U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                   FORM 10-QSB



[X]  Quarterly  Report under Section 13 or 15(d) of the Securities  Exchange Act
     of 1934 For the quarterly period ended September 30, 1999

[ ] Transition  report under Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934 For the transition period from _________ to ________




                                 SURGICARE, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)


          DELAWARE                                        58-1597246
(STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION)


  6699 CHIMNEY ROCK, SUITE 105
    HOUSTON, TEXAS(ADDRESS OF                                77081
   PRINCIPAL EXECUTIVE OFFICES)                           (ZIP CODE)

ISSUER'S TELEPHONE NUMBER: (713) 665-1406


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

Yes [X]  No [ ]

As of November 8, 1999,  12,654,351 shares of Common Stock, $0.005 par value per
share, were outstanding.  As of November 8, 1999,  1,350,000 shares of Preferred
"Series A" Stock, $0.001 par value per share, were outstanding.

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

<PAGE>

PART I
                              FINANCIAL INFORMATION


     The  information   contained   herein  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,
which are intended to be covered by the safe harbors created thereby.  Investors
are cautioned that all forward looking statements involve risks and uncertainty,
including,  without  limitation,  the  ability  of  SurgiCare  to  continue  its
expansion strategy,  changes in federal or state healthcare laws and regulations
or third party payer practices,  SurgiCare's  historical and current  compliance
with existing or future  healthcare  laws and  regulations and third party payer
requirements, changes in costs of supplies, labor and employee benefits, as well
as general  market  conditions,  competition  and  pricing.  Although  SurgiCare
believes  that  the  assumptions   underlying  the  forward  looking  statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore,  there  can be no  assurance  that  the  forward  looking  statements
included  in  this  Form  10-QSB  will  prove  to be  accurate.  In  view of the
significant  uncertainties  inherent in the forward looking statements  included
herein,  the  inclusion  of  such  information  should  not  be  regarded  as  a
representation by SurgiCare or any other person that the objectives and plans of
SurgiCare  will be achieved.  SurgiCare  undertakes  no  obligation to update or
revise forward-looking statements to reflect changed assumptions, the occurrence
of unanticipated  events or changes to future operating results over time. Refer
to the Company's disclousers in its Form 10-SBfor additional information.



ITEM 1.

Financial Statements

The information required hereunder is included in this report as set forth
in the "Index to Financial Statements"

                          INDEX TO FINANCIAL STATEMENTS

Consolidated Balance Sheet as of September 30, 1999                  Page

                                                                      3

Consolidated  Income  Statement for the 3 months ending as
of September 30, 1998 and 1999, and the 9 months ending as
of September 30, 1998 and 1999                                        5

Consolidated Statement of Cash Flows for the 3 months ending
as of September 30, 1998 and 1999, and the 9 months ending as
of September 30, 1998 and 1999                                        6


<PAGE>



                                 SURGICARE, INC.
<TABLE>

<CAPTION>
                           CONSOLIDATED BALANCE SHEETS


                                                         September 30,
                                                             1999
                                                          (Unaudited)
                            ASSETS
<S>                                                         <C>
Current Assets
     Cash and cash equivalents                         $      204,767
     Accounts receivable (less allowance for
        contractual adjustments and doubtful accounts       1,695,181
        of $1,470,530)
     Inventory                                                 48,067
     Prepaid expenses                                          29,492
     Other current Assets                                       8,152

        Total Current Assets                                1,985,659

Property and Equipment
     Office furniture and equipment                            39,196
     Medical and surgical equipment                           601,960
     Leasehold improvements                                    51,392
     Computer equipment                                        56,278
                                                              748,825

     Less: Accumulated depreciation and                       439,944
        amortization

        Total Property and Equipment                          308,881


Other Assets
     Goodwill                                                 169,236


        TOTAL ASSETS                                   $    2,463,776




<PAGE>





                                 SURGICARE, INC.

