FORM 10-Q

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549

(X)   QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934.

For the quarterly period ended July 31, 1997
                                      AND

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

For the transition period from                 to

Commission File Number  0-15266

                       BIO-REFERENCE LABORATORIES, INC.
- ------------------------------------------------------------------------------

            (Exact name of registrant as specified in its charter)
          NEW JERSEY                                 22-2405059
(State or other jurisdiction of              (IRS Employer Identification No.)
incorporation or organization)

481 Edward H. Ross Drive, Elmwood Park, NJ                          07407
(Address of principal executive offices)                          (Zip Code)







(Registrant's telephone number, including area code)            (201) 791-2600
                                                           -------------------

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

(Former name,former address and former fiscal year,if changed since last report)

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Securities  and 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

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section  12, 13 or 15(d) of the  Securities  and  Exchange  Act of 1934
after the distribution of securities under a plan confirmed by a court.
                             Yes        No

                     APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the  latest  practicable  date:  7,115,280  ($.01  par  value) at
September 11, 1997.






                       BIO-REFERENCE, LABORATORIES, INC.

                                   FORM 10-Q

                                JULY 31,  1997




                                   I N D E X



                                                                        Page


PART I.   FINANCIAL INFORMATION

  Item 1.   Financial Statements
            Balance Sheet as of July 31, 1997 (unaudited)                     1

            Statements of Operations for the
                   three months and nine months ended July 31, 1997
            and July 31, 1996 (unaudited)                                     3

            Statements of Cash Flows for the
                   nine months ended July 31, 1997 and July 31,
             1996 (unaudited)                                                  4

            Notes to financial statements                                      6



   Item 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                                8


PART II.   OTHER INFORMATION                                                  11

   Item 6.        Exhibits and Reports on Form 8-K                            11

   Signatures                                                                 11







                                BIO-REFERENCE LABORATORIES, INC.

                                         BALANCE SHEETS

                                             ASSETS

CURRENT ASSETS:
                                                      July 31,                 October 31,
                                                            1997               1996
                                                            ----               ----
                                                            (Unaudited)
                                                                   

  Cash                                               $   1,218,498     $   1,401,474
  Cash- Restricted                                         852,000           852,000
  Accounts Receivable (Net)                             13,952,434        12,019,761
  Inventory                                                501,726           394,377
  Other Current Assets                                     465,708           442,932
  Certificates of Deposit- Restricted                    3,556,250         3,556,250
                                                       -----------         ---------
    TOTAL CURRENT ASSETS                             $  20,546,616     $  18,666,794
    --------------------                               -----------        ----------

  PROPERTY, PLANT AND EQUIPMENT                      $   2,981,559     $   2,577,130
  -----------------------------

LESS:  Accumulated Depreciation                          1,573,117         1,265,836
- ----                                                    ----------         ---------

  TOTAL PROPERTY,
  PLANT AND EQUIPMENT - NET                          $   1,408,442     $   1,311,294
  -------------------------                             ----------         ---------

OTHER ASSETS:
   Certificates of Deposit- Restricted               $     123,750     $          --
   Due from Related Party                                  219,318           234,918
   Deposits                                                187,574           234,918
   Goodwill (Net of Accumulated
    Amortization of $1,210,330 at July 31,
    1997 and 1,052,038 at October 31, 1996)              3,010,112         3,168,403
   Deferred Charges (Net of Accumulated
    Amortization of $1,814,297at July 31,
    1997 and 1,444,265 at October 31, 1996)              3,942,254         4,164,286
   Other Assets                                            341,037           341,037
                                                     -------------      ------------

   TOTAL OTHER ASSETS                                $   7,824,045     $   8,252,648
   ------------------                                -------------         ---------

   TOTAL ASSETS                                      $  29,779,103     $  28,230,736
   ------------                                         ==========        ==========

The Accompanying Notes are an Integral Part of These Financial Statements.

                                               1







                                BIO-REFERENCE LABORATORIES, INC.
                                         BALANCE SHEETS
                              LIABILITIES AND SHAREHOLDERS' EQUITY

                                                                  July 31, October 31,
                                                                  1997              1996
                                                                  ----              ----
                                                                  (Unaudited)
                                                                         

CURRENT LIABILITIES:
  Accounts Payable                                        $ 2,362,907          $    2,139,303
  Salaries and Commissions Payable                            811,368              878,996
  Accrued Expenses                                            324,790              327,876
  Current Portion of Long-Term Debt                           796,867              730,374
  Current Portion of Leases Payable                           144,417              202,147
  Current Portion of Subordinated Notes                       130,329              243,829
  Notes Payable                                            10,852,000            9,930,741
  Taxes Payable                                               176,757              141,081
                                                          -----------              -------
    TOTAL CURRENT LIABILITIES                             $15,599,435          $14,594,347
    -------------------------                             ----------            ----------

LONG-TERM LIABILITIES:
  Long-Term Portion of Long-Term Debt                         880,207            1,433,817
  Long-Term Portion of Leases Payable                         284,956               99,564
                                                          -----------               ------

