<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, 1997  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, $.001 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 2, 1997, 12,195,891 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 $4,095,916.

List hereunder the following documents if incorporated by reference and
the part of the Form 10-K into which the document is incorporated: none.
</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-
rescription 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.

     In connection with the implementation of a new strategic plan, the 
Company is pursuing business opportunities in four segments of 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.

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

                                  -2-
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<PAGE>3
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 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 is expected to
expand 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.

                                  -3-
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<PAGE>4
     Study participants usually arrive at the Company's controlled
environment facility the night before testing is to begin.  To maximize
reliability of the 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 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.  

     CLINICAL TRIAL MANAGEMENT AND MONITORING

     The Company provides project management and monitoring of Phase II, III

                                -4-
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<PAGE>5
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
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

                                  -5-
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<PAGE>6
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 have affected and could continue to 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 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

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<PAGE>7
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 is likely to
result 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.

     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, 1997, 1996 and 1995, one customer contributed
in excess of 10% of contract revenue, accounting for 29%, 27% and 11%,
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

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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, so there is no
currency exchange risk to the Company.  The Company has recognized revenue
of $3,221,000, $3,301,000, and $2,208,000, for the years ended June 30,
1997, 1996 and 1995, respectively, from its clients outside of the United
States.

     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 begin.  At June 30, 1997, the backlog was approximately $6.0
million.  At June 30, 1996, the Company's backlog  was approximately $4.0
million.  The Company expects to recognize revenue from studies included in
the June 30, 1997, backlog during fiscal 1998 and future fiscal years.

     EMPLOYEES

     At July 31, 1997, the Company had 151 employees (58 of whom were part-
time employees), of which 9 hold Ph.D. or M.D. degrees and 11 others hold
masters degrees.  The Company does not have collective bargaining agreements
with any of its employees and considers its employee relations to be
satisfactory.

     BUSINESS CONSIDERATIONS

     Certain statements contained in this Annual Report on Form 10-K are
forward looking statements that have been made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.  There
are numerous risks and uncertainties which may cause the Company's actual
results in future periods or plans for future periods to differ materially
from the forward-looking statements contained herein.  Those risks include,
among others, (1) general economic conditions, (2) conditions affecting the
pharmaceutical industry and the generic drug industry in particular, and (3)
consolidation resulting in increased competition within the Company's
market, as well as certain other risks described herein.


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

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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
borrowing agreements with NationsBank, N.A. (see Notes C and E to the
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.  Therefore, the bankruptcy case is closed.

      (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
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.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                                   NONE


                                  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

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market for the Company's stock is limited and sporadic.  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, 1997                 June 30, 1996
                           --------------                -------------- 
             Quarter         High    Low                  High    Low
             -------       ------- ------                ------ ------- 
             First         $ 21/32 $ 5/16                $ 9/16 $ 11/32
             Second           5/8   13/32                 15/32    1/4
             Third            7/16   3/8                   7/16   11/32
             Fourth           3/8   .245                   1/2    11/32

     Such quotations 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 2, 1997, was
1,107.

     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.


ITEM 6:  SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                                       Years ended June 30,
                    -------------------------------------------------------
                       1997        1996       1995       1994       1993
                    ---------- ----------- ---------- ---------- ----------
<S>                 <C>        <C>         <C>        <C>        <C>
Revenues            $9,597,536 $10,962,160 $9,893,762 $8,847,674 $8,718,246

Earnings (loss):
 Before 
  extraordinary item ($109,513)   $778,895   $127,827   $204,851 ($197,947)
Extraordinary item           -           -          -          -  $107,016

Net earnings (loss)  ($109,513)   $778,895   $127,827   $204,851  ($90,931)

Earnings (loss) 
  per share:
 Before 
  extraordinary item    ($0.01)      $0.06      $0.01      $0.02    ($0.02)
 Extraordinary item          -           -          -          -      0.01

Net earnings (loss) 
  per share             ($0.01)      $0.06      $0.01      $0.02    ($0.01)

Weighted average 
  shares outstanding 12,195,891 12,319,646 12,598,102 12,780,687 10,719,615


                                  -10-
</PAGE>
<PAGE>11
<S>                  <C>        <C>        <C>        <C>        <C>
Total Assets         $5,958,732 $6,622,959 $6,553,348 $6,163,128 $6,198,151

Working capital
  (deficiency)         $282,538   $411,498   ($63,474)  $262,632   $831,114

Long-term 
  liabilities        $1,538,945 $1,784,876 $2,074,109 $2,437,373 $2,866,072

Stockholders' equity $2,438,241 $2,547,754 $1,768,859 $1,540,669 $1,364,898
---------------------------------------------------------------------------
Notes to Selected Financial Data:

     The Company has not declared a dividend on common stock since
inception.

     During the fiscal year ended June 30, 1993, the Company recorded
$68,000 for expenses associated with the reorganization of the Company under
the Bankruptcy Code and debt forgiveness of $107,016, which was recorded as
an extraordinary item.
</TABLE>


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

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 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.

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

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<TABLE>
                          Percentage of            Period to Period 
                          Total Revenues                 Change
                       ---------------------      -------------------
                                                    1997       1996
                        Years ended June 30,          Compared to
                        1997    1996    1995        1996       1995
                       -----   -----   -----       -----      -----
<S>                    <C>     <C>     <C>         <C>        <C>
Contract revenue        91.3%   95.5%   93.5%      (16.3)%     13.2%
License fees             8.7     4.5     6.5        69.1      (23.8)
                       -----   -----   -----       -----      -----    
Total                  100.0   100.0   100.0       (12.4)      10.8
Cost of contracts       73.5    66.5    68.9        (3.2)       7.0
                       -----   -----   -----       -----      -----
Gross margin            26.5    33.5    31.1       (30.7)      19.2
Research 
  and development        4.7     3.6     4.2        12.6       (5.5)
Selling, general
  and administrative    21.4    20.9    22.2       (10.2)       4.3
                       -----   -----   -----       -----      -----
Operating income         0.4     9.0     4.7       (95.9)     112.7   
Interest expense        (1.9)   (2.0)   (2.6)      (16.7)     (13.2) 
Interest income          0.4     0.4     0.4       (11.1)      (3.5)
Loss on disposal 
  of equipment             -    (0.2)      -      (100.0)         -
Loss on sale 
  of investments           -       -    (1.0)          -     (100.0)
Write-down 
  of investments           -       -    (0.5)          -     (100.0)  
                       -----   -----   -----       -----      -----
Earnings (loss) 
  before taxes         (1.1)     7.1     1.0      (114.0)     690.9
Income taxes              -        -    (0.3)     (100.0)     115.4
                       -----   -----   -----       -----      -----
Net earnings (loss)    (1.1)%    7.1%    1.3 %    (114.1)%    509.3%
                       =====   =====   =====       =====      =====
                        
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 for projects not completed by June 30, 1997.  The Company has
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 will continue to receive license fee
income, based on clients' sales of their approved drug products, through the

                                  -12-
</PAGE>
<PAGE>13
expiration of the license fee agreements, the first of which will expire
early in fiscal 1998 and the second of which will expire in fiscal 2000.  In
addition, the Company began receiving license fees 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 the other two license fee arrangements.  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 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
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 is 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.

