<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                                   FORM 10-Q
(Mark One)
     [ X ]  Quarterly Report pursuant to Section 13 or 15(d) of the
            Securities Exchange Act of 1934 for the quarter ended  June 30, 1997
                                      or
     [   ]  Transition Report pursuant to Section 13 or 15(d) of the
            Securities Exchange Act of 1934 [No Fee Required]
            For the transition period from           to 
                                           ---------    ---------
                          Commission File No. 0-19892

                                  IBAH, Inc.
            (Exact name of registrant as specified in its charter)

     Delaware                                                  52-1670189
     --------                                                  ----------
(State or other jurisdiction of                           I.R.S. Employer
incorporation or organization)                     Identification Number)

  Four Valley Square, 512 Township Line Road, Blue Bell, Pennsylvania  19422
              (Address of principal executive offices) (Zip Code)

      Registrant's telephone number, including area code: (215) 283-0770
       Securities registered pursuant to Section 12(b) of the Act:  None

          Securities registered pursuant to Section 12(g) of the Act:
                    Common Stock, par value $.01 per share
                               (Title of Class)

     Indicate by check mark whether the Registrant (1) has filed all reports 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 
                                    ---       ---   

     The aggregate market value of the voting stock held by non-affiliates of
the Registrant on August 7, 1997 was $60,000,000.  For purposes of making this
declaration only, the Registrant has defined affiliates as including all
directors.

The number of outstanding shares of the Registrant's Common Stock, par value
$.01 per share, on August 7, 1997 was 23,103,562
<PAGE>
 
Part I - Financial Information
  Item 1. Financial Statements
                          
                          IBAH, INC. AND SUBSIDIARIES
                          ---------------------------

                          CONSOLIDATED BALANCE SHEETS
                          ---------------------------
                                  (unaudited)

<TABLE>
<CAPTION>
                              ASSETS                             December 31,          June 30,
                              ------                                 1996                1997
                                                                 ------------        ------------  
<S>                                                              <C>                 <C>
CURRENT ASSETS:
 Cash and cash equivalents                                        $15,588,000         $ 7,200,000    
 Short-term investments                                             5,235,000           1,642,000              
 Accounts receivable, net                                          27,614,000          34,341,000            
 Prepaid expenses and other                                           868,000           1,246,000            
                                                                 ------------        ------------  
     Total current assets                                          49,305,000          44,429,000    

PROPERTY AND EQUIPMENT, net                                         7,799,000           8,812,000        

GOODWILL, net                                                      34,571,000          34,271,000         

OTHER ASSETS                                                          451,000             257,000      
                                                                 ------------        ------------  
                                                                  $92,126,000         $87,769,000   
                                                                 ============        ============ 

        LIABILITIES AND STOCKHOLDERS' EQUITY
        ------------------------------------
CURRENT LIABILITIES:
 Current portion of long-term debt                                 $1,376,000          $1,398,000      
 Accounts payable                                                   3,497,000           2,574,000      
 Other accrued expenses                                             9,829,000          10,723,000      
 Payable to independent investigators                               2,585,000           3,507,000      
 Deferred revenue                                                  22,812,000          19,425,000      
                                                                 ------------        ------------  
     Total current liabilities                                     40,099,000          37,627,000    
                                                                 ------------        ------------  
DEFERRED RENT                                                         586,000             559,000    
                                                                 ------------        ------------  
LONG-TERM DEBT                                                      1,885,000           1,487,000     
                                                                 ------------        ------------  

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
 Preferred stock, $.01 par value, 2,000,000 shares authorized,
  749,665 shares issued and outstanding as of
  December 31, 1996 and  June 30, 1997                                  7,000               7,000  
 Common stock, $.01 par value, 50,000,000 shares authorized,
  22,023,846 shares issued and outstanding as of 
  December 31, 1996 and 23,098,010 shares issued and 
  outstanding as of June 30, 1997                                     220,000             231,000      
 Additional paid-in capital                                        73,889,000          75,274,000     
 Accumulated deficit                                              (24,793,000)        (27,367,000)
 Cumulative translation adjustment                                    233,000             (49,000)  
                                                                 ------------        ------------  
     Total stockholders' equity                                    49,556,000          48,096,000 
                                                                 ------------        ------------  
                                                                  $92,126,000         $87,769,000     
                                                                 ============        ============ 
</TABLE>

        The accompanying notes are an integral part of these statements

                                      -2-
<PAGE>
 
                          IBAH, INC. AND SUBSIDIARIES
                          ---------------------------

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     -------------------------------------
                                  (unaudited)

