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 September 30, 1996
       [   ] 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 California

      Internal Revenue Service - Employer Identification Number 95-3557539

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

                     Issuers Telephone Number (714) 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 January 31, 1996: 12,956,769

<PAGE>

Spectrum Laboratories, Inc.

Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements
         Balance Sheet
         Statement of Income, Nine Months Ended September 30, 1996
         Statement of Cash Flows
         Notes to Financial Statements

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

Part II - OTHER  INFORMATION

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


                                       1

<PAGE>
<TABLE>

                                       Spectrum Laboratories, Inc.
                                       Consolidated Balance Sheets
                                       September 30, 1996 and 1995
<CAPTION>

                                                               September 30, 1996
                                                                  (Unaudited)         September 30, 1995
                                                                  -----------         ------------------
<S>                                                             <C>                     <C>
Assets
Current Assets:
        Cash                                                    $    908,536            $     223,553  
        Accounts receivable-trade                                  1,213,702                1,051,105
        Accounts receivable-related parties                          184,870                  466,113
        Inventories                                                1,157,370                1,340,558
        Prepaid expenses and other current                                               
                assets                                                35,192                  294,406
        Deferred income taxes                                        377,185                   66,313
                                                                ------------            -------------
                Total current assets                            $  3,876,855            $   3,442,048
                                                                                         
Equipment and leasehold improvements, net                            898,157                  755,140
Goodwill                                                           3,052,971                2,581,272
Loan receivable-related party                                           --                    121,333
Deferred income taxes                                                   --                    270,304
Other Assets                                                          24,813                   26,549
                                                                ------------            -------------
                                                                                         
Total Assets                                                    $  7,852,796            $   7,196,646
                                                                ============            =============
                                                                                         
                                                                                         
Liabilities and shareholder's equity 
Current liabilities:                                
        Accounts payable-trade                                       402,873                  332,123
        Accrued liabilities                                          362,032                  294,323
        Current portion, long term debt                              357,144                     --
        Current Notes Payable                                        486,574                  375,000
        Due to Related Party                                         138,871                     --
        Income tax payable                                            30,379                     --
        Other Current Liabilities                                    134,973                     --
                                                                ------------            -------------
                Total Current liabilities                       $  1,912,846            $   1,001,446
                                                                                         
Other liabilities                                                                        
        Minority Interest                                             16,368                     --
        Long Term Obligations Related Parties                      1,305,500                     --
        Other Long Term Liabilities                                  192,449                     --
        Long Term Obligations                                      1,704,760                3,917,074
                                                                ------------            -------------
                                                                                         
Total Liabilities                                               $  5,131,923            $   4,918,520
                                                                                         
Shareholders' equity:                                                                    
        Common stock, no par value: 25,000,000
                shares authorized, 12,900,000                                             
                issued and outstanding                               125,124                4,713,220
        Additional paid in capital                                 5,237,848                     --
        Retained earnings, accumulated deficit                    (2,848,596)              (2,447,629)
        Unrealized gain on investment securities                      (7,145)                  12,511
        Year to date income                                          213,642                       24
                                                                ------------            -------------
        Total shareholders' equity                              $  2,720,873            $   2,278,126
                                                                ------------            -------------
                                                                                         
Total liabilities and shareholders' equity                      $  7,852,796            $   7,196,646
                                                                ============            =============
</TABLE>
                                       2
<PAGE>                                                                         
<TABLE>

                                                   Spectrum Laboratories, Inc.
                                                Consolidated Statements of Income
                                         For the Quarters Ended September 30, 1996 &1995
                                                           (Unaudited)

<CAPTION>

                                                          Nine Months Ended                         Quarter Ended
                                               September 30, 1996  September 30, 1995  September 30, 1996  September 30, 1995
                                               ------------------  ------------------  ------------------  -------------------
<S>                                               <C>                 <C>                 <C>                 <C>           
Sales                                             $  6,509,014        $  3,416,662        $  2,047,897        $  1,753,144  
                                                                                                             
Costs and expenses:                                                                                          
       Cost of sales                                 3,874,671           2,466,630           1,242,292           1,264,042
       Selling expenses                              1,028,918             253,463             331,832             120,279
       General and administrative expenses             874,635             586,041             314,975             409,240
       Research and development expenses               258,673              96,738              78,547              65,345
       Interest expense, net of interest income        259,444              34,054              99,816              51,324
       Minority Interest                                25,891                --                 5,378                --
       Other Income/Expense                            (26,860)               --               (26,860)               --
                                                  ------------        ------------        ------------        ------------
                                                                                                             