     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 have not been filled has 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 has 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 has invested in research and development to bring the instrument on-line
and to develop 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 16.7% from $223,000 in fiscal 1996 to
$186,000 in fiscal 1997.  The decrease is primarily attributable to
decreases in the Company's interest bearing obligations.  

     No provision for income taxes has been recorded in fiscal 1997,
compared to minimal amounts for Alternative Minimum Tax obligations in
fiscal 1996.  The Company has available tax loss carryforwards of
approximately $5,319,000, expiring in 2006 through 2010, and general
business credits of approximately $1,433,000, expiring during the period
1999 to 2009.


                                  -13-
</PAGE>
<PAGE>14
1996 COMPARED TO 1995

     Total revenue increased 10.8% from $9.9 million in fiscal 1995 to $11.0
million in fiscal 1996.  The increase was primarily attributable to the
Company's increased marketing efforts and timely completion of several
studies in the fourth quarter of fiscal 1996.  During fiscal 1996, the
Company continued to expand its client list, diversify its services and
perform multiple studies for several of its clients.  Contract revenue
increased 13.2% for fiscal 1996, compared to fiscal 1995.  Revenue growth in
the current fiscal year demonstrates continued growth in volume, despite the
Company's decision in July 1995 to discontinue its offering of Stability and
Dissolution services.  

     License fee income of $493,000 was recorded in fiscal 1996, compared to
$647,000 in fiscal 1995.  License fee income, based on clients' sales of
approved drugs, will continue through the expiration of the  license fee
agreements, the first of which will expire during fiscal 1998 and the second
of which will expire in fiscal 2000.  

     The Company's gross margin increased 19.2% from $3.1 million in fiscal
1995 to $3.7 million in fiscal 1996.  As a percentage of revenue, the
Company's gross margin increased from 31.1% in fiscal 1995 to 33.5% 
in fiscal 1996, on a 10.8% increase in total revenue.  The increase in gross
margin, despite a significant reduction in license fee income, is attributed
to increased productivity, timely completion of studies and increased study
shipments, particularly in the fourth quarter.  Fiscal 1995 also reflected a
reversal of $232,719 in accrued expenses for unemployment insurance
assessments on study participant compensation.  Absent this reversal in
fiscal 1995, gross profit as a percentage of revenue would have been 28.8%.

     Selling, general and administrative expenses totaled $2.3 million for
fiscal 1996, compared to $2.2 million in fiscal 1995, representing a 4.2%
increase.  As a percentage of revenue, selling, general and administrative
expenses were 20.9% in fiscal 1996 and 22.2% in fiscal 1995.  Selling,
general and administrative expenses increased due to the increased
compensation and related expenses associated with the growth of the
Company's administrative staff and certain non-recurring business
development costs.

     Research and development expenses decreased 5.5% from $420,000 in
fiscal 1995 to $397,000 in fiscal 1996.  The Company has continued to invest
in its research and development effort in 1996 in an effort to bring new
analytical methods on-line to meet client demands.  The Company re-directed
certain personnel to revenue generating activities throughout the year in an
effort to meet client demands.

     Interest expense decreased 13.2% from $257,000 in fiscal 1995 to
$223,000 in fiscal 1996.  The decrease is primarily attributable to
decreases in the Company's interest bearing obligations.  In addition, the
rate of interest on the Company's long-term debt has been favorably impacted
by reductions in the prime rate of interest of NationsBank, N.A., 8.25% at
June 30, 1996, compared to 9.00% at June 30, 1995.  Also, on a discretionary
basis, the Company has  made and expects to continue to make accelerated
principal payments relative to its term note payable to the Bank.

                                  -14-
</PAGE>
<PAGE>15
     During fiscal year 1996, the Company sold idle equipment from its
Stability and Dissolution services group.  The sale of the equipment
generated proceeds of $71,400 and a net loss of $17,172.

     Income tax expense of $4,400 was recorded in fiscal 1996.  The tax
arises from the impact of the Alternative Minimum Tax.  At June 30, 1996,
the Company had tax loss carry forwards of approximately $3,885,000,
expiring in 2006 through 2009, and general business credits of approximately
$1,432,500, expiring during the period 1999 through 2009.


LIQUIDITY AND CAPITAL RESOURCES

     On June 30, 1997, the Company had cash and equivalents of $556,000
compared to $990,000 at June 30, 1996.  The decrease in cash is the result
of contractual and discretionary  payments on long-term debt and capital
lease obligations and the purchase of equipment for utilization in the
Company's operating units.  The Company invested $249,000 in capital
equipment purchases, $195,000 of which was paid in cash with the remaining
$54,000 financed through capital leases.  The capital leases have terms
expiring through fiscal 2000.  The Company made principal payments of
$145,000 on its long-term debt obligations during fiscal 1997.  On a
discretionary basis, the Company has made and expects to continue to make
accelerated principal payments relative to its term note payable to
NationsBank, N.A. 

     At June 30, 1997, the Company was not in compliance with its cash flow
ratio as required by the terms of the note. The Bank has granted a waiver
for the Company's lack of compliance on this covenant.  At the time the
waiver was granted, the Company's term note payable to the Bank was amended. 
The note, which had previously borne interest at the rate of the Bank's
prime rate plus one-half percent, now bears interest at the rate of the
Bank's prime rate plus three-quarters percent.  This change was effective
August 1997.
 
     The Company's primary source of funds is cash flow from operations,
which decreased by $554,000 in fiscal 1997 from fiscal 1996, principally as
a result of the Company's 1997 results of operations as compared to 1996. 
The Company also has available a $500,000 line of credit from NationsBank,
N.A. which has not been drawn upon.  Terms of the Company's line of credit
include advances against eligible receivables, interest at the Bank's prime
rate of interest and cash pledges equal to amounts advanced.

     As of June 30, 1997, the Company's stockholders' equity totaled
$2,438,000 compared to $2,548,000 at  June 30, 1996.  The Company had
working capital of $283,000 at June 30, 1997, compared to working capital of
$411,000 at June 30, 1996.  The decrease in working capital reflects the
decrease in cash balances caused by the Company's poor performance during
fiscal 1997. The Company's performance in fiscal 1997 can be attributed to 
weakness in the generic drug market and failure to meet certain internal
time lines resulting in delayed revenue recognition for projects not
completed by June 30, 1997.

     The Company is currently negotiating to lease its second state-of-the-
art laboratory instrument, a LC/MS/MS, delivered to the Company in the first

                                  -15-
</PAGE>
<PAGE>16
quarter of fiscal 1998.  The cost of the instrument approximates $360,000.   

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

              Not applicable to this registrant in 1997




                    REPORT OF INDEPENDENT ACCOUNTANTS
                               _____________



To the Directors and Stockholders of
     PharmaKinetics Laboratories, Inc.


