UNITED STATES

                      SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-Q

(Mark One)
                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
     (X)            OF THE SECURITIES EXCHANGE ACT OF 1934


                 For the Quarterly Period Ended December 31, 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       0-13084

                              WARRANTECH CORPORATION
                (Exact name of registrant as specified in its charter)

                   Delaware                                  13-3178732
          (State or other jurisdiction of                 (I.R.S. Employer
          incorporation or organization)                 Identification No.)

          300 Atlantic Street, Stamford, CT                    06901
          (Address of principal executive offices)           (Zip Code)

         Registrant's telephone number, including area code  (203) 975-1100


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

         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

         Indicate  the  number of  shares  outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

           Class                              Outstanding at December 31, 1996
Common stock, par value $.007 per share              13,109,032 shares



<PAGE>


                     WARRANTECH CORPORATION AND SUBSIDIARIES

                                DECEMBER 31, 1996
                                   (Unaudited)

                                    I N D E X


                                                                     Page No.
PART I - Financial Information:

           Item 1.  Financial Statements:


           Condensed Consolidated Balance Sheet at December 31, 1996
           (Unaudited) and March 31, 1996...........................    3


           Condensed Consolidated Statement of Operations
           For the Nine and Three Months Ended December 31, 1996
           and 1995 (Unaudited) ....................................    4


           Condensed Consolidated Statement of Cash Flows
           For the Nine Months Ended December 31, 1996
           and 1995 (Unaudited) ....................................    5


           Notes to Condensed Consolidated Financial Statements ....    6


           Item 2.  Management's Discussion and Analysis of
             Financial Condition and Results of Operations .........    9



PART II  - Other Information                                           12

Signatures .........................................................   15





                                    Page 2


<PAGE>



                 WARRANTECH CORPORATION AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                   A S S E T S
                                                      December 31,        March 31,
                                                          1996               1996
                                                     --------------     -------------
                                                      (Unaudited)
<S>                                                  <C>                <C>
Current Assets:
Cash and cash equivalents                            $14,376,195        $11,859,487

Investments in marketable securities                     265,687            824,648

Accounts receivable, (net of allowances of $292,328
and $450,092,  respectively)                          24,758,818         16,160,209


Other receivables, net                                 4,064,171          8,610,919
Prepaid expenses, prepaid income taxes and
   other current assets                                1,503,250            988,936
                                                     --------------     -------------
        Total Current Assets                          44,968,121         38,444,199
                                                     --------------     -------------





Property and Equipment, net                            9,628,338          6,802,798
                                                     --------------     -------------

Other Assets:
Excess of cost over fair value of assets acquired,
  ( net of accumulated amortization of
    $3,525,182 and $3,170,089, respectively)           3,763,450          4,118,544
Investment in and advances to joint venture                -              1,885,674
Deferred income taxes                                  2,214,307          2,031,535

Investments in marketable securities                   2,058,527          1,363,047
Certificates of deposit and cash trust fund -            800,000            700,000
restricted

Split dollar life insurance policies                     855,548            683,893
Notes receivable - long-term                              65,124             87,760
Collateral security fund                                 199,389            199,389
Other assets                                             212,108            296,871
                                                     --------------     -------------
          Total Other Assets                          10,168,453         11,366,713
                                                     --------------     -------------

        Total Assets                                 $64,764,912        $56,613,710
                                                     ==============     =============


                                                                                          .
                                                                   Page 3


<PAGE>


LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
                                                        December 31,      March 31,
                                                            1996             1996
                                                       -------------    -------------
                                                        (Unaudited)
Current Liabilities:
Current maturities of long-term debt and capital lease $1,763,537        $648,650
obligations

Insurance premiums payable                             18,702,774      16,247,247
Income taxes payable                                    2,112,942       1,795,018

Accounts and commissions payable                        5,998,605       4,809,527
Accrued expenses and other current liabilities          2,762,579       1,722,545
                                                       -------------    -------------
        Total Current Liabilities                      31,340,437      25,222,987
                                                       -------------    -------------