        TOTAL LONG-TERM LIABILITIES                       $ 1,165,163               99,564
        ---------------------------                       -----------               ------

SHAREHOLDERS' EQUITY:
  Preferred Stock $.10 Par Value;
    Authorized 1,062,589 shares,
    None Issued                                             $      --          $        --
  Senior Preferred Stock, $.10 Par Value;
    Authorized 604,078 shares,
    Issued and Outstanding 604,078 shares                          --                   --
  Common Stock, $.01 Par Value;
    Authorized 18,333,333 shares,
    Issued and Outstanding 7,115,280shares
      in July 31, 1997and Issued and Outstanding
      6,300,280 shares in October 31, 1996.                    71,153               63,003

  Additional Paid-In Capital                               22,845,046           22,493,705

  Accumulated [Deficit]                                   (9,541,117)          (10,431,483)
                                                           ---------            ----------
  Totals                                                  $13,375,082          $12,125,225
  Deferred Compensation                                     (360,577)             (22,217)
                                                          -----------              ------
    TOTAL SHAREHOLDERS' EQUITY                            $13,014,505          $12,103,008
    --------------------------                             ----------           ----------

         TOTAL LIABILITIES AND
         SHAREHOLDERS' EQUITY                             $29,779,103          $28,230,736
         --------------------                              ==========           ==========

The Accompanying Notes are an Integral Part of These Financial Statements.

                                               2







                             BIO-REFERENCE LABORATORIES, INC.
                                 STATEMENTS OF OPERATIONS
                                       [UNAUDITED]

                                                                Three months ended             Nine months ended

                                                                          July 31,                      July 31,
                                                                          -------                       -------
                                                      1 9 9 7           1 9 9 6           1 9 9 7           1 9 9 6
                                                      -------           -------           -------           -------
                                                                                                 

NET REVENUES:                                         $9,814,415        $8,928,529        $29,064,409       $25,912,800
- ------------                                          ----------        ----------        -----------       -----------

COST OF SERVICES:
  Depreciation                                        $  101,094        $   94,292        $   286,370       $   276,379
  Employee Related Expenses                            2,130,195         2,154,055          6,467,929         6,386,869
  Reagents and Lab Supplies                            1,118,741         1,131,878          3,513,617         3,270,054
  Other Cost of Services                               1,468,769         1,239,405          4,180,300         3,536,421
                                                      ----------        ----------        -----------       -----------
      TOTAL COST OF SERVICES                          $4,818,799        $4,619,630        $14,448,216       $13,469,723
      ----------------------                          ----------        ----------        -----------       -----------

GROSS PROFIT ON REVENUES                              $4,995,616        $4,308,899        $14,616,193       $12,443,077
- ------------------------

General and Administrative Expenses:

  Depreciation and Amortization                       $  184,459        $ 156,485         $   549,235           468,113
  Other General and Admin. Expenses                    2,851,933         2,708,364          8,505,267        8,068,547
  Bad Debt Expense                                     1,339,457         1,032,021          3,986,739         3,161,054
                                                      ----------        ----------        -----------       -----------

      TOTAL GENERAL AND ADMIN. EXPENSES               $4,375,849        $3,896,870        $13,041,241       $11,697,714
      ---------------------------------               ----------        ----------        -----------       -----------

  OPERATING INCOME                                    $ 619,767         $ 412,029         $ 1,574,952       $   745,363
  ----------------

OTHER (INCOME) EXPENSES:

  Interest Expense                                    $  275,715        $ 201,501         $   834,145        $  590,870
  Interest Income                                        (68,664)         (69,890)           (202,191)         (221,248)
                                                       ---------        ---------         -----------       -----------

          TOTAL OTHER EXPENSES - NET                  $  207,051        $ 131,611         $   631,954       $   369,622
          --------------------------                  ----------        ---------         -----------       -----------

INCOME BEFORE TAX                                     $ 412,716         $ 280,418         $   942,998       $   375,741
- -----------------

  Provision for Income Taxes                              45,849                 --            52,632            48,501
                                                      ----------        -----------       -----------       -----------

NET INCOME                                            $ 366,867         $ 280,418         $   890,366       $   327,240
- ----------                                            =========         =========         ===========       ===========

  NET INCOME PER SHARE                                $       .05       $      .06        $       .14       $       .06
  --------------------                                ===========       ==========        ===========       ===========
 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING         7,115,280         6,094,259          6,571,947        6,093,205
 ---------------------------------------------        ==========        ==========        ===========       ==========

The Accompanying Notes are an Integral Part of These Financial Statements.

                                            3







                             BIO-REFERENCE LABORATORIES, INC.

