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 March 31, 2000

                         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 May 8,  2000 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

                  Independent Accountants' Review Report...................F-3

                  Condensed Consolidated Balance Sheets -
                  March  31, 2000 (Unaudited) and
                  December 31, 1999........................................F-4

                  Condensed Consolidated Statements
                  of Income and Comprehensive Income -
                  Three Months Ended March 31, 2000
                  and  1999 (Unaudited).................................... F-5

                  Condensed Consolidated Statements of Cash Flows -
                  Three Months Ended March 31, 2000
                  and 1999 (Unaudited)......................................F-6

                  Notes to Condensed Consolidated Financial Statements
                  March 31, 2000 (Unaudited).........................F-7 - F-10

         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








                                       F-2

<PAGE>





                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT



                  To the Board of Directors and Stockholders
                  Menlo Acquisition Corporation


                  We  have  reviewed  the  accompanying  condensed  consolidated
                  balance   sheet   of   Menlo   Acquisition   Corporation   and
                  subsidiaries  as of March 31, 2000 and the  related  condensed
                  consolidated statements of income and comprehensive income and
                  cash flows for the three-month period then ended.

                  These  financial  statements  are  the  responsibility  of the
                  company's management.

                  We  conducted   our  review  in  accordance   with   standards
                  established  by the American  Institute  of  Certified  Public
                  Accountants.   A  review  of  interim  financial   information
                  consists  principally  of applying  analytical  procedures  to
                  financial data and making inquiries of persons responsible for
                  financial and accounting  matters. It is substantially less in
                  scope than an audit  conducted in  accordance  with  generally
                  accepted  auditing  standards,  the  objective of which is the
                  expression of an opinion  regarding  the financial  statements
                  taken as  a  whole.  Accordingly, we  do not  express such an
                  opinion.

                  Based  on  our  review,  we are  not  aware  of  any  material
                  modifications   that  should  be  made  to  the   accompanying
                  financial  statements  for  them  to  be  in  conformity  with
                  generally accepted accounting principles.


                                                J.H. Cohn LLP

                  Roseland, New Jersey
                  May 1, 2000








                                       F-3
<PAGE>



                 MENLO ACQUISITION CORPORATION AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 2000 AND DECEMBER 31, 1999

                                                       March           December
                                                      31, 2000          31, 1999
                                                      --------        ----------
                                                    (Unaudited)
                                                      (In thousands of dollars)
                        ASSETS

Current assets:
     Cash and cash equivalents                         1,690            $  1,182
     Investments in marketable securities              1,216                 722
     Accounts receivable:
        Trade, net of allowance for doubtful accounts
           of  $552 and $614                           3,281               3,880
        Unbilled receivables                              50                  65
        Affiliates                                       110                 110
     Prepaid expenses and other current assets            52                 100
     Deferred tax assets                                  35                  34
                                                     --------          ---------
               Total current assets                    6,434               6,093

Equipment and furnishings, net of accumulated
     depreciation of $ 1,063 and $965                  1,386               1,088
Other assets, net of accumulated amortization
     $5 and $0                                            62                  67
                                                     -------           ---------

               Totals                                 $7,882              $7,248
                                                      ======              ======

              LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current portion of long-term debt                $  106              $  106
     Accounts payable                                  1,032                 942
     Customer deposits                                   450                 445
     Accrued expenses and other liabilities              450                 444
     Income taxes payable                                255                  -
                                                       -----               -----
               Total current liabilities               2,293               1,937
     Long-term debt, net of current portion              142                 168
                                                       -----               -----

               Total liabilities                       2,435               2,105
                                                       -----               -----

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                                 1,107                 803
     Accumulated other comprehensive income -
        Unrealized holding gains on marketable
          securities                                      26                  26
                                                       -----               -----
               Total stockholders' equity              5,447               5,143
                                                     -------             -------

               Totals                                 $7,882              $7,248
                                                      ======              ======

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 MARCH 31, 2000 AND 1999
                                   (Unaudited)

                                     Income
                                     ------
                                                      2000               1999
                                                     ------             ------

                                                      (In thousands of dollars,
                                                         except share data)

