FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



[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 1-11352

                             DynaGen, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                        04-3029787 
-------------------------------                 --------------------------------
(State or other jurisdiction of                 (IRS EmployerIdentification No.)
 incorporation or organization)

                                 99 Erie Street
                               Cambridge, MA 02139
          ------------------------------------------------------------
          (Address of principal executive offices, including zip code)

                                 (617) 491-2527
          ------------------------------------------------------------
              (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 (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[   ]


As of November  11, 1996,  there were  outstanding  28,877,436  shares of common
stock, $.01 par value per share.







                                  DYNAGEN, INC.

                                    FORM 10-Q

                                QUARTERLY REPORT

                                   ----------

                                TABLE OF CONTENTS



Facing Page                                                               1

Table of Contents                                                         2

PART I.  FINANCIAL INFORMATION (*)

         Item 1.    Financial Statements:
                     Condensed Consolidated Balance Sheets                3
                     Condensed Consolidated Statements of Loss            5
                     Condensed Consolidated Statements of Changes
                      in Stockholders' Equity                             6
                     Condensed Consolidated Statements of
                      Cash Flows                                          7
                     Notes to Unaudited Condensed Consolidated
                      Financial Statements                                9

         Item 2.    Management's Discussion and Analysis
                    of Financial Condition and Results
                    of Operations                                        11

PART II.  OTHER INFORMATION

         
         Item 6.    Exhibits and Reports on Form 8-K                     14
                                                      
SIGNATURES                                                               15




(*)      The  financial  information  at June 30, 1996 has been derived from the
         audited  financial  statements  at  that  date  and  should  be read in
         conjunction therewith. All other financial statements are unaudited.



                                        2




                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                                  DYNAGEN, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                                     ASSETS

<TABLE>
<CAPTION>


                                                          September 30,               June 30,
                                                               1996                     1996
                                                          -------------             ------------
<S>                                                       <C>                       <C>
Current assets:
         Cash and cash equivalents
          (including interest-bearing
          deposits of $227,000 and
          $154,000)                                       $     510,379             $    375,948
         Investment securities available
          for sale at fair value                              7,075,778               10,087,918
         Accounts receivable                                     27,618                   89,703
         Inventory (Note 3)                                     380,118                      -
         Notes receivable                                        75,000                   75,000
         Accrued interest receivable                            118,594                   86,873
         Prepaid expenses and other
          current assets                                        681,505                  221,283
                                                          -------------             ------------

            Total current assets                              8,868,992               10,936,725
                                                          -------------             ------------

Property and equipment, net of
 accumulated depreciation and
 amortization of $295,468 and $281,362                          520,218                  143,350
                                                          -------------             ------------

Other assets:
         Patents and trademarks, net of
          accumulated amortization of
          $59,990 and $54,341                                   271,489                  277,138
         Deferred debt financing costs,
          net of accumulated amortization
          of $91,568 and $57,230                                183,137                  217,475
         Deposits                                                67,873                    1,978
                                                          -------------             ------------

            Total other assets                                  522,499                  496,591
                                                          -------------             ------------

                                                          $   9,911,709             $ 11,576,666
                                                          =============             ============
 
</TABLE>




     See accompanying notes to unaudited consolidated financial statements.

                                        3




                                  DYNAGEN, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                      LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>

                                                        September 30,               June 30,
                                                             1996                     1996
                                                        -------------             ------------
<S>                                                    <C>                        <C>
Current liabilities:
         Accounts payable                               $     556,788             $    519,624
         Accrued payroll and
          payroll taxes                                       175,749                  147,441
         Deferred revenue                                      31,772                   65,967
                                                        -------------             ------------

                  Total current liabilities                   764,309                  733,032

Convertible note payable                                    2,000,000                2,000,000
                                                        -------------             ------------

                  Total liabilities                         2,764,309                2,733,032
                                                        -------------             ------------

Stockholders' equity:
         Preferred stock, $.01 par value,
          10,000,000 shares authorized,
          none outstanding                                        -                       -
         Common stock, $.01 par value,
          40,000,000 shares authorized,
          28,661,412 and 28,559,999 shares
          issued and outstanding                              286,614                  285,600
         Additional paid-in capital                        28,645,454               28,567,068
         Accumulated deficit                              (21,787,097)             (20,009,051)
                                                        -------------             ------------
                                                            7,144,971                8,843,617
         Unrealized gain on
          investment securities                                 2,429                       17
                                                        -------------             ------------

                  Total stockholders' equity                7,147,400                8,843,634
                                                        -------------             ------------

                                                        $   9,911,709             $ 11,576,666
                                                        =============             ============
</TABLE>



     See accompanying notes to unaudited consolidated financial statements.