                           CONSOLIDATED BALANCE SHEETS



                         LIABILITIES

Current Liabilities
     Current portion of capital lease                  $       22,441
     Notes Payable                                            537,646
     Accounts Payable                                         114,945
     Accrued Expenses                                          17,599
     Deferred federal income tax                              568,516
     Taxes payable                                             45,576

        Total Current Liabilities                           1,306,723

Long-Term Capital Lease Obligations                            32,582

        Total Liabilities                                   1,339,305

                     SHAREHOLDERS' EQUITY

Preferred Stock, Series A, par value
     $.001, 1,650,000 authorized, 1,350,000 issued              1,350
     and outstanding at September 30, 1999

Common Stock, par value $.005, 50,000,000 shares
     authorized, 12,654,351 issued and outstanding             63,272
     at September 30, 1999

Additional Paid-In Capital                                    892,506

Retained Earnings                                             180,321

Less:   Treasury stock 150 shares at cost
        Shareholders receivables                             (12,978)

        Total Shareholders' Equity                          1,124,471

          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $    2,463,776

</TABLE>

<PAGE>




                                 SURGICARE, INC.
<TABLE>
<CAPTION>

                          CONSOLIDATED INCOME STATEMENT
                                   (unaudited)

                                                           FOR THE                  FOR THE
                                                      THREE MONTHS ENDING      NINE MONTHS ENDING
                                                           September 30,          September 30

                                                       1998        1999         1998        1999
<S>                                                <C>          <C>         <C>           <C>

Revenues, net ..................................   $ 566,121  $ 1,199,163 $  1,697,248 $  3,172,933

Expenses
Direct Surgical Expenses
      Surgical Costs ...........................     120,288      194,376      367,464      444,907
      Salaries, wages and benefits .............      88,986      141,753      277,324      373,954
      Contract services ........................       6,995       38,389       20,954       73,998
      Management fees ..........................      40,529       18,285      147,027      172,254
                                                   -------------------------------------------------
              Total Direct Surgical Expenses ...     256,798      392,803      812,769    1,065,113
 Gen. and Admin. Expenses
      Rent .....................................      42,021       45,883      126,062      132,454
      Depreciation and amortization ............      29,557       34,352       86,740       90,961
      Insurance ................................       6,381        8,155       16,681       21,991
      Professional fees ........................       5,746        6,796       37,174        8,737
      Interest expense .........................      10,202       15,320       32,650       36,212
      Repairs and maintenance ..................      15,185        9,408       43,293       36,128
      Other operating expenses .................      38,820       19,441      122,018      108,837
      Taxes ....................................           0        4,059       17,631       21,585
                                                    -----------------------------------------------
          Total Direct Gen. and Admin.  Expenses     147,911      143,412      482,247      456,904
                                                    -----------------------------------------------
      Management company termination fee .......           0      164,333            0      164,333
          Total Expenses .......................     404,709      700,548    1,295,016    1,686,350

Other Income
      Gain on sale of property and equipment ...           0            0            0       12,025
      Miscellaneous income .....................      31,253        1,893       32,875        6,550
                                                    ------------------------------------------------
          Total Other Income ...................      31,253        1,893       32,875       18,575

Earnings Before Federal Income Tax Expense .....     192,665      500,508      435,107    1,505,158

Federal Income Tax Expense (Benefit)
      Deferred .................................           0      139,865            0      568,516
      Current ..................................           0       18,319            0       18,319
                                                   -------------------------------------------------


Net Earnings .................................  $    192,665 $    342,323 $    435,107 $    918,323
                                                   =================================================

Pro forma income data (unaudited):
      Earnings before federal income tax expense$    192,665 $    500,508 $    435,107 $  1,505,158
      Proforma federal and state income tax ....     (75,139)    (195,198)    (169,692)    (587,012)
                                                   -------------------------------------------------

      Pro forma Net Earnings ...................$    117,526 $    305,310 $    265,415 $    918,146
                                                   =================================================

      Pro forma earnings per share - basic and .$       0.01 $       0.03 $       0.02 $      0.064
      diluted


</TABLE>


<PAGE>





                                 SURGICARE, INC.
<TABLE>
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
                                                           FOR THE                       FOR THE
                                                      THREE MONTHS ENDING           NINE MONTHS ENDING
                                                         September 30,                 September 30,

