content: SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  -------------------------------------------------------------------------------
  
                                      Form 10-Q
  
                  Quarterly Report Pursuant to Section 13 or 15 (d)
                       of the Securities Exchange Act of 1934
                          For quarter ended April 30, 1997
                           Commission File Number 0-14026
                            DALTEX MEDICAL SCIENCES, INC.
               (Exact Name of Registrant As Specified In Its Charter)
  
  
         Delaware                                           13-3174562
  (State of Incorporation)                      (IRS Employer Identification No.)
  
                                   50 Kulick Road
                             Fairfield, New Jersey 07004
                      (Address of Principal Executive Offices)
                                   (201) 227-5066
                (Registrant's telephone number, including area code)
  
           Indicate by check mark whether the registrant (1) has filed all reports
  required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
  1934 during the  preceding  12 months,  and (2) has been  subject to such filing
  requirements for the past 90 days. Yes X No .
  
           Indicate the number of shares  outstanding of each of the  registrant's
  classes of Common Stock, as of the latest practicable date.
  
            Class                                   Outstanding at June 4, 1997
  
  Common Stock,  par value $.01                                  8,632,699
             per share
  
  
  
  <PAGE>
  
                            DALTEX MEDICAL SCIENCES, INC.
  
                                        INDEX
  
                                                                             Page
  
       PART  1 -    FINANCIAL INFORMATION
  
       Item 1 -     Financial Statements
  
  
                    (a)  Condensed  balance  sheets as of April 30, 1997
                         (Unaudited) and July 31, 1996.                      1-2
  
                    (b)  Condensed  statements of operations and deficit
                         accumulated  during the  development  stage for
                         the  three   months   ended   April  30,   1997
                         (Unaudited)  and  April 30,  1996  (Unaudited),
                         nine months  ended  April 30, 1997  (Unaudited)
                         and April  30,  1996  (Unaudited),  and for the
                         period July 28, 1983 (Date of Incorporation) to
                         April 30, 1997 (Unaudited)                            3
  
                    (c)  Condensed statements of cash flows for the nine
                         months  ended  April 30, 1997  (Unaudited)  and
                         April 30, 1996 (Unaudited),  and for the period
                         July 28, 1983 (Date of  Incorporation) to April
                         30, 1997 (Unaudited)                                  4
  
                    (d)  Notes   to   condensed   financial   statements
                         (Unaudited)                                         5-7
  
       Item 2 -     Management's Discussion and Analysis of Financial 
                    Condition and Results of Operations                     7-13
  
  
       PART II -    OTHER INFORMATION
  
       Item 5 -     Other Information                                       13-14
  
       Item 6 -     Exhibits and Reports on Form 8-K                           14
  
  <PAGE>
  PART 1 - FINANCIAL INFORMATION
  
  Item 1 - Financial Statements
  
                           Daltex Medical Sciences, Inc.
                          (A Development Stage Enterprise)
                              Condensed Balance Sheets
  
                                                     April 30,
                                                        1997          July 31,
                                                    (Unaudited)       1996 (A)
  
  Assets
  
  Current assets:
             Cash and cash equivalents                $12,689         $49,926
             Other receivables                         20,319          15,319
             Prepaid royalty                           60,000          60,000
                                                     --------        --------
                Total current assets                   93,008         125,245
  
  Net plant and equipment, at cost
  Patents, net of accumulated amortization of
       $134,426 at April 30, 1997
       and $134,426 at July 31, 1996                       --              --
  Other assets, net                                     3,375           3,375
  Deferred royalty costs (note 2)                     140,000         185,000
                                                     --------        --------
  
                                                     $236,383        $313,620
                                                     ========        ========
  
  
  See accompanying notes to condensed financial statements.
  
  (A) Amounts at July 31, 1996 are from audited financial statements.
  
                                         1
  <PAGE>
                           Daltex Medical Sciences, Inc.
                          (A Development Stage Enterprise)
                              Condensed Balance Sheets
  <TABLE>
  <CAPTION>
                                                               April 30,
                                                                  1997             July 31,
                                                              (Unaudited)          1996 (A)
  <S>                                                        <C>                 <C>      
  Liabilities and Stockholders' Deficiency
  
  Current liabilities:
          Accounts payable & accrued expenses (note 3)           $917,781            $885,942
          Advance royalty payments (note 2)                       120,000             120,000
                                                              -----------         -----------
          Total current liabilities                             1,037,781           1,005,942
                                                              -----------         -----------
  
  
  Advance royalty payments (note 2)                               280,000             370,000
                                                              -----------         -----------
  
  Stockholders' deficiency:
          Common Stock, par value $.01 per share 
          Authorized 20,000,000 shares; issued
           8,632,699 at April 30, 1997 and
          8,632,699 at July 31, 1996                               86,327              86,327
          Paid in capital                                       6,816,369           6,816,369
          Deficit accumulated during the                       (7,984,094)
               development stage                                                   (7,965,018)
                                                              -----------         -----------
  
          Total stockholders' deficiency                       (1,081,398)         (1,062,322)
                                                              -----------         -----------
  
                                                                 $236,383            $313,620
                                                              ===========         ===========
  </TABLE>
  
  See accompanying notes to condensed financial statements
  
  (A) Amounts at July 31, 1996 are from audited financial statements.
  
                                         2
  <PAGE>
                           Daltex Medical Sciences, Inc.
                          (A Development Stage Enterprise)
                        Statements of Operations and Deficit
                      Accumulated During the Development Stage
  <TABLE>
  <CAPTION>
                                                                                                                        For The Period
                                                                                                                          28-Jul-83
                                                      Three Months     Three Months     Nine Months     Nine Months       (Date of
                                                          Ended           Ended           Ended            Ended        Incorporation)
                                                        April 30,        April 30,       April 30,       April 30,       To April 30,
                                                          1997             1996            1997            1996             1997
                                                      (Unaudited)      (Unaudited)     (Unaudited)     (Unaudited)      (Unaudited)
  <S>                                                 <C>             <C>             <C>             <C>              <C>     
  Revenues:
  Sales - Patents & related technology                $         --    $         --    $         --    $         --        $300,000
  Sales - Gloves                                                --              --              --              --         208,440
  Interest and other income (note 5)                            85             199             342          75,199       1,712,903
  License fees and royalties                               158,653         104,706         284,790         214,310       2,654,886
                                                      ------------    ------------    ------------    ------------    ------------
  
  Total revenues                                           158,738         104,905         285,132         289,509       4,876,229
                                                      ------------    ------------    ------------    ------------    ------------
  
  Expenses incurred in the development stage:
  Cost of sales                                                 --              --              --              --         313,243
  Research & development                                        --              --              --           6,400       3,335,251
  General & administrative                                 112,689         132,000         304,208         358,582       9,211,829
                                                      ------------    ------------    ------------    ------------    ------------
  
  Total expenses incurred in the
  development stage                                        112,689         132,000         304,208         364,982      12,860,323
                                                      ------------    ------------    ------------    ------------    ------------
  
  Net income (loss)                                         46,049         (27,102)        (19,076)        (75,473)     (7,984,094)
                                                      ------------    ------------    ------------    ------------    ------------
  
  Deficit accumulated during the development stage:
  
  Beginning of period                                   (8,030,143)     (7,881,145)     (7,965,018)     (7,832,774)             --
                                                      ------------    ------------    ------------    ------------    ------------
  
  End of period                                        $(7,984,094)    $(7,908,247)    $(7,984,094)    $(7,908,247)    $(7,984,094)
                                                      ============    ============    ============    ============    ============
  
  Net income (loss) per common share                          0.01              --              --           (0.01)          (1.02)
                                                      ============    ============    ============    ============    ============
  
  Weighted average number of
  shares outstanding                                     8,633,000       8,633,000       8,633,000       8,633,000       7,810,000
                                                      ============    ============    ============    ============    ============
  </TABLE>
  
  See accompanying notes to condensed financial statements.
                                         3
  <PAGE>
  <TABLE>
                           Daltex Medical Sciences, Inc.
                          (A Development Stage Enterprise)
                         Condensed Statements of Cash Flows
  <CAPTION>
                                                                                                        For the Period
                                                                                                        July 28, 1983
                                                                                                           (Date of
                                                                                                        Incorporation)
                                                                          April 30,        April 30,     to April 30,
                                                                            1997             1996            1997
                                                                        (Unaudited)       (Unaudited)    (Unaudited)
  <S>                                                                  <C>              <C>              <C>    
  Cash flows from operations
       Net loss:                                                          ($19,076)        ($75,473)     ($7,984,094)
       Non-cash expenses included in net loss:
            Depreciation and amortization                                       --           16,440          310,234
       Non-cash compensation charges                                            --               --          889,130
       Abandoned equipment                                                      --               --           53,386
       Write-off of patents                                                     --               --          105,221
       Write-off of inventory/advance payments                                  --               --          115,048
       Other                                                                    --               --            4,499
  Changes in current assets & liabilities:
        (Increase) in inventory & advance payments                              --               --         (115,048)
        (Increase) decrease in grant & other receivables                    (5,000)          43,448          (20,319)
        (Increase) decrease in deferred royalty costs                       45,000         (260,000)        (200,000)
        Increase (decrease) in accounts payable & accrued expenses          31,839         (178,874)         920,103
        Increase (decrease) in advance development
            & royalty payments                                             (90,000)         520,000          400,000
                                                                       -----------      -----------      -----------
        Net cash flows of operations                                       (37,237)          65,541       (5,521,840)
                                                                       -----------      -----------      -----------
  
  Cash flows from investing activities:
        Purchase of U.S. government obligations                                 --               --       (8,813,987)
        Redeemed U.S. government obligations
            and other short-term investments                                    --               --        8,810,987
        Purchase of equipment & furniture                                       --               --         (159,370)
        Purchase of patent & trademark                                          --               --         (171,750)
        (Increase) decrease in due from officer & stockholder                   --               --         (110,601)
        (Purchase) sale of other assets                                         --               --          (30,095)
                                                                       -----------      -----------      -----------
             Net cash flows of investing activities                             --               --         (474,816)
                                                                       -----------      -----------      -----------
  
  Cash flow from financing activities:
       Proceeds from sale of common stock & warrants -net                       --               --        6,009,344
  
  Net increase (decrease) in cash                                          (37,237)          65,541           12,689
  Cash, including certificates of deposit:
       Beginning of period                                                  49,926           10,862               --
                                                                       -----------      -----------      -----------
       End of period                                                       $12,689          $76,403          $12,689
                                                                       ===========      ===========      ===========
  </TABLE>
  
  See accompanying notes to condensed financial statements.
  