<TABLE>
<CAPTION>
                                       For the Three Months Ended    For the Six Months Ended 
                                                June 30,                    June 30,
                                       --------------------------    -------------------------
                                           1996          1997           1996          1997  
                                       ------------  ------------    ------------  ----------- 
<S>                                    <C>           <C>             <C>           <C>
REVENUES                                $18,978,000   $29,358,000    $35,512,000   $57,938,000  
 Less- Reimbursed costs                   5,019,000     8,370,000      8,933,000    17,633,000 
                                       ------------  ------------    ------------  ----------- 
    Net revenues                         13,959,000    20,988,000     26,579,000    40,305,000
                                       ------------  ------------    ------------  ----------- 
OPERATING EXPENSES:
 Direct                                   7,445,000    11,156,000     13,761,000    21,815,000   
 Selling, general and administrative      6,500,000     9,457,000     13,046,000    17,586,000   
 Restructuring costs                              -     1,078,000              -     1,078,000  
                                       ------------  ------------    ------------  ----------- 
    Total operating expenses             13,945,000    21,691,000      26,807,000   40,479,000 
                                       ------------  ------------    ------------  ----------- 
    Operating income (loss)                  14,000      (703,000)       (228,000)    (174,000)

MERGER COSTS                                      -      (176,000)              -     (176,000)

INTEREST INCOME, net of 
 interest expense                           138,000       141,000         138,000      293,000  
                                       ------------  ------------    ------------  ----------- 
 Income (loss) from continuing 
    operations before income taxes          152,000      (738,000)        (90,000)     (57,000)
                                                                                                                   
INCOME TAXES                                      -       256,000               -      492,000            
                                       ------------  ------------    ------------  ----------- 
 Income (loss) from continuing 
    operations                              152,000      (994,000)        (90,000)    (549,000)

LOSS FROM DISCONTINUED OPERATIONS, 
 including loss on disposal 
 of $1,547,000                                    -    (1,854,000)              -   (2,154,000)
                                       ------------  ------------    ------------  ----------- 
                                                                                                                   
NET INCOME (LOSS)                      $    152,000  $ (2,848,000)   $    (90,000) $(2,703,000) 
                                       ============  ============    ============  =========== 

NET INCOME (LOSS) PER SHARE--
 CONTINUING OPERATIONS                 $       0.01  $      (0.04)   $      (0.01) $     (0.02)
 DISCONTINUED OPERATIONS                          -         (0.08)              -        (0.10)
                                       ------------  ------------    ------------  ----------- 
    NET INCOME (LOSS) PER COMMON 
    SHARE                              $       0.01  $      (0.12)   $      (0.01) $     (0.12)
                                       ============  ============    ============  =========== 

WEIGHTED AVERAGE NUMBER OF
 COMMON SHARES OUTSTANDING               24,801,000    22,875,000      16,288,000   22,665,000
                                       ============  ============    ============  =========== 
</TABLE>

       The accompanying notes are an integral part of these statements.

                                      -3-
<PAGE>
 
                          IBAH, INC. AND SUBSIDIARIES
                          ---------------------------

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     -------------------------------------
                                  (unaudited)

<TABLE>
<CAPTION>
                                                             For the Six  Months Ended
                                                                     June 30,
                                                             -------------------------- 
                                                                1996           1997
                                                             -----------    ----------- 
<S>                                                          <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                    $   (90,000)   $(2,703,000)
 Adjustments to reconcile net loss to net cash
   used in operating activities-
   Depreciation and amortization                               1,126,000      2,114,000
   Deferred rent                                                 (47,000)       (27,000)
   Discontinued operations                                             -      2,154,000
   Changes in assets and liabilities-
     (Increase) decrease in-
       Accounts receivable                                     1,815,000     (7,477,000)
       Prepaid expenses and other                                (68,000)      (335,000)
     Increase (decrease) in-
       Accounts payable and accrued expenses                  (1,505,000)    (1,521,000)
       Payables to independent investigators                     (52,000)       964,000
       Deferred revenue                                       (3,032,000)    (2,447,000)
                                                             -----------    ----------- 
          Net cash used in operating activities               (1,853,000)    (9,278,000)
                                                             -----------    ----------- 
CASH FLOWS FROM INVESTING ACTIVITIES:
 Redemption (Purchases) of short-term investments                (28,000)     3,593,000
 Purchases of property and equipment                          (1,157,000)    (2,376,000)
 Net cash paid in business acquisitions                                -       (209,000)
 Net investing activity of discontinued operations                     -       (146,000)
 Other                                                            36,000       (295,000)
                                                             -----------    ----------- 
          Net cash provided by (used) in investing 
           activities                                         (1,149,000)       567,000
                                                             -----------    ----------- 
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from sale of common stock, net of expenses          18,261,000      1,195,000
 Proceeds from issuance of debt, net of expenses                  27,000              -
 Payments on long-term debt                                     (669,000)      (468,000)
                                                             -----------    ----------- 
          Net cash provided by financing activities           17,619,000        727,000
                                                             -----------    ----------- 
EFFECT OF EXCHANGE RATE CHANGES ON CASH                         (160,000)      (404,000)
                                                             -----------    ----------- 
NET INCREASE  (DECREASE) IN CASH AND CASH EQUIVALENTS         14,457,000     (8,388,000)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                 7,564,000     15,588,000
                                                             -----------    ----------- 
CASH AND CASH EQUIVALENTS, END OF PERIOD                     $22,021,000    $ 7,200,000
                                                             ===========    =========== 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 Interest paid                                               $   157,000    $   132,000
                                                             ===========    =========== 
 Equipment acquired under capital lease obligations          $         -    $   129,000
                                                             ===========    =========== 
</TABLE>
       The accompanying notes are an integral part of these statements.

