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 quarterly period ended September 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 Identification No.)
Incorporation or Organization)



         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 October 22, 1999, the registrant  had  11,085,549  Class "A" shares  (without
nominal or par value) outstanding.

<PAGE>


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


     The financial statements required by item 1 are set forth on pages 3-12.



                                                                               2
<PAGE>

OPTIMAL ROBOTICS CORP.

INTERIM
FINANCIAL STATEMENTS

(stated in United States dollars)
September 30, 1999




                                                                               3
<PAGE>

OPTIMAL ROBOTICS CORP.

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

<TABLE>
<CAPTION>
                                                                  September 30     December 31
                                                                      1999            1998
                                                                  ----------------------------
                                                                   (unaudited)
<S>                                                               <C>             <C>
Assets

Current assets
    Cash                                                          $  2,342,937    $       --
    U.S. Treasury bill, at cost                                        558,227         538,490
    Short-term investments                                          24,078,124       5,524,819
    Accounts receivable, net of allowance for doubtful accounts
        of nil (1998 - nil)                                          7,705,289       1,219,716
    Inventory                                                        2,432,683       1,401,049
    Tax credits receivable                                             125,392         114,494
    Prepaid expenses                                                    77,056           2,935
                                                                  ----------------------------
                                                                    37,319,708       8,801,503

Loans receivable                                                       167,813         161,807

Capital assets                                                         653,658         365,869
                                                                  ----------------------------
                                                                  $ 38,141,179    $  9,329,179
                                                                  ============================



Liabilities

Current liabilities
    Accounts payable and accrued liabilities                      $  2,083,396    $  1,233,014
    Deferred revenue                                                 1,299,973         124,784
    Current portion of contract advance                                   --           125,000
                                                                  ----------------------------
                                                                     3,383,369       1,482,798

Contract advance                                                       250,000         250,000
                                                                  ----------------------------
                                                                     3,633,369       1,732,798

Contingency (Note 5)

Shareholders' Equity

Share capital                                                       42,321,981      16,850,531

Other capital                                                           23,240          23,240

Cumulative translation adjustment                                      166,215            --

Deficit                                                             (8,003,626)     (9,277,390)
                                                                  ----------------------------
                                                                    34,507,810       7,596,381
                                                                  ----------------------------
                                                                  $ 38,141,179    $  9,329,179
                                                                  ============================
</TABLE>



                                                                               4
<PAGE>

OPTIMAL ROBOTICS CORP.

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

<TABLE>
<CAPTION>
                                              Three months          Nine months          Three months          Nine months
                                                  ended               ended                 ended                ended
                                               September 30        September 30          September 30         September 30
                                                   1999                1999                  1998                 1998
                                               ---------------------------------------------------------------------------
                                                                                           (Note 2)              (Note 2)
<S>                                            <C>                  <C>                  <C>                   <C>
Revenues
    Systems                                    $10,342,151          $22,016,221          $ 2,617,735           $ 3,603,674
    Development                                     76,381              225,731               52,898               142,989
    Hardware and software maintenance              267,554              557,658               51,505                78,548
    Other                                             --                   --                   --                 118,286
                                               ---------------------------------------------------------------------------

                                                10,686,086           22,799,610            2,722,138             3,943,497

Cost of sales
    Systems                                      7,816,795           17,308,421            2,402,405             3,229,371
    Development                                     24,832               79,077               22,827                59,562
    Hardware and software maintenance              286,090              620,079               38,592                38,592
    Other                                             --                   --                   --                  92,267
                                               ---------------------------------------------------------------------------
                                                 8,127,717           18,007,577            2,463,824             3,419,792
                                               ---------------------------------------------------------------------------

Gross margin                                     2,558,369            4,792,033              258,314               523,705

Research and development, net of tax
    credits                                         66,448              177,404               25,868               142,553
Selling, general, administrative and
    other expenses                               1,604,894            3,761,664            1,624,516             3,944,585
Amortization of capital assets                     101,135              222,487               34,268               102,424

