SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                   FORM 10-QSB

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 1998
                           Commission File No. 1-11182


                         BIO-IMAGING TECHNOLOGIES, INC.
        -----------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)


              Delaware                              11-2872047
   -------------------------------     ------------------------------------
   (State or Other Jurisdiction of     (I.R.S. Employer Identification No.)
   Incorporation or Organization)


   830 Bear Tavern Road, West Trenton, New Jersey                08628-1020
--------------------------------------------------------------------------------
   (Address of Principal Executive Offices)                      (Zip Code)


                                 (609) 883-2000
                           ---------------------------
                           (Issuer's Telephone Number,
                              Including Area Code)


      Check  whether the Issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 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:
                      ---------                          ---------


      State the number of shares  outstanding of each of the Issuer's classes of
common stock, as of March 31, 1998:

Class                                                 Number of Shares
-----                                                 ----------------

Common Stock, $.00025 par value                          7,773,878


      Transitional Small Business Disclosure Format (check one):

                  Yes:                                No:     X
                      ---------                          ---------


<PAGE>


                 BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
                 -----------------------------------------------

                                TABLE OF CONTENTS
                                -----------------

                                                                      Page
PART I      FINANCIAL INFORMATION

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

           CONSOLIDATED BALANCE SHEETS
           as of March 31, 1998 (unaudited) and
           September 30, 1997.........................................  2

           CONSOLIDATED STATEMENTS OF OPERATIONS
           For the Six Months Ended March 31, 1998 and 1997
           (unaudited)................................................  3

           CONSOLIDATED STATEMENTS OF OPERATIONS
           For the Three Months Ended March 31, 1998 and 1997
           (unaudited)................................................  4

           CONSOLIDATED STATEMENTS OF CASH FLOWS
           For the Six Months Ended March 31, 1998 and 1997
           (unaudited)................................................  5

           NOTES TO CONSOLIDATED FINANCIAL
           STATEMENTS (unaudited).....................................  6

      Item 2.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations.................... 10

           Results of Operations...................................... 10

           Liquidity and Capital Resources............................ 16

PART II    OTHER INFORMATION

      Item 1.  Legal Proceedings...................................... 17

      Item 4.  Submission of Matters to a Vote of Security Holders.... 18

      Item 5.  Other Information...................................... 20

      Item 6.  Exhibits and Reports on Form 8-K....................... 21

SIGNATURES     ....................................................... 22


                                      -i-


<PAGE>


                         PART I. FINANCIAL INFORMATION.
                         ------------------------------

Item 1.  Financial Statements.

      Certain  information  and footnote  disclosures  required under  generally
accepted accounting principles have been condensed or omitted from the following
consolidated  financial  statements pursuant to the rules and regulations of the
Securities and Exchange Commission, although Bio-Imaging Technologies, Inc. (the
"Company")  believes  that the  disclosures  are  adequate  to  assure  that the
information  presented is not misleading in any material respect.  The following
consolidated  financial  statements  should  be read  in  conjunction  with  the
year-end  consolidated  financial  statements and notes thereto  included in the
Company's  Annual Report on Form 10-KSB for the fiscal year ended  September 30,
1997.

      The results of operations for the interim periods presented herein are not
necessarily indicative of the results to be expected for the entire fiscal year.


                                      -1-
<PAGE>

<TABLE>
<CAPTION>

                           BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
                           -----------------------------------------------

                                     CONSOLIDATED BALANCE SHEETS
                                     ---------------------------


                                                                            March 31,    September 30,
                                                                              1998           1997
                                                                          ------------   -------------
                                                                           (unaudited)
                                 ASSETS
<S>                                                                       <C>            <C>        
Current assets:
   Cash and cash equivalents ..........................................   $ 1,892,827    $ 2,367,658
   Accounts receivable, net ...........................................     1,182,938      1,214,052
   Prepaid expenses and other current assets ..........................       110,033         88,518
                                                                          -----------    -----------
     Total current assets .............................................     3,185,798      3,670,228

Property and equipment, net ...........................................     1,481,852      1,669,678

Other assets ..........................................................        55,959         67,076
                                                                          -----------    -----------

     Total assets .....................................................   $ 4,723,609    $ 5,406,982
                                                                          ===========    ===========

                                   LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Deferred revenue ...................................................   $   321,898    $   414,360
   Accounts payable ...................................................       174,451         81,832
   Accrued expenses and other current liabilities .....................       446,250        239,351
   Current maturities of long-term debt ...............................        48,791         87,084
                                                                          -----------    -----------
     Total current liabilities ........................................       991,390        822,627
Long-term debt ........................................................         1,862         12,794
                                                                          -----------    -----------
     Total liabilities ................................................       993,252        835,421
                                                                          -----------    -----------

Stockholders' equity:
   Preferred stock - $.00025 par value;  authorized
    3,000,000 shares, 416,667 issued and
    outstanding ($500,000 liquidation preference) .....................           104            104
   Common stock - $.00025 par value; authorized
    18,000,000 shares, 7,773,878 and 7,753,878
    shares issued and outstanding at March 31, 1998
    and September 30, 1997, respectively ..............................         1,944          1,939
   Additional paid-in capital .........................................     9,231,497      9,215,603
   Accumulated deficit ................................................    (5,503,188)    (4,646,085)
                                                                          -----------    -----------
     Stockholders' equity .............................................     3,730,357      4,571,561
                                                                          -----------    -----------

     Total liabilities and stockholders' equity .......................   $ 4,723,609    $ 5,406,982
                                                                          ===========    ===========


                 See Notes to Consolidated Financial Statements


                                     -2-
<PAGE>
</TABLE>
<TABLE>
<CAPTION>

                    BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
                    -----------------------------------------------
                         CONSOLIDATED STATEMENTS OF OPERATIONS
                         -------------------------------------
                                      (unaudited)


                                                          For the Six Months Ended
                                                                 March 31,
                                                      -------------------------------
                                                          1998                1997
                                                      -----------         -----------
<S>                                                   <C>                 <C>
Project revenue ..................................    $ 2,063,911         $ 2,626,401

Project costs ....................................        962,721             954,987
                                                      -----------         -----------

Gross profit .....................................      1,101,190           1,671,414

General and administrative expenses ..............        764,096             839,817

Sales and marketing expenses .....................        526,097             387,450

