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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

|                                             |  |                                                                                         
|-------------------------------------------- |  | ----------------------------------------------------------------------------------------
|(Mark One)                                   | 
|                                            
|[X]                                          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 
|                                            
|For the quarterly period ended June 30, 2003
|                                            
|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 Number 0-22879

|                                                                                 
|---------------------------------------------------------------------------------
|BIORELIANCE CORPORATION(Exact name of the registrant as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 52-1541583                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                              
|14920 Broschart Road
Rockville, Maryland                       |  | 20850                               
|(Address of principal executive offices)                       |  | (Zip code)                          

Registrants telephone number, including area code:(301) 738-1000

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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 by check mark whether registrant is an accelerated filer (as defined
in Rule 12b-2 of the Exchange Act).

YES X
         
NO

As of August 7, 2003, 8,338,896 shares of registrants common stock, par value
$.01 per share, were outstanding.



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BIORELIANCE CORPORATION

TABLE OF CONTENTS

|                                  |                                                                                                  |                                                                                                             |    |        |   | 
|--------------------------------- | ------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------- | -- | ------ | - | 
|                                  |                                                                                                  |                                                                                                             |    | Page  
|                                  |                                                                                                  |                                                                                                             |    | Number
|                                  |                                                                                                  |                                                                                                             |    |       
|PART I      FINANCIAL INFORMATION |                                                                                                  |                                                                                                             |    |       
|                                  | Item 1    Financial Statements:                                                                 |                                                                                                             |    |        |  
|                                  |                                                                                                  | Consolidated Balance Sheets as of December 31, 2002
and June 30, 2003 (Unaudited)                           |    |        | 3 | 
|                                  |                                                                                                  | Consolidated (Unaudited) Statements of Income for the Three and
Six Months Ended June 30, 2002 and 2003     |    |        | 4 | 
|                                  |                                                                                                  | Consolidated (Unaudited) Statements of Cash Flows for the Three
and Six Months Ended June 30, 2002 and 2003 |    |        | 5 | 
|                                  |                                                                                                  | Notes to Consolidated (Unaudited) Financial Statements                                                      |    |        | 6 | 
|                                  | Item 2    Managements Discussion and Analysis of Financial
Condition and Results of Operations |                                                                                                             |    | 10     |  
|                                  | Item 3    Quantitative and Qualitative Disclosures About Market Risks                           |                                                                                                             |    | 23     |  
|                                  | Item 4    Controls and Procedures                                                               |                                                                                                             |    | 24     |  
|PART II      OTHER INFORMATION    |                                                                                                  |                                                                                                             |    |       
|                                  | Item 1   Legal Proceedings                                                                      |                                                                                                             |    | 25     |  
|                                  | Item 2   Changes in Securities and Use of Proceeds                                              |                                                                                                             |    | 25     |  
|                                  | Item 3   Defaults upon Senior Securities                                                        |                                                                                                             |    | 25     |  
|                                  | Item 4   Submission of Matters to Vote of Security Holders                                      |                                                                                                             |    | 25     |  
|                                  | Item 5   Other Information                                                                      |                                                                                                             |    | 25     |  
|                                  | Item 6   Exhibits and Reports on Form 8-K                                                       |                                                                                                             |    | 26     |  
|SIGNATURES                        |                                                                                                  |                                                                                                             | 27 |       
|EXHIBIT INDEX                     |                                                                                                  |                                                                                                             | 28 |       

2



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##### 



BIORELIANCE CORPORATION

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

|                                             |                                                                                                                   |                                            |        |        |         |              |        |             |         |          |  | 
|-------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ------ | ------- | ------------ | ------ | ----------- | ------- | -------- |  | 
|                                             |                                                                                                                   |                                            |        |        |         |              |        |             |         | June 30,
|                                             |                                                                                                                   |                                            |        |        |         | December 31, |        | 2003       
|                                             |                                                                                                                   |                                            |        |        |         | 2002         |        | (Unaudited)
|                                             |                                                                                                                   |                                            |        |        |         |              |        |            
|Assets                                      
|Current assets:                              |                                                                                                                   |                                            |        |        |         |              |        |            
|                                             | Cash and cash equivalents                                                                                         |                                            | $      | 37,739 |         |              | $      | 35,693      |        
|                                             | Accounts receivable, net                                                                                          |                                            |        | 24,704 |         |              |        | 23,972      |        
|                                             | Other current assets                                                                                              |                                            |        | 2,988  |         |              |        | 3,059       |        
|                                             |                                                                                                                   |                                            |        |        |         |              |        |            
|                                             |                                                                                                                   | Total current assets                       |        |        | 65,431  |              |        |             | 62,724  |         
|Property and equipment, net                  |                                                                                                                   |                                            | 41,148 |        |         |              | 44,075 |            
|Deposits and other assets                    |                                                                                                                   |                                            | 136    |        |         |              | 131    |            
|Deferred income taxes                        |                                                                                                                   |                                            | 642    |        |         |              | 392    |            
|                                             |                                                                                                                   |                                            |        |        |         |              |        |            
|                                             |                                                                                                                   | Total assets                               |        | $      | 107,357 |              |        | $           | 107,322 |         
|                                             |                                                                                                                   |                                            |        |        |         |              |        |            
|Liabilities and Stockholders Equity        
|Current liabilities:                         |                                                                                                                   |                                            |        |        |         |              |        |            
|                                             | Current portion of long-term debt and capital lease obligations                                                   |                                            | $      | 918    |         |              | $      | 990         |        
|                                             | Accounts payable                                                                                                  |                                            |        | 2,872  |         |              |        | 3,019       |        
|                                             | Accrued employee compensation and benefits                                                                        |                                            |        | 5,065  |         |              |        | 4,307       |        
|                                             | Other accrued liabilities                                                                                         |                                            |        | 4,656  |         |              |        | 4,895       |        
|                                             | Customer advances                                                                                                 |                                            |        | 5,152  |         |              |        | 2,616       |        
|                                             | Deferred income taxes                                                                                             |                                            |        | 4,589  |         |              |        | 4,958       |        
|                                             |                                                                                                                   |                                            |        |        |         |              |        |            
|                                             |                                                                                                                   | Total current liabilities                  |        |        | 23,252  |              |        |             | 20,785  |         
|Long-term debt and capital lease obligations |                                                                                                                   |                                            | 10,628 |        |         |              | 10,167 |            
|                                             |                                                                                                                   |                                            |        |        |         |              |        |            
|                                             |                                                                                                                   | Total liabilities                          |        |        | 33,880  |              |        |             | 30,952  |         
|                                             |                                                                                                                   |                                            |        |        |         |              |        |            
|Stockholders equity:                        |                                                                                                                   |                                            |        |        |         |              |        |            
|                                             | Preferred stock, $.01 par value: 6,900,000 shares authorized;
no shares issued and outstanding                    |                                            |        |       |         |              |        |            |        
|                                             | Common stock, $.01 par value: 15,000,000 shares authorized;
8,485,722 and 8,333,787 shares issued and outstanding |                                            |        | 85     |         |              |        | 85          |        
|                                             | Additional paid-in capital                                                                                        |                                            |        | 56,144 |         |              |        | 56,426      |        
|                                             | Treasury stock, 0 and 190,242 shares at cost                                                                      |                                            |        |       |         |              |        | (3,501      | )      
|                                             | Retained earnings                                                                                                 |                                            |        | 18,576 |         |              |        | 24,073      |        
|                                             | Accumulated other comprehensive income                                                                            |                                            |        | (1,328 | )       |              |        | (713        | )      
|                                             |                                                                                                                   |                                            |        |        |         |              |        |            
|                                             |                                                                                                                   | Total stockholders equity                 |        |        | 73,477  |              |        |             | 76,370  |         
|                                             |                                                                                                                   |                                            |        |        |         |              |        |            
|                                             |                                                                                                                   | Total liabilities and stockholders equity |        | $      | 107,357 |              |        | $           | 107,322 |         
|                                             |                                                                                                                   |                                            |        |        |         |              |        |            