                                        4




                                  DYNAGEN, INC.

                    CONDENSED CONSOLIDATED STATEMENTS OF LOSS
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                           Three Months Ended
                                                 ---------------------------------------
                                                 September 30,             September 30,
                                                     1996                      1995
                                                 -------------             -------------

<S>                                             <C>                       <C>
Revenues:
         Fees and royalties                      $         -               $     250,000
         Product sales                                  58,693                    18,872
                                                 -------------             -------------

          Total revenues                                58,693                   268,872
                                                 -------------             -------------

Costs and expenses:
         Cost of sales                                  25,313                     8,202
         Research and development                      760,062                   470,099
         Selling, general and
          administrative                             1,072,573                   570,779
                                                 -------------             -------------

          Total costs and expenses                   1,857,948                 1,049,080
                                                 -------------             -------------

          Operating loss                            (1,799,255)                 (780,208)
                                                 -------------             -------------

Other income (expense):
         Investment income, net                         95,547                    54,283
         Interest expense                              (40,000)                      -
         Amortization of debt
          financing costs                              (34,338)                      -
                                                 -------------             -------------

          Other income, net                             21,209                    54,283
                                                 -------------             -------------

          Net loss                               $  (1,778,046)            $    (725,925)
                                                 =============             =============

Net loss per share                               $        (.06)            $        (.03)
                                                 =============             =============

Weighted average shares outstanding
(Note 2)                                            28,616,450                21,807,563
                                                 =============             =============

</TABLE>


     See accompanying notes to unaudited consolidated financial statements.

                                        5




                                  DYNAGEN, INC.

      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 Three Months Ended September 30, 1996 and 1995
                                   (Unaudited)

                                                                             
<TABLE>
<CAPTION>
                                         Common Stock                                                  
                                         ------------                                              Unrealized      
                                                               Additional                        Gain (Loss) on
                                                                Paid-in         Accumulated        Investment
                                      Shares       Amount       Capital           Deficit          Securities           Total
                                      ------       ------       -------           -------          ----------           -----

<S>                                <C>            <C>          <C>              <C>               <C>               <C>
Balance at
 June 30, 1995                      21,448,487    $214,485     $19,236,300      $(14,911,632)      $(12,339)         $  4,526,814
Decrease in unrealized loss
 on investment securities                  -           -               -                 -            6,517                 6,517
Exercise of
 underwriters' warrants                404,552       4,045          (4,045)              -              -                     -
Exercise of
 public warrants                         7,485          75          14,385               -              -                  14,460
Net loss                                   -           -               -            (725,925)           -                (725,925)
                                    ----------    --------     -----------      ------------       --------          ------------

Balance at
 September 30, 1995                 21,860,524    $218,605     $19,246,640      $(15,637,557)      $ (5,822)         $  3,821,866
                                    ==========    ========     ===========      ============       ========          ============

Balance at
 June 30, 1996                      28,559,999    $285,600     $28,567,068      $(20,009,051)      $     17          $  8,843,634
Exercise of stock options               80,767         808          14,942               -              -                  15,750
Stock issued for
 interest obligation                    20,646         206          39,794               -              -                  40,000
Stock options issued
 for services                              -           -            23,650               -              -                  23,650
Increase in unrealized
 gain on investment
 securities                                -           -               -                 -            2,412                 2,412
Net loss                                   -           -               -          (1,778,046)           -              (1,778,046)
                                    ----------    --------     -----------      ------------       --------          ------------

Balance at
 September 30, 1996                 28,661,412    $286,614     $28,645,454      $(21,787,097)      $  2,429          $  7,147,400
                                    ==========    ========     ===========      ============       ========          ============

</TABLE>


     See accompanying notes to unaudited consolidated financial statements.


