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 September 30, 1998

                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
        For the transition period from July 1, 1998 to September 30, 1998

                           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 (Internal
   Revenue Service incorporation or organization) Employer Identification No.)

                 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,  9,446,659  shares of common
stock, par value $.01 per share as of November 25, 1998.

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

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

                                     1 of 10

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                                BIORELEASE CORP.


                                      INDEX

PART I.  FINANCIAL INFORMATION                                             Page
                                                                          Number

Item 1     Financial Statements..............................................3

           Consolidated balance sheets as of September 30, 1998
           (unaudited) and June 30, 1998.....................................3

           Consolidated Statements of Operations for the Three
           Months Ended September 30, 1998 (unaudited) and 1997
           (unaudited), and from October 20, 1989 (inception) to
           September 30, 1998 (unaudited)....................................4

           Consolidated Statements of Cash Flows for the three
           Months Ended September 30, 1998 (unaudited) and 1997
           (unaudited), and from October 20, 1989 (inception)
           to September 30, 1998 (unaudited).................................5

           Notes to Unaudited Consolidated 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.................................................9

Item 2.    Changes in Securities.............................................9

Item 3.    Defaults Upon Senior Securities...................................9

Item 4.    Submission of Matters to a Vote of Security Holders...............9

Item 5.    Other Information.................................................9

Item 6.    Exhibits and Reports on Form 8-K..................................9


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PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statement

                                BIORELEASE CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                           CONSOLIDATED BALANCE SHEETS
                      September 30, 1998 and June 30, 1998

                                                    September           June 30,
                                                     30, 1998             1998
                                                   (Unaudited)          --------
                                 ASSETS            -----------
Current Assets:
   Cash                                          $      6,716       $     1,320
   Accounts receivable                                  4,130             8,455
   Inventories                                         18,257            18,434
   Other receivables                                      745               745
   Prepaid expenses and other current assets                -                 -
                                                 ------------       -----------
Total current assets                                   29,848            28,954
                                                 ------------       -----------
Equipment and leasehold improvements, net               8,865            10,971
                                                 ------------       -----------
Other assets:
   Intangible assets, net                              17,823            20,449
   Other noncurrent assets                                300               300
                                                 ------------       -----------
Total assets                                     $     56,836       $    60,674
                                                 ============       ===========

               LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCIES)

Current liabilities:
   Notes payable                                 $     27,500       $    27,500
   Accounts payable                                   117,283           113,515
   Accrued expenses                                    98,502            93,954
   Notes payable stockholders,current                  46,100            46,100
   Deferred Income                                          -                 -
   Other current liabilities                            1,549             1,549
                                                 ------------       -----------
   Total current liabilities                          290,934           282,618
   Notes payable stockholders, long term               14,955            14,955
   Notes payable others, long term                     16,000            16,000
   Other liabilities                                   87,734            87,734
                                                 ------------       -----------
Total liabilities                                     452,872           401,307
                                                 ------------       -----------
Stockholders' equity (Deficiency):                    409,623
   Common stock of $.01 par value,  50,000,000
   shares  authorized,  10,286,659 and 9,921,659
   issued and 9,736,659 and 9,371,659 Outstanding
   at September 30, 1998 and June 30, 1998            102,867           102,867
Additional paid-in capital                          9,140,088         9,140,088
Development stage accumulated deficit              (9,540,242)       (9,528,088)
Stock subscriptions receivable                        (50,000)          (50,000)
                                                 ------------       -----------
                                                     (347,287)         (335,133)
   Less: Treasury stock, at par                        (5,500)           (5,500)
                                                 ------------       -----------
Total Stockholder's Equity (Deficiencies)            (352,787)         (340,633)
                                                 ------------       -----------
Total liabilities and stockholders' equity
(deficiencies)                                  $      56,836      $     60,674
                                                 ============       ===========

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

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                                BIORELEASE CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                    CONSOLIDATED STATEMENTS OF OPERATIONS For
               the Three Months Ended September 30, 1998 and 1997,
         and the Cumulative Period from Inception to September 30, 1998
                                   (Unaudited)
                            ------------------------

<TABLE>
<CAPTION>
                                                        Three Months Ended        Inception
                                                            September 30,     (October 20,1989)
                                                        ------------------  to September 30, 1998
                                                        1998          1997  ---------------------
                                                        ----          ----

<S>                                               <C>             <C>           <C>       
Revenues                                          $    3,130      $  20,000     $  562,351
Cost of goods sold                                      (177)            (0)       (25,514)
                                                  ----------      ---------     ----------
Gross profit                                           2,953         20,000        536,837

