SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB



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

                  For the quarterly period ended June 30, 2001

                         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  X   No
                     -----    -----

At August 10, 2001 the  registrant  had issued and  outstanding  an aggregate of
5,263,348 shares of its common stock.
---------
<PAGE>
<TABLE>

                                      INDEX

                 MENLO ACQUISITION CORPORATION AND SUBSIDIARIES
<S>                                                                                <C>


PART I.  FINANCIAL INFORMATION                                                     PAGE

         Item 1.  Financial Statements

                  Condensed Consolidated Balance Sheets -
                  June  30, 2001 (Unaudited) and December 31, 2000..................F-3

                  Condensed Consolidated Statements of Income and Comprehensive Income -
                  Six and Three Months Ended June 30, 2001 and 2000  (Unaudited)....F-4 - F-5

                  Condensed Consolidated Statements of Cash Flows -
                  Six Months Ended June 30, 2001 and 2000 (Unaudited)...............F-6

                  Notes to Condensed Consolidated Financial Statements (Unaudited)..F-7 - F-12

         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.  Not Applicable

         Item 6.  Exhibits and Reports on Form 8-K

SIGNATURES

</TABLE>










                                       F-2
<PAGE>


<TABLE>




                 MENLO ACQUISITION CORPORATION AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 2001 AND DECEMBER 31, 2000
<S>                                                                                         <C>                <C>

                                                                                              June              December
                                                                                            30, 2001            31, 2000
                                                                                            --------            --------
                                                                                          (Unaudited)
                                                    ASSETS                                   (In thousands of dollars)
                                                    ------
Current assets:
     Cash and cash equivalents                                                              $  2,921             $ 2,195
     Investments in marketable securities                                                        279                 247
     Accounts receivable:
        Trade, net of allowance for doubtful accounts
           of  $508 and $618                                                                   3,605               3,219
        Unbilled receivables                                                                      10                  58
     Deferred tax assets                                                                          13                  26
     Prepaid expenses and other current assets                                                    86                 116
                                                                                               -----               -----
               Total current assets                                                            6,914               5,861

Property, equipment and furnishings, net of accumulated depreciation
       of $1,655 and $1,427                                                                    3,207               3,217
Other assets, net of accumulated amortization of $12 and $9                                       75                  80
                                                                                               -----               -----
               Totals                                                                       $ 10,196             $ 9,158
                                                                                            --------             -------
              LIABILITIES AND STOCKHOLDERS' EQUITY
              ------------------------------------

Current liabilities:
     Current portion of long-term debt                                                      $     25            $     24
     Accounts payable                                                                            747                 741
     Customer deposits                                                                           431                 440
     Accrued expenses and other liabilities                                                      562                 525
     Income taxes payable                                                                         83                   -
                                                                                                 ---                 ---
               Total current liabilities                                                       1,848               1,730
Long-term debt, net of current portion                                                         1,154               1,167
                                                                                               -----               -----
               Total liabilities                                                               3,002               2,897
                                                                                               -----               -----
Commitments and contingencies

Stockholders' equity:
     Preferred stock, $.0001 par value; 2,000,000 shares
        authorized; none issued                                                                   -                   -
     Common stock, $.0001 par value; 40,000,000 shares
        authorized; 5,263,348 issued and outstanding                                               1                   1
     Additional paid-in capital                                                                4,313               4,313
     Retained earnings                                                                         2,822               1,908
     Accumulated other comprehensive income -
         unrealized holding gain on marketable securities, net                                    58                  39
                                                                                                  --                  --
               Total stockholders' equity                                                      7,194               6,261
                                                                                               -----               -----
               Totals                                                                       $ 10,196             $ 9,158
                                                                                            --------             -------
See Notes to Condensed Consolidated Financial Statements.
</TABLE>

                                       F-3


<PAGE>
<TABLE>


                 MENLO ACQUISITION CORPORATION AND SUBSIDIARIES

       CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                     SIX MONTHS ENDED JUNE 30, 2001 AND 2000
                                   (Unaudited)

                                     Income
                                     ------
<S>                                                                                                <C>                         <C>

                                                                                                   2001                        2000
                                                                                                   ----                        ----
                                                                                                   (In thousands of dollars,
                                                                                                       except share data)

Gross revenue                                                                                    $8,582                      $7,218
Direct project costs and other costs of operations                                                3,252                       2,520
                                                                                                  -----                       -----
Net revenue                                                                                       5,330                       4,698
                                                                                                  -----                       -----
Expenses:
     Labor and related expenses                                                                   1,088                       1,125
     Selling, general and administrative                                                          2,728                       2,719
                                                                                                  -----                       -----
        Totals                                                                                    3,816                       3,844
                                                                                                  -----                       -----
Income from operations                                                                            1,514                         854

Other income (net of mortgage interest expense of $52 in 2001 and $7 in 2000)                       134                          95
                                                                                                    ---                         ---
Income before provision for income taxes                                                          1,648                         949

