SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended December 31, 1996

                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
               For the transition period from ________ to ________


                           Commission File No. 0-15260

                                Biorelease Corp.
        (Exact name of small business issuer as specified in its charter)

            Delaware                                   88-0218411
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


      10 Chestnut Drive #D Bedford, NH                              03110
(Address of principal Executive offices)                          (Zip Code)


                                 (603) 471-1255
                 Issuer's telephone number, including area code

     Former name,  former  address and formal fiscal year, if changed since last
report.

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _____

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the last  practicable  date.  9,471,659  shares of common
stock,    par   value   $.01   per   share   as   of    February    12,    1997.


     Transitional Small Business Disclosure Format (Check One)
Yes _____ No __X__

                                     1 of 10
<PAGE>

                                BIORELEASE CORP.


                                      INDEX

PART I. FINANCIAL INFORMATION                                        Page Number
                  

Item 1.  Financial Statements

         Consolidated  balance sheets as of December 31, 1996
         (unaudited) and June 30, 1996  ..................................    3

         Consolidated  Statements of Operations  for the three
         months and six months ended December 31, 1996
         (unaudited) and 1995 (unaudited),  and from October
         20, 1989 (inception) to December 31, 1996 (unaudited) ...........    4

         Consolidated  Statements  of Cash Flows for the six
         Months  Ended  December 31, 1996   (unaudited) and
         1995 (unaudited), and from October 20, 1989 (inception)
         to December 31, 1996 (unaudited) ................................    5

         Notes to Unaudited Financial Statements .........................    7

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

PART II. OTHER INFORMATION

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

                                    2 of 10
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statement
                                BIORELEASE CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                           CONSOLIDATED BALANCE SHEETS
                       December 31, 1996 and June 30, 1996
<TABLE>
<CAPTION>
                                              December 31,  June 30,
         ASSETS                                  1996         1996
         ------                                  -----      --------
                                              (Unaudited)

<S>                                             <C>        <C>     
Cash ........................................   $ 71,175   $  1,200
Accounts receivable .........................     28,163        563
Inventories .................................     27,138     27,679
Other receivables ...........................      1,015       --
Prepaid expenses and other current assets ...      1,470      1,679
                                                --------   --------
         Total current assets ...............   $128,961   $ 31,121

 Equipment and leasehold improvements, net ..     24,316     30,040
 Intangible assets, net .....................     33,621     38,947
 Other noncurrent assets ....................        698        699
                                                --------   --------
 Total assets ...............................   $187,596   $110,807
         LIABILITIES AND STOCKHOLDERS' EQUITY
 Accounts payable ...........................   $130,213   $ 90,637
 Accrued expenses ...........................    108,029     70,642
 Notes payable - stockholders, current ......     55,600     85,530
 Loans payable - other ......................     75,000       --
 Income taxes payable .......................      1,549      1,549
 Other current liabilities ..................      1,500      1,500
                                                --------   --------
 Total current liabilities ..................    371,891    249,858

 Notes payable - stockholders,long term .....     23,930       --
 Notes payable - other, long term ...........     16,000     16,000
 Other liabilities ..........................     87,734     87,734
                                                --------   --------
 Total liabilities ..........................    499,555    353,592

Stockholders' equity:
     Common stock of $.01 par value,
          50,000,000  shares  authorized,
          9,921,659 shares issued and 9,471,659
          outstanding  at December 31, 1996 and
          9,880,354  issued and 9,430,354
          outstanding at June 30, 1996            99,217     98,803
         Additional paid-in capital            9,119,296  9,113,927
         Stock warrants outstanding                 --         --
         Development stage accumulated deficit(9,475,972)(9,411,015)
        Stock subscription receivable         (   50,000)(   50,000)
                                              ----------  ---------
                                              (  307,459)(  248,285)
        Less: Treasury stock                  (    4,500)(    4,500)
                                              ----------  ---------
        Total stockholders' equity (deficit)  (  311,959)(  252,785)
                                              ----------  ---------
Total liabilities and stockholders' equity
         (deficiency)                         $  187,596 $  110,016
                                             =========== ==========
</TABLE>
               The accompanying notes are an integral part of the
                       consolidated financial statements.

                                    3 of 10
<PAGE>

                                BIORELEASE CORP.