Gross revenue                                        $3,567             $3,247
Direct project costs and other costs of operations    1,197              1,303
                                                    -------            -------

Net revenue                                           2,370              1,944
                                                    -------            -------

Expenses:
     Labor and related expenses                         577                498
     Selling, general and administrative              1,340              1,144
                                                      -----              -----
        Totals                                        1,917              1,642
                                                      -----             ------

Income from operations                                  453                302

Other income (expense)                                   54                 (2)
                                                   --------             -------

Income before income taxes                              507                300

Provision for income taxes (See Note 5)                 203                 -
                                                   --------             -------

Net income                                             $304               $300
                                                      =====               ====


Basic net income per share (See Note 5)               $ .06               $.06
                                                      =====              =====

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


                              Comprehensive Income
                              --------------------
Net income                                             $304               $300
Other comprehensive income, net of taxes
      Unrealized holding gains on marketable
        securities arising during the period:            -                  -
                                                      -----              -----

Comprehensive income                                   $304               $300
                                                      =====               ====




See Notes to Condensed Consolidated Financial Statements.

                                       F-5


<PAGE>


                 MENLO ACQUISITION CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                                   (Unaudited)



                                                          2000             1999
                                                          ----             ----
                                                       (In thousands of dollars)
Operating activities:
     Net income                                            $304            $300
     Adjustments to reconcile net income to net cash
        provided by operating activities:
        Depreciation                                         98              86
        Amortization                                          5              -
        Deferred income taxes                                (1)             -
        Changes in operating assets and liabilities:
           Accounts receivable - trade                      599              33
           Unbilled receivables                              15             (92)
           Accounts receivable - affiliates                   -              11
           Prepaid expenses and other current assets         48               9
           Due from affiliate                                 -              27
           Other assets                                       -              20
           Accounts payable                                  90             204
           Customer deposits                                  5             (39)
           Accrued expenses and other liabilities             6              59
           Income taxes payable                             255              -
                                                            ---            ----
               Net cash provided by operating activities  1,424             618
                                                          -----            ----

Investing activities:
     Purchase of equipment and furnishings                 (396)            (53)
     Purchase of marketable securities                     (494)              -
                                                          ------           -----
               Net cash used in investing activities       (890)            (53)
                                                          ------           -----

Financing activities:
     Repayment of notes payable - bank                       -             (400)
     Repayment of long-term debt - bank                     (26)            (27)
     Repayment of advances from stockholder                  -              (10)
                                                           -----           -----
               Net cash used in financing activities        (26)           (437)
                                                           -----           -----

Net increase in cash and cash equivalents                   508             128

Cash and cash equivalents, beginning of period            1,182              25
                                                         ------           -----

Cash and cash equivalents, end of period                 $1,690           $ 153
                                                         ======           =====

Supplemental disclosure of cash flow data:
     Interest paid                                         $  5           $  14
                                                           ====           =====

     Income taxes paid                                    $   0            $  1
                                                          =====             ===

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.

Certain  amounts in the 1999  Financial  Statements  have been  reclassified  to
conform with the current presentation.

The consolidated results of operations for the three months ended March 31, 2000
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 and in Englewood, Colorado (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, Pennsylvania and Colorado.

NOTE 2: EARNINGS PER SHARE

The Company presents "basic" and, if appropriate,  "diluted" earnings (loss) per
common share  pursuant to the  provisions  of Statement of Financial  Accounting
Standards No. 128, Earnings per Share ("FAS 128").

Basic  earnings  (loss) per common share is calculated by dividing net income or
loss by the weighted  average  number of common  shares  outstanding  during the
period.  The calculation of diluted  earnings (loss) per common share is similar
to that of basic earnings  (loss) 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.
Diluted  earnings per share have not been  presented for the quarter ended March
31, 2000 because the  difference  to basic  earnings per share was not material.
For the quarter ended March 31, 1999,  the Company had no  potentially  dilutive
common shares.

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>



As of March 31,  2000,  the  Company  had a  $750,000  revolving  line-of-credit
facility utilized by its consulting  segment.  The facility expired on April 30,
2000.  Outstanding borrowings were secured by substantially all of the Company's
assets. The line of credit contained certain covenants,  the most restrictive of
which included the maintenance of a maximum capital funds ratio, as defined.  As
of March 31, 2000,  the Company was in  compliance  with all covenants and there
were no amounts outstanding under the line of credit.

