U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                   FORM 10-QSB

(MARK ONE)

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

     For the quarterly period ended June 30, 1999

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

For the transition period from ____________________ to _________________________

                                     0-20436
                             Commission file number

                       U.S. AUTOMOTIVE MANUFACTURING, INC.
        (Exact Name of Small Business Issuer as Specified in its Charter)

          Delaware                                               65-0309477
(State or other jurisdiction of                                (IRS Employer
incorporation or organization)                              Identification No.)

                Route 627, Airport Drive, Tappahannock, VA 22560
               (Address of principal executive offices) (Zip Code)

         Issuer's telephone number, including area code: (804) 444-5356

--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 |_|

As of August 14, 1999, the Issuer had 1,088,320 shares outstanding of its common
stock, $.001 par value.



<PAGE>

                       U.S. AUTOMOTIVE MANUFACTURING, INC.

                                      INDEX

                                                                            Page
                                                                            ----
PART I.  FINANCIAL INFORMATION..............................................   3

Item 1.  Consolidated Financial Statements

              Consolidated Balance Sheets at June 30, 1999
                   (unaudited) and December 31, 1998........................   3

              Consolidated Statements of Operations (unaudited) for the
                   three months ended June 30, 1999 and June 30, 1998.......   4

              Consolidated Statements of Operations (unaudited) for the
                   six months ended June 30, 1999 and June 30, 1998.........   5

              Consolidated Statements of Cash Flows (unaudited) for
                   the six months ended June 30, 1999 and June 30, 1998.....   6

              Notes to Consolidated Financial Statements....................   7

Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations...........................  11

PART II. OTHER INFORMATION..................................................  15

Item 1.  Legal Proceedings..................................................  15

Item 2.  Changes in Securities and Use of Proceeds..........................  15

Item 6.  Exhibits and Reports on Form 8-K...................................  17

SIGNATURES..................................................................  17

                                       2

<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                       U.S. AUTOMOTIVE MANUFACTURING, INC.
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                            June 30, 1999  December 31, 1998
                                                            -------------  -----------------
                                                             (unaudited)
<S>                                                          <C>             <C>
ASSETS
Current Assets:
        Cash .............................................   $    327,552    $    338,641
        Accounts Receivable (net of allowance for doubtful
          accounts of $87,272 and $195,431, respectively)       5,853,896       5,043,316
        Inventories ......................................     10,223,716       9,420,570
        Prepaid Expense and other ........................        176,728          16,078
                                                             ------------    ------------
        Total Current Assets .............................     16,581,892      14,818,605
Property, plant and equipment (net of accumulated
        depreciation of $2,144,307 and $1,599,818,
        respectively) ....................................     11,067,845      11,062,084
Deferred financing costs .................................        162,000         216,000
Goodwill, net ............................................      5,795,171       5,954,669
                                                             ------------    ------------
TOTAL ASSETS .............................................   $ 33,606,908    $ 32,051,358
                                                             ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
        Line of credit ...................................   $    293,000    $  7,691,370
        Current portion of long-term debt ................         50,982         693,163
        Accounts payable .................................      4,414,444       3,965,184
        Accrued liabilities ..............................      1,226,230         756,703
                                                             ------------    ------------
                  Total Current Liabilities ..............      5,984,656      13,106,420

Long-term debt, less current portion .....................        137,737         552,408
Redeemable convertible debentures ........................      2,250,000       2,250,000
Line of Credit                                                  9,994,994       1,050,000
Notes payable to shareholders ............................      5,160,000       4,980,000
                                                             ------------    ------------
                  Total Liabilities ......................     23,527,387      21,938,828
                                                             ------------    ------------
Stockholders' Equity:
Issued & outstanding capital stock $.001 par value .......          1,088           1,048
Additional paid-in capital ...............................     38,949,348      38,900,222
Accumulated deficit ......................................    (28,870,915)    (28,788,740)
                                                             ------------    ------------
                  Total Stockholders' Equity .............     10,079,521      10,112,530
                                                             ------------    ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY .................   $ 33,606,908    $ 32,051,358
                                                             ============    ============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       3

<PAGE>


                           U.S. AUTOMOTIVE MANUFACTURING, INC.

                      Consolidated Statements of Operations

                                   (Unaudited)

                                                    Three Months Ended June 30,
                                                   -----------------------------
                                                       1999             1998
                                                   -----------      -----------
Net Sales ....................................     $ 8,043,361      $ 5,937,296
Cost of Goods Sold ...........................       5,914,957        4,528,545
                                                   -----------      -----------
Gross Profit .................................       2,128,404        1,408,751
                                                   -----------      -----------
Operating Expenses:
    Selling and delivery .....................         751,844          799,378
    General and administrative ...............         708,389          945,066
                                                   -----------      -----------
    Total Operating Expenses .................       1,460,233        1,744,444
                                                   -----------      -----------
Operating income (loss) ......................         668,171         (335,693)
Interest expense .............................        (515,880)        (303,146)
                                                   -----------      -----------
Net Income/(Loss) ............................     $   152,291      $  (638,839)
                                                   ===========      ===========
Net Income/(Loss) per share, basic and diluted     $      0.14      $     (0.61)
                                                   ===========      ===========
Weighted average shares outstanding ..........       1,082,827        1,048,273
                                                   ===========      ===========



              The accompanying notes are an integral part of these
                       consolidated financial statements

                                       4

<PAGE>

                       U.S. AUTOMOTIVE MANUFACTURING, INC.

