<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549


                                   FORM 10-Q
                                   (Mark one)

[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. 0-26149



                               US SEARCH.COM INC.
             (Exact name of registrant as specified in its charter)


           Delaware                                       95-4504143
    (State or other jurisdiction of                    (I.R.S. Employer
    incorporation or organization)                  Identification Number)


        9107 Wilshire Blvd., Suite 700, Beverly Hills, California 90210
          (Address of principal executive offices, including zip code)

                                 (310) 553-7000
              (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) Yes [X] No [ ], and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]


There were 17,421,644 shares of outstanding Common Stock of the registrant as of
November 12, 1999.
<PAGE>

                               US SEARCH.COM INC.
          Form 10-Q for the quarterly period ended September 30, 1999

<TABLE>
<CAPTION>


                                       INDEX                              Page Number
<S>        <C>                                                            <C>

Part I.    FINANCIAL INFORMATION                                                    2

Item 1.    Financial Statements                                                     2

           Balance Sheets as of September 30, 1999 and December 31, 1998            2

           Statements of Operations for the three and nine month periods
           ended September 30, 1999 and 1998                                        3

           Statements of Cash Flows for the nine month periods ended September
           30, 1999 and 1998                                                        4

           Notes to Financial Statements                                            5

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                                9

Item 3.    Quantitative and Qualitative Disclosures about Market Risks             20

Part II.   OTHER INFORMATION                                                       21

Item 1.    Legal Proceedings                                                       21

Item 2.    Changes in Securities and Use of Proceeds                               21

Item 3     Defaults Upon Senior Securities                                         21

Item 4.    Submission of Matters to a Vote of Security Holders                     21

Item 5.    Other Information                                                       21

Item 6.    Exhibits and Reports on Form 8-K                                        21

SIGNATURES                                                                         22

INDEX TO EXHIBITS                                                                  23
</TABLE>
                                       1
<PAGE>

PART I.   FINANCIAL INFORMATION
Item 1.   Financial Statements

                              US SEARCH.COM  INC.

                                 BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                          September 30, 1999                 December 31, 1998
                                                                         -------------------               -------------------
                                                                             (Unaudited)
<S>                                                                      <C>                                <C>
ASSETS:
Current assets:
      Cash and cash equivalents                                                 $ 24,757,000                       $    99,000
      Restricted cash                                                              2,000,000                                 -
      Accounts receivable, less allowance for doubtful
        accounts of $81,000 (1999) and $64,000 (1998)                                108,000                            83,000
      Other current assets                                                         2,758,000                             6,000
                                                                         -------------------               -------------------
        Total current assets                                                      29,623,000                           188,000

Property and equipment, net                                                          735,000                           371,000
Other assets                                                                         132,000                            16,000
                                                                         -------------------               -------------------
          Total assets                                                          $ 30,490,000                       $   575,000
                                                                         ===================               ===================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):

Current liabilities:
      Accounts payable                                                          $  3,728,000                       $ 3,721,000
      Accrued liabilities                                                            630,000                           570,000
      Lines of credit                                                                      -                           372,000
      Notes payable, current portion                                                 148,000                           693,000
      Capital lease obligations, current portion                                      31,000                            40,000
      Related-party notes payable, current portion                                         -                         2,553,000
                                                                         -------------------               -------------------
        Total current liabilities                                                  4,537,000                         7,949,000

Notes payable, net of current portion                                                 50,000                           269,000
Related-party notes payable, net of current portion                                        -                            29,000
Capital lease obligations, net of current portion                                     22,000                            45,000
Other non-current liabilities                                                         32,000                            32,000
                                                                         -------------------               -------------------
          Total liabilities                                                        4,641,000                         8,324,000
                                                                         -------------------               -------------------

Commitments and contingencies (Note 4)

Stockholders' equity (deficit):

      Preferred stock, $.001 par value; authorized 1,000,000
          shares; none issued and outstanding                                              -                                 -
      Common stock, $.001 par value; authorized 40,000,000 shares;
          issued and outstanding 17,421,644 (1999)
          and 9,067,820 (1998)                                                        17,000                            15,000
      Additional paid-in capital                                                  53,847,000                          (922,000)
      Unearned deferred compensation                                              (1,391,000)                                -
      Accumulated deficit                                                        (26,624,000)                       (6,842,000)
                                                                         -------------------               -------------------
          Total stockholders' equity (deficit)                                    25,849,000                        (7,749,000)
                                                                         -------------------               -------------------
          Total liabilities and stockholders' equity (deficit)                  $ 30,490,000                       $   575,000
                                                                         ===================               ===================

</TABLE>
       The accompanying notes are an integral part of these statements.

                                       2
<PAGE>

                               US SEARCH.COM INC.

                           STATEMENTS OF OPERATIONS
                                  (unaudited)
<TABLE>
<CAPTION>

                                                  1999                  1998                    1999                  1998
                                            -------------          -------------          --------------          -------------
<S>                                           <C>                    <C>                  <C>                     <C>
Net revenue                                   $ 6,163,000            $ 2,704,000            $ 13,442,000           $  6,944,000
Cost of services                                2,677,000              1,112,000               5,401,000              2,731,000
                                            -------------          -------------          --------------          -------------
      Gross profit                              3,486,000              1,592,000               8,041,000              4,213,000
                                            -------------          -------------          --------------          -------------

Operating expenses:
      Advertising and marketing                 7,114,000              2,429,000              13,535,000              4,950,000
      General and administrative                2,167,000              1,434,000               4,761,000              2,462,000
      Charge for warrants issued to
      majority stockholder                              -              1,190,000                       -              1,190,000
      Charge for compensation related to
      stock options                               305,000                      -               1,834,000                      -
                                            -------------          -------------          --------------          -------------
      Total operating expenses                  9,586,000              5,053,000              20,130,000              8,602,000
                                            -------------          -------------          --------------          -------------

Loss from operations                           (6,100,000)            (3,461,000)            (12,089,000)            (4,389,000)
Interest income (expense), net                    370,000                (62,000)             (4,596,000)              (132,000)
Amortization of debt issue costs                        -                      -              (3,096,000)                     -
Other income, net                                       -                  1,000                       -                 10,000
                                            -------------          -------------          --------------          -------------
      Loss before income taxes                 (5,730,000)            (3,522,000)            (19,781,000)            (4,511,000)
Provision for income taxes                              -                      -                   1,000                      -
                                            -------------          -------------          --------------          -------------
      Net loss                                $(5,730,000)           $(3,522,000)           $(19,782,000)          $ (4,511,000)
                                            =============          =============          ==============          =============

Basic and diluted net loss per share               $(0.33)                $(0.37)                 $(1.61)                $(0.47)
                                            =============          =============          ==============          =============
Weighted-average shares outstanding
      used in per share calculation            17,421,644              9,521,211              12,280,553              9,521,211
                                            =============          =============          ==============          =============

</TABLE>

        The accompanying notes are an integral part of these statements.

                                      3
<PAGE>

                               US SEARCH.COM INC.

