<PAGE>1                          UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549

                                    FORM 10-K
                   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) 
                      OF THE SECURITIES EXCHANGE ACT OF 1934
 
   For the fiscal year ended June 30, 1998      Commission file number 0-11580

                         PHARMAKINETICS LABORATORIES, INC.
              (Exact Name of Registrant as Specified in its Charter)

                   Maryland                            52-1067519  
           (State of Incorporation)       (I.R.S. Employer Identification No.)

                               302 West Fayette Street
                              Baltimore, Maryland 21201
                       (Address of Principal Executive Offices)    

          Registrant's Telephone Number, Including Area Code  (410) 385-4500

             Securities registered pursuant to Section 12(b) of the Act:
                                        None                 
                               (Title of each class)

             Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, $.005 par value
                                 (Title of Class)

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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K [      ].

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a Court.  Yes __X__ No _____  

As of September 4, 1998, 2,476,129 shares of Common Stock of PharmaKinetics
Laboratories, Inc. were outstanding and the aggregate market value of Common
Stock (based upon the average bid and asked prices as reported on the OTC
Bulletin Board on that date) held by non-affiliates was $9,585,111.

Portions of the registrant's definitive proxy statement for its 1998 annual
meeting of stockholders, to be filed pursuant to Regulation 14A on or prior to
October 28, 1998, are incorporated into Part III of this report.
</PAGE>


<PAGE>2
                                     PART I

ITEM 1.  BUSINESS

     PharmaKinetics Laboratories, Inc. (the "Company") is a contract research
organization ("CRO") providing a range of clinical research and development
services to the worldwide pharmaceutical industry and to the biotechnology
industry in the development of prescription and non-prescription drug
products. The Company also provides bioanalytical laboratory services and
management and monitoring of clinical trials conducted at remote sites,
including ancillary services such as protocol and case report form design,
data management and biostatistics and regulatory consulting.  The Company has
historically focused its business development efforts on generic
pharmaceutical companies in the United States ("U.S.") and Canada, and has
more recently expanded its clients to include several of the innovator
pharmaceutical and biotechnology companies in the U.S. and Europe.

     The Company pursues various business opportunities in the CRO industry:
(1) providing services to generic drug companies - primarily in the area of
bioequivalence/bioavailability studies which include both clinical and
laboratory services; (2) providing Phase I clinical trials - primarily safety
studies on new drugs - to the innovator pharmaceutical industry and to
biotechnology firms; (3) providing bioanalytical laboratory services primarily
to the innovator drug companies - this involves the analysis of biological
samples, typically blood samples, which are the result of trials conducted at
sites around the country and sent to the Company's laboratory for analysis;
and (4) providing project management and monitoring services to both generic
and innovator pharmaceutical firms - overseeing the conduct of trials
conducted at remote sites, typically on patients.  The Company's project
management expertise lies in management of smaller trials conducted at fifteen
or fewer sites with 200 - 400 patients rather than the very large trials more
typically conducted by the large global CROs.

Recent Developments

     In December 1997, the Company initiated a strategic working relationship
with Aster.Cephac S.A., a  French CRO, in connection with a private placement
of $5 million of securities to investors, including certain affiliates of
Aster.Cephac S.A. and CAI Advisors & Co. (collectively the "Purchasers").  The
two entities have entered into a Technology Sharing Agreement under which both
have agreed to share analytical methodology in an effort to expand the
bioanalytical services offered by each entity.  The strategic partnership
enables the Company to have a global presence and provides access to the
European markets. 

     On December 23, 1997, the Company issued 833,300 shares of a newly
created Class A Convertible Preferred Stock and warrants to purchase 1,250,000
shares of the Company's Common Stock, and entered into a Registration Rights
Agreement in connection therewith, to the Purchasers.  The securities were
issued pursuant to a Preferred Share and Warrant Purchase Agreement dated as

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<PAGE>3

of December 4, 1997.  The Purchasers beneficially own approximately 41% of the
Company's voting securities without giving effect to the possible exercise of
warrants, or approximately 54% of the Company's voting securities if all the
warrants are exercised.

     On April 6, 1998, the Company's stockholders approved a five-to-one
reverse split of the Company's Common Stock, the change of authorized shares
of the Company's Common Stock to 10,000,000 shares, par value $0.005 per
share, and the reduction of capital for payment of fractional shares and
amendment of the Company's Charter in connection therewith.  The reverse
split, which became effective at the close of business on April 17, 1998, did
not affect the rights and privileges of holders of Common Stock, either before
or after the reverse split.  The Company did not issue fractional shares as a
result of the reverse split, and each fraction of a share was exchanged for
cash.  The Company's capital was reduced by the amount of cash paid for
fractional shares, the total payment of which was immaterial.

     The effect of the reverse stock split has been retroactively applied to
prior periods presented herein.

Services

     Clinical Evaluation Services 

     The Company offers complete services for the testing of generic
pharmaceutical products to determine bioavailability and bioequivalency. 
 
     Bioavailability testing determines the rate and extent to which an active
drug ingredient is absorbed from a drug product and becomes available at the
site of drug action in the human body.  Typically, the determination of
bioavailability is performed through the collection and laboratory analysis of
blood, urine or other specimens.  However, for certain drug products which are
not absorbed or are minimally absorbed, for example ointments and creams, the
determination of bioavailability must be performed using special procedures
and equipment.  Drug manufacturers are required to include information
obtained from human testing in detailed laboratory and clinical studies as
part of applications for approval to market certain new drug products,
submitted to regulatory authorities, such as the United States Food and Drug
Administration ("FDA").  Bioavailability data is also used to evaluate the
adequacy of proposed labeling recommendations regarding dosage and
administration of a drug product, to define its profile in order to evaluate
product reformulations or changes in recommended dosage strength or dosage
regimens, and to evaluate and substantiate controlled release claims.

     Bioequivalency testing compares the bioavailability of similar generic
and brand name drugs.  The FDA has established bioequivalency requirements for
certain drug products or classes of drug products which are intended to be
interchangeable.  As a result, bioequivalency data is required in the case of
new formulations of certain drug products developed by generic pharmaceutical


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<PAGE>4

manufacturers for marketing upon expiration of patents on brand name drugs
previously found to be safe and effective.  Bioequivalency testing is also
required for certain drug products in the case of new formulations or new
dosage forms intended to be used by the manufacturer which obtained the
original approval.

     The Company also conducts Phase I clinical trials - primarily safety
studies on new drugs - for the innovator pharmaceutical industry and for
biotechnology firms.

     The clinical portions of studies are conducted pursuant to testing plans,
called protocols,  which are designed to reflect the specific characteristics
of the active drug ingredients being tested.  The Company employs experts in
medicine, pharmacology, analytical chemistry, statistical analysis and data
processing to design, evaluate and execute protocols according to current
scientific standards and governmental regulatory requirements.

     Protocols for the Company's clinical studies are either written by the
Company's staff or provided by the client.  Once developed, a protocol is
submitted for approval to the Company's Institutional Review Board, which
independently evaluates and, if necessary, requests revisions of the protocol
in order to safeguard the rights and welfare of the human subjects.  The
current Institutional Review Board consists of one affiliated (non-voting)
individual and ten non-affiliated (voting) individuals, four of whom are
medical doctors (one of these serving as chairman), one pharmacologist, one
clergy, and four representatives of the community.

     For each clinical study the Company uses volunteer study participants. 
The availability of sufficient numbers of qualified and willing study
participants has at times been, and could in the future be, a limitation on
the Company's business.  In 1997 the Company opened a  new screening site in
suburban Baltimore.  The site is close to two colleges and has expanded the
Company's access to healthy volunteers.  

     Each prospective participant is screened at a Company facility and
examined by a physician or physician's assistant employed by the Company. 
Prior to the commencement of a study, the Company's Medical Director or
another qualified individual meets with the study participants to explain the
purpose of the study and the fact that research is involved, the procedures to
be followed and the expected duration of the testing, and to provide them with
other information, including a description of any foreseeable risks or
discomforts deemed relevant, to enable them to make an informed decision as to
whether or not they want to participate in the study.  A written consent form
approved by the Company's Institutional Review Board for each study,
acknowledging such disclosures, is signed by each participant prior to
initiation of the study.

     Study participants usually arrive at the Company's controlled environment
facility the night before testing is to begin.  To maximize reliability of the


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<PAGE>5

test data, all study participants are immediately placed on a strictly
supervised schedule in which all of their activities, including eating,
drinking, sleeping, recreation and type of clothing, are tightly regulated. 
Testing, which can last for as long as four weeks, includes physical
observation by medical personnel and a strict schedule of collecting blood,
urine and other specimens which are subjected to drug analysis in the
Company's analytical chemistry laboratory or by other arrangements of the
client.

     Bioanalytical Laboratory Services

     Laboratory analysis determines the amount of drug present in each of the
hundreds of biological specimens generated by a given study.  Chemists extract
the drug and metabolites (compounds into which a drug is broken down inside
the body) from a specimen using a mixture of solvents or a specific extraction
column.  Extracted samples are then processed by the Company's analytical
instrumentation, including high performance liquid chromatography, and gas
chromatography interfaced with various methods of detection, including mass
spectrometry.  These instruments, HPLC, HPLC/MS/MS, GC and GC/MS, separate the
drug and metabolites from any other remaining substances and have the ability
to detect and quantify as little as billionths of a gram of material.  This
process of extraction and detection is called an assay method.  Each drug
requires the development of a unique assay method, the accuracy and precision
of which must be documented according to current scientific standards to meet
FDA requirements.  The Company's research and development group develops and
validates these unique assay methods. 

     The results of these assays are entered into computers maintained by the
Company to show change in the concentration of drug in the blood over time and
to determine statistically whether the product being evaluated is equivalent
to the already marketed product or other reference material.  A detailed
report on the results of the analysis is prepared by Company scientists and
submitted to the client requesting the test.  Following the system used by the
FDA for granting approval to market new drug products, the pharmaceutical
manufacturer may use the report to support either a New Drug Application
("NDA") or, in the case of generic drugs, an Abbreviated New Drug Application
("ANDA").  In the event that the study results show the product is not
bioequivalent, they may provide the basis for additional development work and
further bioequivalence studies or the manufacturer may discontinue its  NDA or
ANDA application.

     The Company also provides bioanalytical laboratory services to innovator
drug companies conducting clinical trials around the country.  Samples from
these trials are sent to the Company's laboratory for analysis.

     Through July 31, 1995, the Company also offered a complete range of
stability services for finished dosage form pharmaceuticals.  The services
were discontinued because they did not fit strategically with the Company's
base business.  


                                    -5-
</PAGE>

<PAGE>6

     Clinical Trial Management and Monitoring

     The Company provides project management and monitoring of Phase II, III
and IV clinical trials conducted at remote sites.  In the course of such
projects the Company's personnel are involved in site and investigator
recruitment, patient enrollment, and study monitoring and data collection.

     In studies where the Company is providing project management and/or
monitoring services the drug is administered to patients by physicians,
referred to as investigators, at hospitals, clinics, or other locations,
referred to as sites.  Potential investigators may be identified by the drug
sponsor or by the Company.  The Company generally solicits investigators'
participation in the study.  The trial's success depends on the successful
identification and recruitment of investigators with an adequate base of
patients who satisfy the requirements of the study protocol.

     The investigators find and enroll patients suitable for the study.  The
speed with which trials can be completed is significantly affected by the rate
at which patients are enrolled.  The Company's personnel closely track the
rate of patient enrollment and provide input necessary to ensure that the
planned schedule of enrollment is maintained.  Prospective patients are
required to review information about the drug and its possible side effects,
and sign an Informed Consent form to record their knowledge and acceptance of
potential side effects.  Patients also undergo a medical examination to
determine whether they meet the requirements of the study protocol.  Patients
then receive the drug and are examined by the investigator as specified by the
study protocol.

     As patients are examined and tests are conducted in accordance with the
study protocol, data are recorded on Case Report Forms (CRFs) and laboratory
reports.  The data are collected from study sites by specially trained persons
known as monitors.  The Company's monitors visit sites regularly to ensure
study protocol adherence, that the CRFs are completed correctly, and that all
data specified in the protocol are collected.  The monitors take completed
CRFs to be reviewed for consistency and accuracy before their data is entered
into an electronic database.

