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 MARCH 31, 1999
[ ]    TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
       ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO _________

Commission file number 0-25339

                             U. S. Laboratories Inc.
        (Exact name of small business issuer as specified in its charter)


                Delaware                                     33-0586167
    (State or other jurisdiction of                       (I.R.S. Employer
     incorporation or organization)                      Identification No.)


                              7895 Convoy, Suite 18
                           San Diego, California 92111
                    (Address of principal executive offices)

                                  619-715-5800
                           (Issuer's telephone number)


Check  whether the issuer (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 No X

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.
<TABLE>
<CAPTION>

Class                                                           Outstanding as of March 31, 1999
-----                                                           --------------------------------

<S>                                                                      <C>      
Common Stock, $.01 par value per share                                   3,200,000

Transitional Small Business Disclosure Format: Yes__   No  X  
</TABLE>

                                       1
<PAGE>




                             U.S. Laboratories Inc.

                                      Index

                                                                            Page
Part I - Financial Information

Item 1.  Financial Statements

Consolidated Balance Sheets at
March 31, 1999 and December 31, 1998                                        3

Consolidated Statements of Operations
For the Three Months Ended March 31, 1999 and 1998                          5

Consolidated Statements of Stockholders Equity
For the Three Months Ended March 31, 1999                                   6

Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1999 and 1998                          7

Notes to Consolidated Financial Statements                                  9

Item 2.   Management's Discussion and Analysis of
                  Financial Condition and Results of Operations             14

Part II - Other Information

Item 2.  Changes in Securities and Use of Proceeds                          16

Item 6.  Exhibits and Reports on Form 8-K                                   17

Signatures                                                                  18

Exhibits                                                                    19

                                       2
<PAGE>



Part I - Financial Information

Item 1.           Financial Statements

                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                December 31, 1998 and March 31, 1999 (unaudited)
<TABLE>
<CAPTION>


                                     ASSETS
                                                                                  December 31,         March 31,
                                                                                     1998                1999     
                                                                                ---------------     ---------------
                                                                                                      (unaudited)
<S>                                                                             <C>                 <C>            
Current assets
     Cash     ..............................................................    $       121,782     $     2,822,595
     Accounts receivable, net of allowances for doubtful
         accounts of $38,241 and $58,461, respectively......................          3,290,353           3,237,544
     Work-in-process........................................................            254,782             238,209
     Prepaid expenses and other current assets..............................             45,602             273,864
                                                                                ---------------     ---------------
              Total current assets..........................................          3,712,519           6,572,212

Furniture and equipment, net of accumulated depreciation
     of $783,695 and $829,561, respectively.................................            748,059             765,020
Excess cost over fair value of net assets acquired, net
     of accumulated amortization of $442,481 and $472,384,
     respectively ..........................................................          1,637,427           1,608,302
Deferred offering costs.....................................................            552,738                   -
Other assets      ..........................................................            217,984             221,769
                                                                                ---------------     ---------------

                  Total assets..............................................    $     6,868,727     $     9,167,303
                                                                                ===============     ===============
</TABLE>


                                       3
<PAGE>



                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEET (Continued)
                December 31, 1998 and March 31, 1999 (unaudited)

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                                                  December 31,         March 31,
                                                                                      1998               1999     
                                                                                ---------------     ---------------
                                                                                                      (unaudited)
<S>                                                                             <C>                 <C>            
Current liabilities
     Book overdraft.........................................................    $       125,635     $             -
     Lines of credit........................................................            697,744                   -
     Current portion of long-term debt......................................            132,048             137,759
     Current portion of capitalized lease obligations.......................             12,498              15,000
     Current portion of notes payable.......................................            515,000              75,000
     Accounts payable.......................................................            581,738             642,486
     Accrued payroll and payroll taxes......................................            222,641             248,580
     Other accrued expenses.................................................                  -              53,662
     Due to stockholder.....................................................             81,461              81,101
     Deferred income tax....................................................          1,123,606           1,123,606
     Income tax payable.....................................................            162,708             237,463
                                                                                ---------------     ---------------