                        (A DEVELOPMENT STAGE ENTERPRISE)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
      For the Three Months and Six Months Ended December 31, 1996 and 1995,
          and the Cumulative Period from Inception to December 31, 1996
<TABLE>
<CAPTION>
                                       Three Months Ended            Six Months Ended
                                          December 31,                  December 31,       Inception (October
                                                                                              20, 1989 to
                                     1996            1995           1996          1995          1996
                                  (Unaudited)    (Unaudited)     (Unaudited)   (Unaudited)    (Unaudited)
                                  -----------    -----------     ----------    -----------   -------------
<S>                               <C>            <C>            <C>            <C>            <C>        
Revenues ......................   $    32,960    $    48,374    $    45,651    $    62,483    $   432,763
Cost of Goods Sold ............          (541)        (3,067)          (541)        (3,073)       (15,838)
                                  -----------    -----------        -------        -------     ---------- 
   Gross Profit ...............        32,419         45,307         45,110         59,410        416,925
Operating expenses:
 Cell culture operations ......         (--)           (--)           (--)           (--)        (601,116)
 Research and development .....         (--)         (12,500)         (--)         (25,000)    (2,558,041)
 Purchased Technologies .......          --             --             --             --         (690,000)
 General and administrative ...       (33,390)       (59,929)       (77,707)      (120,713)    (4,113,339)
 Other ........................             0              0              0              0              0
                                  -----------    -----------    -----------    -----------    -----------
Loss from operations ..........          (971)       (27,122)       (32,597)       (86,303)    (7,545,571)
                                  -----------    -----------    -----------    -----------    -----------
Other costs:
 Interest, net ................          (981)        (1,212)        (1,962)        (2,405)        85,389
 Lease commitment cost ........          --             --             --             --         (315,000)
 Litigation costs .............         (--)            (650)         (--)          (5,474)       (99,242)
 Other income (costs) .........          --             --             --             --          (23,024)
 Gain(Loss) on sale of assets .          --            (--)            --            1,100         62,616
 Offering costs ...............       (30,396)          --          (30,396)          --         (321,830)
 Option compensation ..........          --             --             --             --         (219,375)
 Income on settlements ........          --           29,361           --           29,361        280,500
 Realized loss for decline
  in value of investment ......         (--)           (--)           (--)           (--)      (1,500,000)
                                  -----------    -----------        -------        -------     ---------- 
     Total other costs ........       (31,377)       (31,377)       (32,358)       (22,582)    (2,049,966)
                                  -----------    -----------        -------        -------     ---------- 
Income (loss) before provision
 for (benefit from income
 taxes cumulative  effect of
 change in accounting principle       (32,348)           377        (64,955)       (63,721)    (9,595,537)
Provision for income taxes ....          --             --             --             --         (343,873)
                                  -----------    -----------        -------        -------     ---------- 
Income (loss) before cumulative
 effect of accounting principle       (32,348)           377        (64,955)       (63,721)    (9,939,410)
Cumulative effect of change in
 accounting principle .........          --             --             --             --          463,440
                                  -----------    -----------        -------        -------     ---------- 
Net income (loss) .............   $   (32,348)   $       377    $   (64,955)   $   (63,721)   $(9,475,970)
                                  ===========    ===========    ===========    ===========    ===========
Weighted average shares .......     9,471,659      8,962,263      9,471,659      5,962,263      5,316,606
Income (Loss) per share .......          (.01)           .01           (.01)          (.01)         (1.78)
</TABLE>
                     The accompanying notes are an integral
                 part of the consolidated financial statements.

                                    4 of 10
<PAGE>

                                BIORELEASE CORP.