                                       6


                                  DYNAGEN, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                                                Three Months Ended
                                                                       ---------------------------------------
                                                                       September 30,             September 30,
                                                                           1996                      1995
                                                                       -------------             --------------

<S>                                                                   <C>                       <C>
Cash flows from operating activities:
         Net loss                                                      $  (1,778,046)            $    (725,925)
         Adjustments to reconcile
          net loss to net cash used for
           operating activities:
                  Depreciation and amortization                               54,093                    15,934
                  Amortization and accretion
                   of (discounts) premiums on
                   investment securities                                     (19,261)                    4,838
                  Stock issued for
                   interest obligation                                        40,000                       -
                  Stock options issued
                   for services                                               23,650                       -
         (Increase) decrease in operating
          assets:
                  Accounts receivable                                         62,085                     4,571
                  Inventory                                                  (66,818)                      -
                  Prepaid expenses and
                   other current assets                                     (491,943)                   89,227
         Increase (decrease) in operating
          liabilities:
                  Accounts payable and
                   accrued expenses                                           65,472                   (37,425)
                  Deferred revenue                                           (34,195)                 (150,000)
                                                                       -------------             -------------

                  Net cash used for
                   operating activities                                   (2,144,963)                 (798,780)
                                                                       -------------             -------------

Cash flows from investing activities:
         Purchase of investment securities                                (2,567,444)               (2,374,903)
         Proceeds from sales and maturities
          of investment securities                                         5,601,257                 3,200,000
         Purchase of wholly-owned
          subsidiary                                                        (700,000)                      -
         Purchase of property and equipment                                   (4,274)                      -
         Increase in deposits                                                (65,895)                  (19,866)
                                                                       -------------             -------------

                  Net cash provided by
                   investing activities                                    2,263,644                   805,231
                                                                       -------------             -------------
</TABLE>

                                   (Continued)




     See accompanying notes to unaudited consolidated financial statements.

                                        7




                                  DYNAGEN, INC.

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONCLUDED)
                                   (UNAUDITED)

<TABLE>
<CAPTION>



                                                                                 Three Months Ended
                                                                       ---------------------------------------
                                                                       September 30,             September 30,
                                                                           1996                      1995
                                                                       -------------             -------------

<S>                                                                    <C>                       <C>   
Cash flows from financing activities:
         Exercise of warrants and options                              $      15,750             $      14,460
                                                                       -------------             -------------

                  Net cash provided by
                   financing activities                                       15,750                    14,460
                                                                       -------------             -------------

Net change in cash and cash equivalents                                      134,431                    20,911

Cash and cash equivalents,
 beginning of period                                                         375,948                   263,956
                                                                       -------------             -------------

Cash and cash equivalents,
 end of period                                                         $     510,379             $     284,867
                                                                       =============             =============

Supplemental cash flow information is presented in Note 4.

</TABLE>




     See accompanying notes to unaudited consolidated financial statements.

                                        8




                                  DYNAGEN, INC.

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 1996



1.       BASIS OF PRESENTATION

         The accompanying  unaudited  consolidated  financial  statements of the
Company have been  prepared in accordance  with  generally  accepted  accounting
principles  for  interim  financial  information  and  in  accordance  with  the
instructions  to Form 10-Q and Rule  10-01 of  Regulation  S-X and  include  the
accounts of DynaGen,  Inc. and its wholly-owned  subsidiary,  Able Laboratories,
Inc. Significant  intercompany balances and transactions have been eliminated in
consolidation.  Accordingly,  they do not include all  information and footnotes
required by generally  accepted  accounting  principles  for complete  financial
statement presentation.

         The results of operations for the periods  reported are not necessarily
indicative  of those that may be  expected  for a full year.  In the  opinion of
management,  all adjustments  (consisting only of normal recurring  adjustments)
which are  necessary for a fair  statement of operating  results for the interim
periods presented have been made.

         The financial  information included in this report has been prepared in
conformity with the accounting  policies,  reflected in the financial statements
included in the Company's  Annual Report on Form 10-K filed with the  Securities
and Exchange Commission.

2.       NET LOSS PER SHARE

         Net loss per share is calculated  based on the weighted  average number
of common shares  outstanding  for the three month  periods ended  September 30,
1996 and 1995.  The effect of all common stock  equivalents  have been  excluded
from the calculation of the weighted average number of common shares outstanding
since their inclusion would be anti-dilutive.

3.       INVENTORY

         Inventory at September 30, 1996 consists of the following:

         Raw material                       $ 248,311
         Work in-process                       81,372
         Finished goods                        50,435
                                            ---------
                                            $ 380,118
                                            =========


                                        9




                                  DYNAGEN, INC.

