================================================================================

                       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, 1998

                                       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                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

    9900 BLACKWELL ROAD
    ROCKVILLE, MARYLAND                                                 20850
(Address of principal executive offices)                              (Zip code)

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

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

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

As of June 30, 1998, 7,813,024 shares of registrant's Common Stock, par value
$.01 per share, were outstanding.

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<PAGE>



                             BIORELIANCE CORPORATION

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                    PAGE
                                                                                                   NUMBER
                                                                                                   ------
<S><C>
PART I            FINANCIAL INFORMATION

                  Item 1  -  Financial Statements:

                      Consolidated Balance Sheets as of December 31, 1997 and
                      June 30, 1998............................................................        3

                      Consolidated Statements of Income for the Three Months and
                      Six Months Ended June 30, 1997 and 1998..................................        4

                      Consolidated Statements of Cash Flows for the Six Months
                      Ended June 30, 1997 and 1998.............................................        5

                      Notes to Consolidated Financial Statements...............................        6

                  Item 2  -  Management's Discussion and Analysis of Financial

                      Condition and Results of Operations......................................       11

PART II           OTHER INFORMATION............................................................       17

SIGNATURES.....................................................................................       18

EXHIBIT INDEX..................................................................................       19
</TABLE>


                                       2

<PAGE>






                        PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                            BIORELIANCE CORPORATION

                          CONSOLIDATED BALANCE SHEETS
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                               JUNE 30,
                                                                           DECEMBER 31,          1998
                                                                               1997           (UNAUDITED)
                                                                           ------------       -----------
<S><C>
ASSETS
Current assets:
    Cash and cash equivalents..........................................      $ 6,227            $ 4,498
    Marketable securities..............................................       27,554             26,497
    Accounts receivable, net...........................................       15,923             19,837
    Other current assets...............................................        1,827              2,283
                                                                             -------            -------
              Total current assets.....................................       51,531             53,115
Property and equipment, net............................................       15,601             19,810
Intangible assets, net.................................................          256                182
Deposits and other assets..............................................          286                336
Deferred income taxes..................................................          977                977
                                                                             -------            -------
              Total assets.............................................      $68,651            $74,420
                                                                             =======            =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Current portion of long-term debt..................................      $ 1,574            $ 1,524
    Accounts payable...................................................        1,811              1,131
    Accrued employee compensation and benefits.........................        2,829              2,042
    Other accrued liabilities..........................................        2,302              3,094
    Customer advances..................................................        3,635              4,102
    Deferred income taxes..............................................        1,271              1,271
                                                                             -------            -------
              Total current liabilities................................       13,422             13,164
Long-term debt.........................................................        5,434              9,017
                                                                             -------            -------
              Total liabilities........................................       18,856             22,181
                                                                             -------            -------
Commitments and contingencies (Note 8)

Stockholders' equity:
    Convertible 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;
      7,685,208 and 7,813,024 shares issued and outstanding............           77                 78
    Additional paid-in capital.........................................       52,457             52,566
    Retained earnings/(accumulated deficit)............................       (2,145)               179
    Equity adjustment from foreign currency translation................         (594)              (584)
                                                                             -------            -------
              Total stockholders' equity...............................       49,795             52,239
                                                                             -------            -------
              Total liabilities and stockholders' equity...............      $68,651            $74,420
                                                                             =======            =======
</TABLE>

