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

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------

                                   FORM 10-QSB
                                   -----------

            [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended: September 30, 1999

            [ ] 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
   incorporation or organization)                     Identification No.)


                               1000 Winter Street
                                   Suite 2700
                                Waltham, MA 02451
                    (Address of principal executive offices)


                                 (781) 890-0021
                           (Issuer's telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X]      No [_]

As of October 28, 1999 there were outstanding 57,883,355 shares of common stock,
$.01 par value per share.

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

<PAGE>
                                  DYNAGEN, INC.

                                   FORM 10-QSB

                                QUARTERLY REPORT

                               SEPTEMBER 30, 1999

                                TABLE OF CONTENTS


Facing Page ........................................................    1

Table of Contents ..................................................    2

PART I.  FINANCIAL INFORMATION (*)

         Item 1.  Financial Statements:
                  Condensed Consolidated Balance Sheet .............    3
                  Condensed Consolidated Statements of Loss ........    5
                  Condensed Consolidated Statements of Changes
                    in Stockholders' Equity (Deficit) ..............    7
                  Condensed Consolidated Statements of
                    Cash Flows .....................................    9
                  Notes to Unaudited Condensed Consolidated
                    Financial Statements ...........................   11

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

PART II. OTHER INFORMATION

         Item 1.  Legal Proceedings ................................   25
         Item 2.  Changes in Securities ............................   25
         Item 3.  Defaults on Senior Securities ....................   26
         Item 6.  Exhibits and Reports on Form 8-K .................   27

SIGNATURES .........................................................   28

(*)      The financial information at December 31, 1998 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
<PAGE>

PART I.  FINANCIAL INFORMATION

                                  DYNAGEN, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      -------------------------------------
                                   (Unaudited)
                                   -----------

                                     ASSETS
                                                  September 30,     December 31,
                                                      1999              1998
                                                   -----------      -----------
Current assets:
     Cash and cash equivalents                     $   702,788      $    97,045
     Accounts receivable, net of
        allowance for doubtful
        accounts of $39,297 and $68,133              4,923,798        3,673,472
     Rebates                                           307,860          398,724
     Inventory                                       7,799,680        6,647,079
     Notes receivable                                   86,500          150,000
     Prepaid expenses and other
         current assets                              1,120,193          201,470
                                                   -----------      -----------
     Total current assets                           14,940,819       11,167,790
                                                   -----------      -----------

Property and equipment, net                          3,116,231        1,685,010
                                                   -----------      -----------

Other assets:
     Customer lists, net of accumulated
         amortization of $5,098,515 and
         $4,205,133                                  2,463,021        7,636,072
     Goodwill, net of accumulated amorti-
         tization of $57,172 and $48,567                   -0-          337,652
     Patents and trademarks, net of
         accumulated amortization of
         $16,305 and $0                                 48,924           65,229
     Deferred debt financing costs, net
         of accumulated amortization                   662,996          277,325
     Deposits and other assets                         357,519          276,372
                                                   -----------      -----------
     Total other assets                              3,532,460        8,592,650
                                                   -----------      -----------
                                                   $21,589,510      $21,445,450
                                                   ===========      ===========

     See accompanying notes to unaudited consolidated financial statements.



                                        3
<PAGE>

                                  DYNAGEN, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      -------------------------------------

                 LIABILITIES AND STOCKHOLDERS' EQUITY (Deficit)
                                   (Unaudited)
                                   -----------


                                                  September 30,     December 31
                                                      1999              1998
                                                   -----------      -----------
Current liabilities:
     Bank overdraft                                $   816,314      $   621,313
     Notes payable and current
         portion of long-term debt                  10,702,708       13,162,041
     Accounts payable and accrued
         expenses                                    4,111,625        3,705,209
     Deferred revenue                                      -0-          100,000
     Settlement obligation, current portion             14,460              -0-
     Acquisition obligation                                -0-        4,083,000
                                                   -----------      -----------
     Total current liabilities                      15,645,107       21,671,563

Warrant put liability                                  949,365          858,435
Long term debt, less current portion                 3,132,063        1,510,813
Settlement obligation, less current portion            471,423              -0-
                                                   -----------      -----------
     Total liabilities                              20,197,958       24,040,811
                                                   -----------      -----------

Commitments and contingencies
Stockholders' equity (deficit):
     Preferred stock, $.01 par value, 10,000,000
         shares authorized, 41,425 and 52,152
         shares of Series A through K outstanding,
         (liquidation value $6,482,485 and
         $5,212,977)                                       414              521
     Common stock, $.01 par value, 75,000,000
         shares authorized, 57,548,131 and
         37,612,612 shares issued and outstanding      575,482          376,126
     Additional paid-in capital                     56,132,350       47,181,545
     Accumulated deficit                           (55,316,694)     (50,153,553)
                                                   -----------      -----------

     Total stockholders' equity (deficit)            1,391,552       (2,595,361)
                                                   -----------      -----------
                                                   $21,589,510      $21,445,450
                                                   ===========      ===========

     See accompanying notes to consolidated unaudited financial statements.


                                        4
<PAGE>
                                  DYNAGEN, INC.

                    CONDENSED CONSOLIDATED STATEMENTS OF LOSS
                    -----------------------------------------
                                   (Unaudited)
                                   -----------

                                                        Three Months Ended

                                                  September 30,    September 30,
                                                      1999              1998
                                                   -----------      -----------
Revenues
     Product sales                                 $ 7,368,820      $ 6,617,614
     Fees and royalties                                    -0-              188
                                                   -----------      -----------
     Total revenues                                  7,368,820        6,617,802
                                                   -----------      -----------

Costs and expenses:
     Cost of sales                                   5,721,391        6,076,656
     Research and development                          699,397          110,487
     Selling, general and administrative             2,013,761        3,206,820
                                                   -----------      -----------
     Total costs and expenses                        8,434,549        9,393,963
                                                   -----------      -----------

     Operating loss                                 (1,065,729)      (2,776,161)
                                                   -----------      -----------

Other income (expense):
     Investment and other income, net                    5,294          143,283
     Interest and financing expense                   (603,882)        (468,091)
                                                   -----------      -----------

     Other income (expense), net                      (598,588)        (324,808)
                                                   -----------      -----------

     Net loss                                       (1,664,317)      (3,100,969)

Less returns to preferred stockholders:
     Beneficial conversion feature                     268,750          245,156
     Dividends paid and accrued                         60,549           28,357
                                                   -----------      -----------

Net loss applicable to common stock                $(1,993,616)     $(3,374,482)
                                                   ===========      ===========

Net loss per share-basic                           $     (0.03)     $     (0.14)
                                                   ===========      ===========

Weighted average shares outstanding                 57,016,814       24,589,980
                                                   ===========      ===========

     See accompanying notes to consolidated unaudited financial statements.


                                        5
<PAGE>
                                  DYNAGEN, INC.

