<PAGE>

================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q

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

               For the quarterly period ended September 30, 1999

                                      OR

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


  For the transition period from ____________________to______________________


                     Commission File No       0-22803
                                        ------------------


                       PROLONG INTERNATIONAL CORPORATION
             (Exact name of registrant as specified in its charter)


<TABLE>
<S>                                   <C>                                                        <C>
      Nevada                                             6 Thomas                                          74-2234246
(State or other jurisdiction                         Irvine, CA  92816                           (IRS Employer Idenfication No.)
of incorporation or organization)     (Address of principal executive offices) (Zip Code)
</TABLE>

                                (949) 587-2700
                        (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.

                            (1)  Yes [X]  No [_]

                            (2)  Yes [X]  No [_]

There were 28,445,835 shares of the registrant's common stock ($0.001 par value)
outstanding as of November 8, 1999.

                              Page 1 of 15 pages
                Exhibit Index on Sequentially Numbered Page 15

================================================================================
<PAGE>

                       PROLONG INTERNATIONAL CORPORATION
                                   FORM 10-Q
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                                                                          <C>
PART 1    FINANCIAL INFORMATION                                              Page

Item 1:   Financial Information

          Consolidated Condensed Balance Sheets -
          September 30, 1999 and December 31, 1998.........................   3

          Consolidated Condensed Statements of Operations - Three months
          and Nine months ended September 30, 1999 and 1998................   4

          Consolidated Condensed Statements of Cash Flows -
          Nine months ended September 30, 1999 and 1998....................   5

          Notes to Consolidated Condensed Financial Statements.............   6

Item 2:   Management's Discussion and Analysis of Financial Condition
          and Results of Operations........................................  10

Item 3:   Quantitative and Qualitative Disclosures About Market Risk.......  14

PART II   OTHER INFORMATION

Item 1:   Legal Proceedings................................................  15

Item 6:   Exhibits and Reports on Form 8-K.................................  15

          Signatures.......................................................  15
</TABLE>

                                       2
<PAGE>

              PROLONG INTERNATIONAL CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED CONDENSED BALANCE SHEETS



<TABLE>
<CAPTION>
                                                  ASSETS

                                                                                    September 30,                December 31,
                                                                                        1999                        1998
                                                                                        ----                        ----
                                                                                     (Unaudited)
<S>                                                                                  <C>                         <C>
CURRENT ASSETS:
Cash and cash equivalents                                                            $ 1,228,845                  $ 1,127,861
Accounts receivable, net                                                               7,030,572                    4,950,055
Inventories, net                                                                       3,078,345                    2,915,249
Prepaid expenses                                                                         831,423                    1,316,443
Prepaid income taxes                                                                           -                      444,371
Prepaid television time                                                                        -                      627,050
Advances to employees                                                                    252,145                      308,630
Deferred tax asset                                                                     1,297,997                       63,645
                                                                                     -----------                  ------------
           Total current assets                                                       13,719,327                   11,753,304

Property and equipment, net                                                            3,557,610                    3,372,509

Intangible assets, net                                                                 7,163,341                    7,543,354

Deferred tax asset, noncurrent                                                           439,791                      439,791

Other assets                                                                             784,273                      101,914
                                                                                     -----------                  ------------
TOTAL ASSETS                                                                         $25,664,342                  $23,210,872
                                                                                     ===========                  ============

                                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable                                                                     $ 2,756,640                  $ 1,878,418
Accrued expenses                                                                       1,118,228                    1,460,163
Loans payable to bank                                                                  3,985,000                            -
Notes payable, current                                                                    42,372                       41,951
                                                                                     -----------                  ------------
           Total current liabilities                                                   7,902,240                    3,380,532

Notes payable, noncurrent                                                              2,342,432                    2,376,005
                                                                                     -----------                  ------------
           Total liabilities                                                          10,244,672                    5,756,537


COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value; 50,000,000 shares authorized;
  no shares issued or outstanding
Common stock, $0.001 par value; 150,000,000 shares authorized;
  28,445,835 shares issued and outstanding                                                28,446                       28,446
Additional paid-in capital                                                            14,782,438                   14,716,438
Retained earnings                                                                        608,786                    2,709,451
                                                                                     -----------                  ------------
           Total stockholders' equity                                                 15,419,670                   17,454,335
                                                                                     -----------                  ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                           $25,664,342                  $23,210,872
                                                                                     ===========                  ============
</TABLE>

           See notes to consolidated condensed financial statements.