Deferred Revenues                                       4,616,314       3,654,794
                                                       -------------    -------------
Long-Term Debt and Capital Lease Obligations            2,599,240       1,124,015
                                                       -------------    -------------
Deferred Rent Payable                                     718,862         534,620
                                                       -------------    -------------

Convertible Exchangeable Preferred Stock- $.0007 par
Value
   Authorized, 15,000,000 shares
    Issued and outstanding -0- at December 31, 1996 and
    3,234,697 shares at March 31, 1996
   (Redemption value - $6,430,000)                           -          6,420,363
                                                       -------------    -------------
 Common Stockholders' Equity:
   Common stock - $.007 par value
     Authorized                     - 30,000,000 shares
     Issued and outstanding     - 13,109,032 shares
      at December 31, 1996 and
     13,082,181 shares at March 31,1996                    90,263          89,375
   Additional paid-in-capital                          12,731,573      12,212,641
   Net unrealized gain (loss) on investments, net of
income taxes of $2,661 and $4,389, respectively            (4,162)        (15,031)
   Accumulated translation adjustments                     42,976         (10,520)
   Retained earnings                                   13,186,451       7,843,332
                                                       -------------   -------------
                                                       26,047,101      20,119,797
Less:  Deferred compensation                              (63,222)        (70,116)
Treasury stock - at cost, 100,000 shares
   at December 31,1996 and March 31, 1996                (493,820)       (392,750)
                                                       -------------   -------------
        Total Common Stockholders' Equity              25,490,059      19,656,931
                                                       -------------   -------------

         Total Liabilities and Common Stockholders'   $64,764,912    $ 56,613,710
Equity                                                =============    =============

See accompanying notes to condensed consolidated financial statements
</TABLE>                                       
                                   Page 4


<PAGE>


===============================================================================

===============================================================================
                        WARRANTECH CORPORATION AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                     (Unaudited)
<TABLE>
<CAPTION>
                                                           For the Nine Months Ended                For the Three Months Ended
                                                                 December 31,                              December 31,
                                                     --------------------------------------     -----------------------------------

                                                            1996                  1995                 1996               1995
                                                     ------------------    ----------------     -----------------   ---------------
<S>                                                    <C>                   <C>                   <C>                <C>
Gross revenues                                          $116,794,753          $78,764,862           $42,131,293        $34,830,265
Revenues deferred to future periods                       (1,305,692)          (1,281,093)             (455,889)          (585,645)
Deferred revenues earned                                     347,451              324,909               119,657            152,225
                                                     ------------------    ---------------      -----------------   ---------------

Net revenues                                             115,836,512           77,808,678            41,795,061         34,396,845

Costs and expenses:
   Direct costs                                           81,915,935           52,357,009            28,397,004         24,102,334
   Service, selling, and general and administrative       25,940,313           18,700,520             9,916,149          7,230,661
   Provision for bad debt expense                             41,156              157,865                 -                 20,409
   Depreciation and amortization                           1,751,172              914,701               640,894            262,959
                                                     -----------------    ----------------      -----------------    ------------
    Total costs and expenses                             109,648,576           72,130,095            38,954,047         31,616,363
                                                     ------------------   ----------------      -----------------    --------------

Income from operations                                     6,187,936            5,678,583             2,841,014          2,780,482
                                                     ------------------   ----------------      -----------------    --------------

Gain on sale of equity joint venture                       1,876,480                 -                                        -
Other income, net                                            336,851              781,300               160,965            245,821
Equity in operations of joint venture                                         (   957,748)                             (    10,155)
                                                     ----------------     ------------------    ----------------    ---------------
Total other income (expenses)                              2,213,331          (   176,448)              160,965            235,666
                                                     ------------------    ----------------    -----------------    ---------------

Income before provision for income taxes                   8,401,267            5,502,135             3,001,979          3,016,148

Provision for income taxes                                 3,134,897            2,617,363             1,169,926          1,389,339
                                                     -----------------     ----------------    -----------------    ---------------
Net income                                            $    5,266,370          $ 2,884,772       $     1,832,053       $  1,626,809
                                                     ==================    ================    =================    ===============
Earnings per share:

   Primary                                                   $.35                $.18                  $.12                $.10
   Fully Diluted                                             $.34                $.17                  $.12                $.09

Weighted average number of shares outstanding:
   Primary                                                15,085,776          15,724,944             15,587,366         15,770,697
   Fully Diluted                                          15,528,601          16,941,129             15,606,166         16,943,919



    See accompanying  notes to condensed consolidated financial statements.