Provision for income taxes (See Note 5)                                                             734                         380
                                                                                                    ---                         ---
Net income                                                                                         $914                        $569
                                                                                                   ----                        ----

Basic earnings per share (See Note 2)                                                              $.17                        $.11
                                                                                                  -----                       -----
Basic weighted average common shares outstanding                                              5,263,348                   5,263,348
                                                                                              ---------                   ---------

                              Comprehensive Income
                              --------------------
Net income                                                                                         $914                        $569
Other comprehensive income (loss) - unrealized
      holding gain (loss) on marketable securities,
        net of income taxes                                                                          19                          (1)
                                                                                                     --                          ---
Comprehensive income                                                                               $933                        $568
                                                                                                   ----                        -----




See Notes to Condensed Consolidated Financial Statements.




                                       F-4
</TABLE>
<PAGE>
<TABLE>

                 MENLO ACQUISITION CORPORATION AND SUBSIDIARIES

      CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                    THREE MONTHS ENDED JUNE 30, 2001 AND 2000
                                   (Unaudited)

                                     Income
                                     ------
<S>                                                                                              <C>                        <C>
                                                                                                  2001                        2000
                                                                                                  ----                        ----
                                                                                                  (In thousands of dollars,
                                                                                                   except share data)

Gross revenue                                                                                    $4,399                      $3,651
Direct project costs and other costs of operations                                                1,518                       1,323
                                                                                                  -----                       -----
Net revenue                                                                                       2,881                       2,328
                                                                                                  -----                       -----
Expenses:
     Labor and related expenses                                                                     523                         548
     Selling, general and administrative                                                          1,380                       1,379
                                                                                                  -----                       -----
        Totals                                                                                    1,903                       1,927
                                                                                                  -----                       -----
Income from operations                                                                              978                         401

Other income (net of mortgage interest expense of $26 in 2001 and $7 in 2000)                        68                          41
                                                                                                     --                          --
Income before provision for income taxes                                                          1,046                         442

Provision for income taxes (See Note 5)                                                             459                         177
                                                                                                    ---                         ---
Net income                                                                                         $587                        $265
                                                                                                   ----                        ----


Basic earnings per share (See Note 2)                                                              $.11                        $.05
                                                                                                   ----                        ----
Basic weighted average common shares outstanding                                              5,263,348                   5,263,348
                                                                                              ---------                   ---------

                              Comprehensive Income
                              --------------------
Net income                                                                                         $587                        $265
Other comprehensive income (loss) - unrealized
      holding gain (loss) on marketable securities,
        net of income taxes                                                                           2                          (1)
                                                                                                     --                          --
Comprehensive income                                                                               $589                        $264
                                                                                                   ----                        ----



See Notes to Condensed Consolidated Financial Statements.



</TABLE>

                                       F-5

<PAGE>


                 MENLO ACQUISITION CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     SIX MONTHS ENDED JUNE 30, 2001 AND 2000
                                   (Unaudited)
<TABLE>

<S>                                                                                             <C>                 <C>

                                                                                                 2001                2000
                                                                                                 ----                ----
                                                                                                 (In thousands of dollars)
Operating activities:
     Net income                                                                                  $914                $569
     Adjustments to reconcile net income to net cash
        provided by operating activities:
        Depreciation                                                                              228                 211
        Amortization                                                                                3                   7
        Deferred income taxes                                                                       -                  (1)
        Loss on sale of fixed asset                                                                 -                   1
        Changes in operating assets and liabilities:
           Accounts receivable - trade                                                           (386)                364
           Unbilled receivables                                                                    48                 (14)
           Accounts receivable - affiliates                                                         -                 (10)
           Prepaid expenses and other current assets                                               30                  21
           Other assets                                                                             2                  (8)
           Accounts payable                                                                         6                 (81)
           Customer deposits                                                                       (9)                (16)
           Accrued expenses and other liabilities                                                  37                 (90)
           Income taxes payable                                                                    83                  55
                                                                                                   --                  --
               Net cash provided by operating activities                                          956               1,008
                                                                                                  ---               -----
Investing activities:
     Purchase of property, equipment and furnishings                                             (218)             (1,223)
     Proceeds from sale of equipment                                                                -                   1
     Redemption of marketable securities, net                                                       -                 499
                                                                                                 -----               -----
                      Net cash used in investing activities                                      (218)               (723)
                                                                                                 -----               -----

Financing activities - repayment of long-term debt and note payable - bank                        (12)               (274)
                                                                                                  ----               -----
Net increase in cash and cash equivalents                                                         726                  11

Cash and cash equivalents, beginning of period                                                  2,195               1,182
                                                                                                -----               -----
Cash and cash equivalents, end of period                                                       $2,921              $1,193
                                                                                               ------              ------
Supplemental disclosure of cash flow data:

     Interest paid                                                                              $  52                $ 15
                                                                                                -----                ----
     Income taxes paid                                                                           $638                $377
                                                                                                -----                ----
Supplemental schedule of noncash investing and financing activities:
     During the six months ended June 30, 2000, the Company completed an acquisition
     of a building for $1,850, in part, with the proceeds of a $1,200 mortgage.

