<PAGE>


                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549
                                   Form 10-QSB

 [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES 
                              EXCHANGE ACT OF 1934

                 For the quarterly period ended October 3, 1998
      [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT


                          Commission File Number 0-9478
                           SPECTRUM LABORATORIES, INC.
           Incorporated pursuant to the laws of the State of Delaware
                                                    -----------------

      Internal Revenue Service - Employer Identification Number 95-3557539

              23022 La Cadena Drive, Laguna Hills, California 92653
                     Address of principal executive offices

                    Issuer's Telephone Number (949) 581-3500

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

                           Yes X         No__


 Number of shares of Common Stock outstanding as of October 31, 1998: 5,207,087


<PAGE>


Spectrum Laboratories, Inc.


<TABLE>
<CAPTION>
<S>             <C>                                                                                               <C>
Page 
-----
Part I    -     FINANCIAL INFORMATION

Item 1.         Financial Statements
                Consolidated Balance Sheet as of October 3, 1998                                                  3
                Consolidated Statements of Operations for the Three and Nine Months Ended
                   October 3, 1998 and September 30, 1997                                                         4
                Consolidated Statements of Cash Flows for the Nine Months Ended October 3,
                   1998 and September 30, 1997                                                                    5
                Notes to Consolidated Statements                                                                  6

Item 2.         Management's Discussion and Analysis of Financial Condition                                       8


Part II   -     OTHER  INFORMATION

Item 1.         Legal Proceedings                                                                                10
Item 2.         Changes in Securities                                                                            10
Item 3.         Defaults Upon Senior Securities                                                                  10
Item 4.         Submission of Matters to a Vote of Security Holders                                              10
Item 5.         Other Information                                                                                10
Item 6.         Exhibits and Reports on Form 8-K                                                                 10
Signature                                                                                                        11

</TABLE>

                                       2
<PAGE>

<TABLE>

                           SPECTRUM LABORATORIES, INC.
                           CONSOLIDATED BALANCE SHEET
                              AS OF OCTOBER 3, 1998
                    (DOLLARS IN THOUSANDS, EXCEPT PAR VALUE)
                                   (UNAUDITED)

<CAPTION>
      <S>                                                                          <C>
      ASSETS
      CURRENT ASSETS
           Cash and cash equivalents                                               $              611
           Accounts receivable                                                                  1,377
           Inventories                                                                          1,674
           Prepaid expenses and other current assets                                              104
                                                                                   -------------------

           Total current assets                                                                 3,766

      Advances to principal shareholder                                                           101
      Property and equipment, net                                                               2,245
      Deferred income taxes                                                                       377
      Goodwill                                                                                  2,767
      Other assets                                                                                252
                                                                                   -------------------

       TOTAL ASSETS                                                                $            9,508
                                                                                   ===================

      LIABILITIES AND SHAREHOLDERS' EQUITY
      CURRENT LIABILITIES
           Accounts payable                                                        $              920
           Accrued expenses                                                                       796
           Current portion of long-term debt                                                    1,852
           Income taxes payable                                                                    26
                                                                                   -------------------

           Total current liabilities                                                            3,594

      LONG-TERM DEBT, less current portion                                                      1,061

      MINORITY INTEREST                                                                         1,912

      SHAREHOLDERS' EQUITY
           Common stock, par value $.01:  25,000,000 shares authorized,
           5,207,087 issued and outstanding                                                        52
           Preferred stock, par value $.01: 10,000,000 shares authorized,
              none issued or outstanding
           Additional paid in capital                                                           5,077
           Accumulated deficit                                                                (2,172)
           Unrealized loss on foreign currency translation                                       (16)
                                                                                   -------------------

      TOTAL SHAREHOLDERS' EQUITY                                                                2,941
                                                                                   -------------------

      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                   $            9,508
                                                                                   ===================


</TABLE>

                                       3
<PAGE>

<TABLE>


                           SPECTRUM LABORATORIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
                                   (UNAUDITED)