</TABLE>   
                                  Page 5

<PAGE>


                               WARRANTECH CORPORATION AND SUBSIDIARIES

                           CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                            (Unaudited)
<TABLE>
<CAPTION>
                                                                                                  For the Nine Months
                                                                                                  Ended December 31,
                                                                                    ----------------------------------------------
                                                                                             1996                     1995
<S>                                                                                <C>                      <C>              
 Net cash provided by operating activities                                          $  7,779,544             $  7,633,949
                                                                                    ---------------------    ---------------------

 Cash flows from investing activities:
    Purchase of property and equipment                                              (  4,158,256)            (  3,854,521)
    Investment in marketable securities                                             (  1,160,562)            (    948,602)
    Proceeds from sale of marketable securities                                          927,763                1,730,612
    Purchase of Home Guarantee Corporation Plc, net of cash
       acquired                                                                              -               (    680,923)
                                                                                    ---------------------    ---------------------
 Net cash used in investing activities                                              (  4,391,055)            (  3,753,434)
                                                                                    ---------------------    ---------------------

 Cash flows from financing activities:
    Proceeds from borrowings                                                                 -                    805,821
    Repayments of borrowings                                                        (  1,290,167)            (    954,638)
    Proceeds from sale/leaseback Of equipment                                                                   1,146,642
    Decrease (increase) in notes receivable                                               22,636             (     28,180)
    Purchase of treasury stock                                                      (    101,070)            (     80,530)
    Issuance of common stock                                                             496,820                   62,500
                                                                                    ---------------------    ---------------------
 Net cash (used in) provided by financing activities                                (    871,781)                 951,615
                                                                                    ---------------------    ---------------------

 Net increase in cash and cash equivalents                                             2,516,708                4,832,130

 Cash and cash equivalents at beginning of period                                     11,859,487                3,039,361
                                                                                    ---------------------    ---------------------

 Cash and cash equivalents at end of period                                         $ 14,376,195              $ 7,871,491
                                                                                    =====================    =====================

 Supplemental Cash Flows Information:

    Cash Payments for the Periods:
       Interest                                                                     $    221,241             $     39,763
                                                                                    =====================    =====================

       Income taxes                                                                 $  3,028,877             $  1,570,450
                                                                                    =====================    =====================
 Noncash Investing and Financing Activities:

 Gain on sale of investment in joint venture                                        $  1,876,480             $          -
 Purchase of preferred stock                                                        (  6,420,363)                       -
 Note issued in connection with purchase of preferred stock                            2,395,960                        -
 Capital lease obligations incurred                                                    1,484,319                   18,765

     See accompanying notes to condensed consolidated financial statements.

</TABLE>                                   
                                  Page 6

<PAGE>


                    WARRANTECH CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               DECEMBER 31, 1996
                                  (Unaudited)


1.  THE COMPANY

Warrantech  Corporation,  ("Warrantech"  or the  "Company"),  through its 
wholly owned subsidiaries  Warrantech  Automotive,  Inc.,  Warrantech  Consumer
Product Services,  Inc.,  Warrantech Direct,  Inc.,  Warrantech Home Service 
Company and Warrantech  International,   Inc,.  markets  and  administers  
service  contract programs  for  retailers,   distributors  and  manufacturers
of  automobiles, recreational  vehicles,  automotive  components,  homes,  
home appliances,  home entertainment products,  computers and peripherals, and
office and communication equipment in the United States,  Puerto Rico, Latin 
America,  Mexico, Canada and the  United  Kingdom.  Additionally,  third-party
administrative  services  are provided to manufacturers of consumer and 
automotive products and other business entities  requiring such services.  The
predominant  terms of the contracts and manufacturer's warranties range from 
twelve (12) to eighty-four (84) months.