<S>                                                   <C>            <C>           <C>              <C>
                                                      1998           1999          1998             1999
Cash Flows From Operating Activities
     Net earnings                              $     192,665 $     342,323 $     435,107 $         918,323
     Adjustments to reconcile net earnings to
     net cash provided by operations:
         Depreciation and amortization                29,557        34,352        86,740            90,964
         Gain on sale of property and                      0             0             0            24,450
         equipment
         Deferred federal income tax                               139,516             0           568,516
         Management company termination fee                        164,333             0           164,333
         (Increase) Decrease in:
         Accounts receivable                          15,739     (322,745)        39,948         (771,749)
         Inventory                                         0             0       (4,001)           (2,013)
         Prepaid expenses                            (3,922)       (1,089)       (4,404)           (1,349)
         Other current assets                          (365)           495           432           (2,290)
         Federal income tax receivable                     0        45,576             0            45,576
         Increase (Decrease) in:
         Accounts payable                           (55,479)       (5,975)      (52,666)            77,119
         Accrued expenses                                  0      (17,601)      (24,601)          (32,212)

         Net Cash Provided by Operating              178,195       379,185       476,555         1,079,668
         Activities

Cash Flows From Investing Activities
     Capital expenditures                           (27,251)      (44,458)       (9,016)          (73,356)
     Collections on shareholder receivable             6,000         8,271         8,363            80,772
     Proceeds from sale of property and                                  0        25,893          (12,025)
     equipment
     Acquisition of SurgiCare, Inc.                              (172,105)             0         (172,105)
         Net Cash Used in Investing Activities      (21,251)     (208,292)        25,240         (176,714)

Cash Flows From Financing Activities
     Borrowings on debt                                            161,000             0           161,000
     Payments on debt                               (33,109)      (61,553)     (133,557)         (168,632)
     Principal payments on capital lease                   0       (8,496)                        (13,604)
     Contributions by shareholders                                  27,000                          27,000
     Dividends paid to preferred shareholders                    (162,000)                       (162,000)
     Distributions to shareholders                  (84,000)                   (346,065)         (599,000)
         Net Cash Used in Financing Activities     (117,109)      (44,049)     (479,622)         (755,236)

Net Decrease in Cash and Cash Equivalents             39,835       126,844        22,173           147,718

Cash and Cash Equivalents - Beginning of              90,480        77,923       108,142            57,049
Period

Cash and Cash Equivalents - End of Period      $     130,315 $     204,767 $     130,315 $         204,767
</TABLE>

<PAGE>

                                 SURGICARE, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

 Note 1 - Basis of Presentation

         In  the  opinion  of  the  SurgiCare's  management,   the  accompanying
unaudited condensed,  consolidated  financial statements include all adjustments
consisting  of  only  normal   recurring   adjustments   necessary  for  a  fair
presentation  of  SurgiCare's  financial  position at September 30, 1999 and the
results of  operations  and cash flows for the three  months and the nine months
ended September 30, 1999 and 1998, respectively.

         Although the Company  believes that the  disclosures in these financial
statements  are  adequate  to make the  information  presented  not  misleading,
certain  information  normally  included  in  financial  statements  prepared in
accordance with generally accepted  accounting  principles has been condensed or
omitted  pursuant to the rules and  regulations  of the  Securities and Exchange
Commission.  Results of operations for the nine months ending September 30, 1999
are not  necessarily  indicative of results of operations to be expected for the
year ending December 31, 1999.  Refer to the Company's  financial  statements on
Form 10-SB for the year ended December 31, 1998 for additional information.


Note 2- Accounting Policies

         SurgiCare,  Inc.  (the  Company)  maintains its accounts on the accrual
method  of  accounting  in  accordance   with  generally   accepted   accounting
principles.  Accounting  principles  followed  by the Company and the methods of
applying those principles which materially affect the determination of financial
position, results of operations and cash flows are summarized below:

   Principles of Consolidation

            These consolidated  financial statements include the accounts of the
   Company  and its  wholly  owned  subsidiary,  Bellaire  SurgiCare,  Inc.  All
   material  intercompany  balances and  transactions  have been  eliminated  in
   consolidation.

