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, 1996
                           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 3, 1996
  
   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, 1996
            (Unaudited) and July 31, 1995                                   3-4
  
       (b)  Condensed statements of operations and deficit
            accumulated during the development stage for the
            three months ended April 30, 1996 (Unaudited) and
            April 30, 1995 (Unaudited), nine months ended
            April 30, 1996 (Unaudited) and April 30, 1995
            (Unaudited), and for the period July 28, 1983
            (Date of incorporation) to April 30, 1996
            (Unaudited)                                                       5
  
       (c)  Condensed statements of cash flows for the nine
            months ended April 30, 1996 (Unaudited) and April
            30, 1995 (Unaudited), and for the period July 28,
            1983 (Date of Incorporation) to April 30, 1996
            (Unaudited)                                                       6
  
       (d)  Notes to condensed financial statements
            (Unaudited)                                                     7-8
  
  Item 2 -  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                            9-15
  
  PART II - OTHER INFORMATION
  
  Item 5 -  Other Information                                             15-16
  
  Item 6 - Exhibits and Reports on Form 8-K                                  16
  
  
                                          2
  
  <PAGE>
  
  PART I - FINANCIAL INFORMATION
  
  Item 1 - Financial Statements
  
                            Daltex Medical Sciences, Inc.
                          (A Development Stage Enterprise)
                              Condensed Balance Sheets
  <TABLE>
  <CAPTION>
  
  
                                               April 30,
                                                  1996      July 31,
                                              (Unaudited)   1995 (A)
  
        Assets
  
  <S>                                           <C>        <C>     
  Current assets:
              Cash and cash equivalents         $ 76,403   $ 10,862
              Other receivables                       --     43,448
                                                --------   --------
                                                  76,403     54,310
  
  Net plant and equipment, at cost                    --      2,568
  Patents, net of accumulated amortization of
    $151,161 at April 30, 1996
    and $115,677 at July 31, 1995                  4,697     18,569
  Other assets, net                                3,375      3,375
  Deferred royalty costs (note 2)                260,000         --
                                                --------   --------
                                                $344,475   $ 78,822
                                                ========   ========
  
  See accompanying notes to condensed financial statements.
  
  <FN>
  (A) Amounts at July 31, 1995 are from audited financial statements.
  </FN>
  </TABLE>
  
                                         3
  
  <PAGE>
  
                            Daltex Medical Sciences, Inc.
                          (A Development Stage Enterprise)
                              Condensed Balance Sheets
  <TABLE>
  <CAPTION>
  
                                                         April 30,
                                                            1996          July 31,
                                                        (Unaudited)       1995 (A)
  <S>                                                   <C>            <C>        
  
  Liabilities and Stockholders' Deficiency
  
  Current liabilities:
              Accounts payable (note 3)                 $   810,511    $   954,727
              Accrued expenses                               19,515         54,173
                                                        -----------    -----------
              Total current liabilities                     830,026      1,008,900
                                                        -----------    -----------
  
  Advance royalty payments (note 2)                         520,000             --
                                                        -----------    -----------
  
  Stockholders' deficiency:
              Common stock, par value $.01 per share 
              Authorized 20,000,000 shares; issued
              8,632,699 shares at April 30, 1996 and
              8,632,699 at July 31, 1995                     86,327         86,327
              Paid in capital                             6,816,369      6,816,369
              Deficit accumulated during the
                development stage                        (7,908,247)    (7,832,774)
                                                        -----------    -----------
  
              Total stockholders' deficiency             (1,005,551)      (930,078)
                                                        -----------    -----------
  
                                                        $   344,475    $    78,822
                                                        ===========    ===========
  
  See accompanying notes to condensed financial statements.
  <FN>
  (A) Amounts at July 31, 1995 are from audited financial statements.
  </FN>
  </TABLE>
  
                                         4
  
  <PAGE>
  
  <TABLE>
  <CAPTION>
                                                                      Daltex Medical Sciences, Inc.
                                                                    (A Development Stage Enterprise)
                                                                   Statements of Operations & Deficit
                                                                Accumulated During the Development Stage
  
                                                                                                           For The Period
                                                                                                           July 28, 1983
                                            Three Months     Three Months   Nine Months    Nine Months     (Date of
                                                Ended            Ended         Ended          Ended        Incorporation)
                                              April 30,        April 30,      April 30,      April 30,       To Apr. 30,
                                                1996             1995          1996            1995             1996
                                            (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 4)                                 199              --          75,199            --         1,712,273
      License fees & royalties                104,706          88,983         214,310         170,654       2,296,438
                                            ---------       ---------       ---------       ---------       ---------
  
           Total revenues                     104,905          88,983         289,509         170,654       4,517,151
                                            ---------       ---------       ---------       ---------       ---------
  
  Expenses incurred in the development
    stage:
      Cost of sales                              --              --              --              --           313,243
      Research & development                     --              --             6,400            --         3,335,251
      General & administrative                132,007         197,869         358,582         429,299       8,776,904
                                            ---------       ---------       ---------       ---------       ---------
  
           Total expenses incurred in
             the development stage            132,007         197,869         364,982         429,299      12,425,398
                                            ---------       ---------       ---------       ---------       ---------
  
  Net income (loss)                           (27,102)       (108,886)        (75,473)       (258,645)     (7,908,247)
                                            ---------       ---------       ---------       ---------       ---------
  
  Deficit accumulated during the
    development stage:
  
      Beginning of period                  (7,881,145)     (7,470,050)     (7,832,774)     (7,320,291)           --
                                            ---------       ---------       ---------       ---------       ---------
  
      End of period                      $ (7,908,247)   $ (7,578,936)   $ (7,908,247)   $ (7,587,936)   $ (7,908,247)
                                         ============    ============    ============    ============    ============ 
  
      Net loss per common share                  --             (0.01)          (0.01)          (0.03)          (1.03)
                                         ============    ============    ============    ============    ============ 
  
      Weighted average number of
        shares outstanding                  8,633,000       8,633,000       8,633,000       8,633,000       7,647,000
                                         ============    ============    ============    ============    ============ 
  </TABLE>
  
  See accompanying notes to condensed financial statements.
  