Costs and expenses:
   Biotech selling expenses                                -              -       (601,116)
   Research and development                                -              -     (2,558,041)
   Purchased technology                                    -              -       (690,000)
   General and administrative                        (13,533)       (12,673)    (4,281,047)
                                                  ----------      ---------     ----------
        Total costs and expenses                     (13,533)       (12,673)    (8,130,204)
                                                  ----------      ---------     ----------
   (Loss)/Gain from operations                       (10,580)         7,327     (7,593,367)
                                                  ----------      ---------     ----------
   Other Income (Costs):
      Interest, net                                   (1,728)        (1,617)        70,279
      Lease commitment costs                               -              -       (315,000)
      Litigation costs                                                    -        (99,242)
      Offering costs                                       -              -       (336,446)
      Option compensation                                  -              -       (219,375)
      Other income (cost)                                  -              -        (23,034)
      Realized loss for decline in value of
      Investment                                           -              -     (1,500,000)
      Gain on equipment sale                               -              -         62,616
      Income recognized on settlements                   154              -        293,760
                                                  ----------      ---------     ----------
   Total other income (cost)                          (1,574)        (1,617)    (2,066,442)
                                                  ----------      ---------     ----------
   (Loss)/Gain before provision for
      (benefit from) income taxes and
      Cumulative effect of change in
      Accounting principle                           (12,154)         5,710     (9,659,809)
   Provision for income taxes                              -              -        343,873
                                                  ----------      ---------     ----------
   (Loss)/Gain before cumulative effect
      Of change in accounting principle              (12,154)         5,710    (10,003,682)
   Cumulative effect of change in
      Accounting principle                                 -              -        463,440
                                                  ----------      ---------     ----------
   Net (loss)/gain                                  ($12,154)    $    5,710    ($9,540,242)
                                                  ==========      =========     ==========
   Weighted average shares                         9,736,659      9,388,325      6,133,012
   Basic and fully diluted loss per share             ($0.00)        ($0.00)        ($1.56)
</TABLE>


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

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                                BIORELEASE CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                    CONSOLIDATED STATEMENT OF CASH FLOWS
               For the three Months Ended September, 1998 and 1997
         and the Cumulative Period from Inception to September 30, 1998
                                  (Unaudited)
                             ----------------------

<TABLE>
<CAPTION>
                                                                               Inception
                                                       Three Months Ended  (October 20, 1989)
                                                          September 30,     to September 30,
                                                        1998        1997          1998
                                                        ----        ----          ----
<S>                                               <C>           <C>          <C>         
Cash flows from operating activities:
Net (loss)/Gain                                   $   (12,154)  $   5,710    $(9,540,242)
   Adjustments to reconcile net loss to net
       cash used in development activities:
     Depreciation and amortization                      4,732       7,500        260,662
     Cumulative effect of change in accounting
       principle                                            -           -       (463,440)
     Recognized loss on investment                          -           -      1,500,000
     (Gain) Loss on sale of assets                          -           -        (38,704)
     Loss on extinguishment of debt                         -           -         42,000
     Common Stock issued in exchange for
         Purchased technologies                             -           -        605,000
     Common Stock issued in exchange for
         services rendered                                  -           -        128,453
     Common stock options issued in exchange of
         services rendered                                  -           -         52,300
     Amortization of unearned compensation                  -           -        140,625
     Re-pricing of A Warrants                               -           -         78,750
   (Increase) Decrease in current assets:
     Accounts Receivable                                4,325      (8,099)        (4,130)
     Inventories                                          177           -        (18,257)
     Other receivables                                      -           -           (745)
     Prepaid expenses and other current assets              -           -            360
     Deferred tax asset                                     -           -        463,440
     Other non-current assets                               -           -           (300)
   Increase (Decrease) in current liabilities:
     Accounts payable                                   3,768        (828)       188,234
     Accrued expenses                                   4,548       2,500        105,970
     Other current liabilities                              -           -          1,549
     Other liabilities                                      -           -         87,734
                                                    ---------     -------    -----------
Net cash used in operating activities               $   5,396     $ 6,783    $(6,410,741)
                                                    =========     =======    ===========
</TABLE>

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

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                                BIORELEASE CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                    CONSOLIDATED STATEMENT OF CASH FLOWS For
               the Three Months Ended September 30, 1998 and 1997
         and the Cumulative Period from Inception to September 30, 1998
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                  Inception
                                                          Three Months Ended  (October 20, 1989)
                                                             September 30,     To September 30,