                                 STATEMENTS OF CASH FLOWS

                                        [UNAUDITED]

                                                                Nine months ended
                                                                                                July 31,
                                                        1 9 9 7           1 9 9 6
                                                        -------           -------
                                                                   

OPERATING ACTIVITIES:
   Net Income                                         $   890,366       $   327,240
   Adjustments to Reconcile Net Income to
   Cash Provided by Operating Activities:
    Deferred Compensation                                  14,924            33,125
    Depreciation and Amortization                         835,854           744,492
     Provision for Bad Debts                            3,986,739         3,161,054
     Gain on Sale of Marketable Securities                     --            (9,274)
     Write-down of Impaired Assets                             --            29,458
     Amortized expenses related to Dianon acquisition          --            65,700
   Change in Assets and Liabilities, net of
       effects of acquisitions
   (Increase) Decrease in:
     Accounts Receivable                               (5,919,412)       (5,533,833)
     Other Assets                                        (130,125)          (35,556)
     Prepaid Expenses and Other Current Assets             48,280            48,355
     Deferred Charges and Goodwill                       (148,000)       (2,167,606)
   Increase (Decrease) in:
     Accounts Payable and Accrued Liabilities             194,523           (87,589)
                                                      ------------      ------------

           NET CASH - OPERATING ACTIVITIES            $  (226,851)      $(3,444,434)
           -------------------------------

INVESTING ACTIVITIES:
   Acquisition of Equipment and
     Leasehold Improvements                           $  (181,568)      $  (481,365)
   Cash overdraft assumed in
     connection with acquisition                               --            (3,797)
   Investment in Certificate of Deposit                        --           192,650
                                                      -----------       -----------

           NET CASH - INVESTING ACTIVITIES            $  (181,568)      $  (382,512)
           -------------------------------


FINANCING ACTIVITIES:
   Proceeds from Sales of Marketable Securities                --           501,893
   Payments of Long-Term Debt                            (595,117)       (1,930,457)
   Increase in Long-Term Debt                             173,758         1,945,148
   Payments of Capital Lease Obligations                 (160,957)         (210,820)
   Payments of Subordinated Notes Payable                (113,500)           (7,920)
   (Increase) Decrease in Restricted Cash                      --         1,427,646
   Increase in Revolving Line of Credit                   921,259         2,806,000
                                                      -----------       -----------

          NET CASH - FINANCING ACTIVITIES             $   225,443       $ 4,531,490
          -------------------------------             -----------       -----------

    NET INCREASE (DECREASE) IN CASH                   $  (182,976)      $   704,544
    -------------------------------

    CASH AT BEGINNING OF PERIODS                        1,401,474           636,246
    ----------------------------                      -----------       -----------

    CASH AT END OF PERIODS                            $ 1,218,498       $ 1,340,790
    ----------------------                            ===========       ===========


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the period for:
     Interest                                         $   860,140       $   572,908
     Income Taxes                                     $    52,632       $    48,501

The Accompanying Notes are an Integral Part of These Financial Statements.

                                            4






SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

In December, 1995, the Company issued 4,745 shares of common stock in payment of
a $17,198.45 invoice due to a vendor.

In  January,  1996,  the  Company  issued  debt in the  amount  of  $108,000  in
connection with the acquisition of a customer list.

In April, 1996,  management  wrote-off an intangible asset with a carrying value
of $197,986  and related  debt in the amount of $168,528 in  connection  with an
impaired contract.

In July, 1996, management wrote-off an intangible asset with a carrying value of
$90,700 in connection with an abandoned acquisition.

In October,  1996, the Company incurred a capital lease obligation of $69,812 in
connection with the acquisition of medical equipment.

In March,  1997, the Company incurred capital lease  obligations (2) of $112,861
in connection with the acquisition of medical equipment.


In May, 1997,  the Company  issued  815,000 shares of common stock  ($313,725 of
Deferred  Compensation)  and 35,200  non-employee  stock options  exercisable to
purchase  35,200 shares of the  Company's  common stock at $.71875 per share for
employment and consulting agreements and director fees.

The Accompanying Notes are an Integral Part of These Consolidated Financial 
Statements.

                                         5





                          BIO-REFERENCE LABORATORIES, INC.
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (UNAUDITED)

[1] In the opinion of management, the accompanying unaudited condensed financial
statements  reflect all adjustments  [consisting only of normal  adjustments and
recurring  accruals]  which are  necessary  to present a fair  statement  of the
results for the interim periods presented. [2] The results of operations for the
nine month  period  ended July 31, 1997 are not  necessarily  indicative  of the
results to be expected for the entire year.  [3] The  financial  statements  and
notes thereto  should be read in conjunction  with the financial  statements and
notes for the year  ended  October  31,  1996 as filed with the  Securities  and
Exchange  Commission in the Company's Annual Report on Form 10-KSB. [4] Revenues
are recognized at the time the services are performed. Revenues on the statement
of operations is net of the following amounts for allowances and discounts.

     Three Months Ended            Nine Months Ended
           July 31                      July 31
     1997          1996           1997          1996
     ----          ----           ----          ----
$    11,249,406 $ 8,340,479   $  30,833,282 $23,469,329

A number of proposals for legislation or regulation are under  discussion  which
could have the effect of  substantially  reducing  Medicare  reimbursements  for
clinical  laboratories.  Depending upon the nature of regulatory action, if any,
which is taken and the content of  legislation,  if any,  which is adopted,  the
Company could  experience a  significant  decrease in revenues from Medicare and
Medicaid, which could have a material adverse effect on the Company. The Company
is unable to predict, however, the extent to which such actions will be taken.