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

                                       3

<PAGE>



                            BIORELIANCE CORPORATION

                       CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                             JUNE 30,                              JUNE 30,
                                                   -----------------------------         --------------------------
                                                      1997               1998               1997            1998
                                                   ----------          ---------         ----------       ---------
<S><C>
Revenue...................................         $   12,583          $  12,677         $   24,364       $  24,648
                                                   ----------          ---------         ----------       ---------
Expenses:
     Cost of sales........................              7,585              6,611             15,027          13,757
     Selling, general and administrative..              2,694              3,810              5,329           6,704
     Research and development.............                323                347                626             733
                                                   ----------          ---------         ----------       ---------
                                                       10,602             10,768             20,982          21,194
                                                   ----------          ---------         ----------       ---------
Income from operations....................              1,981              1,909              3,382           3,454
                                                   ----------          ---------         ----------       ---------
Other income (expense):
     Interest income......................                 90                434                120             920
     Interest expense.....................               (219)               (73)              (448)           (232)
     Other income (expense)...............                 12               (139)                11            (271)
                                                   ----------          ---------         ----------       ---------
                                                         (117)               222               (317)            417
                                                   ----------          ---------         ----------       ---------
Income before income taxes................              1,864              2,131              3,065           3,871
Provision for income taxes................                776                813              1,287           1,547
                                                   ----------          ---------         ----------       ---------
Net income................................         $    1,088          $   1,318         $    1,778       $   2,324
                                                   ==========          =========         ==========       =========
Net income per share:
     Basic................................         $     2.85          $    0.17         $     4.78       $    0.30
                                                   ==========          =========         ==========       =========

     Diluted..............................         $     0.19          $    0.16         $     0.30       $    0.28
                                                   ==========          =========         ==========       =========
</TABLE>

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

                                       4

<PAGE>



                            BIORELIANCE CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      SIX MONTHS ENDED
                                                                                          JUNE 30,
                                                                                  -------------------------
                                                                                     1997           1998
                                                                                  ----------      ---------
<S><C>
Cash flows from operating activities:
  Net income.................................................................     $   1,778       $  2,324
  Adjustments to reconcile net income to net cash provided by (used in)
    operating activities:
      Depreciation...........................................................         1,561          1,546
      Amortization of intangibles............................................           156            118
      Amortization of bond premiums and discounts............................           ---            (96)
      Loss on disposal of fixed assets.......................................           155             20
      Deferred income taxes, net.............................................           945            ---
      Changes in current assets and liabilities:
          Accounts receivable, net...........................................          (640)        (3,869)
          Other current assets...............................................           375           (438)
          Accounts payable...................................................           551           (679)
          Accrued employee compensation and benefits.........................           (19)          (788)
          Other accrued liabilities..........................................           377            710
          Customer advances..................................................           (15)           438
      Deposits and other assets..............................................        (1,317)           (96)
                                                                                  ----------      --------
               Net cash provided by (used in) operating activities..........          3,907           (810)
                                                                                  ----------      --------
Cash flows from investing activities:
    Purchases of marketable securities.......................................           ---        (21,997)
    Proceeds from the maturities of marketable securities....................           ---         23,150
    Purchases of property and equipment......................................        (1,297)        (1,492)
                                                                                  ----------      --------
               Net cash (used in) investing activities.......................        (1,297)          (339)
                                                                                  ----------      --------
Cash flows from financing activities:
     Proceeds from exercise of stock options.................................            49            249
     Proceeds from debt......................................................           ---            ---
     Payments on debt........................................................          (358)          (400)
     Repayment of note payable to stockholder................................        (1,900)           ---
     Payments on capital lease obligations...................................          (484)          (341)
     Repurchase and cancellation of treasury stock...........................           ---           (139)
                                                                                  ----------      --------
               Net cash (used in) financing activities.......................        (2,693)          (631)
                                                                                  ----------      --------

Effect of exchange rate changes on cash and cash equivalents.................          (438)            51
                                                                                  ----------      --------

Net decrease in cash and cash equivalents....................................          (521)        (1,729)
Cash and cash equivalents, beginning of period...............................         2,965          6,227
                                                                                  ----------      --------

Cash and cash equivalents, end of period.................................         $   2,444       $  4,498
                                                                                  ==========      ========
</TABLE>

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

                                       5

<PAGE>



                             BIORELIANCE CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

(1)  DESCRIPTION OF THE BUSINESS

     BioReliance Corporation (the "Corporation") is a contract research
organization providing nonclinical testing and contract manufacturing services
for biologics 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 the 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, 1997 and 1998 include all
normal and recurring adjustments which 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, 1997 and 1998 are not necessarily
indicative of the results for the entire year ending December 31, 1998.

