FORM 10-Q SB

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                Quarterly Report Under Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

For Quarter Ended August 31, 1996                 Commission File Number  0-7405

                          MEDISCIENCE TECHNOLOGY CORP.
--------------------------------------------------------------------------------
  (Exact Name of Registrant as Specified in its Certificate of Incorporation)


                                   New Jersey
--------------------------------------------------------------------------------
         (State or other jurisdiction on incorporation or organization)


                                   22-1937826
--------------------------------------------------------------------------------
                    (I.R.S. Employer Identification Number)

               1235 Folkestone Way, Cherry Hill, New Jersey 08034
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

(Registrant's telephone number, including area code)         609-428-7952
--------------------------------------------------------------------------------

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 [   ]

Registrant has not been involved in bankruptcy  proceedings during the preceding
five years.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of August 31, 1996.

    Title of Class                        Number of Shares Outstanding
    --------------                        ----------------------------

Common Stock, par value
$.01, per share                                    34,641,952

Preferred Stock, par value                              2,074
$.01 per share
<PAGE>
                          MEDISCIENCE TECHNOLOGY CORP.
                                 AUGUST 31, 1996


                                      INDEX


PART I.               Financial Information

Item 1.               Financial Statements

                      Balance Sheets as at August 31, 1996 (Unaudited)
                      and February 28, 1996  
                                                  
                      Statement of Operations for the Six and Three
                      Months ended August 31, 1996 (Unaudited) and
                      August 31, 1995 (Unaudited)   
                                           
                      Statement of Cash Flows for the Six Months ended
                      August 31, 1996 (Unaudited) and August 31, 1995
                      (Unaudited)   
                                                           
                      Statement of Stockholders' Equity for the Six Months
                      ended August 31, 1996 (Unaudited)  
                                      
                      Exhibit to Statements of Operations 
                                     
                      Notes to Financial Statements    
                                        
Item 2.               Management's Plan of Operation   
                                        
PART II.              Other Information      
                                                  
Item 1.               Legal Proceedings

Item 2.               Changes in Securities

Item 3.               Defaults Upon Senior Securities

Item 4.               Submission of Matters to Vote of Security Holders

Item 5.               Other Information

Item 6.               Exhibits and Reports on Form 8-K

<PAGE>
<TABLE>
<CAPTION>
                                   MEDISCIENCE TECHNOLOGY CORP.
                                          BALANCE SHEETS

                                              ASSETS

                                                                      August 31,
                                                                         1996        February 28,
                                                                     (Unaudited)         1996
                                                                     -----------         ----
<S>                                                                  <C>             <C>        
CURRENT ASSETS
      Cash and Cash Equivalents ..................................   $  1,478,644    $    110,161
                                                                     ------------    ------------
PROPERTY, PLANT AND EQUIPMENT
      Net of Accumulated Depreciation $134,649 -
        August 31, 1996; $118,605 - February 28, 1996 ............         55,617          67,481
                                                                     ------------    ------------
OTHER ASSETS
      Deferred Charges ...........................................           --                 8
      Patents - Net of Accumulated Amortization,
        $7,676 - August 31,1996; $6,375 - February 28, 1996 ......         31,324          32,625
      Goodwill - Net of Accumulated Amortization  $178,251  
        August 31, 1996; $166,750 - February 28, 1996 ............        281,749         293,250
                                                                     ------------    ------------
           Total Other Assets ....................................        313,073         325,883
                                                                     ------------    ------------
TOTAL ASSETS .....................................................   $  1,847,334    $    503,525
                                                                     ============    ============