     Regulatory Affairs Services

     The Company provides comprehensive regulatory services to pharmaceutical
and biotechnology companies including: representation with state formularies,
pre-audit facility inspections,  NDA and ANDA report writing, data assessment,
report and literature review, protocol design and development, full
statistical data analysis, and liaison with the FDA.

Liability Exposure

     The Company's clinical research services center on the testing of new and
generic (already marketed) drugs on human volunteers pursuant to a study


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<PAGE>7

protocol.  Clinical research involves a risk of liability for personal injury
or death to participants due, among other reasons, to possible unforeseen
adverse side effects or improper administration of the drug.

     The Company believes that the risk of liability to participants in
clinical research is mitigated by various regulatory requirements, including
the role of IRBs and the need to obtain each participant's informed consent. 
The FDA requires that each human clinical trial be reviewed and approved by
the IRB at each study site.  The Company has its own independent IRB.  This is
an independent committee that includes both medical and non-medical personnel
whose major purpose is to protect the interests and well being of individuals
enrolled in the trial.  After the trial begins, the IRB monitors compliance
with the protocol and measures designed to protect participants, such as the
requirement to obtain the informed consent. 

     To reduce its potential liability, the Company seeks to obtain indemnity
provisions in its contracts with clients and with investigators hired by the
Company on behalf of its clients.  These indemnities generally do not,
however, protect the Company against certain of its own actions such as those
involving negligence.  Moreover, these indemnities are contractual
arrangements that are subject to negotiation with individual clients and the
terms and scope of such indemnities can vary from client to client and from
study to study.  Finally, the financial performance of these indemnities is
not secured so that the Company bears the risk that an indemnifying party may
not have the financial ability to fulfill its indemnification obligations. 
The Company could be materially and adversely affected if it were required to
pay damages or incur defense costs in connection with a claim that is outside
the scope of indemnity or where the indemnity, although applicable, is not
performed in accordance with its terms.

     The Company itself does not maintain professional malpractice insurance
related to its testing procedures as its medical personnel are required to
carry such insurance, and the Company is not a provider of medical care and
related services.  The Company maintains a general liability policy which
provides coverage with a limit of $1,000,000 for each occurrence, an umbrella
liability policy which has a limit of $5,000,000 for each occurrence in excess
of primary, and a workmen's compensation liability policy which provides
coverage of $1,000,000.  There can be no assurance that this insurance
coverage will be adequate, or that insurance coverage will continue to be
available on terms acceptable to the Company.

Government Regulation

     The Company's services are conducted for pharmaceutical and biotechnology
companies to support their applications for approval to market new "branded"
or bioequivalent generic drug products.  These companies, and therefore the
Company, are subject to extensive regulation by government authorities. 
Regulatory proceedings which  adversely affect the Company's clients could 
adversely affect the Company's business.  The repeal or significant alteration
of some or all of the laws or regulations requiring testing of the type

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<PAGE>8

performed by the Company could have a material adverse effect on the Company's
business.  However, regulatory changes which require additional or more
complex testing to be performed in support of the drug approval process could
significantly enhance the Company's business.  Management believes that
legislation and regulation, on balance, have a favorable impact on the demand
for its services by providing sponsors and  manufacturers of new drugs with
additional requirements which increase the need for outsourcing.

     The services provided by the Company and the activities of its clients
are ultimately subject to FDA regulation in the U.S. and comparable agencies
in other countries.  The Company is obligated to comply with FDA requirements
governing activities such as obtaining informed consents, verifying
qualifications of investigators, complying with Standard Operating Procedures
(SOPs), reporting adverse reactions to drugs, and maintaining thorough and
accurate records.  The Company must maintain source documents for each study
for specified periods.  Such documents are frequently reviewed by the study
sponsor during visits to the Company's facility and may be reviewed by the FDA
during audits.  Non-compliance with FDA regulations can result in the
disqualification of data collected during a study.

     The Company is subject to regulation and inspection by the Baltimore City
Health Department (for the Maryland State Department of Health and Mental
Hygiene), the Center for Disease Control of the United States Department of
Health and Human Services and other state and local agencies where the
Company's facility is located.  The Company has not experienced any
significant problems to date in complying with the applicable requirements of
such agencies and does not believe that any existing or proposed regulations
will require material capital expenditures or changes in its method of
operation.  Management believes that the Company is acting in accordance with
all applicable federal, state and local laws.

Competition

     The Company competes primarily against other CROs and pharmaceutical
companies' own in-house research departments.  The CRO industry is highly
fragmented, with approximately twenty "full service" CROs and many small
specialty providers.  In recent years, several large full service CROs have
emerged some of which have substantially greater capital and other resources,
are better known and have more experienced personnel than the Company.  The
recent trend towards industry consolidation has resulted in heightened
competition among the larger CROs.  The Company competes in a specialty niche
segment of the overall market where total size and "full service" are less
important competitive factors than in the overall CRO industry.  Clients
choose to use the Company, or a direct competitor, on the basis of prior
experience with the Company, its reputation for quality of the service
provided, the ability to schedule the specific study in a time frame which
meets the client's needs, scientific and technical capability and the price of
the services performed.  The Company believes it competes favorably in these
areas.


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<PAGE>9

     The Company expects that its relationship with Aster.Cephac S.A. will
enhance its competitive position by providing access to the European markets
and expanding bioanalytical services capabilities, as provided by the
Technology Sharing Agreement signed by both entities.

Clients

     The Company has served most of the leading U.S. and Canadian generic drug
firms and several of the leading U.S. and European pharmaceutical companies. 
The Company's clients also include companies which utilize biotechnology and
other emerging technologies to develop new drugs.

     The Company has in the past derived, and may in the future derive, a
significant portion of its revenue from a relatively limited number of major
clients.  Concentrations of business in the CRO industry are not uncommon and
the Company is likely to experience such concentration in future years. For
the years ended June 30, 1998, 1997 and 1996, one customer contributed in
excess of 10% of contract revenue, accounting for 19%, 29%, and 27%,
respectively, of contract revenue.  

     While an individual client may represent a significant percent of
revenues, these revenues are the result of the sum of a number of different
contracts during the year.  While the complete loss of a significant client
could have a material adverse effect on the Company, the termination or loss
of any one contract would typically not have a material adverse effect on the
Company's results of operations.

Export Sales

     The Company conducts studies for a number of companies outside of the
U.S., primarily in Canada and Europe, in addition to many domestic companies. 
This work is billed and paid in U.S. dollars, therefore eliminating currency
exchange risk to the Company.  The Company's recognized revenue from its
clients outside of the United States is as follows:
                                                                               
                                          Year Ended June 30,                  
                                   1998         1997         1996
                                ----------   ----------   ----------
Canada                          $2,597,000   $2,718,000   $3,124,000
Europe & other                     453,000      503,000      177,000
                                ----------   ----------   ----------
Total                           $3,050,000   $3,221,000   $3,301,000
                                ----------   ----------   ----------

Backlog

     The Company maintains a backlog of its business, representing studies
underway in-house for which revenue has not yet been recognized, and studies
that have been awarded to the Company by its various clients but have yet to


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<PAGE>10

begin.  At June 30, 1998, the backlog was approximately $6.3 million.  At June
30, 1997, the Company's backlog  was approximately $6.0 million.  The Company
expects to recognize revenue from studies included in the June 30, 1998,
backlog during fiscal 1999 and future fiscal years.

Employees

     At July 31, 1998, the Company had 173 employees (69 of whom were part-
time employees), of which 8 hold Ph.D. or M.D. degrees and 15 others hold
advanced degrees.  The Company does not have collective bargaining agreements
with any of its employees and considers its employee relations to be
satisfactory.

ITEM 2.  PROPERTIES

     The Company's principal executive offices are located in Baltimore,
Maryland, where it owns a building containing approximately 142,000 square
feet of space of which approximately 117,000 square feet are utilized in the
Company's operations.  The remaining space, consisting of two unfinished
floors in the seven story 302 W. Fayette Street building, could be made
available for expansion of the Company's operations when necessary.  The
building contains a consolidated analytical chemistry laboratory, a controlled
live-in clinical facility with a 120 bed capacity, and corporate-wide
information and data management systems.  Substantially all of the Company's
assets, including the building, collateralize the Company's working capital
credit facility with NationsBank, N.A. (see Note G to the Consolidated
Financial Statements).

     The Company also leases 1,000 square feet of office space in a Baltimore
suburb for utilization as a screening location to provide more convenient
access for students attending two nearby colleges, as well as for local
residents and those for whom a suburban location is more convenient. 


ITEM 3.  LEGAL PROCEEDINGS

     (a) Reorganization Proceedings under Chapter 11 of the Bankruptcy Code On
November 19, 1990, PharmaKinetics Laboratories, Inc. filed a voluntary
petition (Case No. 90-5-5020-JS) in the United States Bankruptcy Court in the
District of Maryland seeking to reorganize under Chapter 11 of the Federal
Bankruptcy Code.  The Company confirmed its Amended Plan of Reorganization
(the "Plan") on April 1, 1993.  The Plan became effective May 10, 1993.  The
Company received an order approving its Application for Final Decree on May
23, 1996, thereby closing the bankruptcy case.

     (b) Other Material Legal Proceedings
     On January 24, 1997, the Company was notified that it may have incurred
liability or may incur liability under Section 107(a) of the Comprehensive
Environmental Response, Compensation and Liability Act, as amended (CERCLA),
42 U.S.C. Section 9607(a), in connection with the RAMP industries Site in

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<PAGE>11

Denver, Colorado.  The Environmental Protection Agency (the "EPA") has
identified approximately 800 entities that shipped wastes to the site and is
conducting an investigation of the source, extent and nature of the release or
threatened release of hazardous substances, pollutants or contaminants, or
hazardous wastes, on or about the RAMP Industries Site.  It is believed that
the Company may have disposed of 15 cubic feet, or two drums, of waste at this
site.  Management is unable to estimate at this time the Company's portion of
such costs, but based on information available to date, management does not
believe that the resolution of this matter will be material to the Company's
financial position, results of operations, or cash flows.

     (c) Other
     From time to time the Company is involved in disputes and/or litigation
encountered in the ordinary course of its business.  The Company does not
believe that the ultimate impact of the resolution of such outstanding matters
will have a material effect on the Company's financial position, results of
operations or cash flows.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     A Special Meeting in Lieu of Annual Meeting of Stockholders was held
Monday, April 6, 1998, at 11:00 A.M., local prevailing time, at the corporate
offices, 302 W. Fayette Street, Baltimore, Maryland 21201, to consider and
vote upon:

1.  The election of eight directors to serve until the next Annual Meeting of
Stockholders, and until their  successors are duly elected and qualified.

                                                    For         Against  
Class A:  Common Stock and 
          Preferred Stock Voting Together:

          Thomas F. Kearns, Jr.                  19,740,674     98,899
          James K. Leslie                        19,762,374     77,199
          Roger C. Thies                         19,765,374     74,199
          Grover C. Wrenn                        19,765,374     74,199 

Class B:  Preferred Stock Voting Alone:

          Leslie B. Daniels                       8,333,000
          David von Kauffmann                     8,333,000
          Kamal K. Midha, Ph.D., D.Sc.            8,333,000
          John J. Thebault, M.D.                  8,333,000

2.  A proposal to ratify the selection of PricewaterhouseCoopers LLP, as the
Company's independent auditors for  the fiscal year ending June 30, 1998.

                                                             Broker non-votes
                                        For      Against      or Abstentions

                                    19,764,849    50,860          23,864
 
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<PAGE>12

3.  A proposal to approve and adopt the restatement and amendment of the
Company's Charter, among other things, in order to increase the number of
authorized shares of the Company's Common Stock.

                                                             Broker non-votes
                                        For      Against      or Abstentions

                                    19,455,846   266,382          35,044

4.  A proposal to approve of a five to one reverse split of the Company's
Common Stock, the change of authorized shares of the Company's Common Stock to
10,000,000 shares, par value $.005 per share, and the reduction of capital and
amendment of the Company's Charter in connection therewith.

                                                             Broker non-votes
                                        For      Against      or Abstentions

                                    19,094,586   536,512         126,174

5.  A proposal to ratify the adoption of the PharmaKinetics Laboratories, Inc.
1996 Non-Employee Directors  Stock Option Plan, as amended.  

                                                             Broker non-votes
                                        For      Against      or Abstentions

                                    19,173,522   471,162         116,588

     All proposals presented were approved by the Stockholders of the Company. 

