<PAGE>


                                                   THIS PAPER DOCUMENT IS BEING
                                                   SUBMITTED PURSUANT TO RULE
                                                   901(d) OF REGULATION S-T
x

                                      FORM 10-Q

                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549

       (Mark One)
      [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                          SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended September 30, 1996
                                           
                                          OR
                                           
      [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                For the transition period from        to            
                                              --------  ----------

                        Commission File Number:      000-16893

                          DANNINGER MEDICAL TECHNOLOGY, INC.
                (Exact name of registrant as specified in its charter)


          DELAWARE                                               31-0992628
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                               Identification No)


                            5160-B BLAZER MEMORIAL PARKWAY
                                     DUBLIN, OHIO
                                      43017-1339
                       (Address of principal executive offices)

                                    (614) 718-0500
                           (Registrant's telephone number)


    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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days

                                  Yes   x      No
                                      -----      -----

                                      4,864,424
                          Shares of Common Stock Outstanding
                                        As Of
                                  September 30, 1996



<PAGE>

                 DANNINGER MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS
                                    (In thousands)


<TABLE>

                                                            September 30,      December 31,
                                                                1996               1995
                                                             (Unaudited)         (Audited)
                                                            -------------      ------------
                   ASSETS
                   ------
<S>                                                         <C>                <C>

CURRENT ASSETS:
  Cash                                                      $     241
  Accounts receivable trade (net of allowance for
       doubtful accounts of $354 and $204 for
       1996 and 1995, respectively)                             5,940          $     3,497
  Inventories                                                   5,193                4,227
  Prepaid expenses, and other current assets                      631                  409
  Deferred income taxes                                           185                  174
                                                            -------------      ------------
       Total current assets                                    12,190                8,307
                                                            -------------      ------------


  Property and equipment, net                                   1,561                  724
                                                            -------------      ------------


OTHER ASSETS:
  Other asset                                                     102                  102
  Intangibles (net of accumulated amortization
              of $84 and $31 for 1996 and 1995,
              respectively)                                     3,318                  202
  Deferred income taxes                                           132                  182
                                                            -------------      ------------
       Total assets                                         $  17,303          $     9,517
                                                            -------------      ------------
                                                            -------------      ------------
</TABLE>



                     The accompanying notes are an integral part
                             of the financial statements


                                          1


<PAGE>

                 DANNINGER MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS
                         (In thousands except share amounts)

<TABLE>
                                                      September 30,     December 31,
                                                          1996              1995
                                                       (Unaudited)        (Audited)
                                                      -------------     ------------
 
       LIABILITIES AND SHAREHOLDERS' EQUITY
       ------------------------------------
<S>                                                    <C>               <C>
CURRENT LIABILITIES:
  Cash overdraft                                                        $       167
  Current portion, term debt                          $       712             3,380
  Current portion, capital lease obligations                   52                26
  Accounts payable, trade                                   2,306             1,146
  Accrued expenses, and other liabilities                     612               402
                                                      -------------     ------------
       Total current liabilities                            3,682             5,121
                                                      -------------     ------------

  Non-current portion, term debt                            8,797               839
                                                      -------------     ------------
  Obligations under capital leases, net of current
    maturities                                                114                35
                                                      -------------     ------------
  Commitments and Contingencies

SHAREHOLDERS' EQUITY:
  Common stock, $.01 par value:
      Authorized, 10,000,000 shares; issued and
      outstanding 4,864,424 and 4,707,490 shares
      for 1996 and 1995, respectively                          49                47
  Paid-in capital                                           4,079             3,367
  Retained earnings                                           582               108
                                                      -------------     ------------
       Total shareholders' equity                           4,710             3,522
                                                      -------------     ------------

       Total liabilities and shareholders' equity     $    17,303       $     9,517
                                                      -------------     ------------
                                                      -------------     ------------
</TABLE>


                     The accompanying notes are an integral part
                             of the financial statements


                                          2

<PAGE>

<TABLE>
                 DANNINGER MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS
    For the three month and nine month periods ending September 30, 1996 and 1995
                  (In thousands except share and per share amounts)
                                     (Unaudited)

_________________________________________________________________________________________________________
                                         Three             Three              Nine             Nine
                                      Months Ended      Months Ended       Months Ended     Months Ended
                                      September 30,     September 30,      September 30,    September 30,
                                          1996              1995               1996             1995
_________________________________________________________________________________________________________

