SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-QSB


(Mark One)

X                 Quarterly Report Pursuant to Section 13 or 15(d) of the
                  Securities Exchange Act of 1934

                  For the quarterly period ended September 30, 1999


                         Commission file number 0-22136

                          MENLO ACQUISITION CORPORATION
             (Exact name of registrant as specified in its charter)

              Delaware                                         77-0332937
(State or other jurisdiction of                                 (IRS Employer
 incorporation or organization)                            Identification No.)

                                 100 Misty Lane
                              Parsippany, NJ 07054
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (973) 560-1400

Indicate by check mark whether the registrant (1) has filed all reports required
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days. Yes No X

At November 12, 1999 the registrant  had issued and  outstanding an aggregate of
5,263,348 shares of its common stock.
<PAGE>

INDEX

                          MENLO ACQUISITION CORPORATION
                                AND SUBSIDIARIES

                                                                        Page

PART I.  FINANCIAL INFORMATION

         Item 1.  Financial Statements

                  Condensed Consolidated Balance Sheets -
                  September 30, 1999 (Unaudited) and
                  December 31, 1998...................................F-3

                  Condensed Consolidated Statements of Income and
                  Comprehensive Income - Nine and Three Months Ended
                  September 30, 1999 and September 30, 1998
                  (Unaudited).........................................F-4 - F-5

                  Condensed Consolidated Statements of Cash Flows -
                  Nine Months Ended September 30, 1999
                  and September 30, 1998 (Unaudited)..................F-6

                  Notes to Condensed Consolidated Financial Statements
                  September 30, 1999 (Unaudited)......................F-7 - F-11

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

PART II. OTHER INFORMATION

         Item 1.  Not Applicable

         Item 2.  Not Applicable

         Item 3.  Not Applicable

         Item 4.  Not Applicable

         Item 5.  Other Information

         Item 6.  Exhibits and  Reports on Form 8-K

SIGNATURES


























                                      F-2

<PAGE>


                 MENLO ACQUISITION CORPORATION AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 1999 AND DECEMBER 31, 1998


                                               September          December
                                               30, 1999           31, 1998
                                               --------            --------
                                             (Unaudited)         (See Note 1)
                          ASSETS                (In thousands of dollars)
                          ------
Current assets:
     Cash                                          $ 1,108            $     25
     Marketable securities, at market                  218                   -
     Accounts receivable:
        Trade, net of allowance for doubtful
           accounts of $607 and $566                 3,788               4,833
        Unbilled receivables                           195                 107
        Affiliates                                     383                 285
     Prepaid expenses and other current assets          75                  82
     Due from affiliate                                  -                  27
                                                 ---------           ---------
               Total current assets                  5,767               5,359

Equipment and furnishings, net of accumulated
     depreciation of $837 and $550                   1,084               1,020
Other assets                                            14                  38
                                                 ---------           ---------

               Totals                               $6,865              $6,417
                                                    ======              ======


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current liabilities:
     Notes payable - bank                          $     -              $  400
     Current portion of long-term debt                 106                 106
     Accounts payable                                  635                 610
     Customer deposits                                 493                 523
     Accrued expenses and other liabilities            548                 243
     Income taxes payable                               66                  -
     Due stockholder                                     -                  55
                                                  --------            --------
               Total current liabilities             1,848               1,937
     Deferred taxes                                     15                  -
     Long-term debt, net of current portion            195                 275
                                                  --------            --------
               Total liabilities                     2,058               2,212
                                                   -------             -------

Stockholders' equity:
     Common stock, $.0001 par value; 40,000,000
       shares authorized; 5,263,348 issued and
       outstanding                                       1                   1
     Additional paid-in capital                      4,204               4,204
     Accumulated other comprehensive income             22                  -
     Retained earnings                                 580                  -
                                                  --------            --------
               Total stockholders' equity            4,807               4,205
                                                   -------             -------

               Totals                               $6,865              $6,417
                                                    ======              ======


See Notes to Condensed Consolidated Financial Statements.