                                      -4-
<PAGE>
 
                          IBAH, INC. AND SUBSIDIARIES
                          ---------------------------

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
            ------------------------------------------------------
                                        
NOTE 1.  BASIS OF PRESENTATION:
         --------------------- 

     There have been no material changes in accounting policies from those
stated in the Company's Annual Report on Form 10-K for the year ended December
31, 1996.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. 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-K for the year ended
December 31, 1996. The statements for the periods ended June 30, 1996 and 1997
are unaudited. However, in the opinion of the Company, the statements reflect
all adjustments of a normal and recurring nature necessary for a fair
presentation for such periods. Results of operations for the three month periods
are not necessarily indicative of the results to be expected for any other
interim period or for the year.

NOTE 2.  PRINCIPLES OF CONSOLIDATION:
         --------------------------- 

     The consolidated financial statements include the accounts of IBAH, Inc.
and its subsidiaries. All material intercompany balances and transactions have
been eliminated.

NOTE 3.  CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS:
         ------------------------------------------------- 

     Cash and cash equivalents include highly liquid investments which have
original remaining maturities of less than ninety days. At June 30, 1997 and
December 31, 1996, all of the Company's short-term investments are classified as
available for sale. Therefore, any unrealized gains or losses should be
presented in a separate component of stockholders' equity. At both June 30, 1997
and December 31, 1996 there were no significant unrealized gains or losses.

     Investments are held at market value and at June 30, 1997 and December 31,
1996 were classified as short-term. Cash, cash equivalents and investments,
consisted of the following:

<TABLE>
<CAPTION>
                                                    December 31, 1996               June 30, 1997
                                                 -----------------------          ------------------
 
CASH AND CASH EQUIVALENTS:
<S>                                              <C>                              <C>
     Money market funds and demand accounts                  $ 5,447,000                  $5,577,000
     U.S. government securities                                6,313,000                     347,000
     Repurchase agreement                                      2,092,000                     980,000
     Commercial paper                                          1,736,000                     296,000
                                                             -----------                  ----------
                                                              15,588,000                   7,200,000
                                                             -----------                  ----------
INVESTMENTS:
     U.S. government securities                                3,497,000                   1,392,000
     Bank Certificate of Deposit                                       _                     250,000
     Commercial paper                                          1,738,000                           -
                                                             -----------                  ----------
                                                               5,235,000                   1,642,000
                                                             -----------                  ----------
                                                             $20,823,000                  $8,842,000
                                                             ===========                  ==========
</TABLE>

                                      -5-
<PAGE>
 
NOTE 4.    ACCOUNTS RECEIVABLE:
           --------------------

<TABLE>
<CAPTION>
                                            December 31,              June 30,
                                                1996                    1997
                                           --------------          --------------      
 Trade:
<S>                                        <C>                     <C>
     Billed                                   $17,548,000             $22,345,000
     Unbilled                                  10,590,000              12,551,000
     Allowance for doubtful accounts             (524,000)               (555,000)
                                           --------------          --------------      
                                              $27,614,000             $34,341,000
                                           ==============          ==============
</TABLE>

NOTE 5.    EARNINGS PER SHARE ("EPS"):
           ---------------------------
     Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings
per Share," which supersedes Accounting Principles Board Opinion No. 15 ("APB
15"), "Earnings per Share," was issued February, 1997. SFAS 128 requires dual
presentation of basic and diluted EPS for complex capital structures on the face
of the income statement. Basic EPS is computed by dividing income by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution from the exercise or conversion of securities
into common stock, such as stock options. SFAS 128 is required to be adopted for
year-end 1997; earlier application is not permitted. For the six months ended
June 30, 1997 and 1996, and for the three months then ended, the basic and
diluted EPS measured under SFAS 128 is not materially different from primary and
fully-diluted EPS calculated under APB 15.

     For the six and three months ended June 30, 1997 and the six months ended
June 30, 1996, common stock equivalents are antidilutive and have not been
considered in the net loss per share computations. For the three months ended
June 30, 1996, shares used in calculating earnings per share include dilutive,
common stock equivalents--options, warrants and convertible preferred stock.

NOTE 6.  MERGER  WITH PHARMACO PTY., LTD. ("PPL"):
         -----------------------------------------

     On May 5, 1997, the Company acquired all of the outstanding shares of stock
of PPL in exchange for 575,000 shares of the Company's common stock. PPL is a
provider of clinical trial, regulatory, data management and health economics
services in Australia and New Zealand. PPL has been integrated with the
Company's existing Australian operations. This merger was accounted for as a
pooling of interests. Upon final analysis, it has been determined that this
transaction is not material to the Company's financial results taken as a whole,
and as such, prior period financial statements have not been retroactively
restated in conformity with Accounting Principles Board Opinion No. 16,
"Business Combinations." The results of operations of PPL have been included in
the consolidated operating results from the effective date of the merger. The
$176,000 of costs associated with this merger have been charged to earnings as a
separate component of continuing operations.