                                         4
  <PAGE>
  
         NOTES TO CONDENSED FINANCIAL STATEMENTS-April 30, 1997 (Unaudited)
  
            (1)  Basis of Presentation
  
                 The unaudited condensed  financial  statements have been prepared
                 from the books and records of Daltex Medical Sciences,  Inc. (the
                 "Company")  in  accordance  with  generally  accepted  accounting
                 principles  for interim  financial  information  pursuant to Rule
                 10-01 of Regulation S-X. Accordingly,  they do not include all of
                 the  information  and  footnotes  required by generally  accepted
                 accounting principles for complete financial  statements.  In the
                 opinion of  management,  all  adjustments  (consisting  of normal
                 recurring accruals)  considered necessary for a fair presentation
                 have  been  included.   Interim   results  are  not   necessarily
                 indicative  of the results  that may be  expected  for the fiscal
                 year.
  
            (2)  Advance Royalty and Development Phase Payments
  
                 In  October  1995,  the  Company  and Arrow  International,  Inc.
                 ("Arrow")  agreed  to  modify  the  terms of the  existing  Arrow
                 License (the  "Modified  Arrow  License")  concerning  only those
                 license fees payable to the Company by Arrow for  antimicrobially
                 treated  multi-lumen  central venous catheters  (exclusive of the
                 silicone  Hickman/Broviac type,  implantable port or peripherally
                 inserted  central  venous  catheters).  During the quarter  ended
                 October 31,  1995 and  pursuant to the  Modified  Arrow  License,
                 Arrow paid the Company a one time royalty of $600,000 (in lieu of
                 the periodic  royalty  paid to the Company  pursuant to the Arrow
                 License  for such  catheters)  for the  period  August  31,  1995
                 through  September  1,  2000,  of which 50% was paid to  Columbia
                 University  (the  "University")  in November 1995 pursuant to the
                 terms of a 1987  license  agreement  between  the Company and the
                 University (the " 1987 University License").  Revenue, as well as
                 the  expense  for the  amounts  paid to the  University,  will be
                 recognized  each  quarter  through  September  1,  2000 in  equal
                 amounts,  and  accordingly,  $30,000  of revenue  and  $15,000 of
                 related  expense were  recognized  during the quarter ended April
                 30, 1997.  After September 1, 2000, the periodic royalty payments
                 provided  for in the existing  Arrow  License with respect to the
                 antimicrobially treated multi-lumen central venous catheters will
                 resume and will be adjusted to reflect  increases in the Consumer
                 Price  Index  through  September  1,  2000.  All other  terms and
                 conditions  of the  existing  Arrow  License  (including  Arrow's
                 obligation to make quarterly  royalty  payments based on sales of
                 percutaneous  sheath introducer ("PSI") units sold, and quarterly
                 development phase payments for those products Arrow is developing
                 or  has  developed   incorporating  the  Company's  antimicrobial
                 technology), except those terms modified by the Patent Settlement
                 Agreement  of January 1, 1995,  remain in full force and  effect.
                 The Modified  Arrow License does not modify or alter the terms of
                 the Patent Settlement  Agreement.  For a discussion of the Patent
                 Settlement   Agreement   and  the   resolution   of  the   Patent
                 Interference Proceedings,  see "Item 3. Legal Proceedings" of the
                 Company's  Annual  Report on Form 10-K for the fiscal  year ended
                 July 31, 1995.
  
                 During the quarter  ended April 30,  1997,  the Company  received
                 nominal royalty payments from Arrow based on limited sales of PSI
                 units sold during this period,  and
  
                                         5
  <PAGE>
  
                 quarterly development phase payments for two other products which
                 Arrow is developing or has developed  incorporating the Company's
                 antimicrobial technology.
  
                 Additionally,  in November 1996, the Company received an advanced
                 annual payment (which was not scheduled to be paid until April 1,
                 1997) from W.L. Gore & Associates,  Inc. ("Gore"), another of the
                 Company's  sublicensees,  in the amount of  $45,000.  Included in
                 this amount was $15,000  representing  an advance  against annual
                 minimum  royalties  to be paid to the  Company  based on sales of
                 antimicrobialy  treated  hernia  patches which have recently been
                 introduced to the  marketplace by Gore, and $30,000  representing
                 advanced annual  development phase payments for two other product
                 segments  also  licensed to Gore pursuant to the terms of the May
                 1992 License Agreement between the Company and Gore. Such $45,000
                 was recognized as revenue in the quarter ended April 30, 1997.
  
            (3)  License Agreement and Research Agreement
  
                 The Company currently has various license agreements and research
                 agreements with the University  related to certain  antimicrobial
                 technologies  (see  "Management's   Discussion  and  Analysis  of
                 Financial Condition and Results of Operations").
  
                 As of April 30, 1997,  the Company owes the  University  $165,706
                 for the  University's  past due share of sublicensing and royalty
                 payments received by the Company through 1994. Additionally,  the
                 Company owes the University $410  representing  the  University's
                 50% share of  royalties  received by the Company from Arrow based
                 on sales of PSI units,  and $2,500  representing the University's
                 50% share of quarterly  development  fees received by the Company
                 from Arrow in May 1997.  Moreover,  the  Company  has been billed
                 $643,294 as of April 30, 1997 by the University's  patent counsel
                 for patent  work  undertaken  in  connection  with the  Company's
                 license  agreements with the University,  although the Company is
                 currently  disputing a  substantial  portion of these legal fees.
                 All of these  amounts are  included in accounts  payable at April
                 30,  1997 on the  accompanying  condensed  balance  sheets.  This
                 $643,294  includes:  (i)  approximately  $128,954,   representing
                 charges  in  connection  with  the  Company's  protection  of its
                 intellectual  property rights through domestic and foreign patent
                 filings  and  related  matters;   (ii)  approximately   $108,560,
                 representing  charges in connection with two AIDS-related patents
                 and a patent  application  for  antimicrobially  treated  condoms
                 which the Company and the University  have agreed in principle to
                 reassign  to  the  University,   because  the  Company  has  been
                 unsuccessful  in licensing  these  technologies to third parties;
                 and  (iii)  approximately   $401,000,   representing  charges  in
                 connection  with the  previously  disclosed  Patent  Interference
                 Proceedings  and  subsequent  Patent  Settlement   Agreement. The
                 Company disputes the Company's  responsibility for this $401,000,
                 and the  Company and the  University  are  continuing  efforts to
                 negotiate a  settlement.  Because  the  Company  has  proposed to
                 reassign the two AIDS-related  patents and one patent application
                 for  antimicrobially  treated  condoms  to  the  University,  the
                 Company has requested that the University  credit the Company for
                 the  $108,560  outstanding  amount  due the  University's  patent
                 counsel related to these matters. The University has continued to
                 work with the  Company  with  respect  to these  matters  and the
                 Company's financial condition and its relation to the University.
                 Although the Company is continuing  its attempts to resolve these
                 matters,  there  can be no
  
                                         6
  <PAGE>
  
                 assurance  that the  Company  will be  successful  in  reaching a
                 resolution with the University.
  
            (4) License  Amendment  Agreement between the Company and W.L. Gore &
                Associates
  
                In February  1997,  the Company  and Gore  entered  into a License
                Amendment Agreement,  dated as of January 1, 1997,  clarifying the
                specific product and market application  segments set forth in the
                existing license agreement entered into by the Company and Gore in
                May 1992.  In  consideration  for the Company's  cooperation  with
                respect to such License  Amendment  Agreement and to help fund the
                payment  of legal and  filing  costs  incurred  by the  Company in
                connection  with such  Agreement,  the Company  received a payment
                from Gore in February 1997 in the amount of $50,000.  Such payment
                is included in revenues in the quarter  ended April 30, 1997.  The
                Company and Gore have also agreed to a royalty  rate of 5% for any
                product  sold by Gore that is not  otherwise  covered by any other
                categories set forth in the License Amendment Agreement, but which
                are covered by Licensed Products (as defined  therein).  All other
                terms  and  conditions  set  forth in the  existing  1992  license
                agreement remain in full force and effect.
  
  
  
       Item 2
  
                       Management's Discussion and Analysis of
                    Financial Condition and Results of Operation
  
                 The following  discussion  contains  forward  looking  statements
       within the meaning of the Private Securities  Litigation Reform Act of 1995
       relating  to  the   Company's   plans  with  respect  to  its   continually
       deteriorating  financial condition.  Actual results could differ materially
       from management's plans and there can be no assurance that the Company will
       be  successful  in its plan (i) to sell or  license  the  rights to certain
       applications  of  its  antimicrobial  technology,   (ii)  to  sell  all  or
       substantially  all of its assets,  (iii) to negotiate  the  forgiveness  of
       certain debt owed to the University or (iv) to continue as a going concern.
  
                 The Company is in the development  stage and has been principally
       engaged in  research  and  development  activities  with the  objective  of
       developing and  commercializing  certain  cost-reducing  medical device and
       pharmaceutical  technologies.  Since March 1, 1994, the Company has engaged
       in extremely  limited  research and  development  efforts.  In an effort to
       commercialize  its more  fully  developed  technologies,  the  Company  had
       focused,   from  1990  to  March  1994,  its  research,   development   and
       commercialization    efforts   principally   on   its   infection-reducing,
       antimicrobial technologies, including the manufacture and marketing through
       distributors  of the  Company's  antimicrobial  gloves and the licensing of
       other applications of the antimicrobial  technology to larger companies. In
       the first three  quarters of fiscal 1997,  as well as in fiscal  1996,  the
       Company  had no  sales  of any of  its  technologies  or its  antimicrobial
       medical  gloves.  See "Item 1. Business" of the Company's  Annual Report on
       Form 10-K for the fiscal year ended July 31, 1996 for a  discussion  of the
       dispute with the University  concerning  the license for the  antimicrobial
       glove  technology,  and a discussion of 
  
                                         7
  <PAGE>
  
       the terms of the Patent  Settlement  Agreement  dated as of January 1, 1995
       among the Company, the University, Arrow and Becton Dickinson.
  
                 Given the continually  deteriorating  financial  condition of the
       Company,  the  Board of  Directors  of the  Company  has  authorized  Bruce
       Hausman, President and Chief Executive Officer of the Company, to negotiate
       the  sale  of  the  Company's   rights  to  various   applications  of  the
       antimicrobial  technology  to certain  sublicensees  of the Company.  These
       applications constitute  substantially all of the assets of the Company. In
       the event that the Company is  successful in selling  substantially  all of
       its  assets,  the  Company  will  either  endeavor  to sell  the  remaining
       corporate shell to a third party or to liquidate any remaining assets.  The
       Company  has not  entered  into any  agreement  to date for the sale of its
       rights to the antimicrobial  technology or any other assets,  and there can
       be no assurance  that the Company will be  successful in entering into such
       agreement.
  
                 In the event that the Company is  unsuccessful  in  negotiating a
       sale of its rights to the antimicrobial technology, the Company may seek to
       transfer  this  technology  back  to the  University  in  exchange  for the
       forgiveness by the University of all of the outstanding amounts owed by the
       Company to the University.
  