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

3



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BIORELIANCE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)

|                           |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |        |        | 
|-------------------------- | ----------------------------------- | -------------------------- | ------ | ------------------ | ------ | ---------------- | ------ | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                           |                                     |                            |        | Three Months Ended |        | Six Months Ended
|                           |                                     |                            |        | June 30,           |        | June 30,        
|                           |                                     |                            |        |                    |        |                 
|                           |                                     |                            |        | 2002               |        | 2003             |        | 2002   |        | 2003
|                           |                                     |                            |        |                    |        |                  |        |        |        |     
|Revenue                    |                                     | $                          | 20,733 |                    |        | $                | 23,455 |        |        | $    | 39,746 |        |        | $ | 44,254 |       
|                           |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|Expenses:                  |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                           | Cost of sales                       |                            |        | 11,971             |        |                  |        | 13,479 |        |      |        | 22,993 |        |   |        | 26,026 |       
|                           | Selling, general and administrative |                            |        | 4,332              |        |                  |        | 4,711  |        |      |        | 8,521  |        |   |        | 9,027  |       
|                           | Research and development            |                            |        | 194                |        |                  |        | 212    |        |      |        | 456    |        |   |        | 428    |       
|                           |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                           |                                     | Total operating expenses   |        |                    | 16,497 |                  |        |        | 18,402 |      |        |        | 31,970 |   |        |        | 35,481 | 
|                           |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|Income from operations     |                                     |                            | 4,236  |                    |        |                  | 5,053  |        |        |      | 7,776  |        |        |   | 8,773  |       
|                           |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|Other (income) expense:    |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                           | Interest income                     |                            |        | (187               | )      |                  |        | (204   | )      |      |        | (317   | )      |   |        | (388   | )     
|                           | Interest expense                    |                            |        | 268                |        |                  |        | 208    |        |      |        | 422    |        |   |        | 414    |       
|                           | Other (income) expense              |                            |        | (259               | )      |                  |        | (93    | )      |      |        | (50    | )      |   |        | 18     |       
|                           |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                           |                                     | Net other (income) expense |        |                    | (178   | )                |        |        | (89    | )    |        |        | 55     |   |        |        | 44     | 
|                           |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|Income before income taxes |                                     |                            | 4,414  |                    |        |                  | 5,142  |        |        |      | 7,721  |        |        |   | 8,729  |       
|Income tax provision       |                                     |                            | 1,608  |                    |        |                  | 1,902  |        |        |      | 2,818  |        |        |   | 3,229  |       
|                           |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|Net income                 |                                     | $                          | 2,806  |                    |        | $                | 3,240  |        |        | $    | 4,903  |        |        | $ | 5,500  |       
|                           |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|Net income per share:      |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                           | Basic                               |                            | $      | 0.33               |        |                  | $      | 0.39   |        |      | $      | 0.58   |        |   | $      | 0.65   |       
|                           |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                           | Diluted                             |                            | $      | 0.31               |        |                  | $      | 0.37   |        |      | $      | 0.55   |        |   | $      | 0.63   |       
|                           |                                     |                            |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       

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

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BIORELIANCE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

|                                                             |                                                                                   |                                                  |        |                                                    |       |                  |        |        |       |  |        |  
|------------------------------------------------------------ | --------------------------------------------------------------------------------- | ------------------------------------------------ | ------ | -------------------------------------------------- | ----- | ---------------- | ------ | ------ | ----- |  | ------ | -
|                                                             |                                                                                   |                                                  |        |                                                    |       | Six Months Ended
|                                                             |                                                                                   |                                                  |        |                                                    |       | June 30,        
|                                                             |                                                                                   |                                                  |        |                                                    |       |                 
|                                                             |                                                                                   |                                                  |        |                                                    |       | 2002             |        | 2003  
|                                                             |                                                                                   |                                                  |        |                                                    |       |                  |        |       
|Cash flows from operating activities:                        |                                                                                   |                                                  |        |                                                    |       |                  |        |       
|                                                             | Net income                                                                        |                                                  | $      | 4,903                                              |       |                  | $      | 5,500  |      
|                                                             | Adjustments to reconcile net income to net cash provided
by operating activities: |                                                  |        |                                                    |       |                  |        |        |      
|                                                             |                                                                                   | Depreciation                                     |        |                                                    | 2,300 |                  |        |        | 2,479 | 
|                                                             |                                                                                   | Loss on disposal                                 |        |                                                    | 128   |                  |        |        | 122   | 
|                                                             |                                                                                   | Deferred income taxes, net                       |        |                                                    | 564   |                  |        |        | 619   | 
|                                                             |                                                                                   | Changes in current assets and liabilities:       |        |                                                    |       |                  |        |        |       | 
|                                                             |                                                                                   |                                                  |        | Accounts receivable, net                           |       |                  | 964    |        |       |  | 1,011  |  
|                                                             |                                                                                   |                                                  |        | Other current assets                               |       |                  | (728   | )      |       |  | (48    | )
|                                                             |                                                                                   |                                                  |        | Accounts payable                                   |       |                  | (164   | )      |       |  | 34     |  
|                                                             |                                                                                   |                                                  |        | Accrued employee compensation and benefits         |       |                  | (1,721 | )      |       |  | (774   | )
|                                                             |                                                                                   |                                                  |        | Other accrued liabilities                          |       |                  | 2,119  |        |       |  | 231    |  
|                                                             |                                                                                   |                                                  |        | Customer advances                                  |       |                  | 991    |        |       |  | (2,568 | )
|                                                             |                                                                                   | (Increase) decrease in deposits and other assets |        |                                                    | 126   |                  |        |        | 88    | 
|                                                             |                                                                                   |                                                  |        |                                                    |       |                  |        |       
|                                                             |                                                                                   |                                                  |        | Net cash provided by operating activities          |       |                  | 9,482  |        |       |  | 6,694  |  
|                                                             |                                                                                   |                                                  |        |                                                    |       |                  |        |       
|Cash flows from investing activities:                        |                                                                                   |                                                  |        |                                                    |       |                  |        |       
|                                                             | Purchases of property and equipment                                               |                                                  |        | (3,608                                             | )     |                  |        | (5,526 | )    
|                                                             | Proceeds from the sale of property and equipment                                  |                                                  |        | 70                                                 |       |                  |        |       |      
|                                                             |                                                                                   |                                                  |        |                                                    |       |                  |        |       
|                                                             |                                                                                   |                                                  |        | Net cash used in investing activities              |       |                  | (3,538 | )      |       |  | (5,526 | )
|                                                             |                                                                                   |                                                  |        |                                                    |       |                  |        |       
|Cash flows from financing activities:                        |                                                                                   |                                                  |        |                                                    |       |                  |        |       
|                                                             | Proceeds from exercise of stock options                                           |                                                  |        | 514                                                |       |                  |        | 282    |      
|                                                             | Purchases of treasury stock                                                       |                                                  |        |                                                   |       |                  |        | (3,501 | )    
|                                                             | Payments on debt and capital lease obligations                                    |                                                  |        | (464                                               | )     |                  |        | (493   | )    
|                                                             |                                                                                   |                                                  |        |                                                    |       |                  |        |       
|                                                             |                                                                                   |                                                  |        | Net cash provided by(used in) financing activities |       |                  | 50     |        |       |  | (3,712 | )
|                                                             |                                                                                   |                                                  |        |                                                    |       |                  |        |       
|Effect of exchange rate changes on cash and cash equivalents |                                                                                   |                                                  | 829    |                                                    |       |                  | 498    |       
|                                                             |                                                                                   |                                                  |        |                                                    |       |                  |        |       
|Net increase (decrease) in cash and cash equivalents         |                                                                                   |                                                  | 6,823  |                                                    |       |                  | (2,046 | )     
|Cash and cash equivalents, beginning of period               |                                                                                   |                                                  | 27,536 |                                                    |       |                  | 37,739 |       
|                                                             |                                                                                   |                                                  |        |                                                    |       |                  |        |       
|Cash and cash equivalents, end of period                     |                                                                                   | $                                                | 34,359 |                                                    |       | $                | 35,693 |       
|                                                             |                                                                                   |                                                  |        |                                                    |       |                  |        |       

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

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BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(1)    Description of the Business

BioReliance Corporation (the Corporation) is a contract service
organization that provides testing and development, and manufacturing services
for biologics and other biomedical products to biotechnology and pharmaceutical
companies worldwide.

(2)    Interim Financial Statements Presentation

The accompanying interim financial statements are unaudited and have been
prepared by the Corporation pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC) regarding interim financial reporting.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements,
and therefore these consolidated financial statements should be read in
conjunction with the audited consolidated financial statements, and related
notes thereto, included in the Corporations Annual Report on Form 10-K. In
the opinion of management, the unaudited consolidated financial statements for
the three month and six month periods ended June 30, 2002 and 2003 include all
normal and recurring adjustments that are necessary for a fair presentation of
the results of the interim period. The results of operations for the three
month and six month periods ended June 30, 2003 are not necessarily indicative
of the results for the entire year ending December 31, 2003.

(3)    Net Income Per Share

The Corporation calculates earnings per share (EPS) on both a basic and
diluted basis. Dilutive securities are excluded from the computation in
periods in which they have an anti-dilutive effect. Net income available to
common stockholders and common equivalent stockholders is equal to net income
for all periods presented.