Research and development expenses ................        139,309              94,183

Proxy and litigation expenses ....................        281,136                --

Restructuring and severance expenses .............        277,000                --
                                                      -----------         -----------

(Loss) income from operations ....................       (886,448)            349,964

Interest income - net ............................         49,631              19,277
                                                      -----------         -----------

Net (loss) income ................................       (836,817)            369,241

Dividends on preferred stock .....................         20,000              20,000
                                                      -----------         -----------

Net (loss) income applicable to common stock .....    $  (856,817)        $   349,241
                                                      ===========         ===========

Basic (loss) earnings per share ..................    $     (0.11)        $      0.06
                                                      ===========         ===========

Weighted average number of common
  shares .........................................      7,770,563           6,084,687
                                                      ===========         ===========

Diluted (loss) earnings per share ................    $     (0.11)        $      0.05
                                                      ===========         ===========

Weighted average number of common and dilutive
  common equivalent shares .......................      7,770,563           7,990,193
                                                      ===========         ===========


                 See Notes to Consolidated Financial Statements


                                      -3-
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
                    BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
                    -----------------------------------------------
                         CONSOLIDATED STATEMENTS OF OPERATIONS
                         -------------------------------------
                                      (unaudited)


                                                            For the Three Months Ended
                                                                    March 31,
                                                          ----------------------------
                                                             1998              1997
                                                          -----------      -----------
<S>                                                       <C>              <C>
Project revenue .....................................     $   945,815      $ 1,423,851

Project costs .......................................         458,218          504,580
                                                          -----------      -----------

Gross profit ........................................         487,597          919,271

General and administrative expenses .................         295,337          457,904

Sales and marketing expenses ........................         249,163          214,155

Research and development expenses ...................          66,653           54,415

Proxy and litigation expenses .......................         281,136             --

Restructuring and severance expenses ................         127,000             --
                                                          -----------      -----------

(Loss) income from operations .......................        (531,692)         192,797

Interest income - net ...............................          22,933           12,469
                                                          -----------      -----------

Net (loss) income ...................................        (508,759)         205,266

Dividends on preferred stock ........................          10,000           10,000
                                                          -----------      -----------

Net (loss) income applicable to common stock ........     $  (518,759)     $   195,266
                                                          ===========      ===========

Basic (loss) earnings per share .....................     $     (0.07)     $      0.03
                                                          ===========      ===========

Weighted average number of common
  shares ............................................       7,773,878        6,095,226
                                                          ===========      ===========

Diluted (loss) earnings per share ...................     $     (0.07)     $      0.03
                                                          ===========      ===========

Weighted average number of common and dilutive
  common equivalent shares ..........................       7,773,878        8,187,178
                                                          ===========      ===========


                 See Notes to Consolidated Financial Statements


                                      -4-
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
                        BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
                        -----------------------------------------------
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                             -------------------------------------
                                          (unaudited)

                                                                     For the Six Months Ended
                                                                             March 31,
                                                                    --------------------------
                                                                         1998          1997
                                                                    ------------   -----------

<S>                                                                 <C>            <C>        
Cash flows from operating activities:
   Net (loss) income ............................................   $  (836,817)   $   369,241
   Adjustments to reconcile net (loss) income to net cash
    (used in) provided by operating activities:
     Depreciation and amortization ..............................       308,656        318,008
     Changes in operating assets and liabilities:
       Decrease (increase) in accounts receivable ...............        31,114       (369,139)
       Increase in prepaid expenses and other current assets ....       (21,515)       (17,842)
       Decrease (increase) in other assets ......................        11,117         (9,612)
       Decrease in deferred revenue .............................       (92,462)      (102,181)
       Increase in accounts payable .............................        92,619        229,021
       Increase in accrued expenses and other current
         liabilities ............................................       206,899         36,650
                                                                    -----------    -----------
       Net cash (used in) provided by operating activities ......      (300,389)       454,146
                                                                    -----------    -----------

Cash flows from investing activities:
   Purchases of property and equipment ..........................      (118,969)      (544,284)
                                                                    -----------    -----------
       Net cash used in investing activities ....................      (118,969)      (544,284)
                                                                    -----------    -----------

Cash flows from financing activities:
   Payments under equipment lease obligations ...................       (51,086)       (44,554)
   Dividends paid on preferred stock ............................       (20,286)       (41,222)
   Proceeds from exercise of stock options ......................        15,899        275,211
                                                                    -----------    -----------
       Net cash (used in) provided by financing activities ......       (55,473)       189,435
                                                                    -----------    -----------

Net (decrease) increase in cash and cash equivalents ............      (474,831)        99,297

Cash and cash equivalents at beginning of period ................     2,367,658      1,377,633
                                                                    -----------    -----------

Cash and cash equivalents at end of period ......................   $ 1,892,827    $ 1,476,930
                                                                    ===========    ===========

Supplemental disclosures of cash flow information:
   Cash paid during the period for interest .....................   $     3,878    $     8,549
                                                                    ===========    ===========


                 See Notes to Consolidated Financial Statements


                                      -5-
<PAGE>
</TABLE>


                 BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
                 -----------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (unaudited)



Note 1 - Basis of Presentation:

      The  financial  statements  included  herein  have  been  prepared  by the
Company,  without audit, pursuant to the rules and regulations of the Securities
and Exchange  Commission.  Certain information and footnote disclosures normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles have been condensed or omitted pursuant to such rules and
regulations.   These  consolidated   financial  statements  should  be  read  in
conjunction  with  the  consolidated  financial  statements  and  notes  thereto
included  in the  Company's  Annual  Report on Form  10-KSB  for the year  ended
September 30, 1997.

      In the opinion of the  Company's  management  the  accompanying  unaudited
consolidated financial statements contain all adjustments,  consisting solely of
those which are of a normal  recurring  nature,  necessary to present fairly its
financial  position as of March 31, 1998,  the results of its operations for the
three-month  and  six-month  periods  ended March 31, 1998 and 1997 and its cash
flows for the six-month periods ended March 31, 1998 and March 31, 1997.

      Interim  results are not  necessarily  indicative  of results for the full
fiscal year.