(3)  REVENUE RECOGNITION

     Revenue recognized from commercial contracts, which are principally
fixed-price or fixed-rate, is recorded using the percentage-of-completion or the
completed-contract method, depending on the nature and duration of the contract.
The percentage-of-completion method is used for nonclinical testing services
that are completed generally in greater than three days and for manufacturing
contracts that do not provide for delivery of product. The completed-contract
method is used for nonclinical testing services that are completed generally
within three days and for contract manufacturing services that provide for
delivery of product. The percentage of completion is determined using total
project costs as a cost input measure. Revenue recognized from government
contracts, which are principally cost-plus-fixed-fee, is recognized in an amount
equal to reimbursable costs plus a pro-rata portion of the earned fee. Losses,
if any, are provided for at the time at which they become known.


                                       6

<PAGE>



(4)   FOREIGN CURRENCY TRANSLATION

     The accounts of foreign subsidiaries are measured using local currency as
the functional currency. Assets and liabilities of these subsidiaries are
translated into U.S. dollars at period-end exchange rates, and income and
expense accounts are translated at average monthly exchange rates. Net gains and
losses resulting from such translations are included in comprehensive income and
are accumulated in a separate component of stockholders' equity.

(5)  NET INCOME PER SHARE

    In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128").
This statement replaces the presentation of primary earnings per share ("EPS")
with a presentation of basic EPS, and requires dual presentation of basic and
diluted EPS on the face of the income statement. Basic EPS excludes dilution and
is computed by dividing income available to common shareholders by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity. Dilutive securities are excluded from the computation in periods in
which they have an anti-dilutive effect, and net income available to common
stockholders is adjusted accordingly for the effect of cumulative dividends on
Convertible Preferred Stock. The Corporation adopted this statement during the
fourth quarter of 1997, as required. Accordingly, all prior period EPS data has
been restated as required by SFAS 128.

    In February 1998, the SEC issued Staff Accounting Bulletin 98 ("SAB 98").
SAB 98 rescinded SAB 83, which required common shares and common share
equivalents issued or granted by the Corporation at prices below the public
offering price during the twelve months immediately preceding the filing of the
Corporation's initial Registration Statement and through the effective date of
such Registration Statement to be calculated using the treasury stock method
based upon the estimated initial public offering price, and to be included for
all periods presented regardless of whether they are dilutive. The Corporation
has adopted SAB 98 and, accordingly, all EPS data has been restated as required.

    The following is a reconciliation between net income and net income
available to common stockholders used in the numerator for basic EPS for the
three and six months ended June 30:

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED            SIX MONTHS
                                                    JUNE 30,               ENDED JUNE 30,
                                                1997        1998          1997        1998
                                                ----        ----          ----        ----
                                                              (IN THOUSANDS)
<S><C>
Net income...............................    $ 1,088      $ 1,318       $1,778      $2,324
Assumed dividends paid to preferred
stockholders.............................        (35)         ---          (70)        ---
                                             --------     -------       -------     ------
Net income available to common stockholders  $ 1,053      $ 1,318       $1,708      $2,324
                                             =======      =======       ======      ======
</TABLE>

                                       7

<PAGE>



    The following is a reconciliation between net income available to common
stockholders and net income available per common and common equivalent
stockholders used in the numerator for diluted EPS for the three and six months
ended June 30:

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED           SIX MONTHS
                                                JUNE 30,              ENDED JUNE 30,
                                             1997       1998         1997        1998
                                           -------    -------      -------     ------
                                                          (IN THOUSANDS)
<S><C>
Net income available to common
stockholders.............................   $1,053     $1,318       $1,708      $2,324
Assumed dividends paid to preferred
stockholders.............................       35        ---           70         ---
                                            ------     ------       ------      ------
Net income available to common and
common equivalent stockholders...........   $1,088     $1,318       $1,778      $2,324
                                            ======     ======       ======      ======
</TABLE>