[5]  An  allowance  for  contractual  credits  and  uncollectible   accounts  is
determined  based upon a review of the  reimbursement  policies  and  subsequent
collections for the different types of receivables. This allowance, which is net
against  accounts  receivable  was  $7,882,140 at July 31, 1997.  [6] Inventory,
consisting  primarily of purchased clinical supplies,  is valued at the lower of
cost (first-in, first-out) or market.

[7] Property and equipment are carried at cost.  Depreciation is computed by the
straight-line  method over the estimated  useful lives of the respective  assets
which range from 2 to 8 years.  Leasehold  improvements  are amortized  over the
life of the lease, which is approximately five years. On sale or retirement, the
asset cost and related accumulated depreciation or amortization are removed from
the accounts,  and any related gain or loss is reflected in income.  Repairs and
maintenance are charged to expense when incurred.

[8] The  preparation  of  financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

[9] Cash  equivalents are comprised of certain highly liquid  investments with a
maturity of three months or less when purchased.

[10]  Income  per  share is based on the  weighted  average  number of shares of
common stock outstanding during each period.

[11] The  Company,  at  times,  issues  shares of common  stock in  payment  for
services rendered to the Company.  The estimated fair value of the shares issued
approximates the value of the services provided.

[12] At July 31, 1997, the Company had $4,532,000 of restricted cash which 
represents collateral for two demand notes issued pursuant to bank
loans.

[13] At July 31,  1997,  the  Company  had  $5,409,052  in cash in excess of the
federally  insured  limits,   however   $4,532,000  of  this  amount  represents
collateral for demand loans with the same banks.

[14] The Company had net  operating  loss carry  forwards at October 31, 1996 of
approximately  $8,900,000  which  begin to expire in 1997.  As a result of these
carry forwards, the Company has a deferred tax asset of approximately $3,600,000
which has been offset by a valuation  account of $3,600,000,  resulting in a net
deferred asset of $-0-.

[15] In January,  1994,  $3,352,000  was  received  for a demand note payable to
Gotham  Bank of New York.  Interest  is due at three  percent  above the  bank's
corporate savings account rate. The Company deposited a similar sum in a savings
account  with this bank as  collateral  for the loan.  As of January  31,  1996,
$2,500,000 was paid against the principal on this note. The Company has $852,000
in a savings account with this bank restricted as collateral for the loan.

                                         6





[16] In March,  1995, the Company  consummated a $6,500,000  line of credit with
PNC Bank, N.A.-Asset Based Lending Department. The credit line is secured by the
Company's  accounts  receivable,  is for a two-year term and may be extended for
annual  periods by mutual  consents,  thereafter.  In July,  1996,  this line of
credit  was  increased  to  $9,000,000.  In  March,1997,  PNC Bank  amended  its
agreement with the Company to increase this line to $10,000,000.

[17] In November,  1995,  the Company  acquired  Oncodec  Labs,  Inc. All of the
issued and  outstanding  common stock of Oncodec  Labs,  Inc. was acquired for a
maximum of 40,000 shares of the  Company's  common  stock.  At the closing,  the
stockholders  of Oncodec Labs,  Inc.  received  10,000 shares and the additional
30,000 shares will be issued  contingent upon receipts obtained through December
31, 1998. This acquisition was not significant to the Company.

[18] In November,  1995, the Company  acquired  Community  Medical  Laboratories
("CML").  All of the issued and outstanding common stock of CML was acquired for
an aggregate 72,688 shares of the Company's  common stock. In addition,  certain
CML noteholders delivered CML promissory notes totaling an aggregate $399,958 in
indebtedness including accrued interest through October 31, 1995 in exchange for
an  aggregate  $200,174 in principal  amount of the  Company's  debentures.  The
72,688  shares of the  Company's  stock will be held in escrow  pending  certain
required collections from CML customers. In addition, the Company entered into a
five year  employment  agreement  with CML's chief  executive  providing  for an
annual salary of $60,000.

[19]  Management  of the Company  evaluates the period of  amortization  for its
intangible assets to determine  whether later events and  circumstances  warrant
revised  estimates of useful lives. On a quarterly basis,  management  evaluates
whether the carrying value of these intangible assets has become impaired.  This
evaluation is done by comparing the carrying value of these intangible assets to
the  value of  projected  discounted  net cash  flow  from  related  operations.
Impairment  is recognized if the carrying  value of these  intangible  assets is
greater than the projected discounted net cash flow from related operations.  In
the quarter ended April 30, 1996,  certain  intangible  assets were deemed to be
impaired.  As a result,  a charge of $29,458 was recorded for the  write-down of
these assets.