                    CONDENSED CONSOLIDATED STATEMENTS OF LOSS
                    -----------------------------------------
                                   (Unaudited)
                                   -----------

                                                         Nine Months Ended

                                                  September 30,    September 30,
                                                      1999              1998
                                                   -----------      -----------
Revenues
     Product sales                                 $20,974,432      $20,009,036
     Fees and royalties                                    225              553
                                                   -----------      -----------
     Total revenues                                 20,974,657       20,009,589
                                                   -----------      -----------

Costs and expenses:
     Cost of sales                                  16,903,374       17,145,156
     Research and development                        1,198,033          430,774
     Selling, general and administrative             6,370,083        8,437,873
     Loss on impairment of customer lists              400,000              -0-
                                                   -----------      -----------
     Total costs and expenses                       24,871,490       26,013,803
                                                   -----------      -----------

     Operating loss                                 (3,896,833)      (6,004,214)
                                                   -----------      -----------

Other income (expense):
     Investment and other income, net                  483,278          297,894
     Interest and financing expense                (1,749,586)       (1,269,242)
                                                   -----------      -----------
         Other income (expense), net                (1,266,308)        (971,348)
                                                   -----------      -----------

     Net loss                                       (5,163,141)      (6,975,561)

Less returns to preferred stockholders:
     Beneficial conversion feature                   1,264,127          570,198
     Dividends paid and accrued                        108,664          126,006
                                                   -----------      -----------

Net loss applicable to common stock                $(6,535,932)     $(7,671,765)
                                                   ===========      ===========

Net loss per share-basic                           $     (0.13)     $     (0.45)
                                                   ===========      ===========

Weighted average shares outstanding                 48,541,680       17,023,765
                                                   ===========      ===========

     See accompanying notes to consolidated unaudited financial statements.


                                        6
<PAGE>
                                  DYNAGEN, INC.

       CONDENSED CONSOLIDATED STAEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
       -------------------------------------------------------------------
                                    (DEFICIT)
                                    ---------
                  Nine Months Ended September 30, 1999 and 1998

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
           Description                           Preferred Stock                  Common Stock
--------------------------------------      --------------------------      --------------------------
                                              Shares         Amounts          Shares         Amounts
                                            ----------      ----------      ----------      ----------
<S>                                         <C>             <C>             <C>             <C>
Balance at 12/31/97 (as restated)               63,522      $      635       4,315,137      $   43,151
Stock issued for GDI acquistion                 12,000             120              --              --
Shares issued in private placement              34,000             340              --              --
Stock issued for services                           --              --       1,562,671          15,626
Employee stock & stock options granted
   for services                                     --              --         300,000           3,000
Issuance of common stock purchase
   warrants                                         --              --              --              --
Common stock issued for interest                    --              --         416,167           4,162
Conversion of note payable to
   preferred stock                               4,500              45              --              --
Delayed registration penalty                        --              --              --              --
Conversion of note payable into common
   stock                                            --              --       1,798,526          17,986
Conversion of family loans                          --              --       1,560,000          15,600
Conversion of preferred stock                  (58,241)           (582)     16,435,759         164,358
Adjustment due to change in ownership
   of former subsidiary                             --              --              --              --
Comprehensive Income: Net Loss                      --              --              --              --
                                            ----------      ----------      ----------      ----------
Balance at September 30, 1998                   55,781      $      558      26,388,260      $  263,883
                                            ==========      ==========      ==========      ==========

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


Balance @ 12/31/98                              52,152      $      521      37,612,612      $  376,126
Stock options and warrants exercised                --              --         347,572           3,476
Shares issued in private placement              24,500             245              --              --
Conversion of preferred stock                  (35,227)           (352)     11,615,331         116,154
Conversion of debt                                  --              --       3,407,641          34,076
Stock issued for bonus                              --              --         125,000           1,250
Stock issued for services                           --              --       2,940,000          29,400
Stock and warrants issued for Superior
   settlement                                       --              --       1,500,000          15,000
Comprehensive Income: Net loss                      --              --              --              --
                                            ----------      ----------      ----------      ----------
Balance at September 30, 1999                   41,425      $      414      57,548,156      $  575,482
                                            ==========      ==========      ==========      ==========

------------------------------------------------------------------------------------------------------
</TABLE>

     See accompanying notes to consolidated unaudited financial statements.

                                        7
<PAGE>
                                  DYNAGEN, INC.

      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
      --------------------------------------------------------------------
                                    (DEFICIT)
                                    ---------
            Nine Months Ended September 30, 1999 and 1998 (continued)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                        Additional         Accumulated
           Description                                Paid-In Capital        Deficit            Total
--------------------------------------                 ------------       ------------       ------------
<S>                                                    <C>                <C>                <C>
Balance at 12/31/97 (As Restated)                      $ 40,122,386       $(37,541,544)      $  2,624,628
Stock issued for GDI acquisition                          1,199,880                 --          1,200,000
Shares issued in private placements                       3,251,698                 --          3,252,038
Stock issued for services                                   655,584                 --            671,210
Employee stock & stock options granted
   for services                                             128,400                 --            131,400
Issuance of common stock purchase warrants                  182,500                 --            182,500
Common stock issued for interest                            139,528                 --            143,690
Conversion of note payable to preferred stock               449,955                 --            450,000
Delayed registration penalty                               (175,000)                --           (175,000)
Conversion of note payable into common stock                412,014                 --            430,000
Conversion of family loans                                  179,400                 --            195,000
Conversion of preferred stock                              (163,776)                --                 --
Adjustment due to change in
   ownership of former subsidiary                           468,888                 --            468,888
Comprehensive Income: Net Loss                                   --         (6,975,561)        (6,975,561)
                                                       ------------       ------------       ------------
Balance at September  30, 1998                         $ 46,851,457       $(44,517,105)      $  2,598,793
                                                       ============       ============       ============

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

Balance at 12/31/98                                    $ 47,181,545       $(50,153,553)      $ (2,595,361)
Stock options and warrants exercised                         (3,376)                --                100
Shares issued in private placement                        5,138,239                 --          5,138,484
Conversion of preferred stock                              (115,802)                --                 --
Conversion of debt                                        1,016,809                 --          1,050,885
Stock issued for bonus                                       27,500                 --             28,750
Stock issued for services                                   905,435                 --            934,835
Stock and warrants issued for Superior settlement         1,982,000                 --          1,997,000
Comprehensive income: Net Loss                                   --         (5,163,141)        (5,163,141)
                                                       ------------       ------------       ------------
Balance at September 30, 1999                          $ 56,132,350       $(55,316,694)      $  1,391,552
                                                       ============       ============       ============

---------------------------------------------------------------------------------------------------------
</TABLE>

     See accompanying notes to consolidated unaudited financial statements.

                                        8
<PAGE>
                                  DYNAGEN, INC.

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

                                                         Nine Months Ended

                                                  September 30,    September 30,
                                                      1999              1998
                                                   -----------      -----------
Cash flows from operating activities:
     Net loss                                      $(5,163,141)     $(6,975,561)
     Adjustments to reconcile net loss to net
         cash used for operating activities:
     Depreciation and amortization                   1,250,509        2,346,105
     Loss on impairment of customer lists              400,000               --
     Stock, stock options and warrants issued
         for services                                  963,585        1,128,802
     Write-off of patent cost                               --           97,076
     (Increase) decrease in operating assets:
     Accounts receivable                            (1,250,326)         259,332
     Rebates                                            90,864           85,804
     Inventory                                      (1,152,601)       2,608,532
     Prepaid expenses and other current assets        (918,723)         157,969
     Deposits and other assets                         (81,147)         226,944
     Notes receivable                                   63,500               --
     Increase (decrease) in operating liabilities:
     Accounts payable and accrued expenses             867,633       (2,636,119)
     Deferred revenue                                 (100,000)              --
                                                   -----------      -----------

     Net cash used for operating activities         (5,029,847)      (2,701,116)
                                                   -----------      -----------

Cash flows from investing activities:
     Cash paid in Superior Settlement               (1,500,000)              --
     Purchase of wholly-owned subsidiary net of
         cash received in acquisition                       --         (756,406)
     Purchase of property and equipment             (1,641,694)          38,673
     Increase in deferred financing and
         acquisition costs                                  --          (50,000)
                                                   -----------      -----------
     Net cash provided (used) by investing
         activities                                 (3,141,694)        (767,733)
                                                   -----------      -----------


                                        9
<PAGE>
                                  DYNAGEN, INC.

