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, 1997

                                       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)


      340 Granite St., Suite 200          Manchester, NH    03102
(Address of principal Executive offices)                  (Zip Code)


                                (603) 641-8443
                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.  9,536,659  shares of common
stock, par value $.01 per share as of February 2, 1998.

   --------------------------------------------------------------------------

      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,
            1997 (unaudited) and June 30, 1997  . . . . . . . .          3

            Consolidated   Statements  of  Operations  for  the
            three  months and six  months  ended  December  31,
            1997  (unaudited)  and 1996  (unaudited),  and from
            October 20, 1989  (inception)  to December 31, 1997
            (unaudited) . . . . . . . . . . . . . . . . . . . .          4

            Consolidated  Statements of Cash Flows  for the six
            months ended December 31, 1997 (unaudited) and 1996
            (unaudited),  and from October 20, 1989 (inception)
            to December 31, 1997 (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, 1997 and June 30, 1997
                                   --------

                                                    December 31,     June 30,
      ASSETS                                            1997           1997
      ------                                        -----------      ---------
                                                    (Unaudited)

 Cash                                              $    12,834      $   15,277
 Accounts receivable                                         0           8,099
 Inventories                                            19,681          19,681
 Other receivables                                         195             195
 Prepaid expenses and other current assets                 180             180
                                                    ----------       ---------
      Total current assets                         $    32,890      $   43,432

 Equipment and leasehold improvements, net              14,187          18,987
 Intangible assets, net                                 22,147          32,347
 Other noncurrent assets                                   698             699
                                                   -----------      ----------
 Total assets                                      $    69,922      $   95,465
                                                   -----------      ----------
                                                   -----------      ----------
      LIABILITIES AND STOCKHOLDERS' EQUITY

 Accounts payable                                  $    99,103      $  116,397
 Deferred Revenue                                            -          20,000
 Accrued expenses                                      148,244         141,243
 Notes payable - stockholders, current                  53,575          58,575
 Income taxes payable                                    1,549           1,549
 Other current liabilities                                 818             818
                                                   -----------       ---------
 Total current liabilities                             303,289         338,582

 Notes payable - stockholder, long term                 14,955          14,955
 Notes payable - other, long term                       16,000          16,000
 Other liabilities                                      87,734          87,734
                                                   -----------       ---------
 Total liabilities                                     421,978         457,271
                                                   -----------       ---------

 Stockholders' equity:
   Common stock of $.01 par value,
   50,000,000 shares authorized, 10,086,659
       and 9,880,354 issued and 9,536,659 and
       9,430,354 outstanding at December 31,
       1997 and June 30, 1997                           99,381          99,216

      Additional paid-in capital                     9,110,133       9,110,298
      Stock warrants outstanding                             -               -
      Development stage accumulated deficit        ( 9,506,070)     (9,515,820)
        Stock subscription receivable              (    50,000)     (   50,000)
                                                   ------------     -----------
                                                   (   346,556)     (  356,306)
        Less: Treasury stock                       (     5,500)     (    5,500)
                                                   ------------     -----------
        Total stockholders' equity (deficit)       (   352,056)     (  361,806)
                                                   ------------     -----------
 Total  liabilities and stockholders' equity
 (deficiency)                                      $    69,922      $   95,465
                                                   ============     ===========

               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, 1997 and 1996,
          and the Cumulative Period from Inception to December 31, 1997
                                    --------
<TABLE>
<CAPTION>

                                  Three Months Ended          Six Months Ended
                                       December 31,               December 31,          Inception (October
                                  ------------------          ----------------             20, 1989 to
                                   1997         1996           1997          1996              1997
                                   ----         ----           ----          ----              ----
                               (Unaudited)   (Unaudited)    (Unaudited)   (Unaudited)       (Unaudited)