     We have audited the financial statements and financial statement
schedule of PharmaKinetics Laboratories, Inc. listed in the index on page 29
of this Form 10-K.  These financial statements and financial statement
schedule are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards 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. 
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of PharmaKinetics
Laboratories, Inc. as of June 30, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period
ended June 30, 1997 in conformity with generally accepted accounting
principles.  In addition, 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 therein.





                                              COOPERS & LYBRAND, L.L.P.



Baltimore, Maryland 
August 14, 1997

                                  -16-
</PAGE>
<PAGE>17
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

</TABLE>
<TABLE>
                   PHARMAKINETICS LABORATORIES, INC.
                      STATEMENTS OF OPERATIONS
<CAPTION>
                                                 Years ended June 30,
                                        -----------------------------------
                                           1997         1996        1995
                                        ----------  -----------  ----------
<S>                                     <C>         <C>          <C>
Revenues                                $9,597,536  $10,962,160  $9,893,762

Cost of contracts                        7,053,560    7,289,138   6,813,576
                                        ----------   ----------  ----------
  Gross profit                           2,543,976    3,673,022   3,080,186
Selling, general 
  and administrative expenses            2,057,212    2,290,828   2,199,365
Research and development expenses          446,677      396,741     420,049
                                        ----------   ----------  ----------
  Earnings from operations                  40,087      985,453     460,772

Interest expense                          (185,817)    (223,028)   (257,018)
Interest income                             36,217       40,748      42,207
Gain (loss) on disposal of equipment             -      (19,848)      1,315
Loss on sale of investments                      -            -    (101,479)
Write-down of investments                        -            -     (46,750)
                                        ----------   ----------  ----------
  Earnings (loss) before income taxes     (109,513)     783,325      99,047

Provision for (benefit of) income taxes          -        4,430     (28,780)
                                        ----------   ----------  ----------
  Net earnings (loss)                    ($109,513)    $778,895    $127,827
                                        ==========   ==========  ==========

Net earnings (loss) per share               ($0.01)       $0.06       $0.01
                                        ==========   ==========  ==========
Weighted average shares outstanding     12,195,891   12,319,646  12,598,102
                                        ==========   ==========  ==========
</TABLE>
                                  -17-
</PAGE>
<PAGE>18
<TABLE>
                   PHARMAKINETICS LABORATORIES, INC.
                            BALANCE SHEETS
<CAPTION>
                                                          June 30,
                                                 -------------------------
                                                    1997           1996
                                                 ----------     ----------
<S>                                              <C>            <C>
ASSETS
Current Assets:
  Cash and equivalents                             $556,040       $955,526
  Restricted cash and equivalents                         -         34,875
  Accounts receivable                             1,014,538      1,248,293
  Contracts in process                              503,163        336,930
  Prepaid expenses                                  190,343        126,203
                                                 ----------     ----------
     Total Current Assets                         2,264,084      2,701,827

Property, plant and equipment, net                3,654,132      3,862,710
Other assets                                         40,516         58,422
                                                 ----------     ----------
     Total Assets                                $5,958,732     $6,622,959
                                                 ==========     ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Current portion of long-term debt                $206,588       $143,616
  Accounts payable and accrued expenses             912,686      1,213,403
  Deposits on contracts in process                  862,272        933,310
                                                 ----------     ----------
     Total Current Liabilities                    1,981,546      2,290,329

Long-term debt                                    1,500,231      1,708,417
Other liabilities                                    38,714         76,459
                                                 ----------     ----------
     Total Liabilities                            3,520,491      4,075,205
                                                 ----------     ----------
Commitments and Contingent Liabilities
Stockholders' Equity:
  Preferred stock, no par value; 1,500,000                               
    shares authorized and unissued                        -              -
  Common stock, $.001 par value; authorized, 
    25,000,000 shares; issued and outstanding
    12,195,891 shares                                12,196         12,196
  Additional paid-in capital                     12,013,701     12,013,701
  Accumulated deficit                            (9,587,656)    (9,478,143)
                                                 ----------     ----------
     Total Stockholders' Equity                   2,438,241      2,547,754
                                                 ----------     ----------
     Total Liabilities and Stockholders' Equity  $5,958,732     $6,622,959
                                                 ==========     ==========
----------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
                                  -18-
</PAGE>
<PAGE>19
<TABLE>
                   PHARMAKINETICS LABORATORIES, INC.
                  STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
                                                Years ended June 30,
                                       ------------------------------------
                                           1997         1996         1995
                                       ----------   ----------   ----------
<S>                                    <C>          <C>          <C>
COMMON STOCK
Balance, beginning of year                $12,196      $12,196      $12,396
Stock canceled                                  -            -         (200)
                                       ----------   ----------   ---------- 
Balance, end of year                       12,196       12,196       12,196
                                       ----------   ----------   ----------
(Shares outstanding: 12,195,891 at 
  June 30, 1997, 1996 and 1995.)

ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year             12,013,701   12,013,701   12,113,501
Stock subscription canceled                     -            -      (99,800)
                                       ----------   ----------   ----------
Balance, end of year                   12,013,701   12,013,701   12,013,701
                                       ----------   ----------   ----------

ACCUMULATED DEFICIT
Balance, beginning of year             (9,478,143) (10,257,038) (10,384,865)
Net earnings (loss)                      (109,513)     778,895      127,827
                                       ----------   ----------   ----------
Balance, end of year                   (9,587,656)  (9,478,143) (10,257,038)
                                       ----------   ----------   ----------

NOTE RECEIVABLE ON 
  COMMON STOCK SUBSCRIBED
Balance, beginning of year                      -            -     (101,283)
Note canceled                                   -            -      100,000
Interest accrued                                -            -       (6,000)
Interest received                               -            -        7,283
                                       ----------   ----------   ----------
Balance, end of year                            -            -            -
                                       ----------   ----------   ----------

TOTAL STOCKHOLDERS' EQUITY             $2,438,241   $2,547,754   $1,768,859
                                       ==========   ==========   ==========
----------------------------------------------------------------------------
See notes to financial statements.
</TABLE>