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

                                                         Nine Months Ended

                                                  September 30,    September 30,
                                                      1999              1998
                                                   -----------      -----------
Cash flows from financing activities:
     Proceeds from bank loan                                --        1,214,280
     Repayments of loan payable - bank                (254,452)      (2,430,984)
     Net proceeds from debt placements               4,213,415          950,000
     Net proceeds from private stock placements      5,138,484        3,252,038
     Proceeds from stock options exercised                 100               --
     Repayment of debt obligation                     (372,177)              --
     Repayments on settlement obligation               (53,900)              --
     Net change in accounts receivable factoring       (89,187)              --
     Increase (decrease) in bank overdraft             195,001          408,563
     Repayment of Superior note payable                     --         (416,667)
                                                   -----------      -----------

     Net cash provided by financing activities       8,777,284        2,977,230
                                                   -----------      -----------

     Net change in cash and cash equivalents           605,743         (491,619)
     Cash and cash equivalents at beginning             97,045          697,045
                                                   -----------      -----------
     Cash and cash equivalents at end              $   702,788      $   205,426
                                                   ===========      ===========

Supplemental cash flow information:
     Interest paid                                     828,158          633,013

     Common stock issued for convertible note
         payable and accrued interest                1,050,885          450,000
     Debt issued for delayed registration penalty           --          262,500

Schedule of non-cash investing and financing
activities:
On March 2, 1998, the Company purchased the net
assets of Generic Distributors Limited Partnership
for $2,350,000. In connection with the acquisition,
non-cash financing activities, liabilities assumed
and customer lists were as follows:
     Fair value of assets acquired                                  $ 2,375,274
     Cash paid                                                       (1,200,000)
     Preferred stock issued                                          (1,150,000)
     Liabilities assumed                                               (658,274)
                                                                    -----------
Customer lists (exclusive of other
     acquisition costs of $96,205)                                  $   633,000
                                                                    ===========

Additional non-cash investing and financing activities are described in Note 2

     See accompanying notes to consolidated unaudited financial statements.

                                       10
<PAGE>
                                  DYNAGEN, INC.

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS AND BASIS OF PRESENTATION

         The consolidated financial statements include the accounts of DynaGen,
Inc. (the "Company") and its wholly-owned subsidiaries: Able Laboratories,
Inc.("Able"), which is engaged in the manufacture of generic pharmaceuticals,
Superior Pharmaceutical Company ("Superior") and Generic Distributors Inc.
("GDI"), which are engaged in the distribution of generic pharmaceuticals, and
Apex Pharmaceuticals, Inc., which was established to develop therapeutic
products. The consolidated financial statements no longer include the accounts
of BioTrack, Inc. In 1998, the Company sold the majority of its shares in
BioTrack in exchange for a promissory note of BioTrack in the principal amount
of $1,000,000. The Company's ownership interest in BioTrack on September 30,
1999 was approximately 20%. Accordingly, BioTrack's financial statements are not
included in the accompanying consolidated financial statements. All significant
intercompany balances and transactions have been eliminated in consolidation.

         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
conformance with the accounting policies reflected in the financial statements
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998 filed with the Securities and Exchange Commission.

USE OF ESTIMATES

         In preparing consolidated financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the balance sheet date and reported amounts of revenues and
expenses during the reporting period. Material estimates that are particularly
susceptible to significant change in the near term relate to the carrying values
of rebates receivable and intangible assets, the valuation of equity instruments
issued by the Company and the amount of obligations due as a result of defaults
on certain debt obligations. Actual results could differ materially from those
estimates.

EARNINGS PER SHARE

         Basic earnings per share represents income available to common stock
divided by the weighted-average number of common shares outstanding during the
period. Diluted earnings per share reflects additional common shares that would
have been outstanding if dilutive potential common shares had been issued, as
well as any adjustment to income that would result from the assumed issuance.

         For all periods presented, the effect of including shares issuable upon
exercise or conversion of options, warrants and put warrants, would have been
anti-dilutive, and so these shares were excluded in calculating diluted earnings
per share.

                                       11
<PAGE>

         The loss applicable to common stock has been increased by the stated
dividends on the convertible preferred stock and the amortization of discounts
on convertible preferred stock due to beneficial conversion features.

2.       IMPACT OF SUPERIOR SETTLEMENT

         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 secured promissory notes and
166,667 shares of DynaGen's common stock with a guaranteed value of $5,000,000.
The secured promissory notes were subsequently reduced by $400,000 due to a
deficiency in the required net worth of Superior as of the acquisition date.
DynaGen was obligated to issue to the shareholders up to an additional 1,666,667
shares of its common stock on June 19, 1998 if its common stock was not trading
at an average of at least $30.00 per share for 10 consecutive trading days. The
merger agreement provided further that DynaGen would pay to the former Superior
stockholders the difference between $5,000,000 and the current aggregate market
value of the shares issued to the former Superior stockholders. The Company
recorded a $4,083,000 acquisition obligation at December 31, 1997 based on the
difference between the current estimated fair value of the 1,833,334 shares of
common stock issued and issuable and the guaranteed value of $5,000,000.

         On July 31, 1998, DynaGen entered into a contingent settlement
agreement to reduce the remaining purchase price to approximately $4,000,000.
During 1998, the Company issued the former shareholders of Superior 416,167
shares of common stock in connection with a forbearance agreement which has
expired. The shares were valued at $143,700 and charged to expense.

         On December 17, 1998, the former Superior stockholders commenced a
civil action against the Company. In May 1999, we settled all issues between us
and the former Superior stockholders by:


         -    paying $1,500,000 in cash;

         -    issuing 1,500,000 shares of Common Stock;

         -    issuing warrants to purchase 1,000,000 shares of Common Stock
              at a price of $.86 per share;

         -    issuing warrants to purchase 300,000 shares of Common Stock
              at a price of $.01 per share; and

         -    modifying the Commercial Lease Agreement between Superior
              and a company controlled by the former stockholders.

         The Superior acquisition was accounted for as a purchase. The results
of operations of Superior have been included in the Company's consolidated
financial statements since the date of acquisition. The purchase price
allocation as adjusted, has been based on the estimated fair values at the date
of acquisition. The Company initially allocated $13,612,000 of the purchase
price to customer lists, which was being amortized on a straight line basis over
five years. The Company also recorded initial goodwill of $386,219, which was
being amortized over 15 years.


                                       12
<PAGE>

The Company valued the modification of its lease agreement for additional rent,
using discounted cash flows, at $539,783, to be amortized over 15 years. The
Company also wrote off all of its obligations to the Superior shareholders. This
transaction resulted in a reduction of $3,879,669 in the customer list leaving a
balance of $1,979,636 in the customer list. In addition, the goodwill balance of
$329,047 was written off due to the reduction in the purchase price.

3.       GENERIC DISTRIBUTORS, INC.

         On March 2, 1998 the Company, through its subsidiary, Generic
Distributors, Incorporated ("GDI"), completed the acquisition of substantially
all of the assets and liabilities of Generic Distributors Limited Partnership
("GDLP"), of Monroe, LA. In connection with the acquisition, the Company paid
the limited partnership $1,200,000 in cash, 10,500 shares of Series E
Convertible Preferred Stock valued at $1,050,000 and 1,500 shares of Series F
Convertible Preferred Stock valued at $100,000, for a total purchase price of
$2,350,000. The Series E Preferred Stock is convertible beginning 12 months from
the closing into the Company's common shares at the then prevailing market
prices. The Series F Preferred Stock is convertible into $100,000 in value of
the Company's common stock commencing 120 days after the closing at the then
prevailing market prices. In connection with the transaction, GDI received
$1,200,000 in a five-year term loan from Fleet Bank. The loan matures on April
26, 2003. Fleet Bank also established a revolving line of credit for general
working capital in the amount of $300,000. The line bears interest at LIBOR plus
2-1/2%. The loans are secured by all of the assets of GDI and Able and a pledge
of all of the common stock of GDI, and are guaranteed by the Company. In
addition, the Company entered into employment and consulting agreements with the
sellers.

