting policies

     Change in reporting currency

     The financial  statements of the Company were presented in Canadian dollars
     up to December 31, 1997.  Effective  December 31, 1998, the U.S. dollar has
     been adopted as the reporting  currency.  The functional currency continues
     to be the Canadian dollar. The statements of operations and deficit for the
     three and six months  ended June 30, 1998 and cash flows for the six months
     ended June 30, 1998 are  presented  in U.S.  dollars in  accordance  with a
     translation of convenience method using the representative exchange rate at
     December  31,  1998 of  US$1.00 =  Cdn$1.5333.  The  translated  amount for
     non-monetary  items at December  31, 1998 became the  historical  basis for
     those items in subsequent  reporting periods.  The financial statements for
     the three and six months ended June 30, 1999 have been translated using the
     current rate method.

3.   Capital stock

     On May 10, 1999, the Company filed a registration statement with the
     Securities and Exchange Commission qualifying the issuance of 3,000,000
     common shares for gross proceeds of $9.00 per share. Proceeds from the
     offering amounted to $24,414,125 net of underwriting discounts and other
     expenses of $2,585,875.

4.   Research and development

<TABLE>
<CAPTION>
                               Three months    Six months ended   Three months    Six months ended
                              ended June 30        June 30        ended June 30       June 30
                                   1998              1998             1999              1999
                              --------------------------------------------------------------------
<S>                             <C>               <C>              <C>              <C>
     Research and development
        expenses                $ 111,996         $ 175,371        $  83,896        $ 183,646
     Tax credits earned           (28,293)          (58,685)         (33,012)         (72,690)
                              --------------------------------------------------------------------
                                $  83,703         $ 116,686        $  50,884        $ 110,956
                              --------------------------------------------------------------------
</TABLE>

5.   Net earnings (loss) per common share

     The net earnings (loss) per common share has been calculated on the
     weighted average number of shares outstanding. Fully diluted net earnings
     (loss) per common share has not been presented as the effect would be
     anti-dilutive.


                                                                               8
<PAGE>

OPTIMAL ROBOTICS CORP.

6.   Additional disclosures required by U.S. GAAP and differences between
     Canadian GAAP and U.S. GAAP

     Statement of operations

     Transactions  entered  into  after  December  15,  1995 in which an  entity
     acquires  goods and  services  from  non-employees  in exchange  for equity
     instruments are required to be recorded at fair value (SFAS No. 123).

     For stock-based compensation plans, the Company has chosen to use the
     intrinsic value method (APB Opinion No. 25), which requires compensation
     cost to be recognized on the difference, if any, between the quoted market
     price of the stock as at the grant date and the amount the individual must
     pay to acquire the stock. Variable stock option plans require subsequent
     changes in the fair value of the underlying stock to be recorded as an
     adjustment to compensation cost. The options issued in 1997 have a cashless
     exercise option and accordingly, they are accounted for as variable stock
     option plans. On April 22, 1998, option holders waived the cashless
     exercise option on options to acquire 1,507,000 common shares. Therefore,
     subsequent changes in the fair value of the underlying stock are no longer
     recorded as an increase or decrease of compensation cost until the options
     are exercised.


                                                                               9
<PAGE>

OPTIMAL ROBOTICS CORP.

6.   Additional disclosures required by U.S. GAAP and differences between
     Canadian GAAP and U.S. GAAP ...continued

     Under Canadian GAAP, compensation expense is not recognized.

<TABLE>
<CAPTION>
                                    Three months        Six months       Three months       Six months
                                    ended June 30      ended June 30     ended June 30     ended June 30
                                        1998               1998              1999              1999
                                  ======================================================================
<S>                               <C>                <C>                <C>                <C>
Net earnings (loss) for the
  period in accordance
  with Canadian GAAP              $   (948,787)      $ (1,748,112)      $    428,362       $   (146,464)

Stock-based compensation
  costs                             (2,805,004)       (11,412,387)        (1,343,814)        (1,706,745)

Change in reporting currency           (56,795)          (114,297)                --                 --
                                  ----------------------------------------------------------------------
Net loss for the period in
  accordance with
  U.S. GAAP                         (3,810,586)       (13,274,796)          (915,452)        (1,853,209)

Other comprehensive income
  Foreign currency
    translation adjustments           (386,514)          (301,176)            27,166            148,725
                                  ----------------------------------------------------------------------
Comprehensive loss                $ (4,197,100)      $(13,575,972)      $   (888,286)      $ (1,704,484)
                                  ======================================================================
Weighted average number of
  common shares outstanding          7,470,408          7,448,117          9,292,011          8,413,457
                                  ======================================================================
Net loss per common share         $      (0.51)      $      (1.78)      $      (0.10)      $      (0.22)
                                  ======================================================================
</TABLE>


                                                                              10
<PAGE>

OPTIMAL ROBOTICS CORP.