                                       F-3
<PAGE>


                 MENLO ACQUISITION CORPORATION AND SUBSIDIARIES

      CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                   NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (Unaudited)

                                     Income
                                     ------


                                               1999                1998
                                              ------              ------
                                               (In thousands of dollars,
                                                  except share data)

Gross revenue                                 $9,959              $9,154
Direct project costs and other costs of
 operations                                    3,959               4,246
                                             -------             -------

Net revenue                                    6,000               4,908
                                             -------             -------

Expenses:
     Labor and related expenses                1,368               1,335
     Selling, general and administrative       3,724               3,204
     Interest                                     28                  67
                                             -------             -------
        Totals                                 5,120               4,606
                                             -------             -------

Income from operations                           880                 302

Other income                                      88                  65
                                             -------             -------

Income before income taxes                       968                 367

Provision for income taxes                       388                 147
(See Note 5)                                  ------             -------


Net income                                   $   580             $   220
                                             =======             =======

Basic net income per share                      $.11                $.04
                                                ====                ====

Basic weighted average common shares
outstanding                                5,263,348           5,263,348
                                           =========           =========


                              Comprehensive Income
                              --------------------


Net income                                      $580                $220
Other comprehensive income, net of tax
    Unrealized gains on securities:
      Unrealized holding gains arising
        during the year:                          22                  -
                                               -----                ----

Comprehensive income                            $602                $220
                                               =====                ====



See Notes to Condensed Consolidated Financial Statements.

                                       F-4



<PAGE>

                 MENLO ACQUISITION CORPORATION AND SUBSIDIARIES

      CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                     THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (Unaudited)

                                     Income
                                     ------

                                               1999                1998
                                              ------              ------
                                               (In thousands of dollars,
                                                  except share data)

Gross revenue                                 $3,438              $4,451
Direct project costs and other costs of
 operations                                    1,397               2,284
                                             -------             -------

Net revenue                                    2,041               2,167
                                             -------             -------

Expenses:
     Labor and related expenses                  387                 434
     Selling, general and administrative       1,352               1,089
     Interest                                      7                  25
                                             -------             -------
        Totals                                 1,746               1,548
                                             -------             -------

Income from operations                           295                 619

Other income                                      39                  16
                                             -------             -------

Income before income taxes                       334                 635

Provision for income taxes                       134                 254
(See Note 5)                                  ------             -------


Net income                                   $   200             $   381
                                             =======             =======

Basic net income per share                     $.04                $.07
                                               ====                ====

Basic weighted average common shares
outstanding                                5,263,348           5,263,348
                                           =========           =========


                              Comprehensive Income
                              --------------------

Net income                                      $200                $381
Other comprehensive income, net of tax
    Unrealized gains on securities:
      Unrealized holding gains arising during
        the year:                                 22                  -
                                               -----                ----

Comprehensive income                            $222                $381
                                               =====                ====



See Notes to Condensed Consolidated Financial Statements.

                                       F-5



<PAGE>



                 MENLO ACQUISITION CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (Unaudited)



                                                       1999                1998
                                                       ----                ----
                                                       (In thousands of dollars)
Operating activities:
     Net income                                         $580               $220
     Adjustments to reconcile net income to net
        cash provided by operating activities:
        Depreciation                                     287                261
        Provision for bad debts                          100                 90
        Changes in operating assets and liabilities:
           Accounts receivable - trade                   945             (1,471)
           Unbilled receivables                          (88)              (179)
           Accounts receivable - affiliates              (98)              (287)
           Prepaid expenses and other current assets       7                (86)
           Due from affiliate                             27                122
           Other assets                                   24                 -
           Accounts payable                               25              1,280
           Customer deposits                             (30)               184
           Accrued expenses and other liabilities        305                161
           Income Taxes payable                           66                147
                                                      ------             ------
            Net cash provided by operating activities  2,150                442
                                                      ------             ------

Investing activities:
     Purchase of equipment                              (351)              (460)
     Purchase of marketable securities                  (181)                 -
                                                      ------             ------
            Net cash used in investing activities       (532)              (460)
                                                      ------             ------

Financing activities:
     Repayment of notes payable - bank                  (400)              (367)
     Repayment of long-term debt - bank                  (80)               (50)
     Advances from (repayment to) stockholder            (55)               689
                                                      ------             ------
           Net cash (used in) provided by
            financing activities                        (535)               272
                                                       -----             ------

Net increase in cash                                   1,083                254

Cash, beginning of period                                 25                  4
                                                      ------             ------

Cash, end of period                                   $1,108             $  258
                                                      ======             ======


Supplemental disclosure of cash flow data:
     Interest paid                                     $  28              $  67
                                                       =====              =====

     Income taxes paid                                 $ 322              $  61
                                                       =====              =====




See Notes to Condensed Consolidated Financial Statements.