                           STATEMENTS OF CASH FLOWS
                                  (unaudited)
<TABLE>
<CAPTION>

                                                    Nine Months Ended September 30,
                                                   ---------------------------------
                                                        1999              1998
                                                   ----------------  ---------------
<S>                                                <C>               <C>
Cash flows from operating activities:
  Net loss.......................................     $(19,782,000)     $(4,511,000)
  Adjustments to reconcile net loss to
   net cash used in operating activities:
  Depreciation and amortization..................          125,000           89,000
  Provision for doubtful accounts................          146,000          321,000
  Charge for warrants and beneficial conversion
   feature issued to majority stockholder........        4,639,000        1,190,000
  Amortization of unearned compensation..........        1,834,000               --
  Amortization of debt issue costs...............        2,546,000               --
  Related-party charges..........................               --          247,000
  Change in assets and liabilities:
   Accounts receivable...........................         (171,000)        (395,000)
   Accounts payable..............................            7,000        1,902,000
   Accrued liabilities...........................           60,000          176,000
   Prepaid and other.............................       (2,868,000)         (19,000)
                                                      ------------      -----------
Net cash used in operating activities............      (13,464,000)      (1,000,000)
                                                      ------------      -----------
Cash flows from investing activities:
  Purchase of property and equipment.............         (489,000)        (141,000)
                                                      ------------      -----------
Net cash used in investing activities............         (489,000)        (141,000)
                                                      ------------      -----------
Cash flows from financing activities:
  Increase in cash overdrafts....................               --           81,000
  Increase in restricted cash....................       (2,000,000)
  Proceeds from line of credit...................               --        1,100,000
  Repayments of line of credit...................         (372,000)        (776,000)
  Proceeds from third party notes payable........               --          502,000
  Repayments of third party notes payable........         (764,000)        (256,000)
  Advances from related parties..................          200,000          542,000
  Repayments to related parties..................       (2,782,000)         (30,000)
  Repayments of capital lease obligations........          (32,000)         (22,000)
  Proceeds of convertible notes..................        5,500,000               --
 Proceeds of warrant exercise....................        2,752,000               --
 Proceeds of initial public offering.............       36,109,000               --
                                                      ------------      -----------
Net cash provided by financing activities........       38,611,000        1,141,000
                                                      ------------      -----------
Net increase in cash and cash equivalents........       24,658,000               --
Cash at beginning of period......................           99,000               --
                                                      ------------      -----------
Cash at end of period............................     $ 24,757,000   $         --
                                                      ============   ==============
Non-cash investing and financing activities:
  Conversion of notes payable to common stock....     $  5,500,000   $         --
</TABLE>
    The accompanying notes are an integral part of these statements.
                                       4
<PAGE>

                               US SEARCH.COM INC.

                         NOTES TO FINANCIAL STATEMENTS

1. Organization and Business:

  US SEARCH.com Inc. (the "Company") provides public record information about
individuals. The Company was formed as a California S Corporation in 1994, and
converted to a C Corporation in November 1997.

  In February 1999, the Board of Directors approved the reincorporation of the
Company in the State of Delaware and a change in the par value of the Company's
common stock which was effected prior to the closing of the initial public
offering.

  In June 1999 the Company completed its initial public offering and sold
4,500,000 shares of common stock raising net proceeds from the offering of
$36,109,000.  The Company's shares are now traded on the NASDAQ national market
system under the symbol "SRCH".

2. Basis of Presentation:

  These unaudited financial statements and notes prepared in accordance with
instructions to Form 10-Q have been condensed and, therefore, do not contain
certain information included in the Company's annual financial statements and
notes thereto. The unaudited condensed financial statements and notes thereto
should be read in conjunction with the Company's annual financial statements and
notes thereto.

  The unaudited condensed financial statements reflect, in the opinion of
management, all adjustments, all of which are of a normal recurring nature,
necessary to present fairly the financial position of the Company as of
September 30, 1999, and the results of its operations and its cash flows for the
three and nine month periods ended September 30, 1999 and 1998.  Interim results
are not necessarily indicative of results to be expected for a full fiscal year.

  Stock Split

  In June 1999, the Company authorized a 906.782-for-one stock split pursuant to
a stock dividend to its current stockholders which became effective on June 22,
1999. The share information in the accompanying financial statements has been
retroactively restated to reflect the effect of the stock split.

  Restricted Cash

  In September 1999, $2,000,000 was pledged as collateral on an outstanding
letter of credit relating to a new building lease agreement.

  Net Loss Per Common Share

  Basic net loss per common share is computed using the weighted average number
of shares of common stock and diluted net loss per common share is computed
using the weighted average number of shares of common stock and common
equivalent shares outstanding. Common equivalent shares related to stock options
and warrants are excluded from the computation when their effect is
antidilutive. As of September 30, 1999 and 1998, the number of stock options and
warrants that were antidilutive amounted to 1,777,324 and 453,391, respectively.

                                       5
<PAGE>

                               US SEARCH.COM INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)


3.   Notes Payable:


                                                  September 30,  December 31,
                                                      1999           1998
                                                   (unaudited)
                                                  -------------  -------------
Note payable to Kushner-Locke, payable on
  demand bearing interest at 10% per annum......       $     --    $2,540,000
Note payable to third party, payable July
  1999, bearing interest at 12% per annum.......             --       296,000
Notes payable in equal monthly installments of
  $3,333 comprising principal and interest
  through December 2000 bearing interest at
  12.5% per annum...............................         46,000        70,000
Trade notes payable, due in monthly
  installments by $13,583 comprising principal
  and interest through November 1999 bearing
 interest at 10.0% per annum....................             --       142,000
Trade notes payable, due in blended monthly
  installments through May 2000 bearing
  interest at 10.0% per annum...................             --       186,000
Loan payable to former stockholder/executive
  officer of the Company, due in monthly
  installments through July 2001, non-interest
  bearing.......................................         46,000        68,000
Note payable in equal monthly installments
  through December 2000, bearing interest at
  12.25% per annum..............................         23,000        35,000
Loan payable to executive officer of the
  Company, payable in monthly installments of
  $1,100, non-interest bearing..................             --        42,000

Other trade notes payable, payable through
  2000 bearing interest at 10% per annum........         83,000       165,000
                                                       --------    ----------
    Total notes payable.........................       $198,000    $3,544,000
                                                       ========    ==========
Related-party notes payable:
  Current.......................................       $     --    $2,553,000
  Non-current...................................             --        29,000
Other notes payable:
  Current.......................................        148,000       693,000
  Non-current...................................         50,000       269,000
                                                       --------    ----------
    Total notes payable.........................       $198,000    $3,544,000
                                                       ========    ==========

                                       6
<PAGE>

                               US SEARCH.COM INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)
                                  (unaudited)


  Related-Party Convertible Subordinated Note:

  In January 1999, Kushner-Locke agreed to provide a credit facility up to
$5,500,000 of bridge financing to the Company in the form of a convertible
subordinated note ("Note"). The Note bore interest at 10% per annum and matured
on the earlier of December 31, 1999 or on the date the Company completes a
private placement or initial public offering raising gross proceeds of at least
$10,000,000. The Note included a 10% origination fee totaling $550,000 payable
to Kushner-Locke for providing the credit facility. The origination fee was
amortized on a straight line basis over the anticipated term of the Note. Notes
payable on demand to Kushner-Locke of $1,200,000 outstanding as of December 31,
1998 were converted to the Note in January 1999. The Note had a beneficial
conversion feature ("BCF") since it was convertible at a discount to the deemed
fair value of the common stock. Since conversion was at the option of the holder
at any time prior to maturity, the value assigned to the BCF is immediately
recorded as interest expense at the date of each borrowing. The BCF is
calculated using the intrinsic value methodology based on the difference between
the deemed fair value of the underlying common stock and the conversion price on
the Note of $2.21. The value assigned to the BCF is limited to the amount of
each borrowing. For the three and nine-month periods ended September 30, 1999,
the Company has recorded $0 and $4,639,000, respectively, as additional interest
expense.