                              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
      Accounts Payable ...........................................   $      5,044    $     16,785
      Other Accrued Liabilities ..................................        386,383         483,752
                                                                     ------------    ------------
           Total Current Liabilities .............................        391,427         500,537
                                                                     ------------    ------------
STOCKHOLDERS' EQUITY
      Preferred Stock - $.01 Par Value; Authorized
        50,000 Shrs; Outstanding 2,074 Shrs;
        (Preference on Liquidation $20,740) ......................             21              21
      Common Stock $.01 Par Value, Authorized
        39,950,000 Shares; Outstanding 34,641,952 Shares .........        346,420         284,745
      Additional Paid-in Capital .................................     16,702,404      14,275,896
      Common Stock Subscription Receivable .......................           --           (18,750)
      Accumulated Deficit ........................................    (15,592,938)    (14,538,924)
                                                                     ------------    ------------
           Total Stockholders' Equity ............................      1,455,907           2,988
                                                                     ------------    ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY .........................   $  1,847,334    $    503,525
                                                                     ============    ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                   MEDISCIENCE TECHNOLOGY CORP.
                                      STATEMENT OF OPERATIONS
                         FOR THE SIX MONTHS ENDED AUGUST 31, 1996 AND 1995
                                            (UNAUDITED)



                                                SIX MONTHS                    THREE MONTHS
                                                ----------                    ------------
                                          1996            1995           1996             1995
                                     ----------------------------    ----------------------------
<S>                                  <C>             <C>             <C>             <C>
Net Sales ........................   $       --      $       --      $       --      $       --

Cost of Sales ....................           --              --              --              --
                                     ------------    ------------    ------------    ------------
Gross Profit .....................           --              --              --              --

General and Administrative Expense        918,523         381,451         253,759         223,859

Product Development Expense ......        169,270         189,789          64,292          82,839

Advertising, Travel and Marketing          24,847          30,773          11,190          10,857
                                     ------------    ------------    ------------    ------------
      Total Expenses .............      1,112,640         602,013         329,241         317,555
                                     ------------    ------------    ------------    ------------
Other Income .....................         58,626           2,152          45,814           1,848
                                     ------------    ------------    ------------    ------------
Net Loss .........................   $ (1,054,014)   $   (599,861)   $   (283,427)   $   (315,707)
                                     ============    ============    ============    ============
Net Loss Per Common Share ........   $      (0.03)   $      (0.02)   $      (0.01)   $      (0.01)
                                     ============    ============    ============    ============
Weighted Average Number of Shares    
  of Common Stock Outstanding ....     32,996,398      24,941,625      34,591,952      26,109,291
                                     ============    ============    ============    ============

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                       MEDISCIENCE TECHNOLOGY CORP.
                                         STATEMENT OF CASH FLOWS
                            FOR THE SIX MONTHS ENDED AUGUST 31, 1996 AND 1995
                                               (UNAUDITED)



                                                                                  1996           1995
                                                                                  ----           ----
<S>                                                                          <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
      Net Loss ...........................................................   $(1,054,014)   $  (599,861)
      Adjustment for Item Not Requiring Cash Outlay
           Depreciation ..................................................        16,044         16,600
           Amortization ..................................................        12,802         12,800
           Stock Issued to Officer as Additional Compensation ............       453,184           --
           Stock Issued for Services .....................................         5,000           --
                                                                             -----------    -----------
                Subtotal .................................................      (566,984)      (570,461)
      Changes in Assets and Liabilities:
           (Increase) Decrease in Deferred Charges .......................             8          2,786
           (Decrease) in Accounts Payable ................................       (11,741)        (2,789)
           (Decrease) in Other Accrued Liabilities .......................       (97,369)      (136,322)
                                                                             -----------    -----------
                Net Cash Flows Provided by (Used for) Operating Activities      (676,086)      (706,786)
                                                                             -----------    -----------
CASH FLOWS  FROM INVESTING ACTIVITIES
      Acquisition of Equipment ...........................................        (4,180)        (4,816)
                                                                             -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES
      Proceeds From Issuance of Common Stock .............................     2,029,999      1,129,500
      Collection of Common Stock Subscriptions Receivable ................        18,750           --
                                                                             -----------    -----------
                Net Cash Flows Provided by (Used for) Financing Activities     2,048,749      1,129,500
                                                                             -----------    -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .........................     1,368,483        417,898