                 During the first three quarters of fiscal 1997 and for the fiscal
       years  ended  July  31,  1996  and  1995,  the  Company  received  revenues
       principally  from royalty  payments and  development  fees  pursuant to two
       licenses with  sublicensees of applications of the Company's  antimicrobial
       medical technology, and the one-time royalty payment, both discussed below.
       Additionally,   in  June   1997,   the   Company   received   a   one-time,
       non-refundable, non-creditable fee of $100,000 from Arrow, of which $50,000
       was paid on June 5, 1997 to the  University  pursuant to the terms the 1987
       University License,  for those additional "Fields of Application" set forth
       in the Second  Modification  to License  Agreement  between the Company and
       Arrow dated as of May 30, 1997 (the "Second  Modified Arrow  License"),  as
       described under "Item 5 - Other Information."
  
                 In October 1995, the Company  received a one-time royalty payment
       of  $600,000  from  Arrow,  of which 50% was paid in  November  1995 to the
       University  pursuant  to the  1987  University  License.  Additionally,  in
       November  1995,  the Company  received  $75,000 from Arrow to help fund the
       payment of legal  costs  incurred  by the  Company in  connection  with the
       Patent Interference  Proceedings and the Patent Settlement  Agreement.  See
       "-Results of Operations" and "-Liquidity and Capital Resources."
  
                 Except for those  products  covered by the Second  Modified Arrow
       License,  the Company will continue to receive quarterly  development phase
       payments on the other products  incorporating  the Company's  antimicrobial
       technology  which  the  Company's   sublicensees  are  developing  or  have
       developed which have not yet received clearance from the U.S. Food and Drug
       Administration ("FDA"), or have not yet reached the marketplace, as well as
       quarterly  royalty  payments  from Arrow based on sales of PSI units.  As a
       result  of the  introduction  of the  PSI  to  the  marketplace,  quarterly
       development  phase  payments  from Arrow have been  reduced  from $7,500 to
       $5,000,  which will be partially offset by royalty payments related to such
       product.  The Company will also continue to receive annual minimum  royalty
       payments  in the amount of $15,000  for the first three years of sales from
       Gore based on sales of one product segment which has received FDA clearance
       and has recently been  introduced to the  marketplace.  The minimum  annual
       royalty payment is equal to the annual development 
  
                                         8
  <PAGE>
  
       payment  the Company  had been  receiving  for such  product  segment.  The
       Company is unable to assess at this time  whether  and to what  extent such
       royalty payments will increase in the future.
  
       Results of Operations for the Three Months Ended April 30, 1997
  
                 Revenues for the quarter  ended April 30, 1997 totaled  $158,738,
       an increase of 51.3% over the $104,905 in revenues during the corresponding
       period in fiscal 1996 primarily due to factors  described  below.  Revenues
       from  licensing  fees in the third quarter of fiscal 1997 were $85,000,  an
       increase  of 70%  over  the  $50,000  in  licensing  fees  recorded  in the
       corresponding period in fiscal 1996 as a result of the Company's receipt in
       February 1997 of $50,000 from Gore described in note 4 above. Revenues from
       royalties  were  $73,653,  an  increase  of 34% over the $54,706 in royalty
       payments  received during the third quarter of fiscal 1996 as a result of a
       $27,834  payment  made by  Arrow  to the  Company  pursuant  to the  Patent
       Settlement  Agreement  which  provides for certain  royalties to be paid by
       Arrow to the  Company and for such  royalties  to be paid by the Company to
       another party to such Patent  Settlement  Agreement,  a slight  increase in
       royalty  payments  from  Arrow,  of  $820,  of  which  50% is  owed  to the
       University,  related  to sales of PSI  units,  and the  replacement  of one
       annual  development  phase payment with minimum annual royalty  payments of
       $15,000 received from Gore.  Included in revenues from royalties is $30,000
       representing  royalties  earned for the quarter ended April 30, 1997, which
       is derived  from the  $600,000  advance  royalty  payment  received  by the
       Company from Arrow in October 1995. (See notes 2 and 3 above.) The unearned
       portion of  $400,000 is  reflected  as  deferred  revenue in the  liability
       section and the remaining  $200,000 of the $300,000 paid to the  University
       is reflected as deferred royalty costs in the assets section of the balance
       sheets.
  
                 Although the Company had no sales of its antimicrobial  gloves in
       the current quarter,  there were no glove sales in the corresponding period
       of fiscal 1996 either.  The Company  maintains its belief that such lack of
       glove  sales  continues  to be due to the  difficulty  it  faces as a small
       company with extremely limited resources in introducing and marketing a new
       product  internationally  without the  benefit of a domestic  sales base or
       regulatory clearance by the FDA.
  
                 Expenses  incurred  during the three  months ended April 30, 1997
       totaled  $112,689,  a  decrease  of 14.6%  from the  $132,008  of  expenses
       incurred in the three  months  ended April 30,  1996  primarily  due to the
       reduction  of legal costs  incurred by the Company in  connection  with the
       protection of its intellectual property rights.
  
                 The Company  had a net income of $46,049  for the  quarter  ended
       April 30,  1997,  as  compared  to a  recorded  net loss of  $27,102 in the
       corresponding  period in fiscal 1996 due primarily to the Company's receipt
       in February  1997 of $50,000 from Gore  described in note 4 above,  and the
       reduced legal costs described above.
  
       Results of Operations for the Nine Months Ended April 30, 1997
  
                 Revenues  for the  nine  months  ended  April  30,  1997  totaled
       $285,132, a decrease of 1.5% from revenues of $289,509 in the corresponding
       period  last year.  This  decrease  in  revenues  was due to the  Company's
       receipt  from Arrow in fiscal  1996 of the  one-time  payment 
  
                                         9
  <PAGE>
  
       of $75,000 to help fund the payment of legal costs  incurred by the Company
       in  connection  with  the  Patent   Interference   Proceedings  and  Patent
       Settlement  Agreement,  the fixed  royalties  recognized for the first nine
       months  of  fiscal  1997 as a result  of the  modification  to the  license
       agreement  between  the  Company  and Arrow  (see  note 2 to the  financial
       statements),   and  to  a  lesser  extent,  the  replacement  of  quarterly
       development  payments  with nominal  royalty  payments  from Arrow based on
       sales of PSI units.  This  reduction  was  partially  offset by the $50,000
       received from Gore. In addition,  revenues in fiscal 1997 included  $82,905
       as a result of the Patent  Settlement  Agreement which provides for certain
       royalties  to be paid by Arrow to the  Company  and,  in turn,  paid by the
       Company to another party to such agreement, as discussed above.
  
                 Expenses  incurred  during the nine  months  ended April 30, 1997
       totaled  $304,208,  a  decrease  of 16.6%  from the  $364,982  of  expenses
       incurred in the nine months  ended April 30,  1996.  This  decrease was due
       primarily  to the  reduction  in legal  costs  incurred  by the  Company in
       connection  with the  Company's  protection  of its  intellectual  property
       rights,  and to a lesser  extent,  the fixed  royalties  recognized for the
       first nine  months of fiscal  1997 as a result of the  modification  to the
       license  agreement  between the  Company  and Arrow,  a portion of which is
       recorded  in expenses  as a payment to the  University.  (See note 2 to the
       financial  statements.)  This  decrease  was  partially  offset by payments
       totaling  $82,905  made by the  Company  to  another  party  to the  Patent
       Settlement Agreement, as discussed above.
  
                 The  Company  sustained a net loss of $19,076 for the nine months
       ended April 30, 1997, a substantial  reduction from the net loss of $75,473
       in the  corresponding  period in 1996. The decrease in the net loss for the
       nine month period is due primarily to the aforementioned reduced expenses.
  
       Liquidity and Capital Resources
  
                 At April 30, 1997, the Company had a working  capital  deficit of
       approximately  $944,000,  which  represented  an increase of  approximately
       $63,000 in such deficit  from July 31,  1996.  During the nine months ended
       April 30,  1997,  the  Company had a decrease of $37,237 in cash flows from
       operations  principally  due to the receipt in October 1995 of the one-time
       advance royalty payment of $600,000 from Arrow which enabled the Company to
       reduce its  outstanding  accounts  payable,  and the one-time  receipt from
       Arrow in  November  1995 of $75,000 to help fund the payment of legal costs
       incurred  by  the  Company  in  connection  with  the  Patent  Interference
       Proceedings and the Patent Settlement Agreement. It is expected that future
       cash flows will be substantially less than reported revenues due to the one
       time  advance  royalty  payment from Arrow  described in note 2 above,  the
       one-time  payment  from Gore  described  in note 4 above  and the  one-time
       payment received from Arrow described below in Part II - Other  Information
       - Item 5. As a result of the  aforementioned  payments  to the  University,
       payments  to legal  counsel  associated  with  corporate  and  intellectual
       property matters,  and costs associated with general  operations,  at April
       30, 1997, the Company had cash and cash equivalents of $12,689. The Company
       and Arrow entered into a Second Modification to the Arrow License to modify
       certain  terms of the existing  Arrow  License to include  four  additional
       Fields of Application.  In  consideration of the additions to the Fields of
       Application  under the existing Arrow License,  Arrow paid to the Company a
       one-time, non-refundable,  non-creditable fee of $100,000, of which $50,000
       was paid on June 5,  1997 to the  University  pursuant  to the terms of the
       1987 University License.
  
                                         10
  <PAGE>
  
                 The Company  currently owes the University  $168,616 (see notes 2
       and 3 to the financial  statements).  The Company has recently negotiated a
       sublicense,  which is awaiting  approval by the University  pursuant to the
       terms of the 1987 University  License,  with a glove  manufacturer  for the
       right to sublicense the Company's antimicrobial glove technology. The terms
       of the sublicense will include  negotiated  royalty rates based upon future
       sales,  if any,  of  gloves  incorporating  the  antimicrobial  technology.
       Additionally,  the Company is  currently  negotiating  with  certain of its
       sublicensees  for the sale of the  certain  other  rights of the Company to
       various applications of the antimicrobial technology. In the event that the
       Company is successful in selling its rights to this technology, the Company
       would use the funds  received  from such sale to  satisfy  its  outstanding
       financial obligations,  including undisputed amounts owed to the University
       and the University's  patent counsel.  There can be no assurance,  however,
       that  the  Company  will  be  successful  in  selling  its  rights  to  the
       antimicrobial technology to a third party or sublicensing its rights to the
       antimicrobial glove technology.
  
                 In the event that the Company  does not receive  approval for the
       negotiated  sublicense for the rights to its antimicrobial glove technology
       from the  University or is  unsuccessful  in  negotiating a sale of certain
       other rights of the Company to various  applications  of the  antimicrobial
       technology,  the Company may seek to transfer this  technology  back to the
       University in exchange for the  forgiveness by the University of all of the
       outstanding amounts owed by the Company to the University.
  