  In June 1999, the total amount borrowed by the Company of $5,500,000 under
this convertible subordinated note was converted into 2,493,651 shares of common
stock.

  In connection with the Note, the Company granted Kushner-Locke warrants to
purchase (1) 453,391 shares of common stock at an exercise price of $2.76 per
share and (2) 453,391 shares of common stock at an exercise price of $3.31 per
share. The deemed fair value of the warrants of $2,546,000 was recorded as
additional debt issue costs and was fully amortized over six month period ending
June 30, 1999. For the three and nine month periods ended September 30, 1999,
total amortization of this debt issue cost were $0 and $2,546,000, respectively.
In June 1999, these warrants and the warrants issued in September 1998 to
Kushner-Locke were exercised for 1,360,173 shares of common stock.



4. Commitments And Contingencies:

  Strategic Alliance Commitments

  The Company has several cancelable and non-cancelable distribution and
marketing agreements with various Internet companies. Terms of these agreements
provide for varying levels of exclusivity and minimum and maximum fees payable
based on the number of banners, buttons and text links displayed on affiliate
web sites.  The Company also has committed to purchase television advertising
from various media companies.  At September 30, 1999, the minimum non-cancelable
payments under these agreements are approximately $5,860,000 for the remainder
of 1999, $9,661,000 for 2000, $3,920,000 for 2001 and $1,000,000 for 2002.

Purchase Commitments:

  In July 1999, the Company entered into an agreement with a supplier of online
public record data pursuant to which the Company has committed to purchase
approximately $20 million worth of such data and public record information over
a five and one-half year term. The minimum non-cancelable payments under this
agreement are $600,000 for the remainder of 1999, $2,700,000 for 2000,
$3,600,000 for 2001 and $4,200,000 for 2002-2004.

                                       7
<PAGE>

Lease Agreement

  In September 1999, the Company entered into a five-year lease for a new
52,500 square foot facility located in the Marina Del Rey area of Los Angeles,
California. Under the terms of the lease agreement, the Company is committed
to make total rental payments of $5.3 million over the term of the lease.
Relocation is expected to take place in December 1999.
                                       8
<PAGE>

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

Forward Looking Statements

THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT HAVE BEEN MADE PURSUANT TO
THE PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH
FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ESTIMATES AND
PROJECTIONS ABOUT US SEARCH'S BUSINESS, MANAGEMENT'S BELIEFS AND ASSUMPTIONS
MADE BY MANAGEMENT. WORDS SUCH AS "ANTICIPATES," "EXPECTS," "INTENDS," "PLANS,"
"BELIEVES," "SEEKS," "ESTIMATES," "LIKELY," VARIATIONS OF SUCH WORDS AND SIMILAR
EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO CERTAIN
RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT; THEREFORE,
ACTUAL RESULTS AND OUTCOMES MAY DIFFER MATERIALLY FROM WHAT IS EXPRESSED OR
FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS. SUCH RISKS AND UNCERTAINTIES
INCLUDE THOSE SET FORTH HEREIN BELOW UNDER "FACTORS AFFECTING OUR BUSINESS,
OPERATING RESULTS AND FINANCIAL CONDITION" AS WELL AS THOSE NOTED IN US SEARCH'S
AMENDED REGISTRATION STATEMENT ON FORM S-1 (FILE No. 333-76099). US SEARCH
UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS,
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

Overview

  US SEARCH provides clients with quick, easy and inexpensive access to a broad
range of public record information about individuals. We offer our services
through our Web site and our toll free telephone number.

  We generate revenues by performing public record search services for clients.
Our services include individual locator, individual public record report,
nationwide civil court record search and other related public record search
services. Individual locator services provide clients with the address and phone
number for individuals, as well as date of birth, date of death, and the city,
state and zip code where the death benefits were issued. Our Internet-based
"Instant Searches" provide a subset of this information in a completely
automated fashion and at a lower price. Individual public record report services
provide clients with the first and last name, alias, current and previous
address, phone number, vehicle ownership, bankruptcy, property ownership,
nationwide civil court record and corporate affiliation information about an
individual into a single report. The typical time required to complete a search
is one to three days, with "Instant Searches" requiring as little as a few
seconds or minutes. We publish the prices for our services directly on our Web
site and typically determine a client's manner of payment prior to beginning the
search process. Prices for our non-instant searches have ranged from
approximately $20 to $140 per search. Prices for "Instant Searches" have ranged
from approximately $5 to $20 per search. The prices for our services vary based
on the nature and amount of information and whether or not the search is
assisted by a search specialist.

  Revenue for our services is recognized when the search results are delivered
to the client. The terms of sale do not provide for refunds after search
services have been delivered, however, in instances where the clients indicate
that the initial search result was unsuccessful, we may perform, at no charge to
the client, up to three identical searches during the one year period following
the first search. In addition, where clients desire additional information they
can request to broaden the scope of their "Instant Searches" and we apply up to
100% of the cost of the client's "Instant Searches" towards the cost of the more
comprehensive search. For the nine month period ended September 30, 1999,
revenues generated from individual locator and "Instant Searches" accounted for
more than 85% of revenues. We expect the revenue contribution of each of our
services to change over time, with the introduction of new services, including
pre-employment background screening.

                                       9
<PAGE>

  Our cost of services consists primarily of payroll expenses, including
commissions paid to sales employees, data acquisition costs, and local and long
distance telephone charges associated with providing our services. In addition,
we include an allocable portion of facilities, network and technology
infrastructure. Our cost of services is likely to increase substantially as we
expand infrastructure to support an increase in marketing and sales personnel to
address existing and anticipated demand for our services, and in addition, as we
obtain access to new data and information sources.  We have an agreement with a
supplier of online public record data to purchase approximately $20 million
worth of such data and public record information over a five and one-half year
term. The minimum non-cancelable payments under this agreement are $600,000 for
the remainder of 1999, $2.7 million for 2000, $3.6 million for 2001 and $4.2
million for 2002-2004.

  Our operating expenses consist primarily of advertising, marketing, general
and administrative expenses. We expect our operating expenses to continue to
increase as we attempt to expand our sales and marketing force and hire
additional administrative, sales, advertising, financial and accounting
personnel. We have signed a lease for new facilities and will be relocating to
address our expanding operational and personnel needs. We may incur higher costs
and possible disruption to our business as we hire and train new personnel to
replace those lost in the relocation of our facility.

  Advertising and marketing expenses constitute the largest portion of our
operating expenses. Prior to the introduction of our Internet-based services,
advertising consisted primarily of television advertising. With the growth of
our Internet-based services, an increasing portion of our advertising expenses
consists of Internet-based advertising such as arrangements with Internet search
engines and popular Web sites. Production costs associated with such advertising
are expensed in the period first aired or displayed to the public. Costs
relating to actual airing or display of such advertising are expensed in the
quarter the advertising appears. We expect our advertising and marketing
expenses to continue increase as we offer new services attempt to expand our US
SEARCH brand and build a corporate sales force.