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

Earning (loss) before undernoted
    items                                          785,892              630,478           (1,426,338)           (3,665,857)

Other
    Investment income                              319,359              549,284              115,243               360,482
    Foreign exchange gain                          314,977               94,002              289,731               535,898

                                               ---------------------------------------------------------------------------
                                                   634,336              643,286              404,974               896,380
                                               ---------------------------------------------------------------------------

Net earnings (loss) for
    the period                                 $ 1,420,228          $ 1,273,764          $(1,021,364)          $(2,769,477)
                                               ===========================================================================


Weighted average number of common
    shares outstanding                          10,784,114            9,212,360            7,474,278             7,456,933
                                               ===========================================================================

Basic net earnings (loss) per common
    share                                      $      0.13          $      0.14          $     (0.14)          $     (0.37)
                                               ===========================================================================

Fully diluted net earnings (loss)
    per common share                           $      0.12          $      0.14          $     (0.14)          $     (0.37)
                                               ===========================================================================
</TABLE>


                                                                               5
<PAGE>

OPTIMAL ROBOTICS CORP.

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

<TABLE>
<CAPTION>
                                              Three months          Nine months          Three months          Nine months
                                                  ended               ended                 ended                ended
                                               September 30        September 30          September 30         September 30
                                                   1999                1999                  1998                 1998
                                               ---------------------------------------------------------------------------
                                                                                           (Note 2)              (Note 2)
<S>                                            <C>                  <C>                  <C>                   <C>
Deficit, beginning of period                   $(9,423,854)         $(9,277,390)         $(7,114,739)          $(5,366,626)

Net earnings (loss) for
    the period                                   1,420,228            1,273,764           (1,021,364)           (2,769,477)
                                               ---------------------------------------------------------------------------

Deficit, end of period                         $(8,003,626)         $(8,003,626)         $(8,136,103)          $(8,136,103)
                                               ===========================================================================
</TABLE>




                                                                               6
<PAGE>

OPTIMAL ROBOTICS CORP.

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

<TABLE>
<CAPTION>
                                                                        Nine months ended September 30
                                                                          1999                   1998
                                                                    --------------------------------------
                                                                                                (Note 2)
<S>                                                                    <C>                    <C>
Cash provided by (used in)

Operating activities
    Net earnings (loss) for the period                                 $  1,273,764           $ (2,769,477)
    Items not affecting cash
        Amortization of capital assets                                      222,487                102,424
        Unrealized foreign exchange gain on contract advance                (11,041)                  --
    Change in non-cash operating working capital items
        Increase in accounts receivable                                  (6,324,270)            (1,520,432)
        Increase in inventory                                              (952,678)              (316,009)
        Decrease (increase) in tax credits receivable                        (5,662)                28,422
        Decrease (increase) in prepaid expenses                             (72,765)                14,975
        Increase in accounts payable and accrued liabilities                782,584                826,414
        Increase in deferred revenue                                      1,150,223                 85,251
                                                                    --------------------------------------

                                                                         (3,937,358)            (3,548,432)

Financing activities
    Increase in bank indebtedness                                              --                  192,032
    Issuance of common shares                                            25,453,562                432,596
    Repayment of loan under Employee Stock Purchase Agreement                17,593                   --
    Decrease in contract advance                                           (125,000)                51,099
                                                                    --------------------------------------

                                                                         25,346,155                675,727

Investing activities
    Purchase of capital assets                                             (488,645)               (29,137)
    Decrease (increase) in short-term investments                       (18,196,067)             3,161,300
                                                                    --------------------------------------
                                                                        (18,684,712)             3,132,163
                                                                    --------------------------------------

Increase in cash and cash equivalents during the period                   2,724,085                259,458

Effect of foreign exchange fluctuations on cash                            (361,411)                  --

Cash and cash equivalents at beginning of period                            538,490                269,793
                                                                    --------------------------------------

Cash and cash equivalents at end of period                             $  2,901,164           $    529,251
                                                                    --------------------------------------


Cash and cash equivalents is comprised of
    Cash                                                               $  2,342,937           $       --
    U.S. Treasury bill                                                      558,227                529,251
                                                                    --------------------------------------

                                                                       $  2,901,164           $    529,251
                                                                    ======================================
</TABLE>



                                                                               7
<PAGE>


OPTIMAL ROBOTICS CORP.