The following table represents reconciliations between the weighted
average common stock outstanding used in basic EPS and the weighted average
common and common equivalent shares outstanding used in diluted EPS for each of
the periods presented (in thousands):

|                                                                 |  |                    |       |                  |  |      |       |      |  |  |       |  |  |  |       | 
|---------------------------------------------------------------- |  | ------------------ | ----- | ---------------- |  | ---- | ----- | ---- |  |  | ----- |  |  |  | ----- | 
|                                                                 |  | Three Months Ended |       | Six Months Ended
|                                                                 |  | June 30,           |       | June 30,        
|                                                                 |  |                    |       |                 
|                                                                 |  | 2002               |       | 2003             |  | 2002 |       | 2003
|                                                                 |  |                    |       |                  |  |      |       |     
|Weighted average common stock outstanding                        |  |                    | 8,430 |                  |  |      | 8,384 |      |  |  | 8,415 |  |  |  | 8,434 | 
|Stock options, as if converted                                   |  |                    | 488   |                  |  |      | 311   |      |  |  | 490   |  |  |  | 339   | 
|                                                                 |  |                    |       |                  |  |      |       |      |  |  |       |  |  |  |       | 
|Weighted average common and common
equivalent shares outstanding |  |                    | 8,918 |                  |  |      | 8,695 |      |  |  | 8,905 |  |  |  | 8,773 | 
|                                                                 |  |                    |       |                  |  |      |       |      |  |  |       |  |  |  |       | 

6



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##### 



(4)    Segment Information

Summarized financial information concerning the Corporations reportable
segments for the three months and six months ended June 30 is shown in the
following table (in thousands):

|              |                         |  |       |        |   |                |        |                |   |       |        |        |   |        |        |        |   |        |        | 
|------------- | ----------------------- |  | ----- | ------ | - | -------------- | ------ | -------------- | - | ----- | ------ | ------ | - | ------ | ------ | ------ | - | ------ | ------ | 
|              |                         |  |       |        |   | Three Months   |        | Six Months    
|              |                         |  |       |        |   | Ended June 30, |        | Ended June 30,
|              |                         |  |       |        |   |                |        |               
|              |                         |  |       |        |   | 2002           |        | 2003           |   | 2002  |        | 2003  
|              |                         |  |       |        |   |                |        |                |   |       |        |       
|Revenue:      |                         |  |       |        |   |                |        |                |   |       |        |        |   |        |        |       
|              | Testing and Development |  | $     | 17,575 |   |                | $      | 19,073         |   |       | $      | 33,346 |   |        | $      | 35,791 |  
|              | Manufacturing           |  |       | 3,158  |   |                |        | 4,382          |   |       |        | 6,400  |   |        |        | 8,463  |  
|              |                         |  |       |        |   |                |        |                |   |       |        |        |   |        |        |       
|              |                         |  | Total |        |   | $              | 20,733 |                |   | $     | 23,455 |        |   | $      | 39,746 |        |   | $      | 44,254 | 
|              |                         |  |       |        |   |                |        |                |   |       |        |        |   |        |        |       
|Gross Profit: |                         |  |       |        |   |                |        |                |   |       |        |        |   |        |        |       
|              | Testing and Development |  | $     | 8,897  |   |                | $      | 9,667          |   |       | $      | 16,602 |   |        | $      | 17,571 |  
|              | Manufacturing           |  |       | (135   | ) |                |        | 309            |   |       |        | 151    |   |        |        | 657    |  
|              |                         |  |       |        |   |                |        |                |   |       |        |        |   |        |        |       
|              |                         |  | Total |        | $ | 8,762          |        |                | $ | 9,976 |        |        | $ | 16,753 |        |        | $ | 18,228 |       
|              |                         |  |       |        |   |                |        |                |   |       |        |        |   |        |        |       

Summarized financial information concerning the Corporations revenue and
gross profit by geographic region for the three months and six months ended
June 30 is shown in the following table (in thousands):

|              |               |  |       |        |   |                |       |                |   |        |       |        |   |        |        |        |   |        |        | 
|------------- | ------------- |  | ----- | ------ | - | -------------- | ----- | -------------- | - | ------ | ----- | ------ | - | ------ | ------ | ------ | - | ------ | ------ | 
|              |               |  |       |        |   | Three Months   |       | Six Months    
|              |               |  |       |        |   | Ended June 30, |       | Ended June 30,
|              |               |  |       |        |   |                |       |               
|              |               |  |       |        |   | 2002           |       | 2003           |   | 2002   |       | 2003  
|              |               |  |       |        |   |                |       |                |   |        |       |       
|Revenue:      |               |  |       |        |   |                |       |                |   |        |       |        |   |        |        |       
|              | United States |  | $     | 17,079 |   |                | $     | 19,295         |   |        | $     | 32,746 |   |        | $      | 35,467 |  
|              | Europe        |  |       | 3,654  |   |                |       | 4,160          |   |        |       | 7,000  |   |        |        | 8,787  |  
|              |               |  |       |        |   |                |       |                |   |        |       |        |   |        |        |       
|              |               |  | Total |        | $ | 20,733         |       |                | $ | 23,455 |       |        | $ | 39,746 |        |        | $ | 44,254 |       
|              |               |  |       |        |   |                |       |                |   |        |       |        |   |        |        |       
|Gross Profit: |               |  |       |        |   |                |       |                |   |        |       |        |   |        |        |       
|              | United States |  | $     | 6,803  |   |                | $     | 7,902          |   |        | $     | 12,995 |   |        | $      | 13,577 |  
|              | Europe        |  |       | 1,959  |   |                |       | 2,074          |   |        |       | 3,758  |   |        |        | 4,651  |  
|              |               |  |       |        |   |                |       |                |   |        |       |        |   |        |        |       
|              |               |  | Total |        |   | $              | 8,762 |                |   | $      | 9,976 |        |   | $      | 16,753 |        |   | $      | 18,228 | 
|              |               |  |       |        |   |                |       |                |   |        |       |        |   |        |        |       

(5)    Stock Based Compensation

The Corporation has stock-based compensation plans, described more fully
in Note 5 to our audited consolidated financial statements included in our
Annual Report on Form 10-K for the year ended December 31, 2003. Effective
January 1, 2003, BioReliance adopted FASB Statement No. 148 (FAS 148),
Accounting for Stock-Based Compensation  Transition and Disclosure. FAS
148 amends FASB Statement No. 123 (FAS 123), Accounting for Stock-Based
Compensation, to provide, among other things, prominent disclosure of the
effects of an entitys accounting policy with respect to stock-based employee
compensation on reported net income and earnings per share in annual and
interim financial statements. As permitted by FAS 123 and amended by FAS 148,
the Corporation has chosen to continue accounting for stock options at their
intrinsic value. Accordingly, no compensation expense has

7



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##### 



been recognized for
its stock option compensation plans. To determine fair value under FAS 123,
the Corporation used the Black-Scholes option-pricing model and the following
respective weighted average assumptions for the three and six months ended June
30, 2002 and 2003:

|                             |  |                |      |                |  |      |     |      |  |  |      |   |  |  |      |  
|---------------------------- |  | -------------- | ---- | -------------- |  | ---- | --- | ---- |  |  | ---- | - |  |  | ---- | -
|                             |  | Three Months   |      | Six Months    
|                             |  | Ended June 30, |      | Ended June 30,
|                             |  |                |      |               
|                             |  | 2002           |      | 2003*          |  | 2002 |     | 2003
|                             |  |                |      |                |  |      |     |     
|Risk-free interest rate      |  |                | 4.10 | %              |  |      | n/a |      |  |  | 4.10 | % |  |  | 3.32 | %
|Expected volatility          |  |                | 67   | %              |  |      | n/a |      |  |  | 67   | % |  |  | 61   | %
|Expected option life (years) |  |                | 6    |                |  |      | n/a |      |  |  | 6    |   |  |  | 6    |  
|Expected dividends           |  |                | 0    |                |  |      | n/a |      |  |  | 0    |   |  |  | 0    |  



| |                                                                        
| | -----------------------------------------------------------------------
| | *No options were granted in the three month period ended June 30, 2003.

Had the fair value method of accounting been applied to the Corporations
stock option plans utilizing the valuation method currently recognized, the
impact would have been as follows:

|                                                                                                                       |  |                |       |                |  |      |       |      |  |   |       |   |  |   |       |  
|---------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----- | -------------- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                                                                                       |  | Three Months   |       | Six Months    
|                                                                                                                       |  | Ended June 30, |       | Ended June 30,
|                                                                                                                       |  |                |       |               
|                                                                                                                       |  | 2002           |       | 2003           |  | 2002 |       | 2003
|                                                                                                                       |  |                |       |                |  |      |       |     
|Net income as reported                                                                                                 |  | $              | 2,806 |                |  | $    | 3,240 |      |  | $ | 4,903 |   |  | $ | 5,500 |  
|Stock based employee compensation expense determined
under fair value method for all
awards, net of related tax effect |  |                | (221  | )              |  |      | (308  | )    |  |   | (446  | ) |  |   | (657  | )
|                                                                                                                       |  |                |       |                |  |      |       |      |  |   |       |   |  |   |       |  
|Pro-forma net income                                                                                                   |  |                | 2,585 |                |  |      | 2,932 |      |  |   | 4,457 |   |  |   | 4,843 |  
|                                                                                                                       |  |                |       |                |  |      |       |      |  |   |       |   |  |   |       |  
|Basic net income per share  as reported                                                                               |  |                | 0.33  |                |  |      | 0.39  |      |  |   | 0.58  |   |  |   | 0.65  |  
|Basic net income per share  pro-forma                                                                                 |  |                | 0.31  |                |  |      | 0.35  |      |  |   | 0.53  |   |  |   | 0.57  |  
|                                                                                                                       |  |                |       |                |  |      |       |      |  |   |       |   |  |   |       |  
|Diluted net income per share  as reported                                                                             |  |                | 0.31  |                |  |      | 0.37  |      |  |   | 0.55  |   |  |   | 0.63  |  
|Diluted net income per share  pro-forma                                                                               |  |                | 0.29  |                |  |      | 0.34  |      |  |   | 0.50  |   |  |   | 0.55  |  

(6)    Stock Repurchase

On March 5, 2003, the Corporations Board of Directors authorized the
repurchase of up to 500,000 shares of the Corporations common stock over the
following two years. The repurchase is being funded using the Corporations
working capital. During the three months and six months ended June 30, 2003,
the Corporation has repurchased 114,942 shares for $2,262,000 and 190,242
shares for $3,501,000, respectively.