[20] In May,  1996, the Company  acquired  certain assets and rights of Advanced
Medical  Laboratory,  Inc.  ("AML") for a maximum  amount of $612,000,  of which
$180,000  was paid at  closing.  The  remaining  maximum  balance of $432,000 is
payable over a three-year period. AML had revenues of approximately  $900,000 in
the  twelve  months  preceding  the   acquisition.   This  acquisition  was  not
significant to the Company.

[21] On July 19, 1996,  BRLI  completed  the purchase  from  SmithKline  Beecham
Clinical  Laboratories,  Inc. ("SBCL") of certain assets,  rights and associated
goodwill  including the Customer  List related to SBCL's  operation of its Renal
Dialysis Testing Business. The purchase price was $1,800,000 of which $1,200,000
was paid at the  Closing.  The  $600,000  balance was payable in 24  consecutive
monthly installments of $25,000 commencing January 1, 1997. Interest was imputed
at the prime rate. At April 30, 1997, the Outstanding  debt balance as reflected
on  Bio-Reference  Laboratories,  Inc.'s  Balance  Sheet  was  $551,573.  At the
Closing,  SBCL agreed for a three-year  period  commencing no more than 120 days
after the  Closing,  to cease  performing  renal  dialysis  clinical  laboratory
testing  services for renal  dialysis  centers or other  entities  which provide
diagnosis and/or treatment to dialysis patients.  Funding for the $1,200,00 down
payment made by BRLI at the Closing was  provided  pursuant to its term loan and
credit  line  facilities  with the  predecessor  of PNC Bank,  N.A.  The Company
estimates that approximately $1,000,000 in annual revenues could be generated by
this acquisition. (See Note 22).

[22] On December 30, 1996, the Company  commenced a lawsuit  against  SmithKline
Beecham  Clinical  Laboratories  ("SBCL")  alleging  that  SBCL  materially  and
repeatedly  breached its obligations and its representations and warranties made
in the Asset Sale/Purchase  Agreement and the Non- Competition Agreement between
the parties and claimed unspecified amounts of compensatory and punitive damages
and related  costs.  This lawsuit is in its initial stages and no assurances can
be given at this time that it will be concluded  in the  Company's  favor.  As a
result of its  allegations  against SBCL,  the Company has not made any payments
with  respect  to the  $600,000  note  payable  issued  in  connection  with the
purchase.  In the normal  course of its  business,  the  Company is exposed to a
number of other  asserted and  unasserted  potential  claims.  In the opinion of
management,  the  resolution of these  matters will not have a material  adverse
effect on the Company's financial position or results of operations.

[23] On May 13, 1997 the Board of  Directors  approved an  employment  agreement
effective November 1, 1997 with Marc Grodman to serve as chief executive officer
and President.  The agreement  provides (i) for a term through  October 31, 2004
(ii) a minimum  annual  base  compensation  of  $395,000  per year  with  annual
increases to the extent authorized by the Board,  based upon the corporation and
Dr. Grodman's  performance;  (iii) normal health and life insurance  benefits as
well as a minimum of $2,000,000  face amount of "Split  Dollar" life  insurance;
(iv) for the leasing of an automobile for Dr.  Grodman's use; (v)  participation
in fringe benefit,  bonus,  pension,  profit  sharing,  stock option and similar
plans maintained for the Company's  employees;  (vi) twelve months of disability
benefits  at his  then  current  compensation,  and  (vii)  certain  termination
benefits  and in the  event of  termination  due to a Change in  Control  of the
Company,  a severance  payment equal to 2.99 times Dr. Grodman's  average annual
compensation  during the preceding  five years.  The agreement  also granted Dr.
Grodman (a) 300,000 shares of the Company's  Common Stock subject to forfeiture,
(b) five-year  incentive stock options exercisable to purchase 100,000 shares of
the Company's Common Stock at $.790625 per share, and (c) ten-year non-qualified
options  exercisable to purchase 200,000 shares of the Company's Common Stock at
$.71875 per share. In addition,  the Company agreed to effect a recapitalization
of its 604,078 outstanding shares of Senior Preferred Stock owned by Dr. Grodman
and his family and convertible into an aggregate  604,078 shares of Common Stock
at a  conversion  price of $1.50 per  share,  by issuing  in  exchange  therefor
pursuant to a Plan of Recapitalization,  an aggregate 604,078 shares of Series A
Senior Preferred Stock convertible during the approximately ten-year term ending
May 1, 2007 into an  aggregate  604,078  shares of Common  Stock at a conversion
price of $.75 per share.

On May 13,  1997  the  Board  of  Directors  approved  an  employment  agreement
effective May 1, 1997 with Howard Dubinett to serve as chief  operating  officer
and Executive  Vice  President.  The  agreement  provides (i) for a term through
October 31, 2002 (ii) a minimum  annual base  compensation  of $220,000 per year
with annual  increases based on increases in the CPI as well as increases to the
extent authorized by the Board;  (iii) normal health and life insurance benefits
as well as a minimum of $550,000 face amount of "Split  Dollar" life  insurance;
(iv) for the leasing of an automobile for Mr.  Dubinett's use; (v) participation
in fringe benefit,

                                         7





bonus,  pension,  profit sharing,  stock option and similar plans maintained for
the Company's  employees;  (vi) twelve months of disability benefits at his then
current compensation, and (vii) certain termination benefits and in the event of
termination due to a Change in Control of the Company, a severance payment equal
to 2.99 times Mr. Dubinett's  average annual  compensation  during the preceding
five years.  The agreement  also granted Mr.  Dubinett (a) 240,000 shares of the
Company's  Common Stock subject to forfeiture and, (b) ten-year  incentive stock
options  exercisable to purchase 60,000 shares of the Company's  Common Stock at
$.71875 per share.