         Total current liabilities..........................................          3,655,079           2,614,657

Long-term debt, net of current portion......................................            211,383             192,223
Capitalized lease obligations, net of current portion.......................              5,580               6,500
Notes payable, net of current portion.......................................          1,165,000             150,000
                                                                                ---------------     ---------------

              Total liabilities.............................................          5,037,042           2,963,380
                                                                                ---------------     ---------------

Stockholders' equity
     Preferred stock, $0.01 par value
         5,000,000 shares authorized
         none issued and outstanding........................................                  -                   -
     Common stock, $0.01 par value
         50,000,000 shares authorized
         2,200,000 and 3,200,000 shares issued and outstanding..............             22,000              32,000
     Additional paid-in capital.............................................            970,252           5,232,520
     Retained earnings......................................................            839,433             939,403
                                                                                ---------------     ---------------

              Total stockholders' equity....................................          1,831,685           6,203,923
                                                                                ---------------     ---------------

                  Total liabilities and stockholders' equity................    $     6,868,727     $     9,167,303
                                                                                ===============     ===============
</TABLE>


                                       4
<PAGE>



                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
         for the Three Months Ended March 31, 1999 and 1998 (unaudited)
<TABLE>
<CAPTION>

                                                    For the Three Months Ended
                                                              March 31,      
                                                 ---------------------------------
                                                       1999             1998    
                                                 ---------------  ----------------
                                                    (unaudited)      (unaudited)

<S>                                              <C>              <C>             
Revenue  ...................................     $     3,182,700  $      2,055,378
Cost of goods sold..........................           1,719,937         1,081,238
                                                 ---------------  ----------------
Gross profit................................           1,462,763           974,140

Selling, general, and administrative expenses          1,270,043           836,233
                                                 ---------------  ----------------

Income from operations......................             192,720           137,907
                                                 ---------------  ----------------

Other income (expense)
   Interest expense.........................             (43,342)          (27,579)
   Interest income..........................              12,943             3,856
   Other income.............................              15,656                 -
   Other expense............................                  --              (119)
                                                 ---------------  -----------------
     Total other income (expense)...........             (14,743)          (23,842)
                                                 ---------------- -----------------

Income before provision for income taxes....             177,977           114,065
Provision for income taxes..................              78,007            49,936
                                                 ---------------  ----------------

Net income..................................     $        99,970  $         64,129
                                                 ===============  ================

Basic income per share......................     $          0.04  $           0.03
                                                 ===============  ================

Diluted income per share....................     $          0.04  $           0.03
                                                 ===============  ================

Weighted average shares outstanding.........           2,611,111         2,200,000
                                                 ===============  ================
</TABLE>


                                       5
<PAGE>



                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              for the Three Months Ended March 31, 1999 (unaudited)
<TABLE>
<CAPTION>

                                                                  
                                                                                   
                                        Common Stock              Additional       
                             ---------------------------------      Paid-In          Retained
                                  Shares           Amount           Capital           Earnings        Total
                             ---------------   ---------------  ----------------  ---------------  ----------------
<S>                               <C>          <C>              <C>               <C>              <C>      
Balance, December                                                   
   31, 1998                       2,200,000    $        22,000  $      970,252    $       839,433  $      1,831,685

Issuance of common
   stock through the
   Initial Public Offering
   on February 23,
   1999                           1,000,000             10,000       5,990,000                            6,000,000

Deferred offering costs                                             (1,727,732)                          (1,727,732)

Net income                                                                                 99,970            99,970
                             ---------------   ---------------  ----------------  ---------------  ----------------

Balance, March
   31, 1999                       3,200,000    $        32,000  $    5,232,520    $       939,403  $      6,203,923
                             ===============   ===============  ================  ===============  ================


</TABLE>





                                       6
<PAGE>



                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
         For the Three Months Ended March 31, 1999 and 1998 (unaudited)