      Basic (loss)  earnings per share was calculated  based upon the net income
available  to common  stockholders  divided by the  weighted  average  number of
shares of Common Stock  outstanding  during the period.  Diluted loss per common
share for the  three-month  and six-month  periods ended March 31, 1998 excludes
the impact of options and warrants as they are  antidilutive.  Diluted  earnings
per common share for the three-month and six-month  periods ended March 31, 1997
were  calculated  based upon the net income  available  to common  stockholders,
after giving effect to the assumed conversions of preferred stock divided by the
weighted  average number of shares of Common Stock adjusted for the  incremental
dilution of  outstanding  options,  warrants  and  preferred  stock  during such
periods.


                                      -6-
<PAGE>


                 BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
                 -----------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (unaudited)



Note 1 - Basis of Presentation: (continued)

      The  computation  of basic (loss)  earnings  per share and diluted  (loss)
earnings per share were as follows:

<TABLE>
<CAPTION>

                                                    Six Months Ended             Three Months Ended
                                                      March 31,                       March 31,
                                            ----------------------------    -----------------------------
                                                 1998            1997            1998             1997
                                            -----------      -----------    -----------       -----------
<S>                                         <C>              <C>            <C>               <C>        
Net (loss) income ......................    $  (836,817)     $   369,241    $  (508,759)      $   205,266

Dividends on preferred stock ...........         20,000           20,000         10,000            10,000
                                            -----------      -----------    -----------       -----------

Net (loss) income applicable
   to common stock - basic .............    $  (856,817)     $   349,241    $  (518,759)      $   195,266
                                            -----------      -----------    -----------       -----------

Dilutive dividends on preferred
   stock ...............................           --             20,000           --              10,000
                                            -----------      -----------    -----------       -----------
Net (loss) income applicable to common
   stock-diluted .......................       (856,817)         369,241       (518,759)          205,266
                                            -----------      -----------    -----------       -----------
Denominator:

Weighted average number of
  common shares ........................      7,770,563        6,084,687      7,773,878         6,095,226

Basic (loss) earnings per
  share ................................    $     (0.11)     $      0.06    $     (0.07)      $      0.03
                                            ===========      ===========    ===========       ===========

Denominator:

Weighted average number of
  common shares ........................      7,770,563        6,084,687      7,773,878         6,095,226
Common share equivalents of
  outstanding stock options and
  warrants .............................           --          1,488,839           --           1,675,285
                                            
Common share equivalents of
  dilutive outstanding preferred
  stock ................................           --            416,667           --             416,667
                                            -----------      -----------    -----------       -----------

Total shares ...........................      7,770,563        7,990,193      7,773,878         8,187,178
                                            -----------      -----------    -----------       -----------

Diluted (loss) earnings
  per share ............................    $     (0.11)     $      0.05    $     (0.07)      $      0.03
                                            ===========      ===========    ===========       ===========
</TABLE>


                                      -7-
<PAGE>


                 BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
                 -----------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (unaudited)


Note 2 - Stockholders' Equity:

      The Company has 416,667 shares of Series A Preferred Stock (the "Preferred
Stock")  outstanding.  The Preferred  Stock provides for (i) voting rights on an
as-converted to Common Stock basis, with standard protective provisions;  (ii) a
liquidation  preference of $1.20 per share; (iii)  anti-dilution  protection and
price protection  provisions;  (iv) cumulative dividends of $0.096 per share per
annum,  payable out of funds legally  available for the payment of dividends and
only upon declaration of dividends by the Board of Directors of the Company; and
(v) registration rights with respect to the shares of Common Stock issuable upon
conversion  of the  Preferred  Stock.  Dividends  are  payable in cash or in the
Company's Common Stock at the Company's discretion.  The Company, in March 1998,
paid to the  holders of the  Preferred  Stock an  aggregate  amount of  $20,285,
representing $20,000 of accrued cumulative dividends for the period from July 1,
1997 through and  including  December 31, 1997 and interest of $285 from January
1, 1998  through the payment  date.  At March 31, 1998  preferred  dividends  in
arrears  aggregated  approximately  $10,000 or $0.02 per share of the  Preferred
Stock.

      The Company has neither  paid nor  declared  dividends on its Common Stock
since its  inception  and does not plan to pay  dividends on its Common Stock in
the foreseeable future. Any earnings which the Company may realize and which are
not paid as dividends to holders of Preferred  Stock will be retained to finance
the growth of the Company.

Note 3 - Litigation:

      On February 23, 1998,  five  stockholders  of the Company (the  "Committee
Members")  describing  themselves as The  Bio-Imaging  Technologies  Independent
Shareholders'  Committee  (the  "Committee"),  as  plaintiffs,  filed a verified
complaint and motion in the United States District Court for the District of New
Jersey (the "New Jersey District  Court") seeking to enjoin the Company and each
of Jeffrey S. Hurwitz,  Esq., Jeffrey H. Berg, Ph.D. and James A. Taylor,  Ph.D.
(collectively, the "Incumbent Directors") from holding the election of the Board
of Directors,  at the Annual Meeting of Stockholders,  on February 27, 1998. The
Committee  Members  alleged,  among other things,  use of a false and misleading
proxy  statement,  manipulation  of the proxy  process and  manipulation  of the
stockholder  democracy  process  in  connection  with the  pending  election  on
February 27, 1998. The New Jersey District  Court, on February 26, 1998,  denied
the Committee Members' application for a temporary  restraining order and denied
the Committee Members' application for a preliminary injunction.  The New Jersey
District  Court  determined,  among  other  things,  that  the  proxy  statement
furnished in connection with the solicitation by the Incumbent Directors was not
misleading. The New Jersey District Court did not rule on the Committee Members'
verified  complaint.  For further discussion of this litigation see -- "Part II.
Other Information -- Item 1. Legal Proceedings."


                                      -8-
<PAGE>


                 BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
                 -----------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (unaudited)



Note 3 - Litigation: (continued)

      The Company is  currently  negotiating  a  settlement  agreement  with the
Committee  relating to the litigation  above.  The Company is also negotiating a
settlement agreement, which contains severance terms, with Dr. James J. Conklin,
a former  director  and  executive  officer  of the  Company  and  member of the
Committee.  There can be no assurance,  however, that a settlement agreement can
be reached with either Dr. Conklin or the Committee on terms satisfactory to the
Company.  As a result of such  settlement  negotiations  with Dr.  Conklin,  the
Company  accrued  $127,000 of severance  expenses during the quarter ended March
31, 1998. If the  litigation is not settled,  the Company  intends to vigorously
pursue its claims  against  the  Committee,  each of the  Committee  Members and
Investment Partners of America, L.P. ("IPA").