6.   Additional disclosures required by U.S. GAAP and differences between
     Canadian GAAP and U.S. GAAP ...continued

     Balance sheet

<TABLE>
<CAPTION>
                                       December 31, 1998                     June 30, 1999
                                As reported         U.S. GAAP         As reported        U.S. GAAP
                               =====================================================================
<S>                            <C>                <C>                <C>                <C>
Loans receivable               $    161,807       $    144,133       $    168,319       $    151,059
                               =====================================================================
Shareholders' equity
   Share capital               $ 16,850,531       $ 19,420,856       $ 41,562,155       $ 44,269,186
   Other capital                     23,240         18,798,880             23,240         20,449,688
   Deficit                       (9,277,390)       (29,107,267)        (9,451,242)       (30,960,476)
   Cumulative translation
       adjustment                        --                 --            229,080                 --
   Accumulated other
       comprehensive
       income                            --         (1,533,762)                --         (1,385,037)
                               ---------------------------------------------------------------------
                               $  7,596,381       $  7,578,707       $ 32,363,233       $ 32,373,361
                               =====================================================================
</TABLE>


                                                                              11
<PAGE>

OPTIMAL ROBOTICS CORP.

6.   Additional disclosures required by U.S. GAAP and differences
     between Canadian GAAP and U.S. GAAP ...continued

     Change in reporting currency

     As mentioned in Note 2, the Company adopted in 1998 the U.S. dollar as its
     reporting currency. Under U.S. GAAP, the financial statements, including
     prior years, are translated according to the current rate method. Under
     Canadian GAAP, at the time of change in reporting currency, the historical
     financial statements are presented using a translation of convenience (see
     Note 2).

     Under Canadian GAAP, the statements of operations for the three and six
     months ended June 30, 1998 were translated into U.S. dollars using an
     exchange rate of US$1.00 = Cdn$1.5333 (see Note 2). Under U.S. GAAP,
     revenues and expenses would be translated at exchange rates prevailing at
     the respective transaction dates. The average exchange rates for the three
     and six months ended June 30, 1998 were 1.4467 and 1.4386, respectively.

     Statement of cash flows

     Under Canadian GAAP, the statement of cash flows for the six months ended
     June 30, 1998 was translated into U.S. dollars using an exchange rate of
     US$1.00 = Cdn$1.5333 (see Note 2). Under U.S. GAAP, the historical exchange
     rate on the dates of the cash flow activities would be used. For the six
     months ended June 30, 1999, there were no material differences in the
     statement of cash flows under U.S. GAAP versus Canadian GAAP. Following is
     a summary cash flow statement for the six months ended June 30, 1998 under
     U.S. GAAP:

Operating activities                                               $ (1,759,537)
Financing activities                                                    496,594
Investing activities                                                 10,615,168

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

Increase in cash and cash equivalents for the period                  9,352,225
Effect of foreign exchange fluctuations on cash                        (571,990)
Cash and cash equivalents at beginning of period                        269,793
                                                                   ------------
Cash and cash equivalents at end of period                         $  9,050,028
                                                                   ============


                                       12
<PAGE>

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

     Some  of  the  statements   contained  in  this  quarterly  report  contain
forward-looking statements,  which may include information concerning growth and
operating  strategies,  liquidity and capital  expenditures and financing plans.
These forward-looking  statements involve known and unknown risks, uncertainties
and other  factors  that  could  cause the  Company's  actual  results to differ
materially from those anticipated in these forward-looking statements.

Results of Operations

     The  following   discussion  and  analysis  of  the  Company's  results  of
operations  and liquidity and capital  resources  should be read in  conjunction
with the financial  information and the financial  statements of the Company and
their related notes appearing  elsewhere herein.  The financial  statements have
been  prepared in  accordance  with  Generally  Accepted  Accounting  Principles
("GAAP") in Canada, which conform in all material respects with U.S. GAAP except
as disclosed in Note 6 to the financial statements, which explains the nature of
the differences between Canadian and U.S. GAAP and their impact on the financial
statements.