         The GDI acquisition has been accounted for as a purchase. The results
of operations of GDI have been included in the Company's consolidated financial
statements since the date of acquisition. The purchase price allocation was
based on the estimated fair values at the date of acquisition. The Company
allocated $729,205 of the purchase price to customer lists, based on an
independent appraisal. This amount is being amortized on a straight line basis
over five years. Amortization of customer lists amounted to $109,380 and $85,486
for the nine months ended September 30, 1999 and 1998, respectively.

         Unaudited pro forma consolidated operating results for the Company,
assuming the acquisition of GDI had been made as of the beginning of fiscal
1998, are as follows:


                          Three Months Ended         Nine Months Ended
                          September 30, 1998         September 30, 1998
                          ------------------         ------------------

Revenues                  $        7,330,802         $       21,903,312
Net loss                          (3,274,585)                (7,562,796)
                          ------------------         ------------------
Net loss per share        $            (0.13)        $            (0.44)
                          ==================         ==================


         The unaudited pro forma information is not necessarily indicative of
either (i) the actual results of operations that would have occurred had the
purchases been made as of the beginning of the fiscal period presented or (ii)
future results of operations of the combined companies.


                                       13
<PAGE>

3.       INVENTORY

         Inventory consists of the following:

                                             September 30,        December 31,
                                                 1999                 1998
                                             -------------       -------------
         Raw materials                       $     412,651       $     401,531
         Work-in-progress                          539,630              66,372
         Finished goods                          6,847,399           6,179,176
                                             -------------       -------------
                                             $   7,799,680       $   6,647,079
                                             =============       =============

4.       DEBT

         Notes payable consist of the following:

                                             September 30,        December 31,
                                                 1999                 1998
                                             -------------       -------------
         Convertible note payable            $         -0-       $     155,000
         Bridge loans                            1,755,000             725,000
         Accounts receivable factoring              95,643             184,830
         Machinery & Equipment Financing           582,056             586,333
         7% Convertible Debenture                       --             250,000
         8% Convertible Debenture                       --             328,500
         9% Convertible Debenture                  980,000                  --
         Secured debt - Fleet Bank               1,092,840           1,171,420
         Loan Payable -Huntington                4,329,232           4,505,104
         Notes payable - Superior Acquisition           --           3,766,667
         Senior subordinated debt                3,000,000           3,000,000
         NJEA Bond                               2,000,000                 -0-
                                             -------------       -------------
                  Total                         13,834,771          14,672,854

         Less current portion                   10,702,708          13,162,041
                                             -------------       -------------
         Long-term debt                      $   3,132,063       $   1,510,813
                                             =============       =============

9% CONVERTIBLE DEBENTURE

         In the second quarter, the Company received $980,000 by issuing 9%
Convertible Subordinated Debentures. The debentures mature in one year from date
of issuance and carry a quarterly interest payment of 9% per annum. The
principal and interest accrued shall be automatically converted into shares of
Common Stock on the maturity date. Each tranche of $1,000,000 will be converted
into 5% of the shares of Common Stock of DynaGen that are issued and outstanding
on the date of conversion and smaller amounts will be prorated.

                                       14
<PAGE>

NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY BOND

         On June 23, 1999, Able Laboratories, Inc., completed the Industrial
Development Revenue Bond offering issued by the New Jersey Economic Development
Authority. The bonds consist of series 1999A $1,700,000, 8% non-taxable and
series 1999B $300,000, 8.25% taxable. Series 1999A bonds will mature in 15 years
and series 1999B bonds will mature in 4 years. The total cost of the bond issue
is estimated at $240,000 and the net proceeds of approximately $1,700,000 are
being used for acquisition, installation and commissioning of equipment and
machinery.

         In connection with these bonds, the Company has entered into various
agreements with the New Jersey Economic Development Authority and the bond
holders, including an escrow arrangement intended to cover the Company's
obligations under the bond documents for periods of between two and six months.

5.       PREFERRED STOCK

         In May and June 1999, the Company received $3,000,000 from the issuance
of 3,000 shares of Series I to various unaffiliated investors. Shares of Series
I are convertible into Common Stock at 80% of the average of the closing bid
price of Common stock for the three (3) selected, closing bids of past five (5)
trading days immediately preceding any conversion date. The Company issued
165,652 Common Stock warrants at an exercise price of $0.91 and 34,722 Common
Stock warrants at an exercise price of $0.396 in connection with this financing.

         In July 1999, the Company received $1,000,000 from the issuance of
1,000 shares of Series J Preferred Stock to a single unaffiliated investor.
Shares of Series J Preferred Stock are convertible into Common Stock at 80% of
the average closing bid price of Common stock for the five trading days
immediately preceding the conversion notice from the investor. The conversion
can take place on the earlier of (1) 90 days from original issue date of the
Series J Preferred Stock; or (2) the date on which a registration statement is
declared effective by the Securities and Exchange Commission.

         In August and September 1999, the Company received $1,150,000 from the
issuance of 1,150 shares of Series K Preferred Stock to various unaffiliated
investors. Holders of the Series K Preferred Stock have the right to convert
during any five trading day period up to 20% of their holdings, into Common
Stock of the Company at 80% of the three day average quoted price for three days
immediately proceeding the conversion notice from the holder. The discount at
80% to the market price increases to 75%, and then to 70%, if the investor
retains his investment in the Series K Preferred Stock for longer periods.




                                       15
<PAGE>

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

INTRODUCTION

         The following information should be read in conjunction with the
consolidated financial statements and notes thereto in Part I, Item 1 of this
Quarterly Report and with Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1998.

         The Company does not provide forecasts of the future financial
performance of the Company. However, from time to time, information provided by
the Company or statements made by its employees may contain "forward-looking"
information that involves risks and uncertainties. In particular, statements
contained in this Form 10-QSB which are not historical facts constitute
forward-looking statements and are made under the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Each forward-looking statement
should be read in conjunction with the consolidated financial statements and
notes thereto in Part I, Item 1, of this Quarterly Report and with the
information contained in Item 2, including, but not limited to, "Certain Factors
That May Affect Future Results" contained herein, together with the discussion
set forth under the heading Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1998, including, but not limited to,
the section therein entitled "Certain Factors That May Affect Future Results."

RESULTS OF OPERATIONS

         DynaGen makes and sells generic drugs for the human health care market.
During 1998 and the first quarter of 1999, we shifted our business focus from
being a development and licensing company to building a company focused on the
manufacture and distribution of generic drug products and specialty
pharmaceuticals. We intend to implement this strategy through internal product
development as well as through the acquisition of businesses, technologies and
products that we believe are undervalued. In August 1996, we acquired the tablet
business of Able Laboratories, Inc. ("Able"), a generic pharmaceutical product
subsidiary of Alpharma, Inc. In addition, we acquired Superior Pharmaceutical
Company ("Superior"), a distributor of generic pharmaceuticals, in June 1997. In
March 1998, we acquired Generic Distributors Limited Partnership through our
wholly-owned subsidiary, Generic Distributors Incorporated ("GDI").