   Cash and Cash Equivalents

            The Company  considers all short-term  investments  with an original
   maturity of three months or less to be cash equivalents.

   Revenue Recognition

            Revenue is recognized on the date the procedures are performed,  and
   accounts  receivable are recorded at that time.  Revenues are reported at the
   estimated  realizable amounts from patients and third-party payers.  Earnings
   are  charged  with a  provision  for  contractual  adjustments  and  doubtful
   accounts  based  on  fee  schedules,  contracts  and  collection  experience.
   Contractual adjustments and accounts deemed uncollectible are applied against
   the allowance account.

   Inventory

            Inventory consists of medical and pharmaceutical  supplies which are
   stated at the lower of cost or market. Cost is determined under the first-in,
   first-out method.
<PAGE>

                                 SURGICARE, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

   Property and Equipment

            Property and equipment  are presented at cost.  Medical and surgical
   equipment, of approximately $144,000,  under capital lease is recorded at the
   present value of future minimum lease payments. Depreciation and amortization
   are  computed at rates  considered  sufficient  to  amortize  the cost of the
   assets,  using the straight-line  method over their estimated useful lives as
   follows:


                  Office furniture and equipment     7   years
                  Medical and surgical equipment     5   years
                  Leasehold improvements             5   years
                  Computer equipment                 5   years

   Goodwill

            Goodwill  arises  from the  acquisition  of  assets  at an amount in
   excess  of  their  fair  market  value.   Amortization  is  computed  by  the
   straight-line method over 15 years.

   Federal Income Taxes

            Prior to July 1, 1999,  the  Company had elected to be taxed as an S
   corporation  under provisions of the Internal Revenue Code. As such,  current
   taxable   income  had  been  included  on  the  income  tax  returns  of  the
   shareholders  for federal  income tax purposes and no provision had been made
   for federal income taxes.

            Effective July 1, 1999, the Company changed its election to be taxed
   as a C  corporation  under the  Internal  Revenue  Code.  Taxes on income are
   provided  based upon  Statement of Financial  Accounting  Standards  No. 109,
   "Accounting for Income Taxes," which requires an asset and liability approach
   to financial  accounting and reporting for income taxes.  Deferred income tax
   assets and  liabilities  are computed for  differences  between the financial
   statement and tax bases of assets and liabilities that will result in taxable
   or  deductible  amounts in the  future.  Such  deferred  income tax asset and
   liability  computations are based on enacted tax laws and rates applicable to
   periods in which the differences are expected to affect taxable income.

   Use of Estimates

            The preparation of financial statements in conformity with generally
   accepted  accounting  principles  requires  management to make  estimates and
   assumptions  that affect the reported  amounts of assets and  liabilities and
   disclosure of contingent  assets and liabilities at the date of the financial
   statements  and the  reported  amounts of revenues  and  expenses  during the
   reporting period. Actual results could differ from those estimates.


Note 3 - Unaudited Pro Forma Net Earnings and Pro Forma Earnings Per Share

         Pro forma earnings per share  represent pro forma net earnings (after a
pro forma  provision  for income  taxes as if the  Company  had been  subject to
federal and state income taxation as a C corporation since inception)  available
to common  shareholders  divided  by the pro forma  weighted  average  number of
common shares  outstanding  during the period. Pro forma weighted average shares
were  calculated  giving  effect to the 7,304 to 1 exchange of SurgiCare  common
stock for Bellaire common stock,  as if the reverse  acquisition had occurred at
the beginning of each period presented.
<PAGE>