<TABLE>
<CAPTION>

                                                      For the Three Months Ended
                                                                March 31,          
                                                  ---------------------------------
                                                       1999               1998   
                                                  ---------------  ----------------
                                                    (unaudited)       (unaudited)

<S>                                               <C>              <C>             
Cash flows from operating activities
   Net income...............................      $        99,970  $         64,129
   Adjustments to reconcile net income
     to net cash provided by operating
     activities
       Amortization.........................               29,903            19,515
       Depreciation.........................               45,651            43,383


   (Increase) decrease in
     Accounts receivable....................               52,809            95,241
     Work in process........................               16,573            14,576
     Prepaid expenses.......................             (228,262)          (46,946)
     Other assets...........................               (4,564)          (85,290)
   Increase (decrease) in
     Accounts payable.......................               60,748          (119,216)
     Accrued payroll and payroll taxes......               25,939           (36,368)
     Other accrued expenses.................               53,662            53,599
     Income tax payable.....................               74,755            49,997
                                                  ---------------  ----------------

Net cash provided by operating
activities..................................              227,184            52,620
                                                  ---------------  ----------------


Cash flows from investing activities
   Purchase of furniture and equipment......              (62,612)          (31,407)
   Investment in Wyman Enterprises,
     Inc., net of cash acquired.............                    -          (127,310)
                                                  ---------------  ----------------


Net cash used in investing activities.......              (62,612)         (158,717)
                                                  ---------------- ----------------
</TABLE>


                                       7
<PAGE>



                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
         For the Three Months Ended March 31, 1999 and 1998 (unaudited)

<TABLE>
<CAPTION>

                                                                                      For the Three Months Ended
                                                                                               March 31,        
                                                                                  ---------------------------------
                                                                                        1999              1998   
                                                                                  ---------------  ----------------
                                                                                    (unaudited)       (unaudited)

<S>                                                                               <C>              <C>              
Cash flows from financing activities
   Increase (decrease) in book
     overdraft..............................                                      $      (125,635) $         (4,926)
   Line of credit, net......................                                           (1,877,744)          225,169
   Due to stockholders, net.................                                                 (360)          164,815
   Payments on long-term debt, capitalized
       lease obligations and notes payable..                                             (285,028)          (15,692)
   Proceeds from the initial stock offering
     net of the deferred offering costs.....                                            4,825,008           (28,720)
     Due from Wyman Testing
     Laboratories, Inc......................                                                    -           (25,000)
                                                                                  ---------------  -----------------

Net cash provided by 
financing activities  ......................                                            2,536,241           315,646
                                                                                  ---------------  ----------------

Net increase in cash........................                                            2,700,813           209,549

Cash, beginning of period...................                                              121,782            94,132
                                                                                  ---------------  ----------------

Cash, end of period.........................                                      $     2,822,595  $        303,681
                                                                                  ===============  ================


Supplemental disclosures of cash flow information

   Interest paid............................                                      $        43,342  $         27,579
                                                                                  ===============  ================

   Income taxes paid........................                                      $         3,253  $            (61)
                                                                                  ===============  =================


</TABLE>



                                       8
<PAGE>



                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               As of December 31, 1998 and March 31, 1999 and for
           the Three Months Ended March 31, 1999 and 1998 (unaudited)
            (The information with respect to the three months ended
                     March 31, 1999 and 1998 is unaudited.)

NOTE 1 - ORGANIZATION AND BUSINESS

         U.S.  Laboratories  Inc. and subsidiaries  (collectively the "Company")
         offers   engineering   and   design   services,   project   management,
         construction  quality  control,   structural  engineering  and  design,
         environmental  engineering and inspection and testing.  The Company has
         facilities in California,  New Jersey, and Florida and grants credit to
         customers in those states.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         General
         As  contemplated by the Securities and Exchange  Commission  under Item
         310(b) of Regulation  S-B, the  accompanying  financial  statements and
         footnotes  have  been  condensed  and  therefore  do  not  contain  all
         disclosures required by generally accepted accounting  principles.  The
         interim  financial data are unaudited,  however,  in the opinion of the
         Company,  the interim data include all adjustments,  consisting only of
         normal  recurring  adjustments,  necessary for a fair  statement of the
         results for the interim periods.