(7)    New Accounting Pronouncements

In June 2002, the FASB issued FAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities (FAS 146). FAS 146 addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring). The provisions of this Statement are effective for exit or
disposal activities that are initiated after December 31, 2002, with early
application encouraged.

8



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##### 



The Corporation does not expect adoption of this
Statement to have a material impact on the Corporations results of operations
or financial position.

In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45 elaborates on the
existing disclosure requirements for most guarantees. The initial recognition
and measurement provisions apply on a prospective basis to guarantees issued or
modified after December 31, 2002. The disclosure requirements are effective
for financial statements or interim of annual period ending after December 15,
2002. The initial adoption of FIN 45 has had
no material impact on the Corporations results of operations or financial
position.

On December 31, 2002, the FASB issued FAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure (FAS 148). FAS 148
amends FAS 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition to FAS 123s fair value method of accounting
for stock-based employee compensation for an entity that voluntarily changes to
the fair value based method of accounting for stock-based employee
compensation. FAS 148 also requires prominent disclosure of the effects of an
entitys accounting policy with respect to stock-based employee compensation on
reported net income and earnings per share in annual and interim financial
statements. The Corporation intends to continue to follow the disclosure-only
provisions of FAS 123 and, accordingly, will continue to apply APB 25 and its
related interpretations in accounting for its plans. The Corporation does not
expect the adoption of FAS 148 to have a material impact on the Corporations
results of operations or financial position.

In May 2003, the FASB issued FAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity.
FAS 150 establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances). Many of those
instruments were previously classified as equity. FAS 150 is effective for
financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003. The Corporation does not expect the adoption of FAS 150
to have a material effect on the Corporations results of operations or
financial position.

9



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##### 



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

Certain statements made in this Report on Form 10-Q are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include, without limitation, any statement
that may predict, forecast, indicate, or imply future results, performance, or
achievements, which generally are not historical in nature, and may contain the
words believe, anticipate, expect, estimate, project, will be,
will continue, will likely result, or similar words or phrases.
Forward-looking statements in this Report on Form 10-Q include, among others,
statements regarding:



| |  |  | the anticipated growth of revenue and improvement in profit
margins,                                                                                                                                                 
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | the anticipated growth of revenue to exceed cost increases related
to the Corporations U.S. manufacturing facility,                                                                                                 
| |  |  | the Corporations ability to use additional capacity in its
manufacturing facility, or to expand its manufacturing capacity,                                                                                         
| |  |  | the anticipated increase in selling, general and administrative
expenses and the hiring of new employees,                                                                                                            
| |  |  | the Corporations ability to maintain selling, general and
administrative expenses as a percentage of revenue relatively constant
or below 20%,                                                                      
| |  |  | the Corporations ability to maintain research and development
expenses and tax rates at constant levels,                                                                                                            
| |  |  | the Corporations ability to fund its operations, capital
expenditures, stock repurchases and interest and principal payments on
debt for 2003 with existing cash, cash flows from operations and its
line of credit,
| |  |  | the Corporations possible
acquisition of with Q-One Biotech and the Corporations ability to
obtain financing for the proposed acquisition on favorable terms, and                                                  
| |  |  | the Corporations expansion plans.                                                                                                                                                                                   

Forward-looking statements involve risks and uncertainties which may cause
actual results to differ materially from the forward-looking statements. The
risks and uncertainties are detailed from time to time in reports filed by
BioReliance with the Securities and Exchange Commission, including in its
Form10-K filed on March 31, 2003.

The forward looking statements do not take into consideration a possible
acquisition of Q-One Biotech or the significant potential charge to earnings
for transaction and related costs that would result if the transaction were not
completed.

The Corporation undertakes no obligation to revise or publicly release the
results of any revision to these forward-looking statements. Therefore,
readers are cautioned not to place undue reliance on these forward-looking
statements since new risk factors emerge from time to time and it is not
possible for management to predict all such risk factors, or to assess the
impact of all such risk factors on the Corporations business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.

The following discussion and analysis of the Corporations financial
condition and results of operations should be read in conjunction with the
Corporations consolidated financial statements and related notes thereto
included elsewhere in this Form 10-Q.

10



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##### 



Overview

The Corporation is a leading contract service organization providing,
testing, development and manufacturing services for biologics and other
biomedical products to pharmaceutical companies worldwide. The Corporation
believes that it is the largest provider of outsourcing services focused on the
expanding biologics sector of the pharmaceutical industry. During the quarter
ended June 30, 2003, the Corporation continued to work with clients on the
development of global multi-year arrangements, such as those announced in 2002.
The Corporation also continued to contribute to bioterrorism defense through
the work performed in both operating segments on the smallpox vaccine
contracts. The Corporation believes that the services provided under some of
its key relationships, the benefits that have been provided by what the
Corporation believes is a growing market, and the increasing recognition of
BioReliance as a service provider of choice continues to have a positive effect
on the Corporations results of operations.

On
July 17, 2003, the Corporation and Q-One Biotech Group Limited
(Q-One Biotech), a
privately-held company based in Glasgow, Scotland, announced that they entered
into a letter agreement providing for a period of exclusive negotiations in
connection with a proposed acquisition of Q-One Biotech by the
Corporation. BioReliance has also applied for regulatory approval of the proposed
transaction in the United Kingdom.

The
proposed acquisition of Q-One Biotech, if consummated, would involve
the purchase by the Corporation of all of the outstanding capital stock of Q-One
Biotech in an all cash transaction expected to be financed through a new senior
secured credit facility and a portion of existing cash resources. The terms of
the proposed transaction have not been disclosed. The Corporation has not yet
entered into a definitive acquisition agreement with Q-One Biotech or its
shareholders, and no assurances can be given as to whether any agreements will
be signed or a transaction consummated. However, pursuant to the letter
agreement, the parties have agreed in principle on many of the major terms of
the proposed transaction, including the pricing mechanism, and Q-One Biotech
and its principal shareholders have agreed to deal exclusively with
the Corporation
for an undisclosed period to negotiate mutually acceptable definitive
agreements.

11



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##### 



Results of Operations
(Dollars in tables are in thousands)

For the three months ended June 30, 2003, the Corporation had revenue of
$23.5 million, an increase of 13% over revenue of $20.7 million for the three
months ended June 30, 2002. Earnings per share for the three months ended June
30, 2003 were $0.37 (diluted) compared with $0.31 (diluted) for the three
months ended June 30, 2002.

For the six months ended June 30, 2003, the Corporation had revenue of
$44.3 million, an increase of 11% over revenue of $39.7 million for the six
months ended June 30, 2002. Earnings per share for the six months ended June
30, 2003 were $0.63 (diluted) compared with $0.55 (diluted) for the six months
ended June 30, 2002.

Continuing increases in orders fueled revenue growth in both of the
Corporations segments and both geographic regions for the three months and six
months ended June 30, 2003. These higher revenues also drove higher gross
profits in both segments and both geographic regions. Gross margins were
hampered in U.S. manufacturing and U.K. testing and development by
increases while other business units,
particularly European manufacturing, experienced improved margins due largely
to the revenue growth. Although selling, general, and administrative costs
increased, as a percentage of sales these costs decreased to 20% for both the
three months and six months ended June 30, 2003, as a result of continued
programs to control expenses. Income tax rates for the three months and six
months ended June 30, 2003 increased slightly from 36% to 37%, remaining in
line with the Corporations historical rates.

12



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##### 



Gross Revenue by Operating Segment

The following table shows a comparison of revenue by operating segment for
the three months and six months ended June 30, 2002 and 2003:

|                        |                            |      |                          |      |  |            |        |      |  |      |    |            |  |   |        |  |  |   |        |      |  |  |    |  
|----------------------- | -------------------------- | ---- | ------------------------ | ---- |  | ---------- | ------ | ---- |  | ---- | -- | ---------- |  | - | ------ |  |  | - | ------ | ---- |  |  | -- | -
|                        | Three
Months EndedJune 30, |      | Six
Months EndedJune 30,
|                        |                            |      |                         
|                        |                            |      |                          |      |  |            |        |      |  | Fav. |    |            |  |   |        |  |  |   |        | Fav.
|                        |                            | 2002 |                          | 2003 |  | (Unfav.) % |        | 2002 |  | 2003 |    | (Unfav.) %
|                        |                            |      |                          |      |  |            |        |      |  |      |    |           
|Testing and Development |                            | $    | 17,575                   |      |  | $          | 19,073 |      |  |      | 9  | %          |  | $ | 33,346 |  |  | $ | 35,791 |      |  |  | 7  | %
|Manufacturing           |                            |      | 3,158                    |      |  |            | 4,382  |      |  |      | 39 | %          |  |   | 6,400  |  |  |   | 8,463  |      |  |  | 32 | %
|                        |                            |      |                          |      |  |            |        |      |  |      |    |            |  |   |        |  |  |   |        |      |  |  |    |  
|Total                   |                            | $    | 20,733                   |      |  | $          | 23,455 |      |  |      | 13 | %          |  | $ | 39,746 |  |  | $ | 44,254 |      |  |  | 11 | %
|                        |                            |      |                          |      |  |            |        |      |  |      |    |            |  |   |        |  |  |   |        |      |  |  |    |  

The increase in testing and development revenue for the three months and
six months ended June 30, 2003 is due primarily to the continued increase in
new orders. These new orders included those arising from global arrangements
with some major clients. The increase in U.S. testing and development revenue
was partially offset by decreases in revenue generated in Europe for the three
months ended June 30, 2003. The decrease in European testing and development
revenue was the result of client delays in some projects.