The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>

                                                                          For the Three                      For the Nine
                                                                          Months Ended                       Months Ended
                                                                          September 30,                      September 30,
                                                                          -------------                      -------------
                                                                      1998              1999             1998              1999
                                                                          (Unaudited)                        (Unaudited)
<S>                                                              <C>              <C>              <C>              <C>
Basic Earnings Per Share:
   Pro forma net earnings                                       $      117,526    $      342,323   $      265,415    $     918,146
   Less: Preferred dividends                                                                                              (162,000)
                                                                --------------    --------------   --------------    ---------------
   Pro forma net earnings available for common shareholders
                                                                $      117,526    $       342,323  $      265,415    $      756,146
                                                                ==============    ===============  ==============    ===============
   Weighted average shares outstanding                              11,823,980         11,214,560      11,823,980        11,536,272
                                                                ==============    ===============  ==============    ==============
   Pro forma net earnings per share - basic                           $.01              $.03             $.02             $.066
                                                                ==============    ===============  ==============    ===============

Diluted Earnings Per Share:
   Pro forma net earnings                                       $      117,526    $       342,323  $      265,415   $      756,146
                                                                ==============    ===============  ===============   ===============
   Weighted average shares outstanding                              11,823,980         11,214,560      11,823,980        11,536,272
   Plus: Shares from assumed conversion of preferred stock
                                                                                          191,038                           191,038
                                                                --------------            -------  --------------    --------------
   Weighted average shares assuming dilution                        11,823,980         11,405,598      11,823,980        11,727,310
                                                                ==============    ===============  ==============    ===============
   Pro forma net earnings per share - diluted                         $.01              $.03             $.02             $.064
                                                                ===============   ===============  ==============    ===============
</TABLE>


Note 4 - Preferred Stock

         The Series A preferred  stock is  convertible at a rate of one share of
preferred stock into one share of $.005 par value common stock.  The Company can
redeem the stock at $5 per share. The Series A preferred stock accrues dividends
at a rate of $.48 per share per annum  which are  payable,  in  arrears,  on the
first day of the month.  Holders of Series A preferred stock are entitled to one
vote for each share of Series A preferred stock held.


ITEM 2.

Management's  Discussion  and  Analysis of  Financial  Condition  and results of
Operation.

SurgiCare   principal   business   strategies  are  to  (i)  increase  physician
utilization of existing facilities,  (ii) increase both the revenue and profits,
from current cases and procedures  being  performed in existing  facilities and,
(iii) achieve growth and expand revenues by pursuing  strategic  acquisitions of
existing,  and the  development  of new,  physician  owned  ambulatory  surgical
centers.

     (i)  Bellaire  SurgiCare is currently  operating  at or near  capacity.  In
          order to facilitate growth,  SurgiCare is in the process of adding one
          additional  operating room to its Bellaire  facility.  This additional
          operating  room will  increase  the  capacity at Bellaire by 50%.  The
          architectural  and  mechanical  plans for this expansion must meet the
          approval  of both the  Texas  Department  of  Health,  and the City of
          Houston.  This  approval  process can be lengthy,  however  management
          expects to begin its expansion and  remodeling  project before the end
          of fiscal 1999.

     (ii) SurgiCare  is  constantly  striving to achieve  increase  profits from
          existing revenues. This process includes evaluating the use of billing
          codes,  to  insure  proper   reimbursement.   Revenues   generated  at
          ambulatory  surgical  centers are  primarily  derived from third party
          payers.  In an effort to standardize the billing and paying  processes
          the industry uses an elaborate,  extremely  complicated coding system.
          Subsequently  there can be more than one  acceptable set of codes used
          to bill for any given  procedure.  SurgiCare is constantly  evaluating
          the codes used,  in order to maximize the greatest  reimbursement  for
          any given  procedures.  Surgical  supply costs are the single  largest
          cost component of any ambulatory surgical center.  Therefore SurgiCare
          is always looking for ways to decrease the cost of surgical  supplies.
          Through  participation  in national  buying groups  SurgiCare has been
          able to  negotiate  discounts on most of the  commonly  used  surgical
          supplies.  SurgiCare has also implemented a "Just in Time" approach to
          inventory.  This allows the center to minimize  the amount of supplies
          that it is required  to keep in  inventory.  SurgiCare  is also always
          looking for new  distributors  of its surgical  supplies that have the
          capability to deliver the majority of its surgical  supplies  "Just in
          Time", provide quality service, at reduced prices. SurgiCare has found
          that the  purchasing  policy that govern the  acquisition  of surgical
          equipment,  is  an  important  key  to  maximize  a  center's  profit.
          Therefore  all  equipment is purchased at the  corporate  level,  this
          control  enables  SurgiCare  to aquire the lowest  resonably  possible
          price.