                      Consolidated Statements of Operations

                                   (Unaudited)

                                                    Six Months Ended June 30,
                                                 ------------------------------
                                                     1999               1998
                                                 ------------      ------------
Net Sales ..................................     $ 15,364,316      $  9,357,169
Cost of Goods Sold .........................       11,220,091         7,181,872
                                                 ------------      ------------
Gross Profit ...............................        4,144,225         2,175,297
                                                 ------------      ------------
Operating Expenses:
    Selling and delivery ...................        1,534,659         1,331,382
    General and administrative .............        1,677,740         1,905,891
                                                 ------------      ------------
Total Operating Expenses ...................        3,212,399         3,237,273
                                                 ------------      ------------
Operating income (loss) ....................          931,826        (1,061,976)
Interest expense ...........................       (1,014,001)         (551,103)
                                                 ------------      ------------
Net Loss ...................................     $    (82,175)     $ (1,613,079)
                                                 ============      ============
Net Loss per share, basic and diluted ......     $      (0.08)     $      (1.54)
                                                 ============      ============
Weighted average shares outstanding ........        1,065,836         1,048,273
                                                 ============      ============


              The accompanying notes are an integral part of these
                        consolidated financial statements

                                       5

<PAGE>

                       U.S. AUTOMOTIVE MANUFACTURING, INC.

                      Consolidated Statements of Cash Flows

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                             Six Months Ended June 30,
                                                                            --------------------------
                                                                                1999           1998
                                                                            -----------    -----------
<S>                                                                         <C>            <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Loss ................................................................   $   (82,175)   $(1,613,079)
Adjustments to reconcile net loss
to net cash provided (used) by operating activities:
        Depreciation ....................................................       544,489        273,845
        Amortization ....................................................       213,498        159,498
        Change in provision for doubtful accounts .......................      (108,159)       (30,712)
        Rollover of accrued interest ....................................       180,000             --
        Issuance of common stock in satisfaction of related party payables       49,166             --
        (Increase) Decrease In:
                  Accounts receivable ...................................      (702,421)    (1,320,547)
                  Inventory .............................................      (803,146)      (381,319)
                  Prepaid expenses and other ............................      (160,650)       246,949
        Increase (Decrease) In:
        Accounts payable and accrued liabilities ........................       918,787          8,209
                                                                            -----------    -----------
Total Adjustments .......................................................       131,564     (1,044,077)
                                                                            -----------    -----------
Net Cash provided by (used in) Operating Activities .....................        49,389     (2,657,156)
                                                                            -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ....................................................      (550,250)      (560,280)
                                                                            -----------    -----------
CASH FLOW FROM FINANCING ACTIVITIES
Net borrowings on notes payable and debentures ..........................       489,772      4,426,763
                                                                            -----------    -----------

NET INCREASE (DECREASE) IN CASH .........................................       (11,089)     1,209,327

CASH-beginning of period ................................................       338,641      1,001,843
                                                                            -----------    -----------
CASH-end of period ......................................................   $   327,552    $ 2,211,170
                                                                            ===========    ===========
</TABLE>



              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       6

<PAGE>

                       U.S AUTOMOTIVE MANUFACTURING, INC.

                   Notes to Consolidated Financial Statements

                                  June 30, 1999

                                   (Unaudited)

NOTE 1: BUSINESS OPERATIONS AND ORGANIZATION

U.S.  Automotive  Manufacturing,  Inc., a Delaware  corporation  incorporated on
January 16, 1992, together with its wholly-owned subsidiaries Quality Automotive
Company and U.S.  Automotive  Friction,  Inc.  (collectively,  the "Company") is
engaged  in the  manufacture,  assembly  and  distribution  of new  and  rebuilt
automotive   friction   products.   The  Company  maintains   manufacturing  and
warehouse/distribution facilities in Tappahannock, Virginia and Sanford, Florida
(the "Facilities"), which Facilities are either owned or leased by the Company.

The Company manufactures a full line of friction automotive products,  including
brake lining,  integrally molded and riveted brake pads and remanufactured brake
shoes.  The Company markets  various grades of friction  lining,  asbestos,  non
asbestos organic and semi-metallic formulas,  suitable for use by the automotive
and light truck  after-markets.  The Company's  products are marketed  under the
Brakes  Worth   Stopping   For,(R)   Silent   Solution,(R)   Gold  Max,(R)  Dual
Friction,(TM)   Ultra  Brake,(TM)  Max  Life,(TM)  and  Quality   Automotive(TM)
tradenames and various private label packaging.  In 1998, the Company's products
were also sold under the Roinco,(TM) tradename.

Brake pads,  brake shoes or a combination of both are  incorporated in all makes
and models of American and imported  automobiles.  All imported and the majority
of late model domestic  automobiles  are equipped with  integrally  molded brake
pads.  The  Company  generally  produces  the  replacement  brake under the same
process used to manufacture the vehicle's original equipment.