  We have non-cancelable advertising and marketing agreements with several
Internet companies. These agreements provide for varying levels of exclusivity
and require us to make monthly minimum payments based on the number of
impressions displayed on affiliate Web sites. The Company also has committed to
purchase television advertising from various media companies.  As of September
30, 1999, the minimum non-cancelable payments required under these agreements
are approximately $5.9 million for the remainder of 1999, $9.6 million in 2000,
$3.9 million in 2001, and $1.0 million in 2002.

  Our general and administrative expenses consist primarily of compensation and
related costs for administrative personnel, fees for outside professional
advisors and an allocation of our occupancy costs and other overhead costs.
Under an administrative services agreement that terminated on June 30, 1999,
Kushner-Locke provided human resources services, accounting services and
management services, as well as the services of Peter Locke and Donald Kushner.
In connection with this agreement, we paid Kushner-Locke a monthly fee of
$35,000. We have hired additional human resources, finance and accounting
personnel to replace the services provided by Kushner-Locke under this
agreement. We expect that costs relating to these replacement personnel will be
comparable to the fee charged by Kushner-Locke under this agreement. We expect
the trend of increased general and administrative costs to continue as we hire
additional sales, marketing and executive personnel to promote new services to
corporate and professional clients.

   We incurred significant net losses of approximately $1.4 million in 1996,
$399,000 in 1997 and $6.8 million in 1998. For the nine months ended September
30, 1999 we incurred a net loss of $19.8 million. At September 30, 1999, we had
an accumulated deficit of approximately $26.6 million. We expect to incur
significant additional losses and continued negative cash flow from operations
for the foreseeable future.

  We recorded a non-cash interest charge of approximately $4.6 million in the
first half of 1999 relating to the beneficial conversion feature of the
convertible subordinated note issued to Kushner-Locke in January 1999. This
charge is calculated using the deemed fair value of common stock on the date
each advance is made to us subtracting the conversion price and multiplying the
resulting amount by the number of shares into which the advance is convertible.
The value assigned to the beneficial conversion feature is no greater than the
amount of each advance made under the convertible subordinated note.

                                       10
<PAGE>

  We also recorded in the first half of 1999 $3.1 million (including a non-cash
charge of $2.5 million) relating to warrants issued to Kushner-Locke in January
1999. This charge represents the deemed fair value of the warrants, which is the
per share value derived by applying the Black-Scholes option pricing model to
our underlying shares of common stock and multiplying that value by the number
of shares of common stock issuable upon exercise of the warrants. This charge
was amortized over the six months the convertible subordinated note was
outstanding.

  During the first three quarters of 1999, we granted certain stock options to
employees and non-employee directors and will continue to grant options under
the 1998 Stock Incentive Plan and the 1999 Non-Employee Directors' Stock Option
Plan. We recorded an unearned deferred compensation expense of approximately
$3.2 million, representing the difference between the deemed fair value of our
common stock for accounting purposes and the exercise price of such options at
the date of grant. This amount is being amortized as follows: approximately $2.1
million in 1999; $735,000 in 2000; $315,000 in 2001; $75,000 in 2002; and $1,000
thereafter.

Results of Operations

Comparison of the Three Months Ended September 30, 1999 to the Three Months
Ended September 30, 1998

  Net Revenues. Our net revenues increased to approximately $6.2 million for the
three months ended September 30, 1999, or 128%, from approximately $2.7 million
for the three months ended September 30, 1998. The increase is primarily
attributable to an increase in the number of Internet-based transactions which
occurred as a result of increased web site visitor traffic and the introduction
of lower-priced "Individual Public Record Reports." The growth in Web site
traffic was driven by increased advertising on a greater number of Internet
search engines and popular Web sites.

  Gross Profit. Gross profit increased to approximately $3.5 million for the
three months ended September 30, 1999, or 119%, from approximately $1.6 million
for the three months ended September 30, 1998. Gross profit as a percentage of
net revenues were approximately 57% and 59% for the three month periods ended
September 30, 1999, and September 30, 1998, respectively. Cost of services
increased to approximately $2.7 million for the three months ended September 30,
1999, or 141%, from approximately $1.1 million for the three months ended
September 30, 1998. As a percentage of net revenues, cost of services was
approximately 43% and 41% for the three month periods ended September 30, 1999
and September 30, 1998, respectively. Data acquisition and fulfillment costs as
a percentage of revenues increased due to the introduction of certain lower-
priced public record report products. Telephone costs decreased as a percentage
of net revenues primarily due to lower volume of 900-number telephone billings.
Labor costs decreased as a percentage of net revenues primarily due to the
growth in internet-based transactions which do not require the involvement of a
sales representative.

  Advertising and Marketing Expenses. Advertising and marketing expenses
increased to approximately $7.1 million for the three months ended September 30,
1999, from approximately $2.4 million for the three months ended September 30,
1998. As a percentage of net revenues, advertising and marketing expenses
increased to approximately 115% for the three months ended September 30, 1999,
from approximately 90% for the three months ended September 30, 1998. This
increase is primarily attributable to an increase in the level of Internet-based
advertising.

  General and Administrative Expenses. General and administrative expenses
increased to approximately $2.2 million for the three months ended September 30,
1999, from approximately $1.4 million for the three months ended September 30,
1998. As a percentage of net revenues, general and administrative expenses
increased to approximately 35% for the three months ended September 30, 1999,
from approximately 53% for the three months ended September 30, 1998. This
increase in general and administrative expenses in absolute dollars is primarily
attributable to the cost associated with the hiring of additional management and
administrative personnel in 1999.

   Charge relating to issuance of warrants to majority stockholder. These
charges were $0 in 1999 and $1.2 in 1998.  In September 1998, in consideration
of Kushner-Locke's advances to us, provision of administrative services to us
and guarantees made by Kushner-Locke on our behalf, we issued Kushner-Locke
warrants to purchase 453,391 shares of our common stock at an aggregate exercise
price of $5.00. Accordingly, we recorded a charge of approximately $1.2 million
in 1998, representing the fair market value of the warrants at the date of
grant.

                                       11
<PAGE>

  Charge for compensation related to stock options. During the three month
period ended September 30, 1999, approximately $305,000 of compensation expense
was recorded in connection with options granted in 1999.  We expect to incur a
charge of approximately $265,000 for the remainder of 1999, $735,000 for 2000,
$315,000 for 2001, $75,000 for 2002 and $1,000 for 2003 in connection with these
options.

  Interest Income (Expense).  Interest income, net of interest expense increased
to $370,000 for the three months ended September 30, 1999 compared to interest
expense of  $62,000 for the three months ended September 30, 1998. For the three
months ended September 30, 1999, interest income was earned on the cash proceeds
from the sale of stock in the initial public offering, while no such cash
balances were available for investing during the three months ending September
30, 1998.