                                  -19-
</PAGE>
<PAGE>20
<TABLE>
                   PHARMAKINETICS LABORATORIES, INC.
                      STATEMENTS OF CASH FLOWS
<CAPTION>
                                                  Years ended June 30,
                                           --------------------------------
                                              1997       1996        1995
                                           ---------  ---------  ----------
<S>                                        <C>        <C>        <C>
Cash flows from operating activities:
  Net earnings (loss)                      ($109,513)  $778,895    $127,827
  Adjustments to reconcile net earnings
   (loss) to net cash provided (used) 
   by operating activities:
   Depreciation and amortization             457,785    405,703     312,875
   Recovery of doubtful accounts                   -          -      (9,450)
   (Gain) loss in disposal of equipment            -     19,848      (1,315)
   Loss on sale of investments                     -          -     101,479
   Write-down of investments                       -          -      46,750
   Changes in operating assets 
    and liabilities:
     Accounts receivable                     233,755   (473,609)     40,628
     Contracts in process                   (166,233)   358,429    (176,390)
     Prepaid expenses                        (64,140)   (62,522)    (14,093)
     Refundable income taxes                       -     29,364     (29,364)
     Accounts payable and accrued expenses  (306,386)  (327,781)     61,935
     Deposits on contracts in process        (71,038)  (200,237)    378,372
     Other liabilities                             -          -    (204,729)
                                           ---------  ---------  ----------
Net cash provided (used)
  by operating activities                    (25,770)   528,090     634,525
                                           ---------  ---------  ----------
Cash flows from investing activities:
  Payments for purchases 
   of property and equipment                (195,367)  (164,474)   (410,885)
  Proceeds from sale of equipment                  -     71,400       4,300
  Proceeds from sale of investments                -          -      69,747
                                           ---------  ---------  ----------
Net cash used by investing activities       (195,367)   (93,074)   (336,838)
                                           ---------  ---------  ----------
Cash flows from financing activities:
  Payments on long-term debt                (145,214)  (304,264)   (273,153)
  Payments for capital lease obligations     (85,916)  (224,169)    (15,298) 
  Other assets                                17,906          -           -
                                           ---------  ---------  ----------
Net cash used by financing activities       (213,224)  (528,433)   (288,451)
                                           ---------  ---------  ----------
Increase (decrease) in cash and equivalents (434,361)   (93,417)      9,236
Cash and equivalents, beginning of year      990,401  1,083,818   1,074,582
                                           ---------  ---------  ----------
Cash and equivalents, end of year           $556,040   $990,401  $1,083,818
                                           =========  =========  ==========
Supplemental Schedule of Non-Cash Transactions
Fixed assets acquired 
   through capital leases                    $53,840   $347,167    $214,903
----------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
                                  -20-
</PAGE>
<PAGE>21
                   PHARMAKINETICS LABORATORIES, INC.
                     NOTES TO 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 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, 1997, the Company had three license fee
agreements from which it received license fee income.  The Company began
receiving license fees under its third license fee arrangement in November
1996.  Based upon actual client sales, license fee income of $833,701,
$493,076, and $647,308 was recorded during fiscal years ended June 30, 1997,
1996, and 1995, respectively.  License fee income, based on clients' sales
of approved drugs, will continue through the expiration of the license fee
agreements, the first of which will expire early in fiscal 1998.

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.  

     For the years ended June 30, 1997, 1996, and 1995 one client
contributed in excess of 10% of contract revenue, accounting for 29%, 27%
and 11% 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 has recognized revenue

                                   -21-
</PAGE>
<PAGE>22
of $3,221,000, $3,301,000, and $2,208,000, for the years ended June 30,
1997, 1996 and 1995, respectively, from its clients outside of the United
States.

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

     Earnings (loss) per share is determined by dividing net earnings by the
weighted average number  of common stock and dilutive common stock
equivalent shares outstanding.  Outstanding stock options granted under the
Company's stock option plans and other grants outside of the Company's plans
are considered common stock equivalents for the purpose of earnings (loss)
per share data; however, they are excluded from fiscal 1997 calculations
because the effect of their inclusion would be anti-dilutive.

Cash and Equivalents

     Cash equivalents consist of highly liquid investments with an original
maturity of ninety days or less.

     Restricted cash at June 30, 1996, of $34,875 represented an amount held
in escrow for payment of post-confirmation administrative claims.  The
amount was returned to the Company's general funds in September 1996.

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 63.6% of the outstanding
accounts receivable balance at June 30, 1997.  In addition, 34.5% of the
outstanding accounts receivable balance at June 30, 1997 was from clients
outside of the U.S.

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.


                                  -22-
</PAGE>
<PAGE>23
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 reporting period.  Actual amounts could differ from these
estimates.

     During fiscal 1995, the Company reversed a previous accrual for
unemployment insurance assessments on study participant compensation as a
result of a favorable ruling from Maryland's Board of Appeals, which had the
effect of increasing income before taxes by $232,719.

New Accounting Standards Adopted

     Statement of Financial Accounting Standards No. 123, "Accounting for
Stock Based Compensation", establishes accounting and reporting standards
for stock based employee compensation plans.  Accordingly, no compensation
cost has been recognized for the stock option plans consistent with previous
accounting under APB No. 25.  Effective July 1, 1996, the Company adopted
the disclosure only provisions of this Statement.

      Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long Lived Assets and Assets to be Disposed of", adopted
by the Company for its current fiscal year, requires that long lived assets
be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. 
Adoption of this standard had no impact on the Company's financial
statements.
 
New Accounting Standards

     In February 1997, the Financial Accounting Standards Board issued the
following Statements of Financial Accounting Standards:  No. 128 regarding
Earnings per Share and No. 129 regarding Capital Structure.  These require
the Company to present basic and diluted earnings per share in the financial
statements and make certain disclosures about the Company's capital
structure.  The Company must adopt the requirements of these Standards in
the financial statements for periods ending after December 15, 1997. 
Adoption of these Standards is not expected to have a material impact on the
Company's financial presentation and disclosure.


                                  -23-
</PAGE>
<PAGE>24
     Also 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.

C. PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment, at June 30, is summarized as follows:
                                              1997          1996  
                                           ----------    ----------
     Land                                    $200,000      $200,000 
     Building and improvements              2,880,085     2,876,430 
     Furniture and equipment                2,461,118     2,215,566 
                                           ----------    ----------
                                            5,541,203     5,291,996 
     Less: accumulated depreciation        (1,887,071)   (1,429,286)
                                           ----------    ----------
                                           $3,654,132    $3,862,710
                                           ==========    ========== 

     Assets held under capital lease at June 30, 1997 and 1996, were
$289,990 and $535,400, respectively.  Accumulated amortization of assets
held under capital lease at June 30, 1997 and 1996, was $119,267, and
$94,230, respectively.

     During fiscal year 1996, the Company wrote off certain fully
depreciated assets with an historical cost basis of $748,538.  In addition,
idle equipment  was sold, generating cash proceeds of $71,400 and a loss of
$17,172.  These assets had an historical cost basis of $156,359.
  
D.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     At June 30, accounts payable and accrued expenses consisted of the
following:
                                              1997          1996 
                                           ----------    ----------     
     Trade accounts payable                  $488,522      $293,001
     Accrued payroll and related expenses      94,647       341,768
     Other accrued expenses                   329,517       578,634
                                           ----------    ----------
                                             $912,686    $1,213,403
                                           ==========    ==========
   
E. DEBT 

At June 30, long-term debt consisted of the following:
                                              1997          1996
                                           ----------    ----------      
     Note payable                          $1,706,819    $1,852,033 
     Less: current portion                   (206,588)     (143,616)
                                           ----------    ----------
                                           $1,500,231    $1,708,417 
                                           ==========    ==========

                                   -24-
</PAGE>
<PAGE>25
     The Company has a note payable to NationsBank, N.A. and a $500,000
working capital borrowing facility.  Terms of the note and credit facility
provide for interest at the Bank's prime rate (8.50% at June 30, 1997) plus
an additional one-half percent on the note payable only.  Terms of the
Company's line of credit include advances against eligible receivables and
cash pledges equal to amounts advanced.  The note has a five year
amortization schedule with equal monthly payments of $25,000 for principal
and interest.  In May 1998, the Company will have the option to pay the
remaining principal balance over a three year period or to refinance the
note.  The borrowing agreements are collateralized by substantially all of
the Company's assets, place restrictions on borrowings and investments, and
require maintenance of specified amounts of working capital, net worth and
cash flow ratios.  The carrying value of the note approximates its current
value at June 30, 1997.

