Labwire, Inc. was incorporated in 2004 as a Nevada corporation and is headquartered in Brookshire, Texas, close to metropolitan Houston. We are a leading provider of certain third party administrator ("TPA") services. As a provider of TPA services, we administer certain programs for our clients, allowing them to outsource matters that they would prefer not to undertake in-house on their own. We act as a TPA with respect to the following three types of services:

1. Drug testing and other employee screening - In connection with the provision of these services, we supervise specimen collection and test processing by federally certified labs. We also provide a medical review officer, who interprets the results of the testing. Moreover, unrelated to drug testing, we supervise background screening and on-site testing, which includes audio and vision testing, general employee physicals, and metal testing of employees engaged in operations such as mining.

2. Employee training and online certification - In connection with the provision of these services, we have developed training and education programs to enable clients to comply with certain government regulations. Currently, some of these programs deal with Department of Transportation regulations, while others deal with Federal Trade Commission regulations. We plan to broaden our offering of these programs in the future, as we are able.

3. Security - In connection with the provision of these services, we provide K-9 dog teams that search for bombs or drugs, supervise on-site physical security teams, and undertake some surveillance work.

We operate through two wholly-owned subsidiaries, Workplace Screening Services, Inc. and Occupational Testing, Inc. We have developed the Labwire™ Platform, an innovative, proprietary Web-based application that (a) streamlines the complex regulatory and record management activities associated with our drug testing, and (b) offers our employee training and online certification programs. This application figures prominently into our business strategy. Moreover, our management team has extensive experience in our business and industry.

We became a reporting company with the U.S. Securities and Exchange Commission (the "Commission") when our General Form for Registration of Securities on Form 10 became effective on or about April 14, 2008.

There can be no assurance that we will be successful in our business. Our business involves numerous risks, the principal ones of which are described in the section captioned "Risk Factors" in our General Form for Registration of Securities on Form 10.

Listed below are key company events that occurred in the third quarter of 2008:

* We signed an alliance agreement with Global Services to provide compliance management and specimen collections on an international basis.

* We completed the billing interface with USIS and are now in position to increase business through our alliance with that company.

* We again successfully participated in the hurricane security taskforce for Norco, Louisiana and Port Arthur, Texas refining facilities.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Report. In addition to historical information, the discussion in this Report contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated by these forward-looking statements due to factors including, but not limited to, those factors set forth elsewhere in this Report and in the section captioned "RISK FACTORS" in our General Form for Registration of Securities on Form 10.

                             Results of Operations

  Quarter Ended September 30, 2008 Compared to the Quarter Ended September 30,
                                      2007

The following table sets forth certain operating information (unaudited)
regarding the Company for the three-month periods ended September 30, 2008 and
2007:

                         Three Months Ended
                            September 30
                         2008          2007
                      (unaudited)   (unaudited)
Revenues              $  1,292,472  $  1,352,671
Cost of operations    $    747,665 $     927,084
Gross Profit          $    544,807  $    425,587
Operating expenses   $     382,937  $    252,980
Net income            $    117,796  $    159,962

Net income per share       $  0.00       $  0.00

Revenues
Revenues for the three-month periods ended September 30, 2008 and 2007 were $1,292,472 and $1,352,671, respectively. The decrease in revenues is principally due to the inclusion in third quarter 2007 revenues of approximately $208,000 in collections on accounts previously written off. Adjusted for this $208,000 in revenues, third quarter 2008 revenues increased over third quarter 2007 revenues, primarily because of revenues from our Wyoming operations acquired during the fourth quarter of 2007. This increase is despite the expiration of a particular client's account agreement amounting to approximately $400,000 per quarter. We are currently in negotiations to resume services to this client, and we anticipate that revenues from this client may resume in some amount in the first quarter of 2009.

Operating Expenses
Operating expenses for the three-month periods ended September 30, 2008 and 2007 were $382,937 and $252,980, respectively. The $129,957 increase was primarily due to a $54,601 increase in our payroll expense, $18,548 in computer expenses relative to the development of our proprietary software, $10,568 in amortization of capitalized software development costs, and a $14,495 increase in professional fees and the continued development of its infrastructure to prepare for increased business.

Operating Income
Our operating income for the three-month period ended September 30, 2008 was $161,870 compared to an operating income of $172,607 for the three-month period ended September 30, 2007. Our operating income changed little between the two periods, with decreased revenues that were more than offset by a decrease in cost of sales but with an increase in operating expenses.