Comparison of the Nine months ended September 30, 1999 to the Nine months ended
September 30, 1998

  Net Revenues. Our net revenues increased to approximately $13.4 million, or
94%, for the nine months ended September 30, 1999 from approximately $6.9
million for the nine months ended September 30, 1998. The increase is primarily
attributable to an increase in the number of Internet-based transactions, which
occurred as a result of the introduction of lower-priced "Instant Searches" and
"Individual Public Record Reports" driven by increased Internet-based
advertising on a greater number of Internet search engines and popular Web
sites.

  Gross Profit. Gross profit increased to approximately $8.0 million for the
nine months ended September 30, 1999 from approximately $4.2 million for the
nine months ended September 30, 1998. Gross profit as a percentage of net
revenues decreased to approximately 60% for the nine months ended September 30,
1999, from approximately 61% in the nine months ended September 30, 1998. Cost
of services increased to approximately $5.4 million for the nine months ended
September 30, 1999 from approximately $2.7 million for the nine months ended
September 30, 1998. As a percentage of net revenues, cost of services increased
to 40% for the nine months ended September 30, 1999 from 39% for the nine months
ended September 30, 1998. The increase is primarily attributable to increasing
data acquisition costs.  These costs grew as a percentage of revenue due to the
introduction of lower-priced public record report products.  The increase in
data acquisition costs was partially offset by lower telephone costs primarily
due to a lower volume of 900-number telephone billings.

  Advertising and Marketing Expenses. Our advertising and marketing expenses
increased to approximately $13.5 million for the nine months ended September 30,
1999 from $5.0 million for the nine months ended September 30, 1998. As a
percentage of net revenues, advertising and marketing expenses increased to
approximately 101% for the nine months ended September 30, 1999, from
approximately 71% for the nine months ended September 30, 1998.  This increase
is primarily attributable to the expansion of Internet-based advertising and
increased television promotional fee advertisements.

  General and Administrative Expenses. Our general and administrative expenses
increased to approximately $4.8 million for nine months ended September 30, 1999
from approximately $2.5 million for the nine months ended September 30, 1998. As
a percentage of net revenues, general and administrative expenses were
approximately 35% for both the nine months ended September 30, 1999 and the nine
months ended September 30, 1998. This increase in absolute dollars is primarily
attributable to the 1999 hiring of new management and administrative personnel,
and to increased research and development costs, professional fees, and
administrative services charges paid to Kushner-Locke.

   Charge relating to issuance of warrants to majority stockholder.  These
charges were $0 in 1999 and $1.2 in 1998.  In September 1998, in consideration
of Kushner-Locke's advances to us, provision of administrative services to us
and guarantees made by Kushner-Locke on our behalf, we issued Kushner-Locke
warrants to purchase 453,391 shares of our common stock at an aggregate exercise
price of $5.00. Accordingly, we recorded a charge of approximately $1.2 million
in 1998, representing the fair market value of the warrants at the date of
grant.

                                       12
<PAGE>

  Charge for Compensation related to stock options. During the nine month period
ended September 30, 1999, approximately $1.8 million of compensation expense was
recorded in connection with stock options granted in 1999.  No options were
granted in the corresponding nine month period ended September 30, 1998. We
expect to incur a charge of approximately $265,000 for the remainder of 1999,
$735,000 for 2000, $315,000 for 2001, $75,000 for 2002 and $1,000 for 2003 in
connection with these options.

  Interest Expense. Our interest expense (net of interest income) increased to
$4.6 million for the nine months ended September 30, 1999, from $132,000 for the
nine months ended September 30, 1998. Included in interest expense for the nine
months ended in September 30, 1999 is approximately $4.6 million relating to the
beneficial conversion feature on the convertible subordinated note issued to
Kushner-Locke. In addition, the interest expense for the nine months ended
September 30, 1999 also includes interest on outstanding short term and long
term debt, and other inter-company advances from Kushner-Locke.

  Amortization of debt issue costs. In connection with the convertible
subordinated note issued to Kushner-Locke, we granted to Kushner-Locke warrants
to purchase 906,782 shares of our common stock. Relating to these warrants we
have recorded a non-cash charge of $2.5 million that has been amortized over the
six month period that the convertible subordinated note was outstanding.  Also,
the convertible subordinated note includes an origination fee in the amount of
$550,000 payable to Kushner-Locke which was fully amortized in the period.

  We expect that interest expense and debt issue costs for the remainder of 1999
will be substantially lower than the quarter and nine months ended September 30,
1999, due to elimination of amounts relating to warrants, origination fee and
the beneficial conversion feature on the convertible subordinated note.

  Income Taxes. As of December 31, 1998 we had approximately $3.5 million of
federal and $3.5 million of state net operating loss carryforwards to offset
future taxable income. Our net operating loss carryforwards expire beginning in
2017 for federal and 2002 for state. Our ability to utilize net operating loss
carryforwards may be limited in the event that a change in ownership, as defined
in the Internal Revenue Code, occurs in the future. We have recorded a full
valuation allowance against our deferred tax assets as we believe that it is
more likely than not that the deferred tax assets will not be realized based
upon our expected future results of operations.

Liquidity And Capital Resources

  As of September 30, 1999, cash and cash equivalents have increased to $24.8
million (excluding $2.0 million of restricted cash pledged as collateral in
connection with our new building lease) from $99,000 at December 31, 1998
primarily as a result of the proceeds of the initial public offering.

  Cash used in operations increased to $13.5 million for the nine month period
ended September 30, 1999 as compared to $1.0 million for the nine month period
ended September 30, 1998. This increase is primarily attributable to increased
expenditures on Internet-based advertising and increased general and
administrative expenses relating to the hiring of executive personnel and the
development of information technology infrastructure.

  Cash used in investing activities increased to $489,000 for the nine month
period ended September 30, 1999 as compared to $141,000 for the nine months
ended September 30, 1998. This increase is primarily attributable to increased
purchases of computer hardware and software and other fixtures & equipment.

  Cash provided by financing activities increased to approximately $38.6 million
for the nine month period ended September 30, 1999 as compared to $1.1 million
for the nine months ended September 30, 1998. We received approximately $36.1
million as the net proceeds of our initial public offering in 1999, $5.5 million
under convertible notes issued to Kushner-Locke, and $2.7 million in connection
with the exercise of warrants issued to Kushner-Locke.  Partially offsetting
these amounts was the repayment to Kushner-Locke of $2.7 million of advances
from Kushner-Locke, plus interest, repayment of approximately $1.1 million
related to our line of credit and other notes payable and the pledging of
restricted cash of $2.0 million as collateral for our new building lease.

                                       13
<PAGE>

  We require substantial working capital to fund our operations and expect to
use significant amounts of cash to fund our operating losses and capital
expenditures.

  Since inception we have experienced negative cash flow from operations and
expect to continue to experience significant negative cash flow from operations
in the foreseeable future. We currently believe that our existing capital
resources will be sufficient to meet our presently anticipated cash requirements
through at least the next 12 months. After the next 12 months, we may be
required to obtain additional funds through equity or debt financing. No
assurance is given that we will not be required to raise additional financing
prior to that time. Furthermore, there is no assurance that additional financing
will be available when needed or that, if available, the financing will be on
favorable terms. If the financing is not available when required or is not
available on acceptable terms, we may be unable to develop or enhance our
services, take advantage of business opportunities or respond to competitive
pressures, any of which could have a material adverse effect on our business,
financial condition and results of operations.

