SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, D.C.  20549



                                   FORM 10-QSB


                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

                         SECURITIES EXCHANGE ACT OF 1934



     For Quarter Ended September 30, 1996     Commission file number 0-5223



                            CUTCO INDUSTRIES, INC.
     -----------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)



                      New York                              11-1771806
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            (State or other jurisdiction of             (I.R.S. Employer
             incorporation or organization)              Identification No.)


     
       125 South Service Road, Jericho, New York                 11753          
      -----------------------------------------------------------------------
            (Address of principal executive offices)           (Zip Code)



     Registrant's telephone number, including area code   (516) 334-8400       
                                                        --------------------

     -----------------------------------------------------------------------
       Former name, former address and former fiscal year, if changed 
       since last report.


          * 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 
                                                           -----          -----

        Number of common shares outstanding at November 12, 1996 is 780,625
        Transitional Small Business Disclosure:   Yes       No    X
                                                      -----     -----
     
                                    FORM 10-QSB

                                       INDEX



                                                                           Page

     PART I -  FINANCIAL INFORMATION

               Item 1.  Financial Statements (Unaudited)

                   Consolidated Condensed Balance Sheets -
                   September 30, 1996 and June 30, 1996                    1-2 

                   Consolidated Condensed Statements of Operations -
                   Three Months Ended September 30, 1996 and 1995            3

                   Consolidated Condensed Statement of Shareholders'           
                   Equity - Three Months Ended September 30, 1996            4

                   Consolidated Condensed Statements of Cash Flows -
                   Three Months Ended September 30, 1996 and 1995            5

                   Notes to Unaudited Consolidated Condensed 
                   Financial Statements                                      6

               Item 2.  Management's Discussion and Analysis of 
                        Financial Condition and Results of Operations      7-9


 

     PART II - OTHER INFORMATION

               Item 6.  Exhibits and Reports on Form 8-K                    10


     SIGNATURES                                                             11

                        PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.
<TABLE>
CUTCO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
                                           September 30,     June 30,
                                               1996            1996
                                           -------------   -------------

ASSETS
   <S>                                         <C>           <C>

CURRENT ASSETS
   Cash and cash equivalents                   $752,629      $1,035,395 
   Marketable securities                        643,793         565,725 
   Notes and accounts receivable, net           434,542         426,539 
   Merchandise inventory                        496,906         415,236 
   Prepaid and refundable income taxes           21,588          12,851 
   Deferred income taxes                        105,000         105,000 
   Prepaid expenses and miscellaneous                                    
      receivables                               107,720         102,164 
                                           -------------   -------------
                                                                         
      TOTAL CURRENT ASSETS                    2,562,178       2,662,910 
                                           -------------   -------------
                                                                          
PROPERTY AND EQUIPMENT, AT COST                                           
   Furniture, fixtures and equipment          2,081,911       2,305,969 
   Leasehold improvements                       133,230         158,230 
                                           -------------   -------------
                                              2,215,141       2,464,199 
                                                                        
   Less accumulated depreciation                                         
      and amortization                        1,065,747       1,373,794 
                                           -------------   -------------
                                              1,149,394       1,090,405 
                                           -------------   -------------
                                                                           
OTHER ASSETS                                                              
                                                                         
   Notes receivable, noncurrent, net            137,417         120,898 
   Deferred charges and other                   391,571         410,914 
   Deposits                                     119,052         116,677 
                                           -------------   -------------
                                                648,040         648,489 
                                           -------------   -------------
                                             $4,359,612      $4,401,804 
                                           =============   =============
</TABLE>

See notes to unaudited consolidated condensed financial statements.

                               -1-

<TABLE>
CONSOLIDATED CONDENSED BALANCE SHEETS - Continued
(UNAUDITED)
                                           September 30,     June 30,
                                               1996            1996
                                           -------------   -------------


LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
      <S>                                    <C>               <C>

   Accounts payable and accrued
      expenses                               $1,021,853        $961,731 
   Current portion of long-term debt             55,791          54,826 
   Accrued and withheld taxes,                                           
      other than income taxes                    60,858         159,303 
   Income taxes payable                          26,614          21,221 
                                           -------------   -------------
      TOTAL CURRENT LIABILITIES               1,165,116       1,197,081 

                                                                          
LONG-TERM DEBT                                  160,103         174,430 
                                                                          
DEPOSITS PAYABLE                                 58,496          55,637 
                                                                         
DEFERRED INCOME                                  32,781          35,714 
                                                                        
DEFERRED INCOME TAXES                           105,000         105,000 
                                           -------------   -------------
      TOTAL LIABILITIES                       1,521,496       1,567,862 
                                           -------------   -------------



SHAREHOLDERS' EQUITY

   Common Stock                                 188,371         188,371 
   Additional paid-in capital                 4,185,250       4,185,250 
   Retained earnings                          1,946,087       1,941,913 
                                           -------------   -------------
                                              6,319,708       6,315,534 
                                                                         
   Less treasury stock - at cost              3,481,592       3,481,592 
                                           -------------   -------------
      TOTAL SHAREHOLDERS' EQUITY              2,838,116       2,833,942 
                                           -------------   -------------
                                             $4,359,612      $4,401,804 
                                           =============   =============

</TABLE>
See notes to unaudited consolidated condensed financial statements.