                        (A DEVELOPMENT STAGE ENTERPRISE)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
               For the Six Months Ended December 31, 1996 and 1995
          and the Cumulative Period from Inception to December 31,1996
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                       Inception
                                             Six Months Ended      (October 20, 1989)
                                                December 31,         to December 31,
                                           1996           1995           1996
                                        -----------    -----------    -----------
<S>                                     <C>            <C>            <C>         
Cash flows from
  operating
  activities:
Net loss ............................   $   (64,957)   $   (63,721)   $(9,475,972)
  Adjustments to reconcile
  net loss to net cash used in
  development activities:
    Depreciation and
      amortization ..................        12,816         13,081        222,246
    Cumulative effect of change
      in accounting principle .......          --             --         (463,440)
    (Gain) Loss on sale of
      assets ........................         (--)            --          (38,704)
    Recognized loss on
     investment .....................          --             --        1,500,000
    Loss on extinguishment
      of debt .......................          --             --           42,000
    Common stock issued
      in exchange for pur-
      chased technology .............          --             --          605,000
    Common stock issued
      in exchange for
      services rendered .............          --             --           52,300
    Common stock options issued
      in exchange of services
      rendered ......................          --             --           89,228
  Amortization of unearned
    compensation ....................          --             --          140,625
  Repricing of A warrants ...........          --             --           78,750
  Changes in current assets:
    Cash - escrow ...................          --             --             --
    Accounts receivable .............       (27,600)        35,731        (28,163)
    Other receivables ...............        (1,015)         3,073         (1,015)
    Inventories .....................           541           --          (27,138)
    Prepaid expenses and
      other current assets ..........           210             95         (1,469)
    Deferred tax asset ..............          --             --          463,440
    Other non-current assets ........            (1)           403           (698)
  Changes in current liabilities:
    Accounts payable ................        39,576            403        201,164
    Accrued expenses ................        37,387        (19,186)       115,857
  Other current liabilities .........         (--)           (--)          90,781
                                        -----------    -----------    -----------
      Net cash used in
        operating
        activities ..................        (3,043)       (31,185)    (6,435,208)
                                        -----------    -----------    -----------

Cash flows from investing activities:
  Purchase of government backed
    securities ......................          --            1,594     (1,000,000)
  Proceeds from collateralized
    mortgage obligations ............          --            1,210      1,000,000
  Purchase of fixed assets ..........         (--)            (244)      (331,587)
  Proceeds from sale of assets ......          --             --          189,742
  Purchase of intangible
    assets ..........................        (2,726)       (13,297)       (84,752)
                                        -----------    -----------    -----------
      Net cash used in
        investing activities ........        (4,096)        10,737       (226,597)
                                        -----------    -----------    -----------
</TABLE>
                     The accompanying notes are an integral
                 part of the consolidated financial statements.

                                    5 of 10
<PAGE>

                                BIORELEASE CORP.

                        (A DEVELOPMENT STAGE ENTERPRISE)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
     For the Six Months Ended December 31, 1996 and 1995 and the Cumulative
                   Period from Inception to December 31, 1996
<TABLE>
<CAPTION>
                                                                  Inception
                                       Six Months Ended       (October 20, 1989)
                                          December 31,          to December 31,
                                      1996           1995           1996
                                   (Unaudited)    (Unaudited)    (Unaudited)
                                   -----------    -----------    -----------
<S>                                <C>            <C>            <C>        
Cash flows from
 financing activities:

  Advances from
    stockholders ...............          --             --          594,385
  Payments of advances
    from stockholders ..........          --             --         (159,975)
  Loans payable ................        75,000           --           75,000
  Notes payable ................        (6,000)         (--)          95,530
  Issuance of common stock,net .         5,784         18,835      3,611,750
  Purchase of investments in
   issuance of common stock ....          --             --       (1,500,000)
Notes receivable ...............          --             --             --
Recapitalization ...............             0              0      4,031,176
                                   -----------    -----------    -----------

      Net cash provided
      by investing
      activities ...............        74,784         18,835      6,747,866
                                   -----------    -----------    -----------

Net increase (decrease)
  in cash ......................        69,975       (100,088)        71,175
Cash at beginning
  of period ....................         1,200        103,975              0
                                   -----------    -----------    -----------

Cash at end of period ..........   $    71,175    $     3,887    $    71,175
                                   ===========    ===========    ===========



Supplemental disclosure of
 non-cash transactions:

  Interest .....................         1,962          2,405         85,389
  Marketable securities acquired
  through issuance of common
  stock ........................          --             --        1,500,000

  Issuance of common stock
   for subscription receivable .         (--)        (125,000)        50,000

  Liabilities repaid through
  issuance of common stock .....         5,784         31,950        582,773
</TABLE>
                     The accompanying notes are an integral
                 part of the consolidated financial statements.

