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,
         1997; 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 Employer Identification No.)
   incorporation or organization)

                               840 Memorial Drive
                               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  12, 1997,  there were  outstanding  33,685,664  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                                  7
                   Condensed Consolidated Statements of Cash Flows           9
                   Notes to Unaudited Consolidated Financial Statements     11

         Item 2.  Management's Discussion and Analysis                      16
                  of Financial Condition and Results of Operations

PART II.  OTHER INFORMATION

         Item 2.  Changes in Securities                                     18
         Item 5.  Other Information                                         20
         Item 6.  Exhibits and Reports on Form 8-K                          20

SIGNATURES                                                                  22






(*)      The  financial  information  at December 31, 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)

<TABLE>
<CAPTION>
                                     ASSETS

                                                                              September 30,    December 31,
                                                                                  1997            1996
                                                                                  ----            ----
<S>                                                                           <C>             <C>
Current assets:
         Cash and cash equivalents
          (including interest-bearing
          deposits of $1,835,000 at December 31, 1996)                         $    32,145      $ 2,112,300
         Investment securities available for sale at fair value                       --          3,004,700
         Accounts receivable, net of allowance for
          doubtful accounts of $71,429 at September 30, 1997                     3,207,355          261,932
         Rebates                                                                   627,180             --
         Inventory (Note 3)                                                      8,201,045          451,883
         Notes receivable                                                          185,000          185,000
         Prepaid expenses and other current assets                                 215,290          295,613
                                                                               -----------      -----------

            Total current assets                                                12,468,015        6,311,428
                                                                               -----------      -----------

Property and equipment, net of accumulated depreciation
and amortization of $488,640 and $337,813                                        1,676,506          673,969
                                                                               -----------      -----------

Other assets:
         Goodwill, net of accumulated amortization of $277,949                  14,016,585             --
         Patents and trademarks, net of accumulated amortization
         of $83,907 and $65,639                                                    247,572          265,840
         Deferred debt financing costs, net of accumulated
         amortization of $81,046 and $119,039                                      411,439          119,039
         Deposits                                                                  292,873           92,873
                                                                               -----------      -----------

            Total other assets                                                  14,968,469          477,752
                                                                               -----------      -----------

                                                                               $29,112,990      $ 7,463,149
                                                                               ===========      ===========


</TABLE>


     See accompanying notes to unaudited consolidated financial statements.



                                       3





                                  DYNAGEN, INC.

                CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
                                   (Unaudited)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
 

                                                                               September 30,    December 31,
                                                                                    1997            1996
                                                                                    ----            ----
<S>                                                                              <C>              <C>       

Current liabilities: 
  Bank overdraft                                                                 $   844,509      $        -
  Current maturities of long term debt                                             2,701,669               -
  Loan payable - bank                                                              5,270,890               -
  Accounts payable                                                                 3,929,707             712,239
  Accrued payroll and payroll taxes                                                  349,389              96,894
                                                                                 -----------      --------------

                  Total current liabilities                                       13,096,164             809,133

Warrant put liability                                                                725,821               -
Long term debt                                                                     5,245,627           1,600,000
                                                                                 -----------      --------------

                  Total liabilities                                               19,067,612          2,409,133
                                                                                ------------      --------------

Stockholders' equity:
  Preferred  stock,  $.01 par  value,  10,000,000  shares  authorized:
   Series A  convertible, 50,000 shares authorized, 45,150 shares
      issued and outstanding, (liquidation value - $4,515,000)                           452                  -
    Series B convertible, 7,500 shares authorized, issued
      and outstanding, (liquidation value - $747,750)                                     75                  -
     Series C convertible, 7,500 shares authorized, issued
      and outstanding, (liquidation value - $750,000)                                     75                  -
   Series D convertible, 60,000 shares authorized, none issued and
     outstanding                                                                          -                   -
   Common stock, $.01 par value, 75,000,000 shares authorized,
      33,510,114 and 29,106,231 shares issued and outstanding                        335,101             291,062
  Additional paid-in capital                                                      41,637,570          29,076,838
  Accumulated deficit                                                            (31,927,895)        (24,315,191)
                                                                                  ----------       -------------
                                                                                  10,045,378           5,052,709
  Unrealized gain on investment securities                                                -                1,307
                                                                                  ----------       -------------

                  Total stockholders' equity                                      10,045,378           5,054,016
                                                                                 -----------       -------------

                                                                                $ 29,112,990        $  7,463,149
                                                                                ============        ============

</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,
                                                                             1997              1996
                                                                          -----------      -----------
<S>                                                                      <C>              <C>         

Revenues:
         Product sales                                                   $  5,571,779     $     58,693
         Fees and royalties                                                    38,086             --
                                                                         ------------     ------------

          Total revenues                                                    5,609,865           58,693
                                                                         ------------     ------------

Costs and expenses:
         Cost of sales                                                      4,644,546           25,313
         Research and development                                             723,143          760,062
         Selling, general and administrative                                2,546,360        1,072,573
                                                                         ------------     ------------

          Total costs and expenses                                          7,914,049        1,857,948
                                                                         ------------     ------------

          Operating loss                                                   (2,304,184)      (1,799,255)
                                                                         ------------     ------------

Other income (expense):
         Investment income, net                                                 3,136           95,547
         Interest expense                                                    (488,359)         (40,000)
         Amortization of debt financing costs                                 (28,995)         (34,338)
                                                                         ------------     ------------

          Other income (expense), net                                        (514,218)          21,209
                                                                         ------------     ------------

          Net loss                                                       $ (2,818,402)    $ (1,778,046)
                                                                         ============     ============

Net loss per share                                                       $       (.09)    $       (.06)
                                                                         ============     ============

Weighted average shares outstanding (Note 2)                               32,463,119       28,616,450
                                                                         ============     ============

</TABLE>




     See accompanying notes to unaudited consolidated financial statements.


                                       5






                                  DYNAGEN, INC.