Year 2000 Issue

  We depend on the delivery of information over the Internet, a medium which is
susceptible to the Year 2000 Issue. The "Year 2000 Issue" is typically the
result of limitations of software written using two digits rather than four to
define the applicable year. If software with date-sensitive functions are not
Year 2000 compliant, they may recognize a date using "00" as the year 1900
rather than the year 2000.

Risks

  The Year 2000 Issue could result in a system failure or miscalculations
causing significant disruption of our operations, including, among other things,
interruptions in Internet traffic, accessibility of our Web site, delivery of
our service, transaction processing or searching, telephone call center
operations and other features of our services. It is possible that this
disruption will continue for an extended period of time. We depend on
information contained primarily in electronic format in databases and computer
systems maintained by third parties, including governmental agencies. The
disruption of third-party systems or our systems interacting with these third-
party systems could prevent us from receiving orders or delivering search
results in a timely manner. In addition, we rely on the integration of many
systems in aggregating search data from multiple sources. The failure of any of
those systems as a result of Year 2000 compliance issues could prevent us from
delivering our products and services.  Failure of our systems or third-party
systems providing information used in our services could materially adversely
affect our business, financial condition and results of operations. We have
received information from present data suppliers that they are substantially in
compliance with the Year 2000 Issue. We have also confirmed Year 2000 compliance
with key third party vendors.

Readiness for Year 2000

  We have conducted an evaluation of our internal systems. Our objective is to
ensure uninterrupted transition into the Year 2000. The scope of the Year 2000
objective includes: (1) information technology ("IT") such as software and
hardware, (2) non-IT systems such as components contained in various safety
systems, facilities and utilities, and (3) readiness of key third parties,
including suppliers and customers. We have obtained written confirmation of the
Year 2000 status of our third party software. We have identified several minor
modifications that are necessary to assure Year 2000 compliance of internally
developed software. Such modifications are in process and are expected to be
complete by November 30, 1999.  If we are unable to make the required
modifications or conversions in a timely and cost-effective manner or if there
is a malfunction in our systems, potential systems interruptions or delays in
services may have a material adverse effect on our business, financial condition
and results of operations. Further, if we fail to successfully resolve these
issues, some or all of our operations may shut-down, which would have a material
adverse effect on our business, financial condition and results of operations.

                                       14
<PAGE>

Third Party Readiness

  We have a process in place to assess the Year 2000 readiness of our business
critical vendors and customers, and are involved in working with these vendors
and customers on Year 2000 compliance issues. Disruptions with respect to
computer systems of vendors or customers, whose systems are outside our control,
could impair our ability to provide support to our customers, and could have a
material adverse effect on our business, financial condition and results of
operations.

Costs

  We estimate that the total cost of implementing and maintaining our Year 2000
compliance program will not exceed $150,000 and most of these expenses will be
incurred during 1999. This estimate includes implementation of redundant
hardware, software and communications systems. Our costs incurred to date with
respect to Year 2000 compliance have not been significant.

Contingency Plans

  We are currently developing contingency plans to be implemented as part of our
efforts to identify and correct Year 2000 problems with our internal and
Internet-based systems. We substantially completed our plan and we are
addressing various problems, including disruptions to our Web-servers and
telephone service to our call center, significant interruption of data flow
between us and third party data providers, and failures associated with internal
systems. The contingency plans emphasize the identification and accessibility of
additional data sources for our services.

  We have incorporated the utilization of (1) additional data sources, (2)
manual procedures for order processing and delivery of search results (3)
standby equipment and accelerated availability of replacement parts, and (4)
increased staffing levels for resolution of information technology issues and to
manually process orders. Failure to implement any of these plans, if and when
necessary, may have a material adverse effect on our business, financial
condition and results of operations.

FACTORS AFFECTING OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION

The following is a discussion of certain risks, uncertainties and other factors
that currently impact or may impact US SEARCH's business, operating results
and/or financial condition. Anyone making an investment decision with respect to
US SEARCH's Common Stock or other securities of US SEARCH is cautioned to
carefully consider these factors, along with the "Risk Factors" discussed in US
SEARCH's Amended Registration Statement on Form S-1 (File No. 333-76099).

We have incurred significant net losses and we may never achieve profitability

  We incurred significant net losses of approximately $1.4 million in 1996,
$399,000 in 1997 and $6.8 million in 1998. For the nine months ended September
30, 1999, we incurred a net loss of $19.8 million. As of September 30, 1999, we
had an accumulated deficit of approximately $26.6 million. We expect to incur
significant additional losses and continued negative cash flow from operations
for the foreseeable future. We may never achieve profitability.

Our revenues and operating results may fluctuate significantly

  Our quarterly revenues and operating results have fluctuated in the past, and
may significantly fluctuate in the future due to a variety of factors, many of
which are outside of our control. These factors include:

 . service interruption, delays and costs relating to expansion of our networking
  infrastructure and facilities, for example, we have experienced system
  interruptions in the past as well as slower response times during periods of
  high calling volume;
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<PAGE>

 . fluctuations in the cost of television, radio, print and Internet-based
  advertising, for example, television advertising prices are generally higher
  during the last quarter of calendar year due to the seasonal trends in
  programming and consumer viewing patterns;

 . the inability to maintain or develop relationships with, or continue
  advertising on, various key Internet companies and popular Web sites, for
  example, due to capital constraints, we decreased our advertising on popular
  Web sites during the quarter ended December 1998;

 . delays and costs associated with unsuccessful service introductions:

 . increased turnover of our personnel due to a relocation of our facilities or
  for other reasons;

 . loss of one or more of our database providers; and

 . anticipating and responding to the introduction of new or enhanced services by
  our competitors, or more generally to increase demand for our services, for
  example, we reduced the price of our Internet-based services in December 1998
  to further increase demand for these services.

Our business and financial performance may suffer if we are unsuccessful in
expanding our service offerings

  Our strategy includes expanding the market awareness of our existing services.
We intend to offer a greater number of new searches available through our Web
site and to develop and promote service offerings to address the needs of
corporate and professional clients. We have very limited experience in providing
services to corporate and professional clients. Attracting these clients will
require us to hire new sales and marketing personnel and spend money to develop
and promote these new services. We may fail in our efforts to provide these new
services in a timely and cost-effective manner. If individual or corporate
clients are unwilling to pay for the aggregation of public record information,
or if the market for our services fails to develop or develops more slowly than
anticipated, our business and prospects will be materially adversely affected.
Implementing these measures will substantially increase our operating expenses
and will place considerable strain on our existing management and operational
resources. We will incur a substantial portion of these expenses before we
achieve any meaningful revenues or market acceptance of new services. Our new
services may not achieve a sustainable level of market acceptance or ever become
profitable. If a new service is unsuccessful, our reputation and brand position
may be damaged and this may make it more difficult to sell our existing
services. A significant amount of our future growth depends on our ability to
offer these new services.

We depend on a limited number of service offerings for a significant portion of
our revenues

  We have historically derived a substantial portion of our revenues from a
small number of service offerings, particularly our individual locator and
"Instant Searches" services. In the nine months ended September 30, 1999, our
individual locator and "Instant Searches" services accounted for over 85% of our
revenue. If we are unable to continue to offer these services or if our costs of
providing these services increase such that we can no longer offer these
services at competitive prices, our business and results of operations may be
materially adversely affected.