The Company has received a  commitment  from another  financial  institution  to
replace its expired line-of-credit. The commitment is for a $1,000,000 revolving
line-of-credit  to be used by its  operating  segments and a $750,000 line to be
utilized by the  Company's  Lab segment for either the purchase or re-finance of
equipment. The Company anticipates the completion of this refinancing will occur
during the second quarter of 2000.

In addition, the Company has entered into a contract to purchase the facility in
which the Lab  segment  operates  from the current  unaffiliated  lessor for the
amount of $1,850,000.  The Company  intends to finance this  purchase,  in part,
with a  mortgage  in the  amount of  $1,200,000.  Purchase  of the  facility  is
anticipated to be completed by June 15, 2000 and will support anticipated future
growth of the Lab segment for at least the next five years.

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 and expenses  (primarily  legal and  accounting)  related
directly to Menlo  Acquisition  Corporation  are  reported  under the heading of
"Holding".

Revenue,  income from operations and other related  segment  information for the
three months ended March 31, 2000 and 1999 follows:
                                                   2000             1999
                                                   ----             ----
                                                 (In Thousands of Dollars)
    Gross revenue:
         Consulting - Third Party                $2,362           $2,413
         Lab - Third Party                        1,205              834
         Lab - Inter-segment                        243              251
         Holding - Inter-segment                    533                -
         Inter-segment                             (776)            (251)
                                                 ------           ------
             Totals                              $3,567           $3,247
                                                 ======           ======

    Direct project costs and other costs of operations:
         Consulting                              $  739           $1,023
         Lab                                        701              531
         Inter-segment                             (243)            (251)
                                               --------           ------
             Totals                            $  1,197           $1,303
                                               ========           ======

    Other operating expenses
         Consulting                            $  1,471           $1,296
         Lab                                        574              467
         Holding                                     29               -
         Inter-segment                             (157)            (121)
                                               ---------          -------
             Totals                            $  1,917           $1,642
                                               =========          =======

                                       F-8


<PAGE>



NOTE 4: BUSINESS SEGMENTS (CONTINUED):

                    Income from operations:
                         Consulting                $152             $    94
                         Lab                        173                  87
                         Holding                    504                   -
                         Inter-segment             (376)                121
                                              ---------             -------
                             Totals           $     453               $ 302
                                              =========               =====

                    Other income (expense):
                         Consulting           $     209              $  125
                         Lab                         (1)                 (6)
                         Holding                      3                   -
                         Inter-segment             (157)               (121)
                                             ----------            --------
                             Totals             $    54               $  (2)
                                                =======              ======

                      Income before taxes:
                         Consulting            $    361            $    219
                         Lab                        172                  81
                         Holding                    507                   -
                         Inter-segment             (533)                  -
                                              ---------              ------
                             Totals           $     507             $   300
                                              =========             =======

                      Provision for income taxes:
                         Consulting              $    -              $    -
                         Lab                          -                   -
                         Holding                    203                   -
                                                    ---                 ---
                             Totals           $     203               $   -
                                              =========               =====

                      Net Income:
                         Consulting            $    361            $    219
                         Lab                        172                  81
                         Holding                    304                   -
                         Inter-segment             (533)                  -
                                              ---------               -----
                             Totals           $     304             $   300
                                              =========             =======



                Assets by segment as of  March 31, 2000 and 1999 follow:

                                                   2000                1999
                                                   -----               ----

                                                   (In Thousands of Dollars)

                    Cash and investments in marketable securities:
                         Consulting             $ 1,038               $  75
                         Lab                      1,135                  78
                         Holding                    733                   -
                                                    ---                 ---
                             Totals            $  2,906              $  153
                                               ========              ======

                      Accounts receivable, net:
                         Consulting            $  2,533              $4,248
                         Lab                        926               1,696
                         Inter-segment              (18)               (671)
                                               --------              ------
                             Totals            $  3,441              $5,273
                                               ========              ======

                                       F-9


<PAGE>



NOTE 4: BUSINESS SEGMENTS (CONCLUDED):