                                      -9-
<PAGE>


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


RESULTS OF OPERATIONS

     The Company  experienced  a loss for the three  months and six months ended
March 31, 1998, as a result of (i) a proxy contest and related litigation,  (ii)
restructuring  and severance  expenses  related to the elimination of two former
business  divisions and the  resignation in December 1997 of a former  executive
officer and (iii) insufficient  project revenue to support the infrastructure of
the Company. The Company's project revenue was adversely impacted by its lengthy
sales  cycle (the  period  from the  presentation  by the Company to a potential
client to the  engagement of the Company by such client) which is  approximately
nine months.  In  addition,  project  timing  impacts the  Company's  results of
operations.  Typically,  the  contracts  under  which the  Company is engaged to
perform  services  cover a period of 12-24  months  and the  volume  and type of
services  performed  by the  Company  vary  during the course of a project.  The
Company's  lengthy  sales  cycle and  contract  timing  adversely  affected  the
Company's  project  revenue for the three  months and six months ended March 31,
1998.  During  Fiscal  1997,  the  Company  increased  its sales  and  marketing
activities  but expects  project  revenue to continue to be  adversely  affected
through at least the third quarter of Fiscal 1998. No assurance, however, can be
made that the  Company's  project  revenue will  increase to levels  required to
achieve and maintain profitability.  In addition, the revenue generated from the
Company's  client base remains highly  concentrated.  Three clients  represented
approximately  61% of the  Company's  project  revenue for the six months  ended
March 31, 1998, of which one European client  represented  approximately  35% of
project revenue.

     In February 1998 the  Committee and the Company  engaged in a proxy contest
in an effort to, among other things, elect the members of the Company's Board of
Directors at the Annual  Meeting of  Stockholders  held on February 27, 1998. In
connection  with such proxy  contest  and the  related  litigation,  the Company
expended  approximately  $281,000 in the three months ended March 31, 1998.  For
further discussion of this litigation see "Part II. Other Information -- Item 1.
Legal Proceedings."

      In December  1997,  the Company  terminated  two business  divisions,  the
Marketing Information Services Division (the "MISD") and the Data Management and
Information  Systems  Division (the "DMISD"),  which were established in October
1996.  These divisions did not meet the Company's  expectations  and the Company
believed that its  resources  were better  focused on its core  clinical  trials
service business. In addition, two executive officers of the Company resigned in
December.  The Company is  negotiating a settlement  agreement,  which  contains
severance terms,  with one such former executive  officer.  As a result of these
events,  the Company recorded  restructuring and severance  expenses of $277,000
during the six months ended March 31, 1998.

      Despite lower project revenue for the first six months of Fiscal 1998, the
Company believes that demand for its services and technologies  will grow during
the longer  term as the use 


                                      -10-
<PAGE>


of digital  technologies  for data  acquisition and management  increases in the
radiology and drug development communities.  In addition, the United States Food
and Drug Administration is gaining experience with electronic submissions and is
continuing to develop guidelines for computerized  submission of data, including
medical  images.  Furthermore,  the increased use of digital  medical  images in
clinical  trials,  especially  for important drug classes such as neurologic and
oncologic  therapeutics and diagnostic  image agents,  generate large amounts of
image  data  that  will  require  processing,   analysis,  data  management  and
submission  services.   Due  to  several  factors,   including  an  increase  in
competition,  there can be no assurance  that demand for the Company's  services
and  technologies  will grow,  or sustain  growth,  or that  additional  revenue
generating opportunities will be realized by the Company.

      Certain  statements  included  in  the  Form  10-QSB,  including,  without
limitation,  statements  regarding the anticipated growth in the markets for the
Company's  services,  the  continuation  of the trends  favoring  outsourcing of
biomedical  information  technology services by pharmaceutical and biotechnology
companies and trends  favoring the use of such  information  technologies by the
United States Food and Drug  Administration,  the anticipated longer term growth
of the Company's business, the information concerning existing client contracts,
the timing of the  projects  and  trends in future  operating  performance,  are
forward-looking  statements  within the meaning of Section 21E of the Securities
Exchange Act of 1934,  as amended.  The factors  discussed  herein,  such as the
Company's client concentration and lengthy sales cycle, the Company's ability to
obtain new  business and  accurately  estimate the timing of projects due to the
variability in size, scope and duration of projects, regulatory delays, clinical
study results which lead to reductions or cancellations  of projects,  potential
costs of  litigation  and other factors not within the  Company's  control,  and
others expressed from time to time in the Company's  filings with the Securities
and  Exchange  Commission  could cause  actual  results and  developments  to be
materially different from those expressed in or implied by such statements.


      Six Months Ended March 31, 1998 and 1997
      ----------------------------------------

      Project  revenue  for the six months  ended  March 31,  1998 and 1997 were
approximately   $2,064,000   and   $2,626,000,   respectively,   a  decrease  of
approximately  $562,000 or 21.4%. Project revenues in the six months ended March
31, 1998 and 1997 were  derived  from 22 and 18 clients,  respectively.  Revenue
generated  from the Company's  client base remains  highly  concentrated.  Three
clients  represented  approximately 61% of the Company's project revenue for the
six  months  ended  March 31,  1998 of which  one  European  client  represented
approximately 35% or $721,000 of project revenue. For the comparable period last
year,  three clients  represented  approximately  60% of the  Company's  project
revenue of which one  European  client  represented  31% or  $825,000 of project
revenue.  The decrease in project revenue is primarily a result of a decrease in
the work  scheduled to be performed by the Company on existing  contracts in the
six months  ended March 31, 1998 as compared to the same period in Fiscal  1997.
The  Company's  scope of work in both  periods  included  medical  imaging  core
laboratory services and image-based information management services. The Company
currently  has three new projects with such  European  client,  which it entered
into in April 1998 and which 


                                      -11-
<PAGE>


it expects to complete by the end of calendar  1999.  There can be no  assurance
that project revenues from such client will continue at their historic levels.