         We have financed our operating losses primarily through the proceeds
from public and private stock offerings and debt offerings. We anticipate that
revenues from product sales will not be sufficient to fund our current
operations or produce an operating profit until such time as we can establish
acceptance of our products in their respective markets and expand our
distribution channels. We have incurred losses since inception and expect to
incur additional losses until such time as we can successfully develop,
manufacture, and sell or license our existing and proposed products and
technologies.

         Our history of operating losses raises substantial doubt about our
ability to continue operations. If we are unable to secure significant
additional financing or to renegotiate our agreements with our existing
creditors, we may have to file for bankruptcy. Our independent auditors issued
an opinion on our financial statements as of December 31, 1998 and for the year
then ended which included an explanatory paragraph expressing substantial doubt
about our ability to continue as a going concern. See " Certain Factors That May
Affect Future Results."
                                       16
<PAGE>

Three-Month Period Ended September 30, 1999
-------------------------------------------
         Revenues for the three-month period ended September 30, 1999 were
$7,368,820, compared to $6,617,802 for the period ended September 30, 1998. The
increase of $751,018 is primarily the result of increased product sales by Able
of Clorazepate tablets through Superior and outside distributors.

         Cost of product sales was $5,721,391, or 78% of product sales for the
three-month period ended September 30, 1999, compared to $6,076,656, or 92% of
product sales the period ending September 30,1998. The Company has improved the
gross profit margin to 22% due to the lower cost of some of our new drugs
manufactured at Able Laboratories.

         Research and development expenses for the three-month period ended
September 30, 1999 were $699,397 compared to $110,487 for the three-month period
ended September 30, 1998. All of these expenses relate to research which is
currently being conducted at Able to identify and develop generic drug
candidates for future manufacturing and sales.

         Selling, general and administrative expenses for the three-month period
ended September 30, 1999 were $2,013,761 compared to $3,206,820 for the
three-month period ended September 30, 1998. The $1,193,059 decrease is
primarily due to the cost cutbacks and reduction of staff at our headquarters in
Waltham.

         Investment and other income was $5,294 for the three months ended
September 30, 1999, compared to $143,283 for the three-month period ended
September 30, 1998. Interest and financing expenses of $603,882 for the
three-month period ended September 30, 1999, compared to $468,091 for the
three-month period ended September 30, 1998, an increase of $135,791 due
primarily to private placements of debt instruments. We issued several warrants
in connection with debt placements, the values of which are included in our
financing costs.

Nine-Month Period Ended September 30, 1999
------------------------------------------
         The GDI acquisition was completed on March 1, 1998. Therefore, results
for the first three quarters of 1998 include sales for GDI only after that date.

         Revenues for the nine-month period ended September 30, 1999 were
$20,974,657, compared to $20,009,589 for the period ended September 30, 1998.
The increase of $965,068 is primarily the result of increased product sales by
Able of Clorazepate tablets through Superior and outside distributors.

         Cost of product sales was $16,903,374 or 81% of product sales for the
nine-month period ended September 30, 1999, compared to $17,145,146 or 86% of
product sales for the period ended September 30, 1998. The cost of manufacturing
some of our newer drugs at Able tends to be lower than the cost of distribution
activities which accounted for a greater percentage of our revenues in 1998.

         Research and development expenses for the nine-month period ended
September 30, 1999 were $1,198,033, compared to $430,774 for the nine-month
period ended September 30, 1998. All of these expenses relate to research which
is currently being conducted at Able to identify and develop generic drug
candidates for future manufacturing and sales.

         Selling, general and administrative expenses for the nine-month period
ended September 30, 1999 were $6,370,083, compared to $8,437,873 for the
nine-month period ended September 30, 1998. The

                                       17
<PAGE>

$2,067,790 decrease is primarily due to cost cutbacks and reduction of staff at
our headquarters in Waltham.

         We recorded an additional $400,000 of loss on impairment of Superior's
customer lists in the first quarter of 1999, based on our revised projections of
Superior's cash flows after reviewing Superior's performance during the first
quarter of 1999.

         Investment and other income was $483,278 for the nine months ended
September 30, 1999, compared to $297,894 for the nine-month period ended
September 30, 1998. During 1998, we recorded income received from sale of
BioTrack stock held by the Company whereas during 1999, we recorded $311,600 of
income from forgiveness of old payables. Interest and financing expenses were
$1,749,586 for the nine-month period ended September 30, 1999, compared to
$1,269,242 for the nine-month period ended September 30, 1998. The increase is
due to the increase in our average outstanding debt, increased interest rates
and issuance of several warrants in connection with debt placements, the values
of which are included in our financing costs.

Liquidity and Capital Resources

         As of September 30, 1999, we had a working capital deficit of $704,288,
compared to a working capital deficit of $10,503,773 at December 31, 1998. This
significant reduction of the working capital deficit is mainly due to the
settlement of all obligations to the Superior shareholders. The notes payable,
which included $3,766,667 of notes payable to the former stockholders of
Superior , as well as $4,083,000 of additional liability to the sellers booked
due to the decline in the share price, are no longer a part of our current
liabilities. Cash was $702,788 at September 30, 1999 compared to $97,045 at
December, 1998. We continued to have a working capital deficit as funds were
raised through short term debt placements. We expect our cash needs for the next
12 months to be approximately $5,000,000. We intend to generate the needed cash
through additional financing activities. We can give no assurance, though, that
we will be able to obtain such financing or, if we do, that the financing will
be sufficient for our needs. If we are not able to raise the needed financing,
we will likely need to seek the protection of the bankruptcy courts. See
"Certain Factors That May Affect Future Results."

         In June 1997, we acquired Superior Pharmaceutical Company, of
Cincinnati, Ohio, for an adjusted purchase price of $15.9 million in cash, notes
and stock. The merger agreement guaranteed the selling shareholders at least
$5,000,000 in the value of their shares of the Company as of June 1998. The
agreement provided that we would make up any shortfall in this guaranteed stock
value through the issuance of additional stock and cash.

         The Common Stock traded at approximately $0.50 per share as of June 18,
1998, and we therefore became obligated to pay approximately $4,000,000 in cash
to the former stockholders of Superior. Under the agreement, we then owed the
former stockholders a total of approximately $9,000,000 in common stock, cash
and notes. On July 31, 1998 we entered into a contingent settlement agreement to
reduce the remaining purchase price to approximately $4,000,000. We were unable,
however, to obtain financing sufficient in amount and appropriate in form of
payment (i.e., cash and/or stock) to fund the final settlement.

         On December 17, 1998, the former Superior stockholders commenced a
civil action in the Court of Common Pleas, Hamilton County, Ohio. The complaint
filed by the former Superior stockholders alleged that we owed them
approximately $9,000,000, including $4,166,667 in connection with promissory
notes issued in connection with the merger as well as $4,817,660 as an
adjustment to the purchase price. In May 1999, we settled all issues between us
and the former Superior stockholders. The former Superior stockholders agreed to
dismiss their lawsuit in exchange for our:

                                       18
<PAGE>

         o     paying $1,500,000 in cash;

         o     issuing 1,500,000 shares of Common Stock;

         o     issuing warrants to purchase 1,000,000 shares of Common Stock
               at a price of $.86 per share;

         o     issuing warrants to purchase 300,000 shares of Common Stock at
               a price of $.01 per share; and

         o     modifying the Commercial Lease Agreement between Dynagen and a
               company controlled by the former stockholders of Superior.