    The following is a reconciliation between the weighted average common stock
outstanding denominator used in basic EPS and the weighted average common and
common equivalent shares outstanding denominator used in diluted EPS for the
three and six months ended June 30:

<TABLE>
<CAPTION>
                                             THREE MONTHS            SIX MONTHS
                                            ENDED JUNE 30,         ENDED JUNE 30,
                                             1997     1998        1997       1998
                                           -------  -------     -------    ------
                                                       (IN THOUSANDS)
<S><C>
Weighted average common stock outstanding      369    7,799         357      7,766
Preferred stock, as if converted.........    4,783      ---       4,788        ---
Stock  options, as if converted..........      695      452         695        570
                                             -----    -----       -----      -----
Weighted average common and common
equivalent shares outstanding............    5,847    8,251       5,840      8,336
                                             =====    =====       =====      =====
</TABLE>

(6)  INITIAL PUBLIC OFFERING

     On August 1, 1997, the Corporation completed its initial public offering of
2,102,014 shares of its common stock (plus an additional 297,986 shares by a
selling stockholder) at an offering price of $15.00 per share. On August 7,
1997, the underwriters exercised an over-allotment option to purchase an
additional 315,302 shares. The net proceeds to the Corporation from the public
offering and the exercise of the over-allotment option by the underwriters,
after deducting the underwriting discounts and commissions and offering expenses
payable by the Corporation, were approximately $32.5 million. Upon the closing
of the offering, all outstanding shares of the Corporation's convertible
preferred stock were automatically converted into 4,778,072 shares of common
stock.

(7)  COMPREHENSIVE INCOME

     In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"). This statement establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. Comprehensive income is


                                       8

<PAGE>


defined as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources. SFAS 130
requires that all components of comprehensive income be reported in the
financial statements in the period in which they are recognized. The statement
requires reclassification of earlier statements in comparative financial
statements and is effective for fiscal years beginning after December 15, 1997.

     The Corporation adopted this statement during the first quarter of 1998.
Total comprehensive income amounted to $735,000 for the quarter ended June 30,
1998 and $819,000 for the quarter ended June 30, 1997. For the six months ended
June 30, 1998 and 1997, total comprehensive income amounted to $1,017,000 and
$62,000, respectively.

(8)   CAPITAL LEASE OBLIGATIONS

     In April 1998, the Corporation entered into certain third-party leasing
and subleasing arrangements relating to the construction of new laboratory
space. These arrangements require the Corporation to make certain noncancelable
lease payments over the next twenty years and to guarantee indebtedness of
approximately $4.4 million. The terms of the arrangements require that the
leases be accounted for as capital leases. The assets underlying such
capitalized leases are included with the Corporation's owned property and
equipment and are summarized as follows as of June 30, 1998 (in thousands):

             Land                                      $  720
             Construction in progress                   3,554
                                                        -----
             Total assets at cost                       4,274
             Less accumulated depreciation                ---
                                                       ------
             Net assets                                $4,274
                                                       ======

     The future minimum lease payments under the capital lease obligations at
June 30, 1998 were as follows (in thousands):

     Year ending December 31:

             1998                                            $   ---
             1999                                                260
             2000                                                389
             2001                                                389
             2002                                                389
             Thereafter                                        7,079
                                                             -------
         Total minimum lease payments                          8,506
         Less amount representing interest                    (4,232)
                                                             -------
         Present value of minimum lease payments               4,274
         Less current portion                                    (20)
                                                             -------
         Long-term portion                                   $ 4,254
                                                             =======

                                       9

<PAGE>


     Beginning July 1, 1998, the Corporation was committed to make additional
noncancelable payments totaling approximately $3.3 million including interest
over the next twenty years under terms outlined in the aforementioned
agreements. Additionally, the Corporation's obligation for future lease payments
will increase as additional costs are incurred for the construction of the
space. Such additional amounts are estimated to total $1.6 million including
interest.