                                         5
  
  <PAGE>
  
                            Daltex Medical Sciences, Inc.
                          (A Development Stage Enterprise)
                         Condensed Statements of Cash Flows
  <TABLE>
  <CAPTION>
  
                                                                                             For the Period
                                                                                             July 28, 1983
                                                                                              (Date of
                                                                                             Incorporation)
                                                                 April 30,       April 30,    to April 30,
                                                                   1996            1995          1996
                                                               (Unaudited)     (Unaudited)    (Unaudited)
  <S>                                                       <C>            <C>            <C>         
      Cash flows from operations:
           Net loss:                                          $   (75,473)   $  (258,645)   $(7,908,247)
           Non-cash expenses included in net loss:
               Depreciation and amortization                       16,440         17,145        305,537
      Non-cash compensation charges                                  --           60,601        889,130
      Abandoned equipment                                            --             --           53,386
      Write-off of patents                                           --             --          105,221
      Write-off of inventory/advance payments                        --             --          115,048
      Provision for write-off/due from officer                       --          (60,601)          --
      Other                                                          --             --            6,821
  Changes in current assets & liabilities:
      (Increase) in inventory & advance payments                     --             --         (115,048)
      Decrease in grant & other receivables                        43,448           --             --
      (Increase) in deferred royalty costs                       (260,000)          --         (260,000)
      Increase (decrease) in accounts payable                    (144,216)       211,925        810,511
      Increase (decrease) in accrued expenses                     (34,658)         6,106         19,515
      Increase in advance development & royalty payments          520,000         35,000        520,000
                                                              -----------    -----------    -----------
      Net cash flows of operations                                 65,541         11,531     (5,458,126)
                                                              -----------    -----------    -----------
  
  Cash flows from investing activities:
      Purchase of U.S. government obligations                        --             --       (8,813,987)
      Redeemed U.S. government obligations and
      other short-term investments                                   --             --        8,810,988
      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                    --             --         (474,815)
                                                              -----------    -----------    -----------
  
  Cash flow from financing activities:
      Proceeds from sale of common stock & warrants - net            --             --        6,009,344
  
  Net increase (decrease) in cash                                  65,541         11,531         76,403
  Cash, including certificates of deposit:
      Beginning of period                                          10,862         27,090           --
                                                              -----------    -----------    -----------
      End of period                                           $    76,403    $    38,621    $    76,403
                                                              ===========    ===========    ===========
  </TABLE>
  
  See accompanying notes to condensed financial statements.
  
                                         6
  
  <PAGE>
  
  NOTES TO CONDENSED FINANCIAL STATEMENTS-April 30, 1996 (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 Payments
  
            In October 1995, the Company and Arrow International, Inc. ("Arrow")
       agreed to modify the terms of the existing license agreement between the
       Company and Arrow concerning 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 modification to the license agreement,
       Arrow paid to the Company a one-time royalty of $600,000 (in lieu of the
       periodic royalty to be paid to the Company 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.
       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, 1996. After September 1,
       2000, the periodic royalty payments provided for in the existing license
       agreement 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 license agreement (including Arrow's obligation
       to make 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. In addition, the
       modification to the license agreement 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, 1996, the Company received from
       Arrow a nominal royalty payment based on limited sales of percutaneous
       sheath introducer systems ("PSI"), which Arrow has recently introduced to
       the marketplace.
  
  
                                         7
  
  <PAGE>
  
  
  (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"). In this capacity, in November 1995
       the Company paid the University a total amount of $385,841: $300,000
       (representing the University's 50% share of the one-time royalty the
       Company received from Arrow described in note 2 above), $34,289
       (representing the remaining balance due the University pursuant to a
       research agreement based on an invoice received from the University),
       $48,071 (representing the University's 50% share of sublicense and royalty
       fees received by the Company between April 30 and October 12, 1995 from
       Arrow), and $3,481 (representing royalties owed the University, pursuant to
       a 1987 license agreement and an agreement in principle, based on net sales
       of the Company's antimicrobial examination gloves sold in 1991, 1992 and
       1993 which the Company had been reserving in accrued expenses). In January
       1996 the Company paid the University $6,400 for the antimicrobial coating
       and evaluation of samples of tracheal suction catheters for a leading
       medical device manufacturer who has expressed interest in a possible
       licensing arrangement with the Company. The device manufacturer is
       currently evaluating such coated product samples.
  
            During the quarter ended April 30, 1996, the Company made payments to
       the University totalling $28,866 representing the University's 50% share of
       development fees and royalty payments received by the Company during the
       current quarter pursuant to two licenses with sublicensees of applications
       of the Company's antimicrobial medical technology.
  
            As of April 30, 1996, the Company still owes the University $165,706
       for the University's past due share of sublicensing and royalty payments
       received by the Company through 1994. Further, the Company has been billed
       $629,941 as of April 30, 1996 by the University's patent counsel for patent
       work undertaken in connection with the Company's license agreements with
       the University and costs incurred in connection with the Patent
       Interference Proceedings and subsequent Patent Settlement Agreement,
       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, 1996 on the accompanying condensed balance sheets. The Company is
       continuing its attempts to resolve these matters with the University but
       there can be no assurance that the Company will be successful in reaching a
       resolution.
  
  (4)  Other Income
  
            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.
  
  
                                         8
  
  <PAGE>
  
  Item 2
  
                       Management's Discussion and Analysis of
                    Financial Condition and Results of Operations
  
       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. The Company incurred a research and
  development expense during the second quarter of fiscal 1996, in the amount of
  $6,400, for the antimicrobial coating and evaluation of samples of tracheal
  suction catheters performed at the University in connection with possible
  licensing arrangements. The Company will continue to restrict its research and
  development efforts unless and until the Company can develop positive cash flow
  from its more fully developed technologies or raise additional financing. There
  can be no assurance that the Company will be able to develop or commercialize
  any of its product technologies in the future. Future revenues of the Company
  may be limited. Such commercialization activities may not result in sales of
  products on a profitable basis, and the Company may not have sufficient funds
  available to complete its research and development program, pursue applications
  for necessary regulatory clearances and approvals, prosecute its intellectual
  property rights, or remain in business while any products which may be developed
  from its technologies are marketed or are readied for the marketplace.
  
       In an effort to commercialize its more fully developed technologies, the
  Company 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 1996, as well as in fiscal 1995 and 1994, the Company had no sales of any
  of its technologies or its antimicrobial medical gloves. 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 U.S. Food and Drug Administration ("FDA").
  See "Regulatory Developments." During the first three quarters of fiscal 1996,
  and for fiscal 1995 and 1994, the Company received revenues from royalty
  payments and development fees pursuant to two licenses with sublicensees of
  applications of the Company's antimicrobial medical technology in addition to
  the one-time royalty payment discussed below.
  
       In the first quarter of fiscal 1996 the Company received a one-time
  prepayment of periodic royalty payments pursuant to an October 1995 modification
  to its license agreement with Arrow. Such advance essentially represented
  royalty payments due to the Company from Arrow based on sales of antimicrobially
  treated multi-lumen central venous catheters for the period September 1, 1995
  through September 1, 2000. It is expected that future cash flows will be
  substantially less than reported revenues for such period due to this payment,
  as reflected in this quarter's financial statements and as discussed in note 2
  to the financial statements. In the third quarter of fiscal 1996 the Company
  received a nominal royalty payment from Arrow based on limited sales of PSI,
  which Arrow has recently begun marketing. The Company may continue to receive
  future royalty payments from
  
                                         9
  
  <PAGE>
  
  Arrow based on sales of PSI systems and will continue to receive development
  phase payments from Arrow and another of the Company's sublicensees for other
  products incorporating the Company's antimicrobial technology. 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 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, 1996
  
       Revenues for the quarter ended April 30,1996 totalled $104,905, an increase
  of 17.9% over the $88,983 in revenues during the corresponding period in fiscal
  1995. Revenues from licensing fees in the third quarter of fiscal 1996 were
  $50,000, a slight decrease from the $52,500 in licensing fees recorded in the
  corresponding period in fiscal 1995 due to the elimination of one development
  phase payment. Revenues from royalties were $54,706, an increase of 50% over the
  $36,483 in royalty payments received during the third quarter of fiscal 1995 as
  a result of a $24,471 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 and a slight increase in royalty
  payments from Arrow related to the introduction of the PSI to the marketplace.
  Also included in revenues from royalties is $30,000 representing royalties
  earned for the quarter ended April 30, 1996, which is derived from the $600,000
  advance royalty payment received by the Company from Arrow. The unearned portion
  of $520,000 is reflected as deferred revenue in the liability section and the
  remaining $260,000 of the $300,000 paid to the University is reflected as
  deferred royalty costs in the assets section of the balance sheets. (See notes 2
  and 3 to the financial statements.) 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 1995 either.
  