         We have senior secured working capital and lending facilities from
three separate entities. Huntington National Bank has provided working capital
for Superior Pharmaceutical. The initial note matured in June 1998 and since
then, Huntington has extended the facility on a monthly basis. Fleet Capital
provided a term loan for the acquisition of GDI. K&L Financial has provided
working capital for Able Laboratories. We are in default of certain financial
covenants, but we have not defaulted on payment obligations in connection with
these agreements.

         To date we have met substantially all of our capital requirements
through the sale of securities and loans convertible into common stock. The
negative impact of events in 1997 and 1998 severely limited our ability to raise
capital in a conventional sale of our securities. We have engaged an investment
banking firm that specializes in the turnaround of companies to seek both debt
and equity financing. We cannot give any assurance that we will raise the needed
financing. If we cannot raise such financing, we will not have adequate working
capital for our operations. Under such circumstances we may have to seek
protection of the bankruptcy courts. See "Certain Factors That May Affect Future
Results."

YEAR 2000 COMPLIANCE

         Many computer systems and software products could experience problems
handling dates beyond the year 1999 because the systems are coded to accept only
two-digit entries in the date code fields.  Inability of products and systems on
which we rely to process these dates could have a material adverse effect on our
business.

         We have assessed our internal processes and systems. We believe that
our sales, administration, and general operations are substantially year 2000
compliant. Prior to purchasing any new equipment or software, it is company
policy to ensure that the specifications include year 2000 compliance.

         We intend to query major suppliers and other third parties upon which
we may be dependent to determine the extent of their Year 2000 compliance. We
intend to complete this inquiry and assessment of the Year 2000 readiness of the
systems and products of these suppliers and other third parties as soon as
practicable. However, due to the need to devote management and financial
resources to other matters, we have not as yet completed this inquiry and
assessment.

         Contingency Plan

         To minimize potential disruptions, we intend to adopt a contingency
plan, if deemed necessary, to address any issues raised during our planned
assessment in 1999. Because no specific instance of material Year 2000
non-compliance has been discovered to date, we have not adopted a contingency
plan to deal with Year 2000 issues.

                                       19
<PAGE>
         Costs

         Based on our internal investigation to date, we do not expect the total
costs of our Year 2000 review and compliance to have a material adverse effect
on our business or financial results. We may have to spend a material amount to
develop and implement a contingency plan during 1999, if we find that a material
supplier or other third party on whom we rely will face business interruptions
as a result of Year 2000 issues.

         Risks

         Because we have not completed a review of potential Year 2000 Issues,
we cannot rule the possibility that a significant problem might result from Year
2000 Issues. In the worst case, we might be unable to obtain necessary raw
materials or process orders for our inventory, and we could be forced to curtail
or suspend our operations.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

         We do not provide forecast of our future financial performance.
However, some of the information in this quarterly report contains
forward-looking statements that involve substantial risks and uncertainties. In
particular, statements contained in this Report that are not historical facts,
including statements relating to liquidity and capital resources, constitutes
forward-looking statements and are made under the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. You can identify these
statements by forward-looking words such as "may", "will", "expect",
"anticipate", "believe", "estimate", "continue", and similar words. You should
read statements that contain these words carefully because they: (1) discuss our
future expectations; (2) contain projections of our future operating results or
financial condition; or (3) state other "forward-looking" information. We
believe it is important to communicate our expectations to our investors. There
may be events in the future, however, that we are not accurately able to predict
or over which we have no control. The risk factors listed in this report, as
well as any cautionary language in this report, provide examples of risks,
uncertainties and events that may cause our actual results to be materially
worse than the expectations we describe in our forward-looking statements. The
reader should be aware that the occurrence of any of the events described below
and elsewhere in this report could materially and adversely affect our business.
If that happens, the trading price of our common stock could decline and
investors could lose all or part of their investment.

         The following risk factors should be read in conjunction with the
financial statements and related notes thereto. The following factors, among
others, could cause our actual results to differ materially from those contained
in forward-looking statements contained or incorporated by reference in this
report and presented by management from time to time. Such factors, among
others, may have a material adverse effect upon our business, results of
operations and financial condition.

         IF WE CONTINUE TO INCUR LOSSES, THEN THE VALUE OF OUR COMMON STOCK WILL
         LIKELY DECLINE

         We have incurred operating losses in every operating period since our
inception. We had an accumulated deficit of $55,316,694 as of September 30,
1999. We incurred a net loss of $5,163,141 in the nine months ended September
30, 1999. We anticipate future losses, and we can give no assurance that we will
ever generate substantial revenues from our business, or achieve profitability.
If we continue to incur operating losses, then the value of our common stock
will likely decline and stockholders could lose their investment.

         Our losses have resulted principally from expenses we incurred in
research and development activities, and from general and administrative costs
associated with our development efforts. In addition,

                                       20
<PAGE>

our Able subsidiary has incurred operating losses, primarily because its
revenues have not equaled it expenses. To continue development of our current
and proposed products, we will need to expend substantial resources to conduct
further product development and to establish and expand our manufacturing,
sales, marketing, regulatory and administrative capabilities. Therefore, we
expect to incur substantial operating losses over the next several years as we
expand our product programs and commence marketing efforts.

         IF WE CANNOT RAISE SIGNIFICANT ADDITIONAL FUNDS, THEN WE WILL LIKELY
         FACE BANKRUPTCY AND YOU COULD LOSE THEIR INVESTMENT

         Our history of operating losses raises substantial doubt about our
ability to continue operations. If we are unable to secure significant
additional financing or to renegotiate our agreements with our existing
creditors, we may be obliged to seek protection from our creditors by declaring
bankruptcy. If that happens, stockholders could lose their entire investment.
Our independent auditors issued an opinion on our financial statements as of
December 31, 1998 and for the year then ended which included an explanatory
paragraph expressing substantial doubt about our ability to continue as a going
concern. The reasons cited by the independent auditors include the following:

         o    we have incurred recurring losses from operations resulting in
              a stockholders' deficit and a working capital deficiency at
              December 31, 1998

         o    we have defaulted on conditions place upon us by our banks
              and other lenders; and

         o    our ability to use cash generated by our subsidiaries is
              restricted under the terms of the subsidiaries' loan agreements


         WE FACE INTENSE COMPETITION FROM OTHER MANUFACTURERS OF GENERIC DRUGS

         In order to succeed in the generic drug business, we need to achieve a
significant share of the market for each generic drug we market. The generic
drug manufacturing and distribution business is highly competitive. We compete
with several companies that are better capitalized than we are and that have
financial and human resources significantly greater than ours. Because we
manufacture generic drugs, our products by their very nature are chemically and
biologically equivalent to the products of our larger and profitable
competitors. Also, we believe that, as a rule, the first one or two companies to
bring a generic alternative to the market will capture the highest market share
for that product. These larger companies, with their greater resources, could
bring products to the market before us, and could capture a significant share of
the market at our expense.

         IF THE BOSTON STOCK EXCHANGE DELISTS OUR COMMON STOCK, WE WILL HAVE
         GREATER DIFFICULTY RAISING THE CAPITAL WE NEED TO CONTINUE OPERATIONS

         Our common stock has been delisted from the Nasdaq Stock Market and is
 listed on the Boston Stock Exchange. The common stock is also quoted on the OTC
 Bulletin Board. If the common stock was delisted by
the Boston Stock Exchange, then public perception of the value of the common
stock could be materially adversely affected. Stockholder could lose their
investment and we could face greater difficulty raising capital necessary for
our continued operations.
                                       21
<PAGE>

         We received a notice from the Boston Stock Exchange on April 12, 1999
informing us that our common stock did not meet the requirements for continued
listing. The Boston Stock Exchange requires a minimum of $500,000 in
stockholders' equity for continued listing. As of March 31, 1999, we had a
stockholders' deficit of approximately $4,024,000, a shortfall of approximately
$4,524,000 and therefore we did not meet the listing requirements. We responded
to the Boston Stock Exchange, explaining our plan for regaining compliance with
this requirement by June 30, 1999.  We regained compliance with the requirement
and stockholders' equity as of September 30, 1999 was $1,391,522. Therefore, as
of that date we met the requirement and so our common stock remains listed on
the Boston Stock Exchange. Our common stock could face delisting action again,
however, if we do not maintain the minimum stockholders' equity or other listing
requirements.