                    Equipment and furnishings, net:
                         Consulting               $  414            $    425
                         Lab                         972                 562
                                                --------                ----
                             Totals             $  1,386             $   987
                                                ========             =======

                     Other assets:
                         Consulting               $   63             $    74
                         Lab                           6                  17
                         Holding                      80                   -
                                                      --                 ---
                             Totals             $    149              $   91
                                                ========              ======

                             Total assets        $ 7,882             $ 6,504
                                                 =======             =======



NOTE 5: INCOME TAXES:

Prior to the  acquisition  of the two operating  subsidiaries  by the Company on
March 10, 1999, 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 accompanying  condensed  consolidated  statements of income
and comprehensive  income  attributable to these limited liability companies for
the quarter ended March 31, 1999.  The  unaudited  Proforma net income and basic
net income per share data shown below is computed as if the Company acquired the
subsidiaries effective January 1, 1999 and was subject to Corporate Income Tax:

                                                     2000                 1999
                                                     ----                 ----
                                                                       Proforma
                                                     (In thousands of dollars,
                                                      except share data)

Historical income before income taxes                $507                  $300

Proforma:
      Provision for income taxes                      203                   120
                                                      ---                   ---

      Net Income                                     $304                  $180
                                                      ===                   ===
      Basic net income per share                     $.06                  $.03
                                                     ====                  ====

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







                                      F-10

<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 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.

Three Month Comparison for Years 2000 and 1999

                                                                      Percentage
                                                                       Increase
                                                                      (Decrease)
                                                                         Three
                                                                        Months
                                              Percentage                Ended
                                           of Gross Revenue            3/31/00
                                           Three Months Ended             vs.
                                           ------------------             --
                                        3/31/00          3/31/99       3/31/99
                                        -------          -------       -------
Gross revenue                             100.0%          100.0%           9.9%
Direct project costs and other costs
    of operations                          33.6            40.1           (8.1)%
                                         ------          ------           ------
       Net revenue                         66.4            59.9           21.9%
                                         ------          ------          ------

Expenses:
    Labor and related expenses             16.2            15.4           15.9%
    Selling, general and administrative    37.6            35.2           17.1%
                                           ----            ----           -----
          Totals                           53.8            50.6           16.7%
                                         ------          ------         -------

Income from operations                     12.6             9.3           50.0%

Other income (expense)                      1.5            (0.1)        2800.0%
                                         ------            -----       -------

Income before income taxes                 14.1             9.2           69.0%
                                           ====            ====         ======

<PAGE>




         Gross  revenues  for the three  months ended March 31, 2000 were $3,567
versus  $3,247 for the first three  months of 1999,  an  increase  of 9.9%.  The
increase  occurred  in the Lab  segment.  Lab  revenues  increased  $371 (net of
inter-segment  billing) while Consulting revenues decreased slightly by $51. The
significant increase in the revenue of the Lab segment was a result of effective
direct  sales  efforts,  a  strong  demand  for  analytical  services  from  the
environmental  sector,  higher  utilization  of equipment used in performing Lab
services and broadening of the customer base into the  pharmaceutical  industry.
Consulting  revenue is composed of both hours billed by the  professional  staff
(the more profitable component) and pass-through billing of sub-contractor costs
associated with client projects.  While overall consulting revenue was down, the
hours billed  component  increased  by $225. A decrease of $276  occurred in the
pass-through  component  due to less reliance on  sub-contractors  in performing
client services.

         Income from  operations  was $453 in the first three  months of 2000 as
opposed to $302 for the same  period in 1999.  This  represents  an  increase of
50.0%.  Operating margins rose to 12.6% for the current period from 9.3% for the
first three months of 1999. The increase in operating  income and margin was due
to a  significant  reduction  in  the  direct  project  costs  incurred  in  the
Consulting  segment as discussed above. This resulted in a significantly  higher
percentage  of net  revenue.  A larger  portion of revenues was  generated  from
professional  services  in 2000 as  compared  to more  pass-through  billing  of
reimbursable expenses in 1999.  Additionally,  Lab segment operating income rose
due to the  increased  sales  volume  and  the  relatively  low  marginal  costs
associated with analytical testing.