<CAPTION>
                                                                 Three Months Ended      Nine Months Ended
                                                                --------------------- ----------------------
                                                                 Oct. 3     Sep. 30    Oct. 3     Sep. 30
                                                                  1998       1997       1998        1997
                                                                ---------- ---------- ----------  ---------

<S>                                                             <C>        <C>        <C>         <C>     
NET SALES                                                       $   3,142  $   3,211  $   9,144   $ 10,224

COSTS AND EXPENSES
     Cost of sales                                                  1,540      1,887      4,697      5,320
     Selling                                                          428        394      1,378      1,414
     General and administrative                                       782        948      2,413      2,853
     Research and development                                         226        183        601        667
     Other expense, primarily interest                                 81         97        218        284
                                                                ---------- ---------- ----------  ---------

     TOTAL COSTS AND EXPENSES                                       3,057      3,509      9,307     10,538

GAIN ON SALE OF PRODUCT LINE                                                                           768
                                                                ---------- ---------- ----------  ---------

INCOME (LOSS) BEFORE MINORITY INTEREST IN LOSS
  OF SUBSIDIARY AND PROVISION FOR INCOME TAXES                         85       (298)      (163)       454

MINORITY INTEREST IN LOSS OF SUBSIDIARY                                 5          7         17         11
                                                                ---------- ---------- ----------  ---------

INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES              90       (291)      (146)       465

PROVISION (BENEFIT) FOR INCOME TAXES                                   11         (7)        27         21
                                                                ---------- ---------- ----------  ---------

NET INCOME (LOSS)                                               $      79  $    (284) $    (173)  $    444
                                                                ========== ========== ==========  =========




BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE            $     .02  $    (.06) $    (.04)  $     .09
 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                         4,844      4,813       4,821      4,834

</TABLE>

                                       4
<PAGE>

<TABLE>

                           SPECTRUM LABORATORIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

                                                                                             Nine Months Ended
                                                                                   -------------------------------------
                                                                                      Oct. 3                 Sep. 30
                                                                                       1998                   1997
                                                                                   --------------         --------------
<S>                                                                                <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income                                                                  $        (173)         $         444
Adjustments to reconcile net (loss) income to net cash provided by
    operating activities:
Depreciation and amortization                                                                495                    479
Minority interest in loss of subsidiary                                                      (17)                   (11)
Gain on sale of product line                                                                                       (768)
Change in assets and liabilities:
Decrease (increase) in accounts receivables                                                  222                    (87)
(Increase) decrease in inventories                                                          (161)                   521
Decrease (increase) in prepaid expenses and other current assets                              62                    (28)
Increase in other assets                                                                                             (6)
Decrease in accounts payable and accrued and other liabilities                                (3)                  (370)
Other                                                                                         25                     (9)
                                                                                   --------------         --------------

Net cash provided by operating activities                                                    450                    165
                                                                                   --------------         --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of product line                                                                                  969
Acquisitions of property and equipment                                                      (344)                  (173)
Advances to principal shareholder                                                            325                    (15)
Increase in other assets                                                                    (106)
                                                                                   --------------         --------------

Net cash (used in) provided by investing activities                                         (125)                   781
                                                                                   --------------         --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock                                                              500
Principal payments on debt                                                                  (733)                (4,252)
Proceeds from issuance of debt                                                               275                  3,915
Distributions to shareholders                                                               (891)                  (407)
                                                                                   --------------         --------------

Net cash used in financing activities                                                       (849)                  (744)
                                                                                   --------------         --------------


NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                        (524)                   202

CASH AND CASH EQUIVALENTS, beginning of period                                             1,135                    605
                                                                                   --------------         --------------

CASH AND CASH EQUIVALENTS, end of period                                           $         611          $         807
                                                                                   ==============         ==============