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

     The Company's Common Stock is currently traded in the over-the-counter
market and is quoted on the OTC Bulletin Board (OTCBB: PKLB).  The trading
market for the Company's stock is limited and sporadic.  In April 1998, the
Company effected a five-to-one reverse stock split of its Common Stock with
the belief  that the action would raise the Company's minimum bid price per
share above $4.00 thereby enabling the Company to meet the requirements for
listing on the Nasdaq SmallCap Market.  The Company made application to the
Nasdaq SmallCap market in early June 1998, at which time it met all of the
criteria for listing.  However, during the course of the review process, the
Company's minimum bid price per share fluctuated and at times was less than
$4.00 per share.  As a result, the Company no longer met the criteria for
listing on the Nasdaq SmallCap Market.  As of September 2, 1998, the Company
voluntarily withdrew its application.  The Company will continue to monitor
its minimum bid price and intends to again make application as soon as the
Company meets all of the criteria for listing.


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<PAGE>13

     The following table sets forth the high and low bid prices of the Common
Stock for the fiscal periods indicated and as reported through the OTC
Bulletin Board.

                                 Year Ended                 Year Ended
                                June 30, 1998              June 30, 1997  
                             ------------------         ------------------
            Quarter           High         Low           High         Low
            First            $ 3.05      $ 1.25         $ 3.28      $ 1.56
            Second             5.78        3.05           3.13        2.03 
            Third              8.60        4.55           2.19        1.88
            Fourth             7.75        3.63           1.88        1.23

     Such quotations, which have been restated to give effect to the reverse
stock split, reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.  The approximate number
of shareholders of record at September 14, 1998, was 1,048.

     The Company has not declared a dividend on its Common Stock since its
inception and has no intention of doing so in the foreseeable future. 
Notwithstanding the Company's dividend policy, the Company's borrowing
agreement with its primary lender restricts the Company from declaring or
paying a dividend if such dividend would cause the Company to default  under
any of the covenants contained in the borrowing agreement. 

     Sale of Unregistered Securities

     On December 23, 1997, the Company issued 833,300 shares of a newly
created Class A Convertible Preferred Stock and warrants to purchase 1,250,000
shares of the Company's Common Stock, for an aggregate offering price of $5
million, and entered into a Registration Rights Agreement in connection
therewith, to 14 investors including affiliates of Aster.Cephac S.A. and CAI
Advisors & Co.  The securities were issued pursuant to a Preferred Share and
Warrant Purchase Agreement dated as of December 4, 1997.  No underwriter or
selling agent was involved in the  transaction, and no remuneration was paid
to any party in connection with the sale of the securities.  

     These securities were issued in a private transaction in reliance upon
Section 4(2) of the Securities Act of 1933, as amended.  In issuing the
securities, neither the Company nor any person acting on its behalf offered
the securities by means of general advertising or solicitation.  The
securities were issued only to a limited number of sophisticated investors who
had access to all financial and other information about the Company and the
offered securities.  Prior to acquiring the securities, each investor
acknowledged that the securities were not registered under the Securities Act
of 1933, as amended, that the investor was acquiring the securities for
investment only and not with a view to distribution, and that the securities
are subject to restrictions on transferability.  The certificates evidencing
the securities bear a legend reflecting the restrictions on transferability. 


                                    -13-
</PAGE>

<PAGE>14

     The Agreement provided for the sale to the Purchasers of a total of
833,300 shares of Class A Convertible Preferred Stock for $4,937,500 or $5.925
per share.  The Preferred Stock is convertible at any time into shares of
Common Stock at a conversion ratio of one share of Preferred Stock for two
shares of Common Stock.  The conversion ratio is subject to adjustment under
certain circumstances to prevent dilution.  In the event of liquidation of the
Company, the holders of the shares of Preferred Stock who do not convert their
shares into Common Stock are entitled to receive $5.925 per share, prior to
any distributions being made to the holders of any other class or series of
the Company's capital stock.

     In addition, the Agreement provided for the sale to the Purchasers, for
$62,500, of warrants to purchase 1,250,000 shares of Common Stock.  The
warrants are fully exercisable at $6.00 per share and expire on December 23,
2000.  
  
ITEM 6:  SELECTED FINANCIAL DATA
<TABLE>
                                        Years ended June 30,
                     --------------------------------------------------------
                         1998        1997       1996       1995       1994   
                     ----------- ---------- ----------- ---------- ----------
<S>                  <C>         <C>        <C>         <C>        <C>    
Revenues             $12,326,009 $9,597,536 $10,962,160 $9,893,762 $8,847,674
Net earnings (loss):                 
 Before deemed 
   preferred stock 
   dividend             $622,747  ($109,513)   $778,895   $127,827   $204,851
Deemed preferred 
   stock dividend    ($1,020,793)         -           -          -          -
Net earnings (loss) 
   available to 
   common stockholders ($398,046) ($109,513)   $778,895   $127,827   $204,851
Basic earnings 
   (loss) per share       ($0.16)    ($0.04)      $0.32      $0.05      $0.08
Basic weighted average 
   shares outstanding  2,440,429  2,439,129   2,439,129  2,479,178  2,470,192
Diluted earnings 
   (loss) per share       ($0.16)    ($0.04)      $0.32      $0.05      $0.08
Diluted weighted average
   shares outstanding  2,440,429  2,439,129   2,470,109  2,519,620  2,556,137

Total assets         $10,107,478 $5,958,732  $6,622,959 $6,553,348 $6,163,128

Working capital
   (deficiency)       $4,082,645   $282,538    $411,498   ($63,474)  $262,632

Long-term liabilities   $235,074 $1,538,945  $1,784,876 $2,074,109 $2,437,373

Stockholders' equity  $7,873,583 $2,438,241  $2,547,754 $1,768,859 $1,540,669
</TABLE>
                                    -14-
</PAGE>

<PAGE>15

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
          AND RESULTS OF OPERATIONS

CERTAIN FORWARD-LOOKING INFORMATION

     Certain statements in this Management's Discussion and Analysis and
elsewhere in this 1998 Annual Report on Form 10-K are forward-looking
statements based on current expectations, and entail various risks and
uncertainties that could cause actual results to differ materially from those
expressed in such forward-looking statements.  Such risks and uncertainties
include the fluctuation in quarterly operating results which arise from the
timing of orders and the Company's ability to complete projects in a timely
manner once awarded to the Company,  dependence of the Company on the product
development cycles of its clients, dependence of the Company on certain
customers, and dependence of the Company on its key personnel and their
ability to continuously develop new methodology for clinical and analytical
applications.  Other more general factors that could cause or contribute to
such differences include, but are not limited to, general economic conditions,
conditions affecting the pharmaceutical industry, and consolidation resulting
in increased competition within the Company's market.

GENERAL

     PharmaKinetics Laboratories, Inc. ("the Company") is a contract research
organization ("CRO") providing a range of clinical research and development
services to the worldwide pharmaceutical industry and to the biotechnology
industry in the development of prescription and non-prescription drug
products.  The Company also provides bioanalytical laboratory services and
management and monitoring of clinical trials conducted at remote sites
including ancillary services such as protocol and case report form design,
data management and biostatistics and regulatory consulting.  The nature of
the Company's services and recurring business with major clients results in
the Company having individual clients whose business could account for 10% or
more in a fiscal year.  From year to year, the specific clients may change. 
Since the Company's inception in 1976, the Company has assisted pharmaceutical
clients with over 900 Abbreviated New Drug ("ANDA") and New Drug ("NDA")
Approvals which were received as a result of the conduct of over 2,000
studies.  The Company's services are provided in accordance with regulations,
promulgated by the United States Food and Drug Administration ("FDA"), as well
as submissions to the Canadian Health Protection Branch ("HPB"), which govern
clinical trials and the drug approval process.

     On December 23, 1997, the Company issued 833,300 shares of a newly
created Class A Convertible Preferred Stock and warrants to purchase 1,250,000
shares of the Company's Common Stock, and entered into a Registration Rights
Agreement and Technology Sharing Agreement in connection therewith, to
investors including certain affiliates of Aster.Cephac S.A. and CAI Advisors &
Co. (collectively, the "Purchasers").  The securities were issued pursuant to
a Preferred Share and Warrant Purchase Agreement dated as of December 4, 1997. 


                                    -15-
</PAGE>

<PAGE>16

The Purchasers beneficially own approximately 41% of the Company's voting
securities without giving effect to the possible exercise of the warrants, or
approximately 54% of the Company's voting securities if all the warrants are
exercised.

     The Agreement provided for the sale to the Purchasers of a total of
833,300 shares of Class A Convertible Preferred Stock for $4,937,500 or $5.925
per share.  The Preferred Stock is convertible at any time into shares of
Common Stock at a conversion ratio of one share of Preferred Stock for two
shares of Common Stock.  The conversion ratio is subject to adjustment under
certain circumstances to prevent dilution.  In the event of liquidation of the
Company, the holders of the shares of Preferred Stock who do not convert their
shares into Common Stock are entitled to receive $5.925 per share, prior to
any distributions being made to the holders of any other class or series of
the Company's capital stock.

     In addition, the Agreement provided for the sale to the Purchasers, for
$62,500, of warrants to purchase 1,250,000 shares of Common Stock.  The
warrants are fully exercisable at $6.00 per share and expire on December 23,
2000.  

     Net earnings have been adjusted for the fiscal year ended June 30, 1998,
for the deemed preferred stock dividend to the Purchasers, resulting in a net
loss applicable to common stockholders.  The dividend was computed based on
the excess of the fair market value of the Company's Common Stock, into which
the Preferred Stock is convertible, over the purchase price of the Preferred
Stock at the time of issue.  The dividend was recorded for financial reporting
purposes only and was not paid to the Preferred Stockholders.

     On April 6, 1998, the Company's stockholders approved a five-to-one
reverse split of the Company's Common Stock, the change of authorized shares
of the Company's Common Stock to 10,000,000 shares, par value $0.005 per
share, and the reduction of capital for payment of fractional shares and
amendment of the Company's Charter in connection therewith.  The reverse
split, which became effective at the close of business on April 17, 1998, did
not affect the rights and privileges of holders of Common Stock, either before
or after the reverse split.  The Company did not issue fractional shares as a
result of the reverse split, and each fraction of a share was exchanged 
for cash.  The Company's capital was reduced by the amount of cash paid for
fractional shares, the total payment of which was immaterial.

     The effect of the reverse stock split has been retroactively applied to
prior periods presented herein.

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, items in the
Statements of Operations as percentages of total revenue and the increase


    
                                    -16-
</PAGE>

<PAGE>17

(decrease) by each item as a percentage of the amount for the previous period:

                             Percentage of            Period to Period 
                             Total Revenues                Change 
                           --------------------       ----------------       
                                                       1998      1997 
                           Years ended June 30,          Compared to
                           --------------------       ----------------
                            1998   1997   1996         1997      1996  
                           ------ ------ ------       ------    ------       
Contract revenue            94.3%  91.3%  95.5%        32.6%    (16.3)% 
License fees                 5.7    8.7    4.5        (15.7)     69.1 
                           ------ ------ ------       ------    ------
     Total                 100.0  100.0  100.0         28.4     (12.4) 

Cost of contracts           72.5   73.5   66.5         26.6      (3.2)
                           ------ ------ ------       ------    ------   
Gross margin                27.5   26.5   33.5         33.5     (30.7)

Research and development     4.6    4.7    3.6         27.3      12.6
Selling, general, 
  and administrative        17.9   21.4   20.9          7.4     (10.2)   
                           ------ ------ ------       ------    ------
Operating income             5.0    0.4    9.0       1438.6     (95.9)

Interest expense            (1.0)  (1.9)  (2.0)       (30.6)    (16.7)
Interest income              1.2    0.4    0.4        295.3     (11.1) 
Loss on disposal 
  of equipment                 -      -   (0.2)           -    (100.0) 
                           ------ ------ ------       ------    ------
Earnings (loss) 
  before taxes               5.2   (1.1)   7.2        676.1    (114.0) 
Income taxes                (0.1)     -      -        100.0    (100.0)  
                           ------ ------ ------       ------    ------
Net earnings (loss)          5.1%  (1.1)%  7.2%       668.6%   (114.1)%
                           ------ ------ ------       ------    ------ 

1998 Compared to 1997

     Total revenue, which includes contract revenue and revenue from licensing
technologies under special agreements whereby the Company receives license
fees based upon the clients' actual product sales, increased 28.4% from $9.6
million in fiscal 1997 to $12.3 million in fiscal 1998.  The increase resulted
from an increase of approximately $1.6 million in revenues from innovator
pharmaceutical and biotechnology companies due to the Company's marketing
efforts; the initiation of new clinical trial management contracts which
generated an additional $.4 million in revenue in the current fiscal year
compared to fiscal 1997; and expansion of the Company's list of active
clients, and the impact of the availability of the Company's LC/MS/MS


                                    -17-
</PAGE>

<PAGE>18

technology, which collectively contributed approximately $.8 million to the
increase in revenue.  The Company's contract revenue increased 32.6% for
fiscal 1998, compared to fiscal 1997.