       Expenses incurred during the three months ended April 30, 1996 totalled
  $132,007, a decrease of 33.3% from the $197,869 of expenses incurred in the
  three months ended April 30,1995 primarily due to the reduction of legal
  expenses related to the resolution of the Patent Interference Proceedings, which
  reduction was slightly offset by the $24,47l paid by the Company to one party to
  the Patent Settlement Agreement, as discussed above.
  
       The Company sustained a net loss of $27,102 for the quarter ended April 30,
  1996, a decrease of 75% from the net loss of $108,886 in the corresponding
  period in fiscal 1995 due primarily to the reduction of legal expenses as
  described above.
  
  Results of Operations for the Nine Months Ended April 30,1996
  
       Revenues for the nine months ended April 30, 1996 totalled $289,509, an
  increase of 70% over revenues of $170,654 in the corresponding period last year.
  This increase in revenues was the result of the receipt of $75,000 from Arrow as
  described in note 4 to the financial statements, offset slightly by the
  elimination of one development phase payment. In addition, revenues included
  $47,351 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.
  
                                         10
  
  <PAGE>
  
       Expenses incurred during the nine months ended April 30, 1996 totalled
  $364,982, a decrease of 15% from the $429,299 of expenses incurred in the nine
  months ended April 30, 1995. 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 due to the settlement of the Patent
  Interference Proceedings as a result of the execution of the Patent Settlement
  Agreement, and to a lesser extent, the fixed royalties earned for the first nine
  months of fiscal 1996 as a result of the modification to the license agreement
  between the Company and Arrow. (See note 2 to the financial statements.) This
  decrease was partially offset by payments totalling $47,351 made by the Company
  to another party to the Patent Settlement Agreement, as discussed above.
  
       The Company sustained a net loss of $75,473 for the nine months ended April
  30, 1996, a decrease of 71% from the net loss of $258,645 in the corresponding
  period in 1995. The decrease in net loss for the nine month period is due
  primarily to the Company's receipt in the first quarter of 1996 of a one-time
  advance royalty payment of $600,000 from Arrow and the Company's receipt of
  $75,000 from Arrow, as discussed in notes 2 and 4 to the financial statements,
  respectively.
  
  Liquidity and Capital Resources
  
       At April 30, 1996, the Company had a working capital deficit of
  approximately $753,000, which represented a decrease of approximately $202,000
  in such deficit from July 31, 1995. During the nine months ended April 30, 1996,
  the Company had an increase of $65,541 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. 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, 1996, the Company had cash and
  cash equivalents of $76,403.
  
       The Company currently owes the University $165,706 (see notes 2 and 3 to
  the financial statements), and as of April 30, 1996, the Company has been billed
  $629,941 by the University's patent counsel for patent work undertaken in
  connection with the Company's license agreements with the University and costs
  incurred in connection with the Patent Interference Proceedings and Patent
  Settlement Agreement, although the Company is currently disputing a substantial
  portion of these legal fees. As described in note 3 to the financial statements,
  the Company is attempting to continue to have discussions with the University to
  attempt to resolve several issues including the license for the antimicrobial
  glove technology and the aforementioned legal fees. There can be no assurance
  that the Company will be able to resolve these matters. For a discussion of the
  dispute with the University, see "Item 1 - Business Product Technologies
  Licenses with the University" in the Company's Annual Report on Form 10-K for
  the year ended July 31, 1995. The Company had been reserving royalties due the
  University consistent with the terms of the written license agreement for the
  antimicrobial glove technology which had been negotiated between the parties
  based upon an agreement in principle. In November 1995, the Company paid the
  University $3,481 representing such reserved royalties under this license based
  on net sales of the Company's antimicrobial
  
                                         11
  
  <PAGE>
  
  examination gloves sold prior to February 1993. If the Company is unable to
  settle the dispute with the University over the license agreement, the Company
  may not be entitled to sell its antimicrobial medical gloves or sublicense the
  antimicrobial glove technology in the future.
  
       The Company is exploring a number of ways to pay the outstanding amounts
  due the University, including loans, raising of additional capital through
  various equity offerings, private placements, possible mergers with
  revenue-producing entities, and further acceleration of royalty and development
  fee payments from sublicensees as well as from sales of antimicrobial gloves.
  
       The Company is still in the development stage, and its business operations
  have only generated a nominal amount of revenues to date. The report of the
  Company's independent auditors on the Company's financial statements for the
  fiscal years ended July 31, 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, 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, management's plan is to continue 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, in order to
  attempt to raise additional capital, while attempting to develop, market,
  license and sell its products, including its antimicrobial latex surgical and
  examination gloves, and to establish positive cash flow for the Company. The
  Company is exploring a number of ways of raising additional capital, including
  loans, various equity offerings, private placements, mergers with
  revenue-producing entities, as well as from sales of antimicrobial gloves.
  Furthermore, the Company will continue its attempts to curtail expenditures.
  
       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 1996, 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, 1996 to 5:00 p.m. (New York City time) on April 30,
  1997; the exercise price of the Class A Warrants remains $0.25. The expiration
  date of the Company's Class B Warrants was extended from April 30, 1997 to 5:00
  p.m. (New York City time) on October 31, 1997; the exercise 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 without a disclaimer, 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.
  
       The Company does not have any commitments to raise additional capital, and
  there can be no assurance that it will be able to obtain any such commitments or
  raise additional capital in the future, particularly in light of the disclaimer
  opinion discussed above. If (i) there are no antimicrobial glove sales, (ii)
  there is no significant increase in license fees or royalties from sales of
  sublicensed products, (iii) the Company is unsuccessful in raising additional
  capital during the remainder of fiscal year 1996, or (iv) the University revokes
  licenses granted to the Company, the Company may not be
  
                                         12
  
  <PAGE>
  
  able to continue as a going concern, even with further cost-cutting measures. To
  meet its long-term liquidity requirements, the Company must also generate
  sufficient income through operations or obtain additional financing as to which
  there can be no assurance. If the Company raises sufficient additional capital,
  the Company plans to continue to (i) seek increased revenue-producing
  opportunities through the search for additional license and patent purchase
  agreements involving corporate technology, (ii) attempt to obtain U.S.
  regulatory clearance to market certain products, such as its antimicrobial latex
  gloves, directly or through distributors to end users, (iii) investigate merger,
  joint venture or acquisition possibilities with a suitable entity whose business
  may be complementary to that of the Company, and (iv) explore the possibility of
  a sale of the Company or a sale of some or all of its assets.
  