NOTE 7.  BANK LOANS:
         -----------

     The Company is currently renegotiating its banking relationship. The
Company anticipates adding a $7,000,000 term loan facility as well as renewing
the existing $5,000,000 credit facility. As of June 30, 1997, the balance
outstanding under the existing credit arrangement was $1,250,000. The Company
anticipates using the additional term loan facility to finance new leasehold
improvements and new capital equipment for the Pharmaceutics Division and to
enhance the Company's information systems infrastructure.

                                      -6-
<PAGE>
 
NOTE 8.  DISCONTINUED OPERATIONS:
         ------------------------

     On June 21, 1997, the Company closed the software commercialization
business unit of Resources Biometrics, Inc. ("RBI"), a wholly-owned subsidiary
of the Company. Accordingly, all operating results have been reclassified from
continuing operations to discontinued operations. This unit recorded a net loss
of $307,000 for the three months ended June 30, 1997 and a net loss of $607,000
for the six months ended June 30, 1997. In addition, a loss on the disposal of
this unit of $1,547,000 has been recorded in the three months ended June 30,
1997. At the time of the acquisition of RBI, approximately 25% of the purchase
price was allocated to the software commercialization business unit. The
majority of the purchase price allocation was to the service portion of this
business, which has given the Company a viable and active CRO presence on the
West Coast. The loss on disposal is comprised mainly of severance, software
asset write-offs, contract completion costs and future rent related to abandoned
office space. The remaining liabilities related to the loss on disposal at June
30, 1997 are $894,000 and are included in "Other accrued expenses" on the
consolidated balance sheet.

NOTE 9.  RESTRUCTURING CHARGES:
         ----------------------

     In June, 1997, the Company implemented a restructuring plan for the
International CRO. The Company has recorded a one-time restructuring charge of
$1,078,000, consisting primarily of termination benefits for fourteen employees
and an accrual for lease-related charges. As of June 30, 1997, seven employees
have been terminated and an immaterial amount of termination benefits has been
paid.

                                      -7-
<PAGE>
 
Item 2.    Management's Discussion and Analysis of Financial
           -------------------------------------------------
           Condition and Results of Operations
           -----------------------------------

Results of Operations

Three months ended June 30, 1997 versus the three months ended June 30, 1996

IBAH, Inc.
Consolidated Statement of Operations
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
                                                                           For the Three Months Ended
                                                                                    June 30,
                                                           -------------------------------------------------------
 
                                                                                                      1997 (1)
                                                                 1996               1997            (As Restated)
                                                           --------------     -------------     ------------------
 
<S>                                                          <C>                <C>               <C>
Revenues                                                          $18,978           $29,358               $ 29,358
   Less-Reimbursed costs                                            5,019             8,370                  8,370
                                                           --------------     -------------     ------------------
   Net revenues                                                    13,959            20,988                 20,988
Operating expenses:
   Direct                                                           7,445            11,156                 11,156
   Selling, general and administrative                              6,500             9,457                  9,457
   Restructuring costs                                                  -             1,078                      -
                                                           --------------     -------------     ------------------
Operating income (loss)                                                14              (703)                   375
   Merger costs                                                         -              (176)                     -
   Interest income (expense), net                                     138               141                    141
                                                           --------------     -------------     ------------------
Income (loss) from continuing operations before taxes                 152              (738)                   516
   Income taxes                                                         -               256                    256
                                                           --------------     -------------     ------------------
Income (loss) from continuing operations                              152              (994)                   260
   Loss from discontinued operations                                    -            (1,854)                     -
                                                           --------------     -------------     ------------------
Net income (loss)                                                 $   152           $(2,848)              $    260
                                                           ==============     =============     ==================
</TABLE>

(1)  Restated to exclude one-time charges for the cost to restructure the
     operations of the International CRO, for costs related to the PPL merger
     and for the disposal of the RBI software commercialization business unit.

Revenues
--------

     Revenues for the three months ended June 30, 1997 were $29,358,000, an
increase of 54.7% over the same period in 1996.  Approximately half of the
increase was due to organic growth in all business segments, with the remainder
principally due to The Hardardt Group ("THG") acquisition on October 1, 1996.

Reimbursed costs
----------------

     Reimbursed costs were $8,370,000 for the first quarter ended June 30, 1997,
or 28.5% of total revenues as compared to 26.4% for the comparable period in
1996. The increase as a percentage of total revenues is a result of a change of
mix in the business from period to period, whereby more revenue was recognized
from contracts where pass-through costs are reimbursed by clients. The THG
acquisition increased the services performed by the Company in clinical trials
management; and therefore, increased the associated reimbursed costs related to
independent investigator payments and travel costs for monitoring these
investigational sites.

                                      -8-
<PAGE>
 
Net revenues
------------

     Net revenues for the second quarter of 1997 were $20,988,000, an increase
of  50.4% as compared to the second quarter of 1996, of which 20.3% was due to
internal growth without acquisitions. Increases in revenues were recorded in the
US CRO (up 100.8%, 35.9% of which was organic growth) and  Pharmaceutics (up
64.0%) being partially offset by a decrease in International CRO revenues (down
14.5%).  Sequentially, net revenues for the second quarter increased by 8.7%
over first quarter of 1997,  due principally to the International CRO where net
revenues increased by 17.3% over the first quarter net revenues.