On May 13,  1997  the  Board  of  Directors  approved  an  employment  agreement
effective  May 1, 1997 with Sam Singer to serve as chief  financial  officer and
Vice President.  The agreement  provides (i) for a term through October 31, 2002
(ii) a minimum  annual  base  compensation  of  $220,000  per year  with  annual
increases  based on  increases  in the CPI as well as  increases  to the  extent
authorized by the Board; (iii) normal health and life insurance benefits as well
as a minimum of $400,000 face amount of "Split Dollar" life insurance;  (iv) for
the leasing of an automobile for Mr. Singer's use; (v)  participation  in fringe
benefit,  bonus,  pension,  profit  sharing,  stock  option  and  similar  plans
maintained  for the  Company's  employees;  (vi)  twelve  months  of  disability
benefits  at his  then  current  compensation,  and  (vii)  certain  termination
benefits  and in the  event of  termination  due to a Change in  Control  of the
Company,  a severance  payment equal to 2.99 times Mr.  Singer's  average annual
compensation  during the preceding  five years.  The agreement  also granted Mr.
Singer (a) 200,000  shares of the  Company's  Common Stock subject to forfeiture
and, (b) ten-year incentive stock options  exercisable to purchase 50,000 shares
of the Company's Common Stock at $.71875 per share.

Deferred compensation of $313,725 was record because of the above transactions.
  Amortization is over approximately 6 years under the straight line method.

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

                                RESULTS OF OPERATIONS

               COMPARISON OF THIRD QUARTER 1997 VS THIRD QUARTER 1996

NET REVENUES:

Net Revenues for the three month period ended July 31, 1997 were  $9,814,415  as
compared to  $8,928,529  for the prior three month  period  ended July 31, 1996;
this represents a 10% increase in net revenues. The number of patients processed
during the quarter  ended July 31, 1997  increased 4% over the prior  comparable
period.  Net revenue per patient increased from $48.99 for the period ended July
31, 1996 to $51.85 for the period  ended July 31,  1997.  This  represents  a 6%
increase  in net  revenues  per  patient.  Management  can not  project if these
increases will continue, or if they do, at what rate.

COST OF SERVICES:

Cost of services  increased from  $4,619,630 for the three months ended July 31,
1996 to $4,818,799  for the  comparable  three months ended July 31, 1997.  This
represents  a 4%  increase  in  direct  expenses,  which  is in line  with a 10%
increase in net revenues.

GROSS PROFITS:

Gross profits on net revenues increased from $ 4,308,899,  or 48% of net reveues
for the three  month  period  ended July 31, 1996 to  $4,995,616,  or 51% of net
revenues, for the three month period ended July 31, 1997; an increase of 3%.

GENERAL AND ADMINISTRATIVE EXPENSES:

General and  administrative  expenses for the three month period ending July 31,
1997 were  $4,375,849 as compared to $3,896,870  for the quarter ending July 31,
1996,  an  increase  of $478,979  or 12%.  The  Company's  reserve for bad debts
accounted for $307,436 or 64% of this increase. When the increase in the reserve
for bad debts is factored out, indirect expenses increased only 4% compared to a
10% increase in net revenues for the period.

INTEREST EXPENSE:

Interest expense  increased from $201,501 during the three months ended July 31,
1996 to  $275,715  for the three  months  ended July 31,  1997 and is due to the
Company's increase in asset based borrowings and equipment leases..

INCOME:

The Company had net income of $366,867  for the three months ended July 31, 1997
as  compared  to  $280,418  for the  three  months  ended  July 31,  1996.  This
represents  a 31%  increase in net income and  compares  favorably  with the 10%
increase in net revenues.

                    NINE MONTHS 1997 COMPARED TO NINE MONTHS 1996
NET REVENUES:
- ------------

Net revenues for the nine month period ended July 31, 1997 were  $29,064,409  as
compared to  $25,912,800  for the prior  comparable  period ended July 31, 1996;
this represents an 12% increase in net revenues. The number of patients serviced
for the nine month period ended July 31, 1997 was 544,814, which was

                                         8





an  increase of 4% over the same  period in 1997.  Part of this  increase in net
revenues per patient may be attributable to the Company's  emphasis on specialty
testing.  Revenues in the Company's  Renal  Reference  (dialysis  testing unit),
Fertility Reference  Laboratory (a business unit specializing in male fertility)
and GenCare Biomedical Research (the Company's oncology and tumor tissue testing
unit)  have  all   increased  in  the  current  nine  month  period  versus  the
corresponding  period in the prior fiscal year.  These units are all  associated
with higher net revenue per patient  than the rest of Bio-  Reference's  testing
segments.  In  particular,  GenCare  experienced an increase in net revenues per
patient;  to $143.73 for the nine month  period  ended July 31, 1997 from $94.79
during the previous  corresponding  period.  This  represents an increase of net
revenue per patient for this business unit of 52%. Management can not project if
these increases will continue, or if they do, at what rate.