The Company sells its friction  products to other automotive  manufacturers  and
the automotive  after-market.  The automotive after-market encompasses the parts
and service  sold to the vehicle  owners for repair or  replacement  of original
equipment  parts.  The Company  believes that the market for  replacement  parts
generally consists of vehicles which are three to twelve years old. Sales of the
Company's  products  are made to mass  merchandisers,  automotive  distributors,
chain  stores and other brake  manufacturers.  The  Company  does not market its
products directly to retail customers.

NOTE 2: UNAUDITED INTERIM STATEMENTS

The accompanying unaudited consolidated financial statements of the Company have
been  prepared in  accordance  with the  instructions  to Form 10-QSB and do not
include all of the  information  and  footnotes  required by generally  accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management, all adjustments (which consist only of normal recurring adjustments)
necessary  for  a  fair  presentation   have  been  included.   All  significant
intercompany  transactions and balances have been eliminated.  Operating results
for the six months ended June 30, 1999,  are not  necessarily  indicative of the
results to be expected for the year ending  December 31, 1999.  These  financial
statements and notes should be read in conjunction with the financial statements
and notes thereto included in the Company's annual report on Form 10-KSB for the
year ended December 31, 1998.


                                       7

<PAGE>


NOTE 3: REVERSE SPLIT

On February 5,1999, the Company's Board of Directors approved a 1-for-15 reverse
split  with  respect  to the  Company's  common  stock.  All share and per share
information  contained in these  financial  statements  have been  retroactively
adjusted to give effect to the reverse stock split.

NOTE 4: INVENTORY

     Major inventory components were as follows:

                                         June 30, 1999       December 31, 1998

Raw materials ......................      $ 4,280,230           $ 4,131,240
Work in Progress ...................           55,166               107,133
Finished goods .....................        5,888,320             5,182,197
                                          -----------           -----------
                                          $10,223,716           $ 9,420,570
                                          -----------           -----------

NOTE 5: DEBT

Private Placement

     The Company obtained financing during the first quarter of 1998 through the
private  placement  of debt and  equity  instruments  on  February  27,1998 to a
director and an affiliate of another director of the Company,  respectively (the
February  1998  Offering).  The sale was made  pursuant  to a private  placement
consisting  of (i) two (2)  unsecured  non-negotiable  promissory  notes  in the
aggregate  principal  amount of $400,000,  bearing interest at the rate of 10.5%
per annum and a  maturity  date of  February  28,  1999 (the  "Notes" ) and (ii)
warrants to purchase up to an  aggregate  of 6,666  shares of the Common  Stock,
maturing  in  February  2003,  at a  conversion  price equal to $30.00 per share
subject to  adjustment  in certain  conditions.  The net proceeds to the Company
were  approximately  $370,000.  The warrants are  redeemable by the Company upon
notice of not less than 30 days at a price of $0.75 per warrant,  provided  that
the closing bid  quotation  of the Common Stock on all 20 trading days ending on
the third day prior to the day of which the Company  gives notice of  redemption
has been at least 150% of the then effective exercise price of the warrants. The
exercise  price and number of shares of Common Stock issuable on exercise of the
warrants are subject to  adjustment in certain  circumstances,  including in the
event  of  a  stock  dividend,  recapitalization,   reorganization,   merger  or
consolidation of the Company. The outstanding  principal balance,  together with
accrued interest, under the Notes was fully repaid by the Company on or prior to
the February 28, 1999 maturity date.

Convertible Debentures

     In June 1998, the Company obtained additional financing through the sale of
8%  redeemable  convertible  debentures  (each  a  "Reg  S  Debenture"),  in the
aggregate principal amount of $2,250,000,  pursuant to Regulation S ("Regulation
S") under  the  Securities  Act of 1933,  as  amended  (the  "Act")  (the "Reg S
Offering").  The Reg S Debentures represent unsecured obligations of the Company
and must be converted  into shares (the  "Conversion  Shares") of the  Company's
Common  Stock at the  maturity  date  (December  31, 2000) unless they have been
converted  earlier,  at the option of the holder.  The  conversion  price of the
Debentures  will be equal to 80% of the average  closing bid price of the shares
of Common Stock as quoted on the Nasdaq SmallCap Market for the five (5) trading
days  immediately   preceding  the  date  of  conversion.   Notwithstanding  the
foregoing,  the Company is not  obligated to issue more than 209,660  Conversion
Shares (the "Maximum  Conversion Share Allotment").  The Company also agreed, at


                                       8

<PAGE>

its expense,  to (x) file with the Securities and Exchange Commission ("SEC") on
or before August 29, 1998, a registration statement covering the issuance by the
Company of the  Conversion  Shares and (y) use its  reasonable  best  efforts to
cause such registration statement to be declared effective under the Act as soon
as  possible  thereafter.  As at June 30,  1999,  the  Company has yet to file a
registration  statement;  it is  anticipated  that the  Company  will  file such
registration statement during the third quarter of 1999.