      Project  costs  for the six  months  ended  March  31,  1998 and 1997 were
comprised of professional salaries and benefits and allocated overhead.  Project
costs  for the six  months  ended  March 31,  1998 and 1997  were  approximately
$963,000 and  $955,000,  respectively,  an increase of  approximately  $8,000 or
0.8%.  Project costs  remained  relatively  flat,  despite a decrease in project
revenues, as project related staffing levels remained  approximately the same in
the six months ended March 31, 1998 and 1997.

      The gross  margin  percentage  during the six months  ended March 31, 1998
decreased to 53.4% from 63.6% for the  corresponding  Fiscal 1997  period.  Such
decrease is  attributable  primarily to constant  staffing levels and the mix of
services for which the Company was engaged to provide,  and, to a lesser extent,
a decrease  in prices the Company  charged  for certain  services as a result of
increased  competition  from academic core  laboratories  and clinical  research
organizations.  The Company expects that increased  competition will continue to
create pricing pressure for its services.

      General and administrative  expenses in each of the six months ended March
31, 1998 and 1997  consisted  primarily of  professional  salaries and benefits,
depreciation and amortization, professional and consulting services, office rent
and corporate insurance.  General and administrative expenses were approximately
$764,000 in the six months  ended March 31, 1998 and  approximately  $840,000 in
the six months  ended March 31, 1997.  The decrease  during the six months ended
March 31, 1998 of approximately  $76,000 or 9.0%, from the corresponding  Fiscal
1997 period,  resulted primarily from the elimination of expenditures in support
of the former MISD and DMISD  divisions  and  personnel  costs  associated  with
former executive officers who resigned in December 1997. Such decrease reflects,
and is partially  offset by, a full six months of expenses  incurred  during the
Fiscal 1998 period by the Company's European facility which commenced operations
during the second quarter of Fiscal 1997.

      Sales and  marketing  expenses  in each of the six months  ended March 31,
1998 and 1997 were comprised of direct sales and marketing  costs,  professional
salaries and benefits and allocated overhead.  Sales and marketing expenses were
approximately  $526,000 in the six months ended March 31, 1998 and approximately
$387,000 in the  corresponding  Fiscal 1997 period.  The increase during the six
months  ended  March 31,  1998 of  approximately  $139,000,  or 35.9%,  from the
corresponding  Fiscal  1997  period,  resulted  primarily  from the  increase in
personnel  and  resources  dedicated to sales and  marketing  activities  in the
United States and in Europe.

      Research  and  development  expenses in each of the six months ended March
31, 1998 and 1997 consisted of  professional  salaries and benefits and overhead
charged to research and development projects.  Research and development expenses
during the six months ended March 31, 1998 and 1997 were approximately  $139,000
and $94,000,  respectively.  The increase  during the six months ended March 31,
1998 of approximately $45,000, or 47.9%, from the


                                      -12-
<PAGE>


corresponding  Fiscal  1997  period,  resulted  primarily  from an  increase  in
resources  dedicated  to  research  and  development   projects.   Research  and
development  expenses  in each of the six months  ended  March 31, 1998 and 1997
primarily  focused  on  the  formulation  and  design  of  product  and  process
alternatives.  There were no capitalized  computer software development costs in
either the six months ended March 31, 1998 or 1997. However,  the Company has in
the  past  capitalized,  and in the  future  may  capitalize,  certain  computer
development  costs in  accordance  with the  Statement of  Financial  Accounting
Standards Board No. 86.

      Total  operating  expenses in each of the six months  ended March 31, 1998
and 1997  consisted  primarily  of project  costs,  general  and  administrative
expenses,  sales and marketing  expenses and research and development  expenses.
The Company's total operating expenses were approximately  $2,392,000 in the six
months ended March 31, 1998 (excluding  restructuring and severance  expenses of
$277,000  and proxy and  litigation  expenses  of  approximately  $281,000)  and
approximately  $2,276,000  in the  corresponding  period  in Fiscal  1997.  Such
increase of approximately $116,000 or 5.1% is primarily attributable to expenses
incurred by the Company's  European  facility which commenced  operations in the
second  quarter  of  Fiscal  1997 and an  increase  in the  Company's  sales and
marketing  expenses  offset,  in part, by the  elimination  of  expenditures  in
support of the former MISD and DMISD  divisions and lower personnel costs due to
the resignation of former executive officers in December 1997.

      Net interest income of  approximately  $50,000 during the six months ended
March 31, 1998, resulted from interest earned on cash balances, offset, in part,
by interest expense  incurred in conjunction  with equipment lease  obligations.
The Company  earned  greater  interest  income in the six months ended March 31,
1998  than in the  corresponding  period  of  Fiscal  1997  due to  higher  cash
balances.  Net interest income was approximately $19,000 in the six months ended
March 31, 1997.

      The  Company's  net loss  for the six  months  ended  March  31,  1998 was
approximately  $837,000,  while the  Company  had net  income  of  approximately
$369,000 in the six months ended March 31, 1997.  The Company's net loss for the
six  months  ended  March  31,  1998  was  attributable  primarily  to  expenses
associated  with a proxy  contest  and  related  litigation,  restructuring  and
severance  expenses  related to the  elimination  of the  former  MISD and DMISD
divisions and the  resignation in December 1997 of a former  executive  officer,
coupled with insufficient  project revenue to support the  infrastructure of the
Company.


      Three Months Ended March 31, 1998 and 1997
      ------------------------------------------

      Project revenue for the quarters ended March 31, 1998 ("Second  Quarter of
Fiscal  1998") and 1997  ("Second  Quarter of Fiscal  1997") were  approximately
$946,000 and $1,424,000,  respectively,  a decrease of approximately $478,000 or
33.6%.  Project  revenues  in the Second  Quarter of Fiscal 1998 and Fiscal 1997
were derived from 18 and 16 clients,  respectively.  Revenue  generated from the
Company's  client base remains  highly  concentrated.  Four clients  represented
approximately  69% of the Company's  project  revenue for the three months ended
March 31,  1998 of which one  European  client  represented  25% or  $234,000 of
project revenue.  