Nine-month Period Ended September 30, 2008 Compared to the Nine-month Period
Ended September 30, 2007

The following table sets forth certain operating information (unaudited)
regarding the Company for the nine-month periods ended September 30, 2008 and
2007:

                         Nine Months Ended
                            September 30
                         2008         2007
                     (unaudited)   (unaudited)
Revenues             $  3,168,726  $  3,529,956
Cost of operations   $  1,707,178  $  2,285,302
Gross Profit         $  1,461,548  $  1,244,654
Operating expenses   $  1,221,616  $    849,246
Net income           $    145,367 $     338,125

Net income per share      $  0.00       $  0.00

Revenues
Revenues for the nine-month periods ended September 30, 2008 and 2007 were $3,168,726 and $3,529,956, respectively. The decrease in revenues is principally due to the inclusion in third quarter 2007 revenues of approximately $208,000 in collections on accounts previously written off and the expiration of a particular client's account agreement amounting to approximately $400,000 per quarter. The magnitude of the loss in revenues from this account was partially offset in the third quarter 2008 by an increase in revenues from our Wyoming operations acquired during the fourth quarter of 2007. We are currently in negotiations to resume services to this client, and we anticipate that revenues from this client may resume in some amount in the first quarter of 2009.

Operating Expenses
Operating expenses for the nine-month periods ended September 30, 2008 and 2007 were $1,221,616 and $849,246, respectively. The $372,370 increase was primarily due an increase of $230,407 in the Company's payroll expense primarily as the result of the addition our Wyoming operations, a $24,566 increase in contract labor, a $18,956 increase in professional fees, a $24,871 increase in office supplies, a $30,586 increase in the amortization of capitalized software development and a $18,630 increase in postage and delivery expenses.

Operating Income
Our operating income for the nine-month period ended September 30, 2008 was $239,932 compared to an operating income of $395,408 for the nine-month period ended September 30, 2007. The $155,476 decrease in operating income in the 2008 period compared to the 2007 period is attributed primarily to the approximately $208,000 in collections on accounts previously written off and collected during the nine-months ended September 30, 2007 and the expiration of a particular client's account agreement amounting to approximately $400,000 per quarter. Adjusted for this $208,000 in revenues, we would have experienced an approximately $75,000 increase in 2008, primarily because of revenues from our Wyoming operations acquired during the fourth quarter of 2007, despite the expiration of the aforementioned account agreement. We are currently in negotiations to resume services to this client, and we anticipate that revenues from this client may resume in some amount in the first quarter of 2009.

Liquidity and Capital Resources From inception until the third quarter of 2007, our primary sources of capital were proceeds from private placements of our common stock, loans from shareholders and bank lines of credit. We began to experience positive cash flow in the third quarter of 2007, which has allowed us to provide our own operating capital for our operations and reduced the need to access outside capital sources to support current operations. We currently require approximately $130,000 per month to fund our recurring operations. This amount would likely increase if we expand our sales and marketing efforts and continue to develop new products and services as are our plans. Our cash needs are primarily attributable to funding sales and marketing efforts, strengthening technical and helpdesk support, expanding our development capabilities, and building administrative infrastructure, including costs and professional fees associated with being a public company. We intend to meet our immediate capital needs from cash flow provided from operations. We believe that we have sufficient funding to cover our cash needs for the next 12 months, although there can be no assurance in this regard.

As of September 30, 2008, we had cash and cash equivalents of $77,485. The largest uses of our funds are funding general and administrative expenses and salaries and related expenses. As of September 30, 2008, we had total current liabilities of $961,488 and total current assets of $1,125,094, with our current assets exceeding our current liabilities by $163,606.

Net cash used by operating activities was $458,461 for the nine months ended September 30, 2008, compared to net cash provided by operating activities of $73,154 for the nine months ended September 30, 2007. The increase in cash used by operating activities in comparing the nine months ended September 30, 2008 to the nine months ended September 30, 2007 can be attributed primarily to 2008 having a net loss of $96,565 compared to 2007 having a net income of $338,125.

We have two outstanding loans with Frost National Bank ("Frost"). On February 13, 2007, we established a $300,000 revolving line of credit with Frost that was originally scheduled to mature on February 13, 2008. However, on or about March 4, 2008, we converted this revolving line of credit into a term note with an original principal amount of approximately $241,932. This term note is due and payable in 36 level monthly payments. The interest rate on the outstanding balance of this term note is a floating rate of prime plus 1%. This term note is secured by out accounts receivable. The outstanding principal balance on this term note as of September 30, 2008 was $204,143.