</TABLE>


                                       5
<PAGE>


                        NOTES TO CONSOLIDATED STATEMENTS

Note 1 - Basis of Presentation

The accompanying unaudited financial statements consolidate the accounts of
Spectrum Laboratories, Inc. ("Spectrum"), and its wholly-owned subsidiaries, SLI
Acquisition Corp. and Spectrum Europe B.V. and its majority-owned subsidiary,
Spectrum Chromatography, which are collectively referred to as the "Company".
All significant intercompany transactions have been eliminated in consolidation.
In the opinion of management, the accompanying unaudited interim consolidated
financial statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly the financial position of the
Company as of October 3, 1998 and the results of their operations and their cash
flows for the three and nine months ended October 3, 1998 and September 30,
1997. Certain information and footnote disclosures normally included in the
financial statements have been condensed or omitted pursuant to rules and
regulations of the Securities and Exchange Commission, although the Company
believes that the disclosures in the unaudited interim financial statements are
adequate to make the information presented not misleading.

As a result of the merger (See Note 2) of Spectrum Medical Industries, Inc. into
the Company, all financial presentations give effect to the merger as if the
merger had taken place at the beginning of 1997.

Note 2 - Reverse Stock Split, Merger and Issuance of Stock

On September 25, 1998, the Company had a one-for-ten reverse stock split which
reduced the number of shares outstanding from 12,834,394 to 1,283,440. On
September 30, 1998, Spectrum Medical Industries, Inc., (SMI) which formerly
owned 79% of the Company, was merged into the Company with 98 shares of the
Company's stock being issued for each share of SMI stock.

In late September 1998, 229,364 shares of the Company's stock was issued to a
minority shareholder of the Company in exchange for debt previously owed to this
person and, for cash received, 62,500 shares were issued to the majority
shareholder and 103,323 to an unrelated third person.

Note 3 - Inventories

Inventories are stated at the lower of cost, determined using the first-in,
first-out method, or net realizable value and are composed of the following:

              Raw materials                    $   1,448,704
              Work in progress                       112,360
              Finished goods                         633,479 
                                               --------------
                                                   2,194,543
              Reserve for obsolescence              (520,292)
                                               --------------
                                               $   1,674,251
                                               ==============


Note 4 - Earnings per Share

The Company reports per share amounts as required by Statement of Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS 128). SFAS 128 requires
a dual presentation of basic and diluted earnings per share (EPS). Basic EPS
excludes dilution and is computed by dividing net income, available to common
shareholders, by the weighted average of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised and converted
into common stock. The increase in weighted average shares outstanding that
would result from the assumed exercise of stock options, using the treasury
stock method, would not change the earnings per share amounts presented for any
period.



                                       6

<PAGE>

Note 5 - Income Taxes

In the first nine months of 1998, the Company provided $27,000 for income taxes.
This tax provision primarily relates to state taxes. As of January 3, 1998, the
Company had net operating loss carryforwards for federal income tax purposes of
$9,733,699 ($8,100,000 available to offset income of Microgon, a company
purchased in 1995 and merged into Spectrum, only), which expire at various dates
from 1998 through 2009. The utilization of Microgon's $8,100,000 federal net
operating loss is limited to approximately $298,000 of Microgon income annually.
Any unused net operating loss is carried forward. As a result of the limitation,
it is possible that more than $5,000,000 of the Microgon loss may expire without
utilization. The Company has an approximate $3,500,000 state net operating loss
carryforward, which expires at various dates beginning in 1998.





                                       7
<PAGE>



     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                 OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto contained elsewhere within this Report on
Form 10-QSB. Except for the historical information contained herein, the
following discussion may contain forward-looking statements that involve risks
and uncertainties. The actual future results of the Company could differ
materially from those discussed here. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in this report
and those factors discussed in the Company's Form 10-KSB for the year ended
January 3, 1998.

