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

                                  FORM 10 -QSB

[X]      QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 1999

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________TO _________

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.

Class                                      Outstanding as of September 30, 1999

Common Stock, $.01 par value per share                    3,200,000

Transitional Small Business Disclosure Format: Yes_____   No   X




                                        1
<PAGE>

                             U.S. Laboratories Inc.

                                      Index

                                                                          Page
Part I - Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets at
September 30, 1999 and December 31, 1998                                   3

Consolidated Statements of Operations
For the Nine Months ended September 30, 1999 and 1998                      5
and the Three Months ended September 30, 1999 and 1998

Consolidated Statements of Stockholders Equity
For the Nine Months Ended September 30, 1999                               6

Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1999 and 1998                      7

Notes to Consolidated Financial Statements                                 9

Item 2.  Management's Discussion and Analysis of
           Financial Condition and Results of Operations                   15


Part II - Other Information

Item 2. Changes in Securities and Use of Proceeds                          18

Item 5. Other Information                                                  18

Item 6. Exhibits and Reports on Form 8-K                                   19

Signatures                                                                 20

Exhibits                                                                   21


                                        2

<PAGE>


Part I - Financial Information

Item 1.           Financial Statements

                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
              December 31, 1998 and September 30, 1999 (unaudited)


                               ASSETS
<TABLE>
<CAPTION>
                                                            December 31,  September. 30,
                                                                1998           1999
                                                                           (unaudited)
<S>                                                           <C>          <C>
Current assets
      Cash ................................................   $  121,782   $2,198,044
      Accounts receivable, net of allowances for doubtful
             accounts of $38,241 and $86,246, respectively     3,290,353    3,932,845
      Work-in-process .....................................      254,782      478,424
       Prepaid expenses and other current assets ..........       45,602      189,876
                                                              ----------   ----------

                Total current assets ......................    3,712,519    6,799,189

Furniture and equipment, net of accumulated depreciation
       of $783,695 and $986,176, respectively .............      748,059      824,686
Excess cost over fair value of net assets acquired, net
      of accumulated amortization of $442,481 and $531,929,
      respectively ........................................    1,637,427    1,549,977
Deferred offering costs ...................................      552,738         --
Due from stockholder ......................................         --        140,515
Other assets ..............................................      217,984      258,651
                                                              ----------   ----------



                   Total assets ...........................   $6,868,727   $9,573,018
                                                              ==========   ==========

</TABLE>



                                        3

<PAGE>

<TABLE>
                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEET(Continued)
              December 31, 1998 and September 30, 1999 (unaudited)

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>

                                                               December 31,   September. 30,
                                                                   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      101,099
      Current portion of capitalized lease obligations .......       12,498       15,000
      Current portion of notes payable .......................      515,000       75,000
      Accounts payable .......................................      581,738      449,441
      Accrued payroll and payroll taxes ......................      222,641      304,602
      Other accrued expenses .................................         --        303,140
      Due to stockholder .....................................       81,461         --
      Deferred income tax ....................................    1,123,606    1,123,606
      Income tax payable .....................................      162,708      302,953
                                                                 ----------   ----------

         Total current liabilities ...........................    3,655,079    2,674,841

Long-term debt, net of current portion .......................      211,383      291,904
Capitalized lease obligations, net of current portion ........        5,580        6,000
Notes payable, net of current portion ........................    1,165,000      150,000
                                                                 ----------   ----------

         Total liabilities ...................................    5,037,042    3,122,745
                                                                 ----------   ----------

Commitment

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    5,193,199
        Retained earnings ....................................      839,433    1,225,074
                                                                 ----------    ---------

         Total stockholders' equity ..........................    1,831,685    6,450,273
                                                                 ----------    ---------

                  Total liabilities and stockholders' equity .   $6,868,727   $9,573,018
                                                                 ==========   ==========
</TABLE>





                                        4

<PAGE>
<TABLE>

                     U.S. LABORATORIES INC AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
             For the Three Months Ended September 30, 1999 and 1998
          (unaudited) And the Nine Months Ended September 30, 1999 and
                         September 30 , 1998 (unaudited)
<CAPTION>

                                                 For the Three Months Ended       For the Nine Months Ended
                                                           Sept 30,                        Sept 30,
                                                    1999             1998            1999            1998
                                                 (unaudited)     (unaudited)     (unaudited)     (unaudited)

<S>                                             <C>             <C>             <C>             <C>
Revenue .....................................   $  4,245,299    $  3,339,276    $ 11,230,000    $  8,478,329

Cost of goods sold ..........................      2,147,135       1,780,516       5,698,711       4,432,509
                                                ------------    ------------    ------------    ------------