     The Reg S Debentures provided for initial interest of 8% per annum (subject
to increase under certain circumstances),  payable upon conversion or redemption
of the Reg S Debentures, in cash or shares of Common Stock, at the option of the
Company.  The interest rate increased to 20% per annum for the period commencing
January 1, 1999 as a result of the underlying  Conversion Shares having not been
covered by such date by an effective  registration statement filed with the SEC.
It is not expected that the Conversion Shares will be able to be registered with
the SEC before  September  30, 1999. At such time as the  underlying  shares are
registered or tradable, without regard to registration, the rate shall revert to
the 8% per annum.  Further,  if upon  conversion of the  Debentures  the Company
would otherwise issue shares of Common Stock in excess of the Maximum Conversion
Share Allotment,  the interest rate on the Debentures will,  effective as of the
issuance of the Maximum  Conversion Share  Allotment,  increase to 25% per annum
with respect to the  unconverted  Debentures.  The Company has agreed that if it
has not either retired the remaining Debentures with accrued but unpaid interest
within ten (10) days of the issuance of the Maximum  Conversion  Share Allotment
or  issued  a proxy  statement  soliciting  stockholder  authorization  to issue
additional  shares in lieu of such cash redemption of the remaining  Debentures,
the Company  would pay a penalty  equal to the  difference  between the interest
rate paid since inception and 25% on those Debentures  which remain  outstanding
after the issuance of the Maximum  Share  Allotment.  Such penalty  shall not be
applicable if the Company issues such proxy as contemplated.

NOTE 6: STOCKHOLDERS' EQUITY

     On March 31,  1999,  the  Company  issued to two  directors  of the Company
11,759 and 22,734 shares of the Company's  Common Stock, in exchange for accrued
but unpaid  obligations  owing by the Company to such  individuals  and/or their
affiliates.

     On March 31,  1999,  the  Company  granted to  executive  officers  and key
employees of the Company  options  pursuant to the Company's 1992 and 1998 Stock
Option Plans, as follows:

     (i)  The Company  granted to an executive  officer of the Company  ten-year
          options pursuant to the 1992 Stock Option Plan to purchase up to 1,800
          shares of the Company's  Common Stock,  at an exercise price of $1.063
          (the closing sales price for the Common Stock on March 31,1999).  Such
          options  vest  immediately;

     (ii) The Company  granted to an executive  officer of the Company  ten-year
          options pursuant to the 1998 Stock Option Plan to purchase up to 1,800
          shares of the Company's  Common Stock,  at an exercise price of $1.063
          (the closing sales price for the Common Stock on March 31, 1999). Such
          options vest immediately;

    (iii) The Company granted to a key employee of the Company  ten-year options
          pursuant to the 1992 Stock Option Plan to purchase up to 307 shares of
          the Company's  Common  Stock,  at a price of $1.063 (the closing sales
          price for the Common Stock on March 31,1999).  Such options shall vest
          in equal quarterly installments over the course of four (4) years from
          the date of the option grant; and

                                       9
<PAGE>

     (iv) The Company  granted to certain key  employees of the Company  options
          pursuant to the Company's  1998 Stock Option Plan to purchase up to an
          aggregate  of  29,000  shares of the  Company's  Common  Stock,  at an
          exercise  price of $1.063.  (the  closing  sales  price for the Common
          Stock at March 31, 1999).  Such options shall vest in equal  quarterly
          installments  over  the  course  of four  (4)  years  from the date of
          the option grant.

     Options to  purchase up to 2,000  shares of the  Company's  Common  Stock ,
granted to a key employee pursuant to the 1998 Stock Option Plan, were cancelled
prior to issuance during the quarter ended June 30, 1999.

     In  addition,  on March 31, 1999,  the Company  re-priced  all  outstanding
options  under the 1992 Stock  Option  Plan,  exercisable  to  purchase up to an
aggregate of 93 shares of the Company's  Common Stock,  to $1.063 per share (the
closing sales price of the Company's  Common Stock  reported by the Nasdaq Small
Cap Market as of the close of business on March 31, 1999).

     On June 9, 1999, the Company granted  ten-year options to: (i) an executive
officer of the Company,  pursuant to the  Company's  1992 Stock Option Plan,  to
purchase up to 1,800 shares of the  Company's  Common  Stock;  (ii) an executive
officer of the Company,  pursuant to the  Company's  1998 Stock Option Plan,  to
purchase  up to 1,800  shares  of the  Company's  Common  Stock  and (iii) a key
employee of the Company,  pursuant to the  Company's  1998 Stock Option Plan, to
purchase up to 3,000 shares of the Company's  Common Stock.  All of such options
are exercisable at an exercise price of $2.25 per share (the closing sales price
for the Common Stock on June 30, 1999) and vest immediately.

     On June 9, 1999, the Company  granted to two of its directors  2,777 shares
of Common Stock each in lieu of owed and unpaid director's fees in the amount of
$6,250 each, based on a conversion price (the closing sales price for the Common
Stock on June 30, 1999) of $2.25 per share.

NOTE 7: SUBSEQUENT EVENT

     On August 9, 1999 the Company  entered into a new $15 Million Senior Credit
and Term Loan Agreement ("Senior Credit") with IBJ Whitehall, as Agent. Interest
on amounts borrowed under the Senior Credit facility will be calculated,  at the
Company's  option at 3/4 % above the base rate or 300 basis  points over LIBOR .
Substantially  all of the Company's  assets including the stock of the Company's
principal  subsidiaries  are pledged as security for the Senior Credit facility.
The loan agreement  contains  provisions which restrict the Company's ability to
declare cash dividends and covenants include a fixed charge coverage ratio and a
minimum net worth test.  Proceeds from the initial  funding of the Senior Credit
facility were used to retire  principal  and accrued but unpaid  interest on the
LaSalle  Credit  Facility,  the USAM Revolving Loan and the SBA's term loan. The
Senior Credit Facility  matures on June 30, 2002.  Accordingly,  certain amounts
retired with the initial funding are classified as long-term  indebtedness as of
June 30, 1999.