See Notes to Condensed Consolidated Financial Statements.

</TABLE>


                                       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 as of June 30, 2001
and for the six and three month  periods  ended June 30, 2001 and 2000 have been
prepared without audit by Menlo Acquisition  Corporation ("Menlo") in accordance
with accounting  principles  generally  accepted in the United States of America
for interim financial statements and pursuant to the rules of the Securities and
Exchange Commission for Form 10-QSB. Accordingly,  certain information and notes
required by  accounting  principles  generally  accepted in the United States of
America for complete  financial  statements  have been omitted.  As used herein,
"Company" refers to Menlo and its operating  subsidiaries.  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.

The consolidated results of operations for the six and three month periods ended
June 30, 2001 are not  necessarily  indicative of the results to be expected for
the full year ending  December 31, 2001.  The unaudited  condensed  consolidated
financial statements should be read in conjunction with the audited consolidated
financial  statements and related notes included in the Company's  Annual Report
on Form 10-KSB for the year ended  December 31, 2000. The  consolidated  balance
sheet as of December 31, 2000, as presented on page F-3 of this report, has been
derived from those audited consolidated financial statements.

The  Company  has  two   operating   subsidiaries   (segments).   One   provides
environmental  consulting,  remedial  and  disposal  services  with  offices  in
Parsippany   and  West   Windsor,   New  Jersey  and  in   Englewood,   Colorado
("Consulting").  The other conducts testing of soil and water for  environmental
hazards, as well as testing for the pharmaceutical  industry, with a location in
Randolph,  New Jersey ("Lab"). The subsidiaries operate primarily throughout New
Jersey, New York, Connecticut, Pennsylvania and Colorado.

NOTE 2: EARNINGS PER SHARE

The Company presents "basic" and, if applicable,  "diluted"  earnings per common
share pursuant to the provisions of Statement of Financial  Accounting Standards
No. 128,  "Earnings per Share" ("SFAS 128"). Basic earnings per common share are
calculated  by  dividing  net income by the  weighted  average  number of common
shares  outstanding  during the period.  The calculation of diluted earnings per
common share is similar to that of basic earnings per common share,  except that
the  denominator is increased to include the number of additional  common shares
that would have been  outstanding  if all  potentially  dilutive  common shares,
principally  those  issuable  upon the  exercise of stock  options,  were issued
during the period.

For the six and three  month  periods  ended  June 30,  2001 and  2000,  diluted
earnings  per share have not been  presented  because  there were no  additional
shares derived from the assumed exercise of stock options and the application of
the treasury stock method. Such potentially dilutive securities,  however, could
dilute basic earnings per share in the future.

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 consolidated 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>

NOTE 3: COMMITMENTS AND CONTINGENCIES (CONTINUED)

The  Company has a committed  line of credit  agreement  with Summit Bank in the
amount of $1,000,000.  In addition,  it has a $750,000 line of credit  available
for either the purchase or refinance of equipment.  Outstanding  borrowings bear
interest  at the prime  rate less .5%.  At June 30,  2001,  the  Company  had no
outstanding  borrowings  under  either  line  of  credit.  The  line  of  credit
agreements contain certain covenants,  the most restrictive of which include the
maintenance of a maximum debt coverage ratio, as defined.  At June 30, 2001, the
Company was in  compliance  with all  financial  covenants  associated  with the
agreements.  Outstanding  borrowings are  collateralized by substantially all of
the Company's assets.

The Company had a committed line of credit agreement with PNC Bank in the amount
of $750,000 which expired on April 30, 2000.  Outstanding  borrowings under that
line bore  interest  at the prime rate plus .75%.  Outstanding  borrowings  were
collateralized  by substantially all of the Company's assets and were guaranteed
by the principal stockholder.

At  June  30,  2001,  long-term  debt  was  comprised  of  obligations  totaling
$1,178,860  that  represented  the remaining  balance of a mortgage note with an
original  principal  balance  of  $1,200,000.  The  mortgage  note was issued by
Norcrown Bank in connection with the purchase, from an unaffiliated third party,
of the facility used in the Company's  laboratory  testing  operations for total
consideration   of   $1,850,000.   The  mortgage  note  is  payable  in  monthly
installments  of $10,605 (based on a 20-year  amortization  schedule)  including
interest  at 8.75%  until July 1, 2005 at which time the  remaining  outstanding
balance is due. Subject to certain conditions,  the mortgage may be extended for
an additional  five years at an interest rate of 250 basis points above the then
Current Index Rate, as defined.  Future mortgage  principal  payments in each of
the five years  subsequent  to June 30, 2001,  assuming the mortgage note is not
extended,  are as follows:  $25,096 through June 30, 2002;  $27,383 through June
30, 2003;  $29,877  through June 30, 2004;  $32,599  through June 30, 2005;  and
$1,063,905 through July 1, 2005.