CASH AND CASH EQUIVALENTS
      Beginning Balance ..................................................       110,161         55,613
                                                                             -----------    -----------
      Ending Balance .....................................................   $ 1,478,644    $   473,511
                                                                             ===========    ===========

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                    MEDISCIENCE TECHNOLOGY CORP.
                                                  STATEMENT OF STOCKHOLDERS' EQUITY
                                              FOR THE SIX MONTHS ENDED AUGUST 31, 1996
                                                             (UNAUDITED)

                                                                                        Common
                                                        Preferred                        Stock                          Additional  
                                                      Stock Number      Preferred      Number of           Common         Paid in   
                                                       of Shares          Stock         Shares              Stock         Capital   
                                                       ---------          -----         ------              -----         ------- 
<S>                                                       <C>        <C>               <C>              <C>             <C>    
Balance February 28, 1996 ....................            2,074      $        21       28,474,455       $   284,745     $14,275,896

Collection of Common Stock
      Subscriptions Receivable ...............

Issuance of Common Stock for Cash ............                                          2,666,667            26,666       1,953,333

Exercised Stock Options and
      Cancellation of Stock ..................                                          2,843,166            28,432         (28,432)

Stock Issued to Officer
      As Additional Compensation .............                                            552,664             5,527         447,657

Exercise of Warrants
      For Common Stock .......................                                            100,000             1,000          49,000

Issuance of Common Stock
      For Services ...........................                                              5,000                50           4,950

Net Loss for the Six
      Months Ended August 31, 1996 ...........
                                                          -----      -----------      -----------       -----------      -----------
Balance August 31, 1996 ......................            2,074      $        21       34,641,952       $   346,420     $16,702,404
                                                          =====      ===========      ===========       ===========     ===========
<PAGE>

                          MEDISCIENCE TECHNOLOGY CORP.
                        STATEMENT OF STOCKHOLDERS' EQUITY
                    FOR THE SIX MONTHS ENDED AUGUST 31, 1996
                                   (UNAUDITED)
                                  (continued)

                                                  Common Stock                          
                                                 Subscriptions      Accumulated    
                                                   Receivable         Deficit      
                                                   ----------         -------      
                                                                                       
<S>                                              <C>               <C>                                             
Balance February 28, 1996 ..................     $    (18,750)     $(14,538,924)

Collection of Common Stock
      Subscriptions Receivable .............           18,750

Issuance of Common Stock for Cash ..........

Exercised Stock Options and
      Cancellation of Stock ................

Stock Issued to Officer
      As Additional Compensation ...........

Exercise of Warrants
      For Common Stock .....................

Issuance of Common Stock
      For Services .........................

Net Loss for the Six
      Months Ended August 31, 1996 .........                         (1,054,014)
                                                 ------------      ------------
Balance August 31, 1996 ....................     $       --        $(15,592,938)
                                                 ============      ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                       EXHIBIT TO STATEMENTS OF OPERATIONS
                                  WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING




                                                                                                     Weighted
                           Common Stock                                                               Average
                          $.01 Par Value              Common               Number of                 Number of
                            Issued and                 Stock                 Shares                    Shares
                           Outstanding              Equivalents           Outstanding               Outstanding
                           -----------              -----------           -----------               -----------
<S>                         <C>                         <C>                <C>                       <C>
March 1996                  28,486,955                   -                 28,486,955

April 1996                  31,153,622                   -                 31,153,622

May 1996                    34,561,952                   -                 34,561,952

June 1996                   34,566,952                   -                 34,566,952

July 1996                   34,566,952                   -                 34,566,952

August 1996                 34,641,952                   -                 34,641,952                32,996,398


</TABLE>
<PAGE>
                          MEDISCIENCE TECHNOLOGY CORP.
                          NOTES TO FINANCIAL STATEMENTS
                                 AUGUST 31, 1996
                                   (UNAUDITED)


NOTE 1     RESULTS OF OPERATIONS

           The financial statements,  in the opinion of management,  include all
           adjustments and accruals necessary for a fair presentation.