         IF OUR COMMON STOCK BECOMES SUBJECT TO PENNY STOCK RULES, INVESTORS MAY
         HAVE GREATER DIFFICULTY SELLING THEIR SHARES

         The Securities Enforcement and Penny Stock Reform Act of 1999 applies
to stock characterized as "penny stocks" and requires additional disclosure
relating to the market for penny stocks in connection with trades in any stock
defined as a penny stock. The Securities and Exchange Commission has adopted
regulations that generally define a penny stock to be any equity security that
has a market price of less than $5.00 per share, subject to certain exceptions.
The exceptions include exchange-listed securities and any equity security issued
by an issuer that has

         o    net tangible assets of at least $2,000,000, if the issuer has been
              in continuous operation for at least three years;

         o    net tangible assets of least $5,000,000, if the issuer has been in
              continuous operation for less than three years; or

         o    average annual revenue of at least $6,000,000 for the last
              three years.

         Unless an exception is available, the regulations require the delivery,
prior to any transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the associated risks.

         If our common stock is delisted from the Boston Stock Exchange, then
trading in the common stock will be covered by Rules 15g-1 through 15g-6 and
15g-9 promulgated under the Securities Exchange Act. Under those rules,
broker-dealers who recommend such securities to persons other than their
established customers and institutional accredited investors must make a special
written suitability determination for the purchaser and must have received the
purchaser's written agreement to a transaction prior to sale. These regulations
would likely limit the ability of broker-dealers to trade in our common stock
and thus would make it more difficult for purchasers of common stock to sell
their securities in the secondary market. The market liquidity for the common
stock could severely affected.

         WE ARE OBLIGATED TO ISSUE A LARGE NUMBER OF SHARES OF COMMON STOCK AT
         PRICES BELOW THE MARKET PRICE, WHICH COULD ADVERSELY AFFECT THE VALUE
         OF THE COMMON STOCK

         We are obligated to issue a large number of shares of common stock at
prices lower than market value. Therefore, the common stock could lose value if
a large number of shares are issued into the market. At September 30, 1999,
57,548,156 shares of common stock were issued and outstanding. We have issued a
large number of securities, such as options, warrants, convertible preferred
stock and convertible notes, that are convertible by their holders into shares
of common stock. As of September 30, 1999, we were obligated to issue up to
approximately 11,006,667 shares of common stock upon the

                                       22
<PAGE>

conversion or exercise of convertible securities. We have also reserved
8,054,681 shares of common stock for issuance pursuant to options granted to our
employees, officers, directors and consultants. The holders of these convertible
securities likely would only exercise their rights to acquire common stock at
times when the exercise price is lower than the price at which they could buy
the common stock on the open market. Because we would likely receive less than
current market price for any shares of common stock issued upon exercise of
options and warrants, the exercise of a large number of these convertible
securities could reduce the per-share market price of common stock held by
existing investors. Also, the exercise of a large number of convertible
securities could limit our ability to obtain additional equity capital by
selling common stock. In all likelihood, we would be able to sell shares of
common stock elsewhere on more favorable terms at the time the holders of
convertible securities chose to exercise their rights.

         THE VALUE OF THE COMMON STOCK FLUCTUATES WIDELY

         The price of our common stock has fluctuated widely in the past, and it
is likely that it will continue to do so in the future. The market price of our
common stock could fluctuate substantially based on a variety of factors,
including:

         o    quarterly fluctuations in our operating results;

         o    announcements of new products by us or our competitors;

         o    key personnel losses;

         o    sales of common stock; and

         o    developments or announcements with respect to industry
              standards, patents or proprietary rights.


         The market price of our common stock has fluctuated between $70.00 and
$.10 from January 1, 1993 to December 31, 1998. Over the past twelve months, the
common stock has fluctuated between approximately $.89 and approximately $.05,
and was approximately $.48 on October 25, 1999. These broad market fluctuations
could adversely affect the market price of our common stock, in that at the
current price, any fluctuation in the dollar price per share could constitute a
significant percentage decrease in the value of your investment. Also, when the
market price of a stock has been volatile, holders of that stock have often
instituted securities class action litigation against the company that issued
the stock. If any of our stockholders brought such a lawsuit against us, we
could incur substantial costs of defending the lawsuit and we would have to
divert management time and attention away from operations. A lawsuit based on
the volatility of the stock price in whole or in part could seriously harm our
business and the value of stockholders' investment.

                                       23
<PAGE>

         WE COULD FACE A SIGNIFICANT INTERRUPTION IN OUR OPERATIONS BY
         YEAR 2000 ISSUES

         We have not completed an exhaustive analysis of potential Year 2000
issues, and consequently we cannot rule out the chance that we could face
serious operational problems as a result of the Year 2000 change.

         Many software products and computer systems are coded to accept only
two-digit entries in the date code field. These date code fields will need to
accept four digit entries to distinguish 21st century dates from 20th century
dates. This ability is commonly referred to as being Year 2000 compliant. We
have not conducted a comprehensive Year 2000 compliance review of the computer
software we use, or that is used by our vendors and suppliers. If the software
and computer systems we use are not Year 2000 compliant, we could face system
failures or miscalculations causing disruptions of operations, including a
temporary inability to process transactions, send invoices or engage in similar
normal business activities. If the systems maintained by our vendors and
suppliers are not Year 2000 compliant, we could incur significant unanticipated
expenses to remedy any problems or to replace affected vendors and suppliers.
Because we have not completed a review of potential Year 2000 Issues, we cannot
rule out the possibility that a significant problem might result from Year 2000
issues. In the worst case, we might be unable to obtain necessary raw materials
or process orders for our inventory, and we could be forced to curtail or
suspend our operations.

         WE MAY FACE PRODUCT LIABILITY FOR WHICH WE ARE NOT ADEQUATELY INSURED

         The testing, marketing and sale of drug products for human use is
inherently risky. Liability might result from claims made directly by consumers
or by pharmaceutical companies or others selling our products. Superior, GDI and
Able presently carry product liability insurance in amounts that we believe to
be adequate, but we can give no assurance that such insurance will remain
available at a reasonable costs or that any insurance policy would offer
coverage sufficient to meet any liability arising as a result of a claim. We can
give no assurance that we will be able to obtain or maintain adequate insurance
on reasonable terms or that, if obtained, such insurance will be sufficient to
protect us against such potential liability or at a reasonable cost. The
obligation to pay any product liability claim or recall of a product could have
a material adverse affect on our business, financial condition and future
prospects.

         INTENSE REGULATION BY GOVERNMENT AGENCIES MAY DELAY OUR EFFORTS TO
         COMMERCIALIZE OUR PROPOSED DRUG PRODUCTS

         Before we can market any generic drug, we must first obtain FDA
approval of the proposed drug and of the active drug raw materials that we use.
In many instances, our approvals cover only one source of raw materials. If raw
materials from a specified supplier were to become unavailable, we would be
required to file a supplement to our Abbreviated New Drug Application to use a
different manufacturer and revalidate the manufacturing process using a new
supplier's material. This could cause a delay of several months in the
manufacture of the drug involved and the consequent loss of potential revenue
and market share. For example, for a period of time we were unable to acquire
the active drug for our clorazapate dipotassium product, and so we had to
discontinue production of the product. The active drug ingredient has since
become available again and we have resumed manufacturing the product.