         Principles of Consolidation
         The  consolidated  financial  statements  include the  accounts of U.S.
         Laboratories  Inc.  and its  subsidiaries.  All  material  intercompany
         accounts and transactions have been eliminated.

         Cash and Cash Equivalents/Book Overdraft
         For purposes of the statements of cash flows, the Company considers all
         highly-liquid  investments  purchased with original maturities of three
         months or less to be cash  equivalents.  Book overdraft  represents the
         bank balance at period end, plus deposits in transit,  less outstanding
         checks.

         Furniture and Equipment
         Furniture and equipment,  including equipment under capital leases, are
         recorded  at cost,  less  accumulated  depreciation  and  amortization.
         Depreciation  and  amortization  are provided  using the  straight-line
         method over the estimated useful lives as follows:

                  Automobile and trucks                         3 to 5 years
                  Furniture and fixtures                        5 to 7 years
                  Office hardware and software                       5 years
                  Machinery and equipment                       5 to 7 years
                  Leasehold improvements                             5 years

         Maintenance,  repairs,  and minor  renewals  are  expensed as incurred.
         Expenditures  for additions  and major  improvements  are  capitalized.
         Gains  and  losses on  disposals  are  included  in the  statements  of
         operations.

         Intangibles
         Intangibles  consist  of  goodwill  which  is  being  amortized  over a
         fifteen-year  period. The Company continually  evaluates whether events
         or  circumstances  have occurred that indicate the remaining  estimated
         value of goodwill may not be  recoverable.  When factors  indicate that
         the value of  goodwill  may be  impaired,  the  Company  estimates  the
         remaining value and reduces the goodwill to that amount.

         Deferred Offering Costs
         Amounts paid for costs  associated  with an anticipated  initial public
         offering  ("IPO")  were  capitalized  and  subsequently  recorded  as a
         reduction to additional paid-in capital upon the completion of the IPO.

         Revenue Recognition
         Revenue from services performed,  including  fixed-price and unit-price
         contracts,  is  recorded  as  earned  over the  lives of the  contract.
         Revenue from services is recognized  when services have been  performed
         and  accepted.  At the time a loss or a  contract  becomes  known,  the
         entire  amount of the  estimated  ultimate  loss is  recognized  in the
         financial  statements.  The Company has not  experienced  any  material
         losses on these contracts.

                                       9

<PAGE>


                     U.S. LABORATORIES INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
               As of December 31, 1998 and March 31, 1999 and for
           the Three Months Ended March 31, 1999 and 1998 (unaudited)
            (The information with respect to the three months ended
                     March 31, 1999 and 1998 is unaudited.)


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Advertising
         The Company expenses advertising costs as incurred.

         Income Taxes
         The  Company  utilizes  Statement  of  Financial  Accounting  Standards
         ("SFAS") No. 109,  "Accounting  for Income  Taxes," which  requires the
         recognition  of deferred  tax assets and  liabilities  for the expected
         future  tax  consequences  of events  that have  been  included  in the
         financial statements or tax returns. Under this method, deferred income
         taxes  are  recognized  for the tax  consequences  in  future  years of
         differences  between the tax bases of assets and  liabilities and their
         financial  reporting amounts at each year-end based on enacted tax laws
         and  statutory  tax  rates  applicable  to the  periods  in  which  the
         differences are expected to affect taxable income. Valuation allowances
         are established,  when necessary,  to reduce deferred tax assets to the
         amount  expected  to  be  realized.  The  provision  for  income  taxes
         represents  the tax  payable  for the period and the change  during the
         period in deferred tax assets and liabilities.

         Interim Unaudited Financial Information
         The  unaudited  financial  information  furnished  herein  reflects all
         adjustments,  consisting only of normal recurring adjustments, which in
         the opinion of management,  are necessary to fairly state the Company's
         financial position,  the results of operations,  and cash flows for the
         periods presented. The results of operations for the three months ended
         March 31, 1999 are not necessarily indicative of results for the entire
         fiscal year ending December 31, 1999.