                                      -13-
<PAGE>


For the comparable period last year, three clients represented approximately 80%
of the Company's project revenue of which one European client represented 58% or
$825,000 of project  revenue.  The  decrease in project  revenue is  primarily a
result of a decrease in the work  scheduled  to be  performed  by the Company on
existing  contracts  in the Second  Quarter of Fiscal  1998 as  compared  to the
Second  Quarter of Fiscal  1997.  The  Company's  scope of work in both  periods
included  medical imaging core laboratory  services and image-based  information
management  services.  The Company  currently  has three new projects  with such
European  client,  which it  entered  into in April 1998 and which it expects to
complete by the end of calendar  1999.  There can be no  assurance  that project
revenues from such client will continue at their historic levels.

      Project costs in each of the Second Quarter of Fiscal 1998 and Fiscal 1997
were  comprised of  professional  salaries and benefits and allocated  overhead.
Project  costs for the  Second  Quarter  of  Fiscal  1998 and  Fiscal  1997 were
approximately $458,000 and $505,000,  respectively,  a decrease of approximately
$47,000 or 9.3%.  This  decrease  is  attributable  to the  decrease  in project
revenue in the Second  Quarter of Fiscal 1998. As a percentage,  projects  costs
decreased less than project revenues as project related staffing levels remained
approximately  the same in the  Second  Quarter  of Fiscal  1998 and the  Second
Quarter of Fiscal 1997.

      The gross  margin  percentage  during  the Second  Quarter of Fiscal  1998
decreased  to 51.6%  from  64.6%  for the  corresponding  period  in 1997.  Such
decrease is attributable to constant staffing levels and the mix of services for
which the Company was engaged to provide, and, to a lesser extent, a decrease in
prices  the  Company  charged  for  certain  services  as a result of  increased
competition from academic core laboratories and clinical research organizations.
The Company expects that increased  competition  will continue to create pricing
pressure for its services.

      General  and  administrative  expenses  in each of the  Second  Quarter of
Fiscal 1998 and Fiscal 1997  consisted  primarily of  professional  salaries and
benefits,  depreciation and amortization,  professional and consulting services,
office rent and corporate  insurance.  General and administrative  expenses were
approximately  $295,000 in the Second  Quarter of Fiscal 1998 and  approximately
$458,000 in the Second  Quarter of Fiscal 1997.  The decrease  during the Second
Quarter  of  Fiscal  1998  of   approximately   $163,000  or  35.6%,   from  the
corresponding  Fiscal 1997 quarter,  resulted  primarily from the elimination of
expenditures  in support of the former MISD and DMISD  divisions  and  personnel
costs associated with former executive officers who resigned in December 1997.

      Sales and marketing  expenses in each of the Second Quarter of Fiscal 1998
and Fiscal 1997 were comprised of direct sales and marketing costs, professional
salaries and benefits and allocated overhead.  Sales and marketing expenses were
approximately  $249,000 in the Second  Quarter of Fiscal 1998 and  approximately
$214,000 in the Second  Quarter of Fiscal 1997.  The increase  during the Second
Quarter  of  Fiscal  1998  of  approximately   $35,000,   or  16.3%,   from  the


                                      -14-
<PAGE>


corresponding  Fiscal 1997  quarter,  resulted  primarily  from the  increase in
personnel  and  resources  dedicated to sales and  marketing  activities  in the
United States and in Europe.

      Research and development  expenses in each of the Second Quarter of Fiscal
1998 and Fiscal  1997  consisted  of  professional  salaries  and  benefits  and
overhead charged to research and development projects.  Research and development
expenses  during the Second  Quarter of Fiscal 1998 and 1997 were  approximately
$67,000 and $54,000,  respectively.  The increase  during the Second  Quarter of
Fiscal 1998 of approximately  $13,000,  or 24.1%, from the corresponding  Fiscal
1997  quarter,  resulted  primarily  from an increase in resources  dedicated to
research and development projects.  Research and development expenses in each of
the Second  Quarter  of Fiscal  1998 and Fiscal  1997  primarily  focused on the
formulation  and  design of  product  and  process  alternatives.  There were no
capitalized computer software development costs in each of the Second Quarter of
Fiscal 1998 and the Second Quarter of Fiscal 1997.  However,  the Company has in
the  past  capitalized,  and in the  future  may  capitalize,  certain  computer
development  costs in  accordance  with the  Statement of  Financial  Accounting
Standards Board No. 86.

      Total operating  expenses in each of the Second Quarter of Fiscal 1998 and
Fiscal 1997  consisted  primarily of project costs,  general and  administrative
expenses,  sales and marketing  expenses and research and development  expenses.
The Company's  total  operating  expenses were  approximately  $1,069,000 in the
Second Quarter of Fiscal 1998 (excluding restructuring and severance expenses of
$127,000  and proxy and  litigation  expenses  of  approximately  $281,000)  and
approximately  $1,231,000  in the  corresponding  quarter in Fiscal  1997.  Such
decrease of  approximately  $162,000  or 13.2% is  primarily  attributed  to the
elimination of  expenditures  in support of the former MISD and DMISD  divisions
and lower personnel costs due to the resignation of former executive officers in
December 1997.

      Net interest income of approximately  $23,000 during the Second Quarter of
1998,  resulted  from  interest  earned on cash  balances,  offset,  in part, by
interest expense incurred in conjunction with equipment lease  obligations.  The
Company earned greater interest income in the Second Quarter of 1998 than in the
Second  Quarter of 1997 due to higher cash  balances.  Net  interest  income was
approximately $12,000 in the Second Quarter of 1997.

      The  Company's net loss for the Second  Quarter of 1998 was  approximately
$509,000,  while the  Company  had net income of  approximately  $205,000 in the
Second  Quarter of 1997.  The Company's net loss for the Second  Quarter of 1998
was attributable  primarily to the expenses  associated with a proxy contest and
related  litigation,   restructuring  and  severance  expenses  related  to  the
elimination  of the  former  MISD and DMISD  divisions  and the  resignation  in
December 1997 of a former executive officer,  coupled with insufficient  project
revenue to support the infrastructure of the Company.


                                      -15-
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

      At  March  31,  1998,  the  Company  had  cash  and  cash  equivalents  of
approximately  $1,893,000.  Working capital at March 31, 1998 was  approximately
$2,194,000.

      For  the  six  months   ended  March  31,  1998,   the  Company   invested
approximately  $119,000  in capital  and  leasehold  improvements.  The  Company
currently  anticipates that capital  expenditures for the balance of Fiscal 1998
will approximate $150,000.  These expenditures  represent additional upgrades in
the Company's  networking,  data storage and core laboratory  capabilities along
with similar capital requirements for its European operations.