                                      -3-
<PAGE>

              PROLONG INTERNATIONAL CORPORATION AND SUBSIDIARIES
               CONSOLIDATED CONDENSED STATEMENTS  OF OPERATIONS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                           Three Months Ended                    Nine Months Ended
                                                               September 30,                         September 30,
                                                    ----------------------------------    -----------------------------------
                                                           1999               1998               1999               1998
                                                           ----               ----               ----               ----
<S>                                                 <C>                   <C>             <C>                   <C>
NET REVENUES                                            $ 9,758,596       $ 9,662,580         $31,509,675       $28,911,150

COST OF GOODS SOLD                                        2,482,588         2,460,591           8,170,032         6,107,805
                                                        -----------      ------------         -----------       -----------
GROSS PROFIT                                              7,276,008         7,201,989          23,339,643        22,803,345

OPERATING EXPENSES:
Selling and marketing                                     6,400,017         4,990,880          21,087,614        14,889,967
General and administrative                                1,379,843         1,337,663           5,195,419         4,063,476
                                                        -----------      ------------         -----------       -----------
          Total operating expenses                        7,779,860         6,328,543          26,283,033        18,953,443
                                                        -----------      ------------         -----------       -----------
OPERATING INCOME (LOSS)                                    (503,852)          873,446          (2,943,390)        3,849,902

OTHER INCOME (EXPENSE), net:
Interest (expense)                                         (138,599)          (42,777)           (297,119)          (79,486)
Interest income                                               2,179            16,482               8,844           105,027
                                                        -----------      ------------         -----------       -----------
          Total other income (expense), net                (136,420)          (26,295)           (288,275)           25,541
                                                        -----------      ------------         -----------       -----------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES            (640,272)          847,151          (3,231,665)        3,875,443

PROVISION (BENEFIT) FOR INCOME TAXES                       (224,000)          363,020          (1,131,000)        1,669,020
                                                        -----------      ------------         -----------       -----------
NET INCOME (LOSS)                                       $  (416,272)     $    484,131         $(2,100,665)      $ 2,206,423
                                                        ===========      ============         ===========       ===========

NET INCOME (LOSS) PER SHARE
Basic                                                        ($0.01)     $       0.02              ($0.07)      $      0.09
                                                        ===========      ============         ===========       ===========
Diluted                                                      ($0.01)     $       0.02              ($0.07)      $      0.09
                                                        ===========      ============         ===========       ===========
WEIGHTED AVERAGE COMMON SHARES
Basic                                                    28,445,835        25,464,575          28,445,835        25,464,525

Diluted options outstanding                                       0            97,289                   0           397,603
                                                        -----------      ------------         -----------       -----------
Diluted                                                  28,445,835        25,561,864          28,445,835        25,862,128
                                                        ===========      ============         ===========       ===========
</TABLE>