NOTE 4: BUSINESS SEGMENTS

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.
Additionally,  revenue,  expenses (primarily corporate related expenditures) and
other income (primarily investment income) related directly to Menlo Acquisition
Corporation are reported under the heading of "Holding".

Revenue,  income from operations and other related  segment  information for the
six months ended June 30, 2001 and 2000 follows:
<TABLE>

<S>                                                                                          <C>                  <C>
                                                                                                 2001               2000
                                                                                                 ----               ----
                                                                                               (In Thousands of Dollars)
                    Gross revenue:
                         Consulting - Third Party                                             $ 5,274              $4,679
                         Lab - Third Party                                                      3,308               2,539
                         Lab - Inter-segment                                                      387                 484
                         Holding - Inter-segment                                                1,637               1,013
                         Inter-segment                                                         (2,024)             (1,497)
                                                                                              -------              ------
                             Totals                                                           $ 8,582              $7,218
                                                                                              -------              ------
                    Direct project costs and other costs of operations:
                         Consulting                                                           $ 2,131              $1,629
                         Lab                                                                    1,508               1,375
                         Inter-segment                                                           (387)               (484)
                                                                                              -------              ------
                             Totals                                                           $ 3,252              $2,520
                                                                                              -------              ------
</TABLE>
                                       F-8


<PAGE>



NOTE 4: BUSINESS SEGMENTS (CONTINUED)
<TABLE>


<S>                                                                                          <C>                   <C>

                    Other operating expenses:
                         Consulting                                                           $ 2,682              $2,892
                         Lab                                                                    1,310               1,199
                         Holding                                                                   28                  80
                         Inter-segment                                                           (204)               (327)
                                                                                                 ----                ----
                             Totals                                                           $ 3,816              $3,844
                         `                                                                    -------              ------
                    Income from operations:
                         Consulting                                                          $    461              $  158
                         Lab                                                                      877                 449
                         Holding                                                                1,609                 933
                         Inter-segment                                                         (1,433)               (686)
                                                                                               ------                ----
                             Totals                                                           $ 1,514              $  854
                                                                                              -------              ------
                    Other income (expense):
                         Consulting                                                          $    288              $  410
                         Lab                                                                       11                  (4)
                         Holding                                                                   39                  16
                         Inter-segment                                                           (204)               (327)
                                                                                                -----                ----
                             Totals                                                          $    134             $    95
                                                                                             --------             -------
                    Income before provision for income taxes:
                         Consulting                                                          $    749            $    568
                         Lab                                                                      888                 445
                         Holding                                                                1,648                 949
                         Inter-segment                                                         (1,637)             (1,013)
                                                                                               ------               -----
                             Totals                                                           $ 1,648             $   949
                                                                                              -------             -------
                    Provision for income taxes:
                         Consulting                                                           $     -             $     -
                         Lab                                                                        -                   -
                         Holding                                                                  734                 380
                                                                                                  ---                 ---
                             Totals                                                           $   734               $ 380
                                                                                              -------               -----

                    Net income:
                         Consulting                                                          $    749             $   568
                         Lab                                                                      888                 445
                         Holding                                                                  914                 569
                         Inter-segment                                                         (1,637)             (1,013)
                                                                                               ------              ------
                             Totals                                                          $    914             $   569
                                                                                              --------             -------
</TABLE>
<TABLE>
<CAPTION>
Revenue, income from operations and other related segment information for the three months ended June 30,
2001 and 2000 follows:

<S>                                                                                           <C>                 <C>
                                                                                                 2001              2000
                                                                                                 ----              ----
                                                                                              (In Thousands of Dollars)
                    Gross revenue:
                         Consulting - Third Party                                             $ 2,591             $ 2,317
                         Lab - Third Party                                                      1,808               1,334
                         Lab - Inter-segment                                                      214                 241
                         Holding - Inter-segment                                                1,017                 480
                         Inter-segment                                                         (1,231)               (721)
                                                                                                -----             -------
                             Totals                                                           $ 4,399             $ 3,651
                                                                                              -------             -------
</TABLE>

                                       F-9

<PAGE>
<TABLE>
<S>                                                                                         <C>                  <C>

NOTE 4: BUSINESS SEGMENTS (CONTINUED)