       By letter dated October 17, 1995, Beiersdorf AG of Hamburg, Germany
  ("Beiersdorf") informed the Company that it was abandoning the projects for
  developing products under the two German patents Beiersdorf had acquired from
  the Company pursuant to the previously disclosed 1992 Patent Purchase Agreement.
  Consequently, the Company is not entitled to any further payment under the 1992
  agreement. Further, under the terms of the 1992 agreement, the Company had the
  right to repurchase the subject patents together with certain subject matter as
  defined in the agreement. The repurchase price consisted of the $300,000
  non-refundable cash payment the Company had received from Beiersdorf plus legal
  and clinical development costs of approximately $100,000 representing
  Beiersdorf's out-of-pocket expenses. The Company received another letter from
  Beiersdorf on May 8, 1996 inquiring whether the Company wished to accept the
  offer of repurchase. By letter dated May 14, 1996, the Company informed
  Beiersdorf of the Company's decision to decline the offer to repurchase such
  patents, since the Company has been unable to find a pharmaceutical company
  interested in further pursuing the technology, and the Company does not
  presently have the financial resources required for such repurchase.
  
       The Company's patent counsel was notified by letter dated May 16, 1996 from
  the Canadian Patent Office, that the patent for "Methods and Agents for the
  Prophylaxis of Atopy" would be allowed. Additionally, the Company's patent
  counsel received notification dated May 29, 1996 from the U.S. Patent and
  Trademark Office allowing the U.S. case for such patent with certain claims.
  Subsequently, the Company and its U.S. patent counsel have contacted Beiersdorf
  concerning these matters. By letter dated May 23, 1996, the Company informed
  Beiersdorf of the estimated costs associated with the filing of the patent and
  agreed to cover such costs, if Beiersdorf decided not to. Beiersdorf responded
  by letter to the Company's patent counsel instructing such counsel to advise the
  U.S. Patent Examiner to issue the U.S. patent, with Beiersdorf's indication that
  the Company cover any related costs.
  
  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 has, 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") has 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
  
                                         13
  
  <PAGE>
  
  prophylactic effect, thus constituting a new intended use. The ODE has 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, among other grounds for denying market clearance.
  
       In its submissions, the Company has proposed revised labeling claims to be
  consistent with what the Company believes is "substantially equivalent" labeling
  based on FDA precedent. Moreover, the Company has submitted test results that
  the Company considers to demonstrate an appropriate method for, and significant
  effectiveness at, inactivating certain viruses and other fluid borne pathogens
  by the antimicrobial latex examination glove, under conditions of expected use
  of the product. The Company's test results are also believed to demonstrate user
  safety under the expected conditions of use of the antimicrobial latex
  examination gloves.
  
       From 1993 to date, the Company had several meetings with various
  representatives at the FDA's offices and continues its written correspondence
  and discussions with the FDA and the ODE regarding the issues raised by the ODE
  concerning the Company's antimicrobial gloves.
  
       In response to its most recent submission made on September 13, 1995, on
  September 26, 1995, Mr. Timothy Ulatowski of the ODE informed the Company that
  the Company was invited to make a presentation concerning the Company's
  examination gloves before the FDA's independent General Hospital Panel.
  
       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, who attended the meeting on
  the Company's behalf, each made a presentation before the 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. The Company expects to receive written
  notice of the FDA's decision regarding the Company's examination gloves, but has
  not yet received such notice.
  
       At present, the Company does not have sufficient financial resources to
  fund additional clinical testing, if such clinical testing is required. However,
  should the Company's financial condition improve, the Company would spend some
  of these funds on additional testing. There can be no assurance that, even with
  additional testing, if such testing is required, that the Company will obtain
  FDA clearance to market its antimicrobial latex gloves.
  
  
                                         14
  
  <PAGE>
  
  PART II - OTHER INFORMATION
  
  Item 5 - Other Information
  
  (a)  Granting of European Patent for "Treatment of Aged Skin With Oral
       13-Cis-Retinoic Acid" Survives Period of Possible Opposition Without
       Challenge
  
            On February 14, 1996, the Company received written notification from
       patent counsel that the decision in March 1995 by the European Patent
       Office, allowing the claims in the European Patent Application covering the
       "Treatment of Aged Skin With Oral 13-Cis-Retinoic Acid" which was published
       in the European Patent Bulletin of March 22, 1995, survived the nine month
       period of possible opposition by third parties without any challenge.
       Accordingly, the grant of the above patent is now complete. The Company
       continues to seek potential licensees or purchasers of the aging-related
       skin disorder treatment technology in Europe; however, there can be no
       assurance that the Company will be successful in licensing or selling the
       technology to others.
  
  (b)  Research Gift
  
            By letter dated February 8, 1996, the Company has agreed that it will
       support the research efforts directed by Dr. Shanta Modak, Department of
       Surgery of Columbia University. Accordingly, the Company has made a
       commitment to make a research gift in the amount of $20,000 to Dr. Modak's
       laboratory, subject to certain conditions described below, in recognition
       of the consultation service and assistance by Dr. Modak and her colleagues
       in support of the Company's efforts in continuing to obtain clearance from
       the FDA to market the Company's antimicrobial gloves. This research gift
       will be paid upon the first to occur of the following: (i) the Company's
       receipt of clearance from the FDA to market its antimicrobial gloves; or
       (ii) the Company successfully enters into a business venture with a revenue
       producing company related to production and sales of such antimicrobial
       gloves. Such gift has no bearing or effect on prior royalty or other
       payment arrangements between the Company and the University.
  
  (c)  Grant of Stock Options
  
            At a special meeting of the Board of Directors of the Company held on
       March 6, 1996, the Board of Directors granted a non-qualified option to
       Bruce Hausman to purchase 250,000 shares of Common Stock of the Company at
       an exercise price of $0.09 per share, based on the current market price, in
       lieu of cash compensation for Mr. Hausman's services as President and Chief
       Executive Officer of the Company since May 1995.
  
  (d)  Grant of Stock
  
            On March 6, 1996, the Board of Directors of the Company granted
       Lieberman & Nowak, LLP 50,000 shares of Common Stock in recognition of the
       valued services provided by Lieberman & Nowak to the Company for several
       years. The Company has recorded an
  
                                         15
  
  <PAGE>
  
       expense of $2,250 in the third quarter of fiscal 1996 representing the
       estimated fair market value of such shares on the date of grant.
  
  Item 6 - Exhibits and Reports on Form 8-K
  
  (a)  Exhibits
  
            None.
  
  (b)  Reports on Form 8-K
  
            No reports on Form 8-K were filed during the quarter ended April 30,
       1996.
  