(9)  NEW ACCOUNTING PRONOUNCEMENTS

       In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivatives Instruments and for Hedging Activities." SFAS
No. 133 requires all derivatives to be recorded on the balance sheet at fair
value and establishes "special accounting" for the following three different
types of hedges: hedges of changes in the fair value of assets, liabilities or
firm commitments; hedges of the variable cash flows of forecasted transactions;
and hedges of foreign currency exposures of net investments in foreign
operations. SFAS No. 133 is effective for years beginning after June 15, 1999,
with earlier adoption permitted. The Corporation believes that the effect of
adoption of SFAS No. 133 will not be material.


                                       10

<PAGE>



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

         The Private Securities Litigation Reform Act provides a "safe harbor"
for forward-looking statements. Certain statements included in this Quarterly
Report on Form 10-Q are forward-looking. Such forward-looking statements, such
as those related to planned capital expenditures and expansion of operations, in
addition to information contained in Management's Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this Form 10-Q,
are based on the Corporation's current expectations and are subject to a number
of risks and uncertainties that could cause actual future results to differ
significantly from results expressed or implied in any forward-looking
statements contained herein or that may be made from time to time by, or on
behalf of, the Corporation. Information presented in this Form 10-Q should be
read in conjunction with the Corporation's Annual Report on Form 10-K filed with
the Securities and Exchange Commission, including the risk factors contained
therein.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1998 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1997

         Revenue was $12.7 million in the three months ended June 30, 1998, an
increase of 1% over revenue of $12.6 million in the three months ended June 30,
1997. The increase was primarily attributable to strong revenues in the
BioSafety division, offset by declines elsewhere.

         Cost of sales was $6.6 million in the three months ended June 30, 1998,
a decrease of 15% over cost of sales of $7.6 million in the three months ended
June 30, 1997. The decrease was attributable to a favorable mix variance wherein
higher margin BioSafety division revenues made significant additional
contribution.

         Selling, general and administrative expense was $3.8 million in the
three months ended June 30, 1998, an increase of 41% over selling, general and
administrative expense of $2.7 million in the three months ended June 30, 1997.
This increase was due primarily to increased legal and accounting
infrastructure, information systems investment, labor and professional services
expenses.

         Research and development expense was $347,000 in the three months ended
June 30, 1998, an increase of 7% over research and development expense of
$323,000 in the three months ended June 30, 1997. The increase primarily was
attributable to continuing expansion of biotesting assay development work.

         Operating income was $1.9 million in the three months ended June 30,
1998, a decrease of 4% over operating income of $2.0 million in the three months
ended June 30, 1997. The decrease primarily was due to the minor excess of
expenditure growth over the growth of net income.


                                       11

<PAGE>



         The Corporation earned net interest income and other income of $222,000
in the three months ended June 30, 1998, compared to net interest and other
expense of $117,000 in the three months ended June 30, 1997. The improvement was
due primarily to interest earned on IPO cash investments not present in the
quarter ended June 30, 1997.

         The provision for income taxes was $813,000 in the three months ended
June 30, 1998, compared to a provision of $776,000 in the three months ended
June 30, 1997. The effective tax rate was 38% for the three months ended June
30, 1998 and 42% for the three months ended June 30, 1997. The tax rate declined
primarily due to a lower proportion of high tax rate earnings from Germany.

         Net income was $1.3 million in the three months ended June 30, 1998, an
increase of 21% over net income of $1.1 million in the three months ended June
30, 1997. The increase primarily was due to increased gross margin which can be
attributed to favorable mix variances arising in constituent revenues, and an
increase in interest income, offset by increased operating expenses.

SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1997

         Revenue was $24.6 million in the six months ended June 30, 1998, an
increase of 1% over revenue of $24.4 million in the six months ended June 30,
1997. The increase was attributable to the strength of the BioTesting business
in the U.S. and the establishment of a new BioTesting business in Germany.

         Cost of sales was $13.8 million in the six months ended June 30, 1998,
a decrease of 8% over cost of sales of $15.0 million in the six months ended
June 30, 1997. The decrease was attributable primarily to mix variances arising
in constituent revenues and a variety of operating efficiencies as offset by
higher costs in establishing U.S. manufacturing, and other business
developments.