On or about March 4, 2008, we established a new $300,000 revolving line of credit with Frost that is scheduled to mature on February 13, 2010, at which time a balloon payment comprised of all outstanding principal and accrued interest must be paid. The interest rate on the outstanding balance of the revolving line of credit is a floating rate of prime plus 1%, and a payment of all accrued interest is due monthly throughout the term of the line of credit. This revolving line of credit is secured by out accounts receivable. The outstanding principal balance on this line of credit as of September 30, 2008 was $300,000.

As of September 30, 2008, we also had a $434,355 promissory note outstanding and payable at a floating rate of interest of prime plus 1%. The note is related to the purchase of Occupational Testing, Inc.

As of September 30, 2008, we also had a $300,000 promissory note outstanding and payable at an interest rate of 4% per annum and payable on December 31, 2008.

The long-term success of our operations depends on our ability to (1) increase the deployment of our Labwire™ Platform, (2) significantly increase our services revenue through the deployment of the Labwire™ Platform, both through increases in drug and alcohol testing, and usage of employee training and online certification programs, and (3) increase our revenues from K-9 security services. We intend to raise additional capital through an offering of our Common Stock or other securities to provide additional working capital to fund the expansion of operations through acquisitions and the addition of new clients through marketing efforts and joint ventures with other service organizations. We intend to seek up to approximately $2.0 million in capital in the near future in this connection. The exact amount of funds raised, if any, will determine how aggressively we can grow and what additional projects we will be able to undertake. Assuming that we are able to raise the $2.0 million in new capital, we currently anticipate spending approximately $250,000 in marketing and sales in its efforts to sign new clients and seek additional alliances. No assurance can be given that we will be able to raise additional capital, when needed or at all, or that such capital, if available, will be on terms acceptable to us. If adequate funds are not available on acceptable terms, our business, results of operations and financial condition could be materially adversely affected. In a worst-case scenario, we would have to scale back or cease operations, and we might not be able to remain a viable entity.

In addition common stock may also be issued for conversion or settlement of debt and/or payables for equity, future obligations which may be satisfied by the issuance of common shares, and other transactions and agreements which may in the future result in the issuance of additional common shares. The common shares that we may issue in the future could significantly increase the number of shares outstanding and could be extremely dilutive.

Contractual Obligations
Future payments due on our contractual obligations as of September 30, 2008 are
as follows:

                  Total        2008    2009-2010  2010-2012  Thereafter
Operating lease  $   22,600 $   22,600  $       - $        -    $        -
Notes payable       882,440    376,950    235,552    235,552        34,386
Line of credit      300,000          -    300,000          -             -
Total           $ 1,205,040 $  399,550  $ 535,552 $  235,552    $   34,386

Critical Accounting Policies and Estimates Our discussion of our financial condition and results of operations is based on the information reported in our financial statements. The preparation of our financial statements requires us to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities as of the date of our financial statements. We base our assumptions and estimates on historical experience and other sources that we believe to be reasonable at the time. Actual results may vary from our estimates due to changes in circumstances, weather, politics, global economics, mechanical problems, general business conditions and other factors. Our significant accounting policies are detailed in Note 1 to our financial statements included in this Quarterly Report. We have outlined below certain of these policies that have particular importance to the reporting of our financial condition and results of operations and that require the application of significant judgment by our management.

Impairment of Long-Lived Assets
We review long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, in accordance with Statement of financial Accounting Standards ("SFAS") No. 144, Accounting for the Impairment for Disposal of Long-Lived Assets. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, impairment charge is recognized by the amount of the asset exceeds the fair value of the asset.

Fair Value of Financial Instruments
Management believes that the carrying amounts of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to the short-term nature of these instruments. The carrying amount of our long-term debt also approximates fair value, based on market quote values (where applicable) or discounted cash flow analyses.

Income Taxes
We account for income taxes under SFAS No. 109, which requires the asset and liability approach to accounting for income taxes. Under this method, deferred tax assets and liabilities are measured based on differences between financial reporting and tax bases of assets and liabilities measured using enacted tax rates and laws that are expected to be in effect when differences are expected to reverse. Valuation allowances are established when it is necessary to reduce deferred income tax assets to the amount, if any, expected to be realized in future years.