COST OF SERVICES:

Cost of services increased from $13,469,723 for the nine month period ended July
31, 1996 to  $14,448,216  for the nine month period  ended July 31,  1997.  This
represents a 7% increase in direct  operating  costs and is in line with the 12%
increase in net revenues.

GROSS PROFITS:

Gross revenues  increased  from  $12,443,077 or 48% of net revenues for the nine
month period ended July 31, 1996 to  $14,616,193  or 50% of net revenues for the
nine month period ended July 31, 1997; an increase of 2%.

GENERAL AND ADMINISTRATIVE EXPENSES:

General and  administrative  expenses  for the nine month  period ended July 31,
1997 were $13,041,241 as compared to $11,697,714 for the nine month period ended
July 31, 1996,  an increase of  $1,343,527  (12%).  The reserve for bad debt was
increased by $825,685 in the period ended July 31, 1997,  compared to the period
ended July 31, 1996.  When the increase in reserve for bad debt is factored out,
General and  Administrative  Expenses  would have increased by 4%. This compares
favorably to an increase in net revenues for the period of 12%.

INTEREST EXPENSE:

Interest  expense  increased  from $590,870  during the nine month period ending
July 31, 1996 to $834,145  during the nine month  period  ending July 31,  1997.
This increase was caused by the Company's increase in asset based borrowings and
equipment leases.

INCOME:

The Company had net income of $890,366  for the nine months  ended July 31, 1997
as compared to $327,240  for the nine  months  ended July 31,  1996.  Management
believes  the  increase in net income of $563,126  for the period ended July 31,
1997  was  attributable  to (1) the  mild  winter  weather  that  the  Northeast
experienced  during  December,  January and February and (2) the cost  reduction
program implemented during January of 1997.

       LIQUIDITY AND CAPITAL RESOURCES FOR THE NINE MONTHS ENDED JULY 31, 1997

Working  capital as of July 31, 1997 was $4,947,181 as compared to $4,072,447 at
October  31, 1996 an increase  of  $874,734  during the nine month  period.  The
Company decreased its cash position by approximately $183,000 during the current
period.  The Company  utilized  $226,851 in cash for  operating  activities.  To
offset this use of cash the Company raised $173,758 in long-term debt,  $921,259
in credit line  borrowings and repaid  approximately  $870,000 in existing debt.
The capital spending requirements for the Company during 1997 is expected not to
exceed  $595,000.  To date,  approximately  $182,000  has been  spent on capital
improvements and approximately $222,900 in capital leases.

The Company had current  liabilities  of $15,599,435 at July 31, 1997. The three
largest items in this category are note payable of $10,852,000, accounts payable
of $2,154,165 and current portion of long-term debt of $1,071,613.

Containment  of  health-care   costs,   including   reimbursement  for  clinical
laboratory services, has been a focus of ongoing governmental activity.  Omnibus
budget  reconciliation  legislation,  designed to "reconcile" existing laws with
reductions and reimbursement required by enactment of a Congressional budget can
adversely affect clinical  laboratories by reducing  Medicare  reimbursement for
laboratory services.  In each of the omnibus budget  reconciliation laws enacted
in 1987, 1989 and 1990,  Medicare  reimbursement  of clinical  laboratories  was
reduced from previously  authorized  levels.  None of the reductions  enacted to
date has had a material  adverse  effect on the  Company.  For many of the tests
performed for Medicare  beneficiaries or Medicaid  recipients,  laboratories are
required  to bill  Medicare  or  Medicaid  directly,  and to accept  Medicare or
Medicaid reimbursement as payment in full.

A number of proposals for legislation or regulation are under  discussion  which
could have the  effect of  substantially  reducing  Medicare  reimbursements  to
clinical  laboratories.  For example, the House Energy and Commerce Subcommittee
on Oversight  and  Investigation  introduced  legislation  in 1987 and 1989 that
would require clinical laboratories to charge Medicare the lowest prices charged
to any client.  In October 1990, the Office of the Inspector  General ("OIG") of
the  Department  of Health  and Human  Services  ("HHS")  proposed  a  so-called
"laboratory  roll-in"  reimbursement  methodology,  whereby  physicians would be
reimbursed a flat fee per office visit for clinical laboratory testing,  thereby
forcing  clinical  laboratories  to bid to provide those services to physicians.
The Balanced  Budget Act of 1997 reduced  Medicare's fee schedule "CAPS" from 76
to 74 percent of the