         Selling, general and administrative expense was $6.7 million in the six
months ended June 30, 1998, an increase of 26% over selling, general and
administrative expense of $5.3 million in the six months ended June 30, 1997.
This increase was due to increased information systems investment, labor and
professional services and the additional administrative costs of supporting a
public company.

         Research and development expense was $733,000 in the six months ended
June 30, 1998, an increase of 17% over research and development expense of
$626,000 in the six months ended June 30, 1997. The increase primarily was
attributable to continuing development and expansion of new biotesting assays.

         Operating income was $3.5 million in the six months ended June 30,
1998, an increase of 2% over operating income of $3.4 million in the six months
ended June 30, 1997. The increase primarily was due to the leverage achieved
from the increase in revenue on a high fixed cost structure.


                                       12

<PAGE>



         The Corporation earned net interest and other income of $417,000 in the
six months ended June 30, 1998, compared to net interest and other expense of
$317,000 in the six months ended June 30, 1997. The improvement was due
primarily to interest income earned in 1998 on the investment of proceeds
received from the August 1997 Initial Public Offering.

         The provision for income taxes was $1.5 million in the six months ended
June 30, 1998, compared to a provision of $1.3 million in the six months ended
June 30, 1997. The effective tax rate was 40% for the six months ended June 30,
1998 and 42% for the six months ended June 30, 1997. The tax rate declined
primarily due to a lower proportion of high tax rate earnings sourced from
Germany compared to earnings sourced from elsewhere.

         Net income was $2.3 million in the six months ended June 30, 1998, an
increase of 31% over net income of $1.8 million in the six months ended June 30,
1997. The improvement primarily was due to an increase in revenues, an increase
in gross margin primarily attributable to favorable mix variances, and an
increase in interest income.

LIQUIDITY AND CAPITAL RESOURCES

         At June 30, 1998, the Corporation had cash, cash equivalents and
marketable securities of $31.0 million, compared to cash, cash equivalents and
marketable securities of $33.8 million at December 31, 1997.

         The Corporation used cash flows in operations of $810,000 in the six
months ended June 30, 1998, compared to a generation of $3.9 million in the six
months ended June 30, 1997. Net income, as adjusted for depreciation and
amortization, loss on disposal of fixed assets, and deferred income taxes,
provided $3.9 million and $4.6 million in the six months ended June 30, 1998 and
1997, respectively. The decrease in adjusted net income was due primarily to the
absence of a deferred income tax adjustment in 1998 which more than offset a
higher net income in the first half of 1998 compared to the same period in 1997.
Changes in current assets and liabilities used cash of $4.6 million and provided
cash of $629,000 in the six months ended June 30, 1998 and 1997, respectively.

         Working capital increased to $40.0 million at June 30, 1998, compared
to $38.1 million at December 31, 1997. The net increase in working capital
primarily was due to the reinvestment of earnings during the period, as
reflected in payment of accounts payable and employee related accruals and an
investment in accounts receivable, prepayments and other current assets. Such
items are offset by a decrease in marketable securities.

         The Corporation spent $1.5 million for capital expenditures for the six
months ended June 30, 1998, compared to $1.3 million in the six months ended
June 30, 1997 and the six months ended June 30, 1998, respectively. The increase
in capital expenditures reflects the Corporation's investment in information
systems and expansion of the Corporation's laboratory facilities and related
equipment.


                                       13

<PAGE>


         In April 1998, the Corporation entered into a lease agreement with a
developer to construct and lease a facility adjacent to one of the Corporation's
existing facilities in Rockville, Maryland. The new facility will be used as the
Corporation's headquarters to consolidate existing research and development and
administrative activities, and to provide expanded capacity for Analytical
Services.