  
                                         16
  
  <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 13,1996                      By:  /s/Bruce Hausman, Esq.
                                                BRUCE HAUSMAN, ESQ.
                                                President and Chief Executive
                                                Officer
  
  Date:  June 13, 1996                     By:  /s/ Herbert J. Mitschele, Jr.
                                                HERBERT J. MITSCHELE, JR.
                                                Treasurer, Secretary,
                                                and Chief Financial Officer
  
                                         17
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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, 1996
                           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 3, 1996
  
   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, 1996
            (Unaudited) and July 31, 1995                                   3-4
  
       (b)  Condensed statements of operations and deficit
            accumulated during the development stage for the
            three months ended April 30, 1996 (Unaudited) and
            April 30, 1995 (Unaudited), nine months ended
            April 30, 1996 (Unaudited) and April 30, 1995
            (Unaudited), and for the period July 28, 1983
            (Date of incorporation) to April 30, 1996
            (Unaudited)                                                       5
  
       (c)  Condensed statements of cash flows for the nine
            months ended April 30, 1996 (Unaudited) and April
            30, 1995 (Unaudited), and for the period July 28,
            1983 (Date of Incorporation) to April 30, 1996
            (Unaudited)                                                       6
  
       (d)  Notes to condensed financial statements
            (Unaudited)                                                     7-8
  
  Item 2 -  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                            9-15
  
  PART II - OTHER INFORMATION
  
  Item 5 -  Other Information                                             15-16
  
  Item 6 - Exhibits and Reports on Form 8-K                                  16
  
                                          2
  PART I - FINANCIAL INFORMATION
  
  Item 1 - Financial Statements
  
                            Daltex Medical Sciences, Inc.
                          (A Development Stage Enterprise)
                              Condensed Balance Sheets
  April 30,
                                                  1996      July 31,
                                              (Unaudited)   1995 (A)
  
        Assets
  Current assets:
              Cash and cash equivalents         $ 76,403   $ 10,862
              Other receivables                       --     43,448
                                                --------   --------
                                                  76,403     54,310
  
  Net plant and equipment, at cost                    --      2,568
  Patents, net of accumulated amortization of
    $151,161 at April 30, 1996
    and $115,677 at July 31, 1995                  4,697     18,569
  Other assets, net                                3,375      3,375
  Deferred royalty costs (note 2)                260,000         --
                                                --------   --------
                                                $344,475   $ 78,822
                                                ========   ========
  
  See accompanying notes to condensed financial statements.
  (A) Amounts at July 31, 1995 are from audited financial statements.
  3
  Daltex Medical Sciences, Inc.
                          (A Development Stage Enterprise)
                              Condensed Balance Sheets
  April 30,
                                                            1996          July 31,
                                                        (Unaudited)       1995 (A)
  Liabilities and Stockholders' Deficiency
  
  Current liabilities:
              Accounts payable (note 3)                 $   810,511    $   954,727
              Accrued expenses                               19,515         54,173
                                                        -----------    -----------
              Total current liabilities                     830,026      1,008,900
                                                        -----------    -----------
  
  Advance royalty payments (note 2)                         520,000             --
                                                        -----------    -----------
  
  Stockholders' deficiency:
              Common stock, par value $.01 per share 
              Authorized 20,000,000 shares; issued
              8,632,699 shares at April 30, 1996 and
              8,632,699 at July 31, 1995                     86,327         86,327
              Paid in capital                             6,816,369      6,816,369
              Deficit accumulated during the
                development stage                        (7,908,247)    (7,832,774)
                                                        -----------    -----------
  
              Total stockholders' deficiency             (1,005,551)      (930,078)
                                                        -----------    -----------
  
                                                        $   344,475    $    78,822
                                                        ===========    ===========
  
  See accompanying notes to condensed financial statements.
  (A) Amounts at July 31, 1995 are from audited financial statements.
  4
  Daltex Medical Sciences, Inc.
                                                                    (A Development Stage Enterprise)
                                                                   Statements of Operations & Deficit
                                                                Accumulated During the Development Stage
  
                                                                                                           For The Period
                                                                                                           July 28, 1983
                                            Three Months     Three Months   Nine Months    Nine Months     (Date of
                                                Ended            Ended         Ended          Ended        Incorporation)
                                              April 30,        April 30,      April 30,      April 30,       To Apr. 30,
                                                1996             1995          1996            1995             1996
                                            (Unaudited)       (Unaudited)   (Unaudited)     (Unaudited)     (Unaudited)
  Revenues:
      Sales - Patents & related
         technology                               $--             $--             $--             $--        $300,000
      Sales - Gloves                               --              --              --              --         208,440
      Interest and other income
         (note 4)                                 199              --          75,199            --         1,712,273
      License fees & royalties                104,706          88,983         214,310         170,654       2,296,438
                                            ---------       ---------       ---------       ---------       ---------
  
           Total revenues                     104,905          88,983         289,509         170,654       4,517,151
                                            ---------       ---------       ---------       ---------       ---------
  
  Expenses incurred in the development
    stage:
      Cost of sales                              --              --              --              --           313,243
      Research & development                     --              --             6,400            --         3,335,251
      General & administrative                132,007         197,869         358,582         429,299       8,776,904
                                            ---------       ---------       ---------       ---------       ---------
  
           Total expenses incurred in
             the development stage            132,007         197,869         364,982         429,299      12,425,398
                                            ---------       ---------       ---------       ---------       ---------
  
  Net income (loss)                           (27,102)       (108,886)        (75,473)       (258,645)     (7,908,247)
                                            ---------       ---------       ---------       ---------       ---------
  
  Deficit accumulated during the
    development stage:
  
      Beginning of period                  (7,881,145)     (7,470,050)     (7,832,774)     (7,320,291)           --
                                            ---------       ---------       ---------       ---------       ---------
  
      End of period                      $ (7,908,247)   $ (7,578,936)   $ (7,908,247)   $ (7,587,936)   $ (7,908,247)
                                         ============    ============    ============    ============    ============ 
  
      Net loss per common share                  --             (0.01)          (0.01)          (0.03)          (1.03)
                                         ============    ============    ============    ============    ============ 
  
      Weighted average number of
        shares outstanding                  8,633,000       8,633,000       8,633,000       8,633,000       7,647,000
                                         ============    ============    ============    ============    ============
  See accompanying notes to condensed financial statements.
  