                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

                               September 30, 1996

                                   (Continued)



4.       ACQUISITION OF ABLE LABORATORIES, INC.

         On  August  19,  1996,  the  Company  acquired  certain  assets of Able
Laboratories,  Inc.,  consisting  primarily  of  machinery  and  equipment,  raw
materials and finished goods inventory, and other assets of the tablet business.
The assets were  transferred  by the Company to a newly formed and  wholly-owned
subsidiary named Able Laboratories,  Inc. ("Able"). The purchase price consisted
of $550,000 in cash and acquisition costs of $150,000.  The acquisition has been
accounted for as a purchase in accordance with the Accounting  Principles  Board
Opinion  No.  16.  The  Company  allocated  $313,300  of the  purchase  price to
inventory  and $386,700 to property  and  equipment.  The results of  operations
related to Able have been  included  with those of the Company  since August 19,
1996.

         Unaudited  proforma  consolidated  operating  results for the  Company,
assuming  the  acquisition  of Able  had  been  made as of July 1,  1995  are as
follows:

                                           Three Months Ended
                                     ---------------------------------
                                     September 30,        September 30,
                                         1996                 1995
                                     ------------         ------------
         Revenues                    $     77,518         $  1,439,981
         Net loss                      (1,905,811)          (1,130,004)
         Net loss per share                  (.07)                (.05)

The unaudited proforma  information is not necessarily  indicative either of the
results of  operations  that would have  occurred had the purchase  been made on
July 1, 1995 or of future results of operations of the combined companies.



                                       10




                                  DYNAGEN, INC.

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

       The Private Securities Litigation Reform Act of 1995 contains safe
harbor provisions regarding  forward-looking  statements.  Except for historical
information contained herein, the matters discussed in the Liquidity and Capital
Resources  section below contain potential risks and  uncertainties,  including,
without  limitation,  risks  related to the  Company's  ability to  successfully
develop,   test,  produce  and  market  its  proposed   products,   specifically
NicErase(R)-SL;  obtain governmental approvals in a timely manner;  identify and
attract marketing partners to help commercialize the Company's products; attract
and retain key employees;  obtain meaningful patent protection or otherwise over
the Company's  proprietary  technology;  protect  itself from product  liability
risks or limitations imposed due to potential health care reform;  raise capital
for  future  operations  and  commercialization  of its  products;  successfully
integrate  the  Company's  Able  Laboratories,  Inc.  ("Able")  subsidiary;  and
successfully respond to technological changes in the marketplace.  Specifically,
regulatory approvals of the Company's products are subject to factors beyond the
Company's control, and there can be no assurance that such approvals will not be
delayed  or  ultimately  denied.  The  Company  will need to  attract  marketing
partners in order to exploit its  products,  and there can be no assurance  that
the  Company  will  be  successful  in  attracting  such  partners.   Additional
information  on potential  factors  which could affect the  Company's  financial
results are included in the Company's  public  filings with the  Securities  and
Exchange Commission.



                              RESULTS OF OPERATIONS

                   Three-Month Period Ended September 30, 1996
        As Compared With The Three-Month Period Ended September 30, 1995

         Revenues in the first quarter of the year ending June 30, 1997 ("Fiscal
1997") were $59,000 versus $269,000 for the first quarter of the year ended June
30, 1996 ("Fiscal 1996"). This decrease of $210,000 is a result of a decrease in
fees of $250,000 offset by an increase in product sales of $40,000. The decrease
in fee revenue is due to one-time fees from Bristol-Myers Products recognized in
Fiscal  1996.  The  increase in product  sales  resulted  from  greater  product
shipments, primarily MycoDot(R), in the first quarter of Fiscal 1997 compared to
the same period of Fiscal 1996. In the first quarter of Fiscal 1997, the Company
realized limited product sales from its Able subsidiary since its acquisition on
August 19, 1996.

         Cost of product sales was 43% of product sales for the first quarter of
Fiscal 1997. This percentage is comparable to the same period of Fiscal 1996.

                                       11






                                  DYNAGEN, INC.

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
          -------------------------------------------------------------

         Research and development  expenses for the first quarter of Fiscal 1997
were $760,000 versus $470,000 for the same period of Fiscal 1996, an increase of
$290,000.  This increase is primarily  attributable to costs associated with the
ongoing NicErase-SL Phase 3 clinical trial and the Company's efforts to complete
clinical  trials  and file a  510(k)  application  with  the U.S.  Food and Drug
Administration  for its  NicCheck(R)  product.  The Company also conducted early
stage research on bacterial extract for the treatment of infectious diseases.