                                    6 of 10
<PAGE>

                                BIORELEASE CORP.
                          (A DEVELOPMENT STAGE COMPANY)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
               AND CUMULATIVE FROM INCEPTION (OCTOBER 20, 1989) TO
                                DECEMBER 31,1996

1. Basis of presentation

     The  accompanying  unaudited  consolidated  financial  statements have been
     prepared in accordance with generally  accepted  accounting  principles for
     interim financial  information and with the instructions to Form 10-QSB and
     Rule 310 of  Regulation  S-B.  Accordingly,  they do not include all of the
     information  and  footnotes  required  by  generally  accepted   accounting
     principles  for complete  consolidated  financial  statements and should be
     read in  conjunction  with the  Company's  audited  consolidated  financial
     statements  at and for the fiscal year ended June 30, 1996.  In the opinion
     of  management,  all  adjustments  (consisting  only  of  normal  recurring
     accruals)  considered necessary for a fair presentation have been included.
     Operating  results  for the six  months  ended  December  31,  1996 are not
     necessarily  indicative  of the results  that may be expected  for the year
     ended June 30, 1997.

2. Loan payable

     A Private  Placement was  undertaken by the Company to raise up to $500,000
     in the form of unsecured  notes from accredited  individuals  relating to a
     then  pending  business   combination  between  the  Company  and  TheraMed
     Partners,  Inc..  At December 31, 1996 $75,000 in unsecured  notes had been
     subscribed  for. An additional  $12,500 was  subscribed for in January 1997
     for an aggregate of $87,500.  The Subscription  Notes are payable on demand
     with no interest costs. [SEE Part II Item 5. Other Information].

3. Subsequent Events

     On February 12, 1997 the Company  announced that TheraMed  Partners and the
     Company had terminated  their previously  announced  agreement to undertake
     the business  combination  and a related  spin-off of the Subsidiary to the
     Company's stockholders.  As a result of the termination,  the Company plans
     to offer recision rights to the holders of the Subscription Notes. Further,
     on February 12, 1997 the Company  announced that Dr. Leon Gauci had assumed
     the role of President of the Subsidiary (Biorelease Technologies, Inc.).

                                    7 of 10
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Results of Operations


Three Months Ended December 31, 1996 and 1995

     For the three months ended  December 31, 1996,  the Company,  including its
subsidiary  Biorelease  Technologies,  Inc. ("the  Subsidiary")  had revenues of
$32,960  consisting  of $28,420 of  continuing  revenues  relating to  licensing
rights to its chondroitin sulfate technology,  $0 of grant research revenues and
$4,540  from  product  sales,  cost of goods sold of $541,  expenses of its cell
culture  operations of $0,  research and  development  expenses of $0, costs for
purchased  technology  of $0,  general  and  administrative  operation  costs of
$33,390,  interest  expense of $981,  costs related to the  terminated  business
combination  and  offering  costs of $30,396  resulting in a net loss of $32,348
compared to the three  months  ended  December 31, 1995 in which the Company had
revenues of $48,374  consisting  of $12,778 of  continuing  chondroitin  sulfate
licensing  revenues,  $12,500  of grant  research  revenues,  $21,596  from cell
culture product sales and $1,500 of equipment rental income,  cost of goods sold
of  $3,067,  expenses  of  its  cell  culture  operations  of $0,  research  and
development expenses of $12,500, no costs for purchased technology,  general and
administrative   operation  costs  of  $59,929,   interest  expense  of  $1,212,
litigation costs of $650, income from the sale of assets of $0, no costs related
to public  offerings,  no option  compensation  charges,  income  recognized  on
settlements  of $29,361  and income  taxes of $0,  resulting  in a net income of
$377. The increase in net loss was attributed to a decrease in product sales and
a decrease in research and development and  administrative  costs. Also, $30,396
related  to  Private  Placement  offering  costs  and  costs  associated  with a
terminated business  combination were charged to the three months ended December
31, 1996 as compared to $0 in the quarter ended December 31, 1995.

Six Months Ended December 31, 1996 and 1995

     For the six months ended  December  31,  1996,  the Company had revenues of
$32,960,  cost of goods sold of $541,  no cell  culture  costs,  no research and
development  costs, no purchased  technology costs,  general and  administrative
costs of $33,390,  interest of $981,  offering and termination  costs of $30,396
and no income taxes resulting in a net loss of $32,348 of as compared to the six
months  ended  December  31, 1995 in which the Company had  revenues of $62,483,
cost of goods sold of $3,073,  cell culture  operation costs of $0, research and
development  costs of  $25,000,  no  purchased  technology  costs,  general  and
administrative  operational  costs of  $120,713,  interest  expense  of  $2,405,
litigation costs of $5,474,  gain on sale of assets of $1,100,  costs related to
public offerings of $0, option compensation  expense of $0, income recognized on
settlements  of  $29,361  and  income  taxes  of $0  resulting  in a net loss of
$63,721.  The  decrease in net loss over the previous  fiscal  year's six months
resulted primarily from the reduction of administrative costs.