     License fee income of $703,000 was recorded in fiscal 1998, compared to
$834,000 in fiscal 1997, a decrease of 15.7% due to the cessation of the
Company's first license fee agreement in October 1997.  At June 30, 1998, the
Company had two license fee agreements from which it was receiving license fee
income.  License fee income, based on clients' sales of approved drugs, will
continue through the expiration of the license fee agreements, the most
significant of which is expected to expire in fiscal 2004 and the other of
which is expected to expire in fiscal 2000.  The Company believes it is
unlikely that its clients will wish to utilize license fee arrangements in the
future as compensation for work performed.  As a result, contract revenues,
rather than licensing income, will continue to be the primary source of
revenues. 

     The Company's gross margin increased 33.5% from $2.5 million in fiscal
1997 to $3.4 million in fiscal 1998.  As a percentage of revenue, the
Company's gross margin increased from 26.5% in fiscal 1997 to 27.5% in fiscal
1998, on a 28.4% increase in total revenue.  The increase in gross margin
reflects the increase in the use of the Company's LC/MS/MS instrumentation,
which helped increase efficiencies, and the overall increase in the level of
business and diversification of services which culminated in the realization
of certain economies of scale.  

     Selling, general and administrative expenses totaled $2.2 million in
fiscal 1998, compared to $2.1 million in fiscal 1997, representing a 7.4%
increase.  As a percentage of revenue, selling, general and administrative
expenses were 17.9% in fiscal 1998 and 21.4% in fiscal 1997.  The increase is
primarily attributable to the establishment of an allowance for doubtful
accounts, which had the effect of increasing selling, general and
administrative expenses by $150,000, notwithstanding a decrease in
expenditures associated with the loss of personnel  in fiscal 1997 for which
certain positions remained vacant until the second half of fiscal 1998.

     Research and development expenses increased 27.3% from $447,000 in fiscal
1997 to $568,000 in fiscal 1998.  The Company has continued to invest in its
research and development effort in fiscal 1998 in an effort to bring new
analytical methods on-line to meet client demands.  In June 1998, the Company
acquired its third LC/MS/MS instrument for use in its laboratory and has
invested in research and development to bring this instrument on-line and to
develop LC/MS/MS methods for utilization in future studies.  The Company
believes that these investments will result in the generation of new business
and an improvement in its competitive position.

     Interest expense decreased by 30.6% from $186,000 in fiscal 1997 to
$129,000 in fiscal 1998.  In February 1998 the Company utilized $1.6 million
of the $5 million cash received from the Purchasers in the December 23, 1997


                                    -18-
</PAGE>

<PAGE>19

transaction to pay the remaining principal balance of its term note payable to
NationsBank N.A., thereby eliminating its bank debt.  Interest income
increased 295.3% in fiscal 1998, compared to fiscal 1997, due to the
investment of the remaining funds in interest bearing financial instruments. 

     Net earnings have been adjusted for the deemed preferred stock dividend
to the Purchasers, resulting in a net loss applicable to common stockholders. 
The dividend was computed based on the excess of the fair market value of the
Company's Common Stock, into which the Preferred Stock is convertible, over
the purchase price of the Preferred Stock at the time of issue.  The dividend
was recorded for financial reporting purposes only and was not paid to the
Purchasers.

     A provision for income taxes of $8,200 has been recorded in fiscal 1998
for Alternative Minimum Tax obligations.  No provision was recorded for fiscal
1997.  The Company has available tax loss carryforwards of approximately
$5,201,000, expiring in 2006 through 2011, and general business credits of
approximately $1,467,000, expiring during the period 1999 to 2010.

1997 Compared to 1996

     Total revenue decreased 12.4% from $11.0 million in fiscal 1996 to $9.6
million in fiscal 1997.  The decrease was primarily attributable to weakness
in the generic drug market early in the year, caused by an industry-wide
downturn and continued consolidation of generic drug industry clients, and
failure to meet certain internal time lines resulting in delayed revenue
recognition of approximately $200,000 for projects not completed by June 30,
1997.  The Company made progress in accomplishing its goals to increase the
amount of clinical revenue generated from major pharmaceutical and
biotechnology firms; initiate new clinical trial management contracts; and
acquire its second LC/MS/MS instrument for utilization in its laboratory.  The
Company's contract revenue decreased 16.3% for fiscal 1997, compared to fiscal
1996.

     License fee income of $834,000 was recorded in fiscal 1997, compared to
$493,000 in fiscal 1996.  The Company began receiving license fees in 1997
under its third agreement with another of its clients which received approval
from the FDA to manufacture and market Sucralfate Tablets.  The client
received approval to market its drug in April 1996 and commenced sales in
November 1996.  The Company expects to receive payments for a minimum of eight
years from the date of approval.  License fee income from sales of this third
product accounted for the increase in license fee income, notwithstanding a
decline in license fee income from two other license fee arrangements.  The
Company believes it unlikely that its clients will wish to utilize license fee
arrangements in the future as compensation for work performed.  As a result of
this trend, contract revenues, rather than licensing income, will continue to
be the primary source of revenues.

     The Company's gross margin decreased 30.7% from $3.7 million in fiscal
1996 to $2.5 million in fiscal 1997.  As a percentage of revenue, the

                                    -19-
</PAGE>

<PAGE>20

Company's gross margin decreased from 33.5% in fiscal 1996 to 26.5% in fiscal
1997, on a 12.4% decrease in total revenue.  The decrease in gross margin was
indicative of the fact that fixed costs, relative to employee salaries and
other operating expenses, remained at similar levels as revenues decreased. 
Measures to bring costs and staffing levels in line with current levels of
business were implemented in January 1997.  These measures primarily involved
the termination of certain individuals no longer deemed an integral part of
the Company's operations.  The Company terminated these individuals on January
21, 1997.  The Company did not incur restructuring charges related to the
terminations as no severance pay was offered to the individuals terminated.

     Selling, general and administrative expenses totaled $2.1 million for
fiscal 1997, compared to $2.3 million in fiscal 1996, representing a 10.2%
decrease.  As a percentage of revenue, selling, general and administrative
expenses were 20.9% in fiscal 1996 and 21.4% in fiscal 1997.  The Company
effected certain staff reductions for administrative personnel in September
1995.  The fact that these positions were not filled contributed to the
decrease in expenses for fiscal year 1997, offset by increased compensation
and increased operating costs.

     Research and development expenses  increased 12.6% from $397,000 in
fiscal 1996 to $447,000 in fiscal 1997.  The Company continued to invest in
its research and development effort in 1997 in an effort to bring new
analytical methods on-line to meet client demands.  In addition, in August
1996, the Company acquired its first LC/MS/MS instrument for its laboratory
and invested in research and development to bring the instrument on-line and
to develop methods for utilization in future studies.  

     Interest expense decreased 16.7% from $223,000 in fiscal 1996 to $186,000
in fiscal 1997.  The decrease was primarily attributable to decreases in the
Company's interest bearing obligations.  

     No provision for income taxes was recorded in fiscal 1997, compared to
minimal amounts for Alternative Minimum Tax obligations in fiscal 1996.  The
Company had available tax loss carryforwards of approximately $5,770,000
expiring in 2006 through 2010, and general business credits of approximately
$1,433,000, expiring during the period 1999 to 2009.

YEAR 2000 

     The Company has initiated its Year 2000 compliance program, the purpose
of which is to identify those systems that are not yet Year 2000 compliant,
and to initiate replacement or other remedial action to assure that systems
will continue to operate in the Year 2000.  The Company expects to complete
its assessment by December 31, 1998, which includes third party confirmations
from the Company's key suppliers, vendors and business partners, with respect
to their computers, software and systems, and their ability to maintain normal
operations in the Year 2000, and a listing of all equipment subject to Year
2000 concerns.   To the extent that the Company is not satisfied with the


                                    -20-
</PAGE>

<PAGE>21

status of a vendor's Year 2000 compliance or remediation plans, the Company
expects to develop and implement appropriate contingency plans.  Such
contingency plans will include the development of alternative sources for the
product or service provided by any non-compliant vendor.  

     The Company has already initiated the removal and exchange of some non-
compliant systems and expects to continue such replacement or other remedial
action to ensure that its computers, software and systems, and other systems
will continue to operate in the Year 2000.  These activities are intended to
encompass all major categories of systems used by the Company, including
laboratory instrumentation, clinical systems,  building systems, and sales and
financial systems, among others.   In some instances, the installation of new
software and hardware in the normal course of business is being accelerated to
also afford a solution to Year 2000 issues.  The Company has planned for the
investment of approximately $300,000 in a new Laboratory Information
Management System in fiscal 1999, which it expects will streamline data
calculation and reporting ability and allow for customized report formats, as
well as provide the laboratory with an operating system that is Year 2000
compliant.  Other Year 2000 spending is expected to total less than $150,000,
of which the Company had spent approximately $10,000 as of June 30, 1998.  The
total cost estimate is based on the Company's assessment as of June 30, 1998
and is subject to change as the compliance program progresses.

     The capital improvements and expenses required for the Year 2000 effort 
have been included as part of the Company's annual budgets.  The Company does
not expect that the capital spending or period expense associated with the
Year 2000 issues will have a material effect on its financial position or
results of operations.  The Company's policy is to expense all costs related
to its Year 2000 compliance program unless the useful life of the
technological asset is extended or increased.  It is expected that assessment,
remediation and contingency planning will be on-going throughout fiscal 1999
with the goals of appropriately resolving all material internal systems and
third party issues. There can be no assurances, however, that the Company's
computer systems and the applications of other companies on which the
Company's operations rely will be timely converted or that any such failure to
convert by another company will not have a material adverse effect on the
Company's operations.

LIQUIDITY AND CAPITAL RESOURCES

     On June 30, 1998, the Company had cash and equivalents of $3,358,506
compared to $556,040 at June 30, 1997.  The increase in cash resulted from the
receipt of $5,000,000, in December 1997, from the Company's sale of Class A
Convertible Preferred Stock and Warrants to acquire Common Stock to a group of
Purchasers led by CAI Advisors & Co. and Aster.Cephac S.A. Cash was reduced by
a payment of $1,630,390, on February 5, 1998, to NationsBank N.A.,
representing the remaining principal balance plus accrued interest on the
Company's term note payable to the Bank, payments for capital lease
obligations and the purchase of equipment for utilization in the Company's
operating units. 

                                    -21-
</PAGE>

<PAGE>22

     The Company invested $699,571 in capital equipment purchases, $359,406 of
which was paid in cash with the remaining $340,165 financed through a capital
lease.  The Company's capital leases have terms expiring through fiscal 2001. 
The Company made contractual and discretionary principal payments of
$1,706,819 on its long-term debt obligations during fiscal 1998, thereby
eliminating its bank debt.

     The Company's primary source of funds is cash flow from operations, which
increased by $215,234 in fiscal 1998 from fiscal 1997, principally as a result
of the Company's 1998 results of operations as compared to 1997, offset by a
$590,571 increase in working capital.  The Company also has available a
$500,000 line of credit from NationsBank, N.A. which has not been drawn upon. 
Terms of the credit facility provide for interest at the Bank's prime rate and
advances against eligible receivables.  The borrowing agreement is
collateralized by substantially all of the Company's assets, places
restrictions on borrowings and investments, and requires maintenance of
specified amounts of working capital, net worth and cash flow ratios. 