<S>                            <C>           <C>            <C>           <C>             <C>
Revenues                       $   20,000    $  32,960      $    40,000   $  45,651       $    536,396
Cost of Goods Sold                      -    (     541)               -   (     541)      (     23,296)
                                ----------   ----------       ----------  ----------      -------------
   Gross Profit                    20,000       32,419           40,000      45,110            513,100
Operating expenses:
 Cell culture operations                -            -                -           -       (    601,116)
 Research and development               -            -                -           -       (  2,558,041)
 Purchased Technologies                 -            -                -           -       (    690,000)
 General and administrative    (   14,352)   (  33,390)       (  27,025)  (  77,707)      (  4,231,422)
 Other                                  -            -                -           -                  -
                               -----------   -----------      ----------  ---------       -------------
(Loss)/Gain from operations         5,648    (     971)          12,975   (  32,597)      (  7,567,479)
                               -----------   -----------      ----------  ----------      -------------
Other costs:
 Interest, net                 (    1,607)   (     981)       (   3,224)  (   1,962)           77,218
 Lease commitment cost                  -            -                -           -       (    315,000)
 Litigation costs                       -            -                -           -       (     99,242)
 Other income (costs)                   -            -                -           -       (     23,034)
 Gain(Loss) on sale of assets           -            -                -           -             62,616
 Offering costs                         -    (  30,396)               -           -       (    334,946)
 Option compensation                    -            -                -   (  30,396)      (    219,375)
 Income on settlements                  -            -                -            -           293,606
 Realized loss for decline
  in value of investment                -            -                -            -      (  1,500,000)
                               -----------   ----------     ------------   ----------     -------------
   Total other costs           (    1,607)   (  31,377)     (     3,224)   (  32,358)     (  2,058,157)
                               -----------   ----------     ------------   ----------     -------------
Income (loss) before  provision for (benefit  from) income taxes and  cumulative
 effect of change in accounting
 principle                          4,041    (  32,348)           9,751   (  64,955)      (  9,625,636)
Provision for income taxes             -             -                -           -       (    343,873)
                               -----------    ---------     ------------  ----------      -------------
Income (loss) before cumulative effect of
 accounting principle               4,041    (  32,348)           9,751   (  64,955)      (  9,969,509)
Cumulative effect of change in
 accounting principle                   -            -                -           -            463,440
                               -----------   ----------     ------------  ----------      ------------
Net income (loss)               $   4,041    ($ 32,348)       $   9,751   ($ 64,955)      ($ 9,506,070)
=================              ===========   ==========      ==========   ==========      =============
Weighted average shares         9,426,659    9,471,659        9,399,159   9,471,659          5,805,044
Income (Loss) per share               .00         (.01)            .00         (.01)             (1.64)
</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, 1997 and 1996
          and the Cumulative Period from Inception to December 31,1997
                                   (Unaudited)
                                 ---------------

                                                             Inception
                                Six Months Ended         (October 20, 1989)
                                   December 31,            to December 31,
                               1997            1996             1997
                            ----------      ----------       ----------
Cash flows from
  operating
  activities:
Net (Loss)/Gain               $    9,751    ($ 64,957)     ($9,506,070)
  Adjustments to reconcile
  net loss to net cash used in
  development activities:
    Depreciation and
      amortization                15,000       12,816          251,016
    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                      -            -              95,012
  Amortization of unearned
    compensation                    -            -             140,625
  Repricing of A warrants           -            -              78,750
  Changes in current assets:
    Cash - escrow                   -            -                -
    Accounts receivable            8,099    (  27,600)            -
    Other receivables               -       (   1,015)       (     195)
    Inventories                     -             541        (  19,681)
    Prepaid expenses and
      other current assets          -             210              180
    Deferred tax asset              -            -             463,440
    Other non-current assets        -       (       1)       (     698)
  Changes in current liabilities:
    Accounts payable           (  18,517)      39,576          168,831
    Deferred Revenue           (  20,000)        -                -
    Accrued expenses               8,224       37,387          156,935
  Other current liabilities         -            -              90,101
                               ----------   ----------    -------------
      Net cash  provided (used)
        In operating activities
                                   2,557    (   3,043)     ( 6,384,598)
                               ----------   ----------    -------------

Cash flows from investing activities:
  Purchase of government backed
    securities                      -            -         ( 1,000,000)
  Proceeds from collateralized
    mortgage obligations            -            -           1,000,000
  Purchase of fixed assets          -            -         (   333,187)
  Proceeds from sale of assets      -            -             189,742
  Purchase of intangible
    assets                          -        (  1,766)     (   105,205)
                               ----------   ----------    -------------
      Net cash used in
        investing activities        -       (   1,766)     (   248,650)
                               ----------   ----------    -------------

                     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, 1997 and 1996
          and the Cumulative Period from Inception to December 31, 1997
                                    --------


                                                                   Inception
                                          Six Months Ended    (October 20, 1989)
                                             December 31,       to December 31,
                                          1997          1996          1997
                                       -----------   -----------   -----------
                                       (Unaudited)   (Unaudited)   (Unaudited)

Cash flows from financing activities:

  Advances from
    stockholders                             -             -          594,385
  Payments of advances
    from stockholders                        -             -        ( 159,975)
  Loans payable                              -           75,000          -
  Notes payable (paid)                   (  5,000)     (  6,000)       84,530
Issuance of common stock, net                -            5,784     2,095,966
  Purchase of investments in
   issuance of common stock                  -             -             -
Notes receivable                             -             -             -
Recapitalization                             -             -        4,031,176
                                         ---------     ---------   -----------

      Net cash provided
      by investing
      activities                         (  5,000)       74,784     6,646,082
                                         ---------     ---------   -----------

Net increase (decrease)
  in cash                                (  2,443)       69,975        12,834
Cash at beginning
  of period                                15,277         1,200          -
                                         ---------     ---------   -----------

Cash at end of period                   $  12,834     $  71,175   $    12,834
                                         =========     =========   ===========


Supplemental disclosure of non-cash transactions:

  Interest                                  3,224         1,962        77,218
  Marketable securities acquired
  through issuance of common
  stock                                      -             -             -

  Issuance of common stock
   for subscription receivable               -             -           50,000

  Liabilities repaid through
  issuance of common stock                   -            5,784       582,773



                     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, 1997 AND 1996
               AND CUMULATIVE FROM INCEPTION (OCTOBER 20, 1989) TO
                                DECEMBER 31,1997

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, 1997.  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,  1997 are not
     necessarily  indicative  of the results  that may be expected  for the year
     ended June 30, 1998.