                                       F-6
<PAGE>




                          MENLO ACQUISTION CORPORATION
                                AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)


NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

The accompanying  condensed consolidated financial statements have been prepared
without audit by Menlo  Acquisition  Corporation,  ( "Menlo") in accordance with
generally accepted  accounting  principles for interim financial  statements and
pursuant to the rules of the Securities and Exchange  Commission (the "SEC") for
Form  10-QSB.  As used  herein,  "Company"  refers  to Menlo  and its  operating
subsidiaries.  Certain  information and footnotes required by generally accepted
accounting principles for complete financial statements have been omitted. It is
the opinion of management that all adjustments  considered  necessary for a fair
presentation  have been included,  and that all such adjustments are of a normal
and recurring  nature.  Further  information can be obtained by referring to the
Company's  Form 8-K  filed  with the SEC on March  10,  1999 and to the  audited
financial  statements  and footnotes  included in the Company's Form 8-K/A filed
May 10, 1999.

Certain  amounts in the 1998  Financial  Statements  have been  reclassified  to
conform with the current presentation.

The  consolidated  results of operations for the nine months ended September 30,
1999 are not  necessarily  indicative of the results to be expected for the full
year.

The  Company  has  two  operating   subsidiaries.   One  provides  environmental
consulting,  remedial and disposal  services with offices in Parsippany and West
Windsor, New Jersey  (Consulting).  The other conducts testing of soil and water
for  environmental  hazards with an office in Randolph,  New Jersey  (Lab).  The
subsidiaries operate primarily throughout New Jersey, New York,  Connecticut and
Pennsylvania.


NOTE 2: EARNINGS PER SHARE

Effective  January 1, 1999,  the Company  adopted the provisions of Statement of
Financial  Accounting  Standards  No. 128,  Earnings per Share ("FAS 128") which
requires the  presentation  of "basic" and, if appropriate,  "diluted"  earnings
(loss) per common share.  The  calculation of the basic net income per share and
the basic weighted average common shares  outstanding  shown in the accompanying
unaudited Condensed  Consolidated  Statements of Income and Comprehensive Income
for the nine and three months ended  September 30, 1998 have been computed as if
the shares outstanding as of September 30, 1999 had been effectively outstanding
at January 1, 1998.

For the nine and three months ended September 30, 1999 and 1998, the Company had
no common stock equivalents and, accordingly, diluted earnings per share amounts
have not been presented in the  accompanying  unaudited  Condensed  Consolidated
Statements of Income and Comprehensive Income.

NOTE 3: COMMITMENTS AND CONTINGENCIES

The Company is currently  subject to certain claims and lawsuits  arising in the
ordinary  course  of  its  business.  In the  opinion  of  management,  adequate
provision has been made for all known liabilities that are currently expected to
result from these claims and lawsuits,  and in the aggregate such claims are not
expected to have a material effect on the financial position of the Company. The
estimates  used in  establishing  these  provisions  could  differ  from  actual
results. Should these provisions change significantly,  the effect on operations
for any quarterly or annual reporting period could be material.

                                       F-7
<PAGE>

The Company has a $750,000  revolving  line-of-credit  facility  utilized by its
consulting segment.  Outstanding  borrowings are secured by substantially all of
the Company's assets.  The line of credit contains certain  covenants,  the most
restrictive of which includes the  maintenance of a maximum capital funds ratio,
as defined.  As of September 30, 1999,  the Company was in  compliance  with all
covenants and there were no amounts outstanding under the line of credit.

NOTE 4: BUSINESS SEGMENTS

The Company adopted Statement of Financial  Accounting  Standards No. 131 ("SFAS
131"), "Disclosures about Segments of an Enterprise and Related Information," at
the  beginning of 1998.  Following  the  provisions  of SFAS 131, the Company is
reporting segment revenue and income from operations in the same format reviewed
by the Company's  management (the  "management  approach").  The Company has two
reportable segments as described previously in Note 1.