     Increases in the Company's account balances at June 30, 1998 for accounts
receivable, contracts in process and deposits on contracts in process
accounts, as compared to June 30, 1997, are primarily attributable to overall
increases in the levels of business as evidenced by the Company's operating
performance for fiscal 1998.  Prepaid expenses have increased at June 30,
1998, compared to June 30, 1997, due to the timing of the payments of certain
property tax and insurance obligations for fiscal year 1999.  In addition,
other assets have increased primarily due to the placement of a security
deposit on the Company's new capital lease obligation and the Company's
holdings of 44,642 shares of common stock and warrants to acquire 11,161
shares of common stock, at an exercise price of $2.40 per share, of Hybridon,
Inc. (OTCBB:HYBN), with a carrying value of $110,909 at June 30, 1998.   The
carrying value of the stock was determined by the average of the bid and ask
prices of the stock as reported by the National Quotation Bureau on June 30,
1998, which was $2.48 per share.  The Company received the stock and warrants
in exchange for an account receivable in the amount of $89,284.  The warrants
expire on May 5, 2003 and are not subject to a call provision.

     At June 30, 1998, the market value of the Hybridon stock was greater than
the adjusted cost basis of $89,284.  The difference of $21,625 was recorded as
an Unrealized Gain on Investment (a non-cash transaction) and was reflected in
the Stockholders' Equity section of the balance sheet.

     As of June 30, 1998, the Company's stockholders' equity totaled
$7,873,583 compared to $2,438,241 at  June 30, 1997.  The Company had working
capital of $4,082,645 at June 30, 1998, compared to working capital of
$282,538 at June 30, 1997.  The increase in working capital primarily reflects
the increase in cash balances caused by the Company's issuance of Class A
Convertible Preferred Stock and warrants in fiscal 1998. The Company's
performance in fiscal 1998 can be attributed to its efforts to expand its
client base and services within the pharmaceutical and biotechnology
industries. 

                                    -22-
</PAGE>

<PAGE>23

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     Not applicable to this registrant in 1998



                [Remainder of page intentionally left blank]












































                                    -23-
</PAGE>

<PAGE>24


PricewaterhouseCoopers LLP




                    REPORT OF INDEPENDENT ACCOUNTANTS
                             ----------------

To the Board of Directors and Stockholders 
     of PharmaKinetics Laboratories, Inc.

     In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, stockholders' equity and cash
flows, present fairly, in all material respects, the consolidated financial
position of PharmaKinetics Laboratories, Inc. at June 30, 1998 and 1997, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended June 30, 1998, in conformity with
generally accepted accounting principles.  These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits.  We conducted
our audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation.  We believe that
our audits provide a reasonable basis for the opinion expressed
above.


                                              /s/PricewaterhouseCoopers LLP
                                              -----------------------------
                                              PricewaterhouseCoopers LLP

Baltimore, Maryland
August 14, 1998













                                    -24-
</PAGE>

<PAGE>25

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
                        PHARMAKINETICS LABORATORIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
                                                   Years ended June 30,
                                           ----------------------------------
                                               1998       1997       1996 
                                           ----------- ---------- -----------
<S>                                        <C>         <C>        <C>
Revenues                                   $12,326,009 $9,597,536 $10,962,160

Cost of contracts                            8,930,681  7,053,560   7,289,138
                                           ----------- ---------- -----------
  Gross profit                               3,395,328  2,543,976   3,673,022

Selling, general and 
  administrative expenses                    2,210,137  2,057,212   2,290,828
Research and development expenses              568,444    446,677     396,741
                                           ----------- ---------- -----------
  Earnings from operations                     616,747     40,087     985,453

Interest expense                              (128,970)  (185,817)   (223,028)
Interest income                                143,170     36,217      40,748
Loss on disposal of equipment                        -          -     (19,848)
                                           ----------- ---------- -----------
  Earnings (loss) before income taxes          630,947   (109,513)    783,325

Provision for income taxes                       8,200          -       4,430
                                           ----------- ---------- -----------
  Net earnings (loss)                          622,747   (109,513)    778,895

Deemed preferred stock dividend             (1,020,793)         -           -
                                           ----------- ---------- -----------
   Net earnings (loss) applicable
     to common stockholders                  ($398,046) ($109,513)   $778,895
                                           =========== ========== ===========

Basic earnings (loss) per share                 ($0.16)    ($0.04)      $0.32
                                           ----------- ---------- -----------
Basic weighted average shares outstanding    2,440,429  2,439,129   2,439,129
                                           ----------- ---------- -----------
Diluted earnings (loss) per share               ($0.16)    ($0.04)      $0.32
                                           ----------- ---------- -----------
Diluted weighted average shares outstanding  2,440,429  2,439,129   2,470,109
                                           ----------- ---------- -----------
                                                                             
-----------------------------------------------------------------------------
See notes to consolidated financial statements.
</TABLE>

                                    -25-
</PAGE>

<PAGE>26
<TABLE>
                        PHARMAKINETICS LABORATORIES, INC.
                          CONSOLIDATED BALANCE SHEETS
<CAPTION>                                                               
                                                         June 30,
                                                 ------------------------
                                                     1998         1997 
                                                 -----------   ----------
<S>                                              <C>           <C>
ASSETS
Current Assets:
  Cash and equivalents                            $3,358,506     $556,040 
  Accounts receivable, net                         1,731,853    1,014,538 
  Contracts in process                               740,084      503,163 
  Prepaid expenses                                   251,023      190,343
                                                 -----------   ---------- 
     Total Current Assets                          6,081,466    2,264,084 
Property, plant and equipment, net                 3,822,373    3,654,132 
Other assets                                         203,639       40,516 
                                                 -----------   ---------- 
     Total Assets                                $10,107,478   $5,958,732 
                                                 ===========   ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable and accrued expenses             $916,816     $912,686 
  Deposits on contracts in process                 1,082,005      862,272 
  Current portion of long-term debt                        -      206,588
                                                 -----------   ---------- 
     Total Current Liabilities                     1,998,821    1,981,546 
Long-term debt                                             -    1,500,231 
Other liabilities                                    235,074       38,714 
                                                 -----------   ----------
     Total Liabilities                             2,233,895    3,520,491 
                                                 -----------   ----------
Commitments and Contingent Liabilities
Stockholders' Equity:
  Class A Convertible Preferred Stock, 
   no par value; authorized 1,500,000 shares;
   issued and outstanding 833,300 shares           4,937,500            - 
  Common Stock, $.005 par value; authorized, 
   10,000,000 shares; issued and outstanding, 
   2,456,129 and 2,439,129 shares, respectively       12,281       12,196 
  Additional paid-in capital                      11,867,086   12,013,701 
  Accumulated deficit                             (8,964,909)  (9,587,656)
  Unrealized gain on investment                       21,625            - 
                                                 -----------   ----------
     Total Stockholders' Equity                    7,873,583    2,438,241 
                                                 -----------   ----------
     Total Liabilities and Stockholders' Equity  $10,107,478   $5,958,732 
                                                 ===========   ==========
------------------------------------------------------------------------------
See notes to consolidated financial statements.
</TABLE>
                                    -26-
</PAGE>
<PAGE>27
<TABLE>
                        PHARMAKINETICS LABORATORIES, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
                                                 Years ended June 30,
                                          ----------------------------------
                                             1998        1997        1996 
                                          ----------  ----------  ----------
<S>                                       <C>         <C>         <C>
CLASS A CONVERTIBLE PREFERRED STOCK
Balance, beginning of year                $        -  $        -  $        - 
Stock issued (833,300 shares)              4,937,500           -           -
                                          ----------  ----------  ---------- 
Balance, end of year                       4,937,500           -           -
                                          ----------  ----------  ----------
(Shares outstanding: 833,300 at June 30, 1998)

COMMON STOCK
Balance, beginning of year                    12,196      12,196      12,196 
Exercise of stock options (16,960 shares)         85           -           -
                                          ----------  ----------  ----------
Balance, end of year                          12,281      12,196      12,196 
                                          ----------  ----------  ----------
(Shares outstanding: 2,456,129 at June 30, 1998; 
 and 2,439,129 at June 30, 1997 and 1996)

ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year                12,013,701  12,013,701  12,013,701 
Preferred stock issue costs                 (254,114)          -           -
Common stock warrants issued                  62,500           -           - 
Exercise of stock options                     44,999           -           -
                                          ----------  ----------  ----------
Balance, end of year                      11,867,086  12,013,701  12,013,701 
                                          ----------  ----------  ----------

ACCUMULATED DEFICIT
Balance, beginning of year                (9,587,656) (9,478,143)(10,257,038)
Net earnings (loss)                          622,747    (109,513)    778,895
                                          ----------  ----------  ---------- 
Balance, end of year                      (8,964,909) (9,587,656) (9,478,143)
                                          ----------  ----------  ----------

UNREALIZED GAIN ON INVESTMENT 
Balance, beginning of year                         -           -           - 
Unrealized gain                               21,625           -           - 
                                          ----------  ----------  ----------
Balance, end of year                          21,625           -           -
                                          ----------  ----------  ----------
TOTAL STOCKHOLDERS' EQUITY                $7,873,583  $2,438,241  $2,547,754 
                                          ==========  ==========  ==========
----------------------------------------------------------------------------
See notes to consolidated financial statements.
</TABLE>
                                    -27-
</PAGE>
<PAGE>28
<TABLE>
                        PHARMAKINETICS LABORATORIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     Years ended June 30,
                                                -----------------------------
                                                   1998      1997      1996
                                                --------- --------- ---------
<S>                                             <C>       <C>       <C>
Cash flows from operating activities:
 Net earnings (loss)                             $622,747 ($109,513) $778,895
 Adjustments to reconcile net earnings 
  (loss) to net cash provided (used)
  by operating activities:
   Depreciation and amortization                  531,330   457,785   405,703 
   Loss on disposal of equipment                        -         -    19,848 
   Changes in operating assets 
    and liabilities:
     Accounts receivable, net                    (806,599)  233,755  (473,609)
     Contracts in process                        (236,921) (166,233)  358,429 
     Prepaid expenses and other assets           (112,894)  (46,234)  (62,522)
     Refundable income taxes                            -         -    29,364 
     Accounts payable and accrued expenses        (10,026) (306,386) (327,781)
     Deposits on contracts in process             219,733   (71,038) (200,237)
                                                --------- --------- ---------
Net cash provided (used) by operating activities  207,370    (7,864)  528,090
                                                --------- --------- ---------
Cash flows from investing activities:
 Payment for purchases of property and equipment (359,406) (195,367) (164,474)
 Proceeds from sale of equipment                        -         -    71,400
                                                --------- --------- ---------
Net cash used by investing activities            (359,406) (195,367)  (93,074)
                                                --------- --------- ---------
Cash flows from financing activities:
 Proceeds from issuance of preferred stock, net 4,683,386         -         - 
 Proceeds from issuance of warrants                62,500         -         - 
 Payments on long-term debt                    (1,706,819) (145,214) (304,264)
 Payments for capital lease obligations          (129,649)  (85,916) (224,169)
 Proceeds from exercise of stock options           45,084         -         - 
                                                --------- --------- ---------
Net cash provided (used)  
 by financing activities                        2,954,502  (231,130) (528,433)
                                                --------- --------- ---------
Increase (decrease) in cash and equivalents     2,802,466  (434,361)  (93,417)
Cash and equivalents, beginning of year           556,040   990,401 1,083,818
                                                --------- --------- ---------
Cash and equivalents, end of year              $3,358,506  $556,040  $990,401
                                                ========= ========= =========
Non-cash transactions:
 Fixed assets acquired through capital leases    $340,165   $53,840  $347,167 
 Conversion of account receivable to investment   $89,284         -         - 
 Deemed preferred stock dividend               $1,020,793         -         - 
------------------------------------------------------------------------------
See notes to consolidated financial statements.
</TABLE>
</PAGE>                             -28-

<PAGE>29
                        PHARMAKINETICS LABORATORIES, INC.
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.  ORGANIZATION AND BASIS OF PRESENTATION 

     PharmaKinetics Laboratories, Inc. (the "Company"), is a contract research
organization ("CRO") providing a range of clinical research and development
services to the worldwide pharmaceutical industry and to the biotechnology
industry in the development of prescription and non-prescription drug
products. The Company also provides bioanalytical laboratory services and
management and monitoring of clinical trials conducted at remote sites,
including ancillary services such as protocol and case report form design,
data management and biostatistics and regulatory consulting.  The Company has
historically focused its business development efforts on generic
pharmaceutical companies in the United States ("U.S.") and Canada, and has
more recently expanded its clients to include several of the innovator
pharmaceutical and biotechnology companies in the U.S. and Europe.  
 