Direct expenses
---------------

     Direct expenses for the second quarter of 1997 were $11,156,000, or 53.2%
of net revenues, as compared to 53.3% in the second quarter of 1996.  Direct
expenses include all compensation and other direct expenses associated with
revenue producing departments.

Selling, general & administrative
---------------------------------

     Selling, general and administrative expenses for the second quarter of 1997
were $9,457,000, or 45.1% of net revenues, as compared to 46.6% for the same
period in 1996.  The improvement was due principally to the US CRO business
where selling, general and administrative expenses as a percentage of net
revenues decreased from 42.2% in 1996 to 37.0% in 1997.  The US CRO showed this
improvement because the revenue volume for this business has continued to grow
more quickly  than its infrastructure needs.

Restructuring Costs
-------------------

     In June 1997, as part of a full review of International CRO operations,
the Company implemented a restructuring plan to reduce the indirect costs in the
Division.  These changes have not adversely affected clients or staff assigned
to projects, but have reduced administrative personnel and, in some cases, have
allowed for consolidation of office space to more favorable lease situations.
It is anticipated that this restructuring will enhance opportunities for
profitable revenue growth in the future, and will reduce the existing indirect
expense annual run-rate between $700,000 and $1,000,000.  The Company recorded a
one-time restructuring charge of $1,078,000 consisting primarily of severance
and lease related expenses.

Merger Costs
------------

     The merger costs incurred during the three months ended June 30, 1997
relate entirely to the merger with Pharmaco Pty. Ltd. ("PPL"), an Australian
based CRO.  The costs related to this transaction have been charged to earnings
as this merger is accounted for as a pooling of interests.

Interest income, net of interest expense
----------------------------------------

     Net interest income for the second quarter of 1997 was $141,000 as compared
to $138,000 in the comparable 1996 period.

Discontinued Operations
-----------------------

RBI's software commercialization business unit was closed on June 21, 1997.
Accordingly, all operating results have been reclassified from continuing
operations to discontinued operations.  This unit has recorded a net loss of
$307,000 for three months ended June 30, 1997.  In addition, a loss on the
disposal of this unit of $1,547,000 has been recorded in the three months ended
June 30, 1997.  This loss on disposal is comprised mainly of severance, software
asset write-offs, contract completion costs and 

                                      -9-
<PAGE>
 
future rent related to abandoned office space. The strategic decision to close
this unit allows the Company to move from a focus on software commercialization
towards developments that contribute directly to internal process improvements
and speed. Although there are some one-time costs associated with this decision,
the Company believes that focusing on its core competencies in service delivery
will enhance business performance going forward There were no charges to
discontinued operations for the second quarter of 1996.

Net Income (loss)
-----------------

     Net loss for the quarter ended June 30, 1997 was $2,848,000 or $.12 per
share as compared to a profit in the comparable 1996 period of $152,000 or $.01
per share.  Net income, excluding the one-time charges for the discontinued RBI
software commercialization business unit, the PPL merger costs and the
International CRO restructuring, was $260,000 or $.01 per share for the quarter
ended June 30, 1997.

Six months ended June 30, 1997 versus the six months ended June 30, 1996

IBAH, Inc.
Consolidated Statement of Operations
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
                                                                            For the Six Months Ended
                                                                                    June 30,
                                                           --------------------------------------------------------
 
                                                                                                       1997 (1)
                                                                 1996                1997            (As Restated)
                                                           --------------      -------------     ------------------
 
<S>                                                          <C>                 <C>               <C>
Revenues                                                          $35,512            $57,938               $ 57,938
   Less-Reimbursed costs                                            8,933             17,633                 17,633
                                                           --------------      -------------     ------------------
   Net revenues                                                    26,579             40,305                 40,305
Operating expenses:
   Direct                                                          13,761             21,815                 21,815
   Selling, general and administrative                             13,046             17,586                 17,586
   Restructuring costs                                                  -              1,078                      -
                                                           --------------      -------------     ------------------
Operating income (loss)                                              (228)              (174)                   904
   Merger costs                                                         -               (176)                     -
   Interest income (expense), net                                     138                293                    293
                                                           --------------      -------------     ------------------
Income (loss) from continuing operations before taxes                 (90)               (57)                 1,197
   Income taxes                                                         -                492                    492
                                                           --------------      -------------     ------------------
Income (loss) from continuing operations                              (90)              (549)                   705
   Loss from discontinued operations                                    -             (2,154)                     -
                                                           --------------      -------------     ------------------
Net income (loss)                                                 $   (90)           $(2,703)              $    705
                                                           ==============      =============     ==================
</TABLE>


(1)  Restated to exclude one-time charges for the cost to restructure the
     operations of the International CRO, for costs related to the PPL merger
     and for the disposal of the RBI software commercialization business unit.

                                      -10-
<PAGE>
 
Revenues
--------

     Revenues for the six months ended June 30, 1997 were $57,938,000, an
increase of 63.2% over the same period in 1996.