                    CONDENSED CONSOLIDATED STATEMENTS OF LOSS
                                   (Unaudited)



<TABLE>
<CAPTION>

                                                                        Nine Months Ended
                                                                        -----------------
                                                                 September 30,      September 30,
                                                                      1997              1996
                                                                -----------------    -----------
<S>                                                              <C>                <C>         

Revenues:
         Product sales                                           $  7,355,636       $    221,583
         Fees and royalties                                            88,744             60,000
                                                                 ------------       ------------

          Total revenues                                            7,444,380            281,583
                                                                 ------------       ------------

Costs and expenses:
         Cost of sales                                              7,352,213             93,155
         Research and development                                   2,369,821          2,841,586
         Selling, general and administrative                        4,795,008          2,568,665
                                                                 ------------       ------------

          Total costs and expenses                                 14,517,042          5,503,406
                                                                 ------------       ------------

          Operating loss                                           (7,072,662)        (5,221,823)
                                                                 ------------       ------------

Other income (expense):
         Investment income, net                                       112,170            351,741
         Interest expense                                            (604,846)          (103,999)
         Amortization of debt financing costs                         (47,366)           (91,568)
                                                                 ------------       ------------

          Other income (expense), net                                (540,042)           156,174
                                                                 ------------       ------------

          Net loss                                               $ (7,612,704)      $ (5,065,649)
                                                                 ============       ============

Net loss per share                                               $       (.25)      $       (.19)
                                                                 ============       ============

Weighted average shares outstanding (Note 2)                       30,959,820         27,364,110
                                                                 ============       ============
</TABLE>





     See accompanying notes to unaudited consolidated financial statements.


                                       6








                                  DYNAGEN, INC.

      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                      Nine Months Ended September 30, 1997
                                   (Unaudited)


<TABLE>
<CAPTION>


                                                                                                     
                                                           Convertible Preferred Stock               
                                                   ---------------------------------------------
                               Common Stock          Series A          Series B         Series C     
                               ------------         --------          --------          --------     
                                                                                                     
                            Shares     Amount     Shares   Amount   Shares   Amount  Shares   Amount 
                            ------     ------     ------   ------   ------   ------  ------   ------ 

Balance at
<S>                       <C>          <C>         <C>    <C>       <C>      <C>      <C>    <C>
 December 31, 1996         29,106,231  $291,062      -     $  -         -     $   -      -     $ -   
Decrease in unrealized
 gain on investment
 securities                    -            -        -        -         -         -      -       -   
Shares issued in private
 placements                 1,475,000    14,750   45,950     460       7,500      75   7,500    75   
Stock issued for Superior
 acquisition                1,666,667    16,667      -        -         -         -      -       -   
Exercise of stock options       1,500        15      -        -         -         -      -       -   
Issuance of common stock
 purchase warrants                -         -        -        -         -         -      -       -   
Stock options and warrants
issued for services               -         -        -        -         -         -      -       -   
Stock issued for
 interest obligation          38,633        386      -        -         -         -      -       -   
Conversion of note  
 payable                     989,594      9,896      -        -         -         -      -       -   
Conversion of
 Preferred stock
 and stock dividend          232,489      2,325     (800)     (8)       -         -      -        -  
Net loss                          -          -       -        -         -         -      -        -  
                          ----------   --------   ------    ----      -----      ---    ----      ---
Balance at
 September 30, 1997       33,510,114   $335,101   45,150    $452      7,500      $75    7,500     $75
                          ==========   ========   ======    ====      =====      ===    ====      ===

</TABLE>


                                                                  
<TABLE>
<CAPTION>
                                                                  
                                                                  
                                                         Unrealized                
                             Additional                   Gain on                   
                             Paid-in      Accumulated   Investment                 
                             Capital      Deficit       Securities   Total        
                             ----------- -------------  ----------   -----        
                                                                  
                                                                  
<S>                         <C>            <C>           <C>      <C>                       
 Balance at                 $29,076,838    $(24,315,191) $ 1,307  $5,054,016                
  December 31, 1996                                                                         
 Decrease in unrealized                                                                     
  gain on investment              -               -       (1,307)     (1,307)               
  securities                                                                                
 Shares issued in private     5,825,390           -          -      5,840,750               
  placements                                                                                
 Stock issued for Superior    4,983,333           -          -      5,000,000               
  acquisition                     1,110           -          -          1,125               
 Exercise of stock options                                                                  
 Issuance of common stock           450           -          -            450               
  purchase warrants                                                                         
 Stock options and warrants     728,145           -          -        728,145               
 issued for services                                                                        
 Stock issued for                48,752           -          -         49,138               
  interest obligation                                                                       
 Conversion of note             975,869           -          -        985,765               
  payable                                                                                   
 Conversion of                                                                              
  Preferred stock                (2,317)          -          -           -                  
  and stock dividend              -               -          -           - 
Net loss                          -         (7,612,704)      -     (7,612,704)                                   
                           ----------          --------    ------ ----------- 
Balance at                 $41,637,570     $(31,927,895)  $  -    $10,045,378               
  September 30, 1997       ===========     ============    ====== ===========               
                                                                        
 
</TABLE>










     See accompanying notes to unaudited consolidated financial statements.

                                       7






                                  DYNAGEN, INC.

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




<TABLE>
<CAPTION>
                                                          Convertible                                                  
                                                        Preferred Stock                                
                                                       ----------------                                      Unrealized        
                                   Common Stock            Series A           Additional                     Gain on
                                -------------------    ------------------     Paid-in      Accumulated       Investment
                                Shares      Amount     Shares     Amount      Capital      Deficit           Securities   Total
                                ------      ------     ------     ------      ----------- --------------     ----------   -----

<S>                           <C>          <C>        <C>        <C>         <C>           <C>              <C>        <C>       
Balance at December 31, 1995  25,196,963   $251,970      -        $   -       $23,094,903   $(16,721,448)    $   1,142  $6,626,567
Increase in unrealized
 gain on investment
 securities                      -            -          -            -            -              -              1,287       1,287
Shares issued in private
 placements                    1,520,686     15,207   1,178,264     3,461,150   1,376,204         -               -      4,852,561
Conversion of preferred
 stock                         1,612,834     16,128  (1,178,264)   (3,461,150)  3,445,022         -               -           -
Costs related to exercise of
 public warrants                 -            -          -            -            (3,756)        -               -         (3,756)
Exercise of stock options        176,672      1,767      -            -            19,558         -               -         21,325
Employee stock and stock
 option grants                   117,250      1,172      -            -           557,685         -               -        558,857
Stock options issued for
 services                        -            -          -            -            78,875         -               -         78,875
Stock issued for 
 interest obligation              37,057        370      -            -            76,963         -               -         77,333
Net loss                         -            -          -            -            -          (5,065,649)         -     (5,065,649)
                              ----------   --------     -------      ---       ------------   ------------     ------    ----------
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.