         In April 1998, the Corporation entered into certain third-party leasing
and subleasing arrangements relating to the construction of the exterior shell
of new biomanufacturing space. These arrangements require the Corporation to
make certain net noncancelable lease payments totaling approximately $11.8
million over the next twenty years and to guarantee indebtedness of
approximately $4.4 million. In addition, the Company intends to incur
approximately $20.0 million in leasehold improvements and laboratory equipment
relating to the new laboratory and the new headquarters facilities. The terms of
the arrangements require that the leases be accounted for as capital leases. The
assets underlying such capitalized leases are included with the Corporation's
owned property and equipment as of June 30, 1998. Property and equipment at June
30, 1998 includes approximately $4.3 million related to such leases. The related
obligation is included in the Corporation's liabilities at June 30, 1998.

         The Corporation financed the acquisition of BIOMEVA in July 1996 and
obtained additional funds for working capital and expansion of its business
through a promissory note with NationsBank, N.A. ("NationsBank") in the amount
of $1.8 million and a subordinated note from Sidney R. Knafel, the Corporation's
largest stockholder, in the amount of $1.9 million, which was repaid on March
28, 1997. The NationsBank promissory note has a maturity date of June 30, 1999,
requires monthly principal payments of $30,000, and at June 30, 1998,
approximately $1.1 million was outstanding on the note. The note bears interest
at the same rate as the Mortgage Loan. At June 30, 1998, the interest rate was
6.7%.

         In December 1994, the Corporation's existing loan agreement with
NationsBank was modified to provide term loan financing in the amount of
$4,300,000 with a maturity date of November 30, 1999 (the "Mortgage Loan"). In
October 1997 and on April 1, 1998, the Mortgage Loan was modified and restated
to release the foreign subsidiaries from joint and several liability, to include
all the U.S. subsidiaries as joint and several makers, to release the liens
created by the first security interest in all of its tangible and intangible
assets, and to modify the interest rate terms. The Mortgage Loan is secured by a
deed of trust on the Company's facility in Rockville, Maryland. In addition to a
principal payment of $30,000 per month, the note bears interest at the London
Inter-Bank Offering Rate ("LIBOR") plus the applicable LIBOR Rate Additional
Percentage ("LIBOR Rate Option"). The LIBOR Rate Option ranged from 0.85% to
2.15% depending on the Company achieving certain funded debt to EBITDA ratios.
At June 30, 1998 the applicable interest rate was 6.7%. At June 30, 1998,
approximately $3.1 million was outstanding on the loan.

         In May 1995, the Company entered into an interest rate swap agreement
whereby the variable interest rate of the Mortgage Loan was effectively
converted into debt with a fixed rate of 9.05% per annum. Amounts to be paid or
received under the interest rate swap agreement are recognized as interest
income or expense in the periods in which they accrue and are recorded in


                                       14


<PAGE>



the same category as that arising from the Mortgage Loan. This agreement expires
on November 30, 1999. The effect of the interest rate swap agreement on interest
expense was not material in the quarters ended June 30, 1997 and 1998.

         In addition to the Mortgage Loan, the Company has entered into a
revolving loan agreement with NationsBank with a maximum available balance not
to exceed $1,000,000. Amounts to be paid include interest only on the unpaid
principal sum, payable monthly, and unless paid sooner, the unpaid principal
sum, together with unpaid accrued interest payable in full on May 31, 1998. The
note bears interest at the same rate as the Mortgage Loan. The Company has also
agreed to pay a quarterly commitment fee equaling 0.25% of the average unused
portion of the revolving bank loan. At June 30, 1998, no amounts were
outstanding under the facility. This line of credit expires in May 1999.

         The various agreements with NationsBank are cross collateralized and
are secured by a deed of trust on one of the Corporation's facilities in
Rockville, Maryland. The agreements require the Corporation to meet certain
financial and restrictive covenants, including maintaining certain tangible net
worth levels and funded debt to equity ratios.

         At December 31, 1997, the Corporation had formulated capital spending
plans of approximately $25 million, primarily for biomanufacturing facilities,
the consolidation of headquarter and certain biotesting facilities and the
continuing development of computer information systems. To the extent these
plans are confirmed, if external funds are available on favorable terms and
conditions, a significant proportion of the potential expenditure may be
financed from third parties.

