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 JUNE 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 June 30, 1999
-----                                            -------------------------------

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

Transitional Small Business Disclosure Format: Yes__   No   X







<PAGE>



                             U.S. Laboratories Inc.

                                      Index

                                                                            Page
Part I - Financial Information

Item 1. Financial Statements

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

Consolidated Statements of Operations
For the Six Months ended June 30, 1999 and 1998                             5
and the Three Months ended June 30, 1999 and 1998

Consolidated Statements of Stockholders Equity
For the Six Months Ended June 30, 1999                                      6

Consolidated Statements of Cash Flows
For the Six Months Ended June 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                           17

Item 4. Submission of Matters to a Vote of Security Holders                 18

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

Signatures                                                                  20

Exhibits                                                                    21






<PAGE>



Part I - Financial Information

Item 1.           Financial Statements
<TABLE>

                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                 December 31, 1998 and June 30, 1999 (unaudited)
<CAPTION>



                                     ASSETS

                                                                                        December 31,      June 30,
                                                                                           1998             1999
                                                                                       -------------    -------------
                                                                                                         (unaudited)
<S>                                                                                    <C>              <C>
Current assets
         Cash...................................................................       $     121,782    $   2,589,888
         Accounts receivable, net of allowances for doubtful
                  accounts of $38,241 and $83,705, respectively.................           3,290,353        3,668,482
         Work-in-process........................................................             254,782          373,506
         Prepaid expenses and other current assets..............................              45,602          258,220
                                                                                       -------------    -------------

                           Total current assets.................................           3,712,519        6,890,096

Furniture and equipment, net of accumulated depreciation
         of $783,695 and $904,696, respectively.................................             748,059          881,373
Excess cost over fair value of net assets acquired, net
         of accumulated amortization of $442,481 and $502,122,
         respectively...........................................................           1,637,427        1,584,813
Deferred offering costs.........................................................             552,738              -
Other assets....................................................................             217,984          289,941
                                                                                       -------------    -------------
                  Total assets..................................................       $   6,868,727    $   9,646,223
                                                                                       -------------    -------------

</TABLE>




<PAGE>


<TABLE>

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

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>

                                                                       December 31,              June 30,
                                                                          1998                      1999
                                                                       ------------             -----------
                                                                                                (unaudited)

<S>                                                                    <C>                      <C>
Current liabilities
      Book overdraft................................................   $    125,635             $    43,019
      Lines of credit...............................................        697,744                    -
      Current portion of long-term debt.............................        132,048                 199,664
      Current portion of capitalized lease obligations..............         12,498                  15,000
      Current portion of notes payable..............................        515,000                  75,000
      Accounts payable..............................................        581,738                 648,994
      Accrued payroll and payroll taxes.............................        222,641                 296,536
      Other accrued expenses........................................          -                     206,313
      Due to stockholder............................................         81,461                  84,125
      Deferred income tax...........................................      1,123,606               1,123,606
      Income tax payable............................................        162,708                 230,526
                                                                       ------------             -----------

         Total current liabilities..................................      3,655,079               2,922,783

Long-term debt, net of current portion..............................        211,383                 307,881
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               3,387,164
                                                                       ------------             -----------

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               1,033,860
                                                                       ------------             -----------

         Total stockholders' equity.................................      1,831,685               6,259,059
                                                                       ------------             -----------

                  Total liabilities and stockholders' equity........   $  6,868,727             $ 9,646,223
                                                                       ------------             -----------

</TABLE>




<PAGE>

<TABLE>


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


                                             For the Three Months Ended            For the Six Months Ended
                                                       June 30,                             June 30,
                                            -----------------------------        -----------------------------
                                            1999                     1998        1999                     1998
                                            -----------       -----------        -----------       -----------
                                            (unaudited)       (unaudited)        (unaudited)       (unaudited)

<S>                                         <C>               <C>                <C>               <C>
Revenue...........................          $ 3,802,001       $ 3,083,675        $ 6,984,701       $ 5,139,053