     At June 30, 1997, the Company was not in compliance with its cash flow
ratio as required by the terms of the note.  The Bank has granted a waiver
for the Company's lack of compliance on this covenant.  At the time the
waiver was granted, the Company's term note payable to the Bank was amended. 
The note, which had previously borne interest at the rate of the Bank's
prime rate plus one-half percent, now bears interest at the rate of the
Bank's prime rate plus three-quarters percent.  This change was effective
August 1997.

     Cash payments for interest were $181,722, $362,946, and $248,148, in
fiscal 1997, 1996, and 1995, respectively.

     The long-term debt matures as follows:

                                              Year ending June 30,
                                              -------------------
                                               1998       206,588
                                               1999       487,680
                                               2000       532,105
                                               2001       480,446
                                                       ----------
                                                       $1,706,819
                                                       ----------
     On a discretionary basis, the Company has made and expects to continue to
make accelerated principal payments relative to its term note payable to the
bank.

F. INCOME TAXES

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


Deferred tax balances are comprised of the following:



                                  -25-
</PAGE>
<PAGE>26
                                             Year ended June 30,
                                          ------------------------ 
                                             1997          1996
                                          ----------    ----------  
Deferred tax assets:
     Property, plant and equipment          $388,964      $508,225 
     Accrued liabilities                      20,644        73,973 
     Net operating loss carryforwards      2,074,466     1,515,251 
     Alternative minimum tax credits           4,095         4,095 
     General business credits              1,432,538     1,432,538
                                          ----------    ---------- 
Total deferred tax assets                  3,920,707     3,534,082 
     Less:  valuation allowance           (3,920,707)   (3,534,082)
                                          ----------    ----------
Deferred income taxes per balance sheet   $        -    $        -
                                          ==========    ==========

     Based on the weight of evidence available at June 30, 1997, in
management's opinion, a full valuation allowance is required to be recorded
against the Company's deferred income tax assets.

     At June 30, 1997, the Company had tax loss carryforwards of approximately
$5,319,000, expiring in 2006 through 2010, and general business credits of
approximately $1,433,000, expiring during the period 1999 through 2009.

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

                                               Year ended June 30,
                                           -------------------------
                                            1997      1996      1995
                                           -----     -----     -----    
Statutory rate                              34.0%     34.0%     34.0%
State income taxes - net of federal benefit  4.9       4.9       4.9    
Alternative minimum tax                        -        .8         -
Alternative minimum tax credits                -       (.2)    (29.0)   
Loss carryforwards                         (38.9)    (38.9)    (38.9)
                                           -----     -----     -----   
Effective rate                                 -%       .6%    (29.0)%
                                           =====     =====     =====

     The Company made cash payments for income taxes in fiscal years ended June
30, 1997, and 1995, in the amounts of  $5,800 and $5,000, respectively.  The
Company received a refund for income taxes of $29,000 in the fiscal year ended
June 30, 1996. 

G. 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

                                  -26-
</PAGE>
<PAGE>27
terms of less than one year, amounted to $168,000, $50,700 and $106,000 for the
years ended June 30, 1997, 1996 and 1995, respectively.  The future expected
payout of leases with terms in excess of one year is as follows:

                             Year ending June 30, 
                             -------------------

                                   1998                    $175,678
                                   1999                     166,352
                                   2000                      54,078
                                   2001                       7,925
                                   2002                       2,054
                                                           --------
                                                           $406,087
                                                           ========

     The Company has entered into capital lease arrangements for the purchase
of furniture and equipment in the amount of $289,990.  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,
                             -------------------

                                   1998                     $95,019 
                                   1999                      29,695 
                                   2000                      12,664 
                                   less: interest portion   (13,388)
                                                           -------- 
                                                           $123,990
                                                           ======== 

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.

H. CAPITAL STOCK AND STOCK PLANS

Preferred Stock

     The Board of Directors is authorized to issue up to 1,500,000 shares of

                                  -27-
</PAGE>
<PAGE>28
preferred stock at such time or times, in such series, with such designations,
preferences, or other special rights, as it may determine.

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, 1997, the plans
provide for the delivery of up to 2,569,900 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.  The 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 effective November 25, 1996.  Each non-employee
director shall be granted options to purchase 120,000 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 30,000 shares shall vest in each serving director who is
reelected to the Board.  The Plan 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
Plan shall not exceed in the aggregate 600,000 shares.  As of June 30, 1997,
there were 352,500 options outstanding under this Plan. The Plan will be
submitted to stockholders for ratification at the next Annual Meeting of
Stockholders.

     In addition to the options described above, the Company has granted Non-
qualified options to purchase 284,600 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 1997 and 1996 consistent with the provisions of
SFAS No. 123, the Company's net earnings (loss) and earnings (loss) per share
would have been adjusted to the pro forma amounts indicated below:

                                              1997          1996
                                           ---------     --------- 
Net earnings (loss) - as reported          ($109,513)     $778,895
Net earnings (loss) - pro forma            ($151,314)     $768,078
Earnings (loss) per share - as reported       ($0.01)        $0.06
Earnings (loss) per share - pro forma         ($0.01)        $0.06


                                   -28-
</PAGE>
<PAGE>29
     The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-
average assumptions for options granted in 1997 and 1996:

                                              1997          1996
                                           ---------     ---------
Expected option life                         5 years       5 years    
Expected annual volatility                     59.7%         78.6%    
Risk-free interest rate                         6.48%         6.12%
Dividend yield                                   .00%          .00%    

     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:

                                                        Weighted
                                                         Average         
                         Option                Number     Price     Options
                           Price               of Shares  per Share Exercisable
                 --------------------------   --------- --------- -----------
Balance
 June 30, 1994   ($0.28 - $5.25 per share)      988,467     $0.61    539,884

    Granted      ($0.44 - $0.7813 per share)    155,900     $0.51
    Exercised                                         -         -
    Forfeited    ($0.625 - $1.0625 per share)   (63,300)    $0.70
                                              --------- 
Balance
 June 30, 1995   ($0.28 - $5.25 per share)    1,081,067     $0.59    792,660

    Granted      ($0.4375 - $0.50 per share)    281,700     $0.48
    Exercised                                         -         -
    Forfeited    ($0.4375 - $1.50 per share)   (172,700)    $0.64
                                              ---------
Balance
 June 30, 1996   ($0.28 - $5.25 per share)    1,190,067     $0.56    863,434

    Granted      ($0.36 - $0.5469 per share)    725,600     $0.47
    Exercised                                         -         -
    Forfeited    ($0.315 - $2.00 per share)    (311,992)    $0.59
                                              ---------
Balance
 June 30, 1997   ($0.28 - $5.25 per share)    1,603,675     $0.51    788,975
                                              =========

     The following table summarizes information about stock options outstanding
at June 30, 1997:
 
                                   -29-
</PAGE>
<PAGE>30
                          Options outstanding           Options exercisable
                 -----------------------------------  -----------------------
  Range              Number       Weighted    Weighted     Number     Weighted
   of             outstanding     average     average   exercisable   average
exercise              at         remaining    exercise       at      exercise 
 prices            June 30,     contractual    price      June 30,     price
                     1997           life                    1997 
----------------------------------------------------  -----------------------
     $                              years        $                        $
0.28 - 1.00       1,527,775          6.9        0.47       715,325       0.47
1.01 - 5.25          75,900          4.9        1.44        73,650       1.45
----------------------------------------------------   -----------------------
0.28 - 5.25       1,603,675          6.8        0.51       788,975       0.56

     Options exercised to date total 710,012.  Of the options exercised to
date, 200,000 shares were returned to the Company and canceled when a note
receivable for common stock subscribed was canceled effective June 30, 1995.