           See notes to consolidated condensed financial statements

                                      -4-
<PAGE>

              PROLONG INTERNATIONAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                               Nine Months Ended
                                                                                                  September 30,
                                                                                      ----------------------------------------
                                                                                          1999                    1998
                                                                                          ----                    ----
<S>                                                                                   <C>                        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                                        $ (2,100,665)           $ 2,206,423
Adjustments to reconcile net income (loss) to net cash
      used in operating activities:
      Depreciation and amortization                                                           631,343                106,963
      Provision for doubtful accounts                                                        (274,875)               288,571
      Deferred taxes                                                                         (789,981)                     -
      Reserve for obsolesence                                                                  25,891                 67,500
      Compensation costs related to options                                                    66,000                      -
      Changes in assets and liabilities, net of effects of acquisition:
             Accounts receivable                                                           (1,805,642)            (3,644,746)
             Inventories                                                                     (188,987)            (1,898,659)
             Prepaid expenses                                                                 (14,980)              (779,050)
             Prepaid television time                                                          627,050                549,232
             Deposits                                                                        (190,984)               (91,939)
             Accounts payable                                                                 878,222                 20,180
             Accrued expenses                                                                (341,935)              (377,850)
             Income taxes payable                                                                   -             (1,074,553)
                                                                                         ------------            -----------
                  Net cash used in operating activities                                    (3,479,543)            (4,627,928)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                                          (427,806)              (646,481)
Prepaid advances                                                                               56,485                (30,112)
                                                                                         ------------            -----------
                  Net cash used in investing activities                                      (371,321)              (676,593)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable                                                                     (33,152)                 7,141
Proceeds from bank loans                                                                    3,985,000                      -
Proceeds from issuance of common stock                                                              -                    600
                                                                                         ------------            -----------
                  Net cash provided by financing activities                                 3,951,848                  7,741

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                          100,984             (5,296,780)

CASH AND CASH EQUIVALENTS, beginning of period                                              1,127,861              6,180,983
                                                                                         ------------            -----------
CASH AND CASH EQUIVALENTS, end of period                                                 $  1,228,845            $   884,203
                                                                                         ============            ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid                                                                        $          -            $ 2,743,576
                                                                                         ============            ===========
Interest paid                                                                            $    297,119            $    79,486
                                                                                         ============            ===========
</TABLE>


SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:

During 1998, the Company completed the following transactions:
Financed the purchase of the office and warehouse facility with $2,421,000
   in long-term notes payable.
During 1999, the Company completed the following transactions:
Recorded in aggregate of $66,000 to additional paid-in capital for compensation
costs related to stock options.

           See notes to consolidated condensed financial statements

                                      -5-
<PAGE>

                       PROLONG INTERNATIONAL CORPORATION
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1.   BUSINESS

     Prolong International Corporation (PIC) is a Nevada corporation originally
     organized on August 24, 1981. In September 1995, PIC acquired 100% of the
     outstanding stock of Prolong Super Lubricants, Inc. (PSL), a Nevada
     corporation. In 1997, Prolong Foreign Sales Corporation was formed as a
     wholly-owned subsidiary of PIC. In 1998, Prolong International Holdings
     Ltd. was formed as a wholly-owned subsidiary of PIC. At the same time,
     Prolong International Ltd. was formed as a wholly-owned subsidiary of
     Prolong International Holdings Ltd. PIC, through its subsidiaries, is
     engaged in the manufacture, sale and distribution of a line of high
     performance and high quality lubricants and car care appearance products
     under the brand names Prolong(R) and Prolong Super Lubricants(R).

2.   BASIS OF PRESENTATION

     The accompanying unaudited consolidated condensed financial statements
     include the accounts of PIC and its wholly-owned subsidiaries, PSL, Prolong
     Foreign Sales Corporation, Prolong International Holdings Ltd. and its
     wholly-owned subsidiary, Prolong International Ltd. (collectively, the
     Company or Prolong). All significant intercompany accounts have been
     eliminated in consolidation. These financial statements have been prepared
     in accordance with generally accepted accounting principles for interim
     financial information and the instructions to Form 10-Q and Article 10 of
     Regulation S-X. Accordingly, they do not include all of the information and
     footnotes required by generally accepted accounting principles for complete
     financial statements. In the opinion of management, all adjustments,
     including normal recurring accruals, considered necessary for a fair
     presentation have been included. Operating results for the three months and
     the nine months ended September 30, 1999 are not necessarily indicative of
     the results that may be expected for the year ended December 31, 1999. For
     further information, refer to the Form 10-K for the year ended December 31,
     1998 filed by the Company with the Securities and Exchange Commission.