         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 disclosures of contingent assets and liabilities at the
         date of the financial  statements,  as well as the reported  amounts of
         revenues and expenses during the reporting period. Actual results could
         differ from those estimates.

         Fair Value of Financial Instruments
         For certain of the  Company's  financial  instruments  including  cash,
         accounts receivable,  accounts payable, and other accrued expenses, the
         carrying amounts  approximate fair value due to their short maturities.
         The amounts shown for long-term debt and capital lease obligations also
         approximate fair value because current interest rates and terms offered
         to the Company for similar long-term debt and capital lease obligations
         are substantially the same.

         Concentrations of Risk
         The  Company  sells   products  and  provides   contract   services  to
         construction companies and the military,  primarily in California,  New
         Jersey,  and Florida.  It also extends credit based on an evaluation of
         the  customer's  financial   condition,   generally  without  requiring
         collateral.  Exposure to losses on receivables is principally dependent
         on each  customer's  financial  condition.  The  Company  monitors  its
         exposure for credit losses and  maintains  allowances  for  anticipated
         losses.


                                       10
<PAGE>



                     U.S. LABORATORIES INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
               As of December 31, 1998 and March 31, 1999 and for
           the Three Months Ended March 31, 1999 and 1998 (unaudited)
             (The information with respect to the three months ended
                     March 31, 1999 and 1998 is unaudited.)


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Net Income Per Share
         For the three months ended March 31, 1998 and 1999, the Company adopted
         SFAS No.  128,  "Earnings  per  Share."  Basic  earnings  per  share is
         computed  by  dividing  net  income  to  common   stockholders  by  the
         weighted-average   number  of  common  shares  outstanding  during  the
         accounting  period.  Diluted  earnings per share is computed similar to
         basic  earnings per share except that the  denominator  is increased to
         include  the number of  additional  common  shares that would have been
         outstanding  if the potential  common shares had been issued and if the
         additional common shares were dilutive.

         Recently Issued Accounting Pronouncements
         SFAS No.  133,  "Accounting  for  Derivative  Instruments  and  Hedging
         Activities,"  is effective for financial  statements  with fiscal years
         beginning after June 15, 1999. SFAS No. 133 establishes  accounting and
         reporting  standards  for  derivative  instruments,  including  certain
         derivative  instruments  embedded in other  contracts,  and for hedging
         activities.  The  Company  does not expect  adoption of SFAS No. 133 to
         have a material effect, if any, on its financial position or results of
         operations.

         SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained after
         the  Securitization  of  Mortgage  Loans  Held for  Sale by a  Mortgage
         Banking  Enterprise,"  is effective for financial  statements  with the
         first fiscal  quarter  beginning  after  December 15, 1998. The Company
         does not expect adoption of SFAS No. 134 to have a material effect,  if
         any, on its financial position or results of operations.  SFAS No. 135,
         "Rescission  of FASB  Statement No. 75 and Technical  Corrections,"  is
         effective for financial statements with fiscal years beginning February
         1999. This statement is not applicable to the Company.

         SFAS  No.  135,  "Rescission  of FASB  Statement  No. 75 and  Technical
         Corrections,"  is effective for financial  statements with fiscal years
         beginning  February  1999.  This  statement  is not  applicable  to the
         Company.


NOTE 3 - CASH

         The Company  maintains  cash deposits at banks  located in  California,
         Florida,  and New  Jersey.  Deposits  at each bank are  insured  by the
         Federal Deposit  Insurance  Corporation up to $100,000.  As of December
         31, 1998 and March 31,  1999,  uninsured  portions of balances  held at
         banks aggregated to $21,781 and $2,744,657,  respectively.  The Company
         has not  experienced any losses in such accounts and believes it is not
         exposed to any significant credit risk on cash.