Cost of goods sold................            1,831,639         1,570,755          3,551,576         2,651,993
                                            -----------       -----------        -----------       -----------

Gross profit......................            1,970,362         1,512,920          3,433,125         2,487,060
                                            -----------       -----------        -----------       -----------

Selling, general, and
 administrative expenses..........            1,845,805         1,258,521          3,115,848         2,094,754
                                            -----------       -----------        -----------       -----------

Income from operations............              124,557           254,399            317,277           392,306
                                            -----------       -----------        -----------       -----------


Other income (expense)
         Interest expense.........          (    25,478)      (    18,118)       (    68,820)      (    45,697)
         Interest income..........               27,699             -                 40,642             3,856
         Other income.............               19,290            44,205             34,946            44,205
         Other expense............                -                 -                  -           (       119)
                                            -----------       -----------        -----------       -----------

           Total other income (expense)....      21,511            26,087              6,768             2,245
                                            -----------       -----------        -----------       -----------

Income before provision for income taxes...     146,068           280,486            324,045           394,551
Provision for income taxes.................      51,611           108,394            129,618           158,330
                                            -----------       -----------        -----------       -----------

Net income................................. $    94,457       $   172,092        $   194,427       $   236,221
                                            -----------       -----------        -----------       -----------

Basic income per share..................... $      0.03       $      0.08        $      0.07       $      0.11
                                            -----------       -----------        -----------       -----------

Diluted income per share................... $      0.03       $      0.08        $      0.07       $      0.11
                                            -----------       -----------        -----------       -----------


Weighted average shares outstanding........   3,200,000         2,185,505          2,905,555         2,185,505
                                            -----------       -----------        -----------       -----------
</TABLE>




<PAGE>




                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
               For the Six Months Ended June 30, 1999 ( unaudited)

<TABLE>
<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                                                                                 194,427          194,427
                                  ---------         --------       ----------           -----------      ----------
Balance, June
   30, 1999                       3,200,000         $ 32,000       $5,193,199           $1,033,860       $6,259,059
                                  ---------         --------       ----------           -----------      ----------
</TABLE>



<PAGE>



<TABLE>

                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
           For the Six Months Ended June 30, 1999 and 1998 (unaudited)
<CAPTION>

                                                                  For the Six Months Ended
                                                                          June 30
                                                           -------------------------------------
                                                              1999                     1998
                                                           -------------           -------------
                                                            (unaudited)             (unaudited)

<S>                                                        <C>                     <C>
Cash flows from operating activities
     Net income............................                $     194,427           $     236,221
     Adjustments to reconcile net income
        to net cash provided by operating
        activities
           Amortization....................                       52,614                  53,614
           Depreciation....................                      135,094                 105,607



(Increase) decrease in
    Accounts receivable....................                      (62,345)               (221,490)
    Work in process........................                     (118,724)               (219,602)
    Prepaid expenses.......................                     (212,618)                 23,206
    Other assets...........................                      (71,957)                  9,643
Increase (decrease) in
    Accounts payable.......................                       45,161                   4,985
    Accrued payroll and payroll taxes......                       73,895                (100,652)
    Other accrued expenses.................                      176,313                  85,511
    Income tax payable.....................                       67,818                 157,480
                                                           -------------           -------------

Net cash provided by operating
activities.................................                      279,678                 134,523
                                                           -------------           -------------

Cash flows from investing activities
     Purchase of furniture and
      equipment (net)......................                     (141,529)               (109,895)
     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 used in investing activities......                     (325,707)               (455,525)
                                                           -------------           -------------
</TABLE>




<PAGE>



<TABLE>

                     U.S. LABORATORIES INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
          For the Six Months Ended June 30, 1999 and 1998 (unaudited)
<CAPTION>