Inception (October 20, 1989) to December 31, 1996

     From  October 20,  1989,  the date of the  Subsidiary's  initial  activity,
through  December 31, 1996, the Company had revenues of $432,763,  cost of goods
sold of $15,838,  cell culture expenses of $601,116,  research and developmental
expenses of  $2,558,041,  purchased  technology  costs of $690,000,  general and
administrative  expenses  of  $4,113,339,  interest  income  of  $85,389,  lease
commitment  cost of  $315,000,  litigation  costs  of  $99,242,  other  costs of
$23,024,  gain on sale of assets of $62,616,  offering cost of $321,830,  Option
Compensation of $219,375, income recognized on settlements of $280,500, realized
loss for decline in value of  investment  of  $1,500,000,  income tax expense of
$343,873 and a cumulative  effect of change in accounting  principle of $463,440
thereby resulting in an accumulated net loss of $9,475,970.

                                    8 of 10

<PAGE>

Liquidity and Capital Resources

     From inception until the date on which the subsidiary was combined with the
Company (the  Reorganization),  the Subsidiary's primary source of funds was the
proceeds from private offerings of its Common Stock and Stock in the Subsidiary.
Since the  Reorganization,  the primary source of capital has been the Company's
funds and revenues.

     At December 31, 1996, the Company had negative  working capital of $242,930
as compared with the Company's  negative working capital of $218,737 at June 30,
1996.  The change in the  Company's  working  capital  between June 30, 1996 and
December 31, 1996 is  attributable  to operating  expenses in excess of revenues
net of settlements.

With the termination of the TheraMed business  combination,  the Company expects
to operate  within the limited cash flow  generated by its product sales and its
licensing  revenue for the  remainder of this fiscal  year.  In this scaled back
configuration,  the Company will focus on prepaid  research at the University of
New Hampshire and limited outside research funded by its limited cash. Depending
in large part on results  of this  limited  research,  the  Company  may be in a
position to raise additional funds within the next several quarters.


Dividend Policy

     The Company  has not  declared or paid any  dividends  on its common  stock
since its inception and does not anticipate  the  declaration or payment of cash
dividends in the foreseeable future. The Company intends to retain earnings,  if
any, to finance the development  and expansion of its business.  Future dividend
policy will be subject to the  discretion  of the Board of Directors and will be
contingent  upon future  earnings,  if any, the Company's  financial  condition,
capital requirements, general business conditions, and other factors. Therefore,
there can be no assurance that dividends of any kind will ever be paid.

Effect of Inflation

     Management  believes that  inflation  has not had a material  effect on its
operations for the periods presented.

                                    9 of 10
<PAGE>

                                     PART II

                                OTHER INFORMATION

Item 1. Legal Proceedings.

         None.

Item 2. Changes in Securities.

         None.

Item 3. Defaults Upon Senior Securities.

         None.

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

         None.

Item 5. Other Information.

        On October 8, 1996 the Company  announced  it had agreed in principle to
        enter  into  a  reorganization  with  TheraMed  Partners,  Inc.  Between
        November,   1996  and  January,  1997  the  Company  placed  $87,500  in
        Subscription   Notes   under  a  Private   Placement   related  to  this
        reorganization.  On  February  12,  1997 the  Company  announced  it had
        terminated  this  agreement and planned to offer recision to the Private
        Placement investors.

Item 6. Exhibits and Reports of Form 8-K.

         None



         SIGNATURE

        Pursuant  to the  requirements  of Section 13 or 15(d) of the Securities
                  Exchange  Act of 1934,  as amended,  the  Registrant  has duly
                  caused  this  report  to  be  signed  on  its  behalf  by  the
                  undersigned, thereunto duly authorized.

         BIORELEASE CORP.



February 19, 1997 By:  /s/ Richard F. Schubert
                     -------------------------
            Richard F. Schubert, Chairman and
            Principal Financial Officer

                                    10 of 10