                                       11
<PAGE>



                     U.S. LABORATORIES INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
               As of December 31, 1998 and March 31, 1999 and for
           the Three Months Ended March 31, 1999 and 1998 (unaudited)
             (The information with respect to the three months ended
                     March 31, 1999 and 1998 is unaudited.)


NOTE 4 - FURNITURE AND EQUIPMENT

Furniture and equipment consisted of the following:
<TABLE>
<CAPTION>

                                                                             December 31,        March 31,
                                                                                1998                1999     
                                                                          ---------------    ----------------

<S>                                                                       <C>                <C>             
            Automobile and trucks......................................   $       621,719    $        628,645
            Furniture and fixtures.....................................           291,199             261,792
            Office hardware and software...............................            91,918             146,797
            Machinery and equipment....................................           423,846             433,590
            Leasehold improvements.....................................           103,072             123,757
                                                                          ---------------    ----------------

                                                                                1,531,754           1,594,581
            Less accumulated depreciation and amortization.............           783,695             829,561
                                                                          ---------------    ----------------

                Total..................................................   $       748,059    $        765,020
                                                                          ===============    ================

            Depreciation  and  amortization  expense for the three  months  ended March 31, 1998 and 1999 was
            $43,383 and $45,651, respectively.
</TABLE>


NOTE 5 - NOTES PAYABLE

         Notes payable consisted of the following at March 31, 1999:
<TABLE>
<CAPTION>

<S>                                                                                                <C>             
                  Note payable to stockholder of Wyman Enterprises, Inc. in
                      connection with the acquisition. The amount is to be paid in
                      three more annual installments of $37,500 beginning March 25, 2000.........  $        112,500

                  Note payable to stockholder of Wyman Enterprises, Inc. in
                      connection with the acquisition. The amount is to be paid in
                      three more annual installments of $37,500 beginning March 25,..............  $        112,500
                                                                                                   ----------------

                                                                                                            225,000
                  Less current portion...........................................................            75,000
                                                                                                   ----------------

                           Long-term portion.....................................................  $        150,000
                                                                                                   ================
</TABLE>


NOTE 6 - RELATED PARTY TRANSACTIONS

         Due to Stockholder
         At December 31, 1998 and March 31, 1999, the Company had amounts due to
         the  majority  stockholder  of $81,461  and 81,101,  respectively.  The
         amounts are non-interest bearing and are payable upon demand.

         Stockholder Management Fees
         During the three  months  ended March 31,  1998,  the Company  expensed
         $37,755 in management  fees to a stockholder.  The management  fees are
         based upon 5% of net sales of a subsidiary.


                                       12
<PAGE>


                     U.S. LABORATORIES INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
               As of December 31, 1998 and March 31, 1999 and for
           the Three Months Ended March 31, 1999 and 1998 (unaudited)
        (The information with respect to the three months ended March 31,
                          1999 and 1998 is unaudited.)

NOTE 7 - STOCK OPTION PLAN

         In July 1998,  the Board of  Directors  adopted and  approved  the 1998
         Stock  Option Plan (the  "Option  Plan") under which a total of 500,000
         shares of Common Stock have been reserved for  issuance.  Options under
         this plan may be granted to  employees,  officers,  and  directors  and
         consultants  of the  Company.  The  exercise  price of the  options  is
         determined by the Board of Directors, but the exercise price may not be
         less than 100% of the fair market  value on the date of grant.  Options
         vest over periods not to exceed 5 years. In March 1999, the Company had
         395,000 stock  options  outstanding  at an exercise  price ranging from
         $6.00  to  $6.60  per  share,  of  which  238,632  stock  options  were
         exercisable.  The  Board of  Directors  also  approved  the grant of an
         additional 62,500 options to various employees under the plan.