                    Direct project costs and other costs of operations:
                         Consulting                                                          $    964             $   890
                         Lab                                                                      768                 674
                         Inter-segment                                                           (214)               (241)
                                                                                                 ----                ----
                             Totals                                                           $ 1,518              $1,323
                                                                                              -------              ------
                    Other operating expenses (income):
                         Consulting                                                           $ 1,339             $ 1,421
                         Lab                                                                      686                 625
                         Holding                                                                  (10)                 51
                         Inter-segment                                                           (112)               (170)
                                                                                              -------             -------
                             Totals                                                           $ 1,903             $ 1,927
                                                                                              -------             -------
                    Income from operations:
                         Consulting                                                          $    288            $      6
                         Lab                                                                      568                 276
                         Holding                                                                1,027                 429
                         Inter-segment                                                           (905)               (310)
                                                                                                -----                ----
                             Totals                                                          $    978              $  401
                                                                                             --------              ------
                    Other income (expense):
                         Consulting                                                           $   150              $  201
                         Lab                                                                       11                  (3)
                         Holding                                                                   19                  13
                         Inter-segment                                                           (112)               (170)
                                                                                                 ----                ----
                             Totals                                                          $     68             $    41
                                                                                             --------             -------
                    Income before provision for income taxes:
                         Consulting                                                          $    438             $   207
                         Lab                                                                      579                 273
                         Holding                                                                1,046                 442
                         Inter-segment                                                         (1,017)               (480)
                                                                                               ------                ----
                             Totals                                                          $  1,046             $   442
                                                                                             --------             -------
                    Provision for income taxes:
                         Consulting                                                          $      -            $      -
                         Lab                                                                        -                   -
                         Holding                                                                  459                 177
                                                                                                  ---                 ---
                             Totals                                                          $    459              $  177
                                                                                             --------              ------
                    Net income:
                         Consulting                                                          $    438            $    207
                         Lab                                                                      579                 273
                         Holding                                                                  587                 265
                         Inter-segment                                                         (1,017)               (480)
                                                                                               ------                ----
                             Totals                                                          $    587             $   265
                                                                                             --------             -------



</TABLE>

                                      F-10

<PAGE>

NOTE 4: BUSINESS SEGMENTS (CONCLUDED)
<TABLE>
<CAPTION>
Assets by segment as of  June 30, 2001 and 2000 follow:


<S>                                                                                              <C>              <C>
                                                                                                 2001             2000
                                                                                                 ----             ----
                                                                                            (In Thousands of Dollars)
                    Cash, cash equivalents and investments in marketable securities:
                         Consulting                                                          $    288            $    162
                         Lab                                                                      318                  81
                         Holding                                                                2,594               1,172
                                                                                                -----             -------
                             Totals                                                           $ 3,200             $ 1,415
                                                                                              -------             -------
                    Accounts receivable, net:
                         Consulting                                                          $  2,362            $  2,719
                         Lab                                                                    1,253                 956
                         Holding                                                                    -                  40
                                                                                             --------            --------
                             Totals                                                          $  3,615            $  3,715
                                                                                             --------            --------
                    Property, equipment and furnishings, net:
                         Consulting                                                          $    347            $    438
                         Lab                                                                    2,860               2,860
                                                                                             --------            --------
                             Totals                                                          $  3,207            $  3,298
                                                                                             --------            --------
                    Other assets:
                         Consulting                                                          $     77            $     97
                         Lab                                                                       13                   3
                         Holding                                                                   84                  82
                                                                                             --------            --------
                             Totals                                                          $    174            $    182
                                                                                             --------            --------
                             Total assets                                                    $ 10,196            $  8,610
                                                                                             --------            --------
</TABLE>

NOTE 5: INCOME TAXES

The  provisions  for income taxes for the six and three month periods ended June
30, 2001 and 2000 differ from the amounts  computed using the Federal  statutory
rate of 34% as a result of the following:
<TABLE>

<S>                                                                                                  <C>        <C>

                                                                                                     2001       2000
                                                                                                     ----       ----
Six month periods ended June 30, 2001 and 2000:

Expected provision at Federal statutory rate                                                          34.0%      34.0%
Effect of payments attributable to conversion from cash basis income tax reporting                     3.1         -
Effect of state income taxes, net of Federal income tax effect                                         7.4        6.0
                                                                                                       ---        ---
                Effective tax rate                                                                    44.5%      40.0%
                                                                                                      ----       ----
Three month periods ended June 30, 2001 and 2000:

Expected provision at Federal statutory rate                                                          34.0%      34.0%
Effect of payments attributable to conversion from cash basis income tax reporting                     2.8         -
Effect of state income taxes, net of Federal income tax effect                                         7.1        6.0
                                                                                                       ---        ---
                         Effective tax rate                                                           43.9%      40.0%
                                                                                                      ----       ----
</TABLE>
                                      F-11


<PAGE>


NOTE 6: PROPERTY, EQUIPMENT AND FURNISHINGS

Property, equipment and furnishings consist of the following
(In thousands of dollars):
                             Range of
                             Estimated            June          December
                             Useful Lives        30, 2001        31, 2000
                             ------------        --------        --------
Land                                -            $    158        $    158
Building                         40 Years           1,730           1,730
Equipment                       3-7 Years           2,442           2,227
Furniture and fixtures            7 Years             170             167
Vehicles                          5 Years             207             207
Leasehold improvements            7 Years             155             155
                                                     ----            ----
                                                    4,862           4,644
Less accumulated depreciation                       1,655           1,427
                                                    -----           -----
                              Totals              $ 3,207          $3,217
                                                  -------          ------