                                                                              For  the Six Months Ended
                                                                                      June 30
                                                                       -----------------------------------
                                                                          1999                    1998
                                                                       -----------             -----------
                                                                       (unaudited)             (unaudited)
<S>                                                                    <C>                     <C>
Cash flows from financing activities
    Increase (decrease) in book
       overdraft.................................                      $   (82,616)            $    16,804
Line of credit, (net).............................                      (1,877,744)                242,955
    Due to stockholders, (net)....................                           2,664                 340,403
Payments on long-term debt, capitalized
        lease obligations and notes payable.......                        (313,854)                (41,858)
    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...................                          -                      (265,788)
                                                                       -----------             -----------

Net cash provided by
financing activities..............................                       2,514,135                 267,516
                                                                       -----------             -----------

Net increase (decrease) in cash...................                       2,468,106                 (53,486)
                                                                       -----------             -----------

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

Cash, end of period...............................                     $ 2,589,888             $    40,646
                                                                       -----------             -----------

Supplemental disclosures of cash flow information

  Interest paid...................................                     $    68,820             $    45,697
                                                                       -----------             -----------

  Income taxes paid...............................                     $    61,800             $       850
                                                                       -----------             -----------
</TABLE>




<PAGE>




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



                     U.S. LABORATORIES INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
                As of December 31, 1998 and June 30, 1999 and for
             the Six Months Ended June 30, 1999 and 1998 (unaudited)
              (The information with respect to the six months ended
                      June 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
         furture  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 too fairly state the Company's
         financial position,  the results of operations,  and cash flows for the
         periods  presented.  The results of operations for the six months ended
         June 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,
         ccounts 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.



<PAGE>




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

      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 June 30,  1999,  uninsured  portions  of  balances  held at banks
      aggregated to $27,026 and  $2,260,654,  respectively.  The Company has not
      experienced  any losses in such accounts and believes it is not exposed to
      any significant credit risk on cash.




<PAGE>



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

NOTE 4 - FURNITURE AND EQUIPMENT

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

                                                              December 31,              June 30,
                                                                 1998                     1999
                                                              ------------             ----------

<S>                                                           <C>                      <C>
      Automobile and trucks...............................    $    621,719             $  747,204
      Furniture and fixtures..............................         291,199                267,917
      Office hardware and software........................          91,918                167,884
      Machinery and equipment.............................         423,846                476,989
      Leasehold improvements..............................         103,072                126,075
                                                              ------------             ----------

                                                                 1,531,754              1,786,069
      Less accumulated depreciation and amortization......         783,695                904,696
                                                              ------------             ----------

               Total......................................    $    748,059             $  881,373
                                                              ------------             ----------

      Depreciation  and  amortization  expense for the six months ended June 30,
      1998 and 1999 was $105,607 and $135,094, respectively.
</TABLE>

NOTE 5 - NOTES PAYABLE

      Notes payable consisted of the following at June 30, 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, 2000.....    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 June 30, 1999, the company had amounts due to the
      majority stockholder of $81,461 and$84,125,  respectively. The amounts are
      non-interest bearing and are payable upon demand.

      Stockholder Management Fees
      During the six months ended June 30, 1998, the Company expensed $81,237 in
      management fees to a stockholder. The management fees are based upon 5% of
      net sales of a subsidiary.



<PAGE>




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

NOTE 11 - ACQUISITION

         The Company  acquired the assets and liabilities of an engineering firm
         in Las Vegas,  Nevada in the second  quarter.  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.
<PAGE>


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





NOTE 12 - COMMITMENT

         Employment Agreement

         In April 1999,  the Company  entered  into a new  employment  agreement
effective April 1, 1999 with Joseph M. Wasilewski,  Chief Financial  Officer and
Vice  President  which  has a three  year term  expiring  on April 1,  2002.  In
addition to a base salary,  Mr. Wasilewski has been granted 50,000 stock options
at a price  of $6.00  per  share  which  vest  over  the term of the  employment
agreement.