     As of June 30, 1997, the Company has reserved 1,603,675 shares of Common
Stock for future issuance under authorized options and 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

     The directors and executive officers of the Company and their ages,
positions and years of service are as follows:

DIRECTORS

Name, Age, and Year
in which first
Elected a Director     Business Experience
---------------------  --------------------------------------------------------
Thomas F. Kearns, Jr.  Retired from Bear Stearns, Inc. in 1987; Director of
60 (1995)              Biomet, Inc., Fibrogen, Inc. and OnGard Systems, 
                       Inc.; Trustee of the University of North Carolina
                       Foundation and Endowment Fund.

James K. Leslie         President and Chief Executive Officer of PharmaKinetics
52 (1995)              Laboratories, Inc., since July 1995;  Executive Vice
                       President and Chief Operating Officer from June 1995 
                       to July 1995;  President and Chief Executive Officer 
                       of BioFin, Inc., a start-up biotechnology company from
                       July 1993 to June 1995; President and Chief Executive
                       Officer of SICPA Industries of America from 1991 to
                       1992; and President and Chief Operating Officer of
                       Ecogen, Inc. from 1988 - 1990.  Education - M.B.A.
                       (with distinction), Harvard Business School, Boston,
                       Massachusetts, 1969; B.SC., Chemical Engineering
                       (First Class Honors), University of Edinburgh,
                       Edinburgh, Scotland, 1967.

                                   -30-
</PAGE>
<PAGE>31
Roger C. Thies         Director of Hyman, Phelps and McNamara, P.C.
53 (1991)              representing a broad range of clients on legal issues
                       concerning food, drug, medical devices, and cosmetic
                       law and legislation since 1988; Vice President and
                       General Counsel of G.D. Searle managing all of the 
                       company's legal matters from 1986 to 1988.

Grover C. Wrenn        Chairman and CEO of Better Health Network, Inc.,
54 (1997)              a provider of consumer health information to physician
                       waiting rooms in more than 30 media markets since
                       1996.  Previously, President and CEO of Ensys
                       Environmental Products, Inc. from 1995 to 1996 and
                       prior to that President and CEO of Applied Bioscience
                       International from 1990 to 1995.  Director of
                       Strategic Diagnostics, Inc. and Laidlaw
                       Environmental Services.

     The Board of Directors has an Audit Committee and a Compensation
Committee, each consisting of all directors who are not employees of the
Company.  The Board of Directors does not have a Nominating Committee.

EXECUTIVE OFFICERS
                                Position with the Company   Employed  Officer 
Name                       Age  and principal occupation       Since    Since 
-------------------------- ---  --------------------------  --------  -------
Christopher H. Hendy, Ph.D.  37  Vice President Clinical          1993     1993
                                Evaluation Services since         (1)
                                December 1993; Director of
                                Clinical Research of
                                ICON Clinical Research from
                                February 1993 to December
                                1993; Managing Director of 
                                Harris Labs Ltd from April
                                1991 to February 1993; and
                                Manager of European Project
                                Management of Otsuka 
                                Pharmaceutical Co., Ltd from
                                April 1988 to April 1991. 
                                Education - Ph.D., 
                                Neurophysiology, Imperial
                                College, University of London,
                                1987; B.SC.., Zoology, Imperial 
                                College, University of London, 
                                1982. 

Taryn L. Kunkel              36  Vice President, Chief Financial  1990     1991
                                Officer and Treasurer since
                                February 1991; Controller from
                                November 1990 to February 1991;
                                and Director of Financial Analysis
                                from July 1990 to November 1990.
                                Education - M.A.S., Management,
                                Johns Hopkins University,
                                Baltimore, Maryland 1989; B.S., 
                                Accounting (Magna Cum Laude), 
                                Loyola College, Baltimore, 
                                Maryland 1983.  C.P.A.
                                   -31-
</PAGE>
<PAGE>32                                
Elizabeth A. Lane, Ph.D.     52  Vice President Biopharmaceutics  1988     1992
                                and Regulatory Affairs since May
                                1992; Director of Pharmacokinetics
                                and Regulatory Affairs from
                                September 1988 to May 1992.
                                Education - Ph.D., Pharmaceutical
                                Sciences, University of Washington,
                                Seattle, Washington, 1981; B.S. 
                                Pharmacy, University of Washington,
                                Seattle, Washington, 1973; B.Pharm.,
                                University of Sydney, Australia,
                                1965.

James K. Leslie              52  President and Chief Executive    1995     1995
                                Officer since July 1995;    
                                Executive Vice President and
                                Chief Operating Officer
                                from June 1995 to July 1995;
                                President and Chief Executive
                                Officer of BioFin, Inc., a start
                                up biotechnology company from 
                                July 1993 to June 1995; President
                                and Chief Executive Officer of
                                SICPA Industries of America from
                                1991 to 1992; and President and
                                Chief Operating Officer of Ecogen,  
                                Inc. from 1988 - 1990.  Education
                                - M.B.A. (with distinction), 
                                Harvard Business School, Boston,
                                Massachusetts, 1969; 
                                B.SC., Chemical Engineering (First
                                Class Honors), University of
                                Edinburgh, Edinburgh, Scotland, 
                                1967.

Vernon D. Parker, Ph.D.      49  Vice President Clinical Services 1997     1997
                                since January 1997; Director,     (2)
                                Clinical Pharmacology from 1995 
                                to 1997 of Wyeth-Ayerst Research;
                                Associate Director, Clinical 
                                Pharmacology from 1990 to 1995,
                                and Assistant Director, 
                                Clinical Pharmacology from 1988
                                to 1990 also at Wyeth-Ayerst
                                Research.  Education - Ph.D.,
                                Clinical Pharmacy with a minor
                                in pharmacology, Purdue 
                                University School of Pharmacy,
                                West Lafayette, Indiana, 
                                1983; M.S., Pharmacology and
                                Physiology, Tuskegee 
                                University School of Veterinary
                                Medicine, Tuskegee, Alabama, 1976;
                                B.S. Pharm., Pharmacy with a minor 
                                in chemistry, Florida A&M 
                                University School of Pharmacy, 
                                Tallahassee, Florida, 1970.
                                  -32-
</PAGE>
<PAGE>33
James M. Wilkinson II, Ph.D. 45  Vice President Analytical        1996     1996
                                Laboratory Services since
                                July 1996;  Associate Director,
                                Pharmaco International, Inc.
                                Analytical Laboratory Division
                                from December 1992 to June 1996.
                                Education - Postdoctoral Associate, 
                                University of Washington,
                                Seattle, Washington, 1979; 
                                Ph.D., Organic Chemistry, Duke
                                University, Durham, North Carolina,
                                1978; B.S., Chemistry, Virginia
                                Military Institute, Lexington,
                                Virginia, 1974.