      In March 1998,  the Company paid to the holders of its Preferred  Stock an
aggregate  amount  of  $20,285  which  amount  represented   accrued  cumulative
dividends  of $20,000  for the period from July 1, 1997  through  and  including
December  31, 1997 and interest of $285 from January 1, 1998 through the date of
payment.  For future dividend  obligations,  see "Note 2 - Notes to Consolidated
Financial Statements."

      The Company anticipates that its cash and cash equivalents as at March 31,
1998,  together  with cash from  operations,  will be sufficient to fund working
capital needs and capital requirements through Fiscal 1998.


YEAR 2000 COMPLIANCE

      Historically, certain computer programs have been written using two digits
rather  than four to define  the  applicable  year,  which  could  result in the
computer  recognizing  a date using "00" as the year 1900  rather  than the year
2000. This, in turn,  could result in major system failures or  miscalculations,
and  is  generally  referred  to as  the  "Year  2000  Problem."  The  Company's
management  information systems department has reviewed and tested the Company's
internal  business systems for Year 2000 compliance.  The Company believes that,
based on the results of such review and testing, the Company's internal business
systems,  including its computer systems, are Year 2000 compliant.  There can be
no assurance,  however, that the Year 2000 Problem will not adversely affect the
Company's business, financial condition, results of operations or cash flows.

      In addition,  the Company  receives imaging data derived from the computer
systems  of its  clients,  which  data or  software  may or may not be Year 2000
compliant. Although the Company is currently taking steps to address the impact,
if any, of the Year 2000 Problem relating to the data received from its clients,
failure of such computer  systems to properly  address the Year 2000 Problem may
adversely  affect  the  Company's  business,  financial  condition,  results  of
operation or cash flows.


                                      -16-
<PAGE>


                           PART II. OTHER INFORMATION.
                           ---------------------------


Item 1.  Legal Proceedings.

      On February  23, 1998,  the  Committee  Members,  as  plaintiffs,  filed a
verified complaint and motion in the New Jersey District Court seeking to enjoin
the Company and each of the Incumbent Directors from holding the election of the
Board of Directors, at the Annual Meeting of Stockholders, on February 27, 1998.
The Committee Members alleged, among other things, use of a false and misleading
proxy  statement,  manipulation  of the proxy  process and  manipulation  of the
stockholder  democracy  process  in  connection  with the  pending  election  on
February 27, 1998. The New Jersey District  Court, on February 26, 1998,  denied
the Committee Members' application for a temporary  restraining order and denied
the Committee Members' application for a preliminary injunction.  The New Jersey
District  Court  determined,  among  other  things,  that  the  proxy  statement
furnished in connection with the solicitation by the Incumbent Directors was not
misleading. The New Jersey District Court did not rule on the Committee Members'
verified complaint.

      On February 24, 1998, the Company,  as plaintiff,  filed a civil complaint
in the New Jersey  District Court against the  Committee,  each of the Committee
Members,  the IPA and Donald W. Lohin,  the  Company's  former  Chief  Executive
Officer   ("Lohin").   The  complaint  seeks,   among  other  things,   damages,
invalidation  of  the  Committee's   proxies,  a  return  of  all  confidential,
non-public  information,  and preliminary and permanent  injunctive  relief. The
complaint alleged, among other things, illegal solicitation of stockholders, the
submission  of false and  misleading  materials to the  Securities  and Exchange
Commission and to stockholders, the use of Company resources to fund and/or plan
the formation of a business  which would compete with the Company and trading of
shares upon insider information. On March 6, 1998, the New Jersey District Court
consolidated  the February 23, 1998 and February 24, 1998 cases for all purposes
under one civil action.

      On March 27, 1998,  the Company  filed a  counterclaim,  in the New Jersey
District Court,  against each of the Committee  Members relating to the February
23, 1998  verified  complaint.  The  Company  re-alleged  each claim  previously
asserted in its February 24, 1998 complaint.  Such  counterclaim  seeks damages,
preliminary and permanent injunctive relief, and the return of all confidential,
non-public  information.  The Company also  alleged,  among other  things,  that
unless the counterclaim  defendants are required to make corrective disclosures,
the business,  goodwill and reputation of the Company will be irreparably harmed
and the Company's  stockholders will be misled to their detriment.  In addition,
on March 27,  1998,  the  Company  filed an  answer  in which it denied  certain
allegations made by the Committee Members in their verified complaint.

      Subsequent  to the end of the  quarter,  on April 16,  1998,  the  Company
dismissed its claims against Lohin, without prejudice.


                                      -17-
<PAGE>


      The Company is  currently  negotiating  a  settlement  agreement  with the
Committee  relating to the litigation  above.  The Company is also negotiating a
settlement agreement, which contains severance terms, with Dr. James J. Conklin,
a former  director  and  executive  officer  of the  Company  and  member of the
Committee.  There can be no assurance,  however, that a settlement agreement can
be reached with either Dr. Conklin or the Committee on terms satisfactory to the
Company.  As a result of such  settlement  negotiations  with Dr.  Conklin,  the
Company  accrued  $127,000 of severance  expenses during the quarter ended March
31, 1998. If the  litigation is not settled,  the Company  intends to vigorously
pursue its claims against the Committee, each of the Committee Members and IPA.


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


(a)   The Annual Meeting of Stockholders of the Company (the "Meeting") was held
      on February 27, 1998.

(b)   The  following  is a list of all of the  Directors of the Company who were
      elected  at the  Meeting  and  whose  term of office  continued  after the
      Meeting:

      Jeffrey H. Berg, Ph.D.
      Jeffrey S. Hurwitz, Esq.
      James A. Taylor, Ph.D.

(c)   There were  6,293,046  shares present at the Meeting in person or by proxy
      out of a total number of 8,190,545 shares representing 7,773,878 shares of
      Common Stock and 416,667 shares of Preferred  Stock, in each case,  issued
      and outstanding and entitled to vote at the Meeting. The holders of shares
      of Common Stock and  Preferred  Stock voted  together as a single class on
      all matters presented at the Meeting.