NOTE 7: RELATED PARTY TRANSACTIONS

The Company had previously  acquired options from its principal  stockholder for
the  purchase  of a 20%  equity  interest  in  an  affiliated  company,  In-Situ
Oxidative  Technologies,  Inc., which is 50% owned by the principal stockholder.
The  transaction  and the related options are more fully described in Note 10 of
the Company's Annual Report on Form 10-KSB for the year ended December 31, 2000.
The options were not exercised by the Company and expired on June 30, 2001.










































                                      F-12
<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,  but are not limited to, 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 and
the  possibility  of the Company  making  acquisitions  during the next 12 to 18
months. 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  table sets 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 period to
period.

Six Month Comparison for Years 2001 and 2000
<TABLE>
<S>                                                                           <C>                            <C>


                                                                                                             Percentage
                                                                                                              Increase
                                                                                                             (Decrease)
                                                                                                                Six
                                                                                                               Months
                                                                                    Percentage                 Ended
                                                                                 of Gross Revenue              6/30/01
                                                                                 Six Months Ended                vs.
                                                                                 ----------------                ---
                                                                              6/30/01         6/30/00          6/30/00
                                                                              -------         -------          -------
Gross revenue                                                                  100.0%          100.0%            18.9%
Direct project costs and other costs of operations                              37.9            34.9             29.0%
                                                                                ----            ----
       Net revenue                                                              62.1            65.1             13.5%
                                                                                ----            ----
Expenses:
    Labor and related expenses                                                  12.7            15.6             (3.3)%
    Selling, general and administrative                                         31.8            37.7              0.3 %
                                                                                ----            ----
          Totals                                                                44.5            53.3             (0.7)%
                                                                                ----            ----
Income from operations                                                          17.6            11.8             77.3%

Other income                                                                     1.6             1.3             41.1%
                                                                                ----            ----
Income before provision for income taxes                                        19.2            13.1             73.7%
                                                                                ----            ----

</TABLE>

<PAGE>


Gross  revenues for the six months ended June 30, 2001 were $8,582 versus $7,218
for the first six months of 2000, an increase of 18.9%.  Revenue  increases were
evident in both operating  segments.  Lab revenues increased $769 (not including
inter-segment  billing).  Consulting  revenues  increased by $595 for an overall
combined increase of $1,364.  The increase in the revenue of the Lab segment was
due to continued effective direct sales efforts in obtaining  analytical testing
jobs  from  larger   consulting   firms.   One   unaffiliated   client  provided
approximately  11.3% of the Lab revenue for the first six months of 2001 whereas
they were not a significant  component of the revenue of the first six months of
the prior year.  Additionally,  strong demand for  analytical  services from the
environmental  sector and an increased share of work granted by existing clients
has  contributed  to the higher  revenues.  The Lab segment  also  continues  to
realize  increased  sales  from the  broadening  of the  customer  base into the
pharmaceutical  industry.  While the  Consulting  segment  revenue  increase was
substantial,   $502  of  the   increase   was  from   pass-through   billing  of
sub-contractor  costs  associated  with client  projects.  The increase over the
prior year period  occurred as there were  several  large client  projects  that
required  the  significant  use of  sub-contractor  services  (primarily  in the
transportation  and disposal  areas).  The remaining  $93 of Consulting  segment
revenue  growth  was  attributable  to  a  slight  increase  in  the  number  of
professional  staff hours  billed in the first six months of 2001 as compared to
the first six months of the prior year.

Income from operations was $1,514 for the first six months of 2001 as opposed to
$854  for the same  period  in 2000.  This  represents  an  increase  of  77.3%.
Operating margins rose  significantly to 17.6% for the current period from 11.8%
for the first six months of 2000. Both segments showed substantial  increases in
their  income from  operations.  The  expenses of the Lab  operation  related to
performing  analyses  remain  relatively  constant,  therefore as testing volume
increases, a larger percentage of revenue is retained as income. The increase in
revenue discussed above, coupled with the relatively constant expenses, resulted
in the increases in both income and margins for the Lab segment.  The Consulting
segment  operating  income also increased  substantially  due to the rise in net
revenue and reduced operating expenses as explained below.

Labor and related expenses  decreased 3.3% compared to the corresponding  period
in the prior year.  This was  attributable to slightly lower staff levels in the
Consulting segment as compared to the first six months of 2000 and was partially
offset by increases in compensation rates over the prior period.