                                                                              13
<PAGE>

First six months of 1999 compared with First Six Months 1998

     Total revenue increased by $10,892,165,  or 892% from $1,221,359 in 1998 to
$12,113,524  in 1999. In 1999, the Company sold 119 U-Scan(R)  Express  systems,
compared  with 16  systems  in 1998.  The  growth in  systems  sales is due to a
significant   increase  in  orders  from  existing  customers,   which  produced
$10,688,131 of additional systems revenue. Development revenue, which relates to
the POS  business,  increased  by  $59,259,  or 66%.  Service  contract  revenue
recognized for hardware and software maintenance increased by $263,061, or 973%,
because of the increased  number of stores that entered into  contracts with the
Company after purchasing U-Scan(R) Express systems.

     Total cost of sales increased by $8,923,891, or 933%, from $955,969 in 1998
to $9,879,860 in 1999.  Overall gross margin as a percentage of sales  decreased
from  22%  in  1998  to 18% in  1999.  This  decrease  resulted  primarily  from
additional  software  and hardware  maintenance  costs.  In addition,  the gross
margin in 1999 is lower than it would have been if the PSC  arrangement  had not
been altered on April 1, 1998.  Gross margin on system sales  increased from 17%
in 1998 to 19% in 1999. In the first six months of 1999, a negative gross margin
of 15% was  realized  on  hardware  and  software  maintenance  revenue  because
hardware maintenance costs, which are recognized as incurred,  exceeded hardware
maintenance revenues, which are fixed by contract and recognized evenly over the
term thereof.  The gross margin on  development  revenues  increased from 59% in
1998 to 64% in 1999.

     Net research and development expenses decreased by $5,730, or 5%, from 1998
to 1999. As a percentage of sales,  research and development  expenses decreased
from 10% in 1998 to 1% in 1999.  This  decrease  resulted  from the  substantial
increase in the number of U-Scan(R)  Express systems sold in 1999 as compared to
1998.

     Selling,  general  and  administrative  and  other  expenses  decreased  by
$163,298,  or 7% in 1999  compared  to 1998.  As a  percentage  of sales,  these
expenses decreased from 190% in 1998 to 18% in 1999. This decrease resulted from
the substantial increase in the number of U-Scan(R) Express systems sold in 1999
as compared to 1998.


                                                                              14
<PAGE>

Second Quarter of 1999 Compared with Second Quarter of 1998

     Total revenues  increased by $6,326,933,  or 909%, from $696,326 in 1998 to
$7,023,259 in 1999. Sales of U-Scan(R) Express grew from 9 systems in 1998 to 68
systems in 1999, producing $6,231,312 of additional systems revenue, an increase
of 1205%.  Development  revenues increased by $35,381,  or 77%. Service contract
revenue recognized for hardware and software maintenance  increased by $178,526,
or 1182%.

     Total cost of sales increased by $4,953,315, or 850%, from $582,534 in 1998
to $5,535,849 in 1999.  Gross margin increased as a percentage of sales from 16%
in 1998 to 21% in 1999 which was primarily due to the increased  gross margin on
system  sales from 9% in 1998 to 21% in 1999.  In the second  quarter of 1999, a
negative  gross margin of 8% was  realized on hardware and software  maintenance
revenue.  The gross margin on development  revenue increased from 58% in 1998 to
61% in 1999.

     Net research and development  expenses  decreased by $32,819,  or 39%, from
1998 to 1999.  As a  percentage  of sales,  research  and  development  expenses
decreased  from  12% in 1998 to 1% in  1999.  This  decrease  resulted  from the
substantial  increase in the number of U-Scan(R) Express systems sold in 1999 as
compared to 1998.

     Selling,  general  and  administrative  and  other  expenses  decreased  by
$392,488, or 28% in 1999 compared to the second quarter of 1998. As a percentage
of  sales,  these  expenses  decreased  from  201% in 1998 to 14% in 1999.  This
decrease  resulted  from the  substantial  increase  in the number of  U-Scan(R)
Express systems sold in 1999 as compared to 1998.


                                                                              15
<PAGE>

Liquidity and Capital Resources

     As of June 30, 1999, the Company had working  capital of $31,858,389  which
included  cash,  cash  equivalents  and  investment  grade  commercial  paper of
$27,914,644.  Operating  activities  for the  first  six  months  of  1999  used
$2,485,745 as compared with $1,645,240 in 1998.