Gross profit ................................      2,098,164       1,558,760       5,531,289       4,045,820
                                                ------------    ------------    ------------    ------------

Selling, general, and administrative expenses      1,790,362       1,120,502       4,906,210       3,215,256
                                                ------------    ------------    ------------    ------------
Income from operations ......................        307,802         438,258         625,079         830,564
                                                ------------    ------------    ------------    ------------


Other income (expense)
   Interest expense .........................         (6,947)        (73,117)        (75,767)       (118,814)
   Interest income ..........................         17,059           5,396          57,701           9,252
   Other income .............................            776         (31,157)         35,722          13,048
   Other expense ............................           --               119            --               --
                                                ------------    ------------    ------------    ------------

     Total other income (expense) ...........         10,888         (98,759)         17,656         (96,514)
                                                ------------    ------------    ------------    ------------

Income before provision for income taxes ....        318,690         339,499         642,735         734,050
Provision for income taxes ..................        127,476         149,971         257,094         308,301
                                                ------------    ------------    ------------    ------------

Net income ..................................   $    191,214    $    189,528    $    385,641    $    425,749
                                                ============    ============    ============    ============

Basic income per share ......................   $       0.06    $       0.09    $       0.13    $       0.19
                                                ============    ============    ============    ============

Diluted income per share ....................   $       0.06    $       0.09    $       0.13    $       0.19
                                                ============    ============    ============    ============


Weighted average shares outstanding .........      3,200,000       2,200,000       3,003,703       2,200,000
                                                ============    ============    ============    ============

</TABLE>






                                        5

<PAGE>

<TABLE>
                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
            For the Nine Months Ended September 30, 1999 ( unaudited)
<CAPTION>

                                                           Additional
                                    Common Stock             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 ..                                 (1,767,053)                 (1,767,053)

Net income ...............                                    385,641                     385,641
                             -----------    -----------   -----------   -----------   -----------
Balance Sept. 30, 1999 ...     3,200,000    $    32,000   $ 5,193,199   $ 1,225,074   $ 6,450,273
                             ===========    ===========   ===========   ===========   ===========

</TABLE>








                                        6
<PAGE>

                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
        For the Nine Months Ended September 30, 1999 and 1998 (unaudited)

                                                   For the Nine Months Ended
                                                           Sept. 30
                                                      1999         1998
                                                  (unaudited)   (unaudited)

Cash flows from operating activities
    Net income .................................   $ 385,641    $ 425,749
    Adjustments to reconcile net income
     to net cash provided by operating
     activities
     Amortization ..............................      87,450       90,384
     Depreciation ..............................     225,113      182,240



(Increase) decrease in
     Accounts receivable .......................    (326,708)    (639,638)
     Work in process ...........................    (223,642)     (81,843)
     Prepaid expenses ..........................    (144,274)      12,076
     Other assets ..............................     (40,667)     (15,868)
Increase (decrease) in
     Accounts payable ..........................    (154,392)      93,679
     Accrued payroll and payroll taxes .........      81,961       33,606
     Other accrued expenses ....................     273,140      (15,785)
     Income tax payable ........................     140,245      308,301
                                                   ---------     --------

Net cash provided by operating
activities .....................................     303,867      392,901
                                                   ---------    ---------

Cash flows from investing activities
     Purchase of furniture and equipment (net) .    (174,861)    (189,838)
     Investment in Wyman Enterprises,
     Inc., net of cash acquired ................        --       (296,730)
     Investment in Professional
     Service Industries, Inc. ..................        --        (13,900)
     Investment in Jupiter Division
     of Fraser Engineering & Testing ...........        --        (35,000)
     Investment in Buena Engineers, Inc. .......    (184,178)        --
                                                   ---------    ---------

Net cash provided (used in) investing activities    (359,039)    (535,468)
                                                   ---------    ---------


                                        7

<PAGE>

                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
        For the Nine Months Ended September 30, 1999 and 1998 (unaudited)

                                                     For the Nine Months Ended
                                                              Sept. 30
                                                        1999            1998
                                                    (unaudited)     (unaudited)

Cash flows from financing activities
  Increase (decrease) in book
  overdraft .....................................   $  (125,635)   $     7,351
  Line of credit, (net) .........................    (1,877,744)       (98,176)
  Due to stockholders, (net) ....................      (221,976)      (486,782)
  Payments on long-term debt, capitalized
  lease obligations and notes payable ...........      (428,896)      (105,135)
  Proceeds from the initial stock offering
  net of the deferred offering costs ............     4,785,685           --
  Due from Wyman Testing
  Laboratories, Inc. ............................          --          (25,000)
  Deferred offering costs .......................          --         (317,825)
  Increase in notes payable .....................          --        1,218,993
                                                    -----------    -----------