The increase in manufacturing revenue for the three and six months ended
June 30, 2003 represents increases in both the U.S. and Europe. European
increases are attributable to increases in both U.K. and German facilities.
Both European facilities benefited from increased orders and German revenue
benefited from improvements in throughput efficiencies.

13



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##### 



Approximately 28% and 23%, respectively, of the Corporations
manufacturing revenue for the three months and six months ended June 30, 2003
resulted from work performed under the Corporations smallpox vaccine
contracts. Approximately 10% of the Corporations total revenue for the three
months and six months ended June 30, 2003 resulted from work performed under
these smallpox vaccine contracts.

Gross Revenue by Geographic Region

The following table shows a comparison of revenue by geographic region for
the three months ended June 30, 2002 and 2003:

|              |                            |      |                          |      |  |            |        |      |  |      |    |            |  |   |        |  |  |   |        |      |  |  |    |  
|------------- | -------------------------- | ---- | ------------------------ | ---- |  | ---------- | ------ | ---- |  | ---- | -- | ---------- |  | - | ------ |  |  | - | ------ | ---- |  |  | -- | -
|              | Three
Months EndedJune 30, |      | Six
Months EndedJune 30,
|              |                            |      |                         
|              |                            |      |                          |      |  |            |        |      |  | Fav. |    |            |  |   |        |  |  |   |        | Fav.
|              |                            | 2002 |                          | 2003 |  | (Unfav.) % |        | 2002 |  | 2003 |    | (Unfav.) %
|              |                            |      |                          |      |  |            |        |      |  |      |    |           
|United States |                            | $    | 17,079                   |      |  | $          | 19,295 |      |  |      | 13 | %          |  | $ | 32,746 |  |  | $ | 35,467 |      |  |  | 8  | %
|             
|Europe        |                            |      | 3,654                    |      |  |            | 4,160  |      |  |      | 14 | %          |  |   | 7,000  |  |  |   | 8,787  |      |  |  | 26 | %
|              |                            |      |                          |      |  |            |        |      |  |      |    |            |  |   |        |  |  |   |        |      |  |  |    |  
|Total         |                            | $    | 20,733                   |      |  | $          | 23,455 |      |  |      | 13 | %          |  | $ | 39,746 |  |  | $ | 44,254 |      |  |  | 11 | %
|              |                            |      |                          |      |  |            |        |      |  |      |    |            |  |   |        |  |  |   |        |      |  |  |    |  

The increase in revenue generated in the United States for the three
months ended June 30, 2003 resulted from increases in orders, which fueled
increased revenue in both biologics testing and in toxicology services. For
the six months ending June 30, 2003, increases in biologics testing services
were partially offset by decreases in toxicology services revenue. As
previously mentioned, U.S. manufacturing revenue increased for the three and
six months ended June 30, 2003. Revenue generated in the U.S. for the three
and six months ended June 30, 2003 includes an adjustment resulting in
additional revenue of approximately $380,000 relating to long-term contracts.

The increase in revenue generated in Europe for the three months ended
June 30, 2003 reflects an increase in revenue generated in the Corporations
German facilities. The increase in revenue generated in Europe for the six
months ended June 30, 2003 is the result of increases in revenue generated in
both the Corporations U.K. and German facilities as a result of
an increase in orders. The Corporation continues to benefit from increased penetration into the growing European biopharmaceutical market. As
the German facility continues to run near capacity, revenue fluctuations in
that facility are primarily attributable to incremental improvement in
throughput efficiencies and different pricing structures among contracts.

Revenue Outlook

The Corporation expects that testing and development revenue will continue
to increase in both the U.S. and Europe in the foreseeable future, and it
expects that U.S. manufacturing revenue will increase with the Corporations
smallpox vaccine and commercial contracts, as well as with additional service
offerings in the U.S. manufacturing facility. There can be no assurance that
such expectations will prove to be correct. The Corporation expects European
revenue to continue to grow more rapidly than revenue in the U.S. to the extent
that the European markets continue to outpace U.S. markets. The Corporation is
planning for laboratory expansions that would become available to meet
anticipated growth in the U.S. and Europe over a two-year to three-year period.

14



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##### 



Gross Profit by Operating Segment

The following table compares gross profit and gross margin by operating
segment for the three months and six months ended June 30, 2002 and 2003:

|                        |                     |  |                            |       |                          |  |           |       |      |  |      |     |           |  |   |        |  |  |   |        |      |  |  |      | 
|----------------------- | ------------------- |  | -------------------------- | ----- | ------------------------ |  | --------- | ----- | ---- |  | ---- | --- | --------- |  | - | ------ |  |  | - | ------ | ---- |  |  | ---- | 
|                        |                     |  | Three
Months EndedJune 30, |       | Six
Months EndedJune 30,
|                        |                     |  |                            |       |                         
|                        |                     |  |                            |       |                          |  |           |       |      |  | Fav. |     |           |  |   |        |  |  |   |        | Fav.
|                        |                     |  | 2002                       |       | 2003                     |  | (Unfav.)% |       | 2002 |  | 2003 |     | (Unfav.)%
|                        |                     |  |                            |       |                          |  |           |       |      |  |      |     |          
|Testing and Development |                     |  |                            |       |                          |  |           |       |      |  |      |     |           |  |   |        |  |  |   |        |      |  |  |     
|                        | Gross Profit        |  | $                          | 8,897 |                          |  | $         | 9,667 |      |  |      | 9%  |           |  | $ | 16,602 |  |  | $ | 17,571 |      |  |  | 6%   | 
|                        | Gross Margin        |  |                            | 51%   |                          |  |           | 51%   |      |  |      |     |           |  |   | 50%    |  |  |   | 49%    |      |  |  |      | 
|                       
|Manufacturing           |                     |  |                            |       |                          |  |           |       |      |  |      |     |           |  |   |        |  |  |   |        |      |  |  |     
|                        | Gross Profit (Loss) |  |                            | (135  | )                        |  |           | 309   |      |  |      | N.M |           |  |   | 151    |  |  |   | 657    |      |  |  | 335% | 
|                        | Gross Margin        |  |                            | (4%   | )                        |  |           | 7%    |      |  |      |     |           |  |   | 2%     |  |  |   | 8%     |      |  |  |      | 
|                        |                     |  |                            |       |                          |  |           |       |      |  |      |     |           |  |   |        |  |  |   |        |      |  |  |     
|Totals                  |                     |  |                            |       |                          |  |           |       |      |  |      |     |           |  |   |        |  |  |   |        |      |  |  |     
|                        | Gross Profit        |  | $                          | 8,762 |                          |  | $         | 9,976 |      |  |      | 14% |           |  | $ | 16,753 |  |  | $ | 18,228 |      |  |  | 9%   | 
|                        | Gross Margin        |  |                            | 42%   |                          |  |           | 43%   |      |  |      |     |           |  |   | 42%    |  |  |   | 41%    |      |  |  |      | 
|                        |                     |  |                            |       |                          |  |           |       |      |  |      |     |           |  |   |        |  |  |   |        |      |  |  |     

N.M. = Not Meaningful

The testing and development gross margin for the three months ended June
30, 2003 remained unchanged with increased margins in the U.S. being offset by
decreased margins in Europe. The increased gross profit generated in the U.S.
was partially offset by a decreased profit in the U.K. Increased costs
primarily related to quality assurance and quality control costs in the U.S.,
and direct material and labor related costs in Europe impacted gross profits.

For the six months ended June 30, 2003, gross margins were impacted by a
decrease in margins generated in the U.K. resulting from a decrease
in the gross profit generated by testing and development in the U.K.,
only partially offset by increases in the gross profit generated by
European manufacturing. The gross profit was impacted by the increase
in expenses discussed above.

Manufacturing gross margin for the three months ended June 30, 2003
improved, reflecting improvements in both the U.S. and Europe. Gross profits
in Europe increased and losses generated in the U.S. decreased. For the six
months ended June 30, 2003 gross margins increased as a result of increases in
the gross profit generated in Europe, partially offset by increased losses
generated in the U.S. The throughput efficiencies and pricing structures
mentioned earlier allowed European manufacturing revenues to grow at a much
faster rate than cost of sales, thus resulting in increased margin. However,
increased direct materials and labor related costs contributed to a decrease in
U.S. manufacturing gross profit.