         Labor  and   related   expenses   increased   15.9%   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 17.1% compared
to the corresponding  period in the prior year primarily due to additional costs
associated  with the  Colorado  office,  which was opened in January  2000,  and
increased  administrative staffing costs in the Lab segment needed to handle the
volume growth.

         Other income (expense)  increased  2800.0% in the first three months of
2000 as compared to the first three  months of 1999.  This was due to  increased
interest  income from  invested  cash and a  corresponding  decrease in interest
expense due to having little or no debt.

         Income  before taxes for the period was $507  compared with $300 in the
first three months of 1999,  an increase of 69.0%.  This increase was due to the
factors  discussed  above.  Tax provisions were recorded at an effective rate of
40% for the first  quarter  2000 and the Basic  net  income  per share was $.06.
Although no tax  provision was recorded in the first quarter of 1999 (see Note 5
in the Notes to  Condensed  Consolidated  Financial  Statements),  the  Proforma
provision was also  calculated  using an effective  rate of 40% and the Proforma
Basic net income per share was $.03 for the first quarter 1999.  The Company had
5,263,348  shares  outstanding at March 31, 2000 and diluted  earnings per share
would also be $.06 for the quarter then ended as noted in Note 2 in the Notes to
Condensed  Consolidated  Financial  Statements.  For the quarter ended March 31,
1999, the Company had no potentially dilutive common shares.




<PAGE>



Liquidity and Capital Resources

         Net cash  provided by  operations  for the three months ended March 31,
2000 was  $1,424 as  compared  to $618 for the first  three  months of the prior
year. The increase in cash provided by operations was due primarily to increased
monitoring  of  accounts  receivable  and  quicker  conversion  to  cash in both
operating segments.  Additionally,  more stringent cash management policies have
been implemented and practiced.

         The Company made capital  expenditures  on equipment and furnishings of
$396 in the first three months of 2000 compared to capital  expenditures  of $53
in the first three months of the prior year.  The  increased  expenditures  were
made  primarily to maintain the technology  within the Lab segment.  The Company
anticipates  that its  capital  expenditures,  excluding  acquisitions,  for the
current year will be higher by approximately $200 to those incurred in the prior
year.  Additionally,  the Company purchased $494 of marketable securities in the
first three  months of 2000 whereas no such  investments  were made in the first
three months of 1999.

         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 March 31, 2000, the Company had cash and cash equivalents on hand of
$1,690 and working capital of $4,141.  The Company has a commitment for a $1,000
revolving  line-of-credit  facility to be utilized  by its  operating  segments.
Additionally,  the Company has a commitment for a $750 line that can be utilized
for purchase or re-finance of equipment used by its Lab segment.  Any portion of
the $750  equipment  line,  if  utilized,  will  convert into a term loan with a
maximum five-year  amortization.  These  commitments  replaced the previous $750
revolving  credit line  agreement that expired on April 30, 2000. In conjunction
with this  expiration,  the Company paid off, in full, its long-term debt in the
amount of $248. This  transaction  left the Company with no remaining bank debt.
At March 31, 2000,  borrowings  under all lines were $0 leaving the full amounts
of both the revolving  line-of-credit  and the equipment  line  available to the
Company. At March 31, 1999, there were no amounts outstanding on the credit line
then available.  The Company is in compliance  with all covenants  pertaining to
all credit line agreements.

         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 the balance of the fiscal year. The Company will
use  approximately  $650 of its available cash as a down payment on the building
in which the Lab  segment  currently  operates.  The  remaining  balance  of the
purchase  price  (approximately  $1,200) will be financed  with an  unaffiliated
lending  institution  for a period  not to exceed 20  years.  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.  Other than  previously  disclosed,  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.

         Inflation  has not had a material  effect on the revenues or the income
from operations of the Company for the past two years. Inflation is not expected
to have a material future effect.





<PAGE>




                                     PART II

                                OTHER INFORMATION


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 March 31, 2000:

         Exhibit No. 27 - Financial Data Schedule

b.       Reports on Form 8-K

         During the quarter  ended March 31, 2000,  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: May 8,  2000                              -----------------------------
                                                   Frank Russomanno
                                                   Chief Financial Officer