     The Company  believes that it has  sufficient  working  capital to meet its
needs for the next 12 months.

     In the first six months of 1999,  the Company had capital  expenditures  of
$347,026,  principally  relating to the  acquisition  of computer  equipment and
office  furniture.  Until June 1999,  the  Company was leasing all of the office
furniture  at its head  office in  Montreal.  In June 1999,  the balance of this
lease was paid in full.

     On May 20, 1999, the Company sold 3,000,000  Class "A" shares to the public
at a price of $9.00 per share,  less offering  costs and  commissions  for a net
cash proceeds of  $24,414,125.  For the six month period ended June 30, 1999 the
Company also issued 226,271 Class "A" shares pursuant to the exercise of options
and warrants, resulting in net cash proceeds of $297,499.

     The Company maintains an operating line of credit in the amount of $500,000
CAD with its banker. In March 1999, the Company increased its credit through the
opening of a brokerage margin account and closed this account in June 1999 as it
was no longer necessary after the May 20, 1999 public offering.

     In connection with the original  agreement with PSC, the Company received a
$500,000  contract  advance.  In 1998,  a repayment  of $125,000 was made and in
January  1999, a further  $125,000  repayment was made.  The final  repayment of
$250,000 is due on December 31, 2000.


                                                                              16
<PAGE>

Year 2000 Issues

     Many currently installed computer systems are not capable of distinguishing
21st century dates from 20th century dates. As a result, beginning on January 1,
2000, computer systems and software used by the Company's customers will produce
erroneous  results or fail unless they have been modified or upgraded to process
date  information  correctly.  Significant  uncertainty  exists in the  software
industry and other  industries  concerning  the scope and  magnitude of problems
associated  with the century change.  The Company  recognizes the need to ensure
that its  operations  will  not be  adversely  affected  by Year  2000  software
problems.

     The Company has  completed  its  assessment  of the Year 2000 issues in the
software  contained in its  products and the software  contained in its internal
systems.  Based on its current  assessment,  the Company has determined that the
consequences  of the Year  2000  issues  with  respect  thereto  will not have a
material  effect on its business,  results of operation or financial  condition.
Upgrades  required  to make  current  internal  systems  Year  2000  ready  were
installed  and tested by June 30,  1999,  at a cost that was not material to the
Company.  All internal systems  installed  hereafter will be tested and verified
for Year 2000 readiness at the time of  installation  at no additional  cost. No
alteration  to  the  software  contained  in  the  Company's  products  will  be
necessary.  However,  the  Company's  products are generally  integrated  into a
store's information systems, which we may not be able to adequately evaluate for
Year  2000  readiness.  Although  it has not been a party to any  litigation  or
arbitration  involving its products or services  related to Year 2000  readiness
issues,  the Company  may in the future be  required  to defend its  products or
services in such  proceedings,  or to negotiate  resolutions  of claims based on
Year 2000  issues.  The  costs of  defending  and  resolving  Year 2000  related
disputes,  regardless  of the merits of such  disputes,  and any  liability  the
Company may have for Year 2000 related damages, including consequential damages,
could  materially  adversely  affect  its  business,   financial  condition  and
operating results.

     The Company has prepared a questionnaire  to verify the Year 2000 readiness
of all third  parties that could cause a material  impact on the  Company.  When
these questionnaires have been completed and returned by such third parties, the
Company  should be able to assess  their  Year 2000  readiness.  Even if certain
third  parties are not ready for the Year 2000,  however,  the Company  believes
that their situation will not have a material effect on the Company's  business,
results of operation or financial condition.  The Company has multiple suppliers
for each component of its products and, accordingly, the readiness of any single
supplier of a component  would not be expected to have a material  impact on the
Company.  If any of its major  suppliers are  unprepared  for the Year 2000, the
Company believes that it could perform the function currently being performed by
any of its major suppliers or could find a substitute supplier without suffering
a material effect on business,  results of operation or financial condition. The
Company does


                                                                              17
<PAGE>

not have any ongoing  responsibility  for the Year 2000  readiness  of customers
(other  than in  regard  to the  Company's  products)  or the  vendors  to those
customers. Should such a customer suffer Year 2000 related problems, the Company
would not  necessarily  share the  effects of the  problems.  For  example,  the
software in the U-Scan(R) Express reads dates on credit, debit and other similar
cards and accesses  third party systems such as bank networks  (which may not be
Year 2000 ready) to obtain  authorization for the use of the cards. The customer
alone is  responsible  for dealing  with these  networks to ensure that they are
Year 2000 ready. If, in the future, a potential customer should suffer from Year
2000 related problems or make  expenditures on Year 2000 related matters,  it is
likely that the purchase of the Company's products would be delayed. The Company
is not aware of any such delays to date.