         At June 30, 1998, the Corporation had commitments to spend
approximately $253,000 for computer systems, software and integration related to
the development of new information and telecommunication systems, approximately
$577,000 for building and leasehold improvement costs, and approximately $97,000
for laboratory equipment.

         The Corporation expects to continue expanding its operations through
internal growth, geographic expansion and possible strategic acquisitions. The
Corporation expects that such activities will be funded from existing cash, cash
equivalents and marketable securities; cash flows from operations; and bank
borrowings and lease financing. Although the Corporation has no agreements or
arrangements in place with respect to any future acquisition, there may be
acquisition or other growth opportunities 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. There can be no
assurances that such financing will be available on terms acceptable to the
Corporation.

         Based on its current operating plan, the Corporation believes that
available liquid resources are sufficient to meet its foreseeable cash needs.


                                       15

<PAGE>



FOREIGN CURRENCY

         The accounts of foreign subsidiaries are measured using local currency
as the functional currency. Assets and liabilities of these subsidiaries are
translated into U.S. dollars at period-end exchange rates, and income and
expense accounts are translated at average monthly exchange rates. Net gains and
losses resulting from such translations are included in comprehensive income and
are accumulated in a separate component of stockholders' equity.

YEAR 2000

         An issue affecting the Corporation and most other corporations is
whether computer systems will recognize and process dates beginning with the
year 2000. If not corrected, many computer applications could fail or create
erroneous results. The Corporation is currently in the process of evaluating its
computer software, hardware and other equipment incorporating computer
applications to determine whether or not modifications or contingency plans will
be required to avoid problems related to the year 2000. The Corporation has
formed a task force to coordinate its year 2000 assessment. The Corporation's
successful avoidance of year 2000 problems will depend in part on the year 2000
efforts undertaken by its vendors and other entities with which the Corporation
interacts. In addition to evaluating the Corporation's internal systems for
potential year 2000 issues, the task force is taking steps to determine the
status of these other entities' year 2000 compliance. At this time, the
Corporation has not yet determined the cost of evaluating its year 2000 issues
or of making any necessary modifications or contingency plans, but, based on the
information it currently has, the incremental costs are not presently expected
to materially adversely affect the Corporation's financial condition.


                                       16

<PAGE>



                          PART II -- OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

           None

ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS

           As of June 30, 1998 the Corporation had used approximately $3.2
million of the net proceeds from the Corporation's initial public offering
toward debt repayment and purchases of laboratory equipment and information
systems hardware and software.

           At June 30, 1998, approximately $26.5 million of the net proceeds of
the initial public offering were invested in short-term United States government
securities, and the balance was invested in money market funds pending the
purchase of additional United States government securities or in other operating
accounts of the Corporation.

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 May 21, 1998, the
shareholders reelected Messrs. Louttit and Gedale as directors of the
Corporation to terms expiring in 2001, and ratified the appointment of
PricewaterhouseCoopers LLP (formerly Price Waterhouse LLP) as the Corporation's
auditors.

ITEM 5.    OTHER INFORMATION

           None

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a)  Exhibits

                The documents required to be filed as exhibits to this report
under Item 601 of Regulation S-K are listed in the Exhibit Index included
elsewhere in this report, which list is incorporated herein by reference.

           (b)  Reports on Form 8-K

                None


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<PAGE>


                                   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 14, 1998

                                           BioReliance Corporation
                                                  (Registrant)

                                           By __________________________________

                                           Capers W. McDonald
                                           President and Chief Executive Officer

                                           By __________________________________

                                           Michael R.N. Thomas
                                           Vice President,
                                           Chief Financial Officer and Treasurer
                                            (Principal Financial and
                                             Accounting Officer)

                                       18

<PAGE>



                                  EXHIBIT INDEX

EXHIBIT NO.             DESCRIPTION

10.32                   BioReliance Corporation 1997 Incentive Stock Plan
                        (As Adopted May 28, 1997 and Amended and Restated
                        September 24, 1997 and May 21, 1998)


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