                                       10

<PAGE>

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     The  Private  Securities  Litigation  Reform  Act of 1995  provides a "safe
harbor" for forward-looking  statements.  Certain  information  included in this
Report contains statements that are forward-looking, such as statements relating
to plans for future activities.  Such  forward-looking  statements involve known
and unknown  risks,  uncertainties  and other factors which may cause the actual
results,  performance or achievements of the Company to be materially  different
from any future  results,  performance or  achievements  expressed or implied by
such  forward-looking  statements.  Such  factors  include,  among  others,  the
following: the Company's recent losses; the Company's outstanding  indebtedness;
the  ability  to hire  and  retain  key  personnel;  successful  completion  and
integration  of  prior  and any  future  acquisitions;  relationships  with  and
dependence on third-party equipment  manufacturers and suppliers;  uncertainties
relating to business  and  economic  conditions  in markets in which the Company
operates; uncertainties relating to government and regulatory policies and other
political risks;  uncertainties relating to customer plans and commitments,  the
ability  of  critical  third  parties  to be Year  2000  compliant;  cost of and
availability  of component  materials and  inventories;  effect of  governmental
export and import  policies;  the highly  competitive  environment  in which the
Company operates;  potential entry of new, well-capitalized competitors into the
Company's  markets;  and  the  uncertainty  regarding  the  Company's  continued
ability,  through  sales growth,  to absorb the  increasing  costs  incurred and
expected to be incurred in connection  with its business  activities.  The words
"believe", "expect",  "anticipate",  "intend" and "plan" and similar expressions
identify  forward-looking  statements.  Readers are cautioned not to place undue
reliance on these  forward-looking  statements,  which speak only as of the date
the statement was made.

General

     During the three months ended June 30, 1999, the Company increased revenues
by 35%  (compared  to the  quarter  ended  June 30,  1998), and posted its first
quarterly profit since the acquisition of Quality Automotive Company.  While the
trend  toward  operating  improvements  is  expected  to  continue,  problems in
bringing  the  Company's  Florida  facility  to  acceptable  levels  of cost and
production  continue to negatively  impact  results.  Management is committed to
bringing the economics of production at the Florida  facility up to the standard
enjoyed by the main  facilities  in Virginia.  The second  quarter  ended with a
softness in revenues  beyond the normal  seasonal  downturn.  An analysis of the
slowdown  appears to indicate  that the Company did not lose  customers but that
its customers are maintaining  leaner  inventories in managing their  respective
businesses.  The  Company  continues  to  anticipate  the normal fall upturn and
expects  that it will  record  sales  for the full year in the  $30-$35  million
range. Although management cannot guarantee future performance, it believes that
the  Company  will be  profitable  for the year ended  December  31,  1999.  The
Company's  ability to achieve  profitability,  however,  is dependent  upon many
factors including,  but not limited to, the realization of anticipated sales and
the  absence  of any  material  increases  in costs of goods  sold from  current
levels.  There can be no assurance  that the foregoing or other factors will not
prevent the Company from achieving these expectations.

Results of Operations

     Comparison  of Three  Months Ended June 30, 1999 to Three Months Ended June
30, 1998

     Net  Sales.  Net  sales  for the  three  months  ended  June 30,  1999 were
$8,043,361  as compared to net sales of  $5,937,296  for the three  months ended
June 30, 1998. The increase of $2,106,065 or 35% was from a significant  gain in
the Company's base business.



                                       11

<PAGE>

     Gross Profit.  For the three months ended June 30, 1999,  the Company had a
gross profit of $2,128,404 as compared to the gross profit of $1,408,751 for the
three  months  ended June 30,  1998.  The  increase in gross profit (51%) is the
result of the increase in sales offset by a smaller increase in the overall cost
of sales,  attributable to the economies of scale resulting from the increase in
Company sales.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administration expenses for the three months ended June 30, 1999 were $1,460,233
as compared to $1,744,444 for the three months ended June 30, 1998, representing
a  decrease  of  16%.  As a  percentage  of  net  sales,  selling,  general  and
administrative  expenses  decreased  from 29% to 18% as a result of economies of
scale realized through increased sales.

     Interest  Expense.  Interest expense increased by $212,734 from $303,146 in
the second  quarter of 1998 to  $515,880  in the  second  quarter of 1999.  This
increase  was  attributable  to an increase in  borrowings  under the  Company's
borrowing  facilities which was attributable to increased sales and the increase
in borrowing rate under the Reg S Debentures.

     Net  Income  (Loss).  The net  income  in the  second  quarter  of 1999 was
$152,291 or $.14 per share based on 1,082,827 weighted average common and common
equivalent shares outstanding compared to a net loss of ($638,839) or ($.61) per
share in the  second  quarter  of 1998  based on  1,048,273  common  and  common
equivalent  shares  outstanding.  The  increase  in net income of  $791,130  was
attributable  to the  increase in net sales  combined  with a reduction in total
operating expenses due to certain economies of scale.