(1)  Dr. Hendy resigned his position with the Company effective September 24,
     1996.
(2)  Dr. Parker joined the Company on January 3, 1997.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Based on the Company's review of copies of reporting forms received by it,
the Company believes that during the fiscal year ended June 30, 1997, all
applicable filing requirements were complied with, except that one report, a
Form 4, was filed late by Mrs. Kunkel.

ITEM 11.  EXECUTIVE COMPENSATION

EXECUTIVE OFFICERS

     The following table sets forth, for the Company's last three fiscal
years, the cash compensation paid or accrued by the Company, as well as certain
other compensation paid or accrued for those years, to its Chief Executive
Officer and other executive officers whose remuneration exceeded $100,000 for
the fiscal year ended June 30, 1997.


                                  -33-
</PAGE>
<PAGE>34

                             SUMMARY COMPENSATION TABLE
                                Annual Compensation
                             --------------------------
                                                            Long-term   All 
                                                          Compensation  Other
                                                          ------------  -----
                                                      Other Securities  All
                                                       Annual Underlying Other
Name and                      Fiscal  Salary   Bonus   Comp.  Options   Comp.
Principal Position             Year    ($)      ($)    ($)(1)    (#)    ($)(2)
----------------------------- ------ -------  -------  -------   -------  -----
James K. Leslie (3)            1997  150,000       -    6,000  100,000      -
President, CEO                 1996  124,000  87,043    6,000  100,000      -
and Director                   1995    4,700       -      230  120,000      -

Christopher H. Hendy, Ph.D.(4) 1997   28,700       -    1,500        -      -
Vice President                 1996  102,000  32,226    6,000        -      -
Clinical Evaluation Services   1995  102,000       -    6,000   10,000      -

Elizabeth A. Lane, Ph.D.       1997  100,000       -        -        -      -
Vice President                 1996   88,000  10,742        -        -      -
Biopharmaceutics and           1995   85,000       -    3,000        -      -
Regulatory Affairs

Vernon D. Parker, Ph.D. (5)    1997   51,000       -    2,500   60,000  3,600
Vice President                 1996        -       -        -        -      -
Clinical Evaluation Services   1995        -       -        -        -      -

James M. Wilkinson II, Ph.D.   1997  106,000       -    6,000   70,000  7,000
Vice President                 1996        -       -        -        -      -
Analytical Laboratory Services 1995        -       -        -        -      -

(1)  Other Annual Compensation includes personal benefits provided by the
     Company.
(2)  Other compensation includes amounts paid for relocation and related
     expenses.
(3)  Mr. Leslie joined the Company in June 1995.
(4)  Dr. Hendy resigned from the Company effective September 24, 1996.
(5)  Dr. Parker joined the Company on January 3, 1997.  Dr. Parker's annual
     salary for fiscal 1997 was $105,000, plus other compensation of $5,000.

SEVERANCE AGREEMENTS

     The Company has severance agreements with Mr. Leslie and Mrs. Kunkel, Vice
President and Chief Financial Officer, respectively.  The Agreements, which are
identical, provide for continuance of their respective annual base salaries
for a period of twelve (12) months from the date of termination if such
termination occurs at any time during a two (2) year period after a
"Significant Transaction" or a "Change of Board Composition", and is for
reasons other than "Just Cause", such terms being defined in the Agreements. 
Upon termination, the Agreements also provide for accelerated vesting of all
stock options and the option to extend the exercise period of such options. 
The Agreements were effective April 22, 1997.  As of June 30, 1997, benefits
payable would be approximately $156,000 for Mr. Leslie and approximately
$90,500 for Mrs. Kunkel.

                                  -34-
</PAGE>
<PAGE>35
STOCK OPTIONS

     The following table sets forth information concerning the grant of stock
options under the Company's 1996 Incentive Stock Option Plan during fiscal 1997
to the executive officers named in the Summary Compensation Table.

                             OPTION GRANTS IN LAST FISCAL YEAR
                                     INDIVIDUAL GRANTS

                                       % of Total
                                       Options
                             Options   Granted to     Exercise or
                             Granted   Employees in   Base Price   Expiration
Name                         (#)(1)    Fiscal Year    ($/share)    Date
------------------------------------------------------------------------------

James K. Leslie               100,000      13.8%       $0.469         7/01/06
Vernon D. Parker, Ph.D.        60,000       8.3%       $0.4531        1/13/07
James M. Wilkinson II, Ph.D.   70,000       9.6%       $0.469         7/01/06

(1)  All options were granted under the 1996 Incentive Stock Option Plan.  All 
     options vest over a four year period from the date of grant and all
     options expire ten years from the date of grant, if not exercised
     earlier. 

     The following table sets forth information related to the number and value
of options held by four of the Company's executive officers.  No options were
exercised during the fiscal year ended June 30, 1997.
                                                           
    AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES

                                                              Value of
                                              Number of       Unexercised
                         Shares               Unexercised     In-the-Money 
                         Acquired ($)         Options at      Options at  
                         in       Value       FY-End (#)      FY-End ($)(1)
Name                     Exercise Realized    Exer. Unexer.   Exer.   Unexer.
-------------------------------------------------------------------------------
Elizabeth A. Lane, Ph.D.      -       -      75,000        -       -         -
James K. Leslie               -       -      85,000  235,000       -         -
Vernon D. Parker, Ph.D.       -       -           -   60,000       -         -
James M. Wilkinson II, Ph.D.  -       -           -   70,000       -         -

(1)  The exercise price of all options exceeded market value at June 30, 1997.


DIRECTOR COMPENSATION

     Each member of the Board of Directors who is not an employee of the
Company, except one, received a monthly retainer of $1,366.66 and reimbursement
of expenses for attendance at meetings during the period July 1, 1996 through
November 30, 1996.  One director opted to forego his monthly retainer for
personal reasons.  Two of the directors serving the Company during this time
period did not stand for reelection to the Board of Directors at the Company's
Annual Meeting of Stockholders on November 25, 1996.