                 The Company is still in the development  stage,  and its business
       operations have only generated a nominal amount of revenues to date.  There
       can be no  assurance  that  the  Company  will  be  successful  in  raising
       additional funds or that the Company will continue as a going concern.  The
       report of the Company's  independent  auditors on the  Company's  financial
       statements for the fiscal years ended July 31, 1996, 1995 and 1994 included
       an explanatory  paragraph which stated that the Company's  recurring losses
       and working capital and total  stockholders'  deficits  raised  substantial
       doubt  about the  Company's  ability to  continue  as a going  concern  and
       precluded  the  expression  of  an  opinion  on  the  Company's   financial
       statements as of and for the years ended July 31, 1996,  1995 and 1994. The
       financial statements did not include any adjustments that might result from
       the outcome of that  uncertainty.  Because of the continued working capital
       deficit,   the  Company  is  attempting  to  sell  its  rights  to  various
       applications of the  antimicrobial  technology,  as discussed above. In any
       event,  the Company is continuing  its attempts to resolve the dispute with
       the University over the license for the antimicrobial  glove technology and
       legal  fees  billed to the  Company  by the  University's  patent  counsel.
       Furthermore,   the  Company   will   continue   its   attempts  to  curtail
       expenditures. There can be no assurance that the Company will be successful
       in any of the foregoing.
  
                 In the event that the Company is  unsuccessful  in its attempt to
       sell its rights to the antimicrobial  technology,  sublicense its rights to
       the  antimicrobial  glove  technology or to transfer such technology to the
       University,  the Company does not have any other plans to raise  additional
       capital and there can be no assurance that it will be able to continue as a
       going  concern  or  avoid  liquidation,   even  with  further  cost-cutting
       measures.
  
                 In an attempt to raise additional capital in order to continue to
       pursue potential acquisition and/or merger possibilities,  including a sale
       of the Company, in April 1997, the Company extended the expiration dates of
       its Class A and Class B  Warrants.  The  expiration  date of the  Company's
       Class A Warrants  was extended  from April 30, 1997 to 5:00 p.m.  (New York
       City time) on December 31, 1997;  the exerise price of the Class A Warrants
       remains $0.25.  The expiration 
  
                                         11
  <PAGE>
  
       date of the  Company's  Class B Warrants was extended from October 31, 1997
       to 5:00 p.m.  (New York City time) on December 31, 1997;  the exerise price
       of the Company's Class B Warrants remains $1.00.  Under Federal  securities
       laws,  the Company is unable to accept the exercise of any Class A or Class
       B Warrants until such time, if any, as the Company's  independent  auditors
       may express an opinion on the Company's financial statements,  as discussed
       above.  At such time, if any, as the Company may accept such exercise,  the
       Company intends to use any proceeds received from the exercise of its Class
       A and Class B Warrants for working capital, general corporate purposes and,
       if possible, the reinitiation of its research and development efforts.
  
       Regulatory Developments
  
                 In May 1989, the Company filed a pre-market  510(k)  notification
       seeking consent to market its antimicrobial latex examination gloves. Since
       this initial 510(k) submission, the Company had, from 1991 to 1993, amended
       and  resubmitted  the  510(k)  several  times  in an  effort  to  obtain  a
       determination  of "substantial  equivalence"  to previously  marketed latex
       examination  gloves.  The FDA  Office  of  Device  Evaluation  ("ODE")  had
       notified the Company,  in response to each of these  submissions,  that the
       Company's  antimicrobial  latex examination  gloves are not  "substantially
       equivalent" since the gloves have a new indication for an examination glove
       which may affect the prophylactic  effect, thus constituting a new intended
       use.  The ODE  had  further  stated  that no  accepted  scientific  methods
       presently exist for assessment of the  effectiveness of antiviral  activity
       for topical antimicrobials, particularly under glove-use conditions.
  
                 On March 11,  1996,  Dr.  Shanta M.  Modak of the  Department  of
       Surgery, Columbia University,  where the antimicrobial glove technology was
       developed,  and Dr. Louis R.M. Del Guercio, the Company's Chairman,  made a
       presentation,  on the Company's  behalf,  concerning  the Company's  gloves
       before the FDA's  Independent  Advisory  Committee,  General  Hospital  and
       Personal Use Devices Panel, Center for Devices and Radiological Health. Mr.
       Lester Sampath, also of the Department of Surgery, Columbia University, was
       there as an  observer.  The Panel acts in an  advisory  capacity  and makes
       recommendations  to  the  FDA  regarding  whether  or  not  certain  device
       submissions  should  receive FDA clearance to be marketed.  While the Panel
       did not make any  recommendation  to the FDA at the March 11, 1996 meeting,
       the  Panel  voted  to  accept  a  previously   distributed  opinion  of  an
       independent  consultant indicating that the Company's examination gloves do
       not have a positive  impact on disease  control.  Since the March 11,  1996
       meeting,  the Company and Dr. Modak have  remained in contact with the ODE,
       particularly with Mr. Terrell Cunningham, Nurse Consultant of the ODE.
  
                 By letter dated  February  27, 1997,  the Company was informed by
       Mr. Ulatowski of the ODE that, should the Company wish to continue with its
       efforts to bring its  antimicrobial  gloves to market,  the ODE  recommends
       that the  Company  submit a new  510(k),  with the focus of the  submission
       directed at the recommendations outlined in Mr. Ulatowski's letter relating
       to certain labeling claims and additional testing.
  
                    At present,  the Company  does not have  sufficient  financial
       resources to fund additional clinical testing and to prepare the new 510(k)
       submission necessary to ready its
  
                                         12
  <PAGE>
  
       antimicrobial  gloves  for the  marketplace.  In April  1997,  the  Company
       entered into a letter of intent agreement,  as described below, relating to
       a sublicense agreement with a glove manufacturer concerning the patents for
       the antimicroibial  glove technology  currently owned by the University and
       licensed to the Company.  The Company and the glove  manufacturer  recently
       executed such sublicense agreement, subject to appproval by the University.
       However,  there can be no assurance that the Company will receive  approval
       from the University for such sublicense.
  
  
       PART II - OTHER INFORMATION
  
       Item 5 - Other Information
  
            (a)  Nalpak  Industries,  Inc,  and the  Company  Executed a Letter of
                 Intent  Agreement  Concerning the Company's  Antimicrobial  Glove
                 Technology
  
                In April 1997, the Company and Nalpak Industries, Inc. ("Nalpak"),
                a  medical  glove  manufacturer,  entered  into a letter of intent
                agreement concerning the patents which are licensed to the Company
                from the University  relating to antimicrobial  latex  examination
                and  surgeons'  gloves used to prevent or reduce  infection and to
                inhibit the transmission of infectious diseases.
  
                Nalpak has  received an  expression  of interest  from a financing
                partner (collectively,  the "Medpac Group") to sublicense from the
                Company  the  exclusive  worldwide  rights  to  the  antimicrobial
                patents for use with  medical  examination  and  surgeons'  gloves
                currently  owned by the  University  and  licensed to the Company.
                (Due to the Company's extremely limited financial  resources,  the
                Company is unable at this time to cover the costs  associated with
                obtaining  FDA  clearance  to  market  its   antimicrobial   latex
                examination  and  surgeons'  gloves  in the  United  States.)  The
                execution  of such Letter of Intent  Agreement  by the Company and
                Nalpak does not create any legally binding obligations on the part
                of either party, but is intended solely as an outline of the major
                terms upon which the Medpac  Group  intends to  proceed,  and as a
                guideline   for  the   preparation   of   documentation   for  the
                transaction. There can be no assurance that the Company and Nalpak
                will  be  successful  in  entering  into a  definitive  sublicense
                agreement.
  
            (b)  Subsequent  Event -  Second  Modification  to  License  Agreement
                 between the Company and Arrow International, Inc.
  
                The Company and Arrow  entered into a Second  Modification  to the
                Arrow  License  to  modify  certain  terms of the  existing  Arrow
                License to  include  four  additional  Fields of  Application.  In
                consideration for the additions to the Fields of Application under
                the existing Arrow License,  Arrow paid to the Company a one-time,
                non-refundable,  non-creditable fee of $100,000,  of which $50,000
                was paid on June 5, 1997 to the  University  pursuant to the terms
                of the 1987 University License. Further to the terms of the Second
                Modified Arrow License,  the Company will be entitled to receive a
                running  royalty  rate of 5% percent of unit net sales of products
                sold by Arrow  which  are  included  in the  additional  Fields of
                Application.  For  a  licensed  product  or  products  within  the
                additional  Fields of Application that is sold together with other
  
                                         13
  <PAGE>
  
                non-licensed  products  in a single  package  to a  customer,  the
                running royalty rate will apply only to the  established  unit net
                sales price of the  licensed  product or products.  Moreover,  the
                Company  has  agreed to waive,  for the first  three  years of the
                Second Modified Arrow License, development fees and minimum annual
                royalties  due  for  products  sold by  Arrow  falling  under  the
                additional  Fields of  Application.  After the third full year the
                Second  Modified  Arrow  License  is  effective,   Arrow  will  be
                obligated to pay the Company  development fees of $2,500,  payable
                quarterly  in  advance,  for  each  of the  additional  Fields  of
                Application,  during their  development phase and prior to Arrow's
                sales of product in each of the additional  Fields of Application.
                Arrow's  obligation  to pay  development  fees  will  cease in the
                quarter  following  Arrow's  sale  of a  product  in  each  of the
                additional  Fields of  Application.  After  such time as a sale is
                made, Arrow will pay the Company the running royalty rate of 5% of
                net sales, and at a minimum, shall pay a minimum royalty of $2,500
                payable quarterly in advance, for each of the additional Fields of
                Application.  Except as expressly  modified in the Second Modified
                Arrow  License,  all terms and  conditions  of the existing  Arrow
                License and the terms of the first Modified Arrow License,  remain
                in full force and effect.  In addition,  the Second Modified Arrow
                License  does  not  modify  or  allter  the  terms  of the  Patent
                Settlement  Agreement  dated as of  January  1,  1995,  among  the
                University, the Company and Becton Dickinson and Company.
  
  
       Item 6 - Exhibits and Reports on Form 8-K
  
       (a)      Exhibits
  
                 10.1 Letter of  Intent  dated as of April 15,  1997  between  the
                      Company and Nalpak Industries, Inc.
  
                 10.2 Amendment No. 9 to Warrant  Agreement  dated as of April 22,
                      1997 between the Company and Continental  Stock Transfer and
                      Trust Company.
  
                 10.3 Sixth  Lease  Extension  Agreement  dated as of May 8,  1997
                      between the Company and I.C.E. Associates.
  
                 10.4 Second Modification to License Agreement dated as of May 30,
                      1997 between the Company and Arrow International, Inc.
  
       (b)      Reports on Form 8-K
  
                 No reports on Form 8-K were filed during the quarter  ended April
                 30 1997.
  
                                         14
  
  <PAGE>
  
  
                                     SIGNATURES
  
  
       Pursuant to the  requirements  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.
  
  
  
                                        DALTEX MEDICAL SCIENCES, INC.
  