                                         5
  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,
                                                                   1996            1995          1996
                                                               (Unaudited)     (Unaudited)    (Unaudited)
  Cash flows from operations:
           Net loss:                                          $   (75,473)   $  (258,645)   $(7,908,247)
           Non-cash expenses included in net loss:
               Depreciation and amortization                       16,440         17,145        305,537
      Non-cash compensation charges                                  --           60,601        889,130
      Abandoned equipment                                            --             --           53,386
      Write-off of patents                                           --             --          105,221
      Write-off of inventory/advance payments                        --             --          115,048
      Provision for write-off/due from officer                       --          (60,601)          --
      Other                                                          --             --            6,821
  Changes in current assets & liabilities:
      (Increase) in inventory & advance payments                     --             --         (115,048)
      Decrease in grant & other receivables                        43,448           --             --
      (Increase) in deferred royalty costs                       (260,000)          --         (260,000)
      Increase (decrease) in accounts payable                    (144,216)       211,925        810,511
      Increase (decrease) in accrued expenses                     (34,658)         6,106         19,515
      Increase in advance development & royalty payments          520,000         35,000        520,000
                                                              -----------    -----------    -----------
      Net cash flows of operations                                 65,541         11,531     (5,458,126)
                                                              -----------    -----------    -----------
  
  Cash flows from investing activities:
      Purchase of U.S. government obligations                        --             --       (8,813,987)
      Redeemed U.S. government obligations and
      other short-term investments                                   --             --        8,810,988
      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                    --             --         (474,815)
                                                              -----------    -----------    -----------
  
  Cash flow from financing activities:
      Proceeds from sale of common stock & warrants - net            --             --        6,009,344
  
  Net increase (decrease) in cash                                  65,541         11,531         76,403
  Cash, including certificates of deposit:
      Beginning of period                                          10,862         27,090           --
                                                              -----------    -----------    -----------
      End of period                                           $    76,403    $    38,621    $    76,403
                                                              ===========    ===========    ===========
  See accompanying notes to condensed financial statements.
  
                                         6
  NOTES TO CONDENSED FINANCIAL STATEMENTS-April 30, 1996 (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 Payments
  
            In October 1995, the Company and Arrow International, Inc. ("Arrow")
       agreed to modify the terms of the existing license agreement between the
       Company and Arrow concerning 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 modification to the license agreement,
       Arrow paid to the Company a one-time royalty of $600,000 (in lieu of the
       periodic royalty to be paid to the Company 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.
       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, 1996. After September 1,
       2000, the periodic royalty payments provided for in the existing license
       agreement 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 license agreement (including Arrow's obligation
       to make 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. In addition, the
       modification to the license agreement 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, 1996, the Company received from
       Arrow a nominal royalty payment based on limited sales of percutaneous
       sheath introducer systems ("PSI"), which Arrow has recently introduced to
       the marketplace.
  
                                         7
  (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"). In this capacity, in November 1995
       the Company paid the University a total amount of $385,841: $300,000
       (representing the University's 50% share of the one-time royalty the
       Company received from Arrow described in note 2 above), $34,289
       (representing the remaining balance due the University pursuant to a
       research agreement based on an invoice received from the University),
       $48,071 (representing the University's 50% share of sublicense and royalty
       fees received by the Company between April 30 and October 12, 1995 from
       Arrow), and $3,481 (representing royalties owed the University, pursuant to
       a 1987 license agreement and an agreement in principle, based on net sales
       of the Company's antimicrobial examination gloves sold in 1991, 1992 and
       1993 which the Company had been reserving in accrued expenses). In January
       1996 the Company paid the University $6,400 for the antimicrobial coating
       and evaluation of samples of tracheal suction catheters for a leading
       medical device manufacturer who has expressed interest in a possible
       licensing arrangement with the Company. The device manufacturer is
       currently evaluating such coated product samples.
  
            During the quarter ended April 30, 1996, the Company made payments to
       the University totalling $28,866 representing the University's 50% share of
       development fees and royalty payments received by the Company during the
       current quarter pursuant to two licenses with sublicensees of applications
       of the Company's antimicrobial medical technology.
  
            As of April 30, 1996, the Company still owes the University $165,706
       for the University's past due share of sublicensing and royalty payments
       received by the Company through 1994. Further, the Company has been billed
       $629,941 as of April 30, 1996 by the University's patent counsel for patent
       work undertaken in connection with the Company's license agreements with
       the University and costs incurred in connection with the Patent
       Interference Proceedings and subsequent Patent Settlement Agreement,
       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, 1996 on the accompanying condensed balance sheets. The Company is
       continuing its attempts to resolve these matters with the University but
       there can be no assurance that the Company will be successful in reaching a
       resolution.
  
  (4)  Other Income
  
            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.
  
                                         8
  Item 2
  
                       Management's Discussion and Analysis of
                    Financial Condition and Results of Operations
  
       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. The Company incurred a research and
  development expense during the second quarter of fiscal 1996, in the amount of
  $6,400, for the antimicrobial coating and evaluation of samples of tracheal
  suction catheters performed at the University in connection with possible
  licensing arrangements. The Company will continue to restrict its research and
  development efforts unless and until the Company can develop positive cash flow
  from its more fully developed technologies or raise additional financing. There
  can be no assurance that the Company will be able to develop or commercialize
  any of its product technologies in the future. Future revenues of the Company
  may be limited. Such commercialization activities may not result in sales of
  products on a profitable basis, and the Company may not have sufficient funds
  available to complete its research and development program, pursue applications
  for necessary regulatory clearances and approvals, prosecute its intellectual
  property rights, or remain in business while any products which may be developed
  from its technologies are marketed or are readied for the marketplace.
  
       In an effort to commercialize its more fully developed technologies, the
  Company 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 1996, as well as in fiscal 1995 and 1994, the Company had no sales of any
  of its technologies or its antimicrobial medical gloves. 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 U.S. Food and Drug Administration ("FDA").
  See "Regulatory Developments." During the first three quarters of fiscal 1996,
  and for fiscal 1995 and 1994, the Company received revenues from royalty
  payments and development fees pursuant to two licenses with sublicensees of
  applications of the Company's antimicrobial medical technology in addition to
  the one-time royalty payment discussed below.
  
       In the first quarter of fiscal 1996 the Company received a one-time
  prepayment of periodic royalty payments pursuant to an October 1995 modification
  to its license agreement with Arrow. Such advance essentially represented
  royalty payments due to the Company from Arrow based on sales of antimicrobially
  treated multi-lumen central venous catheters for the period September 1, 1995
  through September 1, 2000. It is expected that future cash flows will be
  substantially less than reported revenues for such period due to this payment,
  as reflected in this quarter's financial statements and as discussed in note 2
  to the financial statements. In the third quarter of fiscal 1996 the Company
  received a nominal royalty payment from Arrow based on limited sales of PSI,
  which Arrow has recently begun marketing. The Company may continue to receive
  future royalty payments from
  
                                         9
  Arrow based on sales of PSI systems and will continue to receive development
  phase payments from Arrow and another of the Company's sublicensees for other
  products incorporating the Company's antimicrobial technology. 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 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, 1996
  
       Revenues for the quarter ended April 30,1996 totalled $104,905, an increase
  of 17.9% over the $88,983 in revenues during the corresponding period in fiscal
  1995. Revenues from licensing fees in the third quarter of fiscal 1996 were
  $50,000, a slight decrease from the $52,500 in licensing fees recorded in the
  corresponding period in fiscal 1995 due to the elimination of one development
  phase payment. Revenues from royalties were $54,706, an increase of 50% over the
  $36,483 in royalty payments received during the third quarter of fiscal 1995 as
  a result of a $24,471 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 and a slight increase in royalty
  payments from Arrow related to the introduction of the PSI to the marketplace.
  Also included in revenues from royalties is $30,000 representing royalties
  earned for the quarter ended April 30, 1996, which is derived from the $600,000
  advance royalty payment received by the Company from Arrow. The unearned portion
  of $520,000 is reflected as deferred revenue in the liability section and the
  remaining $260,000 of the $300,000 paid to the University is reflected as
  deferred royalty costs in the assets section of the balance sheets. (See notes 2
  and 3 to the financial statements.) 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 1995 either.
  