Revenue,  income from operations and other related  segment  information for the
nine months ended September 30, 1999 and 1998 follows:

                                            1999                 1998
                                            -----                -----
                                             (In Thousands of Dollars)
  Gross revenue:
       Consulting                          $  6,861              $6,716
       Lab                                    3,696               2,988
       Inter-segment                           (598)               (550)
                                           --------             -------

           Totals                          $  9,959              $9,154
                                           ========             =======

  Direct project costs and other costs
     of operations:
       Consulting                          $  2,790              $3,341
       Lab                                    1,767               1,455
       Inter-segment                           (598)               (550)
                                           --------             -------

           Totals                          $  3,959              $4,246
                                           ========             =======

  Other operating expenses:
       Consulting                          $  3,871              $3,556
       Lab                                    1,648               1,152
       Inter-segment                           (399)               (102)
                                           --------             -------

           Totals                          $  5,120              $4,606
                                           ========             =======

  Income (loss) from operations:
       Consulting                          $    200              $ (181)
       Lab                                      281                 381
       Inter-segment                            399                 102
                                           --------             -------

           Totals                          $    880              $  302
                                           ========             =======

  Other income (expense):
       Consulting                          $    452              $  164
       Lab                                       35                   3
       Inter-segment                           (399)               (102)
                                           --------             -------

           Totals                          $     88              $   65
                                           ========             =======

                                       F-8
<PAGE>

NOTE 4: BUSINESS SEGMENTS (CONTINUED):

  Income (loss) before taxes:
       Consulting                          $    652             $   (17)
       Lab                                      316                 384
                                           --------            --------

           Totals                          $    968             $   367
                                           ========            ========

  Provision (credit) for income taxes:
       Consulting                          $    262             $    (7)
       Lab                                      126                 154
                                           --------            --------

           Totals                          $    388             $   147
                                           ========            ========

  Net Income (loss):
       Consulting                          $    390             $   (10)
       Lab                                      190                 230
                                           --------            --------

          Totals                           $    580             $   220
                                           ========            ========

Revenue,  income from operations and other related  segment  information for the
three months ended September 30, 1999 and 1998 follows:

                                             1999                 1998
                                            -----                -----

                                           (In Thousands of Dollars)
  Gross revenue:
       Consulting                          $  2,215             $ 3,521
       Lab                                    1,376               1,243
       Inter-segment                           (153)               (313)
                                           --------            --------

          Totals                           $  3,438             $ 4,451
                                           ========            ========

  Direct project costs and other
   costs of operations:
       Consulting                          $    919            $  2,064
       Lab                                      631                 533
       Inter-segment                           (153)               (313)
                                           --------            --------

          Totals                           $  1,397            $  2,284
                                           ========             =======

 Other operating expenses:
       Consulting                          $  1,263             $ 1,167
       Lab                                      628                 421
       Inter-segment                           (145)                (40)
                                           --------             -------

           Totals                          $  1,746             $ 1,548
                                           ========             =======

   Income from operations:
        Consulting                         $     33             $   290
        Lab                                     117                 289
        Inter-segment                           145                  40
                                            -------             -------

           Totals                          $    295             $   619
                                           ========             =======

                                       F-9

<PAGE>


NOTE 4: BUSINESS SEGMENTS (CONTINUED):

    Other income (expense):
         Consulting                        $    169             $    54
         Lab                                     15                   2
         Inter-segment                         (145)                (40)
                                           --------             -------

             Totals                        $     39             $    16
                                           ========             =======

    Income before taxes:
         Consulting                        $    202             $   344
         Lab                                    132                 291
                                           --------             -------

             Totals                        $    334             $   635
                                           ========             =======

    Provision for income taxes:
         Consulting                        $     81             $   137
         Lab                                     53                 117
                                           --------             -------

             Totals                        $    134             $   254
                                           ========             ========

    Net Income:
         Consulting                        $    121             $   207
         Lab                                     79                 174
                                           --------             -------

             Totals                        $    200             $   381
                                           ========             =======


  Assets by segment as of September 30, 1999
    and 1998 follow:
                                               1999                1998
                                               ----                ----
                                              (In Thousands of  Dollars)

    Cash and marketable securities,
     at market:
         Consulting                        $    876             $   195
         Lab                                    450                  63
                                           --------             -------

             Totals                        $  1,326             $   258
                                           ========             =======

    Accounts receivable, net:
         Consulting                        $  3,210             $ 5,500
         Lab                                  1,156               1,994
         Inter-segment                           -                 (808)
                                           --------             -------

             Totals                        $  4,366             $ 6,686
                                           ========             =======

    Equipment and furnishings,net:
         Consulting                        $    418             $   464
         Lab                                    666                 648
                                           --------             -------

             Totals                        $  1,084             $ 1,112
                                           ========             =======


                                   F-10

<PAGE>

NOTE 4: BUSINESS SEGMENTS (CONTINUED):


    Other assets:
         Consulting                        $     72             $   608
         Lab                                     17                 109
                                           --------             -------