Reimbursed costs
----------------

     Reimbursed costs were $17,633,000, or 30.4% of total revenues for the six-
month period in 1997 as compared to 25.2% for the six month period in 1996. The
increase as a percentage of total revenues is a result of a change of mix in the
business from period to period, whereby more revenue was recognized from
contracts where pass-through costs are reimbursed by clients. The THG
acquisition increased the services performed by the Company in clinical trials
management; and therefore, increased the associated reimbursed costs related to
independent investigator payments and travel costs for monitoring these
investigational sites.

Net revenues
------------

     Net revenues for the six-month period ended June 30, 1997 were $40,305,000,
an increase of  51.6% over the six month period in 1996, of which 19.9% was due
to internal growth without acquisitions.  Increases in revenues were recorded in
the US CRO (up 109.0%, 36.7% of which was organic growth) and  Pharmaceutics (up
71.8%) being partially offset by a decrease in International CRO revenues (down
19.3%).

Direct expenses
---------------

     Direct expenses for the six months of 1997 were $21,815,000, or 54.1% of
net revenues, as compared to 51.8% for the same period in 1996.  The increase in
direct expenses as a percentage of net revenues from year to year was due
principally to the mix effect in the US CRO where clinical trials revenues
increased as a percentage of revenues, and the impact of the International CRO
performance where revenues declined from 1996 to a point where productivity was
negatively impacted.  Direct expenses include all compensation and other direct
expenses associated with revenue producing departments.

Selling, general & administrative
---------------------------------

     Selling, general and administrative expenses for the six months ended June
30, 1997 were $17,586,000 or 43.6% of net revenues, as compared to 49.1% for the
same period in 1996.  The improvement was due principally to the US CRO business
where selling, general and administrative expenses as a percentage of net
revenues decreased from 46.3% in 1996 to 36.2% in 1997.  The US CRO showed this
improvement because the revenue volume for this business has continued to grow
more quickly  than its infrastructure needs.

Restructuring Costs
-------------------

     In June 1997, as part of a full review of International CRO operations,
the Company implemented a restructuring plan to reduce the indirect costs in the
Division.  These changes have not adversely affected clients or staff assigned
to projects, but have reduced administrative personnel and, in some cases, have
allowed for consolidation of office space to more favorable lease situations.
It is anticipated that this restructuring will enhance opportunities for
profitable revenue growth in the future, and will reduce the existing indirect
expense annual run-rate between $700,000 and $1,000,000.  The Company recorded a
one-time restructuring charge of $1,078,000 consisting primarily of severance
and lease related expenses.

                                      -11-
<PAGE>
 
Merger Costs
------------

The merger costs incurred during the six months ended June 30, 1997 relate
entirely to the merger with Pharmaco Pty. Ltd. ("PPL"), an Australian based CRO.
The costs related to this transaction have been charged to earnings as this
merger is accounted for as a pooling of interests.

Interest income, net of interest expense
----------------------------------------

     Net interest income for six months ended June 30, 1997 was $293,000 as
compared to $138,000 in the comparable 1996 period.  The change was entirely due
to changes in cash balances.

Discontinued Operations
-----------------------

RBI's software commercialization business unit was closed on June 21, 1997.
Accordingly, all operating results have been reclassified from continuing
operations to discontinued operations.  This unit has recorded a net loss of
$607,000 for six months ended June 30, 1997.  In addition, a loss on the
disposal of this unit of $1,547,000 has been recorded in the six months ended
June 30, 1997.  This loss on disposal is comprised mainly of severance, software
asset write-offs, contract completion costs and future rent related to abandoned
office space.  The strategic decision to close this unit allows the Company to
move from a focus on software commercialization towards developments that
contribute directly to internal process improvements and speed.  Although there
are some one-time costs associated with this decision, the Company believes that
focusing on its core competencies in service delivery will enhance business
performance going forward  There were no charges to discontinued operations for
the first six months of 1996.

Net Income (loss)
-----------------

     Net loss for the six months ended June 30, 1997 was $2,703,000 or $.12 per
share as compared to a  net loss in the comparable 1996 period of $90,000 or
$.01 per share.  Net income, excluding the one-time charges for the discontinued
RBI software commercialization business unit, the PPL merger costs and the
International CRO restructuring, was $705,000 or $.02 per share for the six
months ended June 30, 1997.

Project backlog
---------------

     The Company is having success in acquiring new business in the US CRO,
International CRO and Pharmaceutics Divisions.  However, due to the uncertainty
and fluctuations that may occur in contract backlog, the Company, consistent
with other major CROs, no longer reports contract backlog.

Divisional Breakdown (second quarter 1997 versus second quarter 1996)-(See Page
-------------------------------------------------------------------------------
15)
---

     Net revenues of the US CRO increased by 100.8%, (35.9% without
acquisitions), on a comparable quarter basis.  Operating income, before one-time
charges, for this Division was $1,599,000 for the second quarter of 1997, a 368%
increase over the comparable quarter of 1996, reflecting increased revenue
growth and productivity improvements for this Division.  The US CRO continues
its trend of obtaining strong new business commitments.