                               -2-
<TABLE>
CUTCO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
                                                                     Three Months Ended
                                                                       September 30,
                                                                    1996          1995
   <S>                                                           <C>           <C>
                                                                 -----------   -----------
Revenues:
   Owned retail stores                                           $2,047,155    $2,541,315 
   Sales of equipment and products                                   47,341        58,726 
   Royalties and service fees                                       567,844       631,621 
   Franchise fee income                                              19,041        61,986 
                                                                 -----------   -----------
                                                                  2,681,381     3,293,648 
                                                                 -----------   -----------
Costs and Expenses:                                                                           
   Direct costs of owned retail stores                            1,910,983     2,453,109 
   Costs of equipment and products sold                              31,277        50,382 
   Depreciation and amortization                                    117,275       146,605 
   Selling, general and administrative expenses                     585,424       711,256 
   Provision for doubtful accounts and notes receivable              42,000        30,000 
                                                                 -----------   -----------
                                                                  2,686,959     3,391,352 
                                                                 -----------   -----------
                                                                                                  
Other income (loss):                                                                             
   Interest and dividend income                                      20,705        23,837 
   Interest expense                                                  (5,485)      (10,018)
   Gain (loss) on sale/abandonment of assets, net                     3,717       (45,248)
   Other income, net                                                  5,112        17,283 
                                                                 -----------   -----------
                                                                     24,049       (14,146)
                                                                 -----------   -----------
                                                                                            
Income (loss) before income taxes                                    18,471      (111,850)
Income taxes                                                         14,297         7,652 
                                                                 -----------   -----------
Net income (loss)                                                    $4,174     ($119,502)
                                                                 ===========   ===========

Earnings (loss) per common share                                      $0.01        ($0.15)
                                                                 ===========   ===========
Weighted average number of shares outstanding                       780,625       780,625 
                                                                 ===========   ===========
</TABLE>



See notes to unaudited consolidated condensed financial statements.

                                              -3-
<TABLE>
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, 1996



                                 Common Stock     Additional                   Treasury Stock
                                 ------------      Paid-In      Retained       --------------
                           Shares      Amount      Capital      Earnings     Shares      Amount       Total
                         ----------- ----------- ------------ ------------ ---------- ------------ -----------
<S>                       <C>          <C>        <C>          <C>         <C>        <C>          <C>
                                                                                                                
Balance at July 1, 1996   1,883,706    $188,371   $4,185,250   $1,941,913  1,103,081  ($3,481,592) $2,833,942 
                                                                                                                  
Net income                                                          4,174                               4,174 
                                                                                                                  
                         ----------- ----------- ------------ ------------ ---------- ------------ -----------
Balance at September 30,                                                                                        
 1996 (Unaudited)         1,883,706    $188,371   $4,185,250   $1,946,087  1,103,081  ($3,481,592) $2,838,116 
                         =========== =========== ============ ============ ========== ============ ===========
                                                                             
</TABLE>
See notes to unaudited consolidated condensed financial statements.          
                                                                          
                                              -4-

<TABLE>
     CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)                         September 30,
                                                                              -----------------------------
                                                                                  1996            1995
                                                                              -------------   -------------