     Comparison  of Six Months  Ended June 30, 1999 to Six Months Ended June 30,
1998

     Net  Sales.  Net  sales  for  the six  months  ended  June  30,  1999  were
$15,364,316 as compared to net sales of $9,357,169 for the six months ended June
30,  1998.  The  increase of  $6,007,147  or 64% was from an overall gain in the
Company's base business.

     Gross  Profit.  For the six months ended June 30,  1999,  the Company had a
gross profit of $4,144,225  as compared to a gross profit of $2,175,297  for the
six months ended June 30, 1998. The increase in gross profit (91%) resulted from
economies of scale realized as a result of increase in sales.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administration  expenses for the six months ended June 30, 1999 were  $3,212,398
as compared to $3,237,273 for the six months ended June 30, 1998, representing a
decrease of $24,874 (1%) due to increased  sales.  As a percentage of net sales,
selling,  general and  administrative  expenses  decreased  from 35% to 21% as a
result of economies of scale realized through increased sales.

     Interest  Expense.  Interest expense increased by $462,898 from $551,103 in
the six months  ended June 30, 1998 to  $1,014,001  in the six months ended June
30,  1999.  The  increase is  attributable  to  increased  borrowings  under the
Company's  credit  facilities  resulting  from the  increase  in  sales  and the
increase in borrowing rate of the Company's Reg S Debentures.

     Net Loss.  The net loss in the first six  months of 1999 was  ($82,175)  or
($0.08)  per  share  based on  1,065,836  weighted  average  common  and  common
equivalent shares outstanding  compared to a net loss of ($1,613,079) or ($1.54)
per share in the six months  ended June 30, 1998 based on  1,048,273  common and
common equivalent shares outstanding. The decrease in net loss of $1,530,904 was
primarily attributable to the increase in net sales combined with a reduction in
total operating expenses due to certain economies of scale.

                                       12

<PAGE>

Liquidity and Capital Resources

     During the six  months  ended  June 30,  1999,  the  Company  financed  its
operations  primarily through  borrowings under its lending  facilities and cash
generated by operations.

     At June  30,  1999,  the  Company  had  consolidated  cash  and  short-term
investments  totaling  $327,552 and working capital of $10,597,236.  At June 30,
1998,  the Company had  consolidated  cash and short-term  investments  totaling
$338,641 and working capital of $1,712,185. This increase in working capital was
due primarily to the  refinancing  of senior debt whereby the maturity  dates of
the facilities were greater than one year.

     Net cash  provided by  financing  activities  for six months ended June 30,
1999 was $489,772  consisting  primarily of advances under the Company's  senior
credit agreements.

     In  February  1999,  the  Company  paid in full the  outstanding  principal
balance on the  promissory  notes  previously  issued by the Company in February
1998.

     The principal  source of capital for the Company's  operations  during 1999
had been the line of credit (the "Credit  Facility")  between Quality Automotive
Company, the Company's subsidiary  ("Quality") and LaSalle Business Credit, Inc.
("LaSalle"),  which Credit Facility was extended and replaced on August 9, 1999.
The Credit Facility, at June 30, 1999 consisted of the following:

     (i)  a secured revolving credit facility of up to $10 million. Advances are
          made by formula on the Company's accounts receivable and inventory. At
          June 30,  1999,  the  revolving  credit had  approximately  $7,489,617
          million of a possible  $8,743,617  million  outstanding.  Interest  is
          calculated at the prime rate plus 2% (9.75% at June 30, 1999)

     (ii) a secured loan covering machinery equipment, property and plant having
          an  original  loan  amount  of  approximately  $3.5  million  of which
          $1,166,800 was outstanding at June 30, 1999.  Monthly  installments of
          $20,800 are due until  maturity,  at which time any  balance  owing is
          due.  Interest is  calculated  at the prime are plus 2% (9.75% at June
          30, 1999)

    (iii) a secured  loan  covering  machinery  and  equipment  put into service
          under a capital  expenditure  facility of 1995.  The  original  amount
          outstanding  was  approximately  $1  million.  At June 30,  1999,  the
          balance  outstanding was  approximately  $151,667.  The loan calls for
          monthly payments of $25,000 with any balance being due at the maturity
          date.  Interest is calculated at the prime rate plus 2% (9.75% at June
          30, 1999).

                                       13

<PAGE>

     Quality's obligation to pay the principal of, interest on, premium, if any,
and all other amounts  payable on account of the Credit  Facility was secured by
substantially  all of the  assets of Quality as well as the pledge of all of the
Company's ownership interest in Quality.