     (iii)SurgiCare is in the process of identifying ambulatory surgical centers
          as potential  acquisition targets,  and has, in some cases,  conducted
          preliminary  discussions with  representatives of centers. At the time
          of this filing there are no commitments, understandings, or agreements
          with any potential  acquisition  targets. All of such discussions have
          been  tentative in nature and there can be no assurance that SurgiCare
          will  acquire any center with whom  discussions  have been  conducted.
          SurgiCare  expects that generally the  acquisition of another  surgery
          center  would take the form of a merger,  stock-for-stock  exchange or
          stock-for-assets  exchange,  and  that in most  instances  the  target
          company will wish to structure the business  combination  to be within
          the definition of a tax-free  reorganization  under Section 368 of the
          Internal Revenue Code of 1986, as amended. SurgiCare may, however, use
          other  acquisition  structuring  techniques,  including  purchases  of
          assets or stock for cash or cash and stock,  or through  formation  of
          one or more limited partnerships or limited liability companies.


RESULTS OF OPERATION

The following  table sets forth for the period  indicated the number of surgical
cases.
<TABLE>
<CAPTION>

                                                                           For the                            For the
                                                                     Three Months Ended                  Nine Months Ended
                                                                        September 30,                      September 30,
                                                                    1998             1999             1998              1999

<S>                                                              <C>                <C>             <C>            <C>
Total Number of Cases                                               399               718             1312              1918

Total Revenues Generated                                         $ 566,121        $ 1,199,163      $ 1,697,248      $ 3,172,933

Revenue Generated per Case                                       $   1,418        $     1,670      $     1,293      $     1,654

Earnings Before Federal Income Tax per Case                      $     482        $       697      $       331      $       784

</TABLE>


THREE MONTHS ENDING SEPTEMBER 30, 1999 vsTHREE MONTHS ENDING SEPTEMBER 30, 1998

     Bellaire  SurgiCare made a concerted  effort beginning in September of 1998
to increase both revenues and profits.  The strategic plan that was  implemented
consisted of decreasing  the number of cases being done in the less  profitable,
high cost  services, and  increasing  the number of cases being done in the more
profitable  less cost  intensive  services.  The results  were  realized  almost
immediately, 718 case performed by September 30, 1999 compared to 399 procedures
done for the same  period in 1998,  this  represents  80%  increase  in  average
monthly  utilization.  The revenues generated per case increased 18% from $1,418
for the three month period  ending  September  30, 1999,  to $1,670 for the same
three month period in 1999. The pre-tax earnings generated per case increased by
44% from $482 per case for the three month period ending  September 30, 1999, to
$697 for the same three month period in 1999.

     In the three months  ending  September 30, 1999  Bellaire  recorded  record
revenue of  $1,199,163  compared to $566,121  for the same period in 1998,  this
represents a 112% increase.  The  significance  of this increase is amplified by
the disproportionate  increase in expenses for the same period.  Direct surgical
expenses  rose only 53% from  $256,798 to  $392,803.  As a  percentage  of total
revenue, the same surgical cost dropped from 21% to 16% for the same three-month
period ending September 20, 1999. General and Administrative  expenses fell from
$147,911 in 1998 to $143,412 for the same  three-month  period in 1999, and as a
percentage of total revenue,  General and  Administrative  expenses also dropped
from 26% in 1998 to 12% for the same three month period in 1999.  The results of
the record  revenues,  coupled  with the  decrease  in  virtually  all cost as a
percentage of total revenue, translated to an increase in pre-tax earning of 160
% to $500,508 from $192,665.