3.   INVENTORIES

     Inventories consist of the following:

<TABLE>
<CAPTION>
                                      September 30,       December 31,
                                          1999               1998
                                          ----               ----
                                       (Unaudited)
       <S>                            <C>                 <C>
       Raw materials                     $1,475,327         $  936,451
       Finished goods                       806,793          1,430,797
       Promotional items                    796,225            548,001
                                         ----------         ----------
                                         $3,078,345         $2,915,249
                                         ==========         ==========
</TABLE>

                                       6
<PAGE>

4.   PROPERTY AND EQUIPMENT

     Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                            September 30,       December 31,
                                                1999                1998
                                                ----                ----
                                             (Unaudited)
      <S>                                   <C>                 <C>
      Building                                  $2,285,089     $2,268,559
      Computer equipment                           276,729        230,264
      Office equipment                              55,753         54,073
      Furniture and fixtures                       557,571        255,669
      Automotive equipment                          35,925         35,925
      Exhibit equipment                            115,143        115,143
      Molds and dies                               118,643         63,193
      Machinery and equipment                       17,953         12,174
                                                ----------     ----------

                                                 3,462,806      3,035,000
      Less accumulated depreciation               (443,196)      (200,491)
                                                ----------     ----------

                                                 3,019,610      2,834,509
      Land                                         538,000        538,000
                                                ----------     ----------

                                                $3,557,610     $3,372,509
                                                ==========     ==========
</TABLE>


5.   LOANS PAYABLE TO BANK

     As of October 1, 1999, the Company had $4,000,000 available from the bank
     line of credit facility of which $3,985,000 was outstanding. As of
     September 30, 1999, the Company was in compliance or has received waivers
     for all financial covenants.

6.   NOTES PAYABLE

     Notes payable consist of the following as of September 30, 1999:

<TABLE>
     <S>                                                                           <C>
     Note payable to a bank bearing interest at 7.875% per annum to be
     repaid in monthly principal and interest payments of $13,050 with a
     final payment of all remaining unpaid principal and interest due on
     May 1, 2008.                                                                  $1,659,883

     Loan from CDC Small Business Finance Corporation bearing interest at
     7.65% per annum to be repaid in monthly principal and interest
     payments of $6,376 each through July 1, 2018.                                    724,921
                                                                                    ----------
                                                                                    2,384,804
     Less current maturities                                                          (42,372)
                                                                                   ----------
                                                                                   $2,342,432
                                                                                   ==========
</TABLE>

                                       7
<PAGE>

<TABLE>
     <S>                                                        <C>
     Schedule of principal payments for year ending December 31,
     1999                                                       $    11,247
     2000                                                            46,444
     2001                                                            50,256
     2002                                                            53,971
     2003                                                            57,969
     Thereafter                                                   2,164,917
                                                                 ----------

                                                                 $2,384,804
                                                                 ==========
</TABLE>


7.   CONTINGENCIES

     On or about November 17, 1998, Michael Walczak et al, on behalf of himself
     and other similarly situated shareholders of EPL filed a purported class
     action in the U.S. District Court (the "Court") in San Diego, California
     against PIC, PSL, EPL and their respective former and current officers and
     directors. The named plaintiffs allege breach of contract, certain fraud
     claims, civil RICO, breach of fiduciary duty and conversion and seek
     monetary damages. The named plaintiffs in the action are allegedly current
     EPL shareholders who hold less than two percent (2%) of the outstanding
     shares of EPL's common stock, in the aggregate. The plaintiffs applied for
     a preliminary injunction to halt the sale of the assets of EPL to PIC and
     to prevent the dissolution of EPL.

     On November 25, 1998, the Court granted a temporary restraining order
     without a hearing and before opposition could be submitted. On December 30,
     1998, the Court held a hearing on whether a preliminary injunction should
     be issued in connection with such action. The Court entered a preliminary
     injunction based on the plaintiffs' (a) alleged claim for fraudulent
     conveyance in connection with PSL's license agreement with EPL and (b)
     alleged claim for breach of fiduciary duty. The preliminary injunction
     enjoins the further consummation of the asset purchase transaction and
     prevents EPL from completing its liquidation and dissolution until further
     notice from the Court. The preliminary injunction will last until the case
     is tried on its merits or until the preliminary injunction is vacated. The
     Court ordered the plaintiffs to post a bond in the amount of $100,000,
     which bond has been posted. PIC has appealed the Court's preliminary
     injunction ruling to the Ninth Circuit.