  
       Date:  June 16, 1997             By:/s/Bruce Hausman, Esq.
                                           ----------------------
                                           BRUCE HAUSMAN, ESQ.
                                           President and Chief Executive
                                           Officer
  
  
  
       Date:  June 16, 1997             By:/s/Herbert J. Mitschele, Jr.
                                           ----------------------------
                                           HERBERT J. MITSCHELE, JR.
                                           Treasurer, Secretary
                                           and Chief Financial Officer
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 58438}]
metadata_filer: {"company-data": {"conformed-name": "DALTEX MEDICAL SCIENCES INC", "cik": "0000742686", "assigned-sic": "2834", "irs-number": "133174562", "state-of-incorporation": "DE", "fiscal-year-end": "0731"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-14026", "film-number": "97625921"}, "business-address": {"street1": "50 KULICK RD", "city": "FAIRFIELD", "state": "NJ", "zip": "07004", "phone": "2012275066"}}
text: SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  -------------------------------------------------------------------------------
  
                                      Form 10-Q
  
                  Quarterly Report Pursuant to Section 13 or 15 (d)
                       of the Securities Exchange Act of 1934
                          For quarter ended April 30, 1997
                           Commission File Number 0-14026
                            DALTEX MEDICAL SCIENCES, INC.
               (Exact Name of Registrant As Specified In Its Charter)
  
         Delaware                                           13-3174562
  (State of Incorporation)                      (IRS Employer Identification No.)
  
                                   50 Kulick Road
                             Fairfield, New Jersey 07004
                      (Address of Principal Executive Offices)
                                   (201) 227-5066
                (Registrant's telephone number, including area code)
  
           Indicate by check mark whether the registrant (1) has filed all reports
  required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
  1934 during the  preceding  12 months,  and (2) has been  subject to such filing
  requirements for the past 90 days. Yes X No .
  
           Indicate the number of shares  outstanding of each of the  registrant's
  classes of Common Stock, as of the latest practicable date.
  
            Class                                   Outstanding at June 4, 1997
  
  Common Stock,  par value $.01                                  8,632,699
             per share
  DALTEX MEDICAL SCIENCES, INC.
  
                                        INDEX
  
                                                                             Page
  
       PART  1 -    FINANCIAL INFORMATION
  
       Item 1 -     Financial Statements
  
                    (a)  Condensed  balance  sheets as of April 30, 1997
                         (Unaudited) and July 31, 1996.                      1-2
  
                    (b)  Condensed  statements of operations and deficit
                         accumulated  during the  development  stage for
                         the  three   months   ended   April  30,   1997
                         (Unaudited)  and  April 30,  1996  (Unaudited),
                         nine months  ended  April 30, 1997  (Unaudited)
                         and April  30,  1996  (Unaudited),  and for the
                         period July 28, 1983 (Date of Incorporation) to
                         April 30, 1997 (Unaudited)                            3
  
                    (c)  Condensed statements of cash flows for the nine
                         months  ended  April 30, 1997  (Unaudited)  and
                         April 30, 1996 (Unaudited),  and for the period
                         July 28, 1983 (Date of  Incorporation) to April
                         30, 1997 (Unaudited)                                  4
  
                    (d)  Notes   to   condensed   financial   statements
                         (Unaudited)                                         5-7
  
       Item 2 -     Management's Discussion and Analysis of Financial 
                    Condition and Results of Operations                     7-13
  
       PART II -    OTHER INFORMATION
  
       Item 5 -     Other Information                                       13-14
  
       Item 6 -     Exhibits and Reports on Form 8-K                           14
  PART 1 - FINANCIAL INFORMATION
  
  Item 1 - Financial Statements
  
                           Daltex Medical Sciences, Inc.
                          (A Development Stage Enterprise)
                              Condensed Balance Sheets
  
                                                     April 30,
                                                        1997          July 31,
                                                    (Unaudited)       1996 (A)
  
  Assets
  
  Current assets:
             Cash and cash equivalents                $12,689         $49,926
             Other receivables                         20,319          15,319
             Prepaid royalty                           60,000          60,000
                                                     --------        --------
                Total current assets                   93,008         125,245
  
  Net plant and equipment, at cost
  Patents, net of accumulated amortization of
       $134,426 at April 30, 1997
       and $134,426 at July 31, 1996                       --              --
  Other assets, net                                     3,375           3,375
  Deferred royalty costs (note 2)                     140,000         185,000
                                                     --------        --------
  
                                                     $236,383        $313,620
                                                     ========        ========
  
  See accompanying notes to condensed financial statements.
  
  (A) Amounts at July 31, 1996 are from audited financial statements.
  
                                         1
  Daltex Medical Sciences, Inc.
                          (A Development Stage Enterprise)
                              Condensed Balance Sheets
  April 30,
                                                                  1997             July 31,
                                                              (Unaudited)          1996 (A)
  Liabilities and Stockholders' Deficiency
  
  Current liabilities:
          Accounts payable & accrued expenses (note 3)           $917,781            $885,942
          Advance royalty payments (note 2)                       120,000             120,000
                                                              -----------         -----------
          Total current liabilities                             1,037,781           1,005,942
                                                              -----------         -----------
  
  Advance royalty payments (note 2)                               280,000             370,000
                                                              -----------         -----------
  
  Stockholders' deficiency:
          Common Stock, par value $.01 per share 
          Authorized 20,000,000 shares; issued
           8,632,699 at April 30, 1997 and
          8,632,699 at July 31, 1996                               86,327              86,327
          Paid in capital                                       6,816,369           6,816,369
          Deficit accumulated during the                       (7,984,094)
               development stage                                                   (7,965,018)
                                                              -----------         -----------
  
          Total stockholders' deficiency                       (1,081,398)         (1,062,322)
                                                              -----------         -----------
  
                                                                 $236,383            $313,620
                                                              ===========         ===========
  See accompanying notes to condensed financial statements
  
  (A) Amounts at July 31, 1996 are from audited financial statements.
  
                                         2
  Daltex Medical Sciences, Inc.
                          (A Development Stage Enterprise)
                        Statements of Operations and Deficit
                      Accumulated During the Development Stage
  For The Period
                                                                                                                          28-Jul-83
                                                      Three Months     Three Months     Nine Months     Nine Months       (Date of
                                                          Ended           Ended           Ended            Ended        Incorporation)
                                                        April 30,        April 30,       April 30,       April 30,       To April 30,
                                                          1997             1996            1997            1996             1997
                                                      (Unaudited)      (Unaudited)     (Unaudited)     (Unaudited)      (Unaudited)
  Revenues:
  Sales - Patents & related technology                $         --    $         --    $         --    $         --        $300,000
  Sales - Gloves                                                --              --              --              --         208,440
  Interest and other income (note 5)                            85             199             342          75,199       1,712,903
  License fees and royalties                               158,653         104,706         284,790         214,310       2,654,886
                                                      ------------    ------------    ------------    ------------    ------------
  
  Total revenues                                           158,738         104,905         285,132         289,509       4,876,229
                                                      ------------    ------------    ------------    ------------    ------------
  
  Expenses incurred in the development stage:
  Cost of sales                                                 --              --              --              --         313,243
  Research & development                                        --              --              --           6,400       3,335,251
  General & administrative                                 112,689         132,000         304,208         358,582       9,211,829
                                                      ------------    ------------    ------------    ------------    ------------
  
  Total expenses incurred in the
  development stage                                        112,689         132,000         304,208         364,982      12,860,323
                                                      ------------    ------------    ------------    ------------    ------------
  
  Net income (loss)                                         46,049         (27,102)        (19,076)        (75,473)     (7,984,094)
                                                      ------------    ------------    ------------    ------------    ------------
  
  Deficit accumulated during the development stage:
  
  Beginning of period                                   (8,030,143)     (7,881,145)     (7,965,018)     (7,832,774)             --
                                                      ------------    ------------    ------------    ------------    ------------
  
  End of period                                        $(7,984,094)    $(7,908,247)    $(7,984,094)    $(7,908,247)    $(7,984,094)
                                                      ============    ============    ============    ============    ============
  
  Net income (loss) per common share                          0.01              --              --           (0.01)          (1.02)
                                                      ============    ============    ============    ============    ============
  
  Weighted average number of
  shares outstanding                                     8,633,000       8,633,000       8,633,000       8,633,000       7,810,000
                                                      ============    ============    ============    ============    ============
  See accompanying notes to condensed financial statements.
                                         3
  Daltex Medical Sciences, Inc.
                          (A Development Stage Enterprise)
                         Condensed Statements of Cash Flows
  For the Period
                                                                                                        July 28, 1983
                                                                                                           (Date of
                                                                                                        Incorporation)
                                                                          April 30,        April 30,     to April 30,
                                                                            1997             1996            1997
                                                                        (Unaudited)       (Unaudited)    (Unaudited)
  Cash flows from operations
       Net loss:                                                          ($19,076)        ($75,473)     ($7,984,094)
       Non-cash expenses included in net loss:
            Depreciation and amortization                                       --           16,440          310,234
       Non-cash compensation charges                                            --               --          889,130
       Abandoned equipment                                                      --               --           53,386
       Write-off of patents                                                     --               --          105,221
       Write-off of inventory/advance payments                                  --               --          115,048
       Other                                                                    --               --            4,499
  Changes in current assets & liabilities:
        (Increase) in inventory & advance payments                              --               --         (115,048)
        (Increase) decrease in grant & other receivables                    (5,000)          43,448          (20,319)
        (Increase) decrease in deferred royalty costs                       45,000         (260,000)        (200,000)
        Increase (decrease) in accounts payable & accrued expenses          31,839         (178,874)         920,103
        Increase (decrease) in advance development
            & royalty payments                                             (90,000)         520,000          400,000
                                                                       -----------      -----------      -----------
        Net cash flows of operations                                       (37,237)          65,541       (5,521,840)
                                                                       -----------      -----------      -----------
  
  Cash flows from investing activities:
        Purchase of U.S. government obligations                                 --               --       (8,813,987)
        Redeemed U.S. government obligations
            and other short-term investments                                    --               --        8,810,987
        Purchase of equipment & furniture                                       --               --         (159,370)
        Purchase of patent & trademark                                          --               --         (171,750)
        (Increase) decrease in due from officer & stockholder                   --               --         (110,601)
        (Purchase) sale of other assets                                         --               --          (30,095)
                                                                       -----------      -----------      -----------
             Net cash flows of investing activities                             --               --         (474,816)
                                                                       -----------      -----------      -----------
  
  Cash flow from financing activities:
       Proceeds from sale of common stock & warrants -net                       --               --        6,009,344
  
  Net increase (decrease) in cash                                          (37,237)          65,541           12,689
  Cash, including certificates of deposit:
       Beginning of period                                                  49,926           10,862               --
                                                                       -----------      -----------      -----------
       End of period                                                       $12,689          $76,403          $12,689
                                                                       ===========      ===========      ===========
  See accompanying notes to condensed financial statements.
  