         Selling,  general and administrative  expenses for the first quarter of
Fiscal 1997 were $1,073,000  versus $571,000 for the same period of Fiscal 1996,
an increase of  $502,000.  The increase in selling,  general and  administrative
expenses  is  primarily  due  to the  acquisition  of  Able  which  resulted  in
additional  payroll and plant  operating  costs of  approximately  $312,000.  In
addition,  certain DynaGen staff members directed their efforts towards the Able
integration,  which  resulted  in costs of  approximately  $60,000.  The Company
incurred  $89,000 in costs towards the use of business  consultants  to develop,
seek and obtain business  alliances for certain Company products.  The remainder
is due to a net increase in other operating expenses.

         Investment  income increased by $41,000 from $54,000 to $95,000 for the
first  quarter of Fiscal  1996 as compared  to Fiscal  1997,  as the Company had
greater funds available for investment during the Fiscal 1997 period compared to
the same period of Fiscal 1996. The Company incurred interest expense of $40,000
and amortized debt financing  costs of $34,000 both associated with a $2,000,000
convertible note issued in 1996.



                                       12




                                  DYNAGEN, INC.

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
          -------------------------------------------------------------

                         LIQUIDITY AND CAPITAL RESOURCES

         As of September 30, 1996, the Company had working capital of $8,105,000
versus  working  capital of  $10,204,000  at June 30, 1996.  Cash and investment
securities  were  $7,586,000 at September 30, 1996 as compared to $10,464,000 at
June 30, 1996. The decreases in working capital,  cash and investment securities
are primarily the result of  $2,145,000  utilized in the Company's  research and
development efforts and operating activities and the $700,000 purchase price for
the Able acquisition.

         Management  anticipates  that the  available  working  capital  will be
sufficient to fund the current level of operations, including Able, through June
1997. In the past, the Company has realized  limited  revenues from license fees
and the sale of its  diagnostic  products.  Its  future  prospects  and  revenue
potential  from product  sales cannot be  determined  with any certainty at this
time. The Company continues to explore additional sources of capital in order to
fund the  growth  of its  generic  drug  business  and its  product  development
efforts.  There  can be no  assurance  that the  Company  will be able to secure
additional  financing or that financing will be available on favorable terms. If
the Company is unable to obtain such other additional  financing,  the Company's
ability to maintain its current  level of  operations  could be  materially  and
adversely  affected  and the  Company  may be  required  to reduce or  eliminate
certain  expenditures,  including  its research and  development  activity  with
respect to certain proposed products.



                                       13




                                  DYNAGEN, INC.

                           PART II. OTHER INFORMATION
          -------------------------------------------------------------

Item 6.           Exhibits and Reports on Form 8-K

                  (a)      List of Exhibits:

                  The  following  exhibits,  required by Item 601 of  Regulation
                  S-K, are filed as part of this quarterly  Report on Form 10-Q.
                  Exhibit  numbers,   where  applicable,   in  the  left  column
                  correspond to those of Item 601 of Regulation S-K.

                  Exhibit
                    No.                      Description of Exhibits
                  -------           ------------------------------------------
                  27                Financial Data Schedule (filed herewith in
                                    electronic format only).

                  (b)      Reports on Form 8-K:

                  During the quarter ended September 30, 1996, the Company filed
                  on August 23, 1996 a Current  Report on Form 8-K dated  August
                  19,  1996  reporting  the  purchase of  substantially  all the
                  assets of Able  Laboratories,  Inc. On September 23, 1996, the
                  Company filed  Amendment  No. 1 to the Current  Report on Form
                  8-K dated August 19, 1996  providing the financial  statements
                  related to the  business of Able  Laboratories,  Inc.  and the
                  unaudited  proforma  combined  financial  information  of  the
                  Company.



                                       14





                                   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.

                                    DYNAGEN, INC.



                           By:      /s/ Indu A. Muni
                                 -------------------------
                                 Indu A. Muni, Ph.D.
                                 President, Chief Executive Officer, and
                                 Treasurer (Principal Executive, Financial, and
                                 Accounting Officer)








Date:  November 14, 1996


                                       15