           The results of operations for each interim period are not necessarily
           indicative  of  results  to be  expected  for  the  year  due  to the
           unpredictability of market factors, product development,  competition
           and sales in general.

NOTE 2     OTHER ACCRUED LIABILITIES

           Other accrued liabilities consist of the following:

<TABLE>
<CAPTION>
                  <S>                                        <C>
                  Legal and Professional Fees                $   124,750
                  Research & Development                         158,208
                  Salaries, Consulting and Other                 103,425
                                                             ----------- 
                                                             $   386,383
                                                             =========== 
</TABLE>


NOTE 3     CANCELLATION OF STOCK OPTIONS

           In April,  1996,  various officers,  directors or shareholders of the
           Company  collectively  exercised  all of their  options and  acquired
           2,843,166  shares of the Company's  common stock at an exercise price
           of $0.25 per share.  Shares of stock owned by these  individuals were
           tendered to the Company as payment for the options exercised and were
           subsequently canceled by the Company.

NOTE 4     RELATED PARTY TRANSACTION

           As previously reported, the Company elected a new President and Chief
           Executive Officer,  Herbert L. Hugill. Mr. Katevatis remains Chairman
           and Treasurer of the Company.  Accordingly,  the employment agreement
           with Mr. Katevatis was amended  effective March 1, 1996 providing for
           an annual  salary of $100,000 per year for the next three  years.  In
           connection with this amendment, the Company issued 552,664 restricted
           shares of the Company's common stock in consideration for a reduction
           in the term of his employment agreement and a reduction in his annual
           salary.  Accordingly,  the Company recognized  $453,184 as additional
           compensation to Mr. Katevatis during the quarter ended May 1996.
<PAGE>
NOTE 5     OTHER INCOME

           Other income consists of the following:
<TABLE>
<CAPTION>
                   <S>                                    <C>
                   Interest Income                        $     33,626
                   Licensing Option Fee                         25,000
                                                          ------------
                   Total                                  $     58,626
                                                          ============ 
</TABLE>

MANAGEMENT'S PLAN OF OPERATION

The  Company's  mission is to discover,  develop and market novel and  effective
photonic   technologies  for  the  early  detection  of  cancer.  The  focus  of
Mediscience's  devices is aimed toward less invasive,  faster, more accurate and
more cost effective cancer diagnosis.

Mediscience's   primary   area   of   concentration   is  on   development   and
commercialization  of its patented Tissue Fluorescence  Spectroscopy  technology
which uses light for non-invasive and minimally  invasive detection of cancer in
humans,  in  vivo  (in  the  body).  Its  secondary  focus  is on  research  and
development of its Optical  Imaging  technology  which uses laser light to image
dense tissue without exposing the body to harmful ionizing irradiation.

Mediscience  completed  a phase  I  clinical  feasibility  study  at New  York's
Memorial  Sloan-Kettering  Hospital in 1994 and  demonstrated the feasibility of
Tissue  Fluorescence  Spectroscopy to distinguish among cancerous,  precancerous
and normal  tissue in the oral  cavity.  A phase II clinical  study is currently
pending  at  Memorial  Sloan-Kettering  to build on the  earlier  work under the
cosponsorship of the National Cancer Institute and Mediscience.

The Company is also planning to perform additional phase I clinical  feasibility
studies to define additional  medical  applications for its Tissue  Fluorescence
Spectroscopy technology that it can develop for sale to the medical marketplace.
Of the two  clinical  feasibility  studies  that are  committed  presently,  one
involves in vivo optical  diagnosis  of breast  tumors by passing a fine optical
fiber through a minimally invasive stereotactic needle to optically determine if
the tumor is cancerous or benign  without  surgical  excision,  while the second
involves  optical  assessment  of patients  with  Barrett's  esophagus,  a known
precursor  to  esophageal  cancer  in  some  people.  In  addition,  up to  four
additional  clinical  feasibility  studies  are  anticipated  during the next 18
months.