     PIC and PSL and their respective current officers and directors continue to
     believe that there is no merit to the plaintiff's claims and plan to
     vigorously defend against the claims. The defendants have each filed and
     served motions to dismiss the complaint pursuant to Rule 12(b)(6) of the
     Federal Rules of Civil Procedure. The defendants successfully moved to
     transfer venue to the federal court in Orange County, California, where
     PIC's principal office is located.

                                       8
<PAGE>

8.   COMMITMENTS

     The Company has outstanding non-cancelable inventory purchase commitments
     with a contract packager of approximately $1,200,000 as of September 30,
     1999. Under the terms of the agreement, the packager purchases components,
     manufactures, warehouses and distributes certain car care products for the
     Company. When inventories held by the packager exceed approximately 75 days
     from the date of production the Company may be obligated to pay a storage
     handling fee and/or purchase these inventories at the option of the
     packager.

9.   EMPLOYMENT CONTRACTS

     In October 1999, the Company entered into an employment agreement with an
     officer of the Company for a period of 4 years. The terms of the contract
     include base salary, signing bonus, 800,000 warrants with exercise prices
     ranging from $2-$5 per share, stock options, various performance
     incentives, and one year severance payment in the event of early
     termination.

                                       9
<PAGE>

ITEM 2:
-------


                       PROLONG INTERNATIONAL CORPORATION
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                        Percentage of Net Revenues

                                             Three Months Ended              Nine Months Ended
                                               September 30,                   September 30,
                                        --------------------------      -------------------------
                                              1999         1998              1999         1998
                                        --------------------------      -------------------------
<S>                                          <C>           <C>               <C>          <C>
Net revenues                                    100.0        100.0             100.0        100.0
Cost of goods sold                               25.4         25.5              25.9         21.1
                                        --------------------------      -------------------------
Gross profit                                     74.6         74.5              74.1         78.9
Selling expenses                                 65.6         51.6              66.9         51.5
General and administrative expenses              14.1         13.8              16.5         14.1
                                        --------------------------      -------------------------
Operating income (loss)                          (5.1)         9.1              (9.3)        13.3
Other income (expense)                           (1.4)        (0.3)             (0.9)         0.1
                                        --------------------------      -------------------------
Income (loss) before income taxes                (6.5)         8.8             (10.2)        13.4
Provision (benefit) for income taxes             (2.3)         3.8              (3.6)         5.8
                                        --------------------------      -------------------------
Net income (loss)                                (4.2)         5.0              (6.6)         7.6
                                        ==========================      =========================
</TABLE>


Three Months Ended September 30, 1999 vs. Three Months Ended September 30, 1998

Net revenues for the three months ended September 30, 1999 were approximately
$9,759,000 as compared to approximately $9,663,000 for the comparable period of
the prior year, an increase of $96,000 or 1%. Revenues for the three month
period ended September 30, 1999 were derived from the following sources: Direct
response infomercial sales of $811,000 ($629,000 of appearance products and
$182,000 of lubricants); retail sales of $8,406,000 ($407,000 of appearance
products and $7,999,000 of lubricants); industrial sales of $92,000; and,
international and other sales of $450,000.  Revenues for the three month period
ended September 30, 1998 were derived from the following sources: Direct
response infomercial sales of $1,270,000 (all lubricant products); retail sales
of $6,739,000 (all lubricant products); industrial sales of $257,000; and,
international and other sales of $1,397,000.  The increase in sales is mainly
attributable to the launch of the new automotive appearance products.

Cost of goods sold for the three months ended September 30, 1999 was
approximately $2,483,000 as compared to $2,461,000 for the comparable period of
the prior year, an increase of $22,000 or 0.9%.  As a percentage of sales, cost
of goods sold decreased from

                                       10
<PAGE>

25.5% in 1998 to 25.4% in 1999. This decrease was mainly attributable to a shift
in product mix and distribution channels.