                                      -12-
<PAGE>
 
     The operating results of this Division exclude the results of the
discontinued RBI software commercialization business unit.  All operating
results for this unit have been reclassified from continuing operations to
discontinued operations.  The Company anticipates an annual savings in excess of
$800,000 related to discontinuing this unit. A one-time charge of $1,854,000 for
discontinued operations is included in the second quarter 1997 statement of
operations.  This charge is comprised of $1,547,000 related to the disposal of
the software commercialization business unit and operating losses for this unit
of $307,000 during the quarter.  The loss on disposal is comprised mainly of
severance, software asset write-offs, contract completion costs and future rent
related to abandoned office space.

     International net revenues decreased by 14.5% from the second quarter of
1996 to the second quarter of 1997.  However, on a sequential quarter basis ,
net revenue increased 17.3% from the first quarter.   Additionally, operating
losses before one-time charges decreased quarter over quarter due to improved
revenue volume.

     The International CRO had another improved quarter of new business
commitments.  While not yet at an ideal level, the level of new business was
better than the fourth quarter of 1996 and is building on an improving trend
established late in the first quarter.

     Pharmaceutics net revenues increased to $2,283,000 a 64.0% increase over
the second quarter of 1996.  The continued increase in revenue volume favorably
impacted operating income which improved 174.4% to $354,000 in the quarter ended
June 30, 1997 over the comparable quarter of 1996.  Early in the third quarter,
to support future revenue growth, the Division moved to its new facility.  The
new facility will allow for additional production capacity.  The Company is
committed to expanding this new facility over the next two years to enhance the
growth prospects for this business.  The outlook for this Division continues to
be very robust, and in spite of the additional costs of facility and staff
expansion, the Pharmaceutics Division will continue to be a strong profit
contributor.

     Pharmaceutics has continued to obtain larger and longer commitments from
its clients, and its backlog continues to more than replace its growing revenue
earning capacity.

Liquidity and Capital Resources
-------------------------------

     As of June, 1997, the Company had cash, cash equivalents and short-term
investments of $8,842,000 as compared to $20,823,000 as of December 31, 1996.
The decline in cash from December 31, 1996 to June 30, 1997 was due to the
timing of collections of accounts receivable, net of customer deposits and the
capital investment related to the new Pharmaceutics facility.  Working capital
as of June 30, 1997 was $6,802,000 as compared to $9,206,000 as of December 31,
1996.  The decline in working capital  from year-end 1996 to June 30, 1997 was
due principally to increased capital spending for the new Pharmaceutics facility
and the impact of the one-time restructuring and discontinued operations charges

     The Company is currently renegotiating its banking relationship. The
Company anticipates adding a $7,000,000 term loan facility as well as renewing
the existing $5,000,000 credit facility. As of June 30, 1997, the balance
outstanding under the existing credit arrangement was $1,250,000. The Company
expects to use the additional term loan facility to finance new leasehold
improvements and new capital equipment for the Pharmaceutics Division and to
enhance the Company's information systems infrastructure.

     Although the Company does not believe that it requires financing for
working capital purposes, it may seek additional cash infusions for expansion of
operations, for strategic acquisitions or for competitive reasons.   The Company
intends to reinvest any positive cash flow from operations to support operations
through additional capital spending to improve its competitive position.

                                      -13-
<PAGE>
 
     Based on the foregoing and other factors, and while there can be no
assurance that external financing will be available on terms acceptable to the
Company, the Company believes that it has, or has access to, adequate working
capital to meet its strategic objectives and fund its operations for the
foreseeable future.

     This document may contain "forward-looking" statements.  These statements
carry risks and uncertainties that could cause  the Company's actual results to
differ materially from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to;
risks associated with acquisitions; the degree of success of the strategic
decision to discontinue the RBI software commercialization business unit; the
inability to increase sales or revenue growth at or exceeding market rates; the
degree of success of the International CRO restructuring;  the loss or delay of
large contracts for regulatory or other reasons; a letter of intent on a
substantial project that does not materialize into a signed contract for all or
a material portion of that project; fluctuations in foreign currencies; and the
competition or consolidation within the pharmaceutical industry.

                                      -14-
<PAGE>
 
     For purposes of the following discussion, the following table presents the
results of operations on a divisional level (in thousands):

IBAH, Inc.
<TABLE>
<CAPTION>
Divisional Statement of 
 Operations                  US Clinical
                              Services       International Clinical Services      Pharmaceutics        IBAH, Inc. Consolidated
                           ----------------- ----------------------------------  -----------------  -------------------------------
(unaudited)                                                       Three Months Ended June 30,                                     
                           --------------------------------------------------------------------------------------------------------
                                                                    1997 (2)                                            1997 (2) 
                            1996      1997      1996     1997 (1) (As Restated)    1996     1997      1996   1997 (1) (As Restated)
                           -------  --------  --------   -------- -------------  -------- --------  -------- -------- ------------- 

<S>                        <C>      <C>       <C>        <C>      <C>            <C>      <C>       <C>      <C>      <C>
Net revenues                $6,902  $ 13,860    $5,665     $4,845       $ 4,845    $1,392   $2,283  $ 13,959 $ 20,988       $20,988
                           -----------------  ---------------------------------  -----------------  ------------------------------- 