                                         4
  NOTES TO CONDENSED FINANCIAL STATEMENTS-April 30, 1997 (Unaudited)
  
            (1)  Basis of Presentation
  
                 The unaudited condensed  financial  statements have been prepared
                 from the books and records of Daltex Medical Sciences,  Inc. (the
                 "Company")  in  accordance  with  generally  accepted  accounting
                 principles  for interim  financial  information  pursuant to Rule
                 10-01 of Regulation S-X. Accordingly,  they do not include all of
                 the  information  and  footnotes  required by generally  accepted
                 accounting principles for complete financial  statements.  In the
                 opinion of  management,  all  adjustments  (consisting  of normal
                 recurring accruals)  considered necessary for a fair presentation
                 have  been  included.   Interim   results  are  not   necessarily
                 indicative  of the results  that may be  expected  for the fiscal
                 year.
  
            (2)  Advance Royalty and Development Phase Payments
  
                 In  October  1995,  the  Company  and Arrow  International,  Inc.
                 ("Arrow")  agreed  to  modify  the  terms of the  existing  Arrow
                 License (the  "Modified  Arrow  License")  concerning  only those
                 license fees payable to the Company by Arrow for  antimicrobially
                 treated  multi-lumen  central venous catheters  (exclusive of the
                 silicone  Hickman/Broviac type,  implantable port or peripherally
                 inserted  central  venous  catheters).  During the quarter  ended
                 October 31,  1995 and  pursuant to the  Modified  Arrow  License,
                 Arrow paid the Company a one time royalty of $600,000 (in lieu of
                 the periodic  royalty  paid to the Company  pursuant to the Arrow
                 License  for such  catheters)  for the  period  August  31,  1995
                 through  September  1,  2000,  of which 50% was paid to  Columbia
                 University  (the  "University")  in November 1995 pursuant to the
                 terms of a 1987  license  agreement  between  the Company and the
                 University (the " 1987 University License").  Revenue, as well as
                 the  expense  for the  amounts  paid to the  University,  will be
                 recognized  each  quarter  through  September  1,  2000 in  equal
                 amounts,  and  accordingly,  $30,000  of revenue  and  $15,000 of
                 related  expense were  recognized  during the quarter ended April
                 30, 1997.  After September 1, 2000, the periodic royalty payments
                 provided  for in the existing  Arrow  License with respect to the
                 antimicrobially treated multi-lumen central venous catheters will
                 resume and will be adjusted to reflect  increases in the Consumer
                 Price  Index  through  September  1,  2000.  All other  terms and
                 conditions  of the  existing  Arrow  License  (including  Arrow's
                 obligation to make quarterly  royalty  payments based on sales of
                 percutaneous  sheath introducer ("PSI") units sold, and quarterly
                 development phase payments for those products Arrow is developing
                 or  has  developed   incorporating  the  Company's  antimicrobial
                 technology), except those terms modified by the Patent Settlement
                 Agreement  of January 1, 1995,  remain in full force and  effect.
                 The Modified  Arrow License does not modify or alter the terms of
                 the Patent Settlement  Agreement.  For a discussion of the Patent
                 Settlement   Agreement   and  the   resolution   of  the   Patent
                 Interference Proceedings,  see "Item 3. Legal Proceedings" of the
                 Company's  Annual  Report on Form 10-K for the fiscal  year ended
                 July 31, 1995.
  
                 During the quarter  ended April 30,  1997,  the Company  received
                 nominal royalty payments from Arrow based on limited sales of PSI
                 units sold during this period,  and
  
                                         5
  quarterly development phase payments for two other products which
                 Arrow is developing or has developed  incorporating the Company's
                 antimicrobial technology.
  
                 Additionally,  in November 1996, the Company received an advanced
                 annual payment (which was not scheduled to be paid until April 1,
                 1997) from W.L. Gore & Associates,  Inc. ("Gore"), another of the
                 Company's  sublicensees,  in the amount of  $45,000.  Included in
                 this amount was $15,000  representing  an advance  against annual
                 minimum  royalties  to be paid to the  Company  based on sales of
                 antimicrobialy  treated  hernia  patches which have recently been
                 introduced to the  marketplace by Gore, and $30,000  representing
                 advanced annual  development phase payments for two other product
                 segments  also  licensed to Gore pursuant to the terms of the May
                 1992 License Agreement between the Company and Gore. Such $45,000
                 was recognized as revenue in the quarter ended April 30, 1997.
  
            (3)  License Agreement and Research Agreement
  
                 The Company currently has various license agreements and research
                 agreements with the University  related to certain  antimicrobial
                 technologies  (see  "Management's   Discussion  and  Analysis  of
                 Financial Condition and Results of Operations").
  
                 As of April 30, 1997,  the Company owes the  University  $165,706
                 for the  University's  past due share of sublicensing and royalty
                 payments received by the Company through 1994. Additionally,  the
                 Company owes the University $410  representing  the  University's
                 50% share of  royalties  received by the Company from Arrow based
                 on sales of PSI units,  and $2,500  representing the University's
                 50% share of quarterly  development  fees received by the Company
                 from Arrow in May 1997.  Moreover,  the  Company  has been billed
                 $643,294 as of April 30, 1997 by the University's  patent counsel
                 for patent  work  undertaken  in  connection  with the  Company's
                 license  agreements with the University,  although the Company is
                 currently  disputing a  substantial  portion of these legal fees.
                 All of these  amounts are  included in accounts  payable at April
                 30,  1997 on the  accompanying  condensed  balance  sheets.  This
                 $643,294  includes:  (i)  approximately  $128,954,   representing
                 charges  in  connection  with  the  Company's  protection  of its
                 intellectual  property rights through domestic and foreign patent
                 filings  and  related  matters;   (ii)  approximately   $108,560,
                 representing  charges in connection with two AIDS-related patents
                 and a patent  application  for  antimicrobially  treated  condoms
                 which the Company and the University  have agreed in principle to
                 reassign  to  the  University,   because  the  Company  has  been
                 unsuccessful  in licensing  these  technologies to third parties;
                 and  (iii)  approximately   $401,000,   representing  charges  in
                 connection  with the  previously  disclosed  Patent  Interference
                 Proceedings  and  subsequent  Patent  Settlement   Agreement. The
                 Company disputes the Company's  responsibility for this $401,000,
                 and the  Company and the  University  are  continuing  efforts to
                 negotiate a  settlement.  Because  the  Company  has  proposed to
                 reassign the two AIDS-related  patents and one patent application
                 for  antimicrobially  treated  condoms  to  the  University,  the
                 Company has requested that the University  credit the Company for
                 the  $108,560  outstanding  amount  due the  University's  patent
                 counsel related to these matters. The University has continued to
                 work with the  Company  with  respect  to these  matters  and the
                 Company's financial condition and its relation to the University.
                 Although the Company is continuing  its attempts to resolve these
                 matters,  there  can be no
  
                                         6
  assurance  that the  Company  will be  successful  in  reaching a
                 resolution with the University.
  
            (4) License  Amendment  Agreement between the Company and W.L. Gore &
                Associates
  
                In February  1997,  the Company  and Gore  entered  into a License
                Amendment Agreement,  dated as of January 1, 1997,  clarifying the
                specific product and market application  segments set forth in the
                existing license agreement entered into by the Company and Gore in
                May 1992.  In  consideration  for the Company's  cooperation  with
                respect to such License  Amendment  Agreement and to help fund the
                payment  of legal and  filing  costs  incurred  by the  Company in
                connection  with such  Agreement,  the Company  received a payment
                from Gore in February 1997 in the amount of $50,000.  Such payment
                is included in revenues in the quarter  ended April 30, 1997.  The
                Company and Gore have also agreed to a royalty  rate of 5% for any
                product  sold by Gore that is not  otherwise  covered by any other
                categories set forth in the License Amendment Agreement, but which
                are covered by Licensed Products (as defined  therein).  All other
                terms  and  conditions  set  forth in the  existing  1992  license
                agreement remain in full force and effect.
  
       Item 2
  
                       Management's Discussion and Analysis of
                    Financial Condition and Results of Operation
  
                 The following  discussion  contains  forward  looking  statements
       within the meaning of the Private Securities  Litigation Reform Act of 1995
       relating  to  the   Company's   plans  with  respect  to  its   continually
       deteriorating  financial condition.  Actual results could differ materially
       from management's plans and there can be no assurance that the Company will
       be  successful  in its plan (i) to sell or  license  the  rights to certain
       applications  of  its  antimicrobial  technology,   (ii)  to  sell  all  or
       substantially  all of its assets,  (iii) to negotiate  the  forgiveness  of
       certain debt owed to the University or (iv) to continue as a going concern.
  
                 The Company is in the development  stage and has been principally
       engaged in  research  and  development  activities  with the  objective  of
       developing and  commercializing  certain  cost-reducing  medical device and
       pharmaceutical  technologies.  Since March 1, 1994, the Company has engaged
       in extremely  limited  research and  development  efforts.  In an effort to
       commercialize  its more  fully  developed  technologies,  the  Company  had
       focused,   from  1990  to  March  1994,  its  research,   development   and
       commercialization    efforts   principally   on   its   infection-reducing,
       antimicrobial technologies, including the manufacture and marketing through
       distributors  of the  Company's  antimicrobial  gloves and the licensing of
       other applications of the antimicrobial  technology to larger companies. In
       the first three  quarters of fiscal 1997,  as well as in fiscal  1996,  the
       Company  had no  sales  of any of  its  technologies  or its  antimicrobial
       medical  gloves.  See "Item 1. Business" of the Company's  Annual Report on
       Form 10-K for the fiscal year ended July 31, 1996 for a  discussion  of the
       dispute with the University  concerning  the license for the  antimicrobial
       glove  technology,  and a discussion of 
  
                                         7
  the terms of the Patent  Settlement  Agreement  dated as of January 1, 1995
       among the Company, the University, Arrow and Becton Dickinson.
  
                 Given the continually  deteriorating  financial  condition of the
       Company,  the  Board of  Directors  of the  Company  has  authorized  Bruce
       Hausman, President and Chief Executive Officer of the Company, to negotiate
       the  sale  of  the  Company's   rights  to  various   applications  of  the
       antimicrobial  technology  to certain  sublicensees  of the Company.  These
       applications constitute  substantially all of the assets of the Company. In
       the event that the Company is  successful in selling  substantially  all of
       its  assets,  the  Company  will  either  endeavor  to sell  the  remaining
       corporate shell to a third party or to liquidate any remaining assets.  The
       Company  has not  entered  into any  agreement  to date for the sale of its
       rights to the antimicrobial  technology or any other assets,  and there can
       be no assurance  that the Company will be  successful in entering into such
       agreement.
  
                 In the event that the Company is  unsuccessful  in  negotiating a
       sale of its rights to the antimicrobial technology, the Company may seek to
       transfer  this  technology  back  to the  University  in  exchange  for the
       forgiveness by the University of all of the outstanding amounts owed by the
       Company to the University.
  