NINE MONTHS ENDING SEPTEMBER 30, 1999 vs. NINE MONTHS ENDING SEPTEMBER 30, 1998

     The nine months ending  September 30, 1999  dramatically  demonstrated  the
success of SurgiCare's strategic effort to increase the number of profitable low
cost procedures while decreasing the number of high cost, low profit procedures.
The number of surgical  cases rose 46% from 1312 cases for the nine month period
ending  September  30,  1998,  to 1918 for the  same  period  in 1999.  Revenues
generated  per case for the same  period  rose 27% from an  average of $1293 per
case to $1654.  Most  significant  was the 136%  increase  in  pre-tax  earnings
generated  per case,  from $331 for the nine month period  ending  September 30,
1998, to $784 for the same period in 1999.

     In the nine months ending  September 1999,  Bellaire posted record revenues
of  $3,172,933  compared  to  $1,697,248  for the same  period  in  1998,  a 87%
increase.  For the same  period  direct  surgical  expenses  rose  only 31% from
$812,769 to  $1,065,113.  As a percentage of revenue  direct  surgical  expenses
dropped from 47% for the nine month period ending September 30, 1998, to 34% for
the same period in 1999.  General and  Administrative  expenses  dropped 4% from
$482,247 for the nine month period  ending  September  30, 1998, to $456,904 for
the same period in 1999. As a percentage of revenue  General and  Administrative
Expenses fell from 28% for the nine months ending  September 30, 1998 to 14% for
the same  period in 1999.  The  increased  revenue,  along with the  decrease in
expenses  yielded a increase in pre tax earnings of 245% to  $1,505,158  for the
nine month period ending September 30,1999, from $435,107 for the same period in
1998.

         This  increase  was due to the effort  which  beginning in September of
1998 to  increase  both  revenues  and  profits.  The  strategic  plan  that was
implemented  consisted of decreasing  the number of cases being done in the less
profitable,  high cost service, and increasing the number of cases being done in
the more profitable less cost intensive services.

         In 1999, in an effort to better  capture and track  incremental  direct
expense, some expenses previously classified,  as "Professional Fees" have  been
re-classified to "Contract Services". This change in classification dramatically
altered  the  total  expenses  as a  percentage  of  revenue  for  both of these
accounts, however the net effect is unaltered.

         In July of 1999, SurgiCare incurred a one-time charge of $164,333. This
charge  was a fee for the  termination  of  Bellaire's  pre-existing  management
contract with Surgery Centers of America.  As a direct result of the termination
of  this  contract, there  was a  slight  decrease  in the  management  fee as a
percentage  of revenue,  in the seven months  ending July 31, 1999 over the same
period in 1998. The management fee was decreased in July of 1999 only, therefore
estimates that the cost of management will decrease more significantly in future
periods.

LIQUIDITY and CAPTIAL RESOURCES

         SurgiCare's  current  source of liquidity  consists  primarily of funds
from operations.  SurgiCare  believes that the cash available from operations is
adequate to meet the company's requirements.

YEAR 2000 COMPLIANCE

         Many  computer  systems  and  software  products  are  not  capable  of
distinguishing  twenty-first  century ("Y2K") dates. As a result, many companies
could experience  operating problems because of the century change. There exists
uncertainty  concerning the magnitude of the problem associated with the century
change.
         Throughout  the  first  half of  1999  SurgiCare  evaluated  all of its
computer  hardware  and  software  for Y2K  compatibility.  SurgiCare  has since
upgraded its computer  hardware and software to insure Y2K  compatibility.  This
upgrade was  completed  in August 1999.  In addition  SurgiCare  has  contracted
through an independent  biomedical  engineering firm, to research and survey the
Y2K compatibility of all of its patient care equipment. The survey was completed
in  September  1999,  and  the  results  were   immediately  made  available  to
management. The survey discovered no Y2K incompatibilities in any of the patient
care  equipment.  However as a  contingency  SurgiCare  plans to test all of its
patient  critical  equipment  prior to patient  use in the first days of January
2000.
         SurgiCare has contacted its major vendors to determine if there are any
Y2K  issues  that  would  cause an  interruption  in the  delivery  of  surgical
supplies.  SurgiCare is  confident  at this time that all of it's major  vendors
have  prepared for Y2K and expect no delays or  interruption  in the delivery of
supplies.  The Company has, as a  contingency,  located and arranged  additional
sources for it's daily supplies.  Therefore should current vendors encounter any
Y2K problems, it would not prevent the Company from obtaining necessary supplies
and materials from its other sources.