                                       8






                                  DYNAGEN, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                  Nine Months Ended
                                                                                  -----------------
                                                                          September 30,         September 30,
                                                                              1997                   1996
                                                                       --------------------      -------------
<S>                                                                        <C>                     <C>          

Cash flows from operating activities:
  Net loss                                                                 $ (7,612,704)           $ (5,065,649)
  Adjustments to reconcile net loss to net cash used for
  operating activities:
         Stock option and warrants issued for services                          728,145                  23,650
         Employee stock and stock option grants                                    --                   558,857
         Depreciation and amortization                                          494,411                 147,263
         Amortization and accretion of (discounts) premiums
         on investment securities                                               (10,152)               (134,196)
         Amortization and accretion of loan discount and
           Warrant put liability                                                 54,784                    --
         Stock issued for interest obligation                                    49,138                  77,333
           Write-off of patent costs                                               --                    41,852
  (Increase) decrease in operating assets:
         Accounts receivable                                                   (390,132)                 24,974
         Prepaid expenses and other current assets                              112,982                (502,496)
         Inventory                                                             (358,105)                (66,818)
         Rebates                                                               (128,876)                   --
  Increase (decrease) in operating liabilities:
          Accounts payable and accrued expenses                               2,315,208                 399,100
          Deferred revenue                                                         --                   (68,228)
                                                                           ------------            ------------

                  Net cash used for operating activities                     (4,745,301)             (4,564,358)
                                                                           ------------            ------------

Cash flows from investing activities:
  Acquisition of Superior                                                    (6,878,463)                   --
  Acquisition of Able                                                              --                  (700,000)
  Purchase of investment securities                                          (1,186,455)            (26,543,490)
  Proceeds from sales and maturities of investment securities                 4,200,000              24,175,257
  Purchase of property and equipment                                           (783,268)                (37,420)
  Patent and trademark costs                                                       --                   (39,744)
  Increase in deposits                                                         (200,000)                (65,895)
  Increase in notes receivable                                                     --                   (75,000)
                                                                           ------------            ------------
                  Net cash used for investing activities                     (4,848,186)             (3,286,292)
                                                                           ------------            ------------
Cash flows from financing activities:
         Net proceeds from exercise of
          stock warrants and options                                              1,125                  17,569
         Net proceeds from issuance of common
          stock and warrants                                                    854,250               4,852,561
         Net proceeds from preferred stock                                    5,790,052               1,725,295
         Net proceeds from private debt placement                             2,696,898                    --
         Increase in deferred financing costs                                  (419,002)                   --
         Net repayments, notes payable-bank                                  (1,837,833)                   --
         Repayments of long-term debt                                          (416,667)                   --
         Bank overdraft                                                         844,509                    --
                                                                           ------------            ------------
                  Net cash provided by financing activities                   7,513,332               6,595,425
                                                                           ------------            ------------
</TABLE>


     See accompanying notes to unaudited consolidated financial statements.



                                       9






                                  DYNAGEN, INC.

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                             Nine Months Ended
                                                                                             -----------------
                                                                                         September 30,   September 30,
                                                                                             1997             1996
                                                                                       ---------------   ------------



<S>                                                                                        <C>              <C>        
Net change in cash and cash equivalents                                                    (2,080,155)      (1,255,225)
Cash and cash equivalents at beginning of year                                              2,112,300        1,765,604
                                                                                        -------------    -------------

Cash and cash equivalents, end of period                                               $       32,145    $     510,379
                                                                                       ==============    =============

Supplemental cash flow information:  
         Conversion of preferred stock to common stock                                 $        2,325    $  3,461,150
         Conversion of convertible notes into common stock                             $    1,065,000    $       -
         Interest paid                                                                 $      549,527    $     77,332
Schedule of non cash investing and financing  activities:  On June 18, 1997, the
Company  purchased all of the common stock of Superior  Pharmaceutical  Company,
Inc. for  $16,250,000.  In connection with the  acquisition,  non cash financing
activities, liabilities assumed and goodwill were as follows:
         Fair value of assets acquired                                                   $10,913,834
         Cash paid for common stock                                                       (6,250,000)
         Fair value of common stock issued                                                (5,000,000)
         Note payable issued                                                              (5,000,000)
         Liabilities assumed                                                              (8,263,478)
                                                                                         -----------
         Goodwill (exclusive of other acquisition costs
         of $694,890)                                                                    $13,599,644
                                                                                         ===========




</TABLE>


     See accompanying notes to unaudited consolidated financial statements.




                                       10






                                  DYNAGEN, INC.

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1997



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   subsidiaries,   Superior
Pharmaceutical  Company and Able  Laboratories,  Inc.  Accordingly,  they do not
include all information and footnotes required by generally accepted  accounting
principles   for  complete   financial   statement   presentation.   Significant
intercompany balances and transactions have been eliminated in consolidation.

         As of December 31, 1996, the Company  changed from a fiscal year ending
June 30 to a fiscal year ending December 31.

         The results of  operations  for the interim  periods  reported  are not
necessarily  indicative of expected results for any future interim period or for
a full fiscal year. In the opinion of management, all adjustments have been made
(consisting only of normal recurring adjustments) which are necessary for a fair
presentation of operating results for the interim periods presented.

         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 Transition Report on Form 10-K as of December 31, 1996
filed with the Securities and Exchange Commission.

2.       NET LOSS PER SHARE

         Net loss per common share has been computed by dividing the net loss by
the weighted  average  number of shares of common stock  outstanding  during the
periods indicated. 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, 1997 consists of the following:

         Raw material               $  412,126
         Work in-process               221,059
         Finished goods              7,567,860
                                    ----------
                                    $8,201,045








                                       11





                                  DYNAGEN, INC.

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1997

                                   (Continued)


4.       BUSINESS ACQUISITIONS

         On  August  19,  1996,  the  Company  acquired  certain  assets of 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.  The results of  operations  related to Able have been  included  with
those of the Company since August 19, 1996.