Net earnings (loss) per share
Basic and diluted net loss per share information is presented under the requirements of SFAS No. 128, Earnings per Share. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding for the period, less shares subject to repurchase. Diluted net loss per share reflects the potential dilution of securities by adding other common stock equivalents, including stock options, shares subject to repurchase, warrants and convertible notes in the weighted-average number of common shares outstanding for a period, if dilutive. All potentially dilutive securities have been excluded from the computation, as their effect is anti-dilutive.

Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Revenue recognition
We have three main sources of revenue: drug testing and related services, training and online certification, and security services provided by an allied company. Drug testing: we fulfill orders for drug testing services, wherein we are responsible for the performance and data maintenance related to employee drug testing for its clients. We do not perform the drug tests, but we fulfill the order through our network of third party labs and other drug testing facilities. Revenue is recognized when the drug testing has been completed by the lab and the customer has been invoiced for the services. We have low bad debt levels because our policy is to deal with large well-positioned firms that pay monthly. Because we track these company's activities daily, we are constantly aware of our position and therefore can demand and receive timely payments as we provide on-going compliance services. Pursuant to EITF 99-19, we are responsible for fulfilling a customer's order, including whether the service is acceptable and therefore bears the risks and rewards of principal. As such, we have elected to record the gross amounts of the contracts. Our service agreements rarely include multiple parts that would have a material impact on the recognition of revenue. As such, we have created our revenue recognition policies pursuant to EITF 00-21.

Online training and certification: the Company has designed online testing for various certifications which client employees must attain for their employment. The employee takes the certification examinations online and the client is automatically tagged for billing, which coincides with performance of services.

Security services provided by us through an allied company: the process is handled in similar fashion to that described above for drug testing.

Allowance for Uncollectible Receivables
The allowance for all probable uncollectible receivables is based on a combination of historical data, cash payment trends, specific customer issues, write-off trends, general economic conditions and other factors. These factors are continuously monitored by management to arrive at an estimate for the amount of accounts receivable that may ultimately be uncollectible. In circumstances where we are aware of a specific customer's inability to meet its financial obligations, we record a specific allowance for bad debts against amounts due to reduce the net recognized receivable to the amount it reasonably believes will be collected. This analysis requires making significant estimates, and changes in facts and circumstances could result in material changes in the allowance for uncollectible receivables.

Software Development Costs
During the period, we began developing a software platform for certain exclusively internal purposes. We follow the guidance set forth in Statement of Position 98-1, Accounting for the Cost of Computer Software Developed or Obtained for Internal Use (SOP 98-1), in accounting for costs incurred in the development of its on-demand application suite. SOP 98-1 requires companies to capitalize qualifying computer software costs that are incurred during the application development stage and amortize them over the software's estimated useful life.

We capitalize costs associated with developing software for internal use, which costs primarily include salaries of developers. Direct costs incurred in the development of software are capitalized once the preliminary project stage is completed, management has committed to funding the project and completion, and use of the software for its intended purpose are probable. We cease capitalization of development costs once the software has been substantially completed at the date of conversion and is ready for its intended use. The estimation of useful lives requires a significant amount of judgment related to matters, specifically, future changes in technology. We believe no events or circumstances warrant revised estimates of useful lives of the software.

Purchase Accounting
We completed acquisitions in 2004 and the fourth quarter of 2007. The purchase method of accounting requires companies to assign values to assets and liabilities acquired based upon their fair values. In most instances, there is not a readily defined or listed market price for individual assets and liabilities acquired in connection with a business, including intangible assets. The determination of fair value for assets and liabilities in many instances requires a high degree of estimation. The valuation of intangibles assets, in particular, is very subjective. We generally use internal cash flow models and, in certain instances, third party valuations in estimating fair values. The use of different valuation techniques and assumptions can change the amounts and useful lives assigned to the assets and liabilities acquired, including goodwill and other intangible assets and related amortization expense.

Intangible Assets
Intangible assets with estimable useful lives are amortized over respective estimated useful lives, and reviewed for impairment in accordance with FASB Statement No. 142, Goodwill and Other Intangible Assets.

Recent Accounting Pronouncements In September 2006, the FASB issued FASB Statement 157 "Fair Value Measurements" ("SFAS No. 157") that defines and measures fair value and expands disclosures about fair value measurements. The statement emphasizes that fair value is a market-based measurement and not an entity-specific measurement. The provisions of SFAS No. 157 are effective for fiscal years beginning after November 15, 2007.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 applies to all entities and is effective for fiscal years beginning after November 15, 2007.

We do not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on their consolidated financial position, results of operations or cash flow.

Off Balance Sheet Arrangements We have no off balance sheet arrangements.