NOTE 8 - WARRANTS

         In July  1998,  the Board of  Directors  approved  the grant of 150,000
         stock  warrants  to certain  employees  of the  Company.  The  warrants
         entitle the holder to purchase Company Common Stock at a price of $5.00
         per share.  The warrants are  exercisable the earlier of (i)the date on
         which the closing  price of a share of the  Company's  Common  Stock as
         reported on the Nasdaq  Small-Cap Market is greater than $12.00 or (ii)
         the date on which the audited consolidated earnings for the fiscal year
         ending December 31, 1998, or any fiscal year  thereafter,  are at least
         twice the base period  earnings of $841,041.  The warrants  expire upon
         termination or November 9, 2003.

Note 9 - INITIAL PUBLIC OFFERING 

         On February 23, 1999 the Company  completed an initial public  offering
         that generated net cash of $4,825,008 in this quarter. The offering was
         for the sale of 1,000,000 shares of common stock which represent 31.25%
         of the  post  offering  common  stock.  A part of the  proceeds  of the
         offering  was  used  to  retire  debt  in  the  approximate  amount  of
         $2,150,000.

Note 10 - YEAR 2000 ISSUE

         The  Company  is  conducting  a  comprehensive  review of its  computer
         systems to identify the systems that could be affected by the Year 2000
         Issue and is developing an implementation plan to resolve the Issue.

         The  issue  is  whether  computer   systems  will  properly   recognize
         date-sensitive  information when the year changes to 2000. Systems that
         do not properly  recognize such  information  could generate  erroneous
         data or cause a system to fail.  The Company is  dependent  on computer
         processing in the conduct of its business activities.

         Based  on the  review  of the  computer  systems,  management  does not
         believe the cost of  implemenation  will be  material to the  Company's
         financial position and results of operations.

Note 11 - SUBSEQUENT EVENT

         The Company  acquired the assets and liabilities of an engineering firm
         in Las Vegas,  Nevada.  The purchase price was comprised of $170,000 in
         cash plus 3,333 shares of U.S.  Laboratories  Inc.  common  stock.  The
         Agreement requires the Company to pay an additional  $40,000,  which is
         conditional upon completion of certain tasks by the seller.


                                       13
<PAGE>



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

Financial Condition and Results of Operations

         Three Months Ended March 31, 1999 and 1998

         Revenue.  Revenue  for the  three  months  ended  March  31,  1999  was
$3,182,700,  an increase of 55% over the same period in 1998.  This increase was
due to an  internal  growth  rate  of  approximately  10% and  45%  through  the
acquisition of operating units in California, Florida and New Jersey.

         Gross  Profit.  Gross  profit  for the  three  months  ended  1999  was
$1,462,763,  an increase of 50% over the same period in 1998.  This  increase in
gross profit was due primarily to the increase of revenues described above.

         Income Before  Provision for Income Taxes.  Income before provision for
income taxes and minority interest for the three months ended March 31, 1999 was
$177,977,  an increase of 56% over the same period in 1998. The profit increased
by a greater amount than the incremental increase in gross profit because of the
realization of the economies of administering the larger volume of business.

         Interest  Expense.  Interest  expense was  $43,342 in the three  months
ended March 31,  1999,  an  increase  of 57% over the same period in 1998.  This
increase  was  due  primarily  to  increased  debt   associated   with  business
acquisitions,  the funding of the initial public offering and the related use of
operating lines of credit.

         Net  Income.  Net  income for the three  months  ended  March 31,  1999
$99,970,  an increase of 56% over the same period in 1998.  The increase was due
primarily to the  increased  revenues  associated  with the  ordinary  growth of
existing  operations,  the  realization  of the economies of  administering  the
larger volume of business, and the acquisitions made during 1998.

Liquidity and Capital Resources

         During the three months ended March 31, 1999,  our net cash provided by
operating  activities  was 227,184,  an increase of 332% over the same period in
1998.

         We also have a line of credit  with Bank of  America  in the  amount of
$500,000.  Dickerson Wright and his spouse guarantee this line of credit.  It is
an unsecured  note that is all due in July 2000.  The note bears interest at the
prime rate. This line of credit is still in place and has been reduced to a zero
outstanding  balance  since the end of 1998. We do not intend to use this credit
facility in the future.