         On June 18, 1997, the Company acquired all of the outstanding  stock of
Superior   Pharmaceutical   Company  ("Superior"),   a  distributor  of  generic
pharmaceutical   products.   The  Company  paid  the  shareholders  of  Superior
$6,250,000  in cash,  $5,000,000  in three  year notes and  1,666,667  shares of
DynaGen's  common  stock  with a  guaranteed  value of  $5,000,000.  DynaGen  is
obligated to issue to the  shareholders up to an additional  1,666,667 shares of
its common  stock after  twelve  months if its common stock is not trading at an
average  of at least  $3.00 per  share  for 10  consecutive  trading  days.  If,
immediately following the issuance of the additional 1,666,667 shares, DynaGen's
common stock is not trading for at least $1.50 per share,  DynaGen  shall pay to
the shareholders the difference between $1.50 and the then current trading price
of its common stock for each of the  3,333,334  shares.  DynaGen is obligated to
register the shares within eleven months after the closing of the acquisition.

         The former shareholders of Superior, who remain as senior management at
Superior,  may also  receive  certain  incentive  payments  based on  Superior's
performance  during  the three  years  following  the close of the  acquisition.
Immediately  following  the  closing  of the  acquisition,  DynaGen  contributed
additional capital of $1,750,000 to Superior.

         The  Superior  acquisition  has  been  accounted  for  as  a  purchase.
Accordingly,  the results of  operations  of Superior  have been included in the
Company's consolidated  financial statements since the date of acquisition.  The
preliminary  purchase price allocation was based on the estimated fair values at
the date of  acquisition  which resulted in an excess of purchase price over net
assets  acquired of  $14,294,534,  which is being  amortized on a  straight-line
basis over 15 years. The preliminary  allocation is subject to change because of
the  incentive  payments that may be made to certain  shareholders  and deferred
income  taxes.  The  Company  capitalized  costs  of  $694,890  related  to  the
acquisition.

         Unaudited  proforma  consolidated  operating  results for the  Company,
assuming the acquisitions of Able and Superior had been made as of the beginning
of the fiscal year for each of the periods presented, are as follows:

                     Nine Months Ended             Three Months Ended
                       September 30,                  September 30,
                   1997             1996           1997            1996
                  ------          --------        --------       ---------    

Revenues       $ 19,557,291     $ 24,825,713   $  5,609,865     $ 8,280,819
Net loss       $ (8,517,250)    $ (5,698,709)  $ (2,818,402)    $(1,682,102)
Net loss
  per share    $       (.25)    $       (.19)  $       (.09)    $      (.05)

The unaudited proforma  information is not necessarily  indicative either of the
actual  results of operations  that would have  occurred had the purchases  been
made as of the  beginning of each of the fiscal  periods  presented or of future
results of operations of the combined companies.



                                       12





                                  DYNAGEN, INC.

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1997

                                   (Continued)

5.       NOTES PAYABLE - SUPERIOR ACQUISITION

         In connection  with the  acquisition  of Superior,  the Company  issued
$5,000,000 in notes payable to the former Superior  stockholders.  The notes are
payable in quarterly  installments of principal and interest over three years at
an interest rate of 9.5% and are secured by a pledge of Superior Common Stock.

         As of September  30, 1997,  amounts  payable on the notes over the next
three fiscal years are as follows:

                       Year Ended
                       December 31,                Amount
                       ------------                ------

                           1997                $   833,333
                           1998                  1,666,667
                           1999                  1,666,667
                           2000                    416,666
                                               ------------
                                                $4,583,333
                                               ============

6.       FINANCING OF SUPERIOR ACQUISITION

         The  following  debt and equity  financings  were  arranged to fund the
acquisition of Superior:

         (A) DynaGen obtained senior  subordinated  debt financing of $3,000,000
from two  private  investors  bearing  interest  at  13.5%  payable  in  monthly
installments.  The principal is paid upon maturity at the end of five years. The
loan is secured by a first-lien  security  interest on the assets of DynaGen,  a
second-lien  security  interest  on the  assets of  Superior  and a  second-lien
interest  in the  pledge  of the  Superior  stock.  DynaGen  also  issued to the
investors  warrants to purchase  400,000 shares of Common Stock of DynaGen at an
exercise  price per share of $.01  exercisable  for five  years.  Under  certain
circumstances, the two investors may exchange the warrants to buy DynaGen common
stock for  warrants to purchase  15% of  Superior's  common stock at an exercise
price per share of $.01. In addition, these warrants are subject to put features
under certain circumstances.

         Proceeds of $702,000 from this  financing were allocated to the DynaGen
stock warrants, based on their estimated fair value. This amount is reflected in
the  accompanying  financial  statements as a warrant put liability  because the
warrants  are  subject  to a put which  gives the  holders  the choice of a cash
settlement  under  certain  conditions.  The  put  allows  the  holders  to sell
two-thirds of the warrants to the company  after three years for  $667,000,  and
all of the warrants after five years for $1,500,000,  unless the market value of
the shares issuable  pursuant to the warrant is equal to or greater than the put
value.

         The remaining proceeds from this offering  $2,298,000 were allocated to
the subordinated  debt. The debt discount of $702,000 is being amortized,  using
the interest method, over the term of the debt.

         (B) DynaGen  obtained  debt  financing  in the form of a bridge loan of
$500,000,  from a private  investor at an interest  rate of 7% per annum and due
September 30, 1997, to be used for the maintenance of net worth requirements for
Superior's  credit  facility,  working capital for operations of DynaGen and the
acquisition.  This loan is a non-recourse obligation of DynaGen. Two founders of
DynaGen have pledged 1 million shares of DynaGen's Common Stock in order



                                       13




                                  DYNAGEN, INC.

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1997

                                   (Continued)

to secure the  obligations  represented by this bridge loan. In connection  with
this bridge  loan,  the Company has issued  150,000  shares of its  unregistered
Common  Stock to the  investor.  On October  10,  1997,  the bridge loan and all
accrued  interest was converted into 5,015 shares of Series B Preferred Stock in
full satisfaction of the debt. An additional  150,000 shares of common stock was
issued to the investor in connection with the conversion.

         Proceeds of $150,000  from the debt  financing  were  allocated  to the
common stock based on the fair value of the common  stock at June 18, 1997.  The
balance of the proceeds was  allocated to the bridge loan.  The debt discount of
$150,000 on the bridge loan was fully amortized through September 30, 1997.