2.  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have 
been prepared in accordance with generally accepted accounting principles for 
interim financial  information and with the  instructions to Form 10-Q and 
Article 10 of Regulation S-X.  Accordingly,  they do not include all 
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.  Operating  results 
for the quarter  ended  December  31, 1996 are not necessarily  indicative  of 
the results that may be expected for the year ending March 31, 1997. For 
further  information,  refer to the  consolidated  financial statements  and 
footnotes  thereto  included in the Company's  Form 10-K for the year ended 
March 31, 1996.

3.  JOINT VENTURE

In July, 1993, the Company and American International Group Inc. ("AIG")
formed a corporate joint venture, Techmark Services Ltd. ("Techmark" or the
"Joint Venture") owned fifty-one percent (51%) by AIG and forty-nine percent
(49%) by the Company.




                                Page 7


<PAGE>





In conjunction with the foregoing alliance, in October, 1993, AIG purchased, 
for a price of $6,430,000,  options and a special issue of preferred stock 
which was convertible into an issue of new shares of common stock which, 
subsequent to its issuance,  would be equivalent to twenty  percent (20%) of 
the Company's  issued and outstanding  common stock. Under the terms of this 
purchase  agreement,  AIG had the right to purchase an increased interest in 
the Company,  to a maximum of thirty percent (30%) of the Company's  issued 
and  outstanding  common stock, if certain operating goals were achieved by 
the Company.

On April  18,  1996,  the  Company  and AIG  consummated  an  agreement  for 
the termination of the Techmark Joint Venture (the "Agreement").  Under the 
terms of the Agreement, AIG agreed to purchase the Company's forty-nine (49%) 
interest in the Joint  Venture for  $3,762,154  and the  Company  agreed to  
repurchase  the 3,234,697  shares of  convertible  preferred  stock held by 
AIG for its original redemption  value of  $6,430,000  and further  relinquish 
their rights to other options  under the  original  agreement.  As a result 
of this  transaction,  the Company no longer has any  investment  in or 
liability to the Joint  Venture and will no longer  record any equity in the  
operations of the Joint  Venture.  The redemption  value will be offset by the 
amount due the Company  from the sale of its investment,  with the net amount 
due AIG of $2,395,960  resulting in a three year,  non-interest  bearing note 
payable in 11 equal quarterly  installments of $205,000  commencing  June 30, 
1996 with a final  installment  of  $140,960  due March, 1999. In the event o
default by the Company under the note payable,  the Company  would be required 
to reissue to AIG  preferred  stock for the remaining amount due at the default
date.

At March 31, 1996, the Company's  carrying  value of its investment  amounted 
to $1,885,674 which resulted in a gain on the sale of the investment of 
$1,876,480, recognized in the first quarter of fiscal 1997.

Also,  as part of the  agreement,  AIG paid the  Company  $1,480,000  related 
to amounts  due the  Company  as of  March  31,  1996,  under  its  profit  
sharing arrangement.  In connection with this payment, the Company issued an 
irrevocable letter of credit to the benefit of AIG through  December 2002 
which can be drawn upon by AIG in the event the ultimate  profit  sharing 
amount due the Company is less than the amount  previously  paid. It is  
anticipated  at this time that no amounts will be due AIG under the letter of 
credit.

                                   Page 8


<PAGE>



4.  LITIGATION

    (i)   In 1989, a lawsuit was filed in an Illinois court against a
          subsidiary of the Company by a former agent alleging  breach of
          contract.  While the complaint does not specify the dollar amounts of
          its alleged damages, the Plaintiff retained an expert witness who
          estimates the Plaintiff's damages in excess of $9 million.  Recently,
          the District Court ruled that the report from Plaintiff's damage
          expert was not admissible at trial.  This ruling would preclud
          Plaintiff's expert from offering trial testimony based on legal
          theories contained in his report.  The Company has retained its own
          economic expert who will directly refute the magnitude of the
          Plaintiff's damages.  The Company's expert has concluded that the
          maximum amount recoverable by the Plaintiff, if any, is less than
          $1 million after allowances of all appropriate offsets.  The Company
          intends to vigorously defend this lawsuit.  No trial date has been
          set as yet.