     The accompanying consolidated financial statements include the results of
the Company and the PKLB Limited Partnership, which owns the building the
Company occupies.  The Company includes 100% of the building operations in its
financial statements.

     The Company operates principally in one industry segment, the testing and
related research of pharmaceutical products.  Revenues include contract
revenue and revenue from licensing technologies under special agreements
whereby the Company receives license fees based upon the clients' actual
product sales.  At June 30, 1998, the Company had two license fee agreements
from which it was receiving license fee income.  The Company had a third
license fee arrangement which expired in October 1997.  License fee income of
$702,798, $833,701, and $493,076, was recorded during fiscal years ended June
30, 1998, 1997, and 1996, respectively.  License fee income, based on clients'
sales of approved drugs, will continue through the expiration of the license
fee agreements, the most significant of which is expected to expire in fiscal
2004 and the other of which is expected to expire in fiscal 2000. 

B.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

     Revenues associated with testing services, which are short-term in
duration, are earned and recognized upon completion of all required clinical
and laboratory analysis.  Operating revenue attributable to the performance of
long-term testing is recorded by contract by determining the status of work
performed to date in relation to total services to be provided.  Revenues
under fixed-rate contracts include a proration of the earnings expected to be
realized on the contract based upon the ratio of costs incurred to estimated
total costs.  Projected losses on contracts are provided for in their entirety
when known.  License fee income is recognized as a percentage of client sales
when client sales are reported monthly to the Company.


                                    -29-

</PAGE>
<PAGE>30

     For the years ended June 30, 1998, 1997, and 1996 one client contributed
in excess of 10% of contract revenue, accounting for 19%, 29%, and 27% of
contract revenue, respectively.   

     The Company conducts studies for a number of companies outside of the
U.S., primarily in Canada and Europe, in addition to many domestic companies. 
This work is billed and paid in U.S. dollars, so there is no currency exchange
risk to the Company.  The Company's recognized revenue from its clients
outside of the United States is as follows:

                                         Year Ended June 30,                  
                                   1998         1997         1996
                                ----------   ----------   ----------
Canada                          $2,597,000   $2,718,000   $3,124,000
Europe & other                     453,000      503,000      177,000
                                ----------   ----------   ----------
Total                           $3,050,000   $3,221,000   $3,301,000
                                ----------   ----------   ----------
          
Contracts in Process and Deposits on Contracts

     Contracts in process includes direct and indirect costs related to
contract performance.  Deposits on contracts represent interim payments.  Upon
completion of contracts, the customer is billed for the total contract amount
less any deposits or interim payments.  

Earnings (Loss) per Share

     In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 regarding the computation
of earnings per share.  This Statement requires the Company to present basic
and diluted earnings per share in the financial statements.  The Company
adopted the requirements of this Statement in fiscal 1998.  Basic earnings
(loss) per share ("EPS") is calculated by dividing net earnings (loss) by the
weighted average common shares outstanding during the period.  Diluted EPS
reflects the potential dilution to EPS that could occur upon conversion or
exercise of securities, options or other such items, to common shares using
the treasury stock method based upon the weighted average fair value of the
Company's common stock during the period. The Company's Class A Convertible
Preferred Stock, warrants to acquire common stock, outstanding stock options
granted under the Company's stock option plans and other options granted
outside of the Company's plans are considered common stock equivalents for the
purpose of the diluted earnings (loss) per share data; however, they are
excluded from the calculations for fiscal 1998 and 1997 because the effect of
their inclusion would be anti-dilutive.  In 1996 dilutive common stock
equivalents related to options outstanding totaled 30,980.  All periods
presented have been restated to conform to the new standard.

Cash and Equivalents

     Cash equivalents consist of highly liquid investments with an original

                                    -30-
</PAGE>
<PAGE>31

maturity of ninety days or less.

Concentration of Credit Risk

     The Company is subject to credit risk related to cash balances with
financial institutions in excess of insured amounts.  The risk is mitigated by
the fact that, at the close of each business day, excess funds in the
Company's operating accounts are placed in an overnight investment account
which is collateralized by government securities held by the financial
institution.

     Five of the Company's customers account for 59.5% of the outstanding
accounts receivable balance at June 30, 1998.  In addition, 11.6% of the
outstanding accounts receivable balance at June 30, 1998 was from clients
outside of the U.S.

Investment

     The Company's investment, which is considered available for sale, is
recorded at market value.  Fluctuations in the market value of the investment
are reported as unrealized holding gains or losses as a separate component in
stockholders' equity.

Property, Plant and Equipment

     Property, plant and equipment are stated at the lower of cost or net
realizable value.  Depreciation is computed using the straight-line method
over the estimated useful lives of the related assets.  

     Estimated useful lives of the Company's furniture and equipment
approximate five years, and its building and improvements range from fifteen
to thirty-six years.

Income Taxes

     The Company uses the asset and liability method of accounting for income
taxes.  Under the asset and liability method, deferred income taxes are
recognized for the tax consequences of temporary differences by applying
currently enacted statutory rates applicable to future years to differences
between the financial statement carrying amounts and the tax bases of existing
assets and liabilities.  Valuation allowances are established when the
deferred tax assets are not currently assured of realization.

Accounting Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the

                                    -31-
</PAGE>

<PAGE>32

reporting period.  Actual amounts could differ from these estimates.

Research and Development Expenses

     The nature of the Company's bioanalytical laboratory services requires
that the Company develop new assay methods for use in testing pharmaceutical
products to determine the amount of drug present in each of the biological
specimens tested.  Each drug requires the development of a unique assay
method, the accuracy and precision of which must be documented according to
current scientific standards to meet FDA requirements.  The Company's research
and development group develops and validates these unique assay methods.

     The Company charges research and development expenses to operations as
incurred.

Year 2000 

     The Company's policy is to expense all costs related to its Year 2000
compliance program unless the useful life of the technological asset is
extended or increased.

New Accounting Standards

     During 1997, the Financial Accounting Standards Board issued the
following Statements of Financial Accounting Standards that will impact the
Company's financial statement presentation and disclosure:  No. 130 regarding
Reporting Comprehensive Income and No. 131 regarding Segment Reporting.  The
Company will adopt these Standards as prescribed in fiscal 1999.  Adoption of
these Standards is not expected to have a material impact on the Company's
financial presentation and disclosure.

C.  ACCOUNTS RECEIVABLE

     Accounts receivable at June 30, 1998 and 1997 are shown net of an
allowance for doubtful accounts of $150,000 and $0, respectively.

D. PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment, at June 30, is summarized as follows:

                                              1998            1997
                                          -----------     -----------
         Land                             $   200,000     $   200,000 
         Building and improvements          3,031,862       2,880,085 
         Furniture and equipment            2,831,930       2,461,118
                                          -----------     -----------
                                            6,063,792       5,541,203 
         Less: accumulated depreciation
               and amortization            (2,241,419)     (1,887,071)
                                          -----------     -----------
                                          $ 3,822,373     $ 3,654,132 
                                          ===========     ===========
                                    -32-
</PAGE>
<PAGE>33

     Assets held under capital lease at June 30, 1998 and 1997, were $441,922
and $289,990, respectively.  Accumulated amortization of assets held under
capital lease at June 30, 1998 and 1997, was $75,324, and $119,267,
respectively.

     During fiscal year 1998, the Company wrote off certain fully depreciated
assets with an historical cost basis of $176,982.  

E.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     At June 30, accounts payable and accrued expenses consisted of the
following:

                                              1998            1997
                                          -----------     -----------
         Trade accounts payable           $   388,389     $   488,522
         Accrued payroll and 
           related expenses                   145,220          94,647
         Other accrued expenses               383,207         329,517
                                          -----------     -----------
                                          $   916,816     $   912,686
                                          ===========     ===========

F. OTHER ASSETS

     At June 30, 1998, the Company held 44,642 shares of common stock and
warrants to acquire 11,161 shares of common stock, at an exercise price of
$2.40 per share, of Hybridon, Inc. (OTCBB:HYBN) with a carrying value of
$110,909.  The carrying value of the stock was determined by the average of
the bid and ask prices of the stock as reported by the National Quotation
Bureau on June 30, 1998, which was $2.48 per share.  The Company received the
stock and warrants in exchange for an account receivable in the amount of
$89,284.  The warrants expire on May 5, 2003 and are not subject to a call
provision.

G. DEBT 

     At June 30, long-term debt consisted of the following:

                                              1998            1997
                                          -----------     -----------
         Note payable                     $         -     $ 1,706,819  
         Less: current portion                      -        (206,588)
                                          -----------     -----------
                                          $         -     $ 1,500,231 
                                          ===========     ===========

     On February 5, 1998, the Company elected to repay the remaining principal
balance on its term note payable to NationsBank, N.A. , thereby eliminating
its bank debt.  The Company continues to have available a $500,000 working

                                    -33-
</PAGE>

<PAGE>34

capital borrowing facility which was unused at June 30, 1998.  Terms of the
credit facility provide for interest at the Bank's prime rate and advances
against eligible receivables.  The borrowing agreement is collateralized by
substantially all of the Company's assets, places restrictions on borrowings
and investments, and requires maintenance of specified amounts of working
capital, net worth and cash flow ratios.  

     Cash payments for interest were $132,495, $181,722, and $362,946, in
fiscal years 1998, 1997, and 1996, respectively.

H. INCOME TAXES

     The Company's expenses for income taxes result from the impact of
alternative minimum tax charges and credits.

     Deferred tax balances are comprised of the following:

                                                   June 30,
                                          ---------------------------
                                              1998            1997
                                          -----------     -----------
Deferred tax assets:
         Accounts receivable              $    58,500     $         -
         Property, plant and equipment        279,201         388,964
         Accrued liabilities                   40,802          20,644 
         Net operating loss carryforwards   2,028,418       2,250,142 
         Alternative minimum tax credits       14,936           4,095 
         General business credits           1,466,998       1,432,538
                                          -----------     ----------- 
Total deferred tax assets                   3,888,855       4,096,383 

Less:  valuation allowance                 (3,888,855)     (4,096,383)
                                          -----------     -----------
Deferred income taxes per balance sheet   $         -     $         - 
                                          ===========     ===========

     Based on the weight of evidence available at June 30, 1998, in
management's opinion, a full valuation allowance is required to be recorded
against the Company's deferred income tax assets.

     At June 30, 1998, the Company had tax loss carryforwards of approximately
$5,201,000, expiring in 2006 through 2011, and general business credits of
approximately $1,467,000 expiring during the period 1999 through 2010.

     The principal differences between the actual effective tax rate and the
statutory federal tax rate are as follows:




                                    -34-
</PAGE>


<PAGE>35

                                         Year ended June 30,             
                                   1998         1997         1996    
                                ----------   ----------   ----------
Statutory rate                     34.0 %       34.0 %       34.0 %
State income taxes - 
  net of federal benefit            4.9          4.9          4.9    
Alternative minimum tax             2.0            -           .8    
Alternative minimum tax credits     (.7)           -          (.2)  
Loss carryforwards                (38.9)       (38.9)       (38.9)
                                ----------   ----------   ----------
Effective rate                      1.3 %          - %         .6 %
                               ==========   ==========   ==========

     The Company made cash payments for income taxes in the fiscal years ended
June 30, 1998 and 1997, in the amounts of  $3,000 and $5,800, respectively. 
The Company received a refund for income taxes of $29,000 in the fiscal year
ended June 30, 1996. 