                                         9





median of all fee schedules  effective January 1, 1998. In addition,  Medicare's
annual cost of living  increase was eliminated for the next five years,  through
fiscal  year  2002.  The  Health  Care  Financing  Administration  ("HCFA")  has
announced  that it is  developing  a proposal  to provide for  reimbursement  of
clinical  laboratories  on a  competitive  bid basis.  In addition,  a number of
states, HHS and Medicare carriers (insurance companies that administer Medicare)
have  imposed   reductions  and  other  limitations  on  Medicare  and  Medicaid
reimbursement for laboratory testing and one state has imposed, and other states
are  considering,  new  taxes  on  health  care  providers,  including  clinical
laboratories.  Depending upon the nature of regulatory  action, if any, which is
taken and the content of  legislation,  if any,  which is  adopted,  the Company
could experience a significant  decrease in revenues from Medicare and Medicaid,
which could have a material adverse effect on the Company. The Company is unable
to predict, however, the extent to which such actions will be taken.

The Company intends to capitalize on the current trend of  consolidation  in the
clinical laboratory  industry through  acquisitions of other laboratories in its
geographical region with significant customer lists.  Purchase prices to acquire
other laboratories may involve cash, notes,  common stock,  and/or  combinations
thereof.  The Company has a credit facility with PNC Bank, N.A. for $10,000,000.
As of July  31,  1997,  $10,000,000  of this  facility  has  been  utilized.  In
addition,  the Company has verbally  renegotiated  the  convertible  debt due to
certain former owners of GenCare that were due and payable on January 4, 1997 in
the amount of approximately $235,729. These notes are now expected to be paid in
full during the first quarter of calendar 1999.

On May 13, 1997, the Board of Directors approved new employment  agreements with
the three  Executive  Officers of the Company (See footnote 23). The  agreements
provide for a minimum annual base salary totaling $835,000 for approximately six
years.

Cash on  hand,  equity  financing  and  additional  borrowing  capabilities  are
expected to be  sufficient  to meet  anticipated  operating  requirements,  debt
repayments and provide funds for capital  expenditures,  excluding  acquisitions
for the foreseeable future.


IMPACT OF INFLATION:

To date, inflation has not had a material effect on the Company's operations

NEW AUTHORITATIVE PRONOUNCEMENTS:

The Financial  Accounting Standards Board ("FASB") issued Statement of Financial
Accounting  Standards  ("SFAS") No. 128, "Earnings Per Share," and SFAS No. 129,
"Disclosure of Information  about Capital  Structure" in February 1997. SFAS No.
128  simplifies  the  earnings  per  share  ("EPS")  calculations   required  by
Accounting   Principles   Board   "("AFB")   Opinion   No.   15,   and   related
interpretations,   by  replacing  the   presentation   of  primary  EPS  with  a
presentation of basic EPS. SFAS No. 128 requires dual  presentation of basic and
diluted EPS by entities with complex capital structures by the  weighted-average
number of common  shares  outstanding  for the period.  Diluted EPS reflects the
potential  dilution of securities that could share in the earnings of an entity,
similar  to the  fully  diluted  EPS of APB  Opinion  No.  15.  SFAS No.  128 is
effective for financial  statements issued for periods ending after December 15,
1997,  including  interim periods;  earlier  application is not permitted.  When
adopted,  SFAS No. 128 will require  restatement  of all  prior-period  EPS data
presented;  however,  the Company has not sufficiently  analyzed SFAS no. 128 to
determine  what effect SFAS No. 128 will have on its  historically  reported EPS
amounts.

SFAS No. 129 does not change any previous  disclosure  requirements,  but rather
consolidates existing disclosure requirements for ease of retrieval.

The FASB has issued SFAS No. 130, "Reporting Comprehensive Income." SFAS
 No. 130 is effective for fiscal years beginning after December 15, 1997.
Earlier application is permitted.  Reclassification of financial statements 
for earlier periods provided for comparative purposes is required.
  SFAS No. 130 is not
expected to have a material impact on the Company.

The FASB has issued SFAS No. 131,  "Disclosures  About Segments of an Enterprise
and  Related  Information."  SFAS No. 131  changes how  operating  segments  are
reported in annual  financial  statements and requires the reporting of selected
information  about  operating  segments in interim  financial  reports issued to
shareholders. SFAS No. 131 is effective for periods beginning after December 15,
1997, and comparative  information for earlier years is to be restated. SFAS No.
131 need not be applied to interim  financial  statements in the initial year of
its  application.  SFAS No. 131 is not expected to have a material impact on the
Company.

                                         10





                                       PART II

Item 6

EXHIBITS AND REPORTS ON FORM 8-K

No reports on Form 8-K have been filed during the quarter ended July 31, 1997

                                     SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                              BIO-REFERENCE LABORATORIES, INC.
                                              (Registrant)



                                              /S/ Marc D. Grodman
                                              Marc D. Grodman, M.D.
                                              President




                                              /S/ Sam Singer
                                              Sam Singer
                                          Chief Financial and Accounting Officer

Date: September 12, 1997

                                         11