Selling, general and administrative (SG&A) expenses on an overall basis were not
significantly  different  from  those in the  first  six  months  of 2000 as the
overall increase was only 0.3%.  However,  Lab segment SG&A increased roughly 9%
to handle the increased  volume of business  while the  Consulting  segment SG&A
decreased  by  approximately  10% as an effort  was made to reduce or  eliminate
non-essential administrative expenses. Additionally,  effective January 1, 2001,
certain  management  of the  Company  is being  compensated  directly  by Menlo,
whereas  they were  compensated  by the  subsidiaries  in the prior  year.  This
compensation  and other  associated  management  costs are being offset  through
administrative fee charges to the operating subsidiaries and are included in the
applicable subsidiary's selling, general and administrative expense category.

Other income  increased 41.1% in the first six months of 2001 as compared to the
first six months of 2000.  The  increase  was almost  entirely  attributable  to
additional  administrative  fee  income.  Administrative  services  to a company
affiliated with the principal stockholder generated this additional income.

Income before provision for income taxes for the period was $1,648 compared with
$949 for the first six months of 2000, an increase of 73.7%. This increase was a
result of all of the factors discussed above. Tax provisions were recorded at an
effective  rate of 44.5%  for the  first  six  months  of 2001 and the basic net
income  per share was $.17.  See Note 5 in the Notes to  Condensed  Consolidated
Financial  Statements  for the  reconciliation  of the effective tax rate to the
statutory  rate.  In the  corresponding  period of 2000,  the tax  provision was
calculated using an effective rate of 40% and the basic net income per share was
$.11.  The Company had 5,263,348  shares  outstanding  at both June 30, 2001 and
2000 and diluted  earnings  per share would also be $.17 and $.11,  respectively
for the  periods  then ended as  described  in Note 2 in the Notes to  Condensed
Consolidated Financial Statements.
<PAGE>

Second Quarter Comparison for Years 2001 and 2000

<TABLE>
<S>                                                                       <C>               <C>             <C>


                                                                                                            Percentage
                                                                                                             Increase
                                                                                                            (Decrease)
                                                                                                              Three
                                                                                                              Months
                                                                                    Percentage                Ended
                                                                                 of Gross Revenue             6/30/01
                                                                                Three Months Ended              vs.
                                                                                ------------------              --
                                                                             6/30/01         6/30/00          6/30/00
                                                                             -------         -------          -------
Gross revenue                                                                  100.0%          100.0%            20.5%
Direct project costs and other costs of operations                              34.5            36.2             14.7%
                                                                               -----           -----
       Net revenue                                                              65.5            63.8             23.8%
                                                                               -----           -----
Expenses:
    Labor and related expenses                                                  11.9            15.0             (4.6)%
    Selling, general and administrative                                         31.4            37.8              0.1%
                                                                                ----            ----
          Totals                                                                43.3            52.8             (1.2)%
                                                                                ----            ----
Income from operations                                                          22.2            11.0            143.9%

Other income                                                                     1.6             1.1             65.9%
                                                                                ----             ---
Income before provision for income taxes                                        23.8            12.1            136.7%
                                                                                ----            ----
</TABLE>

Gross  revenues  for the three  months  ended June 30, 2001 were  $4,399  versus
$3,651 for the same  period in 2000,  an increase  of 20.5%.  Again,  there were
increases in both operating segments. Third party Lab segment revenues grew $474
while  Consulting  revenues  increased by $274.  Lab  revenues  continue to grow
significantly  over prior  periods due to the reasons  outlined in the six-month
discussion above.  Consulting professional staff billing (net revenue) increased
by $200 while the pass-through  component of Consulting revenue rose by $74. The
rise in net revenue for this quarter versus the second quarter of the prior year
was due  primarily to an increase in the total  number of billable  hours by the
professional staff.

Income from operations was $978 in the second quarter of 2001 as opposed to $401
for the same period in 2000.  This  represents an increase of 143.9%.  Operating
margins rose to 22.2% for the current  period from 11.0% for the second  quarter
2000.  Again,  both segments showed  substantial  increases in their income from
operations. The reasons for the increases in both income and margins for the Lab
segment  are the  same as  discussed  in the  six-month  comparison  above.  The
Consulting segment operating income and margin also increased  substantially due
to the rise in net  revenues  in the  quarter  and a  corresponding  decrease in
operating expenses.

Labor and related expenses  decreased 4.6% compared to the corresponding  period
in the prior year due to the reasons explained in the six-month comparison.

Selling,  general and  administrative  (SG&A)  expenses  experienced  an overall
increase of 0.1% compared to the second  quarter of the prior year.  Lab segment
SG&A increased by approximately  10% while Consulting  segment SG&A decreased by
approximately  6%. The reasons for the changes in the current quarter versus the
prior year second quarter are the same as noted above.