          In February 1996,  the Plaintiff in this matter filed another  
          lawsuit in an Illinois  court against a subsidiary of the Company,  
          the parent Company,  the  parent  Company's  Chairman  and the  
          parent  Company's President alleging that the Defendants  tortuously 
          interfered with the Plaintiff's business  relationships after the 
          Plaintiff was terminated as an  agent.  The  Plaintiff  seeks to  
          recover  commissions  that it contends it would have earned if the  
          Defendants had not precluded the Plaintiff  from  servicing  certain 
          accounts  after  the  Plaintiff's termination.  In the  Complaint the
          Plaintiff is seeking $8 million in compensatory  damages.  The 
          Plaintiff  also seeks to recover  punitive damages in the amount of 
          $24 million.  All of the Defendants  deny and dispute  Plaintiff's 
          claims against them in this case, and they intend to vigorously 
          defend and oppose those claims.

          On October 10, 1996, WDBS requested  permission from the Court to 
          file a counterclaim  against the Oak companies,  as well as James 
          Nerad and John Peterson, the majority shareholders and principal 
          officers of the Oak  companies.  WDBS'  counterclaims  include  
          claims  for (i)  civil conspiracy,  (ii) breach of contract,  and 
          (iii) tortuous interference with WDBS' contractual relationships.  
          On October 16, 1996, WDBS filed a motion to  consolidate  this case 
          with the  lawsuit  Oak  previously filed against Warrantech  
          Corporation,  Joel San Antonio,  and William Tweed.  Hearings on all 
          of these motions are scheduled for November 6, 1996. In defense of 
          the lawsuit filed by the Oak companies against the Company and the 
          individual defendants,  each of the defendants has set forth numerous
          legal defenses to the Oak companies'  claims. The Court has  ordered
          that  all  discovery  in each of these  actions  must be completed 
          by February 28, 1997 and set the date of trial for April 7, 1997.

   (ii)   In December 1993, a lawsuit was filed by a former officer and
          director of the Company, David Robertson, against the Company and one
          of its subsidiaries in a Texas Court. The matter is currently pending
          before the American Arbitration Association in Connecticut.
          Robertson has alleged that the Company wrongfully terminated an
          employment agreement between Robertson and WDBS, and that the Company
          engaged in tortuous interference and fraud.  Robertson has requested
          damages ranging from $450,000 to $5 million which includes his
          request for punitive damages.  The Company has denied all material
          allegations in the claims.  The Company has asserted a counterclaim
          in the amount of approximately $340,000 for reimbursement of
          attorneys' fees advanced by it on behalf of Robertson in  connection
          with certain other actions.  Management intends to vigorously defend
          against Robertson's claims and to vigorously prosecute its
          counterclaims.  No hearings in this matter have begun and the case is
          proceeding.

          Management  believes  that the ultimate  outcome of these matters 
          will not have a substantial impact on the operations of the Company.

                                        Page 9

<PAGE>


                      WARRANTECH CORPORATION AND SUBSIDIARIES

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

Results of Operations

Gross  revenues for the nine month and three month  periods  ended  
December 31, 1996 amounted to  $116,794,753  and  $42,131,293,  respectively 
as compared with $78,764,862 and  $34,830,265 for the same periods a year ago
representing a 48% and 21% increase for those periods,  respectively. The 
increases in the nine and three month periods are directly  attributable to 
approximately  $21 million and $6 million, respectively,  related to new 
customers in both the consumer product and  automotive   programs  and  
approximately  $17  million  and  $1  million, respectively,  related to 
volume increases with existing customers and renewals.
Included in the nine and three month  periods  last year is one time  revenue 
of approximately  $3.0  million  and  1.8  million   respectively  related  to 
the acquisition of a portfolio of business from a new customer.