<S>                                    <C>              <C>                <C>              <C>

Revenue:
    Net sales                          $    3,999       $     2,758        $    11,162      $     8,451
    Lease and rental revenue                  543               236              1,210              492
                                       ----------       -----------        -----------      -----------
                                            4,542             2,994             12,372            8,943

    Cost of goods sold                      1,873             1,988              5,451            4,626
                                       ----------       -----------        -----------      -----------
         Gross margin                       2,669             1,006              6,921            4,317
                                       ----------       -----------        -----------      -----------
Operating expenses:
    Sales and marketing                     1,255               915              3,209            2,327
    General and administrative                708               503              1,959            1,474
    Research and development                  308               332                763              904
                                       ----------       -----------        -----------      -----------
                                            2,271             1,750              5,931            4,705
                                       ----------       -----------        -----------      -----------
         Operating income (loss)              398              (744)               990             (388)

Other expense:     
    Interest expense, net                     153                76                370              199
    Other                                                         4                                   4
                                       ----------       -----------        -----------      -----------
                                              153                80                370              203  

         Income (loss) before     
         income taxes                         245              (824)               620             (591)

Income tax expense (benefit)                   54               (58)               146               18
                                       ----------       -----------        -----------      -----------

         Net income (loss)             $      191       $      (766)       $       474      $      (609)

                                       ----------       -----------        -----------      -----------
                                       ----------       -----------        -----------      -----------
Earnings per share:
    Net income (loss) per share        $      .04       $     ( .16)       $       .09      $      (.13)
                                       ----------       -----------        -----------      -----------

Weighted average shares 
    outstanding including common 
    stock equivalents                   5,013,661         4,687,739          5,008,837        4,621,986
_______________________________________________________________________________________________________
</TABLE>

                     The accompanying notes are an integral part
                              of the financial statements


                                          3


<PAGE>

                 DANNINGER MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
            For the nine month periods ending September 30, 1996 and 1995
                                    (In thousands)
                                     (Unaudited)


                                                     1996           1995
                                                  ---------      ---------
    
                              
Net cash used in operating activities                (1,136)        (1,918)
                                                  ---------      ---------
Cash flows used in investing activities:
    Payments received on notes receivable                              113 
    Purchases of property and equipment                (415)          (416)
    Purchase of business, net of cash
            acquired                                   (976)
                                                  ---------      ---------
    Net cash used in investing activities            (1,391)          (303)
                                                  ---------      ---------
Cash flows from financing activities:
    Proceeds from term debt                           1,334          1,831
    Proceeds from convertible subordinated 
            debenture offering                        5,250
    Repayment of term debt and capitalized
            lease obligations                        (3,314)            17
    Debt issue costs                                   (542)
    Cash overdraft                                     (167)
    Proceeds from exercise of stock options             207            407
                                                  ---------      ---------

            Net cash provided by 
                 financing activities                 2,768          2,255
                                                  ---------      ---------

            Net increase in cash                        241             34

Cash balance at the beginning of the period               0              3
                                                  ---------      ---------
Cash balance at the end of the period             $     241     $       37
                                                  ---------      ---------
                                                  ---------      ---------


                     The accompanying notes are an integral part
                             of the financial statements


                                          4


<PAGE>

                 DANNINGER MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
                    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                     (Unaudited)
                                           

1.   Management's Statement

     In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (all of which are normal and recurring
in nature) necessary to present fairly the financial position of Danninger
Medical Technology, Inc. and Subsidiaries at September 30, 1996, and the results
of operations and cash flows for the three month and nine month periods
ending September 30, 1996 and 1995. The notes to the Consolidated Financial
Statements which are contained in the 1995 Annual Report to Shareholders should
be read in conjunction with these Consolidated Financial Statements.


2.   Inventories

     Inventories are valued at the lower of first-in, first-out cost or market
and consisted of the following (in thousands):

                                         September        December    
                                           1996             1995

         Raw materials                   $    858        $    671
         Work-in-process                       88             108
         Finished goods                     3,137           2,686
         Consigned inventory                1,110             762
                                         --------         -------
                                         $  5,193         $ 4,227
                                         --------         -------
                                         --------         -------

3.   Income Taxes

     The Company provides for federal, state, and local income taxes in interim
periods using an estimated effective tax rate for the year.  The Company
maintains valuation allowances of $584,000 against net deferred tax assets.