       Expenses incurred during the three months ended April 30, 1996 totalled
  $132,007, a decrease of 33.3% from the $197,869 of expenses incurred in the
  three months ended April 30,1995 primarily due to the reduction of legal
  expenses related to the resolution of the Patent Interference Proceedings, which
  reduction was slightly offset by the $24,47l paid by the Company to one party to
  the Patent Settlement Agreement, as discussed above.
  
       The Company sustained a net loss of $27,102 for the quarter ended April 30,
  1996, a decrease of 75% from the net loss of $108,886 in the corresponding
  period in fiscal 1995 due primarily to the reduction of legal expenses as
  described above.
  
  Results of Operations for the Nine Months Ended April 30,1996
  
       Revenues for the nine months ended April 30, 1996 totalled $289,509, an
  increase of 70% over revenues of $170,654 in the corresponding period last year.
  This increase in revenues was the result of the receipt of $75,000 from Arrow as
  described in note 4 to the financial statements, offset slightly by the
  elimination of one development phase payment. In addition, revenues included
  $47,351 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.
  
                                         10
  Expenses incurred during the nine months ended April 30, 1996 totalled
  $364,982, a decrease of 15% from the $429,299 of expenses incurred in the nine
  months ended April 30, 1995. 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 due to the settlement of the Patent
  Interference Proceedings as a result of the execution of the Patent Settlement
  Agreement, and to a lesser extent, the fixed royalties earned for the first nine
  months of fiscal 1996 as a result of the modification to the license agreement
  between the Company and Arrow. (See note 2 to the financial statements.) This
  decrease was partially offset by payments totalling $47,351 made by the Company
  to another party to the Patent Settlement Agreement, as discussed above.
  
       The Company sustained a net loss of $75,473 for the nine months ended April
  30, 1996, a decrease of 71% from the net loss of $258,645 in the corresponding
  period in 1995. The decrease in net loss for the nine month period is due
  primarily to the Company's receipt in the first quarter of 1996 of a one-time
  advance royalty payment of $600,000 from Arrow and the Company's receipt of
  $75,000 from Arrow, as discussed in notes 2 and 4 to the financial statements,
  respectively.
  
  Liquidity and Capital Resources
  
       At April 30, 1996, the Company had a working capital deficit of
  approximately $753,000, which represented a decrease of approximately $202,000
  in such deficit from July 31, 1995. During the nine months ended April 30, 1996,
  the Company had an increase of $65,541 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. 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, 1996, the Company had cash and
  cash equivalents of $76,403.
  
       The Company currently owes the University $165,706 (see notes 2 and 3 to
  the financial statements), and as of April 30, 1996, the Company has been billed
  $629,941 by the University's patent counsel for patent work undertaken in
  connection with the Company's license agreements with the University and costs
  incurred in connection with the Patent Interference Proceedings and Patent
  Settlement Agreement, although the Company is currently disputing a substantial
  portion of these legal fees. As described in note 3 to the financial statements,
  the Company is attempting to continue to have discussions with the University to
  attempt to resolve several issues including the license for the antimicrobial
  glove technology and the aforementioned legal fees. There can be no assurance
  that the Company will be able to resolve these matters. For a discussion of the
  dispute with the University, see "Item 1 - Business Product Technologies
  Licenses with the University" in the Company's Annual Report on Form 10-K for
  the year ended July 31, 1995. The Company had been reserving royalties due the
  University consistent with the terms of the written license agreement for the
  antimicrobial glove technology which had been negotiated between the parties
  based upon an agreement in principle. In November 1995, the Company paid the
  University $3,481 representing such reserved royalties under this license based
  on net sales of the Company's antimicrobial
  
                                         11
  examination gloves sold prior to February 1993. If the Company is unable to
  settle the dispute with the University over the license agreement, the Company
  may not be entitled to sell its antimicrobial medical gloves or sublicense the
  antimicrobial glove technology in the future.
  
       The Company is exploring a number of ways to pay the outstanding amounts
  due the University, including loans, raising of additional capital through
  various equity offerings, private placements, possible mergers with
  revenue-producing entities, and further acceleration of royalty and development
  fee payments from sublicensees as well as from sales of antimicrobial gloves.
  
       The Company is still in the development stage, and its business operations
  have only generated a nominal amount of revenues to date. The report of the
  Company's independent auditors on the Company's financial statements for the
  fiscal years ended July 31, 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, 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, management's plan is to continue 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, in order to
  attempt to raise additional capital, while attempting to develop, market,
  license and sell its products, including its antimicrobial latex surgical and
  examination gloves, and to establish positive cash flow for the Company. The
  Company is exploring a number of ways of raising additional capital, including
  loans, various equity offerings, private placements, mergers with
  revenue-producing entities, as well as from sales of antimicrobial gloves.
  Furthermore, the Company will continue its attempts to curtail expenditures.
  
       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 1996, 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, 1996 to 5:00 p.m. (New York City time) on April 30,
  1997; the exercise price of the Class A Warrants remains $0.25. The expiration
  date of the Company's Class B Warrants was extended from April 30, 1997 to 5:00
  p.m. (New York City time) on October 31, 1997; the exercise 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 without a disclaimer, 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.
  
       The Company does not have any commitments to raise additional capital, and
  there can be no assurance that it will be able to obtain any such commitments or
  raise additional capital in the future, particularly in light of the disclaimer
  opinion discussed above. If (i) there are no antimicrobial glove sales, (ii)
  there is no significant increase in license fees or royalties from sales of
  sublicensed products, (iii) the Company is unsuccessful in raising additional
  capital during the remainder of fiscal year 1996, or (iv) the University revokes
  licenses granted to the Company, the Company may not be
  
                                         12
  able to continue as a going concern, even with further cost-cutting measures. To
  meet its long-term liquidity requirements, the Company must also generate
  sufficient income through operations or obtain additional financing as to which
  there can be no assurance. If the Company raises sufficient additional capital,
  the Company plans to continue to (i) seek increased revenue-producing
  opportunities through the search for additional license and patent purchase
  agreements involving corporate technology, (ii) attempt to obtain U.S.
  regulatory clearance to market certain products, such as its antimicrobial latex
  gloves, directly or through distributors to end users, (iii) investigate merger,
  joint venture or acquisition possibilities with a suitable entity whose business
  may be complementary to that of the Company, and (iv) explore the possibility of
  a sale of the Company or a sale of some or all of its assets.
  