Net cash provided by
financing activities ............................     2,131,434        193,426

Net increase (decrease) in cash .................     2,076,262         50,859
                                                    -----------    -----------

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

Cash, end of period .............................   $ 2,198,044    $   144,991
                                                    ===========    ===========


Supplemental disclosures of cash flow information

  Interest paid .................................   $    75,767    $   118,814
                                                    ===========    ===========

  Income taxes paid .............................   $   111,800    $       135
                                                    ===========    ===========







                                        8

<PAGE>

                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             As of December 31, 1998 and September 30, 1999 and for
          the Nine Months Ended September 30, 1999 and 1998 (unaudited)
             (The information with respect to the nine months ended
                   September 30, 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,  Florida and Nevada 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.

                                        9

<PAGE>

                     U.S. LABORATORIES INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
             As of December 31, 1998 and September 30, 1999 and for
          the Nine Months Ended September 30, 1999 and 1998 (unaudited)
             (The information with respect to the nine months ended
                   September 30, 1999 and 1998 is unaudited.)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
         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 service 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.

         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 nine months ended
         September  30, 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.



                                       10

<PAGE>
                     U.S. LABORATORIES INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
             As of December 31, 1998 and September 30, 1999 and for
          the Nine Months Ended September 30, 1999 and 1998 (unaudited)
             (The information with respect to the nine months ended
                   September 30, 1999 and 1998 is unaudited.)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


         Concentrations of Risk
         The  Company  sells   products  and  provides   contract   services  to
         construction companies and the military,  primarily in California,  New
         Jersey,  Florida,  and  Nevada.  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.

         Net Income Per Share
         For the nine months  ended  September  30,  1999 and 1998,  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.

NOTE 3 - CASH

         The Company  maintains  cash deposits at banks  located in  California,
         Nevada,  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  September  30,  1999,  uninsured  portions  of
         balances  held  at  banks   aggregated   to  $27,026  and   $1,744,813,
         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 STATEMENT (Continued)
             As of December 31, 1998 and September 30, 1999 and for
          the Nine Months Ended September 30, 1999 and 1998 (unaudited)
             (The information with respect to the nine months ended
                   September 30, 1999 and 1998 is unaudited.)

NOTE 4 - FURNITURE AND EQUIPMENT

         Furniture and equipment consisted of the following:

                                                     December 31,  September 30,
                                                         1998          1999

Automobile and trucks...............................$      621,719   $  753,998
Furniture and fixtures ..............................      291,199      270,628
Office hardware and software ........................       91,918      171,092
Machinery and equipment .............................      423,846      485,305
Leasehold improvements ..............................      103,072      129,839
                                                        ----------   ----------

                                                         1,531,754    1,810,862
Less accumulated depreciation and amortization ......      783,695      986,176
                                                        ----------   ----------

         Total ......................................   $  748,059   $  824,686
                                                        ==========   ==========

         Depreciation  and  amortization  expense  for  the  nine  months  ended
         September 30, 1998 and 1999 was $182,240 and $225,113, respectively.

NOTE 5 - NOTES PAYABLE

         Notes payable consisted of the following at September 30, 1999:

         Note payable to stockholder of Wyman Enterprises,
           Inc. in connection with the acquisition.
           The amount is to be paid in three 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 annual
           installments of $37,500 beginning March 25,
           2000 ..................................................       112,500
                                                                      ----------
                                                                         225,000
           Less current portion...................................        75,000
                                                                      ----------
              Long-term portion...................................    $  150,000
                                                                      ----------
NOTE 6 - RELATED PARTY TRANSACTIONS

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

         Due from Stockholder
         At September  30,  1999,  the company had amounts due from the majority
         stockholder  of  $140,515.  The amounts are due in three  annual  equal
         installments and are non - interest bearing.


                                       12

<PAGE>

                     U.S. LABORATORIES INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                 As of December 31, 1998 and September 30 , 1999
      and for the Nine Months Ended September 30, 1999 and 1998 (unaudited)
      (The information with respect to the nine months ended September 30,
                          1999 and 1998 is unaudited.)

NOTE 6 - RELATED PARTY TRANSACTIONS (Continued)

         Stockholder Management Fees
         During the nine months ended  September 30, 1998, the Company  expensed
         $137,063 in management  fees to a stockholder.  The management fees are
         based upon 5% of net sales of a subsidiary.