In  addition  to working on its own,  Mediscience  is also  seeking  one or more
corporate alliance arrangements to jointly develop specific end use applications
for its two  technologies.  The Company is also  selectively  considering  other
non-medical   applications  of  its  technology   through  possible   partnering
arrangements.
<PAGE>
Mediscience  subcontracts  its research and  development  through an arrangement
with the City  University of New York.  Dr. Robert  Alfano,  a consultant to the
Company,  distinguished  professor  of science and  engineering  at CUNY and the
inventor  of  the  technology,  supervises  the  Company's  research  as  CUNY's
Principal  Investigator.  As a result of the contract research relationship with
CUNY, the Company has exclusive  rights to 12 patents and optional  rights to 17
pending  patents.  Mediscience  also  licensed  3 other  patents  from two other
institutions.

The Company has a research agreement with Memorial  Sloan-Kettering Hospital for
investigation of its Tissue Fluorescence  Spectroscopy  technology and maintains
close  working  relationships  with  Columbia  Presbyterian  Hospital,  New York
Hospital's Cornell Medical Center and Massachusetts General Hospital. The breast
clinical feasibility study is scheduled to be conducted at Massachusetts General
Hospital and the Barrett's esophagus  feasibility study is scheduled for Cornell
Medical Center.

Two Prototype  devices have been developed and a third is in progress.  CD Scan,
the first device,  has been tested  pre-clinically  and was successfully used in
the above noted phase I clinical feasibility study at Memorial  Sloan-Kettering.
CD  Ratiometer,  the  Company's  second device has been used  successfully  on a
pre-clinical  basis and will be employed in each of the pending phase I clinical
feasibility  studies,  i.e.,  optical  breast  biopsy  and  Barrett's  esophagus
studies.

In an effort to address  its  liquidity  problems  and its  shortage  of capital
resources,  the Company successfully completed a $2,000,000 private placement of
its common stock in April, 1996. The Company continues to explore  codevelopment
arrangements  with other  companies  to defray  costs and  extend the  Company's
capital and human  resources.  The Company's  ability to maintain its operations
throughout its history has been dependent upon the periodic  infusion of capital
and the willingness of its creditors to accept payment beyond normal terms.

The Company  believes that its recent  private  placement  offering will satisfy
it's working capital needs beyond the end of its current fiscal year.
<PAGE>
                           PART II - OTHER INFORMATION 


Item 1.    Legal Proceedings

           None

Item 2.    Changes in Securities

           None

Item 3.    Defaults Upon Senior Securities

           None

Item 4.    Submission of Matters to a Vote of Security Holders

           None

Item 5.    Other Information

           None

Item 6.    Exhibits and Reports on Form 8-K

           On June 15,  1996,  the  Company  filed  Form 8-K with  regard to the
following matter:

                Registrant, Mediscience Technology Corp. (OTCMDSC), Mallinckrodt
                Medical,  Inc., St. Louis, MO and the Research Foundation of the
                City University of New York entered into a research agreement in
                the field of  imaging  and  photophysics  related  to the use of
                contrast  dyes.   Inventions   developed  under  this  Agreement
                utilizing  technology  protected by patents owned or licensed to
                registrant,  Mediscience  Technology Corp. (OTCMDSC) will result
                in royalties to be  negotiated  in good faith by the  respective
                parties on a sharing basis.
<PAGE>


                                   SIGNATURES



PURSUANT TO THE  REQUIREMENTS  OF THE  SECURITIES  AND EXCHANGE ACT OF 1934, THE
REGISTRANT  HAS DULY  CAUSED  THIS  REPORT  TO BE  SIGNED  ON ITS  BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.

                                           MEDISCIENCE TECHNOLOGY CORP.
                                           ----------------------------
                                                    (REGISTRANT)




DATE:                                             By:  /s/Herbert L. Hugill
                                                       -------------------- 
                                                       HERBERT L. HUGILL
                                                       President/CEO

                                                  By:  /s/Peter Katevatis  
                                                       ------------------
                                                       PETER KATEVATIS
                                                       Treasurer
                                                       Chief Accounting Officer