                                  -35-
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<PAGE>36   
     Subsequent to the Annual Meeting of Stockholders on November 25, 1996 the
Company instituted a stock option plan covering non-employee directors pursuant
to which each director shall be granted options to purchase 120,000 shares at
the fair market value of the Stock on the effective date of the grant, which
shall vest in four equal installments of 30,000 shares over four years.  The
first year's installment shall vest on the effective date of the grant and
shall be prorated for directors joining the Board after the effective date of
November 25, 1996, but shall in no event be less than 15,000 shares. 
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
30,000 shares shall vest in each serving director who is reelected to the
Board.  The Plan shall be administered by the Board and provides that the
number of shares of Stock that may be issued pursuant to Options granted under
the Plan shall not exceed 600,000 shares.  Currently there are options covering
352,500 shares outstanding under this Plan.  Although the Plan, by its terms,
became effective on November 25, 1996, no options granted under this Plan may
be exercised unless and until the Plan has been approved by the vote of the
holders of a majority of the shares of Common Stock of the Company represented
in person or by proxy at the Company's next annual meeting of shareholders.

     Each member of the Board of Directors who is not an employee of the
Company continues to receive reimbursement of expenses for attendance at
meetings.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information as of September 2, 1997,
regarding stock ownership of management and owners of 5% or more of the
Company's Common Stock:
                                           Beneficial Ownership
                                  ------------------------------------       
                                    Number of               Percent of
Name & Address                     Shares Owned            Shares Owned
--------------                     ------------            ------------
R.A. Mackie and Co., L.P.               173,593                    1.4%
18 North Astor Street
Irvington, NY 10533

Robert A. Mackie, Jr.                   898,383                    7.4%
18 North Astor Street
Irvington, NY 10533

Allen and Company, Incorporated         843,155                    6.9%
Allen Holding Inc.
711 Fifth Avenue
New York, NY 10022

Thomas F. Kearns                         69,078 (1)                 (3)
Elizabeth A. Lane, Ph.D.                 75,000 (1)                 (3)
James K. Leslie                         245,000 (1)(2)             2.0%
Roger C. Thies                           44,600 (1)                 (3)
James M. Wilkinson II, Ph.D.             17,500 (1)                 (3)
Grover C. Wrenn                          22,500 (1)                 (3)

All directors and officers as a group   563,678 (1)                4.5%

                                  -36-
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<PAGE>37
(1)  Includes shares of stock which directors and officers have exercisable
     rights to acquire as of or within 60 days of June 30, 1997, through the
     exercise of options, in the amount of 30,000 shares for Mr. Kearns; 75,000
     shares for Dr. Lane; 135,000 shares for Mr. Leslie; 44,600 shares for Mr.
     Thies; 17,500 shares for Dr. Wilkinson; 22,500 shares for Mr. Wrenn;
     and 414,600 shares for all directors and officers as a group.
(2)  Of the total shares, 10,000 shares are held in the estate of Mary Hogan
     Leslie for which Mr. Leslie is a beneficiary.  Mr. Leslie serves as
     executor of the estate.
(3)  Less than 1%.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On September 20, 1996, Dr. Wilkinson executed a non-interest bearing
Promissory Note in favor of the Company in the amount of $20,000.  Dr.
Wilkinson may earn the forgiveness of the principal balance of the note upon
successful completion of specific goals and objectives over a five year period. 
None of the principal was forgiven for the fiscal year ended June 30, 1997. 
This financial accommodation was made to Dr. Wilkinson in connection with
recruitment for his position.


                             PART IV

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

                                                                  Page(s)
(a)1.  FINANCIAL STATEMENTS 

       Report of Independent Accountants                            16
       Statements of operations for each of the three years         17
          in the period ended June 30, 1997
       Balance sheets at June 30, 1997 and 1996                     18
       Statements of stockholders' equity for each of the three     19
          years in the period ended June 30, 1997
       Statements of cash flows for each of the three years         20
          in the period ended June 30, 1997
       Notes to financial statements                                21

   2.  FINANCIAL STATEMENT SCHEDULES

       Schedule II - Valuation and Qualifying Accounts              39

   3.  EXHIBITS 

       See Exhibit Index                                            40

(b)    REPORTS ON FORM 8-K

       No reports of Form 8-K were filed during the 
          quarter ended June 30, 1997.





                                  -37-
</PAGE>
<PAGE>38
                                 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 29, 1997                   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 29, 1997                   /s/James K. Leslie               
------------------------                   ------------------
                                           James K. Leslie,
                                           Chief Executive Officer,
                                           President and Director 
                                           (Principal Executive Officer)

Date: September 29, 1997                   /s/Taryn L. Kunkel             
------------------------                   ------------------
                                           Taryn L. Kunkel,
                                           Vice-President and 
                                           Chief Financial Officer
                                           (Principal Financial Officer
                                           and Principal Accounting Officer)

Date: September 29, 1997                   /s/Thomas F. Kearns
------------------------                   ------------------- 
                                           Thomas F. Kearns,
                                           Director

Date: September 29, 1997                   /s/Roger C. Thies
------------------------                   ----------------- 
                                           Roger C. Thies,
                                           Director 

Date: September 29, 1997                   /s/Grover C. Wrenn
------------------------                   ------------------ 
                                           Grover C. Wrenn,
                                           Director 



                                  -38-
</PAGE>
<PAGE>39


                   PHARMAKINETICS LABORATORIES, INC.
                             SCHEDULE II
                   VALUATION AND QUALIFYING ACCOUNTS
            FOR THE YEARS ENDED JUNE 30, 1997, 1996 AND 1995


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

Valuation 
  Allowance
  Deferred
  Tax Assets

     1997        $3,534,082           -     $386,625            -  $3,920,707
     1996        $3,866,842           -    ($332,760)           -  $3,534,082
     1995        $4,341,980           -    ($475,138)           -  $3,866,842


Notes:

(a)  Represents charges to deferred tax asset account.


See Note F to Financial Statements.




        










                                  -39-
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<PAGE>40
                             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) Articles of Incorporation as amended (incorporated by reference to 
      Exhibit 3(a) to the Company's Annual Report on Form 10-K for the fiscal
      year ended June 30, 1993).
  (b) Bylaws, as amended (incorporated by reference to Exhibit 3(b) to the
      Company's Annual Report on Form 10-K for the fiscal year ended June 30,
      1989).

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. 1996 Non-Employee Director's Stock
        Option Plan (filed herewith).
    (e) Severance Agreement, dated April 15, 1997,  between the Company and
        James K. Leslie (filed herewith).
    (f) Severance Agreement, dated April 15, 1997, between the Company and 
        Taryn L. Kunkel (filed herewith).
    (g) Promissory Note, dated September 20, 1996, from James M. Wilkinson II,
        Ph.D. in favor of the Company (filed herewith).
    (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
       (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).

                                  -40-
</PAGE>
<PAGE>41
    (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. (filed herewith).
    (n) Third Amendment to Loan Agreement, dated November 30, 1996, between
        NationsBank, N.A. and PharmaKinetics Laboratories, Inc. (filed
        herewith).
    (o) Second Note Modification Agreement dated August 1, 1997, between
        NationsBank N.A. and PharmaKinetics Laboratories, Inc. (filed
        herewith).
    (p) Fourth Amendment to Loan Agreement, dated August 1, 1997, between
        NationsBank, N.A. and PharmaKinetics Laboratories, Inc. (filed
        herewith).

11. Computations of net earnings per common share (filed herewith).

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).


















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