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.  In June 1999,
         the Board of Directors and the stockholders approved an increase in the
         number of shares  reserved  under  the  Option  Plan to bring the total
         number of shares  reserved to 810,000.  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 September  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 of November 9, 2003.

NOTE 9 - INITIAL PUBLIC OFFERING

         On February 23, 1999 the Company  completed an initial public  offering
         that  generated  net  cash of  $4,825,000  in the  first  quarter.  The
         offering  was for the sale of  1,000,000  shares of common  stock which
         represent  31.l25% 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  implementation  will be material to the  Company's
         financial position and results of operations.

                                       13
<PAGE>

                     U.S. LABORATORIES INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                 As of December 31, 1998 and September 30, 1999
      and for The Nine Months Ended September 30, 1999 and 1998 (unaudited)
      (The information with respect to the nine months ended September 30,
                          1999 and 1998 is unaudited.)



NOTE 11 - COMMITMENT

         During  1999,  we signed a three  year  office  building  lease  with a
related  party to lease office space in New Jersey for the  companies  financial
and mergers and acquisition staff.

         The rental payments are $1,600 per month plus utilities.

NOTE 12 - LINES OF CREDIT

         In the third  quarter  1999,  the  Company  entered  into a  $4,000,000
revolving working capital line of credit facility as part of its ongoing efforts
to ensure  appropriate  levels of  liquidity.  At the end of September 30, 1999,
this working capital line of credit was unused and available for future use.

         In the third quarter 1999, the Company entered into a $200,000  capital
purchases  line of credit  facility.  This line of credit is used for  equipment
purchases of the company and at the end of one year this  facility  will convert
to a five year  term  loan.  At the end of  September  30,  1999,  this  capital
purchases line of credit was unused and available for
future use.

         In the third quarter,  1999,  the Company  entered into a $350,000 term
loan facility to refinance  existing equipment debt. At the end of September 30,
1999, this term loan facility was unused and available for future use.

         All of these  credit  facilities  are  secured  with the  assets of the
company and its subsidiaries and bear interest at the variable prime rate.

         The  Company  also has 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.  The company does
not intend to use this credit facility in the future.




                                       14

<PAGE>

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

Financial Condition and Results of Operations

         Nine Months Ended September 30, 1999 and 1998

           Revenue.  Revenue for the nine months  ended  September  30, 1999 was
$11,230,000,  an increase of 33% over the same period in 1998.  The  increase is
primarily attributable to an internal growth rate of approximately 29%, with the
remaining 4% attributed to the expansion of operations  through the  acquisition
of an engineering consulting services company in the second quarter 1999.

           Gross  Profit.  Gross  profit  for the  nine  months  ended  1999 was
$5,531,289,  an increase of 37% over the same period in 1998.  This  increase in
gross profit was due primarily to the increase in revenues described above.

           Income Before Provision for Income Taxes. Income before provision for
income  taxes for the nine months  ended  September  30, 1999 was  $642,735,  an
decrease of 12% over the same  period in 1998.  The profit  decreased  due to an
increase  in  selling,  general  and  administrative   expenses.   Specifically,
increased  costs for travel and due  diligence to locate  potential  acquisition
candidates,  for upgrading  computer systems and increased costs to operate as a
public company that were not incurred in 1998.

           Interest  Expense.  Interest  expense  was $75,767 in the nine months
ended  September 30, 1999, an decrease of 36% over the same period in 1998. This
decrease was due  primarily to reduced debt  associated  with the funding of the
initial public offering.

           Net Income.  Net income for the nine months ended  September 30, 1999
was $385,641, a decrease of 9% over the same period in 1998. The decrease in net
income was primarily due to the increase in selling,  general and administrative
expenses described above.

Liquidity and Capital Resources

           During  the  nine  months  ended  September  30,  1999,  our net cash
provided by operating  activities was $303,867,  a decrease of 23% over the same
period in 1998 primarily due to the payment of estimated federal and state taxes
in the second and third quarters of 1999.

           In the third  quarter  1999,  we entered into a $4,000,000  revolving
working capital line of credit facility as part of its ongoing efforts to ensure
appropriate levels of liquidity.  At the end of September 30, 1999, this working
capital line of credit was unused and available for future use.

           In the  third  quarter  1999,  we  entered  into a  $200,000  capital
purchases  line of credit  facility.  This line of credit is used for  equipment
purchases of the company and at the end of one year this  facility  will convert
to a five year  term  loan.  At the end of  September  30,  1999,  this  capital
purchases line of credit was unused and available for future use.

           In the third  quarter,  1999 we  entered  into a  $350,000  term loan
facility to refinance existing equipment debt. At the end of September 30, 1999,
this term loan facility was unused and available for future use.