         (C) The  Company  sold 41,000  shares of Series A  Preferred  Stock and
warrants to purchase 328,000 shares of Common Stock for $4,100,000. The Series A
Preferred Stock has a stated  dividend of $5.00 per share per annum.  DynaGen is
obligated to register the shares of Common Stock issuable upon conversion of the
Series A Preferred  Stock and exercise of the warrants  within 90 days after the
closing of the  Acquisition.  The exercise price of the warrants will be 120% of
the average  closing bid price of  DynaGen's  Common  Stock for the five trading
days  immediately  preceding  the date on which the  registration  statement  is
declared effective.  The holders of Series A Preferred Stock have certain rights
of first refusal on future equity financings.

         The Series A preferred  stock may be  converted  into common stock at a
conversion  price equal to the lesser of 120% of the average  closing bid price,
as defined  (the  Series A Effective  Price) or  discounted  percentages  of the
Series A Effective  Price  decreasing  from 80% to 74% over time.  In  September
1997,  800 shares of Series A Preferred  Stock with  accumulated  dividends  was
converted into 232,489  shares of common stock.  Any  outstanding  shares of the
Series A Preferred  Stock will be  automatically  converted  to common stock two
years from the issue date.

         (D) The  Company  sold  7,500  shares of Series B  Preferred  Stock and
225,000 shares of Common Stock for $750,000 to a private investor.  The Series B
Preferred  Stock  has a stated  dividend  of $7.00 per  share  per  annum.  Upon
liquidation, the Series B Preferred Stock ranks junior to the Series A Preferred
Stock.  DynaGen is  obligated  to register  the 225,000  shares of Common  Stock
issued and the shares of Common Stock  issuable upon  conversion of the Series B
Preferred Stock within 150 days after the closing of the acquisition.

         The Series B preferred  stock may be  converted  into Common Stock at a
conversion  price equal to the lesser of 125% of the average  closing bid price,
as defined (the "Series B Effective  Price") or  discounted  percentages  of the
Series B Effective  Price  decreasing from 80% to 75% over time. Any outstanding
shares of the Series B Preferred Stock will be automatically converted to common
stock two years from the issue date.

7.       NOTES PAYABLE - BANK

         Superior  obtained  a  secured  revolving  line  of  credit  of  up  to
$9,000,000 from a bank to provide  working  capital for its general  operations.
Advances under the line of credit are subject to a borrowing base  consisting of
the sum of (1) 80% of Superior's eligible accounts  receivable,  plus (2) 60% of
Superior's eligible inventory.



                                       14







                                  DYNAGEN, INC.

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1997

                                   (Continued)


         The  advances  under  the line are  secured  by a  first-lien  security
interest  in all of the  assets  of  Superior  and are  guaranteed  by  DynaGen.
Superior  may draw on the line of credit  until  April 5, 1998.  Interest on the
line of credit is based on the lower of the prime  lending rate or LIBOR plus 2%
(7.66% at September 30, 1997).

8.       LONG-TERM DEBT

Long-term debt consists of the following:
         Notes payable - Superior acquisition        $4,583,333
         Senior subordinated debt                     2,328,963
         Bridge loan                                    500,000
         Convertible note payable                       535,000
                                                        -------
                                                      7,947,296
Less: current maturities                             (2,701,669)
                                                     ---------- 
Long-term debt                                       $5,245,627
                                                     ==========


9.       RECENT FINANCING ACTIVITIES

         On August 7,  August 15 and  August 22,  1997,  the  Company  issued an
aggregate  of 4,950  shares of its Series A Preferred  Stock,  .01 par value per
share and Common Stock  Purchase  Warrants to purchase  39,600  shares of Common
Stock for a purchase price of $495,000.

         On August 21, 1997,  DynaGen  issued 7,500 shares of Series C Preferred
Stock and a Common  Stock  Purchase  Warrant to purchase  250,000  shares of its
Common Stock to a private investor for a purchase price of $750,000.

         On August 21 and  September  11,  1997,  the Company  issued  1,100,000
shares of its common stock to investment bankers as consideration for investment
banking and placement agent services  rendered to the Company in connection with
its debt and equity financings.

         On August 28, 1997, the Company issued a warrant to purchase  1,000,000
shares of Common Stock at an exercise price of $0.15 per share as  consideration
of investment  banking services rendered to the Company by an investment banker.
The Company recognized  compensation expense of $452,000 in the third quarter of
Fiscal 1997 based on the fair value of the warrant.

         Additional information on financing activities is presented in Part II,
Item 2c, Changes in Securities.


                                       15







                                  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 raise capital for
future operations and  commercialization of its products;  successfully develop,
test, produce and market its proposed products; 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;  integrate the products and personnel the Company
acquired  in the  acquisition  of Able  Laboratories,  Inc.  ("Able"),  Superior
Pharmaceutical   Company   ("Superior")   and  any  future   acquisitions;   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,  including without limitation its transition report on Form
10-K for the period ended December 31, 1996.

                              RESULTS OF OPERATIONS

RECENT AND PROPOSED ACQUISITIONS

         On August 19,  1996,  the  Company  acquired  the tablet  manufacturing
business of Able, a generic pharmaceutical product subsidiary of ALPHARMA,  Inc.
On June  18,  1997,  the  Company  acquired  all of the  outstanding  shares  of
Superior, a distributor of generic pharmaceutical  products.  These acquisitions
have been accounted for using the "purchase" method of accounting.  As a result,
the results of operations  for the three and nine month periods ended  September
30, 1997 reflect a full three and nine months of operations,  respectively,  for
Able, and for Superior,  reflect a full three months of operations for the three
months ended  September 30, 1997 and three and one-half months of operations for
the nine months ended  September  30, 1997.  The results of  operations  for the
three and nine months ended  September 30, 1996 do not reflect any operations of
Superior and includes 42 days of operations for Able.

         On September 18, 1997, the Company signed a letter of intent to acquire
assets and liabilities of Generic  Distributors Limited Partnership ("GDI"). GDI
distributes  generic  pharmaceutical  products  primarily in  Louisiana  and the
southern  United  States.  In 1996,  GDI  reported  revenues of $6.0 million and
earnings  before taxes of  $325,000.  The  proposed  acquisition  price of $2.25
million  consists  of $1.2  million  in cash and $1.05  million  in  convertible
preferred  stock.  The preferred stock would not be convertible for at least one
year from the closing of the  transaction.  The  Company  intends to finance the
cash portion of the purchase price through bank debt.