The net increase in deferred  revenues for the nine month period ended  
December 31, 1996 as compared with the same period a year ago is directly a
ttributable to the increased number of service contracts sold during that 
period of time with a service  period  greater  than one  year,  offset in 
part by  amounts  earned on expiring  contracts during the same period.  The 
net change in deferred revenues for the three month period  ended  
December  31,  1996,  compared  with the same period a year ago, is  
attributable  to the mix and volume of contracts  for the three month periods.

Direct costs are those costs directly  related to the production and 
acquisition of service contracts. Direct costs were $81,915,935 and 
$28,397,004 for the nine and three month periods ended December 31, 1996, 
respectively,  as compared with $52,357,009  and  $24,102,334  for the  
comparable  period in fiscal  1996.  The increase is directly  attributable to 
the volume increases in contracts sold and a higher level of premium
reflecting improved coverage on selected programs.

Service,  selling and general and administrative expenses for the nine and 
three month  periods  ended  December  31,  1996  were   $25,940,313   and  
$9,916,149 respectively, as compared with $18,700,520 and $7,230,661 for the 
nine and three month periods ended December 31, 1995.  These  increases are 
related to payroll, payroll  related costs and training  costs arising from 
an increase in headcount to meet the service requirements associated with the 
increased number of service contracts  being sold as  compared  with the same
periods a year ago and office facilities  expense  associated  with  additional
office  space.  In  addition, service,  selling, and general and administrative
expenses include approximately $1,179,127  and  $468,848  for the nine  month 
and  three  month  periods  ended December 31, 1996 as compared  with $637,318
and $411,696 for the nine and three month  periods ended  December 31, 1995 
related to  Warrantech  Europe which was acquired in July of 1995. As a 
percentage of gross  revenues  service,  selling, general and  administrative 
expenses have  decreased  approximately  2% for the three month period ended 
December 31, 1996,  which is indicative of management's efforts to contain its
overhead costs while  maintaining  the highest quality of service levels to 
its customers during a time of rapid expansion.


                                 Page 10


<PAGE>



The increase in depreciation and amortization for the nine month and three 
month periods ended  December 31, 1996 over the  comparable  periods a year 
ago is the result of increased depreciation resulting from capital additions 
related to the Company's  ongoing upgrade of its computer systems and the 
additional  equipment requirements resulting from the service level increases.

In April 1996, the Company and its  international  joint venture  partner,  
AIG, agreed to terminate the joint venture, Techmark Services Ltd., effective 
January 1, 1996.  Under the terms of the agreement,  AIG agreed to purchase 
the Company's forty-nine  percent (49%) investment in the joint venture for 
$3,762,154.  As of March 31, 1996,  the Company's  carrying  value of the joint
venture  investment amounted to $1,885,674  which resulted in a pre-tax gain 
recognized in the three month period ended June 30, 1996 amounting to  
$1,876,480.  The equity loss from the joint venture  recognized in the nine 
and three month periods ended December 31, 1995  amounted to $957,748 and 
$10,155,  respectively,  and  represents  the Company's share of the joint 
venture losses for those periods.

The  provision  for income  taxes is based on the  Company's  projection  of 
its estimated  effective tax rate for the fiscal year. The higher effective 
tax rate for the nine and three  month  periods  ended  December  31, 1995  
reflects  the non-deductibility of the foreign losses for U.S. purposes at that
time.

Net income for the nine and three  month  periods  ended  December  31, 1996 
was $5,266,370 or $.35 per share and $1,832,053 or $.12 per share, 
respectively,  as compared  with  $2,884,772  or $.18 per share and  
$1,626,809 or $.10 per share, respectively,  calculated  on the same basis a 
year ago.  The earnings per share for the nine month  period ended  December 
31, 1996  includes the effect of the gain on the sale of the  Company's  joint
venture in the first quarter of fiscal 1997 of $.08 per share  (refer to  
footnote 3 ).  Included in the nine and three months results ended December 
1995, were after tax gains of  approximately  $1.8 million or $0.11 per share 
and $1.0  million  or $0.06 per share,  respectively, related to the 
acquisition of a portfolio of business from a new customer.