4.   Intangibles

     Intangible assets include patents and goodwill. Intangible assets 
including goodwill are amortized over their useful lives from five to 25 
years. Management periodically evaluates the recoverability of all intangible 
assets based on estimated future cash flows.

5.   Term Debt

     Term debt included $5,250,000 of Convertible Subordinated Debentures 
("Debentures") at 8.5% interest due June 1, 2003. The Debentures are 
convertible prior to maturity or redemption into the Company's Common Stock 
at $8.125 per share beginning July 1, 1999. The Company will be obligated to 
redeem Debentures tendered by June 1, 1999 at their fair amount plus accrued 
interest. Redemption may be accelerated in the event of a change in control 
of the Company and in certain other circumstances as described in the bond 
indenture. The Debentures contain certain convenants with respect to default 
of interest and redemption of payments and defaults under other indebtedness 
of the Company in excess of $1,000,000.

     In connection with the acquisition of SOS, a $1,500,000 note payable to 
the seller with interest at the prime rate (8.25% at September 30, 1996). 
Interest only in payable monthly and the note is due in September 1999.

6.   Accounting Estimates

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

7.   New Accounting Standards

     In October 1995, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 123, Accounting for 
Stock-Based Compensation. The Company does not plan to adopt the expense 
recognition provisions of this Standard; therefore, the adoption of this 
Standard will have no effect on the Company's financial condition or results 
of operations.

     In March 1995, the Financial Accounting Standards Board issued Statement 
of Financial Accounting Standards No. 121, Accounting for the Impairment of 
Long-Lived Assets and for Long-Lived Assets to be Disposed Of. The Company 
adopted this Statement effective January 1, 1996. The adoption of this 
Standard had no effect on the Company's fianncial conditions or results of 
operations as of September 30, 1996.

8.   Contingency

      The Company maintains a claims made product liability insurance policy
with $50,000 per occurrence and $250,000 aggregate retention limits.  Beyond
these retention limits, the policy covers aggregate insured claims made during
each policy year up to $5,000,000.

      The Company and other spinal implant manufacturers have been named as
defendants in various class action product liability lawsuits alleging that the
plaintiffs were injured by spinal implants supplied by the Company and others. 
All such lawsuits were consolidated for pretrial proceedings in the Federal
District Court for the Eastern District of Pennsylvania and on February 22,
1995, the plaintiffs were denied class certification.  In response to the denial
of class certification, a large number of additional individual lawsuits have
been filed alleging, in addition to damages from spinal implants, a 


                                          5

<PAGE>

                 DANNINGER MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
              NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                     (UNAUDITED)

conspiracy among manufacturers, physicians and other spinal implant industry 
members.  Approximately 500 such lawsuits have been filed in which the 
Company is a party.  Approximately fifteen of such cases involve individual 
plaintiffs utilizing implants supplied by the Company.  The Company cannot 
estimate precisely at this time the number of such lawsuits that may 
eventually be filed.  The vast majority of such lawsuits are pending in 
federal courts and are in preliminary stages.  Discovery proceedings, 
including the taking of depositions, have commenced in certain lawsuits.  
Plaintiffs in these cases typically seek relief in the form of monetary 
damages, often in unspecified amounts.  While the aggregate monetary damages 
eventually sought in all of such individual actions is substantial and 
exceeds the limits of the Company's product liability insurance policies, the 
Company believes that it has affirmative defenses, and that these individual 
lawsuits are otherwise without merit.  An estimate of the amount of loss 
cannot be made as the Company does not have sufficient information on which 
to base an estimate.  All pending cases are being defended by the Company's 
insurance carrier, in some cases under a reservation of rights.  There can be 
no assurance, however, that the $5,000,000 per annum limit of the Company's 
coverage will be sufficient to cover the cost of defending all lawsuits or 
the payment of any amounts that may be paid in satisfaction of any 
settlements of judgments.  Further, there can be no assurance that the 
Company will continue to be able to obtain sufficient amounts of product 
liability insurance coverage at commercially reasonable premiums.

      In addition to the above, in the ordinary course of business the Company
has been named as a defendant in various other legal proceedings.  These
actions, when finally concluded, will not, in the opinion of the Company, have a
material adverse affect upon the financial position or results of operations of
the Company.  However, there can be no assurance that future quarterly or
annually operating results will not be materially adversely affected by the
final resolution of these matters.

      Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of trade accounts receivable
(domestic and international).  The Company follows certain guidelines in
determining the credit-worthiness of domestic and foreign customers.  The credit
risk associated with each customer and each country is reviewed before a credit
decision is made.  All international sales are denominated in U.S. dollars.