         Finalization  of the GDI  acquisition by the Company will depend on the
Company's  ability  to  obtain  adequate  financing  and  the  negotiation  of a
definitive  acquisition  agreement.  There  can be no  assurance  that  the  GDI
acquisition  will occur and if the  acquisition  does occur that any anticipated
benefits from this acquisition will be realized.

                   THREE-MONTH PERIOD ENDED SEPTEMBER 30, 1997
        AS COMPARED WITH THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 1996

         Revenues  for the third  quarter of the year ending  December  31, 1997
("Fiscal 1997") were $5,610,000 versus $59,000 for the third quarter of the year
ended  December  31,  1996  ("Fiscal  1996").  This  increase of  $5,551,000  is
primarily  the result of generic  pharmaceutical  product sales by the Company's
wholly-owned subsidiaries, Able and Superior.


                                       16







                                  DYNAGEN, INC.
            Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

         Cost of product sales was 83% of product sales for the third quarter of
Fiscal  1997 as  compared  to 43% for the same  period as Fiscal  1996.  This is
primarily due to low  production  and sales levels at Able which did not support
the fixed  manufacturing  costs at the Able  facility.  Gross  profit on product
sales  increased from $33,000 in the third quarter of Fiscal 1996 to $927,000 in
the third quarter of Fiscal 1997  primarily due to Superior's  product sales and
gross profit.

         Research and development  expenses for the third quarter of Fiscal 1997
were $723,000  versus $760,000 for the same period as Fiscal 1996, a decrease of
$37,000.  Research  and  development  expenses  primarily  decreased  due to the
completion of  NicErase-SL  Phase 3 clinical  trials and  discontinuance  of the
NicErase-SL  development  program.  This was  partially  offset by research  and
development expenses for the Company's breast biopsy and ImmuDynTM technologies,
both in early stages of development. In addition, the Company is also conducting
research and  development on generic  pharmaceuticals  and expects  research and
development  expenses to increase in the future.  Continuance  of the  Company's
research  and  development  programs  is  dependent  upon its  ability to obtain
sufficient capital. See Liquidity and Capital Resources.

         Selling,  general and administrative  expenses for the third quarter of
Fiscal  1997 were  $2,546,000  versus  $1,072,000  for the same period as Fiscal
1996,  an increase of  $1,474,000.  This increase is primarily  attributable  to
operating expenses of the Company's generic pharmaceutical  business at Superior
and Able and compensation  expense recognized from the issuance of stock options
and warrants.

         Investment  income  decreased by $92,000 from $96,000 to $3,000 for the
third  quarter of Fiscal 1997 as compared to the third  quarter of Fiscal  1996,
respectively,  as the Company had less funds available for  investment.  For the
third quarter of Fiscal 1997, the increase in interest  expense is primarily due
to private debt financing for the Superior acquisition.

                   NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1997
         AS COMPARED WITH THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1996

         Revenues  for the nine  months of Fiscal  1997 were  $7,444,000  versus
$281,000  for the nine months of Fiscal 1996.  This  increase of  $7,193,000  is
primarily  the result of product  sales by the  Company's  wholly-owned  generic
pharmaceutical subsidiaries, Able and Superior.

         Cost of product sales was  approximately  100% of product sales for the
nine months of Fiscal 1997 due to low  production and sales levels at Able which
did not  support  the  fixed  manufacturing  costs  of the  Able  facility.  The
Company's  management  recently  initiated  cost  reduction  measures at Able to
eliminate  or reduce  costs,  including  staff  reductions  and  elimination  of
discretionary spending.

         Research  and  development  expenses for the nine months of Fiscal 1997
were $2,370,000 versus $2,842,000 for the same period as Fiscal 1996, a decrease
of  $472,000.  This  decrease  is  primarily  the  result of the  completion  of
NicErase-SL  Phase 3 clinical trials and the  discontinuance  of the NicErase-SL
development  program.  The Company is continuing its development  efforts on the
breast biopsy and ImmuDynTM,  technologies, both in early stages of development.
The   Company  is  also   developing   several   generic   versions  of  branded
pharmaceuticals to support its generic drug business.

         Selling,  general and  administrative  expenses  for the nine months of
Fiscal  1997 were  $4,795,000  versus  $2,569,000  for the same period as Fiscal
1996,  an increase of  $2,226,000.  This increase is primarily  attributable  to
acquisition and business development costs, and compensation expense of $728,000
recognized  from the issuance of stock options and warrants,  and the inclusion,
in Fiscal 1997, of selling, general and administrative expenses of the Company's
subsidiary operations at Able and Superior.

         Investment  income  decreased by $240,000 from $352,000 to $112,000 for
the nine months of Fiscal  1997 as  compared to the same period as Fiscal  1996,
respectively,  as the Company had less funds available for investment.  Interest
expense and  amortized  debt  financing  costs relate  primarily to private debt
financing for the Superior acquisition.


                                       17




                                  DYNAGEN, INC.

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

            ----------------------------------------------------------

                         LIQUIDITY AND CAPITAL RESOURCES

         As of September 30, 1997, the Company had a deficit  working capital of
$628,000  versus  working  capital of $5,502,000 at December 31, 1996.  Cash and
investment  securities  were  $32,000  at  September  30,  1997 as  compared  to
$5,117,000 at December 31, 1996. Working capital was used primarily for research
and development and to fund Able and its operations during Fiscal 1997.

         The  Company's  current  working  capital is  insufficient  to fund its
current level of operations.  In addition,  the Company has incurred significant
losses since inception. To date, the Company has financed current operations and
acquisitions  primarily through private and public sale of equity as well as the
private sale of debt.  In the third quarter of Fiscal 1997,  the Company  raised
gross proceeds of $1,245,000  through the private sale of its equity.  In August
1997,  the Company  negotiated the sale to a third party of between $2.4 million
and $4.8  million of its  equity  subject  to  certain  restrictions  based upon
trading  volume,  share price and other factors.  If the Company is able to draw
upon this financing,  management  anticipates that the available working capital
will be sufficient to fund the current level of  operations,  including the Able
and Superior businesses,  through June 1998. There can be no assurance, however,
that the Company  will be able to draw upon this  financing.  The  Company  also
intends  to spin off its  breast  biopsy  and  ImmuDynTM  technologies  into two
separate majority-owned  operating entities and to pursue separate financing for
each.  There can be no  assurance,  however,  that the  Company  will be able to
secure this  financing.  The survival of the Company is dependent on its ability
to obtain additional  financing and to generate revenue and profits from sale of
its  products.  If the  Company is unable to obtain  additional  financing,  the
Company will be unable to maintain its current level of  operations  and will be
required to reduce or eliminate its expenditures relating to its business.