         We currently intend to use  approximately  $2.5 million of the proceeds
from our initial public offering to fund acquisitions.  Additionally,  we intend
to make acquisitions  through other financing mechanisms such as notes and other
instruments.   Historically,  we  have  been  able  to  make  acquisitions  with
approximately  20-50%  of  the  purchase  price  in  cash  and  the  balance  in
non-interest  bearing  purchase notes over extended time frames.  Although it is
not our intention to use significant amounts of U.S.  Laboratories Inc. stock as
consideration while making  acquisitions,  from time to time it may be necessary
to do so.

         We believe that our available cash and cash equivalents as well as cash
generated from operations will be sufficient to meet our cash  requirements  for
at least the next twelve months.  We are,  nevertheless,  currently  negotiating
with a number of lenders to secure credit facilities that can be used to finance
additional acquisitions.  During 1999, we intend to actively continue our search
for acquisitions in order to expand our geographical  representation and enhance
our technical capabilities.


                                       14
<PAGE>



Year 2000 Compliance

         We believe  that the software  packages we currently  use and expect to
use,  and  those  used by our  vendors  prior to the year  2000,  are Year  2000
compliant.  We do not expect the financial  impact of required  modifications to
this software will be material to our financial position, cash flows, or results
of operations.

Inflation

         Inflation  does not  currently  affect  our  operations,  and we do not
expect inflation to affect them in the foreseeable future.



                                       15
<PAGE>



                                     Part II

Item 2.  Changes in Securities and Use of Proceeds

         (a)  Not applicable.

         (b) Not applicable.

         (c) On March 15, 1999, we granted options to purchase 100,000 shares of
common  stock at an  exercise  price  of  $4.50  per  share  to  Miller  Capital
Corporation,  our investment  relations firm, in exchange for investor relations
services.  The options vest 50% immediately and 50% when the market price of our
common stock is at least $7.00 per share.  We have the  discretion to revise the
vesting  schedule to make all of the options vest  without  regard to the market
price of our common  stock.  We sold the  securities  under the  exemption  from
registration provided by Section 4(2) of the Securities Act of 1933.

         (d) Our  registration  statement on Form SB-2 was made effective by the
Securities  and Exchange  Commission  on February 23,  1999.  We sold  1,000,000
units,  each consisting of one share of common stock,  $.01 par value per share,
and one redeemable  warrant to purchase one share of common stock at an exercise
price  of  $7.80.  We  sold  the  units  on  February  23,  1999.  Our  managing
underwriters were Cardinal Capital Management,  Inc. and Janda & Garrington LLC.
After deducting the underwriting discounts,  commissions, and all the offering's
expenses, we received approximately $4,275,000 from the offering.

         As of May 14,  1999,  we have used the net proceeds as described in the
table below.

------------------------------------ --------------------
Use                                  Amount
------------------------------------ --------------------
Acquisitions                         $   10,000
------------------------------------ --------------------
Repayment of Debt                    $2,150,000
------------------------------------ --------------------
Working Capital for Operations       $  200,000
------------------------------------ --------------------


                                       16
<PAGE>



Item 6.           Exhibits and Reports on Form 8-K

         a.       Exhibits

4.1               Amendment to Restated and Amended Certificate of Incorporation

27                Financial Data Schedule
                     (EDGAR version only)

         b.       Reports on Form 8-K

                  The Company  did not file a Current  Report on Form 8-K during
                  the quarter ended March 31, 1999.


                                       17
<PAGE>



                                   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.


                                      U. S. Laboratories Inc.



Date:  May 19, 1999                   /S/ Dickerson Wright                      
                                      ------------------------------------------
                                      Dickerson Wright, President


Date:  May 19, 1999                   /S/ James Wait                            
                                      ------------------------------------------
                                      James Wait
                                      Vice President and Chief Financial Officer




                                       18
<PAGE>



                                  Exhibit Index


Exhibit Number
--------------

4.1               Amendment to Restated and Amended Certificate of Incorporation

27                Financial Data Schedule
                  (EDGAR version only)



                                       19