Results of Operations

Net sales for the three months ended October 3, 1998 of $3,142,000 were
essentially level with the sales of $3,211,000 for the three months ended
September 30, 1997. However, the 1997 sales would have been 8% higher than in
1998 had this period in 1997 not experienced reductions due to isolated returns
as a result of a quality problem and returns of customized product. Net sales
for the first nine months of 1998 of $9,144,000 were 11% lower than sales of
$10,224,000 for the first nine months of 1997. The decreases were primarily due
to a lack in demand, especially in the Asian and European markets.

Cost of sales as a percentage of sales was 49% for the three months ended
October 3, 1998 compared to 59% for the three months ended September 30, 1997.
The percentages for the first nine months of 1998 and 1997 were 51% and 52%,
respectively. The high percentage for the three months of 1997 was primarily due
to some product returns which resulted in write-downs in inventory value.

General and administrative expenses decreased 18% for the three months ended
October 3, 1998 compared to the three months ended September 30, 1997 and were
15% lower for the first nine months of 1998 as compared to the same period of
1997. These decreases were primarily due to the implementation of cost
reductions in the third quarter of 1998.

The gain on sale of product line was the result of the sale of the Company's
microbiological sampling and transport product line in the first quarter of
1997.

Liquidity and Capital Resources

During the first nine months of the current fiscal year, cash generated by
operations exceeded by cash used for investing and financing activities.

The Company is currently in violation of a covenant in its loan agreement with
its bank. The bank has waived this violation. Provisions of the Company's loan
agreement with the bank required the Company to make principal and interest
payments of approximately $1,000,000 on July 1, 1998. The bank has granted an
extension to January 4, 1999 on approximately $680,000 of this amount. The
company intends to refinance this debt in the near future and believes that,
with the refinancing and funds expected to be generated from operations, funds
will be sufficient for operating requirements for the remainder of fiscal 1998.

Year 2000 Matters

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
hardware or computer programs that have time-sensitive software may recognize a
date using "00" as the year 1900 rather than the Year 2000. This could result in
a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
  
In 1997, the Company initiated a conversion from existing hardware and
accounting software to hardware and software programs that are Year 2000
compliant. Management has determined that the year 2000 issue will not pose
significant operational problems for its computer systems. As a result, all
costs associated with this conversion are being expensed as incurred.


                                       8
<PAGE>

The Company is in the process of initiating formal communications with all of
its significant suppliers and large customers to determine the extent to which
the Company's interface systems are vulnerable to those third parties' failure
to remediate their own Year 2000 issue. There can be no guarantee that the
systems of other companies on which the Company's systems rely will be timely
converted and would not have an adverse effect on the Company's systems.

The Company will utilize both internal and external resources to reprogram, or
replace, and test the software and equipment for Year 2000 modifications. The
Company anticipates completing the Year 2000 project within 6 months, but not
later than June 30, 1999. The total cost of the Year 2000 project is estimated
at $25,000 and is being funded through operating cash flows.

The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates,
which were derived from assumptions of future events, including the continued
availability of certain resources, third-party modification plans and other
factors. However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from those anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes and hardware, and
similar uncertainties.


                                       9
<PAGE>


Part II.  OTHER INFORMATION

Item 1.   Legal Proceedings
          None

Item 2.   Change in Securities
          None

Item 3.   Defaults upon Senior Securities
          Not Applicable

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

          None. Spectrum Laboratories, Inc., a California corporation, was
          merged into Spectrum Laboratories, Inc., a Delaware corporation, on
          Spectrum 30, 1998. The Company did not solicit the consent of
          shareholders because the majority shareholders had sufficient votes to
          effectuate the merger. A Schedule 14 ( C ) Information Statement was
          filed on August 4, 1998.

Item 5.   Other Information
          None

Item 6.   Exhibits and reports on Form 8-K
          (a) Exhibits - None
          (b) Reports on Form 8-K
              The Company filed no reports on Form 8-K during the quarter ended
              October 3, 1998


                                       10
<PAGE>


SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

SPECTRUM LABORATORIES, INC.
(Registrant)


 /s/  F. Jesus Martinez
-----------------------
Signature

F. Jesus Martinez
President


                                       11