We have substantial fixed costs which may not be offset by our revenues

   A substantial portion of our operating expenses are fixed in any given
quarter, such as costs relating to management personnel, administrative support
and advertising on television programming, Internet search engines and popular
Web sites. Our advertising is typically conducted under non-cancelable fixed
term contracts. We also have minimum payment obligations under the agreement
with our key database and information supplier. As a result, a substantial
portion of our expenses in any given period is fixed and based in part on our
expectations of future revenues and advertising and sales productivity. We may
be unable to adjust our spending in a timely manner to compensate for any
unexpected revenue shortfall. If we are unable to generate sufficient revenues
to offset our advertising costs or the minimum payment obligations under the
agreement with our key database and information supplier, or if we are unable to
lower our advertising costs to respond to lower than expected revenues, our
results of operations will suffer and the market price of our common stock could
fall.
                                       16
<PAGE>

Our limited experience offering services on the Internet could make it difficult
for us to expand this business

  Our success and future growth depends on our ability to expand the nature and
number of our services offered on the Internet. Historically, we offered our
services primarily through our toll free telephone number, 1-800 U.S. SEARCH.
Since December 1998, we began offering our Internet-based "Instant Searches."
Additionally, we intend to increase the number and range of "Instant Searches"
available on our Web site. Our limited experience may make it difficult for us
to continually increase Internet traffic and transactions on our Web site. In
particular, it may be difficult for us to adequately predict consumer response
to our Internet advertising, causing us to spend more on Internet advertising
than planned. Our Internet advertising may also be ineffective in strengthening
our brand, increasing awareness of our services, or generating additional
traffic or sales. The loss of one or more marketing relationships with Internet
companies could adversely impact our ability to generate additional traffic or
sales. If we fail to generate additional traffic, or if we fail to increase
demand for our Internet-based services as a result of any additional traffic,
our business, financial condition and results of operations could be materially
adversely affected.

We depend on our marketing agreements with Internet companies

  An important element of our current business strategy is to maintain
relationships with an increasing number of Internet search engines and popular
Web sites for advertising and to direct and attract traffic to our Web site.
Advertising on the Internet is expensive, new and evolving. The effectiveness of
Internet-based advertising is not clear. Under our marketing and advertising
agreements, we are typically required to make payments in advance of running ads
on a Web site. Internet companies display our text, banner or logo, often
referred to as "impressions," on their Web sites. These impressions may not lead
to sales of our services, and our payment is required whether or not the
advertising was effective. We may not be able to maintain our existing marketing
relationships with other Internet companies. We may also be unable to enter into
new marketing relationships with Internet companies, which generate adequate
returns to offset related costs. Internet-based advertising expenses comprised
over 46% of our total operating expenses for the nine month period ended
September 30, 1999. We currently anticipate that these expenses will continue to
constitute a significant portion of our total operating expenses in future
periods. Due to our limited operating experience, we are unable to accurately
forecast the revenues these agreements will generate. Any termination of
existing agreements or failure to enter into new agreements with Internet
companies on terms favorable to us, could have a material adverse effect on our
business, financial condition and results of operations.

Our access to key Internet advertising depends on marketing agreements between
other Internet companies that are beyond our control

  Advertising arrangements with one Internet company may provide us access to
another company's Web site. For example, our arrangement with Infospace provides
us with advertising within the white page directories of the AOL and Netcenter
Web sites, independent of any agreements with AOL or Netcenter. Our advertising
on these Web sites depends on the continued relationship Infospace has with
companies such as AOL and Netcenter. If this relationship is terminated for any
reason and if we are either unable to enter into an agreement with these
companies or unable to enter into an agreement with another company that has an
agreement providing access to AOL and/or Netcenter, our advertising will no
longer appear on their Web sites. This could significantly reduce our
advertising reach and, consequently, lower the number of potential clients
visiting our Web site which could in turn materially adversely affect our
business, financial condition and results of operations.

Service interruptions may have a negative impact on our revenues and may damage
our reputation and decrease our ability to attract clients

  We depend on the satisfactory performance, reliability and availability of our
Web site and telecommunications infrastructure to attract clients and generate
sales. Our revenues, reputation and brand would be harmed and the value of our
services to clients would be reduced if we experience technical difficulties
that result in slower response times, disruptions or unavailability of the
services. We have experienced unanticipated system interruptions in the past and
we believe that these interruptions may occur again in the future. For example,
we have experienced system disruptions and slower response times as we change or
upgrade the software and hardware running on our network. In addition, telephone

                                       17
<PAGE>

systems and networks are subject to unanticipated downtimes due to national
disasters, power outages and similar events. Our servers may be vulnerable to
computer viruses, physical or electronic break-ins and similar disruptions,
which could lead to interruptions, delays, loss of data or the inability to
accept and fulfill client orders. The occurrence of any of these events may have
a material adverse effect on our business, financial condition and results of
operations.

If we are unable to expand and improve our infrastructure, facilities, and
operational capacity, we will be unable to grow and our business and our
financial condition will suffer

  The recent growth of our business has placed significant strain on our
communication and networking infrastructure and existing facility. From time to
time, demand for our services following television or Internet-based advertising
has exceeded our infrastructure and operational capacity. Clients may experience
delays during times when demand for our services exceeds our operational
capacity. These instances are independent of any service interruptions related
to disruption of our Web site or other systems. For example, we have in the past
experienced longer response times to client telephone calls during periods of
high calling volume because we lacked adequate capacity through our telephone
systems and operations and support personnel to handle the increased number of
calls. Similarly, we have experienced slower Web site response times during
periods of high traffic because our Internet servers lacked adequate capacity.
If these events occur again, we may lose clients and our reputation may be
damaged. This growth has also increased the demands on our management team and
technical, sales and operational resources. We anticipate that continued growth
will require us to implement and improve our operational, financial and
management information systems. In addition, we will need to invest in new and
expanded computer, telecommunication and information systems that better address
our existing capacity constraints. We have executed a lease agreement and will
be relocating to a larger facility that will better address our operational and
personnel needs. As we offer new services and pursue corporate and professional
markets, we will also need to increase our executive and sales and support
personnel. Our business and results of operations will be adversely affected if
we are unable to expand and continually improve our infrastructure.

We face competition from many sources

  The market in which we operate is highly competitive and highly fragmented.
Currently, our competition falls into four categories:

 .  free individual locator and information services, including services offered
   by Internet search engines, telephone companies and other third parties who
   publish free printed or electronic directories;

 .  fee-based Internet search services offering comparable services, such as
   KnowX.com, which, during the quarter ending September 30, 1999 was acquired
   by DBT Online, our primary data supplier; firms offering more comprehensive
   public record information, such as LEXIS- NEXIS, a division of Reed Elsevier
   Inc., The Dun & Bradstreet Corporation, Reuters Limited, Avert, Inc. and
   ChoicePoint, Inc.; and

 .  local, regional and national private investigation firms, such as Kroll-
   O'Gara Company, Pinkerton, the Proudfoot Reports Division of ASI Solutions,
   Inc., and a significant number of companies operating on either a national
   scale or a local or regional basis.