     The components of the Company's current and deferred income tax
provisions are as follows:

                                        Year ended June 30,             
                                   1998         1997         1996    
                                ----------   ----------   ----------
  Current provision
    Federal                    $    8,200   $        -   $    4,430
    State                               -            -            -
                               ----------   ----------   ----------
  Total current                $    8,200   $        -   $    4,430
                               ==========   ==========   ==========

  Deferred provision
    Federal                    $        -   $        -   $        - 
    State                               -            -            -
                               ----------   ----------   ----------
  Total deferred               $        -   $        -   $        -
                               ==========   ==========   ==========

I. COMMITMENTS AND CONTINGENT LIABILITIES

Leases

     On October 1, 1996, the Company commenced an operating lease for a
LC/MS/MS for utilization in its analytical laboratory.  The terms of the lease
include an original instrument cost of $358,000, 36 monthly payments of
approximately $10,200 and an end-of-lease-term option to retain or return the
instrument.  Lease expense for all operating leases, including leases with
terms of less than one year, amounted to $215,100, $168,000, and $50,700 for
the years ended June 30, 1998, 1997 and 1996, respectively.  The future
expected payout of leases with terms in excess of one year is as follows:

                                    -35-
</PAGE>

<PAGE>36
                                  Year ending June 30,
                                  -------------------
                                         1999         $  166,424
                                         2000             54,149
                                         2001              7,996
                                         2002              2,125
                                                      ----------
                                                      $  230,694
                                                      ==========

     The Company has entered into capital lease arrangements for the purchase
of furniture and laboratory equipment, which included one LC/MS/MS, in the
aggregate amount of $441,922.  The current and long-term portions of the
capital lease obligations are in accounts payable and accrued expenses and
other liabilities, respectively.  The future expected payout of these capital
leases is as follows:

                                  Year ending June 30,
                                  -------------------
                                         1999         $  127,991
                                         2000            110,960
                                         2001            152,721
                               less: interest portion    (57,161)
                                                      ----------
                                                      $  334,511 
                                                      ==========

Legal Proceedings

     On January 24, 1997, the Company was notified that it may have incurred
liability or may incur liability under Section 107(a) of the Comprehensive
Environmental Response, Compensation and Liability Act, as amended (CERCLA),
42 U.S.C. Section 9607(a), in connection with the RAMP industries Site in
Denver, Colorado.  The Environmental Protection Agency (the "EPA") has
identified approximately 800 entities that shipped wastes to the site and is
conducting an investigation of the source, extent and nature of the release or
threatened release of hazardous substances, pollutants or contaminants, or
hazardous wastes, on or about the RAMP Industries Site.  It is believed that
the Company may have disposed of 15 cubic feet, or two drums, of waste at this
site.  Management is unable to estimate at this time the Company's portion of
such costs, but based on information available to date, management does not
believe that the resolution of this matter will be material to the Company's
financial position, results of operations, or cash flows.

J. CAPITAL STOCK AND STOCK PLANS

Preferred Stock and Warrants

     The Board of Directors is authorized to issue up to 1,500,000 shares of
preferred stock at such time or times, in such series, with such designations,
preferences, or other special rights, as it may determine.

                                    -36-
</PAGE>

<PAGE>37

     On December 23, 1997, the Company issued 833,300 shares of a newly
created Class A Convertible Preferred Stock and warrants to purchase 1,250,000
shares of the Company's Common Stock, and entered into a Registration Rights
Agreement and Technology Sharing Agreement in connection therewith, to
investors including certain affiliates of Aster.Cephac S.A. and CAI Advisors &
Co. (collectively, the "Purchasers").  The securities were issued pursuant to
a Preferred Share and Warrant Purchase Agreement dated as of December 4, 1997. 
The Purchasers beneficially own approximately 41% of the Company's voting
securities without giving effect to the possible exercise of warrants, or
approximately 54% of the Company's voting securities if all the warrants are
exercised.

     The Agreement provided for the sale to the Purchasers of a total of
833,300 shares of Class A Convertible Preferred Stock for $4,937,500 or $5.925
per share.  The Preferred Stock is convertible at any time into shares of
Common Stock at a conversion ratio of one share of Preferred Stock for two
shares of Common Stock.  The conversion ratio is subject to adjustment under
certain circumstances to prevent dilution.  In the event of liquidation of the
Company, the holders of the shares of Preferred Stock who do not convert their
shares into Common Stock are entitled to receive $5.925 per share, prior to
any distributions being made to the holders of any other class or series of
the Company's capital stock.

     In addition, the Agreement provided for the sale to the Purchasers, for
$62,500, of warrants to purchase 1,250,000 shares of Common Stock.  The
warrants are fully exercisable at $6.00 per share and expire on December 23,
2000.  

     Net earnings have been adjusted for the fiscal year ended June 30, 1998,
for the deemed preferred stock dividend to the Purchasers, resulting in a net
loss applicable to common stockholders.  The dividend was computed based on
the excess of the fair market value of the Company's Common Stock, into which
the Preferred Stock was convertible, over the purchase price of the Preferred
Stock at the date of issue.  The dividend was recorded for financial reporting
purposes only and was not paid to the Purchasers.

Reverse Stock Split

     On April 6, 1998, the Company's stockholders approved a five-to-one
reverse split of the Company's Common Stock, the change of authorized shares
of the Company's Common Stock to 10,000,000 shares, par value $0.005 per
share, and the reduction of capital for payment of fractional shares and
amendment of the Company's Charter in connection therewith.  The reverse
split, which became effective at the close of business on April 17, 1998, did
not affect the rights and privileges of holders of Common Stock, either before
or after the reverse split.  The Company did not issue fractional shares as a
result of the reverse split, and each fraction of a share was exchanged for
cash.  The Company's capital was reduced by the amount of cash paid for
fractional shares, the total payment of which was immaterial.


                                    -37-

</PAGE>

<PAGE>38

     All share and per share information in the consolidated financial
statements have been restated to give effect to the reverse stock split.

Stock Option Plans

     The Company has stock option plans under which incentive and non-
qualified stock options may be granted to key employees.  As of June 30, 1998,
the plans provide for the delivery of up to 323,005 shares of common stock
upon exercise of options granted at no less than the fair market value of the
shares on the date of grant.  Options may be granted for terms up to but not
exceeding ten years and are generally fully vested after five years from the
date granted.   

     In November 1996, the Board of Directors elected to discontinue cash
compensation for its non-employee directors and to adopt a Non-Employee
Directors Stock Option Plan (the "1996 Plan") effective November 25, 1996. 
The 1996 Plan was amended by resolution of the Board of Directors on January
20, 1998 in order to increase the number of shares of Common Stock subject to
options available for grant under the 1996 Plan.  Each non-employee director
shall be granted options to purchase 24,000 shares of the Company's Common
Stock, at the fair market value of the stock on the effective date of the
grant, which shall vest in four equal installments of one-quarter over four
years.  The first year's grant will be pro-rated for directors joining the
Board after the effective date.  The first installment shall vest on the
effective date of the grant.  Thereafter, on the date of each of the next
three annual meetings of stockholders at which elections to the Board are
conducted, an installment of 6,000 shares shall vest in each serving director
who is reelected to the Board.  The 1996 Plan, as amended, shall be
administered by the Board or the Compensation Committee established by the
Board and provides that the number of shares of Stock that may be issued
pursuant to options granted under the 1996 Plan shall not exceed in the
aggregate 200,000 shares.  As of June 30, 1998, there were 160,500 options
granted and 148,500 options outstanding under the 1996 Plan. The 1996 Plan was
ratified by the Company's stockholders at the Company's Special Meeting in
lieu of Annual Meeting of Stockholders held April 6, 1998.

     In addition to the options described above, the Company has granted non-
qualified options to purchase 56,920 shares of the Company's Common Stock to
non-employees.  The options were granted at fair market value of the stock on
the effective date of the grant and were considered vested on the effective
date of the grant.

     The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" and has continued to account for its stock based compensation in
accordance with the provisions of APB No. 25.  Accordingly, no compensation
cost has been recognized for the stock option plans. Had compensation cost for
the Company' stock option plans been determined based on the fair value at the
date of grant for awards in 1998, 1997 and 1996 consistent with the provisions


                                    -38-

</PAGE>
<PAGE>39

of SFAS No. 123, the Company's net loss and loss per share would have been
adjusted to the pro forma amounts indicated below:

                                                1998       1997       1996    
                                             ---------- ---------- ----------
Net earnings (loss) applicable to 
  common stockholders- as reported          ($ 398,046)($ 109,513)   $778,895

Net earnings (loss) applicable to
   common stockholders- pro forma           ($ 526,181)($ 153,451)   $768,854

Basic earnings (loss) per share - as reported   ($0.16)    ($0.04)      $0.32
Basic earnings (loss) per share - pro forma     ($0.22)    ($0.06)      $0.32
Diluted earnings (loss) per share - as reported ($0.16)    ($0.04)      $0.32
Diluted earnings (loss) per share - pro forma   ($0.22)    ($0.06)      $0.31
  
                                                  Year Ended June 30,
                                                1998      1997       1996    
                                             ---------- ---------- ----------
  Weighted average fair value 
  of options granted:                            $4.12      $1.47      $1.50  

     The fair value of each option grant is estimated on the date of grant
using a type of Black-Scholes option-pricing model with the following
assumptions used for grants issued during the years ended June 30, 1998, 1997,
and 1996:  dividend yield of 0%, expected volatility of 69.4%, expected term
of 5 years, and risk free interest rates which varied from grant to grant
based on the 10 year Treasury Rate in effect at the time of grant, the
weighted average of which was 5.7% in fiscal 1998, 6.48% in fiscal 1997, and
6.12% in fiscal 1996.

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferrable.  In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility.  Changes in the subjective input assumptions can materially affect
the fair value estimate, therefore, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value
of its stock options.

    The status of stock options is summarized as follows:










                                    -39-
</PAGE>

<PAGE>40

                                                        Weighted 
                                                         Average
                                            Number        Price      Options
                    Option Price           of Shares    per Share  Exercisable
                ------------------------   ---------    ---------  ----------- 
Balance
 June 30, 1995 ($1.40 - $26.25 per share)    216,213       $2.95      158,532

    Granted    ($2.1875 - $2.50 per share)    56,340       $2.40
    Exercised                                      -           -
    Forfeited  ($2.1875 - $7.50 per share)   (34,540)      $3.20
                                            --------
Balance
 June 30, 1996 ($1.40 - $26.25 per share)    238,013       $2.80      172,687

    Granted    ($1.80 - $2.7345 per share)   145,120       $2.35
    Exercised                                      -           -
    Forfeited  ($1.575 - $10.00 per share)   (62,398)      $2.94
                                            --------
Balance
 June 30, 1997 ($1.40 - $26.25 per share)    320,735       $2.56      157,795 

    Granted    ($4.05 - $7.42 per share)     242,600       $6.63
    Exercised  ($2.1875 - $3.4375 per share) (16,960)      $2.66
    Forfeited  ($1.925 - $7.50 per share)    (17,950)      $2.98
                                            --------
Balance
 June 30, 1998 ($1.40 - $26.25 per share)    528,425       $4.41      216,120
                                            ========

     The following table summarizes information about stock options
outstanding at June 30, 1998:
 
                Options outstanding                    Options exercisable
--------------------------------------------------- --------------------------
Range of     Number       Weighted     Weighted       Number       Weighted
exercise  outstanding at   average      average    exercisable at   average
prices      June 30,     remaining   exercise price   June 30,  exercise price
              1998    contractual life                 1998 
--------------------------------------------------- --------------------------
    $                       years           $                         $

1.40 - 5.00    291,845       5.9          2.39         173,540      2.30
5.01 - 26.25   236,580       9.4          6.92          42,580      6.40
--------------------------------------------------- --------------------------
1.40 - 26.25   528,425       7.4          4.41         216,120      3.11


     Options exercised to date total 158,962.  Of the options exercised to
date, 40,000 shares were returned to the Company and canceled when a note

                                    -40-
</PAGE>

<PAGE>41

receivable for common stock subscribed was canceled effective June 30, 1995.

     As of June 30, 1998, the Company has reserved 528,425 shares of Common
Stock for future issuance under authorized option grants.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         FINANCIAL DISCLOSURE
                                    NONE


                                  PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Pursuant to General Instruction G(3) to Form 10-K, the information
required by this Item with respect to directors is contained in the Company's
Proxy Statement for its 1998 annual meeting and is incorporated herein by
reference.  Such Proxy Statement will be filed with the Securities and
Exchange Commission not later than 120 days subsequent to June 30, 1998.


ITEM 11.  EXECUTIVE COMPENSATION

     Pursuant to General Instruction G(3) to Form 10-K, the information
required with respect to this Item is contained in the Company's Proxy
Statement for its 1998 annual meeting and is incorporated herein by reference. 
Such Proxy Statement will be filed with the Securities and Exchange Commission
not later than 120 days subsequent to June 30, 1998.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Pursuant to General Instruction G(3) to Form 10-K, the information
required by this Item with respect to directors is contained in the Company's
Proxy Statement for its 1998 annual meeting and is incorporated herein by
reference.  Such Proxy Statement will be filed with the Securities and
Exchange Commission not later than 120 days subsequent to June 30, 1998.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Pursuant to General Instruction G(3) to Form 10-K, the information
required by this Item with respect to directors is contained in the Company's
Proxy Statement for its 1998 annual meeting and is incorporated herein by
reference.  Such Proxy Statement will be filed with the Securities and
Exchange Commission not later than 120 days subsequent to June 30, 1998.