                                     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, 1997 and 1996

     For the three months ended  December 31, 1997,  the Company,  including its
subsidiary  Biorelease  Technologies,  Inc. ("the  Subsidiary")  had revenues of
$20,000.  Cost of goods sold of $0,  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 $14,352,  interest expense of
$1,607,  resulting  in a net gain of $4,041,  compared to the three months ended
December  31, 1996 in which the Company had  revenues of $32,960  consisting  of
$28,420 of continuing  chondroitin sulfate licensing  revenues,  zero from grant
research  revenues,  $4,540  from cell  culture  and cost of goods sold of $541,
expenses of its cell culture operations of $0, research and development expenses
of $0, no costs for purchased technology,  general and administrative  operation
costs of $33,390,  interest expense of $981, litigation costs of $0, income from
the sale of assets of $0, costs related to terminated  business  combination and
offering costs of $30,396, no option compensation charges,  income recognized on
settlements  of $0 and income  taxes of $0,  resulting in a net loss of $32,348.
The  gain  was  attributed  to  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, 1997.

Six Months Ended December 31, 1997 and 1996

     For the six months ended  December  31,  1997,  the Company had revenues of
$40,000,  cost of goods  sold of $0, no cell  culture  costs,  no  research  and
development  costs, no purchased  technology costs,  general and  administrative
costs of $27,025,  interest of $3,224,  offering and termination costs of $0 and
no income taxes resulting in a net gain of $9,751, as compared to the six months
ended  December 31, 1996 in which the Company had  revenues of $45,651,  cost of
goods  sold of $541,  cell  culture  operation  costs  of $0,  no  research  and
development  costs, no purchased  technology costs,  general and  administrative
operational costs of $77,707 interest expense of $1,962, litigation costs of $0,
gain on sale of assets of $0, costs related to terminated  business  combination
and  offering  costs of  $30,396,  option  compensation  expense  of $0,  income
recognized on  settlements  of $0 and income taxes of $0 resulting in a net loss
of $64,955. The net gain compared to the net loss the previous fiscal year's six
months resulted primarily from the reduction of administrative costs and $30,396
related  to  Private  Placement  offering  costs  and  costs  associated  with a
terminated  business  combination  charged to the six months ended  December 31,
1996.

Inception (October 20, 1989) to December 31, 1997

     From  October 20,  1989,  the date of the  Subsidiary's  initial  activity,
through  December 31, 1997,  the Company had revenues of $536,396  cost of goods
sold of $23,296,  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  $4,231,422,  interest  income  of  $77,218,  lease
commitment  cost of  $315,000,  litigation  costs  of  $99,242,  other  costs of
$23,034,  gain on sale of assets of $62,616,  offering cost of $334,946,  Option
Compensation of $219,375, income recognized on settlements of $293,606, 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 $9,506,070.

                                     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 were 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.  The Company  continues to seek a company to combine with to
increase its liquidity and asset levels and/or to contribute to the  development
of the Company's technologies.


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.


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 12, 1998        By:  /s/ Richard F. Schubert
                                  ------------------------
                                  Richard F. Schubert, Chairman and
                                  Principal Financial Officer

                                    10 of 10

<PAGE>


FINANCIAL DATA SCHEDULE

BIORELEASE, CORP.

CURRENCY    US

FISCAL YEAR END                     JUN-30-1998
PERIOD START                        OCT-1-1997
PERIOD END                          DEC 31-1997
CASH                                12,834
SECURITIES                          -
RECEIVABLES                         185
ALLOWANCE                           -
INVENTORY                           19,681
CURRENT ASSETS                      32,890
PP & E                              80,700
DEPRECIATION                        66,514
TOTAL ASSETS                        69,922
CURRENT LIABILITIES                 303,289
BONDS                               -
PREFERRED-MANDATORY                 -
PREFERRED                           -
COMMON                              99,216
OTHER SECURITIES                    -
TOTAL LIABILITY AND EQUITY          69,922
SALES                               40,000
TOTAL REVENUES                      40,000
CGS                                 0
TOTAL COSTS                         0
OTHER EXPENSES                      27,025
LOSS PROVISION                      -
INTEREST EXPENSE                    3,224
INCOME TAX                          -
INCOME - PRETAX                     9,751
INCOME - CONTINUING                 -
DISCONTINUED                        -
EXTRAORDINARY                       -
CHANGES                             -
NET INCOME                          9,751
EPS-PRIMARY                         -
EPS-DILUTED                         -