             Totals                        $     89             $   717
                                           ========             =======

             Total assets                  $  6,865             $ 8,773
                                           ========            ========

NOTE 5: INCOME TAXES:

Prior to the acquisition of the two operating subsidiaries by the Company (Refer
to the Form 8-K/A),  the subsidiaries were Limited  Liability  Companies and, as
such, were treated as partnerships for Federal and State income tax purposes.  A
partnership is not a tax paying entity for Federal or State income tax purposes.
Income or loss of a limited  liability  company is  reported  in the  individual
member's  income tax returns and  accordingly,  no provision  for income tax had
been recorded in the  historical  condensed  consolidated  financial  statements
attributable to these limited liability  companies included with the Form 8-K/A.
The  unaudited  basic  net  income  per  share  data as shown  on the  Condensed
Consolidated  Statements  of Income  and  Comprehensive  Income for the nine and
three months ended September 30, 1998 is computed as if the Company acquired the
subsidiaries effective January 1, 1998 and was subject to Corporate Income Tax.

NOTE 6: COMPREHENSIVE INCOME:

Effective  January 1, 1999,  the Company  adopted the provisions of Statement of
Financial  Accounting  Standards No. 130, Reporting  Comprehensive  Income ("FAS
130") which establishes new rules for the reporting and display of comprehensive
income and its components.  The Company owns  marketable  securities as shown in
the accompanying  Condensed  Consolidated Balance Sheets which are classified as
available for sale.  These  securities are recorded at fair value and unrealized
gains and losses,  net of tax, are reported as accumulated  other  comprehensive
income  within  stockholders'  equity.  The adoption had no impact on prior year
financial statements.






















                                      F-11


<PAGE>


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

Cautionary Statement Regarding Forward Looking Statements

The  statements  in this  report that are  forward-looking  are based on current
expectations,  and actual  results may differ  materially.  The  forward-looking
statements  include  those  regarding  the  level of future  purchases  of fixed
assets,  the possible  impact of current and future  claims  against the Company
based upon  negligence and other theories of liability,  the  possibility of the
Company  making  acquisitions  during the next 12 to 18 months and the impact of
becoming Year 2000 compliant.  Forward-looking statements involve numerous risks
and  uncertainties  that  could  cause  actual  results  to  differ  materially,
including,  but not  limited  to,  the  possibilities  that the  demand  for the
Company's  services  may decline as a result of possible  changes in general and
industry  specific economic  conditions and the effects of competitive  services
and pricing;  one or more current or future  claims made against the Company may
result in substantial liabilities; and such other risks and uncertainties as are
described in reports and other  documents filed by the Company from time to time
with the Securities and Exchange Commission.

Results of Operations
(In thousands of dollars, except share data)

The following  tables set forth,  for the periods  indicated:  i) the percentage
that  certain  items in the  condensed  consolidated  statements  of income  and
comprehensive  income  of the  Company  bear  to  gross  revenues,  and  ii) the
percentage  increase  (decrease)  in dollar  amounts  of such items from year to
year.

Nine Month Comparison for Years 1999 and 1998



                                                                      Percentage
                                                                       Increase
                                                                      (Decrease)
                                                                         Nine
                                                                        Months
                                             Percentage                 Ended
                                          of Gross Revenue             9/30/99
                                         Nine Months Ended                 vs.
                                         ----------------                 --
                                     9/30/99          9/30/98          9/30/98
                                     ------           -------          -------

Gross revenue                           100.0%          100.0%             8.8%
Direct project costs and other costs
    of operations                        39.8            46.4             (6.8)%
                                       ------          ------             -----
       Net revenue                       60.2            53.6             22.2%
                                       ------          ------             -----

Expenses:
    Labor and related expenses           13.7            14.6              2.5%
    Selling, general and
     administrative                      37.4            35.0             16.2%
    Interest                              0.3             0.7            (58.2)%
                                       ------          ------            ------

       Totals                            51.4            50.3             11.2%
                                       ------          ------            ------

Income from operations                    8.8             3.3            191.4%

Other income                              0.9             0.7             35.4%
                                       ------          ------            ------

Income before income taxes                9.7             4.0            163.8%
                                       ======          ======            ======

<PAGE>

Gross  revenues for the nine months ended  September 30, 1999 were $9,959 versus
$9,154  for the  first  nine  months of 1998,  an  increase  of 8.8%.  Increases
occurred in both the  Consulting and Lab segments.  Lab revenues  increased $660
(net of inter-segment billing) and Consulting increased $145. Consulting revenue
increased  primarily  due to  continued  strength in the real estate  sector and
increased hours billed from the professional staff. The significant  increase in
the revenue of the Lab segment was a result of effective  direct  sales  efforts
from a larger sales force,  higher  utilization  of equipment used in performing
Lab  services  and  broadening  of the  customer  base  into the  pharmaceutical
industry.