     In addition to the Credit  Facility,  up to $2.0 million was made available
to the Company under a revolving  credit  agreement (the "USAM Revolving  Loan")
entered  into on March  31,1998.  At June 30,  1999,  an aggregate of up to $1.4
million had been advanced to the Company under the USAM  Revolving  Loan.  Under
the terms of the USAM Revolving Loan, the lender is not obligated to advance the
Company  more than $1 million at any time during the term of the loan.  Advances
pursuant to the USAM  Revolving  Loan bear interest at the rate of 11% per annum
and are to be repaid by the Company,  together with accrued interest thereon, at
the expiration of 2 years, unless earlier prepaid, at the option of the Company.
The USAM Revolving Loan is secured by a general security  interest in the assets
of the  Company as well as a first  security  interest  in and to the  Company's
Florida  production  facility.  Under the terms of the USAM Revolving  Loan, the
Company  granted (i) five year  warrants to purchase up to 14,000  shares of the
Company's  Common  Stock at an  exercise  price of $1.43 per share,  exercisable
after March 31, 1999,  (ii) five year warrants to purchase up to an aggregate of
3,500  additional  shares of the Company's  Common Stock at an exercise price of
$1.43 per share,  exercisable after March 31, 1999, and (iii) five year warrants
to purchase  up to an  aggregate  of 3,500  additional  shares of the  Company's
Common Stock at an exercise price of $1.97 per share, exercisable after June 30,
1999.  The USAM  Revolving  Loan was prepaid on August 9, 1999.  The Company has
agreed to grant to the lender or its  assigns  "piggyback"  registration  rights
with respect to the shares underlying such warrants.

     On August 9, 1999 the Company  entered into a new $15 Million Senior Credit
and Term Loan Agreement ("Senior Credit") with IBJ Whitehall, as Agent. Interest
on amounts borrowed under the Senior Credit facility will be calculated,  at the
Company's  option at 3/4 % above the base rate or 300 basis  points over LIBOR .
Substantially  all of the Company's  assets including the stock of the Company's
principal  subsidiaries  are pledged as security for the Senior Credit facility.
The loan agreement  contains  provisions which restrict the Company's ability to
declare cash dividends and covenants include a fixed charge coverage ratio and a
minimum net worth test.  Proceeds from the initial  funding of the Senior Credit
facility were used to retire  principal  and accrued but unpaid  interest on the
LaSalle Credit Facility, the USAM Revolving Loan and the SBA's term loan.

Impact of the Year 2000

In  1997,  as  part  of a  general  improvement  to  Company  reporting,  a  new
manufacturing  and financial  software  package was purchased  from a recognized
leader in its field. As part of that general  upgrade,  the Company moved from a
IBM 36 advanced to an IBM AS400.  The new system,  which fully  contemplates the
computer  related  problems  with  the new  millennium,  is  operational  at the
Tappahannock,  Virginia facility.  The Company's new system  accommodates remote
locations  and the Sanford,  Florida  facility is expected to be placed  on-line
prior to October 31,1999.

The Company,  in assessing the readiness of third party suppliers and customers,
has concentrated on alternative  back-up procedures to minimize or eliminate any
adverse  effect on the  Company's  business in the event  customers or suppliers
systems have a Year 2000 problem.  As at June 30, 1999, the Company  believes it
has set sufficient back-up systems in place to insulate its business from a Year
2000 problem.

                                       14

<PAGE>

Nevertheless,  although  the  Company  does  not  expect  significant  costs  or
disruptions  in  operations  from its  customers'  and  suppliers'  inability to
achieve Year 2000 compliance,  the Company can not guaranty customer or supplier
performance.  Accordingly,  it can not predict what effect  noncompliance  might
have.  While the Company has a  substantial  investment  in the new computer and
software,  such costs were incurred as part of a general  system upgrade and not
in response to a potential Year 2000 problem.  The Company  estimates that costs
incurred in  investigating  and  correcting any potential Year 2000 problem have
been and will be immaterial.


PART II: OTHER INFORMATION

ITEM 1:  LEGAL PROCEEDINGS

     On August 21,1998, an eight count complaint,  entitled Al Dulisse,  Bernard
Bard, Michael Scicchitano and Barry Schwartz vs. U.S. Automotive  Manufacturing,
Inc.,  f/k/a  R.T.   Industries,   Inc.,  a  Delaware   corporation   (Case  No.
98-007490AN),  was filed in the Circuit Court of the Fifteenth  Judicial Circuit
of  Florida,  in and for Palm Beach  County  (the  "Complaint").  The  Complaint
alleges that the Company failed to recognize stock options purportedly exercised
by each  plaintiff  under  alleged  stock option  agreements  with the Company's
predecessor,  R.T. Industries, Inc. The Complaint contained a breach of contract
claim  and  unpaid-wages  claim  for each of the  four  plaintiffs;  however  on
November 23, 1998, the Court entered an Order  dismissing  with prejudice all of
the  unpaid-wages  claim.  Accordingly,  the action is proceeding  solely on the
breach of contract claims.

     Various other legal proceedings and claims have been or may be from time to
time  asserted  against  the  Company in the  ordinary  course of its  business.
Management believes that it has meritorious  defenses and will vigorously defend
itself with respect to all existing  proceedings or claims. Any costs or damages
that management estimates may be paid as a result of these proceedings or claims
are accrued when the  liability,  if any, is considered  probable and the amount
can be reasonably  estimated.  Although the ultimate  disposition of proceedings
and claims currently pending is not presently determinable,  management believes
that,  after  consultation  with counsel,  the likelihood that material costs or
damages  will be incurred by the Company as a result of any pending  proceedings
is remote.

ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS

     On March 31,1999 and June 30,1999  respectively,  the Company  granted five
year  warrants  exercisable  to purchase up to 3500 shares (at each date) of its
Common Stock to its lenders  pursuant to the terms of the USAM  Revolving  Loan.
Such  warrants are  exercisable  immediately  at an exercise  price of $1.43 for
those  warrants  issued on March31,  1999 and at an exercise  price of $1.97 for
those  warrants  issued  on June  30,1999(eighty  percent  (80%) of the  average
closing  price for the Common Stock for the twenty (20)  trading days  preceding
March  31,1999  and  June  30,1999,respectively).  The USAM  Revolving  Loan was
prepaid  on August  9,1999  and no further  warrants  will be issued.  At August
12,1999 warrants  exercisable to purchase up to an aggregate of 21,000 shares of
the Company's Common Stock had been granted pursuant to the USAM Revolving Loan.

     On March  31,1999,  the  Company  granted  to  executive  officers  and key
employees of the Company  options  pursuant to the Company's 1992 and 1998 Stock
Option Plan as follows:

                                       15

<PAGE>

     (i)  The Company  granted to an executive  officer of the Company  ten-year
          options pursuant to the 1992 Stock Option Plan to purchase up to 1,800
          shares of the Company's  Common Stock,  at an exercise price of $1.063
          (the  closing  price  for the  Common  Stock on March  31,1999).  Such
          options vest immediately;

     (ii) The Company  granted to an executive  officer of the Company  ten-year
          options pursuant to the 1998 Stock Option Plan to purchase up to 1,800
          shares of the Company's  Common Stock,  at an exercise price of $1.063
          (the  closing  price  for the  Common  Stock on March 31,  1999.  Such
          options vest immediately;

    (iii) The Company  granted to a key employee of the Company ten year options
          pursuant to the 1992 Stock Option Plan to purchase up to 307 shares of
          the Company's Common Stock at an exercise price of $1.063 (the closing
          sales price for the  Company's  Common Stock on March  31,1999).  Such
          options shall vest in equal quarterly  installments over the course of
          four (4) years from the date of the option grant; and

     (iv) The Company  granted to certain key  employees of the Company  options
          pursuant to the Company's  1998 Stock Option Plan to purchase up to an
          aggregate  of  29,000  shares  of the  Company's  Common  Stock  at an
          exercise  price of $1.063 ( the  closing  sales  price for the  Common
          Stock at March  31,1999)  Such options  shall vest in equal  quarterly
          installments  over  the  course  of four  (4)  years  from the date of
          the option grant.

     Options to  purchase  up to 2,000  shares of the  Company's  Common  Stock,
granted pursuant to the Company's 1998 Stock Option Plan were cancelled prior to
issuance during the quarter ended June 30, 1999.

     In  addition,  on March  31,1999,  the Company  re-priced  all  outstanding
options  under the 1992 Stock  Option  Plan,  exercisable  to  purchase up to an
aggregate of 93 shares of the Company's  Common Stock,  to $1.063 per share (the
price of the Company's common Stock reported by the Nasdaq SmallCap  Market,  as
of the close of trading on March 31,1999).

     On June 9, 1999, the Company granted  ten-year options to: (i) an executive
officer of the Company,  pursuant to the  Company's  1992 Stock Option Plan,  to
purchase up to 1,800 shares of the  Company's  Common  Stock;  (ii) an executive
officer of the Company,  pursuant to the  Company's  1998 Stock Option Plan,  to
purchase  up to 1,800  shares  of the  Company's  Common  Stock  and (iii) a key
employee of the Company,  pursuant to the  Company's  1998 Stock Option Plan, to
purchase up to 3,000 shares of the Company's  Common Stock.  All of such options
are  exercisable  at an exercise price of $2.25 per share (the closing price for
the Common Stock on June 30, 1999) and vest immediately.

     On March 31,  1999,  the  Company  issued to two  directors  of the Company
11,759 and 22,734 shares of the Company's  Common Stock, in exchange for accrued
but unpaid  obligations  owing by the Company to such  individuals  and/or their
affiliates.

     On June 9, 1999, the Company  granted to two of its directors  2,777 shares
of Common Stock each in lieu of owed and unpaid director's fees in the amount of
$6,250 each, based on a conversion price (the closing sales price for the Common
Stock on June 30, 1999) of $2.25 per share.

     At January 1, 1999, the interest rate of the Reg S Debentures was increased
to 20%  per  annum  (from  8% per  annum)  until  such  time  as the  underlying
Conversion Shares are covered by an effective  registration statement filed with
the SEC or the Company  redeems  same.  It is not expected  that the  Conversion
Shares will be able to be registered with the SEC before  September 30, 1999. At
such time as the underlying  Conversion  Shares are tradable,  without regard to
registration, the interest rate will revert to 8% per annum.

     In connection with the above  referenced  issuances,  the Company relied on
Section 4(2) under the Securities Act of 1933 as  transactions  by an issuer not
involving any public offering .


                                       16

<PAGE>

ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          Exhibit 27 Financial Data Schedule

     (b)  Form 8-K

          No Form 8-K's were filed during the quarter ended June 30, 1999.

                                   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.

Dated: August 12, 1999

                                             U.S. AUTOMOTIVE MANUFACTURING, INC.

                                             By: /s/ JOHN W. KOHUT
                                                 ---------------------------
                                                 John W. Kohut,
                                                 Chairman of the Board
                                                 and Principal Financial Officer
                                                 (duly authorize officer)