      (i)   The results of the vote of the stockholders  taken at the Meeting by
            ballot  and by proxy as  solicited  by the  Company on behalf of the
            Board of Directors were as follows:


                                      -18-
<PAGE>


      (A)   The results of the vote taken at the Meeting for the election of the
            nominees for the Board of Directors of the Company were as follows:

                   Nominee                       For                Withheld
            ------------------------   -------------------    -----------------

            Jeffrey H. Berg, Ph.D.          3,582,726              43,900
            Jeffrey S. Hurwitz, Esq.        3,581,126              45,500
            James A. Taylor, Ph.D.          3,582,726              43,900


      (B)   A vote was taken on the proposal to ratify the appointment of Arthur
            Andersen LLP as  independent  auditors of the Company for the fiscal
            year ending September 30, 1998. The results of the vote taken at the
            Meeting with respect to such appointment were as follows:

                      For                     Against               Abstain
            ------------------------   -------------------    -----------------

                  3,591,026                   11,400                10,500


     (C)    A vote was taken on the proposal to amend the By-laws of the Company
            to require a minimum of six directors. The results of the vote taken
            at the Meeting with respect to such amendment were as follows:

                      For                     Against               Abstain
            ------------------------   -------------------    -----------------

                     14,240                2,723,101                 1,000


     (ii)   The results of the vote of the stockholders  taken at the Meeting by
            ballot and by proxy as solicited by the Committee were as follows:

      (A)   A vote was taken on the proposal to amend the By-laws of the Company
            to require a minimum of six directors. The results of the vote taken
            at the Meeting with respect to such amendment were as follows:

                     For                     Against               Abstain
           ------------------------   -------------------    -----------------

                  2,664,780                      900                   740




                                      -19-
<PAGE>


      (B)   The results of the vote taken at the Meeting for the election of the
            nominees for the Board of Directors of the Company were as follows:

                   Nominee                       For                Withheld
            ------------------------   -------------------    -----------------

            Frank J.  Abella, Jr.           2,653,587              12,833
            Marc Berger                     2,653,587              12,833
            J.A. Cole, Jr.                  2,653,587              12,833
            James J. Conklin, M.D.          2,653,587              12,833
            Richard Dumler                  2,653,587              12,833
            David Nowicki, M.D.             2,653,587              12,833


    (iii)   The results of the vote of the stockholders  taken at the Meeting by
            ballot and by proxy as  solicited  by each of the Board of Directors
            of the Company and the Committee were as follows:

      (A)   A vote was taken on the Board of Directors' proxy authorizing a vote
            upon other  matters as may  properly  come before the  Meeting.  The
            results of the vote taken at the Meeting  with respect to such proxy
            were as follows:

                     For                     Against               Abstain
           ------------------------   -------------------    -----------------

                  3,192,120                   25,282                54,167

      (B)   A vote was taken on the  Committee's  proxy  authorizing a vote upon
            other matters as may properly  come before the Meeting.  The results
            of the vote taken at the Meeting  with respect to such proxy were as
            follows:


                     For                     Against               Abstain
           ------------------------   -------------------    -----------------

                  2,644,180                      500                21,740


Item 5.  Other Information.

      MANAGEMENT CHANGE AND ADDITION TO THE BOARD OF DIRECTORS
      
      On February  20,  1998,  Mark L.  Weinstein  was elected to the offices of
President and Chief Executive Officer of the Company.  In addition,  on March 9,
1998,  Mr.  Weinstein was elected to serve on the  Company's  Board of Directors
until the next Annual Meeting of  Stockholders  and until his successor has been
duly elected and qualified.


                                      -20-
<PAGE>


      NOTIFICATION FROM NASDAQ
      
      On March 2, 1998,  the  Company  received  notice  from the  Nasdaq  Stock
Market,  Inc.  ("Nasdaq"),  that the Company's Common Stock is trading below the
new minimum bid price requirement of $1.00 required for continued listing on the
Nasdaq SmallCap Market. As a result,  the Company has until May 28, 1998 for its
Common  Stock  to  trade  at or  above  the  minimum  requirement  for at  least
10-consecutive trade days. If the Common Stock does not regain compliance before
May 28,  1998,  Nasdaq will issue a delisting  letter  which will  identify  the
review procedures  available to the Company. The Company may request a review at
that time,  which will  generally  stay  delisting.  There can be no  assurance,
however, that Nasdaq will stay the delisting or that the Company will be able to
maintain compliance with the Nasdaq requirements for continued listing.

      In the event the Company's  Common Stock ceases to be listed on the Nasdaq
SmallCap Market, the Company believes that its Common Stock would continue to be
quoted and traded in either the OTC  Bulletin  Board or on the  over-the-counter
market. However, the Company believes that the marketability of its Common Stock
would be  negatively  impacted if moved to either the OTC Bulletin  Board or the
over-the-counter market. A decrease in the marketability of the Company's Common
Stock may cause a decline in the Company's stock price. The Company is currently
exploring possible courses of action and evaluating  alternatives to comply with
Nasdaq's new continued listing requirements. There can be no assurance, however,
that pursuing  available  alternatives  will result in the  Company's  continued
listing with the Nasdaq SmallCap Market.


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

      (a)   Exhibits.

             3.1  By-Laws of the Company, as amended.

             27    Financial Data Schedule.

      (b)   Reports on Form 8-K.

            On January 15, 1998, the Company filed a report on Form 8-K relating
      the change in certifying accountants,  for the fiscal year ended September
      30,  1998,  from  Goldstein,  Golub,  Kessler &  Company,  P.C.  to Arthur
      Andersen LLP.



                                      -21-
<PAGE>


                                   SIGNATURES


      In accordance  with the  requirements  of the  Securities  Exchange Act of
1934,  the  registrant  caused  this  report to be  signed on its  behalf by the
undersigned, thereunto duly authorized.



                                  BIO-IMAGING TECHNOLOGIES, INC.



DATE:   May 15, 1998              By:/s/ Mark L. Weinstein
                                     -------------------------------------
                                     Mark L. Weinstein, President and
                                     Chief Executive Officer
                                     (Principal Executive Officer)



DATE:   May 15, 1998              By:/s/ Robert J. Phillips
                                     -------------------------------------
                                     Robert J. Phillips, Vice President
                                     and Chief Financial Officer
                                     (Principal Financial and Accounting
                                     Officer)


                                      -22-
<PAGE>