                                       24
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
         -----------------

         The Company is not party to any pending legal proceedings, other than
routine litigation that is incidental to the business, which would have a
material adverse effect on the Company's financial position or results of
operations for the nine-month period ended September 30, 1999.

ITEM 2.  CHANGES IN SECURITIES
         ---------------------

         a.   Not applicable.

         b.   Sales of Unregistered Securities - In the three months ended
              September 30, 1999, the Company sold the following securities:

         In July 1999, the Company received $1,000,000 from the issuance of
1,000 shares of Series J Preferred Stock to a single unaffiliated investor.
Shares of Series J Preferred Stock are convertible into Common Stock at 80% of
the average closing bid price of Common stock for the five trading days
immediately preceding the conversion notice from the investor. The conversion
can take place on the earlier of (1) 90 days from original issue date of the
Series J Preferred Stock; or (2) the date of which a registration statement is
declared effective by the Securities and Exchange Commission.  The Company
issued a warrant to purchase 33,334 shares of common stock at an exercise price
of $.01 in connection with Series J offering to the accredited investor.

         In August and September 1999, the Company received $1,150,000 from the
issuance of 1,150 shares of Series K Preferred Stock to various unaffiliated
investors. The holders of Series K have the right to convert during any five
trading day period up to 20% of their holding into Common Stock of the Company
at 80% of the three day average quoted price for three days immediately
proceeding the conversion notice from the holder. The discount of 80% to the
market price increases to 75% and then 70% if the investor retains his
investment in the Series K Preferred Stock for longer periods. In August, the
Company issued two warrants to exercise a total of 168,750 of Common Stock at an
exercise price of $.01 to the secured subordinated lenders for their continued
forbearance of certain covenant defaults.

         During the quarter ending September 30, 1999, the Company issued an
aggregate of 1,359,368 shares of Common Stock upon the exercise of option and
warrants and conversion of convertible debt and equity securities.


                                       25
<PAGE>

ITEM 3.  DEFAULTS ON SENIOR SECURITIES
         -----------------------------

         The Company has incurred recurring losses from operations resulting in
an accumulated deficit of $55,316,694 and a working capital deficiency of
$704,288 at September 30, 1999. In addition, the Company is in default with
respect to certain covenants in its debt agreements and obligated to make
payments as follows:

         Sirrom Capital Corporation ("Sirrom") and Odyssey Investment Partners,
L.P. ("Odyssey") - The Company issued secured promissory notes in the aggregate
principal amount of $3,000,000 on June 18, 1997 due June 17, 2002. In addition,
the Company issued stock warrants to purchase in the aggregate 400,000 shares of
the Company's common stock and granted Sirrom and Odyssey the right to sell to
the Company the warrants (put warrants) under a put and substitution agreement.
At the time of issuance, $702,000 of the proceeds was allocated to the put
warrants, resulting in a discount on the promissory notes.

         The discount on the notes was being amortized to expense over the term
of the promissory notes. The Company is in default of certain covenants in the
loan agreement and has not obtained a waiver of the defaults from the lender.
Accordingly, the total principal amount of the loan, $3,000,000, has been
classified as a current liability and the unamortized discount on the loan has
been charged to expense.

         The Huntington National Bank - The Company's subsidiary, Superior, has
a line of credit with the Huntington National Bank in the amount of
approximately $4,500,000. At September 30, 1999, Superior is in default of
certain loan covenants, in the loan and security agreement with the bank.
Superior is in negotiations with the bank with respect to the defaults, but has
not received a waiver of the defaults at the present time.

         The Company has guaranteed the loan to the bank. The loan and security
agreement with the bank requires the Company to achieve a tangible net worth,
exclusive of the tangible net worth of Superior, of $4,000,000, which the
Company has not achieved at September 30, 1999.

         The loan and security agreement with the bank allowed Superior to make
distributions to the Company in amounts sufficient to enable the Company to pay
the debt service due to the former stockholders of Superior, provided, however,
that such permitted payments cannot be made by Superior in the event of a
default.






                                       26
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
         --------------------------------

         (a)  List of Exhibits

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


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

              3.1  Restated Certificate of Incorporation (filed as Exhibit 3a to
                   the Company's Report on Form 10-Q for the Quarter ended June
                   30, 1998, as amended on September 14, 1998, and incorporated
                   herein by reference)


              3.2  By-laws, as amended (filed 3b to Registrant's Registration
                   Statement on Form S-1, No. 33-46445, and incorporated by
                   reference).


              3.3  Certificate of Designations, Preferences, and Rights of
                   Series J Preferred Stock


              3.4  Certificate of Designations, Preferences, and Rights of
                   Series K Preferred Stock


              4.1  Stock Purchase Warrant for 56,250 Shares of Common Stock
                   dated August 1999 in the name of Argosy Investment Partners,
                   L.P.

              4.2  Stock Purchase Warrant for 112,500 Shares of Common Stock
                   dated August 1999 in the name of Sirrom Capital Corporation

              4.3  Stock Purchase Warrant for 33,334 Shares of Common Stock
                   dated June 1999 in the name of Kenilworth, LLC

             10.1  Subscription Agreement for Series J Preferred Stock dated
                   July, 1999

             10.2  Registration Rights Agreement for Series J Preferred Stock
                   dated July, 1999

             10.3  Form of Subscription Agreement for Series K Preferred Stock
                   dated November, 1999

             10.4  Form of Registration Rights Agreement for Series K Preferred
                   Stock dated November, 1999

             27.1  Financial Data Schedule



         (b)  Reports on Form 8-K

                    None

                                       27
<PAGE>

                                   SIGNATURES

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




                                                 DYNAGEN, INC.

November 15, 1999                                By: /s/ Dhananjay G. Wadekar
                                                 ----------------------------
                                                 Dhananjay G. Wadekar
                                                 Duly Authorized Officer and
                                                 Principal Financial and
                                                 Accounting Officer






                                       28
<PAGE>

                                  EXHIBIT INDEX


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

              3.1  Restated Certificate of Incorporation (filed as Exhibit 3a to
                   the Company's Report on Form 10-Q for the Quarter ended June
                   30, 1998, as amended on September 14, 1998, and incorporated
                   herein by reference)

              3.2  By-laws, as amended (filed 3b to Registrant's Registration
                   Statement on Form S-1, No. 33-46445, and incorporated by
                   reference).

              3.3  Certificate of Designations, Preferences, and Rights of
                   Series J Preferred Stock

              3.4  Certificate of Designations, Preferences, and Rights of
                   Series K Preferred Stock

              4.1  Stock Purchase Warrant for 56,250 Shares of Common Stock
                   dated August 1999 in the name of Argosy Investment Partners,
                   L.P.

              4.2  Stock Purchase Warrant for 112,500 Shares of Common Stock
                   dated August 1999 in the name of Sirrom Capital Corporation

              4.3  Stock Purchase Warrant for 33,334 Shares of Common Stock
                   dated June 1999 in the name of Kenilworth, LLC

             10.1  Subscription Agreement for Series J Preferred Stock dated
                   July, 1999

             10.2  Registration Rights Agreement for Series J Preferred Stock
                   dated July, 1999

             10.3  Form of Subscription Agreement for Series K Preferred Stock
                   dated November, 1999

             10.4  Form of Registration Rights Agreement for Series K Preferred
                   Stock dated November, 1999

             27.1  Financial Data Schedule





                                       29