Income from  operations  was $880 in the first nine months of 1999 as opposed to
$302 for the same  period  in 1998.  This  represents  an  increase  of  191.4%.
Operating  margins  rose to 8.8% for the current  period from 3.3% for the first
nine months of 1998.  The increase in  operating  income and margin was due to a
significant  reduction in the direct  project costs  incurred in the  Consulting
segment.  This resulted in a higher percentage of net revenue.  A larger portion
of revenues was generated from professional services in 1999 as compared to more
pass-through billing of reimbursable expenses in 1998.

Labor and related expenses  increased 2.5% compared to the corresponding  period
in the prior year primarily due to increases in the number of technical staff in
the Consulting segment and increases in compensation rates.

Selling,  general and  administrative  expenses  increased 16.2% compared to the
corresponding  period in the prior year primarily due to the increase in the Lab
segment direct sales force and their associated direct selling expenses.

Interest expense decreased 58.2% in the first nine months of 1999 as compared to
the first nine  months of 1998.  This  decrease  was due to  limited  use of the
revolving line of credit in 1999. There have been no amounts  outstanding on the
line since early March 1999 whereas there was significant  usage of the facility
during 1998.

Income before taxes for the period was $968 compared with $367 in the first nine
months of 1998,  an  increase  of 163.8%.  Tax  provisions  were  recorded at an
effective  rate of 40% for  both  1999  and  1998  (see  Note 5 in the  Notes to
Condensed  Consolidated  Financial  Statements).  Basic net income per share was
$.11 in 1999 versus $.04 in 1998. The Company had 5,263,348  shares  outstanding
at September 30, 1999 and the September 30, 1998 per share amount was calculated
assuming  the same number of shares were also  effectively  outstanding  at that
date.  The Company had no common  stock  equivalents  at  September  30, 1999 or
September 30, 1998, therefore no dilutive earnings per share were calculated.

Third Quarter Comparison for Years 1999 and 1998




                                                                      Percentage
                                                                       Increase
                                                                      (Decrease)
                                                                        Three
                                                                        Months
                                         Percentage                     Ended
                                      of Gross Revenue                 9/30/99
                                     Three Months Ended                  vs.
                                     ------------------                  --
                                      9/30/99         9/30/98          9/30/98
                                      -------         -------          -------
Gross revenue                          100.0%          100.0%           (22.8)%
Direct project costs and other costs
    of operations                       40.6            51.3            (38.8)%
                                      ------          ------            ------
       Net revenue                      59.4            48.7             (5.8)%
                                      ------          ------            ------
<PAGE>

Expenses:
    Labor and related expenses          11.3             9.7            (10.8)%
    Selling, general and
     administrative                     39.3            24.5             24.2%
    Interest                             0.2             0.6            (72.0)%
                                      ------          ------            ------
       Totals                           50.8            34.8             12.8%
                                      ------          ------            ------

Income from operations                   8.6            13.9            (52.3)%
                                                                        ------

Other income                             1.1             0.4            143.8%
                                      ------          ------            ------
Income before income taxes               9.7            14.3            (47.4)%
                                      ======          ======            ======

Gross  revenue for the  quarter  ended  September  30, 1999  totaled  $3,438,  a
decrease  of 22.8% from gross  revenue of $4,451 for the third  quarter of 1998.
There was a significant increase in the Lab segment of $293 (net of intercompany
billing)  due to  the  items  discussed  in the  nine-month  comparison.  In the
Consulting segment, the high level of 1998 third quarter revenue was a result of
the  correction of the billing  problems that occurred in the second  quarter of
1998. Please refer to the previous 10-QSB for a more detailed discussion of this
issue.  Third quarter 1999 revenue of the Consulting  segment is consistent with
the previous two quarters of 1999.

Income from operations was $295 in the third quarter of 1999, compared with $619
for the same period in 1998.  The  operating  margin fell to 8.6% in the current
quarter from 13.9% in the third  quarter 1998.  Again,  the margin for the third
quarter 1999 is  consistent  with previous  quarters of the year.  The unusually
high operating margin shown in the prior year is due to the large revenue amount
as explained above.