   <S>                                                                           <C>          <C>
                                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                                                $4,174       ($119,502)
   Adjustments to reconcile net income (loss) to net                                                        
     cash used in operating activities:                                                                     
       Depreciation and amortization                                               117,275         146,605 
       Provision for doubtful accounts and notes receivable                         42,000          30,000 
       (Gain) loss on sale/abandonment of assets, net                               (3,717)         45,248 
       Changes in operating assets and liabilities, net of effect of                                          
         acquisition and sale:
           Notes and accounts receivable                                           (46,522)        (78,980)
           Merchandise inventory                                                   (84,854)        (74,604)
           Prepaid and refundable income taxes                                      (8,737)         22,713 
           Prepaid expenses and miscellaneous receivables                           (5,556)         16,597 
           Deposits and other                                                       (3,464)         (6,520)
           Accounts payable and accrued expenses                                    60,122         (26,853)
           Accrued and withheld taxes, other than income taxes                     (98,445)        (37,010)
           Income taxes payable                                                      5,393         (23,242)
           Deposits payable                                                          2,859               3 
           Deferred income                                                          (2,933)        (41,985)
                                                                              -------------   -------------
   Net cash used in operating activities                                           (22,405)       (147,530)
                                                                              -------------   -------------
   Cash flows from investing activities:                                                                    
     Purchases of property and equipment                                          (128,931)       (138,112)
     (Increase) decrease in marketable securities                                  (78,068)          1,175 
     Proceeds from sale of property and equipment                                    5,000           1,620 
     Payment for business acquired                                                 (45,000)        (15,000)
                                                                              -------------   -------------
   Net cash used in investing activities                                          (246,999)       (150,317)
                                                                              -------------   -------------
   Cash flows from financing activities:                                                                     
     Principal payments on loans                                                   (13,362)        (20,493)
                                                                              -------------   -------------
   Net cash used in financing activities                                           (13,362)        (20,493)
                                                                              -------------   -------------
   NET DECREASE IN CASH AND CASH EQUIVALENTS                                      (282,766)       (318,340)
   Cash and cash equivalents at beginning of period                              1,035,395       1,096,793 
                                                                              -------------   -------------
   Cash and cash equivalents at end of period                                     $752,629        $778,453 
                                                                              =============   =============
Supplemental disclosures of cash flow information:                                                          
   Cash paid during the period for:                                                                         
     Interest                                                                       $3,649          $5,276 
     Income taxes                                                                  $15,209          $4,150 
   Non cash investing and financing activities:                                                              
     Notes payable issued in connection with acquisition of salon                                  $20,000 
     Notes and accounts receivable forgiven in connection                                                      
        with acquisition of salon                                                                  $49,960 
     Notes and accounts receivable received in connection
        with sale of salon                                                         $20,000
                          
See notes to unaudited consolidated condensed financial statements.        
                                               -5-
</TABLE>
     
     Notes to Unaudited Consolidated Condensed Financial Statements

                           September 30, 1996

 


   Note 1 - Financial Statements

           The accompanying unaudited consolidated condensed financial 
           statements have been prepared without audit in accordance 
           with generally accepted accounting principles for interim 
           financial information and with the instructions to Form  10-
           QSB of the Securities and Exchange Commission.   
           Accordingly, they do not include all of the information and 
           footnotes required by generally accepted accounting 
           principles for complete financial statements.  In the 
           opinion of management, all adjustments (consisting of normal 
           recurring accruals) considered necessary for a fair 
           presentation have been included.  Operating results for the 
           three month period ended September 30, 1996 are not 
           necessarily indicative of the results that may be expected 
           for the year ending June 30, 1997.  For further information, 
           refer to the consolidated financial statements and footnotes 
           as of June 30, 1996 included in the Company's Annual Report 
           on Form  10-KSB for the  Company's fiscal year  then  ended. 

                                   -6-

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

              Three Months Ended September 30, 1996
           


   Liquidity and Capital Resources: 

              Cash and cash equivalents were $752,629 at 
              September 30, 1996, as compared to $1,035,395 at 
              June 30, 1996.  In addition, at September 30, 1996, 
              the Company had $643,793 of marketable securities, 
              as compared to $565,725 at June 30, 1996.  During 
              the three months ended September 30, 1996, the 
              primary use of the Company's capital resources was 
              net cash used in investing activities of $247,000, 
              as compared to $150,000 in the comparable 1995 
              period.  In the three months ended September 30, 
              1996, the Company invested $129,000 in property and 
              equipment and cash of $45,000 to acquire an 
              accredited cosmetology technical training school.  
              The Company had net purchases of marketable 
              securities of $78,000, as compared to net sales of 
              $1,000 in the three months ended September 30, 
              1995. 

              The Company had a current ratio of 2.20 at 
              September 30, 1996, as compared to 2.07 at 
              September 30, 1995 and 2.22 at June 30, 1996. 

              At September 30, 1996, commitments for capital 
              expenditures and other investments did not exceed 
              $400,000.  Such commitments were for acquisition or 
              construction of salons, salon refurbishing, and 
              other investments.  The Company believes its cash 
              resources and liquidity are adequate for its 
              present short  and long-term business requirements. 


   Results of Operations: 

              In the three months ended September 30, 1996, 
              revenues from Company-owned salon operations 
              decreased by 19.4% or $494,000, over revenues for 
              the three months ended September 30, 1995.  The 
              decrease in revenues is mainly attributable to a 
              decrease in the average number of company-owned 
              salons operating during the three months ending 
              September 30, 1996.  As of September 30, 1996, 
              there were 43 company-owned salons, as compared to 
              51 at September 30, 1995.  Comparable store sales 
              for salons operating throughout the entire three 
              month period ended September 30, 1996 and September 
              30, 1995 declined by 2.6% in 1996 from 1995.  In 
              the three months ended September 30, 1996, direct 
   
                             -7-
              costs of Company-owned salons decreased by 22.1% or 
              $542,000, over such total costs for the three 
              months ended September 30, 1995.   These variances 
              are largely attributable to costs that fluctuate in 
              direct relation to sales.  However, the Company 
              incurred decreased payroll,  occupancy, and 
              advertising costs, as a percent of sales  during 
              the three months ended September 30, 1996.  During 
              the three months ended September 30, 1996 the 
              Company opened two salons, sold one salon to a 
              licensee and acquired one accredited cosmetology 
              technical training school. Management's policy is 
              to close existing salons that do not meet its cash 
              flow criteria. 