      Certain of the Company's accounts receivable result from third party
reimbursements that may be dependent on limitations imposed by the payor on the
amount of reimbursement.  The Company records the receivable and related revenue
net of such limitations.

9.    Acquisition of Business

      In September 1996, the Company acquired all of the outstanding stock of 
Surgical & Orthopedic Specialties, Inc. (SOS) for approximately $3.0 million. 
The acquisition has been accounted for on the purchase method. The 
consideration was comprised of $1.1 million cash, $0.5 million of common 
stock, $1.5 million in a seller financed note payable. SOS is engaged in the 
rental of recovery products. Intangible assets in the accompanying 
consolidated balance sheet includes approximately $2.5 million of goodwill 
resulting from this transaction which is amortized over 25 years. The 
acquisition of SOS was accounted for under the purchase method. Accordingly, 
the purchase price has been allocated to the assets acquired and liabilities 
assumed based on their estimated fair values at the date of acquisition. The 
results of operations of SOS have been included in the Consolidated 
Statements of Operations from the acquisition date.

Business acquired (in thousands):
Fair value of assets                    $3,794
Fair value of liabilities                 (818)
Common stock issued                       (500)
Acquisition indebtedness                (1,500)
                                        -------
Net cash paid                           $  976
                                        -------
                                        -------

                                          6

<PAGE>

                 DANNINGER MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
                       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


     The following table shows the Company's operating results as a percent 
of revenues for the periods indicated for certain items reflected in the 
statement of operations.  

_______________________________________________________________________________
                                        Percent                  Percent
                                      of Revenues               of Revenues
                                          for                      for
                                      three months              nine months 
                                         ending                   ending
                                      September 30,             September 30,
_______________________________________________________________________________

                                  1996         1995         1996         1995
                                  ----         ----         ----         ----

Net sales                         88.0%        92.1%        90.2%        94.5%
Lease/rental revenue              12.0%         7.9%         9.8%         5.5%
                                  ----         ----         ----         ----
                                 100.0%       100.0%       100.0%       100.0%

Cost of goods sold                41.2%        66.4%        44.1%        51.7%

Gross margin                      58.8%        33.6%        55.9%        48.3% 
 
Operating expenses:
    Sales and marketing           27.6%        30.6%        25.9%        26.0%

    General and administrative    15.6%        16.8%        15.8%        16.5%

    Research and development       6.8%        11.1%         6.2%        10.1%

Interest expense, net              3.4%         2.5%         3.0%         2.2%

Other expense                                    .1%                       .1%

Income (loss) before income
  taxes                            5.4%       (27.5%)        5.0%        (6.6%)

Income tax expense (benefit)       1.2%        (1.9%)        1.2%          .2%

Net income (loss)                  4.2%       (25.6%)        3.8%        (6.8%)
________________________________________________________________________________


                                          7


<PAGE>

                 DANNINGER MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
                       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


GENERAL

    The Company continues to develop its strategy of focusing on increasing
market penetration with its Synergy-TM- spinal implant system as it continues to
expand its distribution network in the United States and internationally.  The
Company also continues to assess and develop new products to add to its existing
spinal implant line.

    In addition, the Company continues to analyze the rental market for 
orthopedic rehabilitation devices.  In 1994, the Company formed a subsidiary 
to determine the feasibility of entering this market.  In September, 1996, 
the Company acquired Surgical and Orthopedic Specialities, Inc. (SOS), an 
independent orthopedic dealer, for $3 million (in stock, cash, note, and 
non-compete agreement).  The Company expects to continue negotiating 
additional similar transactions with other independent dealers. There can be 
no assurance, however, that the Company will be able to successfully 
implement this strategy by reaching final purchase agreements with the 
independent dealers.

FINANCIAL CONDITION AS OF SEPTEMBER 30, 1996

     As of September 30, 1996, the Company's working capital position 
increased by $5,322,000 resulting in a working capital ratio of 3.31 to 1.  
The increase in working capital is principally attributable to the retirement 
of the $3,000,000 line of credit facility with the proceeds from the 
Company's $5,250,000 convertible subordinated debenture offering which was 
completed in May.  The $3,000,000 line of credit facility has been renewed 
and is available to fund future working capital requirements.  As of 
September 30, 1996, $3,000,000 is available. In addition, working capital 
increased due to the operating results experienced by the Company during the 
third quarter of 1996.