       By letter dated October 17, 1995, Beiersdorf AG of Hamburg, Germany
  ("Beiersdorf") informed the Company that it was abandoning the projects for
  developing products under the two German patents Beiersdorf had acquired from
  the Company pursuant to the previously disclosed 1992 Patent Purchase Agreement.
  Consequently, the Company is not entitled to any further payment under the 1992
  agreement. Further, under the terms of the 1992 agreement, the Company had the
  right to repurchase the subject patents together with certain subject matter as
  defined in the agreement. The repurchase price consisted of the $300,000
  non-refundable cash payment the Company had received from Beiersdorf plus legal
  and clinical development costs of approximately $100,000 representing
  Beiersdorf's out-of-pocket expenses. The Company received another letter from
  Beiersdorf on May 8, 1996 inquiring whether the Company wished to accept the
  offer of repurchase. By letter dated May 14, 1996, the Company informed
  Beiersdorf of the Company's decision to decline the offer to repurchase such
  patents, since the Company has been unable to find a pharmaceutical company
  interested in further pursuing the technology, and the Company does not
  presently have the financial resources required for such repurchase.
  
       The Company's patent counsel was notified by letter dated May 16, 1996 from
  the Canadian Patent Office, that the patent for "Methods and Agents for the
  Prophylaxis of Atopy" would be allowed. Additionally, the Company's patent
  counsel received notification dated May 29, 1996 from the U.S. Patent and
  Trademark Office allowing the U.S. case for such patent with certain claims.
  Subsequently, the Company and its U.S. patent counsel have contacted Beiersdorf
  concerning these matters. By letter dated May 23, 1996, the Company informed
  Beiersdorf of the estimated costs associated with the filing of the patent and
  agreed to cover such costs, if Beiersdorf decided not to. Beiersdorf responded
  by letter to the Company's patent counsel instructing such counsel to advise the
  U.S. Patent Examiner to issue the U.S. patent, with Beiersdorf's indication that
  the Company cover any related costs.
  
  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 has, 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") has 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
  
                                         13
  prophylactic effect, thus constituting a new intended use. The ODE has 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, among other grounds for denying market clearance.
  
       In its submissions, the Company has proposed revised labeling claims to be
  consistent with what the Company believes is "substantially equivalent" labeling
  based on FDA precedent. Moreover, the Company has submitted test results that
  the Company considers to demonstrate an appropriate method for, and significant
  effectiveness at, inactivating certain viruses and other fluid borne pathogens
  by the antimicrobial latex examination glove, under conditions of expected use
  of the product. The Company's test results are also believed to demonstrate user
  safety under the expected conditions of use of the antimicrobial latex
  examination gloves.
  
       From 1993 to date, the Company had several meetings with various
  representatives at the FDA's offices and continues its written correspondence
  and discussions with the FDA and the ODE regarding the issues raised by the ODE
  concerning the Company's antimicrobial gloves.
  
       In response to its most recent submission made on September 13, 1995, on
  September 26, 1995, Mr. Timothy Ulatowski of the ODE informed the Company that
  the Company was invited to make a presentation concerning the Company's
  examination gloves before the FDA's independent General Hospital Panel.
  
       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, who attended the meeting on
  the Company's behalf, each made a presentation before the 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. The Company expects to receive written
  notice of the FDA's decision regarding the Company's examination gloves, but has
  not yet received such notice.
  
       At present, the Company does not have sufficient financial resources to
  fund additional clinical testing, if such clinical testing is required. However,
  should the Company's financial condition improve, the Company would spend some
  of these funds on additional testing. There can be no assurance that, even with
  additional testing, if such testing is required, that the Company will obtain
  FDA clearance to market its antimicrobial latex gloves.
  
                                         14
  PART II - OTHER INFORMATION
  
  Item 5 - Other Information
  
  (a)  Granting of European Patent for "Treatment of Aged Skin With Oral
       13-Cis-Retinoic Acid" Survives Period of Possible Opposition Without
       Challenge
  
            On February 14, 1996, the Company received written notification from
       patent counsel that the decision in March 1995 by the European Patent
       Office, allowing the claims in the European Patent Application covering the
       "Treatment of Aged Skin With Oral 13-Cis-Retinoic Acid" which was published
       in the European Patent Bulletin of March 22, 1995, survived the nine month
       period of possible opposition by third parties without any challenge.
       Accordingly, the grant of the above patent is now complete. The Company
       continues to seek potential licensees or purchasers of the aging-related
       skin disorder treatment technology in Europe; however, there can be no
       assurance that the Company will be successful in licensing or selling the
       technology to others.
  
  (b)  Research Gift
  
            By letter dated February 8, 1996, the Company has agreed that it will
       support the research efforts directed by Dr. Shanta Modak, Department of
       Surgery of Columbia University. Accordingly, the Company has made a
       commitment to make a research gift in the amount of $20,000 to Dr. Modak's
       laboratory, subject to certain conditions described below, in recognition
       of the consultation service and assistance by Dr. Modak and her colleagues
       in support of the Company's efforts in continuing to obtain clearance from
       the FDA to market the Company's antimicrobial gloves. This research gift
       will be paid upon the first to occur of the following: (i) the Company's
       receipt of clearance from the FDA to market its antimicrobial gloves; or
       (ii) the Company successfully enters into a business venture with a revenue
       producing company related to production and sales of such antimicrobial
       gloves. Such gift has no bearing or effect on prior royalty or other
       payment arrangements between the Company and the University.
  
  (c)  Grant of Stock Options
  
            At a special meeting of the Board of Directors of the Company held on
       March 6, 1996, the Board of Directors granted a non-qualified option to
       Bruce Hausman to purchase 250,000 shares of Common Stock of the Company at
       an exercise price of $0.09 per share, based on the current market price, in
       lieu of cash compensation for Mr. Hausman's services as President and Chief
       Executive Officer of the Company since May 1995.
  
  (d)  Grant of Stock
  
            On March 6, 1996, the Board of Directors of the Company granted
       Lieberman & Nowak, LLP 50,000 shares of Common Stock in recognition of the
       valued services provided by Lieberman & Nowak to the Company for several
       years. The Company has recorded an
  
                                         15
  expense of $2,250 in the third quarter of fiscal 1996 representing the
       estimated fair market value of such shares on the date of grant.
  
  Item 6 - Exhibits and Reports on Form 8-K
  
  (a)  Exhibits
  
            None.
  
  (b)  Reports on Form 8-K
  
            No reports on Form 8-K were filed during the quarter ended April 30,
       1996.
  
                                         16
  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 13,1996                      By:  /s/Bruce Hausman, Esq.
                                                BRUCE HAUSMAN, ESQ.
                                                President and Chief Executive
                                                Officer
  
  Date:  June 13, 1996                     By:  /s/ Herbert J. Mitschele, Jr.
                                                HERBERT J. MITSCHELE, JR.
                                                Treasurer, Secretary,
                                                and Chief Financial Officer
  
                                         17