              Sales of equipment and products decreased by 19.4% 
              or $11,000 in the three months ended September 30, 
              1996, as compared to the three months ended 
              September 30, 1995.  Correspondingly, cost of 
              equipment and products sold decreased by 37.9% or 
              $19,000 reflecting higher margins.  The decrease in 
              sales is due in part to the decreased number of 
              franchised salons. 

              Royalties and service fees decreased by 10.1% or 
              $64,000 in the three months ended September 30, 
              1996 as compared to the three months ended 
              September 30, 1995.  This decrease is due in part 
              to a decline in the number of franchised hair 
              salons.  The number of franchised hair salons has 
              been steadily decreasing for several years (319 at 
              September 30, 1994,   299 at September 30, 1995 and 
              287 at September 30, 1996).  

              The Company expects the decline in royalties to 
              continue as a result of attrition of existing 
              licensees without replacements with new licensees. 
              The Company does not anticipate significant hair 
              care franchise sales from new locations for fiscal 
              1997, due to increased competition for new 
              locations, coupled with a longer period from a 
              salon's opening until it achieves profitable 
              operations. 

              Franchise fee income decreased in the three months 
              ended September 30, 1996 by $43,000, as compared to 
              the three months ended September 30, 1995.  
              Franchise fees, which are principally related to 
              the New Area Development Program, will continue to 
              decline as payments to the Company under notes 
              obtained in connection with that Program, cease at 
              the varying maturities of such notes. 


                                -8-

              The number of franchised salons has been steadily
              decreasing for several years and management 
              believes that such decreases will continue for the 
              foreseeable future.  It is likely that the downward 
              trend in franchise related revenues  will continue 
              for as long as the downward trend in the number of 
              franchised salons continues. 

              Inflation has not materially affected the Company's 
              revenues and income during the past two fiscal 
              years.  

              Interest and dividend income in the three months 
              ended September 30, 1996 declined by $3,000 as a 
              result of the decline in the amount of interest 
              bearing notes receivable. 

              In the three months ended September 30, 1996 
              selling, general, and administrative expenses 
              decreased by 17.7% or $126,000 from $711,000 in the 
              three months ended September 30, 1995.  The 
              decreases are due in part   to lower general and 
              administrative payroll costs and other overhead 
              expenses.

              During the three months ended September 30, 1996 
              the Company had a gain of $4,000 from the 
              abandonment/sale of assets as compared to a loss of 
              $45,000 in the three months ended September 30, 
              1995.  In the three months ended September 30, 
              1995,  the Company closed five (5) salons. No 
              salons were closed in the three months ended 
              September 30, 1996. 

              There was an income tax charge of $14,000 in the 
              three months ended September 30, 1996 on income of 
              $18,000 compared to an income tax charge of $8,000 
              in the three months ended September 30, 1995 on a 
              loss of $112,000. In the three months ended 
              September 30, 1995 the Company was not able to 
              carryback for federal income tax purposes its net 
              operating loss.  Additionally, since the Company
              files separate subsidiary state income tax returns, 
              rather than consolidated state income tax returns, 
              the Company was not able to offset certain 
              subsidiary losses against other subsidiary income 
              in the three months ended September 30, 1996 and 
              1995. 

              The Company's salons and franchising activities, 
              including its sales of franchises, are not 
              materially affected by seasonal fluctuations, in 
              the volume of business. 



                                -9-


           Part II - Other Information
           

  Item 6.  Exhibits and Reports on Form 8-K

           a)  Not Applicable.

           b)  None.

                                     -10-

              CUTCO INDUSTRIES, INC. AND SUBSIDIARIES

     
                                   SIGNATURES


     Pursuant to the requirements of the Exchange Act, the Registrant 

     caused this report to be signed on its behalf by the undersigned, 

     thereunto duly authorized.



                                   CUTCO INDUSTRIES, INC.

                                   (Registrant)


                                   s/DON vonLIEBERMANN
                                   ____________________________________
                                           DON vonLIEBERMANN
                                               President


                                   s/MICHAEL KRAMER
                                   ____________________________________
                                             MICHAEL KRAMER
                                          Principal Financial &
                                        Chief Accounting Officer



      DATE:  November 13, 1996 

                            -11-