           All of these  credit  facilities  are secured  with the assets of our
company and our subsidiaries and bear interest at the variable prime rate.


                                       15

<PAGE>

Liquidity and Capital Resources (Continued)

           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 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.

Related Party Transactions

           During  1999,  we signed a three year  office  building  lease with a
related  party to lease office space in New Jersey for the  companies  financial
and mergers and acquisition staff. The rental payments are $1,600 per month plus
utilities.

Management Indebtedness

           At September 30, 1999, we had amounts due from a majority stockholder
in the amount of $140,515.  This amount was  evidenced by a promissory  note and
the  principal  payments  are due in three  equal  annual  installments  and are
non-interest bearing.

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.

Subsequent Event

           On October 15, 1999, we acquired certain assets and liabilities of an
engineering  firm in Naples,  Ft.  Myers,  Florida.  The  purchase  price was of
$100,000 in cash, plus 20,000 shares of U.S.  Laboratories Inc. common stock and
notes  payable of  $100,000.  The  Agreement  provides for the company to reduce
these  payments if the seller does not meet a minimum net book value or maintain
certain operating goals.


                                       16

<PAGE>


Backlog

As at September  30, 1999,  our backlog has reached  approximately  $10 million.
This figure has increased approximately 38% or $2.8 million from $7.2 million at
September 30, 1998.

New contract awards to our strategically  located subsidiaries in the northeast,
southeast and  southwest  regions of the United States are combined in the total
backlog.

The  following  major  new  contracts  cover  projects  from all the  subsidiary
regions.

o        The Philadelphia Eagles Football Team's new practice facility
o        The Dolphin Mall, retail and entertainment complex near Miami Airport
o        Deguardiola Development Ventures Abacoa Town Center in Jupiter, Florida
o        The Ocean  Spray  Distribution  Center and  various  projects  for Boyd
         Gaming in Las Vegas, Nevada
o        The Del Mar Marriott,  Sea World  Attraction  2000 and Hollywood  Water
         Quality Improvement Project in California

Forward Looking and Cautionary Statements

           Except  for the  historical  information  and  discussions  contained
herein,  statements  contained in this Form 10-QSB (including  statements in the
Year 2000 discussion above) may constitute  `forward looking  statements' within
the  meaning of the  Private  Securities  Litigation  Reform Act of 1995.  These
statements involve a number of risks, uncertainties and other factors that could
cause actual results to differ  materially,  including the company's  failure to
continue to develop and market new and  innovative  products and services and to
keep pace with technological change; competitive pressures; failure to obtain or
protect  intellectual  property rights;  the ultimate impact of the various Year
2000  issues on the  company's  business,  financial  condition  or  results  of
operations;  quarterly  fluctuations in revenues and volatility of stock prices;
the company's ability to attract and retain key personnel; currency and customer
financing risks;  dependence on certain  suppliers;  changes in the financial or
business  condition of the company's  distributors  or resellers;  the company's
ability to successfully manage acquisitions and alliances;  legal, political and
economic  changes and other risks,  uncertainties  and factors  discussed in the
company's  other filings with the  Securities  and Exchange  Commission,  and in
materials incorporated therein by reference.
















                                       17
<PAGE>

                                     Part II
Item 2.  Changes in Securities and Use of Proceeds.

         (a)      Not applicable.

         (b)      Not applicable.

         (c)      Not applicable.

         (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 November 10, 1999,  we have used the net proceeds as described in
the table below.

Use                                                           Amount

Acquisitions                                                  $305,000

Repayment of Debt                                           $2,150,000

Working Capital for Operations                                $650,000



Item 5.  Other Information

         The Board of  Directors  authorized  a stock  buyback  program  for the
repurchase of up to 100,000  shares of our common stock on November 2, 1999. The
open market  transactions  will be made from time to time as  determined  by us.
Repurchases  will be made in compliance  with  applicable  rules and regulations
utilizing corporate earnings, and may be discontinued at any time.









                                       18

<PAGE>


Item 6.           Exhibits and Reports on Form 8-K

         a.       Exhibits

                  None

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 September 30, 1999.













                                       19
<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: November 12, 1999             /S/ Dickerson Wright
                                    ------------------------------------
                                    Dickerson Wright, President


Date: November 12, 1999             /S/ Joseph M. Wasilewski
                                    ------------------------------------
                                    Joseph M. Wasilewski,
                                    Vice President and Chief Financial Officer







                                       20

<PAGE>


                                  Exhibit Index

Exhibit Number

27       Financial Data Schedule
          (EDGAR version only)













                                       21