Operating expenses:
     Direct expenses         3,648     7,136     2,972      2,849         2,849       825    1,171     7,445   11,156        11,156
     Selling, general 
     & administrative        2,912     5,125     3,150      3,574         3,574       438      758     6,500    9,457         9,457
     Restructuring costs       _         _         _        1,078           -         -        _         _      1,078           _
                           -----------------  ---------------------------------  -----------------  ------------------------------- 

Operating income (loss)     $  342    $1,599    $ (457)  $ (2,656)      $(1,578)   $  129     $354  $     14   $ (703)      $   375
                           =================  =================================  =================  ===============================
</TABLE>
     The information presented in the above table does not purport to be
indicative of future results of operations.

(1)  Amounts include the operations of Pharmaco Pty. Ltd from the date of the
     Merger on May 5, 1997.

(2)  Excludes one-time charges for the cost to restructure the operations of the
     International CRO. Amounts include the operations of Pharmaco Pty. Ltd from
     the date of the Merger on May 5, 1997.

                                      -15-
<PAGE>
 
     For purposes of the following discussion, the following table presents the
results of operations on a divisional level (in thousands):

IBAH, Inc.
<TABLE>
<CAPTION>
Divisional Statement of     US Clinical
  Operations                 Services       International Clinical Services      Pharmaceutics        IBAH, Inc. Consolidated 
                         -----------------  --------------------------------  ------------------- --------------------------------
(unaudited)                                                      Six Months Ended June 30,                                        
                         ---------------------------------------------------------------------------------------------------------
                                                                1997 (2)                                              1997 (2)
                           1996    1997       1996    1997 (1) (As Restated)    1996      1997      1996    1997 (1) (As Restated)
                         -------- --------  --------- -------- -------------  --------- --------- --------- -------- -------------
<S>                      <C>      <C>       <C>       <C>      <C>            <C>       <C>       <C>       <C>      <C> 
Net revenues             $ 12,882 $ 26,917  $ 11,130    $8,977        $8,977     $2,567    $4,411  $ 26,579 $ 40,305       $40,305
                         -----------------  --------------------------------  ------------------- --------------------------------
Operating expenses:
     Direct expenses        6,692   13,742     5,552     5,649         5,649      1,517     2,424    13,761   21,815        21,815
     Selling, general & 
     administrative         5,964    9,752     6,227     6,549         6,549        855     1,285    13,046   17,586        17,586
     Restructuring costs      _        _         _       1,078           _          _         _         _      1,078           _ 
                         -----------------  --------------------------------  ------------------- --------------------------------
Operating income (loss)  $    226 $  3,423  $   (649)  $(4,299)      $(3,221)     $ 195     $ 702    $ (228)  $ (174)      $   904
                         =================  ================================  =================== ================================
</TABLE>

     The information presented in the above table does not purport to be
indicative of future results of operations.

(1)  Amounts include the operations of Pharmaco Pty. Ltd from the date of the
     Merger on May 5, 1997.

(2)  Excludes one-time charges for the cost to restructure the operations of the
     International CRO. Amounts include the operations of Pharmaco Pty. Ltd from
     the date of the Merger on May 5, 1997.

                                      -16-
<PAGE>
 
Part II -   Other Information

Item 2.   Changes in Securities
 
     None.

Item 3.   Defaults Upon Senior Securities

     None.
 
Item 4.   Submission of Matters to a Vote of Security Holders

     None.

Item 5.   Other Information

     None.

Item 6. Exhibits and Reports on Form 8-K

 
(a) Exhibits

 
     10.1  Employment Agreement dated  May 14, 1997 between the Registrant and
           Cornelius Hill Lansing.

     10.2  Employment Agreement dated June 1, 1997 between the Registrant and
           Rudi Weekers.

     10.3  Letter acknowledging new financial convenants to the Amended and
           Restated Loan and Security Agreement, dated December 31, 1996,
           between the Registrant and Corestates Bank.
           
     11    Computation of Net Income (Loss) per Common Share.

     27    Financial Data

(b) Reports on Form 8-K
 
     The Company filed one report on Form 8-K dated May 16, 1997 to report on
     the merger with Pharmaco Pty. Ltd.(see Note 6 of the consolidated financial
     statements.) No other reports on Form 8-K were filed during the second
     quarter of 1997.

                                      -17-
<PAGE>
 
                                   Signatures
                                        
                                        

     Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.


                                     IBAH, INC.

Date:  August 8, 1997            By  /s/ Geraldine A. Henwood
                                     ------------------------
                                     Geraldine A. Henwood
                                     Chief Executive Officer


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, 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:  August 8, 1997            By:  /s/ Geraldine A. Henwood
                                      ------------------------
                                      Geraldine A. Henwood
                                      Chief Executive Officer
                                      (Principal Executive Officer)


Date:  August 8, 1997            By:  /s/ Cornelius H. Lansing
                                      ------------------------
                                      Cornelius H. Lansing
                                      Chief Financial Officer
                                      (Principal Financial Officer)

                                      -18-