     Accounts receivables increased by $2,443,000, inventories increased by 
$966,000 and trade payables increased by $1,160,000.  The increase in 
accounts receivables is attributable to increased sales in the third quarter. 
Also, accounts receivable increased by approximately $765,000 and accounts 
payable increased by approximately $201,000 when the Company acquired SOS.  
The increase in the inventory is primarily due to supporting the growing 
spinal implant business.   

     During the second quarter of 1996, the Company received $5,250,000 
during the debenture offering.  During the third quarter of 1996, the Company 
entered into a note payable and a non-compete agreement for $1,500,000 during 
the acquisition of SOS.  During 1996, the Company had additional borrowings 
of $1,827,000 which contributed to an overall increase in liabilities.

     The Company believes its bank loan facility, working capital, and funds
anticipated to be generated by operations will be sufficient to fund the
Company's growth plans for the foreseeable future.


                                          8

<PAGE>

                 DANNINGER MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
                       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                           

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED
TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995

     Total revenue increased 51.7% for the three months ended September 30, 1996
to $4,542,000 from $2,994,000 for the three months ended September 30, 1995. 
The increase is primarily attributable to increased sales of the Company's
Synergy-TM- spinal implant system.  In addition, the Company benefited from
continued penetration into the orthopedic home care rental market.

     Cost of sales as a percentage of total revenue decreased to 41.2% for 
the three months ended September 30, 1996 from 66.4% for the three months 
ended September 30, 1995.  The decrease is primarily due to the establishment 
of an inventory reserve of $312,000 or approximately 10% of sales during the 
third quarter of 1995.  The decrease was also impacted by a change in the 
sales mix from 1995 to 1996, from recovery products which have high cost of 
sales percentages to the spinal implant business and the orthopedic home care 
rental business which have lower cost of sales percentages.

     Sales and marketing expense decreased to 27.6% from 30.6% of total 
revenue for the three months ended September 30, 1996 and 1995, respectively. 
The Company has been effective at reducing the amount and cost of sales 
travel.  General and administrative expenses decreased to 15.6% from 16.8% of 
total revenue for the three months ended September 30, 1996 and 1995, 
respectively. Research and development expenses decreased to 6.8% from 11.1% 
of total revenue for the three months ended September 30, 1996 and 1995, 
respectively, principally as a result of higher level of expenditures in 1995 
in connection with obtaining Section 510(k) approval of the Synergy-TM- 
spinal implant system.

     These factors resulted in an overall increase in operating income to
$398,000 or 8.8% of total revenue for the three months ended September 30, 1996
from $(744,000) or (24.8%) for the three months ended September 30, 1995.  

     Interest expense increased to 3.4% from 2.5% of total revenue for the 
three months ended September 30, 1996 and 1995, respectively, as a result of 
increased borrowings to provide additional working capital.

     Net income (loss) increased to $191,000 from $(766,000) for the three
months ended September 30, 1996 and 1995, respectively, and earnings per share
increased to $.04 from $(.16) for the same periods.


                                          9

<PAGE> 

                 DANNINGER MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
                       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                           

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED
TO THE NINE MONTHS ENDED SEPTEMBER 30, 1995

     For the nine months ended September 30, 1996 total revenue increased 38.3%
to $12,372,000 from $8,943,000 for the nine months ended September 30, 1995. 
Cost of goods sold decreased to 44.1% from 51.7% for the nine months ended
September 30, 1996 and 1995, respectively.  As a percentage of total revenue,
sales and marketing expense remained constant to 25.9% from 26.0%, general and
administrative expenses decreased to 15.8% from 16.5% and research and
development expense decreased to 6.2% from 10.1% for the nine months ended
September 30, 1996 and 1995, respectively.  Interest expense, net increased to 
3.0% from 2.2% for the same periods.

     Net income (loss) for the nine months ended September 30, 1996 increased to
$474,000 from $(609,000) for the nine months ended September 30, 1995.  Earnings
per share increased to $.09 from $(.13) for the same periods.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT 
OF 1995

     Except for the historical information in this report, it includes
forward-looking statements that involve risks and uncertainties, including, but
not limited to quarterly fluctuations in results, the management of growth, and
other risks detailed from time to time in the Company's Securities and Exchange
Commission filings, including the Company's Form 10-K for the fiscal year ended
December 31, 1995.  Actual results may differ materially from management
expectations.