                                    -41-
</PAGE>

<PAGE>42

                                  PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

                                                               Page(s)
(a)1.  FINANCIAL STATEMENTS

       Report of Independent Accountants                         24
       Consolidated statements of operations 
         for each of the three years
         in the period ended June 30, 1998                       25
       Consolidated balance sheets at June 30, 1998 and 1997     26
       Consolidated statements of stockholders' equity
         for each of the three years in the period ended 
         June 30, 1998                                           27
       Consolidated statements of cash flows for each of the 
         three years in the period ended June 30, 1998           28
       Notes to consolidated financial statements                29

   2.  FINANCIAL STATEMENT SCHEDULE

       Report of Independent Accountants on Financial            43
         Statement Schedule

       Schedule IX - Valuation and Qualifying Accounts           44

   3.  EXHIBITS 

       See Exhibit Index                                         46

(b)  REPORTS ON FORM 8-K

     On April 21, 1998, the Company filed a Report on Form 8-K stating that as
a result of a stockholder vote on April 6, 1998, approving a five-to-one
reverse split of the Company's Common Stock, effective on the close of
business on Friday, April 17, 1998, the Company's authorized shares of Common
Stock is now 10 million and the total number of shares of Common Stock
outstanding approximates 2.4 million.  The Common Stock traded in the over-
the-counter market on a post-split basis on Monday, April 20, 1998.












                                    -42-
</PAGE>

<PAGE>43


PricewaterhouseCoopers LLP


               Report of Independent Accountants on Financial
                             Statement Schedule
                               --------------


To the Board of Directors and Stockholders 
  of PharmaKinetics Laboratories, Inc.

     Our report on the consolidated financial statements of PharmaKinetics
Laboratories, Inc. is included on Page 24 of this Form 10-K.  In connection
with our audits of such financial statements, we have also audited the related
financial statement schedule listed in the index on page 44 of this Form 10-K.

     In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included herein.



                                                      
                                     /s/PricewaterhouseCoopers LLP
                                     -----------------------------
                                     PricewaterhouseCoopers LLP


Baltimore, Maryland
August 14, 1998



















                                    -43-
</PAGE>

<PAGE>44

                       PHARMAKINETICS LABORATORIES, INC.
                                  SCHEDULE IX
                       VALUATION AND QUALIFYING ACCOUNTS
               FOR THE YEARS ENDED JUNE 30, 1998, 1997 AND 1996

<TABLE>

  Column A      Column B              Column C          Column D    Column E
-----------    ----------     ------------------------ ----------- -----------
               Balance at     Charged to    Charged to             Balance at 
               Beginning       Costs and       Other                  end
Description    of Period        Expense      Accounts  Deductions   of Period
-----------    ----------     ------------------------ ----------- -----------
<S>            <C>            <C>          <C>         <C>         <C>
Valuation Allowances:

   Doubtful accounts

   1998       $         -      $300,000             -   ($150,000)  $  150,000
   1997       $         -             -             -           -   $        -
   1996       $         -             -             -           -   $        -

 

   Deferred tax assets                         (a)

   1998       $ 4,096,383             -     ($207,528)          -   $3,888,855
   1997       $ 3,534,082             -      $562,301           -   $4,096,383
   1996       $ 3,866,842             -     ($332,760)          -   $3,534,082
   



Notes:
-----

(a)   Represents charges to deferred tax asset account.












</TABLE>

                                    -44-
</PAGE>

<PAGE>45
                                SIGNATURES
     Pursuant to the requirements of Section 13 or 15(d) 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.
                                        PHARMAKINETICS LABORATORIES, INC.
Date: September 28, 1998            By: /s/James K. Leslie
                                        ------------------- 
                                        James K. Leslie, Chief Executive
                                        Officer and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:

Date: September 28, 1998            /s/James K. Leslie 
                                    ------------------
                                    James K. Leslie, Chief Executive
                                    Officer, President and Director 
                                    (Principal Executive Officer)

Date: September 28, 1998            /s/Taryn L. Kunkel
                                    ------------------ 
                                    Taryn L. Kunkel,
                                    Vice-President and Chief Financial 
                                    Officer (Principal Financial Officer
                                    and Principal Accounting Officer)

Date: September 28, 1998            /s/ Leslie B. Daniels
                                    ---------------------
                                    Leslie B. Daniels, Director

Date: September 28, 1998            /s/ David von Kauffmann 
                                    -----------------------  
                                    David von Kauffmann, Director

Date: September 28, 1998            /s/ Thomas F. Kearns
                                    -------------------- 
                                    Thomas F. Kearns, Jr., Director

Date: September 28, 1998            /s/ Kamal K. Midha 
                                    ------------------
                                    Kamal K. Midha,Ph.D.,D.SC., Director

Date: September 28, 1998            /s/ John J. Thebault 
                                    --------------------
                                    John J. Thebault, M.D., Director

Date: September 28, 1998            /s/ Roger C. Thies  
                                    ------------------
                                    Roger C. Thies, Director

Date: September 28, 1998            /s/ Grover C. Wrenn 
                                    -------------------
                                    Grover C. Wrenn, Director
</PAGE>                             -45- 

<PAGE>46

                               EXHIBIT INDEX

Exhibit No.

2.    Disclosure Statement (incorporated by reference to Exhibit 2 of the
      Company's 8-K filing on April 6, 1993).

3.    (a)  Amended and Restated Articles of Incorporation, dated April 6,
           1998 (filed herewith).
      (b)  Bylaws, as amended and restated (incorporated by reference to
           Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q
           for the quarter ended December 31, 1997).

4.     Registration Rights Agreement dated as of December 23, 1997
       (incorporated by reference to Exhibit 4.4 to the Company's January
       7, 1998 filing on Form 8-K).

10.    Material Contracts
       (a) PharmaKinetics Laboratories, Inc. Incentive Stock Option Plan
           (incorporated by reference to Registration Statement on Form
           S-8, No. 33-51840).
       (b) PharmaKinetics Laboratories, Inc. 1996 Incentive Stock Option
           Plan (incorporated by reference to Registration Statement on
           Form S-8, No. 333-19865).
       (c) PharmaKinetics Laboratories, Inc. Non-qualified Employee Stock
           Option Plan (incorporated by reference to Registration
           Statement on Form S-8, No. 33-51838).
       (d) PharmaKinetics Laboratories, Inc. Amended and Restated 1996
           Non-Employee Director's Stock Option Plan (incorporated by
           reference to Registration Statement on Form S-8, No. 333-
           59647).
       (e) Severance Agreement, dated April 15, 1997,  between the
           Company and James K. Leslie (incorporated by reference to
           Exhibit 3(e) to the Company's Annual Report on Form 10-K for
           the fiscal year ended June 30, 1997).
       (f) Severance Agreement, dated April 15, 1997, between the Company
           and Taryn L. Kunkel (incorporated by reference to Exhibit 3(f)
           to the Company's Annual Report on Form 10-K for the fiscal
           year ended June 30, 1997).
       (g) Promissory Note, dated September 20, 1996, from James M.
           Wilkinson II, Ph.D. in favor of the Company (incorporated by
           reference to Exhibit 3(g) to the Company's Annual Report on
           Form 10-K for the fiscal year ended June 30, 1997).
       (h) Loan documents dated May 13, 1993, between Maryland National
           Bank (now, NationsBank, N.A.) and PharmaKinetics Laboratories,
           Inc. (incorporated by reference to Exhibit 10(d) to the
           Company's Annual Report on Form 10-K for the fiscal year ended
           June 30, 1993).
           (i)    Amended and Restated Insurance Agreement
           (ii)   Partnership/Joint Venture Borrowing Authority

                                    -46-
</PAGE>

<PAGE>47

           (iii)  Unconditional Guaranty of Payment
           (iv)   Security Agreement
           (v)    Commercial Promissory Note
           (vi)   Collateral Pledge Agreement
           (vii)  Note
           (viii) Indemnity Deed of Trust
           (ix)   Indemnity Deed of Trust
           (x)    Financing Statement
           (xi)   Loan Agreement 
                  (i) First Amendment to Loan Agreement, dated May 11,
                      1995, between NationsBank, N.A. and PharmaKinetics
                      Laboratories, Inc. (incorporated by reference to
                      Exhibit 10(e) to the Company's Annual Report on
                      Form 10-K for the fiscal year ended June 30, 1995).
       (j) First Commercial Promissory Note Modification Agreement dated
           May 11, 1995, between NationsBank, N.A. and PharmaKinetics
           Laboratories, Inc. (incorporated by reference to Exhibit 10(f)
           to the Company's Annual Report on Form 10-K for the fiscal
           year ended June 30, 1995).
       (k) First Note Modification Agreement dated May 11, 1995, between
           NationsBank, N.A. and PharmaKinetics Laboratories, Inc.
           (incorporated by reference to Exhibit 10(g) to the 
           Company's Annual Report on Form 10-K for the fiscal year ended
           June 30, 1995).
       (l) Second Amendment to Loan Agreement, dated June 20, 1996,
           between NationsBank, N.A. and PharmaKinetics Laboratories,
           Inc. (incorporated by reference to Exhibit 10(h) to the
           Company's Annual Report on Form 10-K for the fiscal year ended
           June 30, 1996).
       (m) Second Commercial Promissory Note Modification Agreement,
           dated November 30, 1996, between NationsBank, N.A. and
           PharmaKinetics Laboratories, Inc. (incorporated by reference
           to Exhibit 10(m) to the Company's Annual Report on Form 10-K
           for the fiscal year ended June 30, 1997).
       (n) Third Amendment to Loan Agreement, dated November 30, 1996,
           between NationsBank, N.A. and PharmaKinetics Laboratories,
           Inc. (incorporated by reference to Exhibit 10(n) to the
           Company's Annual Report on Form 10-K for the fiscal year ended
           June 30, 1997).
       (o) Second Note Modification Agreement dated August 1, 1997,
           between NationsBank N.A. and PharmaKinetics Laboratories,
           Inc. (incorporated by reference to Exhibit 10(o) to the
           Company's Annual Report on Form 10-K for the fiscal year
           ended June 30, 1997).
       (p) Fourth Amendment to Loan Agreement, dated August 1, 1997,
           between NationsBank, N.A. and PharmaKinetics Laboratories,
           Inc. (incorporated by reference to Exhibit 10(p) to the
           Company's Annual Report on Form 10-K for the fiscal year ended
           June 30, 1997).
       

                                    -47-
</PAGE>


<PAGE>48

       (q) Fifth Amendment to Loan Agreement, dated November 30, 1997,
           between NationsBank N.A. and PharmaKinetics Laboratories,
           Inc. (incorporated by reference to Exhibit 10(q) to the
           Company's Quarterly Report on Form 10-Q for the quarter ended
           December 31, 1997).
       (r) Third Note Modification Agreement, dated November 30, 1997,
           between NationsBank N.A. and PharmaKinetics Laboratories,
           Inc. (incorporated by reference to Exhibit 10(r) to the
           Company's Quarterly Report on Form 10-Q for the quarter ended
           December 31, 1997).
       (s) Third Commercial Promissory Note Modification Agreement, dated
           November 30, 1997, between NationsBank N.A. and PharmaKinetics
           Laboratories, Inc. (incorporated by reference to Exhibit 10(s)
           to the Company's Quarterly Report on Form 10-Q for the quarter
           ended December 31, 1997).
       (t) Technology Sharing Agreement dated as of December 23, 1997
           (incorporated by reference to Exhibit 99.2 to the Company's
           January 7, 1998 filing on Form 8-K).

21.   List of subsidiaries of registrant (incorporated by reference to
      Exhibit 10(g) to the Company's Annual Report on Form 10-K for the
      fiscal year ended June 30, 1995).
23.   Consent of Independent Accountants (filed herewith).

27.   Financial Data Schedule (filed herewith).

99.   (a) Court Order approving Debtor's Amended Plan of reorganization
          (incorporated by reference to the Company's 8-K filing on April
          6, 1993).
      (b) Court Order approving Application for Final Decree(incorporated
          by reference to Exhibit 99 (b) to the Company's Annual Report
          on Form 10-K for the fiscal year ended June 30, 1996).



















                                    -48-
</PAGE>