Labor and related  expenses  were not  substantially  different in comparing the
results of the two quarters.

The percentage of selling,  general and  administrative  expenses increased this
quarter as compared to the same quarter last year. The  percentage  shown in the
third quarter 1998 is reduced due to the higher revenue base in that quarter.

Interest  expense  decreased  72.0% in the third quarter 1999 as compared to the
third  quarter  1998.  This decrease was due to the fact that the Company had no
amounts  outstanding  on the  revolving  line-of-credit  during the entire third
quarter of 1999, while outstanding amounts in the third quarter of 1998 averaged
approximately $520.

Income  before taxes for the current  quarter was $334 compared with $635 in the
third quarter of 1998. Tax provisions  were recorded at an effective rate of 40%
for both  1999 and  1998  (see  Note 5 in the  Notes to  Condensed  Consolidated
Financial  Statements).  Basic net income per share was $.04 in 1999 versus $.07
in 1998 and was calculated as described  previously.  Again,  the Company had no
common stock equivalents at September 30, 1999 or September 30, 1998,  therefore
no dilutive earnings per share were calculated.


Liquidity and Capital Resources

Net cash provided by operations for the nine months ended September 30, 1999 was
$2,150 as  compared  to $442 for the first nine  months of the prior  year.  The
increase  in cash  provided by  operations  was due to  implementation  of a new
project  accounting  software  system in the Consulting  segment,  enabling more
timely billing of the Company's services and resulting in improved monitoring of
accounts  receivable and quicker  conversion to cash.  Additionally,  net income
increased  substantially  from the prior year and more stringent cash management
policies have been implemented.
<PAGE>

The Company  made net capital  expenditures  of $351 in the first nine months of
1999  compared to net capital  expenditures  of $460 in the first nine months of
the prior year. The Company anticipates that its capital expenditures, excluding
acquisitions,  for the  current  year  will be  approximately  the same as those
incurred  in the  prior  year.  Additionally,  the  Company  purchased  $181  of
marketable  securities in the first nine months of 1999. No such  purchases were
made in the first nine months of 1998.

The Company, in the normal course of business,  encounters  potential liability,
including claims for errors and omissions, resulting from the performance of its
services.  The Company is party to lawsuits and is aware of  potential  exposure
related to certain claims. In the opinion of management,  adequate provision has
been made for all known  liabilities that are currently  expected to result from
these  matters,  and in the  aggregate,  such claims are not  expected to have a
material  impact  on the  financial  position  and  liquidity  of  the  Company.
Currently,  the  Company is provided a $5 million  per  occurrence,  $10 million
aggregate  professional  services  insurance policy through an unrelated,  rated
carrier. The Company also maintains a general liability insurance policy with an
unrelated, rated carrier.

At September 30, 1999, the Company had cash on hand of $1,108. The Company has a
$750  revolving  credit  line  agreement  that  expired  on  October  31,  1999.
Management  is in  the  process  of  renewing  this  agreement  and  forsees  no
difficulties in the renewal. The lender has informed management that the current
agreement  will be extended  and remain in effect until such time as the renewal
agreement is finalized. At September 30, 1999, borrowings under the line were $0
leaving $750 available to the Company  compared to $530 outstanding at September
30, 1998.  Borrowings were available to the Company at an interest rate of 9% at
September 30, 1999 and 8.75% at September 30, 1998. The Company is in compliance
with all covenants pertaining to the credit line agreement.

The Company  believes that its available  cash, as well as cash  generated  from
operations  and its  available  credit  line,  will be  sufficient  to meet  the
Company's  cash  requirements  for the balance of the fiscal  year.  The Company
intends  to  actively  search  for   acquisitions  to  expand  its  geographical
representation  and enhance its technical  capabilities.  The Company expects to
utilize a portion of its  liquidity  over the next 12 to 18 months  for  capital
expenditures,  including  acquisitions  and  investments in aligned  businesses.
There are no  present  agreements,  understandings  or other  arrangements  with
respect to any acquisition or investment.


Year 2000 Compliance

Overview

Computer  systems and software have  historically  been coded to accept only two
digit  entries  for the year.  Consequently,  on January 1, 2000,  as well as on
other  significant  dates,  errors  may  occur.  If  computers  cannot  properly
distinguish  between the years 1900 and 2000,  computers may shutdown or perform
incorrect calculations.