                 During the first three quarters of fiscal 1997 and for the fiscal
       years  ended  July  31,  1996  and  1995,  the  Company  received  revenues
       principally  from royalty  payments and  development  fees  pursuant to two
       licenses with  sublicensees of applications of the Company's  antimicrobial
       medical technology, and the one-time royalty payment, both discussed below.
       Additionally,   in  June   1997,   the   Company   received   a   one-time,
       non-refundable, non-creditable fee of $100,000 from Arrow, of which $50,000
       was paid on June 5, 1997 to the  University  pursuant to the terms the 1987
       University License,  for those additional "Fields of Application" set forth
       in the Second  Modification  to License  Agreement  between the Company and
       Arrow dated as of May 30, 1997 (the "Second  Modified Arrow  License"),  as
       described under "Item 5 - Other Information."
  
                 In October 1995, the Company  received a one-time royalty payment
       of  $600,000  from  Arrow,  of which 50% was paid in  November  1995 to the
       University  pursuant  to the  1987  University  License.  Additionally,  in
       November  1995,  the Company  received  $75,000 from Arrow to help fund the
       payment of legal  costs  incurred  by the  Company in  connection  with the
       Patent Interference  Proceedings and the Patent Settlement  Agreement.  See
       "-Results of Operations" and "-Liquidity and Capital Resources."
  
                 Except for those  products  covered by the Second  Modified Arrow
       License,  the Company will continue to receive quarterly  development phase
       payments on the other products  incorporating  the Company's  antimicrobial
       technology  which  the  Company's   sublicensees  are  developing  or  have
       developed which have not yet received clearance from the U.S. Food and Drug
       Administration ("FDA"), or have not yet reached the marketplace, as well as
       quarterly  royalty  payments  from Arrow based on sales of PSI units.  As a
       result  of the  introduction  of the  PSI  to  the  marketplace,  quarterly
       development  phase  payments  from Arrow have been  reduced  from $7,500 to
       $5,000,  which will be partially offset by royalty payments related to such
       product.  The Company will also continue to receive annual minimum  royalty
       payments  in the amount of $15,000  for the first three years of sales from
       Gore based on sales of one product segment which has received FDA clearance
       and has recently been  introduced to the  marketplace.  The minimum  annual
       royalty payment is equal to the annual development 
  
                                         8
  payment  the Company  had been  receiving  for such  product  segment.  The
       Company is unable to assess at this time  whether  and to what  extent such
       royalty payments will increase in the future.
  
       Results of Operations for the Three Months Ended April 30, 1997
  
                 Revenues for the quarter  ended April 30, 1997 totaled  $158,738,
       an increase of 51.3% over the $104,905 in revenues during the corresponding
       period in fiscal 1996 primarily due to factors  described  below.  Revenues
       from  licensing  fees in the third quarter of fiscal 1997 were $85,000,  an
       increase  of 70%  over  the  $50,000  in  licensing  fees  recorded  in the
       corresponding period in fiscal 1996 as a result of the Company's receipt in
       February 1997 of $50,000 from Gore described in note 4 above. Revenues from
       royalties  were  $73,653,  an  increase  of 34% over the $54,706 in royalty
       payments  received during the third quarter of fiscal 1996 as a result of a
       $27,834  payment  made by  Arrow  to the  Company  pursuant  to the  Patent
       Settlement  Agreement  which  provides for certain  royalties to be paid by
       Arrow to the  Company and for such  royalties  to be paid by the Company to
       another party to such Patent  Settlement  Agreement,  a slight  increase in
       royalty  payments  from  Arrow,  of  $820,  of  which  50% is  owed  to the
       University,  related  to sales of PSI  units,  and the  replacement  of one
       annual  development  phase payment with minimum annual royalty  payments of
       $15,000 received from Gore.  Included in revenues from royalties is $30,000
       representing  royalties  earned for the quarter ended April 30, 1997, which
       is derived  from the  $600,000  advance  royalty  payment  received  by the
       Company from Arrow in October 1995. (See notes 2 and 3 above.) The unearned
       portion of  $400,000 is  reflected  as  deferred  revenue in the  liability
       section and the remaining  $200,000 of the $300,000 paid to the  University
       is reflected as deferred royalty costs in the assets section of the balance
       sheets.
  
                 Although the Company had no sales of its antimicrobial  gloves in
       the current quarter,  there were no glove sales in the corresponding period
       of fiscal 1996 either.  The Company  maintains its belief that such lack of
       glove  sales  continues  to be due to the  difficulty  it  faces as a small
       company with extremely limited resources in introducing and marketing a new
       product  internationally  without the  benefit of a domestic  sales base or
       regulatory clearance by the FDA.
  
                 Expenses  incurred  during the three  months ended April 30, 1997
       totaled  $112,689,  a  decrease  of 14.6%  from the  $132,008  of  expenses
       incurred in the three  months  ended April 30,  1996  primarily  due to the
       reduction  of legal costs  incurred by the Company in  connection  with the
       protection of its intellectual property rights.
  
                 The Company  had a net income of $46,049  for the  quarter  ended
       April 30,  1997,  as  compared  to a  recorded  net loss of  $27,102 in the
       corresponding  period in fiscal 1996 due primarily to the Company's receipt
       in February  1997 of $50,000 from Gore  described in note 4 above,  and the
       reduced legal costs described above.
  
       Results of Operations for the Nine Months Ended April 30, 1997
  
                 Revenues  for the  nine  months  ended  April  30,  1997  totaled
       $285,132, a decrease of 1.5% from revenues of $289,509 in the corresponding
       period  last year.  This  decrease  in  revenues  was due to the  Company's
       receipt  from Arrow in fiscal  1996 of the  one-time  payment 
  
                                         9
  of $75,000 to help fund the payment of legal costs  incurred by the Company
       in  connection  with  the  Patent   Interference   Proceedings  and  Patent
       Settlement  Agreement,  the fixed  royalties  recognized for the first nine
       months  of  fiscal  1997 as a result  of the  modification  to the  license
       agreement  between  the  Company  and Arrow  (see  note 2 to the  financial
       statements),   and  to  a  lesser  extent,  the  replacement  of  quarterly
       development  payments  with nominal  royalty  payments  from Arrow based on
       sales of PSI units.  This  reduction  was  partially  offset by the $50,000
       received from Gore. In addition,  revenues in fiscal 1997 included  $82,905
       as a result of the Patent  Settlement  Agreement which provides for certain
       royalties  to be paid by Arrow to the  Company  and,  in turn,  paid by the
       Company to another party to such agreement, as discussed above.
  
                 Expenses  incurred  during the nine  months  ended April 30, 1997
       totaled  $304,208,  a  decrease  of 16.6%  from the  $364,982  of  expenses
       incurred in the nine months  ended April 30,  1996.  This  decrease was due
       primarily  to the  reduction  in legal  costs  incurred  by the  Company in
       connection  with the  Company's  protection  of its  intellectual  property
       rights,  and to a lesser  extent,  the fixed  royalties  recognized for the
       first nine  months of fiscal  1997 as a result of the  modification  to the
       license  agreement  between the  Company  and Arrow,  a portion of which is
       recorded  in expenses  as a payment to the  University.  (See note 2 to the
       financial  statements.)  This  decrease  was  partially  offset by payments
       totaling  $82,905  made by the  Company  to  another  party  to the  Patent
       Settlement Agreement, as discussed above.
  
                 The  Company  sustained a net loss of $19,076 for the nine months
       ended April 30, 1997, a substantial  reduction from the net loss of $75,473
       in the  corresponding  period in 1996. The decrease in the net loss for the
       nine month period is due primarily to the aforementioned reduced expenses.
  
       Liquidity and Capital Resources
  
                 At April 30, 1997, the Company had a working  capital  deficit of
       approximately  $944,000,  which  represented  an increase of  approximately
       $63,000 in such deficit  from July 31,  1996.  During the nine months ended
       April 30,  1997,  the  Company had a decrease of $37,237 in cash flows from
       operations  principally  due to the receipt in October 1995 of the one-time
       advance royalty payment of $600,000 from Arrow which enabled the Company to
       reduce its  outstanding  accounts  payable,  and the one-time  receipt from
       Arrow in  November  1995 of $75,000 to help fund the payment of legal costs
       incurred  by  the  Company  in  connection  with  the  Patent  Interference
       Proceedings and the Patent Settlement Agreement. It is expected that future
       cash flows will be substantially less than reported revenues due to the one
       time  advance  royalty  payment from Arrow  described in note 2 above,  the
       one-time  payment  from Gore  described  in note 4 above  and the  one-time
       payment received from Arrow described below in Part II - Other  Information
       - Item 5. As a result of the  aforementioned  payments  to the  University,
       payments  to legal  counsel  associated  with  corporate  and  intellectual
       property matters,  and costs associated with general  operations,  at April
       30, 1997, the Company had cash and cash equivalents of $12,689. The Company
       and Arrow entered into a Second Modification to the Arrow License to modify
       certain  terms of the existing  Arrow  License to include  four  additional
       Fields of Application.  In  consideration of the additions to the Fields of
       Application  under the existing Arrow License,  Arrow paid to the Company a
       one-time, non-refundable,  non-creditable fee of $100,000, of which $50,000
       was paid on June 5,  1997 to the  University  pursuant  to the terms of the
       1987 University License.
  
                                         10
  The Company  currently owes the University  $168,616 (see notes 2
       and 3 to the financial  statements).  The Company has recently negotiated a
       sublicense,  which is awaiting  approval by the University  pursuant to the
       terms of the 1987 University  License,  with a glove  manufacturer  for the
       right to sublicense the Company's antimicrobial glove technology. The terms
       of the sublicense will include  negotiated  royalty rates based upon future
       sales,  if any,  of  gloves  incorporating  the  antimicrobial  technology.
       Additionally,  the Company is  currently  negotiating  with  certain of its
       sublicensees  for the sale of the  certain  other  rights of the Company to
       various applications of the antimicrobial technology. In the event that the
       Company is successful in selling its rights to this technology, the Company
       would use the funds  received  from such sale to  satisfy  its  outstanding
       financial obligations,  including undisputed amounts owed to the University
       and the University's  patent counsel.  There can be no assurance,  however,
       that  the  Company  will  be  successful  in  selling  its  rights  to  the
       antimicrobial technology to a third party or sublicensing its rights to the
       antimicrobial glove technology.
  
                 In the event that the Company  does not receive  approval for the
       negotiated  sublicense for the rights to its antimicrobial glove technology
       from the  University or is  unsuccessful  in  negotiating a sale of certain
       other rights of the Company to various  applications  of the  antimicrobial
       technology,  the Company may seek to transfer this  technology  back to the
       University in exchange for the  forgiveness by the University of all of the
       outstanding amounts owed by the Company to the University.
  