15



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##### 



Gross Profit by Geographic Region

The following table compares gross profit and gross margin by geographic
region for the three months and six months ended June 30, 2002 and 2003:

|              |              |  |                            |       |                          |  |            |       |      |  |      |     |            |  |   |        |  |  |   |        |      |  |  |     | 
|------------- | ------------ |  | -------------------------- | ----- | ------------------------ |  | ---------- | ----- | ---- |  | ---- | --- | ---------- |  | - | ------ |  |  | - | ------ | ---- |  |  | --- | 
|              |              |  | Three
Months EndedJune 30, |       | Six
Months EndedJune 30,
|              |              |  |                            |       |                         
|              |              |  |                            |       |                          |  |            |       |      |  | Fav. |     |            |  |   |        |  |  |   |        | Fav.
|              |              |  | 2002                       |       | 2003                     |  | (Unfav.) % |       | 2002 |  | 2003 |     | (Unfav.) %
|              |              |  |                            |       |                          |  |            |       |      |  |      |     |           
|United States |              |  |                            |       |                          |  |            |       |      |  |      |     |            |  |   |        |  |  |   |        |      |  |  |    
|              | Gross Profit |  | $                          | 6,802 |                          |  | $          | 7,902 |      |  |      | 16% |            |  | $ | 12,994 |  |  | $ | 13,577 |      |  |  | 4%  | 
|              | Gross Margin |  |                            | 40%   |                          |  |            | 41%   |      |  |      |     |            |  |   | 40%    |  |  |   | 38%    |      |  |  |     | 
|             
|Europe        |              |  |                            |       |                          |  |            |       |      |  |      |     |            |  |   |        |  |  |   |        |      |  |  |    
|              | Gross Profit |  |                            | 1,960 |                          |  |            | 2,074 |      |  |      | 6%  |            |  |   | 3,759  |  |  |   | 4,651  |      |  |  | 24% | 
|              | Gross Margin |  |                            | 54%   |                          |  |            | 50%   |      |  |      |     |            |  |   | 54%    |  |  |   | 53%    |      |  |  |     | 
|             
|Totals        |              |  |                            |       |                          |  |            |       |      |  |      |     |            |  |   |        |  |  |   |        |      |  |  |    
|              |              |  |                            |       |                          |  |            |       |      |  |      |     |            |  |   |        |  |  |   |        |      |  |  |    
|              | Gross Profit |  | $                          | 8,762 |                          |  | $          | 9,976 |      |  |      | 14% |            |  | $ | 16,753 |  |  | $ | 18,228 |      |  |  | 9%  | 
|              | Gross Margin |  |                            | 42%   |                          |  |            | 43%   |      |  |      |     |            |  |   | 42%    |  |  |   | 41%    |      |  |  |     | 
|              |              |  |                            |       |                          |  |            |       |      |  |      |     |            |  |   |        |  |  |   |        |      |  |  |    

For the three months ended June 30, 2003 the increase in U.S. gross margin
resulted from an increase in margins generated from testing and development and
a decrease in the losses generated in U.S. manufacturing. The improved margins
and increased revenue combined to produce an increased gross profit for the
quarter.

The decrease in U.S. gross margin for the six months ended June 30, 2003
reflects a decrease in U.S. manufacturing margins while U.S. testing and
development margins remained relatively constant. Although testing and
development margins remained constant, the increases in revenue actually
resulted in an increased gross profit for the six month period. Losses
generated by U.S. manufacturing increased as a result of the cost increases
discussed above.

The decrease in European gross margins for the three and six months ended
June 30, 2003 is attributable to significant European testing and development
gross margin decreases outpacing an increase in the European manufacturing
margin. While cost of sales increases in European testing and development
negatively impacted gross profit, European manufacturing revenue increased at a
much faster rate than its related cost of sales, thus significantly increasing
gross profit in Europe. U.S. testing and development business also includes
several units with relatively lower margins, which are not part of the U.K.
testing and development business.

16



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##### 



Outlook for Gross Margins

The Corporation expects future revenue growth to exceed cost increases
related to its U.S. manufacturing facility, thereby improving gross margins.
Revenue growth, if any, will likely come from expanding manufacturing
capabilities and service offerings. However, the build-out and validation of
this facility has demanded and will continue to demand considerable time and
resources, and there are high fixed costs related to the facility. This
facility will likely constrain earnings for the Corporation at least for the
foreseeable future. Management cannot predict when, if ever, the facility
will generate profits.

The Corporation expects margins in the testing and development segment,
both in the U.S. and Europe, to improve moderately with economies of scale in
the foreseeable future. The rate of improvement is expected to be impacted by
expenditures related to planned additions to capacity beginning in 2003 in
Europe and the U.S.

Operating Expenses

The following table shows a comparison of operating expenses, other than
cost of sales, for the three months and six months ended June 30, 2002 and
2003:

|                                    |  |      |                            |      |                          |            |       |      |  |      |    |            |  |   |       |  |  |   |       |      |  |  |    |   
|----------------------------------- |  | ---- | -------------------------- | ---- | ------------------------ | ---------- | ----- | ---- |  | ---- | -- | ---------- |  | - | ----- |  |  | - | ----- | ---- |  |  | -- | --
|                                    |  |      | Three
Months EndedJune 30, |      | Six
Months EndedJune 30,
|                                    |  |      |                            |      |                         
|                                    |  |      |                            |      |                          |            |       |      |  | Fav. |    |            |  |   |       |  |  |   |       | Fav.
|                                    |  | 2002 |                            | 2003 |                          | (Unfav.) % |       | 2002 |  | 2003 |    | (Unfav.) %
|                                    |  |      |                            |      |                          |            |       |      |  |      |    |           
|Selling, General and
Administrative |  | $    | 4,332                      |      |                          | $          | 4,711 |      |  |      | (9 | %)         |  | $ | 8,521 |  |  | $ | 9,027 |      |  |  | (6 | %)
|Research and Development            |  |      | 194                        |      |                          |            | 212   |      |  |      | (9 | %)         |  |   | 456   |  |  |   | 428   |      |  |  | 6  | % 
|                                    |  |      |                            |      |                          |            |       |      |  |      |    |            |  |   |       |  |  |   |       |      |  |  |    |   
|Total                               |  | $    | 4,526                      |      |                          | $          | 4,923 |      |  |      | (9 | %)         |  | $ | 8,977 |  |  | $ | 9,455 |      |  |  | (5 | %)
|                                    |  |      |                            |      |                          |            |       |      |  |      |    |            |  |   |       |  |  |   |       |      |  |  |    |   

Selling, general and administrative (SG&A) expenses increased for the
three months and six months ended June 30, 2003 due primarily to increases in
labor, fringe and insurance costs. These increases were partially offset by a
reduction in the Corporations bad debt expense and legal fees. SG&A expenses
are expected to increase as the Corporation hires additional administrative
staff, implements additional applications for its information systems and makes
additional investments for technical sales support and marketing
infrastructure, including investments for developing manufacturing business in
the U.S.

As a percentage of revenue, SG&A expenses decreased slightly to 20% for
the three months and six months ended June 30, 2003 from 21% for the three
months and six months ended June 30, 2002. The decrease is principally
attributable to increased revenues, continued programs to control expenses, and
the successful integration of past enhancements and expansion in sales,
marketing and information systems. The Corporation believes it can maintain
SG&A as a percentage of revenue relatively near or below 20% for the
foreseeable future.

17



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##### 



Research and development expenses represent the investment of internal
resources to develop new methods and tests to support the Corporations
services. These expenses have remained relatively constant as the Corporation
continues to focus on the development of tests that can be delivered to
clients in a relatively shorter period. The Corporation expects these expenses
to remain near these levels for the foreseeable future.

Income Taxes and Other Expenses

The following table shows a comparison of income taxes and other expenses
for the three months and six months ended June 30, 2002 and 2003:

|                       |                |   |                            |       |                          |   |            |       |      |  |      |      |            |   |    |       |  |   |    |       |      |  |     |      |  
|---------------------- | -------------- | - | -------------------------- | ----- | ------------------------ | - | ---------- | ----- | ---- |  | ---- | ---- | ---------- | - | -- | ----- |  | - | -- | ----- | ---- |  | --- | ---- | -
|                       |                |   | Three
Months EndedJune 30, |       | Six
Months EndedJune 30,
|                       |                |   |                            |       |                         
|                       |                |   |                            |       |                          |   |            |       |      |  | Fav. |      |            |   |    |       |  |   |    |       | Fav.
|                       |                |   | 2002                       |       | 2003                     |   | (Unfav.) % |       | 2002 |  | 2003 |      | (Unfav.) %
|                       |                |   |                            |       |                          |   |            |       |      |  |      |      |           
|Other Expense (Income) |                | $ | (178                       | )     |                          | $ | (89        | )     |      |  | (50% | )    |            | $ | 55 |       |  | $ | 44 |       |      |  | 20% |     
|                       |                |   |                            |       |                          |   |            |       |      |  |      |      |            |   |    |       |  |   |    |       |      |  |     |     
|Income Taxes           |                |   |                            |       |                          |   |            |       |      |  |      |      |            |   |    |       |  |   |    |       |      |  |     |     
|                       | Provision      |   | $                          | 1,608 |                          |   | $          | 1,902 |      |  |      | (18% | )          |   | $  | 2,818 |  |   | $  | 3,229 |      |  |     | (15% | )
|                       | Effective Rate |   |                            | 36%   |                          |   |            | 37%   |      |  |      |      |            |   |    | 36%   |  |   |    | 37%   |      |  |     |      |  
|                       |                |   |                            |       |                          |   |            |       |      |  |      |      |            |   |    |       |  |   |    |       |      |  |     |     

The Corporations net other income decreased to $89,000 for the three
months ended June 30, 2003 compared to $178,000 for the three months ended June
30, 2002. The decrease was primarily due to decreased foreign currency
translation gains and business tax refunds, partially offset by decreased
losses on the disposal of fixed assets. For the six months ended June 30,
2003, net other expense of $44,000 remained relatively constant when compared
to net other expense of $55,000 for the six months ended June 30, 2002.