NOTES TO INTERIM FINANCIAL STATEMENTS
September 30, 1999


1    Interim financial information

     The  financial  information  as at  September  30, 1999 and for the periods
     ended September 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 nine months ended  September 30, 1998 and statement of cash flows
     for the nine months ended September 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 nine months ended September 30, 1999
     have been translated using the current rate method.

3    Research and development

<TABLE>
<CAPTION>
                                           Three months                           Three months
                                         ended September     Nine months ended  ended September    Nine months ended
                                             30 1999         September 30 1999      30 1998        September 30 1998
                                        -----------------------------------------------------------------------------
                                                                                    (Note 2)            (Note 2)
<S>                                         <C>               <C>               <C>              <C>
        Research and development
           expenses                         $     102,832     $     286,478     $      38,361    $     213,731
        Tax credits earned                        (36,384)         (109,074)          (12,493)         (71,178)
                                        -----------------------------------------------------------------------------

                                            $      66,448     $     177,404     $      25,868    $     142,553
                                        =============================================================================
</TABLE>


4    Basic net earnings (loss) per common share

     The basic net earnings  (loss) per common share has been  calculated on the
     weighted average number of shares outstanding.

     Fully diluted net earnings per share has been determined using the weighted
     average number of common shares plus any dilutive common share  equivalents
     outstanding during the period. Net earnings for the period are increased by
     the estimated additional earnings on the proceeds from exercise of dilutive
     common share equivalents.


                                                                               8
<PAGE>

OPTIMAL ROBOTICS CORP.


NOTES TO INTERIM FINANCIAL STATEMENTS...continued
September 30, 1999


5    Contingency

     On July 2, 1999,  legal  proceedings  were  instituted  against the Company
     alleging patent  infringement.  The Company has filed a defence against the
     claim and believes that the claim is without merit; therefore, no provision
     has been made in the financial statements.

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.


NOTES TO INTERIM FINANCIAL STATEMENTS...continued
September 30, 1999


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.

     Under U.S. GAAP,  fully diluted  earnings per share is calculated using the
     treasury stock method.

<TABLE>
<CAPTION>
                                  Three months          Nine months          Three months       Nine months
                                      ended               ended                 ended             ended
                                   September 30        September 30          September 30       September 30
                                       1999                1999                  1998             1998
                                ---------------------------------------------------------------------------
<S>                                <C>                 <C>                 <C>                 <C>
Net earnings (loss) for the
   period in accordance with
   Canadian GAAP                   $  1,420,228        $  1,273,764        $ (1,021,364)       $ (2,769,477)

Stock-based compensation
   costs                               (603,839)         (2,310,584)           (268,034)        (11,680,421)

Change in reporting currency               --                  --               (12,519)           (126,816)
                                ---------------------------------------------------------------------------

Net earnings (loss) for the
   period in accordance with
   U.S. GAAP                            816,389          (1,036,820)         (1,301,917)        (14,576,714)

Other comprehensive income
   Foreign currency
       translation
       adjustments                       35,846             184,571            (383,066)           (684,242)
                                ---------------------------------------------------------------------------

Comprehensive income (loss)        $    852,235            (852,249)       $ (1,684,983)       $(15,260,956)
                                ===========================================================================


Weighted average number of
   common shares outstanding         10,784,114           9,212,360           7,474,278           7,456,933
                                ===========================================================================

Basic net earnings (loss)
   per common share                $       0.08               (0.11)       $      (0.17)       $      (1.95)
                                ===========================================================================


Fully diluted net earnings
   (loss) per common share         $       0.07               (0.11)       $      (0.17)       $      (1.95)
                                ===========================================================================
</TABLE>


                                                                              10
<PAGE>

OPTIMAL ROBOTICS CORP.