             Total costs and expenses             $  6,295,372        $  3,436,926        $  2,045,980        $  1,910,230
                                                  ------------        ------------        ------------        ------------
                                                                                                             
Income before income taxes                        $    213,642        $    (20,264)       $      1,917        $   (157,086)
                                                                                                             
NOL Tax Recapture                                       88,093                --                   805                --
                                                                                                             
Provision for income taxes                             (88,093)             (8,511)               (805)            (61,359)
                                                  ------------        ------------        ------------        ------------
                                                                                                             
Net income                                        $    213,642        $    (11,753)       $      1,917        $    (95,727)
                                                  ============        ============        ============        ============
                                                                                                             
Net income per share                              $       0.02        $      (0.00)       $       0.00        $      (0.01)
                                                  ============        ============        ============        ============
                                                                                                             
Average number of common and common                                                                          
       equivalent shares                            12,900,000          12,900,000          12,900,000          12,900,000
                                                  ============        ============        ============        ============
<FN>
                                                                                                         
                                                           See accompanying notes.
</FN>
</TABLE>
                                       3
<PAGE>
<TABLE>

                                                 Spectrum Laboratories, Inc.
                                            Consolidated Statements of Cash Flows
                                       Nine Months Ended September 30, 1996, and 1995
                                                         (Unaudited)
<CAPTION>

                                                                               Nine Months Ended
                                                                   September 30, 1996       September 30, 1995
                                                                   ------------------       ------------------
<S>                                                                 <C>                      <C>
Cash flows from operating activities

          Net income                                                $   213,642               $   (11,753) 
                                                                                             
          Adjustments to  reconcile  net  income to net cash                                 
                    used in  operating activities:                                           
                                                                                             
                    Depreciation and amortization                       272,801                   137,122
                    Deferred income taxes                                  --                      25,562
                                                                                             
          Change in assets and liabilities:                                                  
                                                                                             
          (Increase) in accounts receivable                            (198,169)                 (222,440)
          (Increase), decrease in inventories                           328,891                    (3,203)
          (Increase) in prepaid expenses and other                                           
                    current assets                                      (14,243)                 (177,736)
          (Increase) in other assets                                     (6,837)                  (14,561)
          Increase in accounts payable                                  173,049                   120,652
          Increase, (decrease)  in accrued liabilities                  (79,682)                   85,747
          Increase in other liabilities                                 134,973                      --
          Increase  in due to related parties                           575,326                      --
          Decrease in long term debt                                   (438,096)                     --
                                                                    -----------               -----------
                                                                                             
                    Net cash used in operating activities           $   961,655               $   (60,610)
                                                                                             
Cash flows from investing activities:                                                        
                                                                                             
          Acquisition of equipment and leasehold                                             
                    improvements                                       (180,295)                  (68,204)
          Investments                                                    44,704                     6,917
          Acquisition of Microgon, Inc.                                    --                  (4,022,251)
                                                                    -----------               -----------
                                                                                             
                    Net cash used in investing activities           $  (135,591)              $(4,083,538)
                                                                                             
Cash flows from financing activities:                                                        
          Increase in notes payable                                        --                   3,792,074
                                                                    -----------               -----------
                                                                                             
Net increase (decrease) in cash                                     $   826,064               $  (352,074)
                                                                                             
Cash at beginning of year                                           $    82,472                   575,627
                                                                    -----------               -----------
                                                                                             
          Cash at end of nine months                                $   908,536               $   223,553
                                                                    ===========               ===========
                                                                                             
<FN>
 
                             See accompanying notes
</FN>
</TABLE>
 
                                        4

<PAGE>

Spectrum Laboratories, Inc.
Notes to Consolidated Financial Statements
September 30, 1996
(Unaudited)



1.  Basis for Presentation

The accompanying unaudited interim financial statements consolidate the accounts
of Spectrum Laboratories,  Inc. ("Spectrum") and its partially owned subsidiary,
Spectrum Europe B.V. (Spectrum B.V.), which are collectively  referred to as the
"Company".  All  significant  intercompany  transactions  and balances 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 as of September 30, 1996, and the results of their operations
and their cash flows for the nine months ended  September 30, 1996 and 1995. The
results of  operations  for the nine  months  ended  September  30, 1996 are not
necessarily  indicative  of the results to be expected for the full year.  These
statements  should be read in  conjunction  with the Company's  annual report on
Form 10-KSB for the year ended December 31, 1995.