Selling expenses of approximately $6,400,000 for the three months ended
September 30, 1999 represented an increase of $1,409,000 over the comparable
period of the prior year.  This 28.2% increase was primarily the result of
additional marketing allowances to retail customers to continue to build brand
awareness and distribution.  Selling expenses as a percentage of sales were
65.6% for the three months ended September 30, 1999 versus 51.6% for the
comparable period of the previous year.  Selling expenses as a percentage of
sales increased largely due to the factors described above.

General and administrative expenses for the three months ended September 30,
1999 were approximately $1,380,000 as compared to $1,338,000 for the three
months ended September 30, 1998, an increase of $42,000 or 3.1%.  This increase
is primarily attributable to higher legal expenses.

Interest expense of approximately $139,000 for the three months ended September
30, 1999 represented an increase of $96,000 over the comparable period of the
prior year.  The increase is attributable to the increase in bank loans payable.

Net income (loss) for the three months period ended September 30, 1999 was
approximately $(416,000) as compared to approximately $484,000 for the
comparable period in the prior year, a decrease of $900,000.  The decrease is a
result of the factors described above.

Nine Months Ended September 30, 1999 vs. Nine Months Ended September 30, 1998

Net revenues for the nine months ended September 30, 1999 were approximately
$31,510,000 as compared to approximately $28,911,000 for the comparable period
in the prior year, an increase of $2,599,000 or 9.0%.  Revenues for the nine
month period ended September 30, 1999 were derived from the following sources:
Direct response infomercial sales of $3,879,000 ($2,776,000 of appearance
products and $1,103,000 of lubricants); retail sales of $25,624,000 ($4,652,000
of appearance products and $20,972,000 of lubricants); industrial sales of
$483,000; and, international and other sales of $1,524,000.  Revenues for the
nine month period ended September 30, 1998 were derived from the following
sources: direct response infomercial sales of $4,612,000 (all lubricants);
retail sales of $20,945,000 (all lubricants); industrial sales of $870,000; and,
international and other sales of $2,484,000.  The increase in sales is mainly
attributable to sales of approximately $7,400,000 of the new automotive
appearance products which was partially offset by a decrease in lubricant sales
of approximately $4,800,000.  The decrease in lubricant sales was attributable
to a reduction in direct response television sales resulting from reduced
purchases of air time as the lubricant television show is reaching the end of
its effective life.

Cost of goods sold for the nine months ended September 30, 1999 was
approximately $8,170,000 as compared to $6,108,000 for the comparable period of
the prior year, an increase of $2,062,000 or 33.8%.  Cost of goods sold, as a
percentage of sales, increased from 21.1% for the nine month period ended
September 30, 1998 to 25.9% for the comparable period in 1999.  The increase was
mainly attributable to the higher cost of new packaging (introduced toward the
end of the second quarter of 1998) for the lubricant

                                       11
<PAGE>

products and a shift in product mix with the appearance products yielding lower
gross margin than the lubricant products.

Selling expenses of $21,088,000 for the nine months ended September 30, 1999
represented an increase of $6,198,000 over the comparable period of the prior
year.  This 41.6% increase was primarily the result of salaries and benefits for
new employees, marketing allowances to retail customers, one time sales slotting
fees to new retailers, promotional activities, expenditures for print and media
advertising, and increased telemarketing expenses and television air-time
purchases relating to the launch of the new appearance product line.  Selling
expenses as a percentage of sales were 66.9% for the nine months ended September
30, 1999 versus 51.5% for the comparable period of the previous year. Selling
expenses as a percentage of sales increased largely due to the high level of
air-time purchases required to introduce the appearance line of products to the
marketplace during the beginning of the buying season for these products.
Additionally, large one time slotting fees were paid during the nine month
period in order to obtain large new sources of product distribution.  Other
contributing factors to the increase as a percentage of sales were significant
promotional activities and telemarketing expenses to continue to build brand
awareness.