Scope & Status

The Company has taken  seriously the potential  risks of the Year 2000 issue and
has devoted  resources to address the issue.  The Company has established a Year
2000  oversight  committee.  The committee was assigned to address the following
key components related to the Year 2000 issue:

   - Information  applications,  including the Company's project  management and
      accounting  systems
   - Computer  hardware,  software,  operating  systems and network
      infrastructure including telecommunications systems
   - Facility and administrative systems
   - Major suppliers and customers' systems
<PAGE>


During the fourth  quarter of 1998,  the Company  implemented a new  information
technology system (a project management and accounting  system).  This system is
warranted as Year 2000 compliant.  The Company has performed  specific Year 2000
compliance testing of this system as well as others in use during the first nine
months of 1999.

The Company has also  conducted an inventory and  assessment of its hardware and
software  for Year 2000  compliance.  Any  non-compliant  components  identified
(hardware  or software)  have been made  compliant  or replaced  with  compliant
versions.  Facility and administrative systems that support the Company (such as
telephone,  security  systems,  etc.)  have  also  been  assessed  for Year 2000
compliance  and  required  upgrades  to such  hardware  and  software  have been
completed.

The Company has undertaken an analysis of its vendors and suppliers to determine
potential  areas of risk  with  regard to their  failure  to  achieve  Year 2000
compliance. To-date, no such risks have been identified.  Contingency plans will
be  developed  as  appropriate  to address any  potential  problems  that may be
identified in the near future.

Costs

The costs  associated  with  Year 2000  compliance  have not been  material  and
generally fall within normally anticipated  operating and capital spending.  The
costs of becoming  Year 2000  compliant  have not been material to the financial
position of the Company.  Although the Company has not currently found the costs
of Year 2000 compliance to be material, it cannot ensure Year 2000 compliance by
third parties.

Risks

The conversion of the Company's project  management and accounting  systems to a
Year 2000 compliant  system  mitigates the risk that the Company would be unable
to maintain accurate client records and billings.

The Company  cannot  predict  with  accuracy the extent to which its vendors and
clients will become compliant.  The resulting effects on the Company's financial
position could be adversely  affected if major vendors or clients do not operate
into and beyond the change in the  millennium.  The  Company  believes  that the
completion of its Year 2000 Project  significantly  reduces the  possibility  of
major  interruptions to its normal business  operations;  however, no assurances
can be given.


<PAGE>



                                     PART II

                                OTHER INFORMATION

ITEM 5.   OTHER INFORMATION

          The  Company  has  been   advised  that  the  staff  of  the  National
          Association of Securities  Dealers,  Inc. ("NASD") has determined that
          shares of its common stock are no longer eligible for quotation in the
          OTC Bulletin Board service. The staff claims that the Company does not
          satisfy  the  eligibility   requirement  of  being  "current"  in  its
          reporting  obligations under the Securities  Exchange Act of 1934. The
          Company  strongly  disputes  that claim and believes that it has filed
          all  reports  required to be filed,  based upon a "no  action"  letter
          received by its predecessor  from the Division of Corporation  Finance
          of the  Securities  and Exchange  Commission  and  informal  advice it
          received from the accounting  staff of that Division.  The Company has
          retained counsel to pursue available  appeal/review  procedures within
          the NASD.

          There can be no assurance  that the Company's  shares will continue to
          be quoted on the OTC Bulletin  Board.  If the Company's  shares are no
          longer eligible for such quotation,  the Company will seek to have its
          shares  quoted on the "pink  sheets."  As a  consequence,  present and
          prospective  investors may experience some  difficulties in buying and
          selling the  Company's  shares or in obtaining  the benefits of a more
          established trading market for such shares.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

a.        Exhibits

          The  following  exhibits  are  furnished  along  with this Form 10-QSB
          Quarterly Report for the period ended September 30, 1999:

          Exhibit No. 27 - Financial Data Schedule

b.        Reports on Form 8-K

          During the quarter  ended September 30, 1999, the Company did not file
          any Current Reports on Form 8-K.






                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange act of 1934,
         the  registrant  has duly caused this report to be signed on its behalf
         by the undersigned thereunto duly authorized.





                                                  MENLO ACQUISITION CORPORATION



Date: November 12, 1999                            /ss/Frank Russomanno
                                                  --------------------------
                                                  Frank Russomanno
                                                  Chief Financial Officer