2.    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:


                             September 30, 1996      September 30, 1995
                            -------------------     -------------------

Raw materials                 $        702,788       $        614,748
Work in progress                        63,128                 97,800
Finished goods                         579,534                684,606
                              ----------------      ----------------- 
                              $      1,345,450      $       1,397,154

Reserve for obsolescence              (188,080)               (56,596)
                              ----------------      ----------------- 

Total                         $      1,157,370      $       1,340,558
                              ================      ================= 


                                       5

<PAGE>


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

Introduction

The  following  discussion  and  analysis  covers  Spectrum  Laboratories,  Inc.
("Spectrum"), referred to as the "Company".

Results of  Operations

Sales for the third quarter were $2,047,897 vs. $1,753,144 for the third quarter
of 1995. During the nine months ended September 30,1996, consolidated sales were
$6,509,014 as compared to sales of $3,416,662  for the same period of 1995.  The
1996 sales figures include sales from Microgon, a privately held company,  which
was  purchased  by the  Company  on  August  1,  1995.  Microgon  sales are also
reflected in the 1995 numbers beginning August 1995.

Gross  margins were 39.3% for the third quarter vs. 27.9% for the same period in
1995 and were  41.9% for the first  nine  months of 1996  compared  to 39.6% for
1995. The  improvement  in margins is largely  attributed to the changing mix of
products as sales from Microgon begin to be reflected in the 1996 sales figures.

Selling  expenses for the third quarter were $331,832 vs. $120,279 for the third
quarter  of 1995.  During  the nine  months  ended  September  30,1996,  selling
expenses were $1,028,918 as compared to $253,463 for the same period in 1995.

General and administrative  expenses were $314,975 for the third quarter of 1996
vs. $409,240 for the same period in 1995.  Expenses in the third quarter of 1995
were higher than the current quarter,  due to a one time  reorganization  charge
associated with the  acquisition of Microgon.  For the first nine months of 1996
G&A expenses were $874,635 as compared to $586,041 for the same period in 1995.

Research and  Development  expenses  were $78,547 for the third quarter 1996 vs.
$65,345 for the third quarter of 1995.  R&D expenses were $258,673 for the first
nine months of 1996 as compared to $96,738 for the same period in 1995.

The  increases  in spending  in selling  expenses,  general  and  administrative
expenses,   and  research  and  development   expenses  are  attributed  to  the
acquisition of Microgon whose expenses are only partially reflected in 1995, but
are included for the entire 1996 reporting period.

Interest  expense  net of income is  $99,816  for the third  quarter of 1996 vs.
$51,324  for the  third  quarter  of 1995.  Interest  expense  net of  income is
$259,444  for the first nine months of 1996 vs.  $34,054 as compared to the same
period of 1995. This is a result of notes and loans  outstanding  related to the
acquisition of Microgon. Prior to the acquisition of Microgon,  interest expense
net of income was positive.

After the close of the reporting  period,  the Company entered into an agreement
to purchase  Cellco Inc., a privately held cell and gene therapy company located
in Germantown,  MD. The Company  believes that Cellco's  technology and products
are very synergistic with its existing high tech membrane business.  The Company
plans to move Cellco's manufacturing activities into its California plant, while
maintaining  the  scientific  and sales  staff at Cellco's  current  location in
Maryland.  The transition of the manufacturing  operations to California will be
completed  before the end of the year.  Action has already  been taken to reduce
the size of Cellco's facility in Maryland commensurate with the reduced level of
activity and personnel.

                                       7
<PAGE>

The Company manufactures a wide variety of medical,  laboratory and life science
products at its facilities in Texas and California.  The company's  products are
sold  through a  combination  of direct  sales  and  distributors  in the US and
through its partially owned  subsidiary,  Spectrum Europe B.V., for sales to the
rest of the world.


Liquidity and Capital Resources

On September 30, 1996, the Company had cash of $908,536.  At present the Company
has no other material unused sources of liquidity.  Management expects that cash
generated  from  operations  will  be  sufficient  to  fund  operations  for the
remainder of the year and into 1997.

Capital Commitments

As of  September  30,1996,  the  Company  owes  $2,061,904  to the Union Bank of
California related to the acquisition of Microgon in August of 1995.


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

Item 5.  Other Information
         None

Item 6.  Exhibits and reports on Form 8-K
         (a)   The Company filed no exhibits during the quarter ended 
               September 30, 1996
         (b)   Reports on Form 8-K
               The Company filed no reports on Form 8-K during the quarter ended
               September 30, 1996


                                       8
<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/ Bruce R. Peasland
-------------------------------
Signature

Bruce R. Peasland
Chief Financial Officer


                                       9