Some of these competitors do not currently offer public record search sales over
the Internet, but they may do so in the future. There are no significant
barriers that would prevent new companies from entering the market in which we
operate. In addition, some of our current suppliers and companies with which we
have advertising agreements may compete with us in the future, which may make it
more difficult to advertise our services effectively on their Web sites.

We may be unable to respond to the competitive efforts of other companies

  Many of our competitors have greater financial and marketing resources than we
do and may have significant competitive advantages through other lines of
business, their existing client base and other business relationships. These
competitors and other potential competitors may undertake more extensive
marketing campaigns, adopt more aggressive pricing policies and devote more
resources to developing public record search services for individual or
corporate clients

                                       18
<PAGE>

than we are willing or able to accomplish. Our competitors or potential
competitors may develop services that are superior be able to successfully
compete against our current or future competitors with respect to any of these
factors. As a response to changes in the competitive environment, we may make
pricing, service or marketing decisions such as reducing our prices or
increasing our advertising, all of which may affect our operating results. If we
are unsuccessful in responding to our competitors, our business, financial
condition and results of operations will be materially adversely affected.

We are dependent on a limited number of third party database and other
information suppliers for information used in our services

  We obtain data used in our services from a limited number of third party
suppliers.  Some of these suppliers offer services that may compete with ours.
Our primary data supplier, DBT Online, recently acquired Know-X.com, which
provides fee-based internet search services comparable to some of our service
offerings.  If our current suppliers raise their prices, or if, due to
limitations or restrictions placed on a supplier by government regulations or
its own contractual arrangements, or for other reasons, the information they
provide becomes unavailable or unreliable, we may need to find alternative
sources of information. The time it takes to identify and contract with suitable
alternative data suppliers, as well as integrate these data sources into our
service offerings, could cause service disruptions, increased costs and reduced
quality of our services. Additionally, costs of obtaining data that may be
necessary in our new service offerings, such as criminal record searches, could
be significantly higher, on a per transaction basis, than our current
information costs. Termination of existing agreements, or, failure after
termination, to enter into new agreements with third party suppliers on terms
favorable to us, could have a material adverse effect on our business, financial
condition and results of operations. Additionally, failure to obtain the data
and information necessary for our intended service offerings at commercially
reasonable costs or at all could prevent us from offering these new services and
our business, financial condition and results of operations could be materially
adversely affected.

We may be subject to federal and state laws relating to the use of personal
information and privacy rights

  Many privacy and consumer advocates and federal regulators have become
increasingly concerned with the use of personal information, particularly
consumer credit reports.  We do not currently provide such credit reports, but
we have recently incorporated a subsidiary, US SEARCH Screening Services, Inc.,
that plans to offer them with the pre-employment screening services conducted in
compliance with the Fair Credit Reporting Act. However, for certain qualified
business customers, we use the social security numbers of individuals to search
various databases, including those of consumer credit reporting agencies. For
example, we search the "header" information contained in various consumer credit
reporting agencies' databases to find, among other items, current and previous
addresses, social security numbers used by an individual, or possible other
names (such as maiden names, married names, etc.). "Header" information consists
of such information as the name, social security number, date of birth, and
current and previous addresses on a consumer credit report. We also search these
databases to determine if a customer's social security number is being used by
any other party. Attempts have been made and can be expected to continue to be
made by various federal regulators and organized groups to adopt new or
additional federal and state legislation to regulate the use of personal
information. If federal and/or state laws are amended or enacted in the future
relating to access and use of personal information, in particular, and privacy
and civil rights, in general, there could be a material adverse effect on our
business and results of operations.

                                       19
<PAGE>

Item 3. Quantitative and qualitative disclosures about market risk

  US SEARCH has not used derivative financial instruments in its investment
portfolio. US SEARCH invests its excess cash in debt instruments (either
directly or through money market or mutual funds) of the U.S. Government and its
agencies, and in high-quality corporate issuers and, by policy, limits the
amount of credit exposure to any one issuer. US SEARCH protects and preserves
its invested funds by limiting default, market and reinvestment risk.
Investments in both fixed rate and floating rate interest earning instruments
carry a degree of interest rate risk.  Fixed rate securities may have their fair
market value adversely impacted due to a rise in interest rates, while floating
rate securities may produce less income than expected if interest rates fall.
Due in part to these factors, US SEARCH's future investment income may fall
short of expectations due to changes in interest rates, or US SEARCH may suffer
losses in principal if forced to sell securities which have declined in market
value due to changes in interest rates.  US SEARCH's total liabilities as of
September 30, 1999 consist primarily of notes payable and accounts payable which
have fixed interest rates and were not subject to any significant market risk.

                                       20
<PAGE>

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings

None

Item 2.   Changes in Securities and Use of Proceeds

None

Item 3.   Defaults upon Senior Securities

None

Item 4.   Submission of Matters to a Vote of Security Holders.

None

Item 5.   Other Information

None

Item 6.   Exhibits and Reports on Form 8-K

(a)  Exhibits:

Exhibit No.             Description
-----------             -----------


3.1*            Certificate of Incorporation
3.1.1*          Certificate of Amendment of Certificate of Incorporation, dated
                May 12, 1999, changing corporate name to US SEARCH.com Inc.
4.1*            Form of Common Stock Certificate
10.1**+         Data Processing Service Agreement dated July 1, 1999 between DBT
                Online, Inc. and US SEARCH.com Inc.
10.2            Lease Agreement dated September 9, 1999 between US SEARCH.com
                Inc. and The Mortensen Trust
27.1            Financial Data Schedule


*   Filed with the Company's Registration Statement on Form S-1, File No. 333-
    76099, declared effective on June 24, 1999, incorporated herein by
    reference.
**  Filed with the Company's Quarterly Report on Form 10-Q for the
    period ending June 30, 1999, incorporated herein by reference.
+   Confidentiality granted with respect to certain portions

(b) Reports on Form 8-K:

None

                                       21
<PAGE>

                                   SIGNATURES

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.


                     US SEARCH.COM INC.
                       (Registrant)


Date:  November 15, 1999  /s/ WILLIAM G. LANGLEY
                          ----------------------

                          William G. Langley
                          Vice President, Chief Financial Officer
                          (Principal Financial Officer)



Date:  November 15, 1999  /s/ ALAN S. MAZURSKY
                          --------------------

                          Alan S. Mazursky
                          Vice President, Finance
                          (Principal Accounting Officer)





                                       22
<PAGE>

                               INDEX TO EXHIBITS

Exhibit No.             Description
-----------             -----------


3.1*            Certificate of Incorporation
3.1.1*          Certificate of Amendment of Certificate of Incorporation, dated
                May 12, 1999, changing corporate name to US SEARCH.com Inc.
4.1*            Form of Common Stock Certificate
10.1**+         Data Processing Service Agreement dated July 1, 1999 between DBT
                Online, Inc. and US SEARCH.com Inc.
10.2            Lease Agreement dated September 9, 1999 between US SEARCH.com
                Inc. and The Mortensen Trust
27.1            Financial Data Schedule


*   Filed with the Company's Registration Statement on Form S-1, File No. 333-
    76099, declared effective on June 24, 1999, incorporated herein by
    reference.
**  Filed with the Company's Quarterly Report on Form 10-Q for the
    period ending June 30, 1999, incorporated herein by reference.
+   Confidentiality granted with respect to certain portions

                                       23