         While the acquisition of Able has increased the Company's revenues, the
acquisition has also increased costs and expenses,  capital expenditures and net
cash used for operating activities.  In recent months, the Company has initiated
certain  cost  reduction  programs  to reduce the net cash  required  to support
Able's operation. The Company intends to fund Able's operations until it becomes
self-supporting.  The Company continues to pursue additional  sources of capital
in order to fund the growth and operations of the Able generic drug business and
its product development efforts. There can be no assurance that the Company will
be able to secure  additional  financing  for the Able business or its continued
product  development  efforts or that  financing  will be available on favorable
terms.  If the  Company  is unable  to obtain  such  additional  financing,  the
Company's  ability  to  maintain  its  current  level  of  operations  would  be
materially and adversely  affected and the Company will be required to reduce or
eliminate certain expenditures,  including its research and development activity
with respect to certain proposed products.

         Superior's  operations  are funded from its  internally  generated cash
flow and  financed  with a line of credit to fund short term cash  requirements.
The  Company  believes  that  Superior  will  fund  its own  operations  for the
foreseeable future.


PART II.  OTHER INFORMATION
Item 2.  Changes in Securities
         a.       Not applicable.
         b.       Not applicable.
         c.       On August 7, August 15 and August 22, 1997, the Company issued
                  an aggregate of 4,950 shares of its Series A Preferred  Stock,
                  $.01 par value per share,  and Common Stock Purchase  Warrants
                  to purchase an aggregate  of 39,600  shares of Common Stock to
                  ten  accredited  investors for an aggregate  purchase price of
                  $495,000.  The  Company is  obligated  to  register  under the
                  Securities  Act the  shares  of  Common  Stock  issuable  upon
                  conversion of the Series A Preferred Stock and exercise of the
                  warrants  within  90 days  after  the date of the sale of such
                  Series A Preferred Stock and warrants.  The Series A Preferred
                  Stock is  convertible  into Common  Stock at the lesser of (i)
                  120% of the average


                                       18


                                  DYNAGEN, INC.

                           PART II. OTHER INFORMATION

                  closing bid price of the Company's Common Stock as reported by
                  the Nasdaq  SmallCap  Market (or such other  exchange on which
                  the Common  Stock is then  traded) for the five  trading  days
                  immediately  preceding  the date on which the  Securities  and
                  Exchange Commission (the "Commission")  declares effective the
                  registration  statement to be filed  registering the shares of
                  Common  Stock  issuable  upon   conversion  of  the  Series  A
                  Preferred  Stock  and  exercise  of  the  warrants  or  (ii) a
                  discount  on the average  closing  bid price of the  Company's
                  Common  Stock as  reported by the Nasdaq  SmallCap  market (or
                  such other  exchange on which the Common Stock is then traded)
                  for the five trading days  immediately  preceding  the date on
                  which the Series A Preferred Stock is converted.  The exercise
                  price of the warrants will be 120% of the average  closing bid
                  price of the Company's  Common Stock as reported by the Nasdaq
                  SmallCap  Market (or such other  exchange  on which the Common
                  Stock is then traded) for the five  trading  days  immediately
                  preceding the date on which the Commission  declares effective
                  the registration  statement to be filed registering the shares
                  of Common  Stock  issuable  upon  conversion  of the  Series A
                  Preferred Stock and exercise of the warrants. The warrants are
                  exercisable  for two years.  The Series A Preferred  Stock and
                  warrants  were  issued  pursuant  to  Regulation  D under  the
                  Securities Act of 1933, as amended (the "Securities Act").

                  On August 21,  1997,  the Company  issued  7,500 shares of its
                  Series C  Preferred  Stock,  $.01 par value per  share,  and a
                  Common Stock  Purchase  Warrant to purchase  250,000 shares of
                  its  Common  Stock  to  Endeavour  Capital  Fund  S.A.  for an
                  aggregate purchase price of $750,000. The Company is obligated
                  to  register  under the  Securities  Act the  shares of Common
                  Stock issuable upon conversion of the Series C Preferred Stock
                  and  exercise of the warrant  within 90 days after the date of
                  the sale of such Series C  Preferred  Stock and  warrant.  The
                  Series C Preferred  Stock is convertible  into Common Stock at
                  the lesser of (i) 125% of the average closing bid price of the
                  Company's  Common  Stock as  reported  by the Nasdaq  SmallCap
                  Market (or such other  exchange  on which the Common  Stock is
                  then traded) for the five trading days  immediately  preceding
                  August 21, 1997 or (ii) a discount on the average  closing bid
                  price of the Company's  Common Stock as reported by the Nasdaq
                  SmallCap  Market (or such other  exchange  on which the Common
                  Stock is then traded) for the five  trading  days  immediately
                  preceding  the date on which the Series C  Preferred  Stock is
                  converted.  The exercise  price of the warrants is 125% of the
                  average  closing bid price of the  Company's  Common  Stock as
                  reported by the Nasdaq SmallCap Market (or such other exchange
                  on which the Common  Stock is then  traded) for the 10 trading
                  days  immediately  preceding  August 21, 1997.  The warrant is
                  exercisable  for three years.  In connection  with the sale of
                  the Series C Preferred Stock and the warrant, the Company also
                  entered into a binding obligation to sell to Endeavour Capital
                  Fund S.A. no less than 24,000  shares and up to 48,000  shares
                  of its Series D Preferred  Stock,  at a purchase price of $100
                  per share,  in a series of tranches of between 2,000 and 4,000
                  shares not less than 30 days  apart.  The  Series C  Preferred
                  Stock and the warrant  were issued  pursuant to  Regulation  D
                  under the Securities Act.

                  On August 21, 1997,  the Company  issued 100,000 shares of its
                  Common Stock to Jesup & Lamont as consideration for investment
                  banking and placement agent services  rendered to the Company.
                  The  shares  of  Common   Stock  were   issued  in  a  private
                  transaction  not  involving  a public  offering,  pursuant  to
                  Section 4(2) of the Securities Act.