NOTES TO INTERIM FINANCIAL STATEMENTS...continued
September 30, 1999

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

<TABLE>
<CAPTION>
                                              September 30, 1999                    December 31, 1998
                                        As reported         U.S. GAAP         As reported        U.S. GAAP
                                     ---------------------------------------------------------------------------
<S>                                     <C>               <C>                <C>               <C>
        Loans receivable                $      167,813    $      150,607     $      161,807    $      144,133
                                     ---------------------------------------------------------------------------


        Shareholders' equity
           Share capital                $   42,321,981        46,395,648     $   16,850,531    $   19,420,856
           Other capital                        23,240        19,588,234             23,240        18,798,880
           Deficit                          (8,003,626)      (30,144,087)        (9,277,390)      (29,107,267)
           Cumulative translation
               adjustment                      166,215                --                 --                --
           Accumulated other
               comprehensive income                 --        (1,349,191)                --        (1,533,762)
                                     ---------------------------------------------------------------------------

                                        $   34,507,810    $   34,490,604     $    7,596,381    $    7,578,707
                                     ===========================================================================
</TABLE>


     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 nine
     months ended September 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  nine  months  ended   September  30,  1998  were  1.5147  and  1.4639,
     respectively.



                                                                              11
<PAGE>

OPTIMAL ROBOTICS CORP.


NOTES TO INTERIM FINANCIAL STATEMENTS...continued
September 30, 1999


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

     Statement of cash flows

     Under  Canadian GAAP, the statement of cash flows for the nine months ended
     September 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  nine  months  ended  September  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 nine months ended
     September 30, 1998 under U.S. GAAP:

        Operating activities                                   $   (3,675,248)
        Financing activities                                          707,762
        Investing activities                                        3,280,651
                                                               -----------------

        Increase in cash and cash equivalents for the period          313,165
        Effect of foreign exchange fluctuations on cash               (53,707)
        Cash and cash equivalents at beginning of period              269,793
                                                               -----------------

        Cash and cash equivalents at end of period             $      529,251
                                                               =================


                                                                              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.

Reporting Currency

     The comparative  financial  statements for the three and nine month periods
ended  September 30, 1998 are presented in U.S.  dollars in accordance  with the
translation  of  convenience  method using the  representative  exchange rate at
December 31, 1998 of US$1.00 = Cdn$1.5333


                                                                              13
<PAGE>

First nine months of 1999 compared with first nine months 1998

     Total revenue  increased by $18,856,113 or 478% from  $3,943,497 in 1998 to
$22,799,610  in 1999. In 1999, the Company sold 224 U-Scan(R)  Express  systems,
compared  with 40  systems  in 1998.  The  growth in  systems  sales is due to a
significant   increase  in  orders  from  existing  customers,   which  produced
$18,412,547 of additional systems revenue. Development revenue, which relates to
the POS  business,  increased  by  $82,742,  or 58%.  Service  contract  revenue
recognized for hardware and software maintenance increased by $479,110, or 610%,
because of increased sales and the related increase in the number of stores that
entered into  contracts  with the Company  after  purchasing  U-Scan(R)  Express
systems.

     Total cost of sales  increased by $14,587,785 or 427%,  from  $3,419,792 in
1998 to  $18,007,577  in 1999.  Overall  gross margin as a  percentage  of total
revenue  increased  from  13% in 1998 to 21% in  1999.  This  increase  resulted
primarily from taking  advantage of economies of scale and reducing the costs of
installing  and servicing our products.  Gross margin on system sales  increased
from 10% in 1998 to 21% in 1999.  In the first nine  months of 1999,  a negative
gross margin of 11% was realized on hardware  and software  maintenance  revenue
because of the increase in the related hardware and software  maintenance  costs
that are required to support the rapid  deployment of systems.  The gross margin
on development revenue increased from 58% in 1998 to 65% in 1999.