     To  date,  the  Company  has  not  incurred  any  material  costs  directly
associated  with  its Year  2000  readiness  efforts,  except  for  compensation
expenses  associated with its salaried  employees who have devoted some of their
time to the Company's Year 2000 assessment and remediation efforts. As discussed
above,  the Company  does not expect the total cost of Year 2000  problems to be
material to its business,  financial  condition and operating results.  However,
during the months prior to the century change,  it will continue to evaluate new
versions  of its  software  and  products  supplied  to it.  Despite its current
assessment,  the Company may not identify and correct all significant  Year 2000
problems on a timely basis.

     The reasonable  worst case Year 2000 scenario for the Company would include
the  partial  or  complete   shutdown  of  potential  and  existing   customers'
information  systems.  A shutdown would prevent or delay  purchases of U-Scan(R)
Express  systems.  The Company  has no  contingency  plan for dealing  with this
scenario and is not planning to develop one. The cost to the Company should this
scenario  occur  would be the sales that are lost or deferred  until  customers'
Year 2000 problems are remedied. The Company will seek to mitigate its losses by
dealing with  customers,  if any, that do not suffer Year 2000 problems.  If PSC
encounters Year 2000 problems and is unable to perform its obligations under its
agreement with the Company, the Company's  contingency plan is to replace PSC by
developing   in-house   capability   or  by  finding  a  different   third-party
manufacturer  that  continues  to operate.  The Company  believes  that it could
develop this  capability  within 60 days at a cost not to exceed  $100,000.  The
reasonable worst case scenario would also include the failure of infrastructure,
such as electricity  and water  supplies.  The Company relies upon  governmental
supplies  for  water,   electricity  and  other  infrastructure   services.  Any
significant  failure  of the  infrastructure  would  completely  shut  down  the
Company.  The Company  does not have its own  ability to produce  infrastructure
services and does not plan to develop it. The contingency  plan for dealing with
a failure of  infrastructure  is for the Company to use its best efforts to find
alternate governmental or private suppliers.  If the Company were unable to find
alternate suppliers, all of the Company's operations would be halted unless they
could be moved to a location where infrastructure supplies are available.


                                                                              18
<PAGE>

Item 3: Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes since December 31, 1998.


                                                                              19
<PAGE>

PART II. OTHER INFORMATION

Item 1. In each of 1995 and 1996,  the Company  received a lawyer's  letter from
International  Automated  Systems ("IAS") alleging that the Company's  U-Scan(R)
Express  system  infringes  upon IAS's  patent.  At such times,  the Company had
reviewed  the claim and  believed  that IAS would not prevail in any lawsuit and
that such a lawsuit  would not have a material  adverse  effect on the Company's
business or prospects.

The  Company  has  been  informed  that on July 2,  1999,  IAS  alleging  patent
infringement  filed a complaint  against  the Company in the State of Utah.  The
complaint  has not yet been  served on the  Company.  The Company  continues  to
believe  that IAS will not  prevail,  believes  that the lawsuit will not have a
material adverse effect on the Company's  business or prospects,  and intends to
vigorously defend the claim.

Item 2. The registrant has nothing to report under this item.

Items 3. The registrant has nothing to report under this item.

Item 4. The registrant  held its annual meeting of the  shareholders on June 28,
1999. The following resolutions were adopted:

--------------------------------------------------------------------------------
Resolution                     Votes For        Votes Against       Withheld
--------------------------------------------------------------------------------
Election of Directors          7,276,647                             2,367
--------------------------------------------------------------------------------
Re-appointment of Price        7,283,776                             2,192
WaterhouseCoopers as
Auditors
--------------------------------------------------------------------------------

Items 5. The registrant has nothing to report under this item.

Item 6.

(a)  Exhibits - Not applicable.

(b)  Reports on Form 8K - None


                                                                              20
<PAGE>

                                    Signature

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

                                          OPTIMAL ROBOTICS CORP.


Dated: July 23, 1999                  By: /s/ Gary S. Wechsler
                                          ----------------------------------
                                              Gary S. Wechsler, C.A.
                                              Secretary, Treasurer and
                                              Chief Financial Officer