Liquidity and Financial Resources

The Company  believes  that  internally  generated  funds will be  sufficient
to finance  its  current  operations  for at least  the next  twelve  months.
Cash provided by  operations  during the nine month  period  ended  
December 31, 1996 amounted to  $7,779,544  which is  principally  attributable
to new accounts as compared with comparable levels of accounts receivable at 
December 31, 1995.

The  Company  has a line of  credit  with a bank  which  provides  for a 
maximum aggregate borrowing up to $10 million.  The line of credit is secured 
by certain accounts  receivable and has been renewed and now expires on August
31, 1997. At December 31, 1996, the Company did not have any borrowings 
outstanding under the line of credit.

In connection with the Company's ongoing upgrade of its information systems, 
the Company  has  financed  additional  equipment  during  the nine and three  
month periods ended December 31, 1996 through capital lease transactions  
amounting to $1,484,319 and $566,993 respectively.

                               Page 11


<PAGE>



In connection with the sale of the Company's joint venture  interest to AIG, 
the Company  agreed  to  repurchase  3,234,697  shares of  convertible  
exchangeable preferred stock held by AIG at their redemption value of
$6,430,000. This amount was offset by the amount due the  Company for the sale 
of its  investment,  with the net amount due AIG of  $2,395,960  resulting  
in a three year,  non-interest bearing note payable. The note is payable in 11 
equal quarterly  installments of $205,000  commencing  June 30, 1996,  with a 
final  installment  of $140,960 due March  1999.  Also,  as part of the  
agreement,  AIG  agreed to pay the  Company $1,480,000  related  to  amounts  
due  the  Company  under  its  profit  sharing arrangement.  In connection with
this payment, the Company issued an irrevocable letter of credit to the  
benefit of AIG through  December  31, 2002 which can be drawn against by AIG in
the event that the ultimate  profit  sharing  amount due the Company is less 
than the amount paid. It is anticipated at this time that no amounts will be 
due AIG under this letter of credit.

The  effect of  inflation  has not been  significant  to the  Company  since 
its formation.






















                                   Page 12


<PAGE>



PART II. Other Information


Item 1.       Legal Proceedings

              A.   No material developments regarding litigation have occurred
                   during the period.

Item 2.       Changes in Securities

              Not applicable.

Item 3.       Defaults Upon Senior Securities

              Not applicable.
























                                     Page 13


<PAGE>



Item 4.     Submission of Matters to Vote of Security Holders

            At the Company's  Annual Meeting of Shareholders  held on November
            25,  1996,  the  shareholders'  elected the  following to serve as
            directors until the next Annual Meeting of Shareholders  and until
            their successors are duly elected and qualified.

                                        For                        Withheld
            Joel San Antonio            11,213,596                  28,129
            William Tweed               11,213,596                  28,129
            Jeffrey J. White            11,213,596                  28,129
            Michael J. Salpeter         11,213,596                  28,129
            Lawrence Richenstein        11,208,596                  33,129

            In  addition,  the  shareholders  approved  an  amendment  to  the
            Company's  1988 Employee  Incentive  stock Option Plan to increase
            the maximum  aggregate  number of shares which may be issued under
            options  under the Plan  from  300,000  shares of Common  Stock to
            600,000 shares of Common Stock by a vote of 10,498,089 for,
            688,200 against and 48,436 withheld.






















                                   Page 14


<PAGE>





Item 5.       Other Information

              Not applicable.

Item 6 (a)    Exhibits

              (11)   Statement re: computation of per share earnings.
              (22)   Financial Data Schedule

Item 6 (b)    Reports on 8-K

              None.































                                 Page 15


<PAGE>


                               SIGNATURES




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




                                           WARRANTECH CORPORATION



                                   S/N/S  Joel San Antonio

                                   Joel San Antonio - Chairman of the Board
                                           (Chief Executive Officer)


Date:  February 14, 1997

                                   S/N/S  Bernard J. White

                                                Bernard J. White
                                            (Chief Financial Officer)


Date:  February 14, 1997










                                 Page 16

<PAGE>