                  On August 28, 1997,  the Company  issued to H.J.  Myers & Co.,
                  Inc. a warrant to purchase 1,000,000 shares of Common Stock at
                  an exercise  price of $0.15 per share,  as  consideration  for
                  investment  banking  services  rendered  to the  Company.  The
                  warrant was  immediately  exercisable  on the date of issuance
                  with respect to 700,000 of the shares of Common Stock  subject
                  thereto,   and  the  remaining  300,000  shares  shall  become
                  exercisable,  in such  installments  as shall be determined by
                  the Board of Directors of the Company,  upon the  satisfactory
                  performance  by H.J.  Meyers  & Co.,  Inc.  of the  investment
                  banking  services.   The  warrant  was  issued  in  a  private
                  transaction  not  involving  a public  offering,  pursuant  to
                  Section 4(2) of the Securities Act.



                                       19





                                  DYNAGEN, INC.

                           PART II. OTHER INFORMATION

                  On August 1, 1997,  the Company  issued  13,481  shares of its
                  Common  Stock to GFL  Performance  Fund  Limited in payment of
                  $10,700 in  interest  due on the  Company's  Convertible  Note
                  dated  February  7, 1996.  The shares were issued in a private
                  transaction  not  involving  a public  offering,  pursuant  to
                  Section 4(2) of the Securities Act.

                  On September 11, 1997, the Company issued  1,000,000 shares of
                  its Common Stock to Curzon Management Limited as consideration
                  for investment  banking and placement agent services  rendered
                  to the  Company.  The shares of Common  Stock were issued in a
                  private transaction not involving a public offering,  pursuant
                  to Section 4(2) of the Securities Act.

Item 5.           Other Information.

                  On  August  29,  1997,  the  Company  issued  a press  release
                  regarding  its  decision  to  discontinue   its   NicErase7-SL
                  (sublingual  tablet)  program as a result of  clinical  trials
                  which did not show  statistically  significant  efficacy  with
                  respect  to this  technology.  The press  release  is filed as
                  Exhibit 99a to this report.

                  Under   applicable  law,  the  Company's   current  or  future
                  licensees  will not be  permitted to sell  NicErase,  and thus
                  generate  any  revenue  from their  development  of  NicErase,
                  unless they obtain the necessary regulatory approvals from the
                  U.S.  Food  and  Drug   Administration  (the  "FDA")  for  the
                  commercial  sale of that  product.  To obtain such  regulatory
                  approvals,  the  Company's  current or future  licensees  must
                  demonstrate   to  the   satisfaction   of  the  FDA,   through
                  preclinical studies and clinical trials, that NicErase is safe
                  and effective.  In light of the Company's  recently  completed
                  pivotal Phase 3 clinical trial of  NicErase-SL,  which did not
                  show statistically significant efficacy, the Company is unable
                  to predict  whether  delivery  formulations  of lobeline other
                  than  sublingual  will  demonstrate   acceptable   safety  and
                  efficacy  to obtain FDA  approval.  There can be no  assurance
                  that the Company's current or future licensees will be able to
                  successfully formulate new delivery systems for lobeline, that
                  such licensees will have sufficient technological or financial
                  resources  to initiate  and  complete  the  required  clinical
                  trials, or that such trials will demonstrate sufficient safety
                  and  efficacy to obtain the required  regulatory  approvals or
                  develop  marketable  products.  A number of  companies  in the
                  pharmaceutical  industry have suffered significant setbacks in
                  advanced  clinical  trials,  even after  promising  results in
                  earlier  trials.  If any  future  clinical  trials do not show
                  NicErase to be safe and effective in any alternative  delivery
                  format,  and if the  Company's  licensees  are thus  unable to
                  commercialize  NicErase,  the  Company  will not  realize  any
                  revenues from the NicErase product.

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.



                                       20





                                  DYNAGEN, INC.

                           PART II. OTHER INFORMATION





Exhibit
  No.                          Description of Exhibit
  ---                           ----------------------

3a       Certificate  of  Designations,  Preferences  and  Rights  of  Series  A
         Preferred  Stock of the Company (filed as Exhibit 4.13 to the Company's
         Current Report on Form 8-K dated June 18, 1997).

3b       Certificate  of  Designations,  Preferences  and  Rights  of  Series  C
         Preferred Stock of the Company (filed herewith).

3c       Certificate  of  Designations,  Preferences  and  Rights  of  Series  D
         Preferred Stock of the Company (filed herewith).

4a       Form  of  Securities  Purchase  Agreement  among  the  Company  and the
         purchasers of Series A Preferred Stock (filed herewith).

4b       Master  Registration  Rights  Agreement  dated August 6, 1997 among the
         Company  and  the  purchasers  of  Series  A  Preferred   Stock  (filed
         herewith).

4c       Form of Common  Stock  Purchase  Warrant  issued by the  Company to the
         purchasers  of Series A Preferred  Stock  (filed as Exhibit 4.16 to the
         Company's Current Report on Form 8-K dated June 18, 1997).

4d       Stock Purchase  Agreement dated August 21, 1997 between the Company and
         Endeavour Capital Fund S.A. (filed herewith).

4e       Registration Rights Agreement dated August 21, 1997 between the Company
         and Endeavour Capital Fund S.A. (filed herewith).

4f       Common  Stock  Purchase  Warrant  dated  August 21,  1997 issued by the
         Company to Endeavour Capital Fund S.A. (filed herewith).

4g       Common  Stock  Purchase  Warrant  dated  August 28,  1997 issued by the
         Company to H.J. Meyers & Co., Inc. (filed herewith).

10a      Indenture of Lease dated July 1, 1997 between Rivertech  Associates LLC
         and the Company (filed herewith).

27       Financial Data Schedule (filed herewith in electronic format only).

99a      Press Release of the Company dated August 29, 1997 (filed herewith).

         (b) Reports on Form 8-K:

         During the quarter ended  September 30, 1997, the Company filed on July
         3, 1997 a Current  Report on Form 8-K dated June 18, 1997 reporting the
         Company's   acquisition   of  the   outstanding   stock   of   Superior
         Pharmaceutical  Company.  On July 11 and August 29,  1997,  the Company
         filed Current Reports on Form 8-K/A amending the Current Report on Form
         8-K dated June 18, 1997.



                                       21




                                   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, 1997


  
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