General and administrative expenses for the nine months ended September 30, 1999
were approximately $5,195,000 as compared to $4,063,000 for the nine months
ended September 30, 1998, an increase of $1,132,000 or 27.9%.  This increase is
primarily attributable to salaries and benefits for new employees, increases in
legal expenses, general insurance expenses, and costs related to the design of
the Company's new e-commerce web-site.  As a percentage of sales, general and
administrative expenses increased from 14.1% for the nine months ended September
30, 1998 to 16.5% for the same period in 1999.  This increase was largely
attributable to higher than normal legal fees required to handle outstanding
legal matters and the development costs for the Company's e-commerce web-site.

Interest expense of approximately $297,000 for the nine months ended September
30, 1999 represented an increase of $218,000 over the comparable period of the
prior year.  The increase is attributable to the financing related to the
purchase of the Company's facility in Irvine, California and interest expenses
related to the outstanding bank loan.

Net income (loss) for the nine month period ended September 30, 1999 was
approximately $(2,101,000) as compared to approximately $2,206,000 for the
comparable period in the prior year, a decrease of $4,307,000.  The decrease is
a result of the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 1999, the Company had net working capital of $5,817,000 as
compared to $8,373,000 at December 31, 1998 or a decrease of $2,556,000.  During
the nine months ended September 30, 1999, the Company used approximately
$3,480,000 in operating activities largely to fund a $1,806,000 increase in
accounts receivable, a $189,000 increase in inventories, $342,000 decrease in
accrued expenses, and $2,101,000 of losses during the period.  These uses of
cash were partially offset by a $878,000 increase in accounts payable and a
decrease in prepaid television time of $627,000.  Additionally, the Company used
approximately $428,000 for investing activities which were primarily purchases
of property and equipment.  These uses of cash were funded during the nine
months ended September 30,

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<PAGE>

1999 primarily by existing cash reserves and proceeds from the Company's bank
credit line in the amount of $3,985,000.

The Company, as of October 1, 1999, had $4,000,000 available from the bank line
of credit facility, of which $3,985,000 was outstanding. During the second
quarter of 1999 and continuing in the third quarter, the Company has implemented
certain measures to reduce expenditures including such strategies as evaluating
the purchase of television air time, a reallocation of advertising dollars, a
review of sponsorship payments and motorsports promotional activities, a
curtailment of legal expenses and reductions in general and administrative
expenses.  Additionally, the Company is evaluating strategies to convert assets
to cash on a more efficient basis and reviewing other strategies to optimize the
generation of cash flow.

The Company does not anticipate the need for any material production-related
capital expenditures as it will continue with its strategy to subcontract all
future manufacturing, bypassing the need for any material manufacturing
infrastructure investment. The Company anticipates that its activities will be
funded by working capital and existing and/or new credit facilities in addition
to the strategies discussed above.  The Company is currently seeking additional
financing, but there is no assurance that appropriate financing can be obtained.

YEAR 2000 READINESS DISCLOSURE

PIC has developed and is well into implementing a company-wide Year 2000 plan
(the "Plan") with the intent to ensure that its computer equipment and
operations are "Year 2000 compliant".  PIC has formed a Year 2000 response team
comprised of key members from various business areas to review and respond
quickly to Year 2000 issues as they occur.  The response team is expected to be
on call during the millennium change to monitor and provide solutions to any
issues that arise. PIC's Year 2000 Plan is directed to four major areas:
products, internal systems (including information technology (IT) and non-IT
systems), suppliers and dealers.  PIC's Year 2000 Plan includes a series of
initiatives to ensure that all of the computer hardware, software and
communications systems will function without incident at the turn of the
millennium and beyond.  To date, the cost to identify, assess and remediate
PIC's Year 2000 issues is not expected to be material to PIC's financial
condition or impact business operations.  None of PIC's other information
technology projects have been delayed or deferred as a result of Year 2000
assessment and remediation. PIC is progressing with replacement or enhancement
to internal IT systems and functions.