<PAGE>



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

Financial Condition and Results of Operations

     Six Months Ended June 30, 1999 and 1998

         Revenue. Revenue for the six months ended June 30, 1999 was $6,984,701,
an  increase  of 36% over the same period in 1998.  The  increase  is  primarily
attributable to an internal growth rate of approximately 34%, with the remaining
2%  attributed  to the expansion of  operations  through the  acquisition  of an
engineering consulting services company that expanded the company's geographical
presence  to  include  Las  Vegas,  Nevada  and  includes  service to the gaming
industry that is complimentary to the company's existing service to the Atlantic
City gaming industry through its New Jersey operations.

         Gross  Profit.   Gross  profit  for  the  six  months  ended  1999  was
$3,433,125,  an increase of 38% 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 and  minority  interest for the six months ended June 30, 1999 was
$324,045,  an decrease of 18% over the same period in 1998. The profit decreased
due  to  an   increase  in  selling,   general  and   administrative   expenses.
Specifically,   increased  costs  for  the   implementation  of  an  acquisition
department in the second quarter 1999 and increased costs to operate as a public
company which were not incurred in 1998.

         Interest Expense.  Interest expense was $68,820 in the six months ended
June 30, 1999,  an increase of 51% 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 six months ended June 30, 1999 $194,927,
an decrease of 18% 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 six months  ended June 30,  1999,  our net cash  provided by
operating  activities was $279,678,  an increase of 108% 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.

Liquidity and Capital Resources

         We currently intend to use  approximately  $2.0 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.

Liquidity and Capital Resources (continued)

         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.

<PAGE>


During 1999, we intend to actively continue our search for acquisitions in order
to  expand  our   geographical   representation   and  enhance   our   technical
capabilities.

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.



<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 August 11,  1999,  we have used the net  proceeds as described in
the table below.

--------------------------------------------- ------------------------
Use                                           Amount
--------------------------------------------- ------------------------
Acquisitions                                     $  205,000
--------------------------------------------- ------------------------
Repayment of Debt                                $2,150,000
--------------------------------------------- ------------------------
Working Capital for Operations                   $  270,000
--------------------------------------------- ------------------------


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

On June 19, 1999, the Company's  Annual Meeting of Stockholders  was held in Las
Vegas, Nevada, for the following purposes:

(a) The following  directors  were elected to serve  one-year terms to expire at
    the year 2000 Annual Meeting of Stockholders:

         Electon of Directors:     FOR          AGAINST          WITHHELD
         ---------------------     ---          -------          --------

         Dickerson Wright          3,160,922       0              4,200
         Gary Elzweig              3,160,922       0              4,200
         Donald C. Alford          3,160,922       0              4,200
         Mark Baron                3,160,922       0              4,200
         Martin B. Lowenthal       3,160,922       0              4,200
         Joseph Wasilewski         3,160,922       0              4,200
         Thomas H. Chapman         3,160,922       0              4,200
         James L. McCumber         3,160,922       0              4,200
         Robert E. Petersen        3,160,922       0              4,200
         Noel Schwartz             3,160,922       0              4,200
         Irvin Fuchs               3,160,922       0              4,200

(b) The  Stockholders  approved an amendment to the Company's  1998 Stock Option
    Plan to increase the authorized  number shares of Common Stock available for
    issuance  under  the Plan by  310,000  shares to a total of  810,000  and to
    comply with California law. The total number of votes cast for,  against and
    abstained was 2,345,440; 57,100; and 14,000, respectively.

<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 June 30, 1999.




<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: August 11, 1999                /S/ Dickerson Wright
                                     ------------------------------------
                                     Dickerson Wright, President


Date: August 11, 1999                /S/ Joseph M. Wasilewski
                                     ------------------------------------
                                     Joseph M. Wasilewski,
                                     Vice President and Chief Financial Officer


<PAGE>



                                  Exhibit Index

Exhibit Number



27             Financial Data Schedule
               (EDGAR version only)