Other income  increased  65.9% in the second three months of 2001 as compared to
the  second  three  months  of  2000.   Again,   this  was  due  to   additional
administrative  fee income generated by providing  administrative  services to a
company affiliated with the principal stockholder.
<PAGE>

Income  before taxes for the period was $1,046  compared with $442 in the second
quarter of 2000, an increase of 136.7%. This increase was a result of all of the
factors  discussed  above.  Tax provisions were recorded at an effective rate of
43.9% for the  second  quarter  of 2001 and the basic net  income  per share was
$.11. See Note 5 in the Notes to Condensed Consolidated Financial Statements for
the  reconciliation  of the  effective  tax rate to the  statutory  rate. In the
corresponding  period  of  2000,  the tax  provision  was  calculated  using  an
effective  rate of 40% and the basic net income per share was $.05.  The Company
had  5,263,348  shares  outstanding  at both June 30,  2001 and 2000 and diluted
earnings per share would also be $.11 and $.05, respectively for the three month
periods then ended as described in Note 2 in the Notes to Condensed Consolidated
Financial Statements.

Liquidity and Capital Resources

Net cash provided by operations  for the six months ended June 30, 2001 was $956
as  compared  to $1,008  for the first six  months of the prior  year.  The most
significant  components of cash provided by operations in the current  six-month
period were net income and non-cash  expenses.  These were partially offset by a
rise in the total outstanding trade accounts  receivable.  Outstanding  accounts
receivable  is higher due to the  increased  revenues  achieved in the first six
months of 2001.  However,  the "days sales  outstanding"  (a  measurement of the
total  dollar  value of accounts  receivable  as a  percentage  of revenue)  has
actually  decreased as compared to the first six months of 2000.  This indicates
an improvement in the collection cycle. Cash provided by operations in the prior
year six-month period was due primarily to net income and a reduction of overall
accounts  receivable  balances  from  the  corresponding  period  in 1999 as the
effects of a newly implemented billing system were being realized.

The Company made net capital  expenditures for equipment and furnishings of $218
in the first six months of 2001 compared to net capital  expenditures  of $1,223
in the first six months of the prior year.  The current year  expenditures  were
primarily made to maintain and enhance the technology within the Lab segment. In
the prior year period, the most significant  expenditure was the purchase of the
Lab segment's  operating  facility for approximately  $1,850.  This purchase was
financed with a $1,200 mortgage loan and  approximately  $650 of Company working
capital.  The  Company  anticipates  that its  capital  expenditures,  excluding
possible  acquisitions,  for the current year will be  significantly  lower than
those  incurred in the prior year.  The Company  anticipates  that total capital
expenditures for the current year will not be in excess of $500. The Company did
not have any marketable  security  transactions  in the first six months of 2001
whereas there were net  redemptions  of  marketable  securities in the amount of
$499 made in the first six months of 2000.  Excess  operating cash will continue
to be invested in highly liquid  instruments in order to maximize  returns while
maintaining acceptable risk tolerances.

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.

At June 30, 2001,  the Company had cash and cash  equivalents  on hand of $2,921
and working capital of $5,066. The Company has a $1,000 revolving line-of-credit
facility available to its operating  segments.  Additionally,  the Company has a
$750 line that can be utilized for the purchase or re-finance of equipment.  Any
portion of the $750 equipment  line, if utilized,  will convert into a term loan
with a maximum five-year  amortization.  Outstanding borrowings bear interest at
the prime rate less .5%. At June 30, 2001,  there are no borrowings  outstanding
leaving the full amounts of both the revolving  line-of-credit and the equipment
line  available  to the  Company.  Currently,  the  Company  has no  bank  debt,
exclusive  of  the  mortgage  discussed  in  Note 3 in the  Notes  to  Condensed
Consolidated  Financial  Statements.  The current  credit lines  replaced a $750
revolving credit line agreement that expired on April 30, 2000. During the three
month period ended June 30, 2000 and in  conjunction  with the  expiration,  the
Company paid off, in full, its long-term debt in the amount of $248, the balance
outstanding  at the  expiration  date.  At June 30, 2000,  there were no amounts
outstanding on the credit lines. The Company is in compliance with all covenants
pertaining to the credit line agreements.
<PAGE>

The Company  believes that its available  cash, as well as cash  generated  from
operations  and its  committed  credit  lines,  will be  sufficient  to meet the
Company's cash  requirements for at least the next twelve months.  Additionally,
the Company  intends to continue 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  is no  present  agreement,  understanding  or other
arrangement  with respect to any  acquisition  or  investment.  However,  future
agreements concerning  acquisitions may require the Company to obtain additional
financing.

The Company does not believe that inflation has had a significant  impact on the
Company's results of operations for the periods presented.  On an ongoing basis,
the Company  attempts to minimize  any  effects of  inflation  on its  operating
results by controlling  operating  costs,  and,  whenever  possible,  seeking to
insure that billing rates and prices for its services reflect increases in costs
due to inflation.

<PAGE>

                                     PART II


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 June 30, 2001:

         None

   b.    Reports on Form 8-K

         During the quarter ended June 30, 2001, 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

                                                  /ss/ Frank Russomanno

  Date: August 10, 2001                          -----------------------------
                                                 Frank Russomanno
                                                 Chief Financial Officer