                                                            1998       1997          1998
                                                            ----       ----          ----
Cash flows from investing activities:
<S>                                                         <C>       <C>        <C>
   Purchase of collateralized mortgage obligations             -          -      (1,000,000)
   Proceeds from collateralized mortgage obligations           -          -       1,000,000
   Purchase of fixed assets                                    -          -        (333,187)
   Purchase of intangible assets                               -          -        (105,205)
   Proceeds from sale of assets                               (-)        (-)        189,742
                                                         -------   --------      ----------
       Net cash used in investing activities                  (-)        (-)       (248,650)
                                                         -------   --------      ----------
       Cash flows from financing activities:
   Advances from and amounts due to
       Stockholders                                            -          -         594,385
   Payments of advances from stockholders                      -          -        (159,975)
   Notes receivable                                            -          -               -
   Notes payable                                               -     (3,000)        104,555
   Issuance of common stock, net                               -          -       2,105,966
   Purchase of treasury stock                                  -          -         (10,000)
   Re-capitalization                                           -          -       4,031,176
                                                         -------   --------      ----------
       Net cash provided by investing activities               -     (3,000)      6,666,107
                                                         -------   --------      ----------
       Net increase (decrease) in cash                     5,396     16,909           6,712
       Cash at beginning of period                         1,320     15,277               -
                                                         -------   --------      ----------
       Cash at end of period                             $ 6,716   $ 32,186      $    6,712
                                                         =======   ========      ==========
</TABLE>

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

                                     6 of 10

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                                BIORELEASE CORP.
                          (A DEVELOPMENT STAGE COMPANY)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
     AND CUMULATIVE FROM INCEPTION (OCTOBER 20, 1989) TO SEPTEMBER 30, 1998

ITEM 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, 1998. 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 three months ended September 30,
1998 are not necessarily  indicative of the results that may be expected for the
year ended June 30, 1999.


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

Results of Operations

     The following discussion includes the business of Biorelease  Technologies,
Inc. (the  "Subsidiary"),  since the Company,  prior to its  acquisition  of the
Subsidiary,  had no operations  other than raising  capital and searching for an
acquisition  candidate  (i.e.,  the  Subsidiary).  Where  relevant,  all numbers
retroactively  take  into  account  the  acquisition  of the  Subsidiary  by the
Company.

Three Months Ended September 30, 1998 and 1997

     For the three months ended  September 30, 1998, the Company had revenues of
$3,130,  costs of goods sold of $177,  general  and  administrative  expenses of
$13,533, interest expense of $1,728 and income recognized in settlements of $154
resulting  in a net loss of  $12,154  as  compared  to the  three  months  ended
September 30, 1997 in which the Company had $20,000,  costs of goods sold of $0,
general and administrative  expenses of $12,673,  interest expense of $1,617, no
litigation  costs, no gain on sale of equipment of and no income taxes resulting
in a net profit of $5,710.

     From  October 20,  1989,  the initial  date of the  Subsidiary's  activity,
through September 30, 1998, the Company,  including the Subsidiary, had revenues
of $562,351,  cost of goods sold of $25,514,  Cell culture operation expenses of
$601,116,   research  and  developmental   expenses  of  $2,558,041,   purchased
technology costs of $690,000, general and administrative expenses of $4,281,047,
other costs in the  aggregate  of  $2,066,442,  income  taxes of $343,873  and a
cumulative effect of change in accounting principle of $463,440 thereby yielding
an accumulated net loss of $9,540,242.

Liquidity and Capital Resources

     From inception until the closing of the  Reorganization,  the  Subsidiary's
primary  source of funds has been the  proceeds  from  private  offerings of its
Common and Preferred  Stock.  Since the  Reorganization,  the primary  source of
current capital is the Company's funds and revenues.

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.


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                                     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  February  19,  1998,  The Company  announced  that it had signed a
          definitive  agreement to acquire Xenix Resources,  Inc. As a result of
          adverse  changes in Xenix's  financial  condition since that time, the
          Company has  discontinued  its plan to acquire  Xenix  Resources.  The
          Company had not expended any significant  funds in the pursuit of this
          acquisition  and  does not  expect  this  termination  to  affect  the
          financial results.

Item 6.   Exhibits and Reports on form 8-K.

          None


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                                    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.



December 01, 1998    By:  /s/ R. Bruce Reeves
                              --------------------------------------
                              R. Bruce Reeves, President and
                              Principal Financial Officer


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