During the assessment and remediation phase of the Year 2000 Plan, PIC
identified and corrected problems involving calculations or data manipulation
based on date values.  PIC upgraded to software products with proven versions of
Year 2000 compliant products.  The use of Year 2000 certified software and
product upgrades has further strengthened PIC's Year 2000 transition position.
In addition, PIC has also assessed and remediated non-IT support systems such as
phone switches, copier/facsimile machines and facility security systems.  With
regard to the outside supplier portion of the Plan, PIC is currently assessing
Year 2000 readiness of production and distribution suppliers based on projected
severity levels of Year 2000 outage issues.  Suppliers have been asked to
respond to a compliance questionnaire and initial responses to these
questionnaires have been received.  Based on the

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<PAGE>

response thus far, PIC believes that the worst case scenario with respect to
Year 2000 issues is the failure of a supplier to become Year 2000 compliant in
time. It is projected that such a failure by a supplier would result in
disruption of manufacturing and distribution functions and the implementation of
manual systems and processes until such time as the failure is cured. At the
present time, PIC expects to be fully Year 2000 compliant by the November 30,
1999.

The Company presently believes it has an effective Plan to anticipate and
resolve any potential internal Year 2000 issues in a timely manner.  In
addition, the Company has reviewed potential Year 2000 failure points and
implemented corrective action to resolve any issues in addition to providing
manual systems and procedures to ensure business needs are being serviced until
such time as Year 2000 automated system failures can be remediated and
corrected.  The Company plans to have its contingency plan in place by November
30, 1999.

RISK FACTORS AND FORWARD LOOKING STATEMENTS

This report contains certain 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, that involve risks and
uncertainties.  In addition, the Company may from time to time make oral forward
looking statements.  Actual results are uncertain and may be impacted by the
factors discussed in more detail in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998 filed with the Securities and Exchange
Commission.  In particular, certain risks and uncertainties that may impact the
accuracy of the forward looking statements with respect to revenues, expenses
and operating results including without limitation, the risks set forth in the
risk factors section of the Annual Report on Form 10-K for the year ended
December 31, 1998, which risk factors are hereby incorporated into this report
by this reference.  As a result, the actual results may differ materially from
those projected in the forward looking statements.

Because of these and other factors that may affect the Company's operating
results, past financial performance should not be considered an indicator of
future performance, and investors should not use historical trends to anticipate
results or trends in future periods.

ITEM 3:
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

PIC's financial instruments include cash and long-term debt.  At September 30,
1999 and December 31, 1998, the carrying values of PIC's financial instruments
approximated their fair values based on current market prices and rates.  It is
PIC's policy not to enter into derivative financial instruments.  PIC does not
currently have any significant foreign currency exposure since it does not
transact business in foreign currencies.  Due to this, PIC did not have
significant overall currency exposure at September 30, 1999 and December 31,
1998.

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<PAGE>

                       PROLONG INTERNATIONAL CORPORATION
                          PART II--OTHER INFORMATION


Item 1.  Legal Proceedings

Reference is made to Note 7 of the notes to consolidated condensed financial
statements.

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits

     10.24  Employment Agreement, dated October 5, 1999, by and among the
            Company, Prolong Super Lubricants, Inc. and Thomas G. Iwanski,
            including the following exhibits: (i) Warrant Agreement, dated
            October 5, 1999, and (ii) Form of Stock Option Agreement
            (incorporated by reference to Exhibit 10.12 to the Company's
            Registration Statement on Form 10 filed July 3, 1997).

     10.25  Registration Rights Agreement, dated October 5, 1999, between the
            Company and Thomas G. Iwanski.

      27.1  Financial Data Schedule (electronic filing only)


(b) Reports on Form 8-K

            No reports on Form 8-K have been filed by the Company during the
            quarterly period ended September 30, 1999.

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.

                                      PROLONG INTERNATIONAL CORPORATION

Date:    November 12, 1999            /s/ Nicholas Rosier
                                      --------------------------------
                                      Nicholas Rosier
                                      Chief Financial Officer

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