                                          10

<PAGE>

                            PART II  -  OTHER INFORMATION

ITEM 1.     Legal Proceedings

      The Company maintains a claims made product liability insurance policy
with per occurrence ($50,000) and aggregate ($250,000) retention limits.  Beyond
these retention limits, the policy covers aggregate insured claims made during
each policy year up to $5,000,000.

      The Company and other spinal implant manufacturers have been named as 
defendants in various class action product liability lawsuits alleging that 
the plaintiffs were injured by spinal implants supplied by the Company and 
others. All such lawsuits were consolidated for pretrial proceedings in the 
Federal District court for the Eastern District of Pennsylvania and on 
February 22, 1995 the plaintiffs were denied class certification.  In 
response to the denial of class certification, a large number of additional 
individual lawsuits have been filed alleging, in addition to damages from 
spinal implants, a conspiracy among manufacturers, physicians and other 
spinal implant industry members.  Approximately 500 such lawsuits have been 
filed in which the Company is a party.  Approximately fifteen of such cases 
involve individual plaintiffs utilizing implants supplied by the Company.  
The Company cannot estimate precisely at this time the number of such 
lawsuits that may eventually be filed. The vast majority of such lawsuits are 
pending in federal courts and are in preliminary stages.  Discovery 
proceedings, including the taking of depositions, have commenced in certain 
of the lawsuits.  Plaintiffs in these cases are typically seek relief in the 
form of monetary damages, often in unspecified amounts.  While the aggregate 
monetary damages eventually sought in all of such individual actions is 
substantial and exceeds the limits of the Company's product liability 
insurance policies, the Company believes that it has affirmative defenses, 
and that these individual lawsuits are otherwise without merit.  An estimate 
of the amount of loss cannot be made as the Company does not have sufficient 
information on which to base an estimate.  All pending cases are being 
defended by the Company's insurance carrier, in some cases under a 
reservation of rights.  There can be no assurance, however, that the 
$5,000,000 per annum limit of the Company's coverage will be sufficient to 
cover the cost of defending all lawsuits or the payment of any amounts that 
may be paid in satisfaction of any settlements or judgments.  Further, there 
can be no assurance that the Company will continue to be able to obtain 
sufficient amounts of product liability insurance coverage at commercially 
reasonable premiums.

      In addition to the above, in the ordinary course of business the Company
has been named as a defendant in various other legal proceedings.  These
actions, when finally concluded, will not, in the opinion of the Company, have a
material adverse affect upon the financial position or results of operations of
the Company.  However, there can be no assurance that future quarterly or
annually operating results will not be materially adversely affected by the
final resolution of these matters.


ITEM 6.     Exhibits and Reports on Form 8-K

  (a)    Exhibits

         The exhibits listed in the accompanying index to exhibits are filed as
         a part of this Report.

  (b)    Reports on Form 8-K

         The Company filed the following Current Report on Form 8-K since 
         June 30, 1996:

         Current Report on Form 8-K, dated September 20, 1996, filed with the
         Securities and Exchange Commission on September 20, 1996 (Items 2 
         and 7)


                                         11 
<PAGE>

                                  Signatures

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


                                           DANNINGER MEDICAL TECHNOLOGY, INC.
                                                      (Registrant)





Dated:  November 13, 1996                      /S/ Joseph A. Mussey
                                                   Joseph A. Mussey
                                            Chief Executive Officer, President,
                                                      and Treasurer





Dated:  November 13, 1996                      /S/ Paul A. Miller
                                                   Paul A. Miller
                                                Chief Financial Officer
                                       (Principal Financial/Accounting Officer)



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                 DANNINGER MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES

                                      FORM 10-Q
                                    EXHIBIT INDEX


Exhibit No.    Exhibit                                              

   10(a)       Employment Agreement, dated November 7, 1996,
               between the Company and Joseph A. Mussey.

   10(b)       Employment Agreement, dated November 7, 1996,
               between the Company and Paul A. Miller.

   10(c)       Employment Agreement, dated November 7, 1996,
               between the Company and Ira Benson.

   10(d)       Employment Agreement, dated November 7, 1996,
               between the Company and Thomas E. Zimmer.

   10(e)       Employment Agreement, dated November 7, 1996,
               between the Company and Paul A. Mellinger.

   10(f)       Non-Competition Agreement dated September 6, 1996,
               between the Company and Stephen R. Draper.

   11          Statement re:  Computation of Per Share Earnings       

   27          Financial Data Schedules                               





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