For the three months and six months ended June 30, 2003, the income tax
rate increased slightly and is in line with the Corporations long-term
historical rates, excluding 2001. The Corporation expects tax rates to remain
at current levels for the remainder of 2003 and into the foreseeable future.
However, since the Corporation has international operations in jurisdictions
with different rates, its effective tax rate may vary from quarter to quarter
due to changes in the distribution of its pre-tax earnings, among other
factors.

Liquidity and Capital Resources

The Corporation has funded its business through existing cash, cash flows
from operations, long-term bank loans and capital leases. At June 30, 2003,
the Corporation had cash and cash equivalents of $35.7 million, compared to
$37.7 million at December 31, 2002.

The Corporation generated cash flows from operations of $6.7 million for
the six months ended June 30, 2003, compared to $9.5 million for the six months
ended June 30, 2002. Changes in current assets and liabilities used cash of
$2.0 million for the six months ended June 30, 2003 primarily due to a
reduction in customer advances and accrued compensation and benefits, partially
offset by a decrease in accounts receivable. Changes in current assets and
liabilities generated cash of $1.6 million for the six months ended June 30,
2002 primarily due to an increase in other accrued liabilities and customer
advances and a decrease in accounts receivable, partially offset by a reduction
in accrued compensation and benefits and an increase in other current
assets.



18



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##### 



The Corporation used $3.5 million of cash for the six months ended June
30, 2003 to repurchase shares of its common stock, which the Corporation now
holds as treasury stock under a stock repurchase program. The Corporation
implemented this repurchase program in March 2003 and may repurchase up to
500,000 shares over two years. These shares are available for reissuance in
connection with any lawful purposes. During the six months ended June 30,
2003, the Corporation has repurchased 190,242 shares for $3.5 million. There
were no such repurchases during the six months ended June 30, 2002.

Working capital decreased slightly to $41.9 million at June 30, 2003 from
$42.2 million at December 31, 2002 as a result of a decrease in current assets
of $2.7 million, partially offset by a decrease in current liabilities. The
decrease in current assets was primarily due to a decrease in cash. The
decrease in current liabilities was primarily a result of decreases in customer
deposits and accrued employee compensation and benefits.

The Corporation believes that its existing cash and cash equivalents of
$35.7 million at June 30, 2003, cash flows from operations, and available
borrowings of $2.0 million under its revolving loan agreement will provide
sufficient liquidity to meet the Corporations operating plan, planned capital
expenditures, planned stock repurchases, and interest and principal payments on
the Corporations debt for 2003.

If the
Corporation enters into a definitive agreement to acquire Q-One
Biotech, the Corporation intends to finance a large portion of the acquisition
cost with a new senior secured credit facility.

A decrease in demand for the Corporations services could reduce operating
cash flows, but would also decrease the need for any capital expansion. The
key factors that could affect the Corporations sources of cash include the
following:



| |  |  | the Corporations ability to generate orders for new contracts;                                                                                                                                   
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | the ability of the Corporation to utilize its facilities,
particularly the U.S. manufacturing facility;                                                                                           
| |  |  | the size and growth of the overall markets for biopharmaceuticals;                                                                                                                                
| |  |  | the possible combination with
Q-One Biotech and the new senior secured credit facility and the
Corporation intends to use to finance a large portion of the costs of
the proposed acquisition; and
| |  |  | the economies in the U.S. and Europe.                                                                                                                                                             

These and other factors are more fully described in the Risk Factors
section in the Corporations Form 10-K filed on March 31, 2003. Additionally,
a significant deterioration in the Corporations financial performance and
ratios could accelerate the maturity of principal outstanding under the
Corporations loans.

Operating Leases

The Corporation leases facilities and equipment under operating leases
that expire at various dates through 2024. As of June 30, 2003, the
Corporation is required to make noncancelable lease payments totaling
approximately $27.5 million under these leases.

Capital Leases

The Corporations U.S. manufacturing facility in Rockville, Maryland has
been operational since late 2000. The Corporation leases this facility under
three capital leases that require it to make net noncancelable lease payments
totaling approximately $9.5 million through 2034. The Corporation has also
guaranteed indebtedness related to the construction of this facility of
approximately $4.0 million at June 30, 2003. A portion of the lease payments
is equivalent to the interest and principal due on the indebtedness.

19



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Under an interest rate swap with respect to one of these capital leases,
the variable interest rate portion of the indebtedness was effectively
converted into debt with a fixed rate of 6.14% per annum. This swap expires on
November 1, 2009. Amounts paid or received under the interest rate swap are
recognized as interest income or expense in the periods in which they accrued
and are recorded in the same category as that arising from the indebtedness.
As a result of a decrease in the variable interest rate, for the three months
and six months ended June 30, 2003, the Corporation recorded $53,000 and
$105,000, respectively, of additional interest expense related to this interest
rate swap. For the three and six months ended June 30, 2002, the Corporation
recorded additional interest expense of $51,000 and $97,000, respectively. In
accordance with the Statement of Financial Accounting Standard (FAS) 133, the
Corporation adjusted the liability for the change in the fair value of this
swap from $653,000 at December 31, 2002 to $727,000 at June 30, 2003. The
corresponding amount is reflected in other comprehensive expense, as the
Corporation has met the criteria of FAS 133 to record the contract as a cash
flow hedge. This hedge will be extinguished with the lease obligation to which
it pertains.

The Corporation accounts for the leases and subleases of its U.S.
manufacturing facility as capital leases. The assets underlying the capital
leases are included with the Corporations owned property and equipment at June
30, 2003. Property and equipment, net of accumulated depreciation and
amortization, at June 30, 2003 included approximately $6.9 million related to
these capital leases. The related obligation is included in the Corporations
liabilities at June 30, 2003.

The Corporation also leases land for one of its facilities and certain
office equipment under terms that require the leases to be accounted for as
capital leases. At June 30, 2003, property and equipment, net of accumulated
depreciation and amortization, included $2.0 million related to these capital
leases. The related lease obligation of $0.5 million is included in the
Corporations liabilities at June 30, 2003.

Borrowings and Credit Facilities

The Corporation has a mortgage loan of $4.3 million from Bank of America
with a maturity date of November 30, 2009 that was used to finance the
construction of one of its facilities in Rockville, Maryland. In addition to a
principal payment of $10,576 per month, the mortgage loan bears interest at the
London Inter-Bank Offering Rate (LIBOR) plus the applicable LIBOR Rate
Additional Percentage (LIBOR Rate Option). The LIBOR Rate Option ranges from
1.0% to 2.15% depending on the Corporation achieving certain funded debt to
EBITDA ratios. At June 30, 2003, the applicable interest rate on the mortgage
loan was 1.11% and the LIBOR Rate Option was 1.40%. At June 30, 2003,
approximately $2.1 million was outstanding on the mortgage loan.

Under an interest rate swap, the variable interest rate portion of the
mortgage loan was effectively converted into debt with a fixed rate of 6.14%
per annum. This swap expires November 1, 2009. Amounts paid or received under
the interest rate swap are recognized as interest income or expensed in the
periods in which they accrued and are recorded in the same category as that
arising from the mortgage loan. As a result of a decrease in the variable
interest rate, for the three months and six months ended June 30, 2003, the
Corporation recorded $26,000 and $52,000, respectively, of additional interest
expense related to the interest rate swap. For the three and six months ended
June 30, 2002, the Corporation recorded additional interest expense of $26,000
and $49,000, respectively. In accordance with FAS 133, the Corporation
adjusted the liability for the change in the fair value of this swap from
$306,000 at December 31, 2002 to $337,000 at June 30, 2003. The corresponding
amount is reflected in other comprehensive expense, as the Corporation has met
the criteria of FAS 133 to record the contract as a cash flow hedge. This
hedge will be extinguished with the mortgage loan to which it pertains.

The Corporation has available borrowings up to $2.0 million under a
revolving loan agreement with Bank of America. The revolving loan agreement
requires monthly interest payments on the unpaid principal. The unpaid
principal and all unpaid accrued interest is payable in full on May 31, 2005,
and the line of credit expires at that time. Amounts borrowed under the
revolving loan agreement bear

20



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##### 



interest at the LIBOR rate plus the applicable
LIBOR Rate Option that ranges from 0.85% to 2.0% depending on the Corporation
achieving certain funded debt to EBITDA ratios. During the first six months of
2003, no amounts were borrowed under this revolving loan agreement.

All of the Corporations agreements with Bank of America are cross
collateralized and are secured by a deed of trust on one of the Corporations
laboratory facilities in Rockville, Maryland. The agreements require the
Corporation to comply with financial and restrictive covenants, including fixed
charge coverage and funded debt to EBITDA ratios. Specifically, the
Corporation is required to:



| |  |  | Maintain a ratio of total funded indebtedness to EBITDA not
greater than 3.50 to 1.00 as of the end of each fiscal quarter,
calculated on the preceding four-quarter period. EBITDA is defined
as earnings before interest, taxes, depreciation and amortization.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Maintain a fixed charge coverage ratio as of the end of each
quarter of at least 1.25 to 1.00. This ratio is determined by
dividing EBITDA by the sum of interest expense and current
maturities of long-term debt and capital leases.                           

At June 30, 2003, the Corporation was in compliance with all covenants
under its loan agreements.