     Net research and development  expenses  increased by $34,851,  or 24%, from
1998 to  1999.  As a  percentage  of total  revenue,  research  and  development
expenses  decreased  from 4% in 1998 to 1% in  1999.  This  percentage  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
$182,921,  or 5% in 1999  compared to 1998.  As a percentage  of total  revenue,
these  expenses  decreased  from  100% in 1998 to 16% in 1999.  This  percentage
decrease  resulted  from the  substantial  increase  in the number of  U-Scan(R)
Express systems sold in 1999 as compared to 1998.


                                                                              14
<PAGE>

Third quarter of 1999 compared with third quarter of 1998

     Total revenue increased by $7,963,948,  or 293%, from $2,722,138 in 1998 to
$10,686,086 in 1999. Sales of U-Scan(R)  Express grew from 24 systems in 1998 to
105 systems in 1999,  producing  $7,724,416 of additional  systems  revenue,  an
increase of 295%.  Development  revenue  increased by $23,483,  or 44%.  Service
contract revenue recognized for hardware and software  maintenance  increased by
$216,049, or 419%.

     Total cost of sales  increased by $5,663,893,  or 230%,  from $2,463,824 in
1998 to  $8,127,717  in 1999.  Gross margin  increased as a percentage  of total
revenue from 9% in 1998 to 24% in 1999 which was  primarily due to the increased
gross margin on system sales which  increased from 8% in 1998 to 24% in 1999. In
the third  quarter  of 1999,  a  negative  gross  margin of 7% was  realized  on
hardware  and software  maintenance  revenue.  The gross  margin on  development
revenue increased from 57% in 1998 to 67% in 1999.

     Net research and development  expenses increased by $40,580,  or 157%, from
1998 to  1999.  As a  percentage  of total  revenue,  research  and  development
expenses remained constant at approximately 1%.

     Selling,  general  and  administrative  and  other  expenses  decreased  by
$19,622, or 1% in 1999 compared to the third quarter of 1998. As a percentage of
total revenue,  these expenses  decreased from 60% in 1998 to 15% in 1999.  This
percentage  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 September 30, 1999, the Company had working  capital of  $33,936,339,
which included cash, cash  equivalents and investment  grade commercial paper of
$26,979,288.  Operating  activities  for the  first  nine  months  of 1999  used
$3,937,358 as compared with $3,548,432 in 1998.

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

     In the first nine months of 1999, the Company had capital  expenditures  of
$488,645,  principally relating to the acquisition of computer equipment, office
furniture, and mobile test units.

     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 $24,169,388. For the nine-month period ended September 30, 1999
the Company  also issued  610,271  Class "A" shares  pursuant to the exercise of
options and warrants, resulting in net cash proceeds of $1,284,174.

     The Company maintains an operating line of credit in the amount of $500,000
CAD with its banker.

     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 Company's software products will be necessary.  The Company is
in the process of upgrading the software operating platform used in its products
to a version which is certified to be Year 2000 ready.

     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  prepared a questionnaire  to verify the Year 2000 readiness of
all third parties that could cause a material  impact on the Company.  All major
and most minor  suppliers have  responded,  and have reported that they are Year
2000  ready.  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 not  have  any  ongoing
responsibility for the Year 2000 readiness of customers (other than in regard to
the  Company's


                                                                              17
<PAGE>

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,
Inc. (the contract  manufacturer  of our systems)  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, Inc. by developing  in-house
capability or by finding  another  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.

          On July 2, 1999, IAS, alleging patent infringement,  filed a complaint
          against the Company in the State of Utah.  On October  22,  1999,  the
          Company  filed an answer to the  complaint.  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.

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

Item 4.   The registrant has nothing to report under this item.

Item 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: October 25, 1999                  By:  /s/ Gary S. Wechsler
                                              ----------------------------------
                                              Gary S. Wechsler, C.A.
                                              Secretary, Treasurer and Chief
                                              Financial Officer


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