         The  costs  of the  Company's  Y2K  program  will  not be  material  to
financial  condition or results of operations.  The Company  believes that there
will be no  significant  disruptions  in  operations  from Y2K  related  issues.
However,  failure of  telecommunications  or banking service providers to be Y2K
compliant  could have a material effect on the Company's  financial  position or
results of  operations.  SurgiCare  has  received  disclosures  from its banking
service provider that it is Y2K compliant,  and expects no disruption due to any
Y2K complications.

PART II
                                OTHER INFORMATION
ITEM 1.
Legal Proceedings

         SurgiCare is not currently involved in any legal proceedings.

ITEM 2.
Change in Securities and Use of Proceeds

         There has been no change in  securities  since  SurgiCare  filled  its
Form 10-SB on August 20, 1999.

ITEM 3.
Default Upon Senior Securities

         SurgiCare has not defaulted on any payments of principle or interest on
any securities.


ITEM 4.
Submission of Matters to a Vote of Security Holder

     By notice dated  October 18, 1999,  By "NOTICE OF TAKING  CORPORATE  ACTION
WITHOUT A MEETING  BY WRITTEN  CONSENTS".  dated  October  18,  1999,  SurgiCare
notified is'a  stockholders of the following actions taken by written consent of
a majortiy of its stockholders:

1.       Election of Directors
2.       Amendment and Restatement of Certificate of Incorporation; Change of
           Name
3.       Approval of Stock Exchange  Agreement

         On August 20,1999,  the Company filed a registration  statement on Form
10-SB (the "Form 10-SB") with the  Commission  to register  shares of its common
stock and Series A Redeemable  Preferred Stock with the Commission under Section
12(g) of the  Exchange  Act. On November 4, 1999 the Company filed an amend Form
10-SB in response  to initial  comments  by the  Commission.  The Form 10-SB
will also be subject to further amendment by the Company in response to any
later comments by the  Commission.  On October 19,1999,  through lapse of time,
the Form 10-SB become effective and the Company's  obligation to file periodic
reports, as required by Section 13 of the  Securities  and Exchange  Act, began
on that date.


                                    SIGNATURES



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


Date:    November 5, 1999                            REGISTRANT:

                                                        SurgiCare, Inc

                                                By: /s/ David Blumfield
                                                     Dr. David Blumfield
                                                     President and CEO


                                                By:  /s/ CHARLES S. COHEN
                                                     Charles S. Cohen
                                                     Chief Operating Officer


ITEM 6.
INDEX TO EXHIBITS

                                                           DESCRIPTION
     EXHIBIT
     NUMBER
       3.1         * Amended and Restated Certificate of Incorporation of
                     SurgiCare, Inc.
       3.2         * Articles of Incorporation of Bellaire SurgiCare, Inc.
       3.3         * By-Laws of Technical Coatings Incorporated
                     (now SurgiCare, Inc.)
       3.4         * By-Laws of Bellaire SurgiCare, Inc.
        4          * Certificate of Designation,  Powers, Preferences and Rights
                     of Series A Redeemable  Preferred  Stock, par value $.001
                     per share, of SurgiCare, Inc.
      10.1         * Agreement, dated July 29, 1989, 1999, between
                     SurgiCare, Inc. and Surgery Centers of
                     America II, Inc.
      10.2         * Letter agreement with SCOA
       27          * Financial Data Schedule


* Incorporated herein by reference to the Company's Current Report on form 10-SB
filed on August 20, 1999.

During the three months ended September 30, 1999,  SurgiCare filed the following
current  reports on 10-SB 1) August  20,1999 - Form 10-SB 2)  November 4, 1999 -
Amended Form 10-SB