The Corporation has a $3.0 million loan from the Department of Business
and Economic Development, a department of the State of Maryland. The
Corporation is required to use the proceeds to expand and relocate its
activities in Rockville, Maryland. The loan requires quarterly principal
payments of $107,143 plus accrued interest and matures on June 30, 2006. The
loan bears interest at rates from 0.0% to 7.5% based on the Corporations
achieving specific employment levels through 2005. The current interest rate
is 0.0%. The terms of the loan contain annual reporting requirements,
including the reporting of employment data. At June 30, 2003, approximately
$1.3 million was outstanding on the loan.

The proposed transaction with Q-One Biotech, if consummated, would involve
the purchase by BioReliance of all of the outstanding capital stock of Q-One
Biotech in an all cash transaction expected to be financed through a new senior
secured credit facility and a portion of existing cash resources.

Capital Expenditures

During the six months ended June 30, 2003 and 2002, the Corporation
invested $5.5 million and $3.6 million, respectively, for capital expenditures.
These capital expenditures were primarily for leasehold improvements and
investments in new equipment.

Estimated capital expenditures for the remainder of 2003 include capacity
expansions in U.S. testing and development operations, U.S. manufacturing and
U.K. manufacturing operations. The Corporations plans also include additional
investments in information systems, as well as in normal equipment
replacements.

The Corporation expects to fund its growth and its planned capital
expenditures from existing cash and cash flows from operations, but may also
enter into arrangements for bank borrowings and leases or other financing from
third party sources, to the extent that funds are available on favorable terms
and conditions. While the Corporation remains confident that expansion of its
capacity will contribute to growth, there can be no assurance that such
expansion will be fully utilized or that funding for the plans will meet with
the Corporations expectations. The Corporations expectations do not take
into consideration the possible combination with Q-One Biotech.

21



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Although the Corporation has no final agreements or arrangements in place
with respect to any future acquisition, there may be acquisition or other
growth opportunities, including the possible combination with Q-One
Biotech, that
require additional external financing, and the Corporation may, from time to
time, seek to obtain funds from public or private issuances of equity or debt
securities on a strategic basis. There can be no assurances that such
financing will be available on terms acceptable to the Corporation.

Foreign Currency

The accounts of the Corporations international subsidiaries are measured
using local currency as the functional currency. Assets and liabilities of
these subsidiaries are translated into United States dollars at period-end
exchange rates, and revenue and expense accounts are translated at average
monthly exchange rates. Net exchange gains and losses resulting from these
translations are excluded from net income and are accumulated in a separate
component of stockholders equity. Transaction gains and losses that arise
from some intercompany transactions denominated in a currency other than the
functional currency are included in the results of operations as incurred. The
Corporation recorded $0.7 million in net exchange gains for both the three
months and six months ended June 30, 2003 compared to $0.8 million and $0.6
million for the three months and six months ended June 30, 2002, respectively.

Since the revenues and expenses of the Corporations international
operations generally are denominated in local currencies, exchange rate
fluctuations between such local currencies and the United States dollar will
subject the Corporation to currency translation risk with respect to the
reported results of its international operations as well as to other risks
sometimes associated with international operations. The Corporation derived
17.7% and 17.6% of its revenue for the three months ended June 30, 2003 and
2002, respectively, and 19.9% and 17.6% of its revenue for the six months ended
June 30, 2003 and 2002, respectively from services performed in the United
Kingdom and Germany. In addition, the Corporation may be subject to currency
risk when the Corporations service contracts are denominated in a currency
other than the currency in which the Corporation incurs expenses related to
such contracts.

The Corporation may experience fluctuations in financial results from the
Corporations operations outside the United States, and the Corporation may not
be able, contractually or otherwise, to reduce the currency risks associated
with its operations. At the present time, the Corporation does not use
derivative financial instruments to manage or control foreign currency risk
because most of its revenue and related expenses are in the same functional
currencies. While the Corporation may use such financial instruments in the
future, these financial instruments may not be successful in managing or
controlling foreign currency risk.

22



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Item 3.    Quantitative and Qualitative Disclosures About Market Risk

Market Risk

The Corporation is exposed to credit market risk from adverse changes in
interest rates and foreign currency exchange rates.

Interest Rate Risks

The Corporation is exposed to interest rate risk primarily through its
investments in cash equivalents. The Corporations investment policy stipulates
investment in short-term, low-risk instruments. At June 30, 2003, the
Corporation had $35.7 million in cash and cash equivalents. If interest rates
fall, floating rate securities may generate less interest income. The
Corporation does not believe that it is exposed to any material interest rate
risk as a result of its investments in cash equivalents.

At June 30, 2003, the Corporation had total debt of $11.2 million, most of
which bears interest at a fixed interest rate. Thus, the Corporation does not
believe that it is exposed to any material interest rate risk as a result of
borrowing activities.

Foreign Currency Exchange Risk

The Corporations international operations are subject to foreign exchange
rate fluctuations. The Corporation derived 17.7% and 19.9% of its revenue for
the three and six months ended June 30, 2003, respectively, from services
performed in the United Kingdom and Germany. The Corporation does not hedge
its foreign currency exposure. Management does not believe that the
Corporations exposure to foreign currency rate fluctuations is material. See
Foreign Currency in Managements Discussion and Analysis of Financial
Condition and Results of Operation for a more detailed discussion of our
foreign currency risks and exposures.

23



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##### 



Item 4.    Controls and Procedures

The Corporations Chief Executive Officer and Chief Financial Officer
evaluated the Corporations disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the
period covered by this report. Based on this evaluation, the Corporations
Chief Executive Officer and Chief Financial Officer has concluded that, as of
June 30, 2003, the Corporations disclosure controls and procedures were (1)
designed to ensure that material information relating to the Corporation,
including its consolidated subsidiaries, is made known to the Companys Chief
Executive Officer and Chief Financial Officer by others within those entities,
particularly during the period in which this report was being prepared and (2)
effective, in that they provide reasonable assurance that the information
required to be disclosed by the Corporation in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SECs rules and forms.

24



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PART II  OTHER INFORMATION

Item 1.    Legal Proceedings

None

Item 2.    Changes in Securities and Use of Proceeds

As of June 30, 2003, the Corporation had used approximately $27.3 million
of the net proceeds from its initial public offering toward planning and
construction for manufacturing expansion, purchases of laboratory equipment and
information systems hardware and software, and debt repayments.

At June 30, 2003, approximately $4.9 million of the net proceeds of the
initial public offering were invested in money market funds.

Item 3.    Defaults upon Senior Securities

None

Item 4.    Submission of Matters to Vote of Security Holders



| |                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------
| | At the Annual Meeting of Shareholders held on June 10, 2003, the
following proposals were adopted by the margins indicated:



| | 1. |  | To reelect Mr. Sidney R. Knafel and Mr. Capers W. McDonald
as directors of the Corporation to terms expiring in 2006.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------

|                   |  |     |                  |  |          |  |         | 
|------------------ |  | --- | ---------------- |  | -------- |  | ------- | 
|                   |  |     | Number of Shares | 
|                   |  |     |                  | 
|                   |  | For |                  |  | Withheld | 
|Sidney R. Knafel   |  |     | 7,632,147        |  |          |  | 643,981 | 
|Capers W. McDonald |  |     | 6,953,072        |  |          |  | 849,290 | 



| | 2. |  | To ratify the appointment of PricewaterhouseCoopers LLP as
the Corporations auditors for the fiscal year ending December 31,
2003.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------

|        |  |  |           | 
|------- |  |  | --------- | 
|For     |  |  | 6,955,812 | 
|Against |  |  | 843,495   | 
|Abstain |  |  | 3,058     | 

Item 5.    Other Information

None

25



---



##### 



Item 6.    Exhibits and Reports on Form 8-K

(a)  Exhibits



| | 31.1 |  | Certification of Chief Executive Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002                                               
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 31.2 |  | Certification of Chief Financial Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002                                               
|
| | 32.1 |  | Certification of Chief Executive Officer Pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
|
| | 32.2 |  | Certification of Chief Financial Officer Pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002

(b)  Reports on Form 8-K



| |                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------
| | Report dated
April 23, 2003 regarding the issuance of a press
release announcing the Corporations earnings for the first quarter of 2003.
|
| | Report dated
July 23, 2003 regarding the issuance of a press
release announcing the Corporations earnings for the second quarter of 2003.

26



---



##### 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                         |  |  |  |                                                                                                                                                        
|------------------------ |  |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|Dated:   August 11, 2003 |  |  | 
|                        
|                         |  |  |  | BioReliance Corporation
         (Registrant)                                                                                                          
|                        
|                        
|                         |  |  |  | By    /s/ Capers W. McDonald                                                                                                                           
|                        
|                         |  |  |  | Capers W. McDonald
President and Chief Executive Officer                                                                                               
|                        
|                         |  |  |  | By   /s/ John L. Coker                                                                                                                                 
|                        
|                         |  |  |  | John L. Coker
Vice President, Finance and Administration, Chief
Financial Officer, Treasurer and Secretary
(Principal Financial and Accounting Officer)

27



---



##### 



EXHIBIT INDEX

|            |  |                                                                                                                                                   |  | 
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|EXHIBIT NO. |  | DESCRIPTION                                                                                                                                      
|            |  |                                                                                                                                                  
|           
|31.1        |  | Certification of
Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                               
|           
|31.2        |  | Certification of
Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                               
|           
|32.1        |  | Certification of
Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|           
|32.2        |  | Certification of
Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

28