                 The Company is still in the development  stage,  and its business
       operations have only generated a nominal amount of revenues to date.  There
       can be no  assurance  that  the  Company  will  be  successful  in  raising
       additional funds or that the Company will continue as a going concern.  The
       report of the Company's  independent  auditors on the  Company's  financial
       statements for the fiscal years ended July 31, 1996, 1995 and 1994 included
       an explanatory  paragraph which stated that the Company's  recurring losses
       and working capital and total  stockholders'  deficits  raised  substantial
       doubt  about the  Company's  ability to  continue  as a going  concern  and
       precluded  the  expression  of  an  opinion  on  the  Company's   financial
       statements as of and for the years ended July 31, 1996,  1995 and 1994. The
       financial statements did not include any adjustments that might result from
       the outcome of that  uncertainty.  Because of the continued working capital
       deficit,   the  Company  is  attempting  to  sell  its  rights  to  various
       applications of the  antimicrobial  technology,  as discussed above. In any
       event,  the Company is continuing  its attempts to resolve the dispute with
       the University over the license for the antimicrobial  glove technology and
       legal  fees  billed to the  Company  by the  University's  patent  counsel.
       Furthermore,   the  Company   will   continue   its   attempts  to  curtail
       expenditures. There can be no assurance that the Company will be successful
       in any of the foregoing.
  
                 In the event that the Company is  unsuccessful  in its attempt to
       sell its rights to the antimicrobial  technology,  sublicense its rights to
       the  antimicrobial  glove  technology or to transfer such technology to the
       University,  the Company does not have any other plans to raise  additional
       capital and there can be no assurance that it will be able to continue as a
       going  concern  or  avoid  liquidation,   even  with  further  cost-cutting
       measures.
  
                 In an attempt to raise additional capital in order to continue to
       pursue potential acquisition and/or merger possibilities,  including a sale
       of the Company, in April 1997, the Company extended the expiration dates of
       its Class A and Class B  Warrants.  The  expiration  date of the  Company's
       Class A Warrants  was extended  from April 30, 1997 to 5:00 p.m.  (New York
       City time) on December 31, 1997;  the exerise price of the Class A Warrants
       remains $0.25.  The expiration 
  
                                         11
  date of the  Company's  Class B Warrants was extended from October 31, 1997
       to 5:00 p.m.  (New York City time) on December 31, 1997;  the exerise price
       of the Company's Class B Warrants remains $1.00.  Under Federal  securities
       laws,  the Company is unable to accept the exercise of any Class A or Class
       B Warrants until such time, if any, as the Company's  independent  auditors
       may express an opinion on the Company's financial statements,  as discussed
       above.  At such time, if any, as the Company may accept such exercise,  the
       Company intends to use any proceeds received from the exercise of its Class
       A and Class B Warrants for working capital, general corporate purposes and,
       if possible, the reinitiation of its research and development efforts.
  
       Regulatory Developments
  
                 In May 1989, the Company filed a pre-market  510(k)  notification
       seeking consent to market its antimicrobial latex examination gloves. Since
       this initial 510(k) submission, the Company had, from 1991 to 1993, amended
       and  resubmitted  the  510(k)  several  times  in an  effort  to  obtain  a
       determination  of "substantial  equivalence"  to previously  marketed latex
       examination  gloves.  The FDA  Office  of  Device  Evaluation  ("ODE")  had
       notified the Company,  in response to each of these  submissions,  that the
       Company's  antimicrobial  latex examination  gloves are not  "substantially
       equivalent" since the gloves have a new indication for an examination glove
       which may affect the prophylactic  effect, thus constituting a new intended
       use.  The ODE  had  further  stated  that no  accepted  scientific  methods
       presently exist for assessment of the  effectiveness of antiviral  activity
       for topical antimicrobials, particularly under glove-use conditions.
  
                 On March 11,  1996,  Dr.  Shanta M.  Modak of the  Department  of
       Surgery, Columbia University,  where the antimicrobial glove technology was
       developed,  and Dr. Louis R.M. Del Guercio, the Company's Chairman,  made a
       presentation,  on the Company's  behalf,  concerning  the Company's  gloves
       before the FDA's  Independent  Advisory  Committee,  General  Hospital  and
       Personal Use Devices Panel, Center for Devices and Radiological Health. Mr.
       Lester Sampath, also of the Department of Surgery, Columbia University, was
       there as an  observer.  The Panel acts in an  advisory  capacity  and makes
       recommendations  to  the  FDA  regarding  whether  or  not  certain  device
       submissions  should  receive FDA clearance to be marketed.  While the Panel
       did not make any  recommendation  to the FDA at the March 11, 1996 meeting,
       the  Panel  voted  to  accept  a  previously   distributed  opinion  of  an
       independent  consultant indicating that the Company's examination gloves do
       not have a positive  impact on disease  control.  Since the March 11,  1996
       meeting,  the Company and Dr. Modak have  remained in contact with the ODE,
       particularly with Mr. Terrell Cunningham, Nurse Consultant of the ODE.
  
                 By letter dated  February  27, 1997,  the Company was informed by
       Mr. Ulatowski of the ODE that, should the Company wish to continue with its
       efforts to bring its  antimicrobial  gloves to market,  the ODE  recommends
       that the  Company  submit a new  510(k),  with the focus of the  submission
       directed at the recommendations outlined in Mr. Ulatowski's letter relating
       to certain labeling claims and additional testing.
  
                    At present,  the Company  does not have  sufficient  financial
       resources to fund additional clinical testing and to prepare the new 510(k)
       submission necessary to ready its
  
                                         12
  antimicrobial  gloves  for the  marketplace.  In April  1997,  the  Company
       entered into a letter of intent agreement,  as described below, relating to
       a sublicense agreement with a glove manufacturer concerning the patents for
       the antimicroibial  glove technology  currently owned by the University and
       licensed to the Company.  The Company and the glove  manufacturer  recently
       executed such sublicense agreement, subject to appproval by the University.
       However,  there can be no assurance that the Company will receive  approval
       from the University for such sublicense.
  
       PART II - OTHER INFORMATION
  
       Item 5 - Other Information
  
            (a)  Nalpak  Industries,  Inc,  and the  Company  Executed a Letter of
                 Intent  Agreement  Concerning the Company's  Antimicrobial  Glove
                 Technology
  
                In April 1997, the Company and Nalpak Industries, Inc. ("Nalpak"),
                a  medical  glove  manufacturer,  entered  into a letter of intent
                agreement concerning the patents which are licensed to the Company
                from the University  relating to antimicrobial  latex  examination
                and  surgeons'  gloves used to prevent or reduce  infection and to
                inhibit the transmission of infectious diseases.
  
                Nalpak has  received an  expression  of interest  from a financing
                partner (collectively,  the "Medpac Group") to sublicense from the
                Company  the  exclusive  worldwide  rights  to  the  antimicrobial
                patents for use with  medical  examination  and  surgeons'  gloves
                currently  owned by the  University  and  licensed to the Company.
                (Due to the Company's extremely limited financial  resources,  the
                Company is unable at this time to cover the costs  associated with
                obtaining  FDA  clearance  to  market  its   antimicrobial   latex
                examination  and  surgeons'  gloves  in the  United  States.)  The
                execution  of such Letter of Intent  Agreement  by the Company and
                Nalpak does not create any legally binding obligations on the part
                of either party, but is intended solely as an outline of the major
                terms upon which the Medpac  Group  intends to  proceed,  and as a
                guideline   for  the   preparation   of   documentation   for  the
                transaction. There can be no assurance that the Company and Nalpak
                will  be  successful  in  entering  into a  definitive  sublicense
                agreement.
  
            (b)  Subsequent  Event -  Second  Modification  to  License  Agreement
                 between the Company and Arrow International, Inc.
  
                The Company and Arrow  entered into a Second  Modification  to the
                Arrow  License  to  modify  certain  terms of the  existing  Arrow
                License to  include  four  additional  Fields of  Application.  In
                consideration for the additions to the Fields of Application under
                the existing Arrow License,  Arrow paid to the Company a one-time,
                non-refundable,  non-creditable fee of $100,000,  of which $50,000
                was paid on June 5, 1997 to the  University  pursuant to the terms
                of the 1987 University License. Further to the terms of the Second
                Modified Arrow License,  the Company will be entitled to receive a
                running  royalty  rate of 5% percent of unit net sales of products
                sold by Arrow  which  are  included  in the  additional  Fields of
                Application.  For  a  licensed  product  or  products  within  the
                additional  Fields of Application that is sold together with other
  
                                         13
  non-licensed  products  in a single  package  to a  customer,  the
                running royalty rate will apply only to the  established  unit net
                sales price of the  licensed  product or products.  Moreover,  the
                Company  has  agreed to waive,  for the first  three  years of the
                Second Modified Arrow License, development fees and minimum annual
                royalties  due  for  products  sold by  Arrow  falling  under  the
                additional  Fields of  Application.  After the third full year the
                Second  Modified  Arrow  License  is  effective,   Arrow  will  be
                obligated to pay the Company  development fees of $2,500,  payable
                quarterly  in  advance,  for  each  of the  additional  Fields  of
                Application,  during their  development phase and prior to Arrow's
                sales of product in each of the additional  Fields of Application.
                Arrow's  obligation  to pay  development  fees  will  cease in the
                quarter  following  Arrow's  sale  of a  product  in  each  of the
                additional  Fields of  Application.  After  such time as a sale is
                made, Arrow will pay the Company the running royalty rate of 5% of
                net sales, and at a minimum, shall pay a minimum royalty of $2,500
                payable quarterly in advance, for each of the additional Fields of
                Application.  Except as expressly  modified in the Second Modified
                Arrow  License,  all terms and  conditions  of the existing  Arrow
                License and the terms of the first Modified Arrow License,  remain
                in full force and effect.  In addition,  the Second Modified Arrow
                License  does  not  modify  or  allter  the  terms  of the  Patent
                Settlement  Agreement  dated as of  January  1,  1995,  among  the
                University, the Company and Becton Dickinson and Company.
  
       Item 6 - Exhibits and Reports on Form 8-K
  
       (a)      Exhibits
  
                 10.1 Letter of  Intent  dated as of April 15,  1997  between  the
                      Company and Nalpak Industries, Inc.
  
                 10.2 Amendment No. 9 to Warrant  Agreement  dated as of April 22,
                      1997 between the Company and Continental  Stock Transfer and
                      Trust Company.
  
                 10.3 Sixth  Lease  Extension  Agreement  dated as of May 8,  1997
                      between the Company and I.C.E. Associates.
  
                 10.4 Second Modification to License Agreement dated as of May 30,
                      1997 between the Company and Arrow International, Inc.
  
       (b)      Reports on Form 8-K
  
                 No reports on Form 8-K were filed during the quarter  ended April
                 30 1997.
  
                                         14
  SIGNATURES
  
       Pursuant to the  requirements  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.
  
                                        DALTEX MEDICAL SCIENCES, INC.
  
       Date:  June 16, 1997             By:/s/Bruce Hausman, Esq.
                                           ----------------------
                                           BRUCE HAUSMAN, ESQ.
                                           President and Chief Executive
                                           Officer
  
       Date:  June 16, 1997             By:/s/Herbert J. Mitschele, Jr.
                                           ----------------------------
                                           HERBERT J. MITSCHELE, JR.
                                           Treasurer, Secretary
                                           and Chief Financial Officer