FORM 10-Q SB

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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

        For Quarter Ended August 31, 1998 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 Folkstone 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, 1998.

    Title of Class                               Number of Shares Outstanding
    --------------                               ----------------------------
Common Stock, par value                                   35,143,618
$.01, per share

Preferred Stock, par value                                     2,074
$.01 per share



<PAGE>



                          MEDISCIENCE TECHNOLOGY CORP.
                                 AUGUST 31, 1998


                                      INDEX


                                                                             
PART I.               Financial Information

Item 1.               Financial Statements

                      Balance Sheets as at August 31, 1998 (Unaudited)
                      and February 28, 1998   
                               
                      Statement of Operations for the Six and Three
                      Months ended August 31, 1998 (Unaudited) and
                      August 31, 1997 (Unaudited) 
                           
                      Statement of Cash Flows for the Six Months ended
                      August 31, 1998 (Unaudited) and August 31, 1997
                      (Unaudited)   
                                         
                      Statement of Stockholders' Equity for the Six Months
                      ended August 31, 1998 (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, 1998      February 28,
                                                                       (Unaudited)           1998
                                                                       ------------      ------------
<S>                                                                    <C>               <C>         
CURRENT ASSETS
      Cash and Cash Equivalents ..................................     $     15,405      $     21,240
      Other Assets ...............................................            2,192            17,123
                                                                       ------------      ------------
           Total Current Assets ..................................           17,597            38,363
                                                                       ------------      ------------
PROPERTY, PLANT AND EQUIPMENT
      Net of Accumulated Depreciation $183,572
        August 31, 1998; $177,574 - February 28, 1998 ............           20,405            26,404
                                                                       ------------      ------------

TOTAL ASSETS .....................................................     $     38,002      $     64,767
                                                                       ============      ============
                         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
      Accounts Payable ...........................................     $     38,570      $     30,860
      Other Accrued Liabilities ..................................        1,328,687           897,926
                                                                       ------------      ------------
           Total Current Liabilities .............................        1,367,257           928,786
                                                                       ------------      ------------
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 35,143,618 Shares .........          351,436           349,436
      Additional Paid-in Capital .................................       17,621,096        17,573,096
      Accumulated Deficit ........................................      (19,301,808)      (18,786,572)
                                                                       ------------      ------------
           Total Stockholders' Equity (Deficiency) ...............       (1,329,255)         (864,019)
                                                                       ------------      ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY .........................     $     38,002      $     64,767
                                                                       ============      ============ 
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                     MEDISCIENCE TECHNOLOGY CORP.
                                        STATEMENT OF OPERATIONS
                           FOR THE SIX MONTHS ENDED AUGUST 31, 1998 AND 1997
                                              (UNAUDITED)



                                                SIX MONTHS                           THREE MONTHS
                                       ------------------------------      ------------------------------
                                           1998               1997              1998              1997
                                       ------------      ------------      ------------      ------------
<S>                                    <C>               <C>               <C>               <C>
Net Sales ........................     $       --        $       --        $       --        $       --
Cost of Sales ....................             --                --                --                --
                                       ------------      ------------      ------------      ------------
Gross Profit .....................             --                --                --                --

General and Administrative Expense          333,006           396,035           178,573           173,722
Product Development Expense ......          167,257           247,367            78,127           115,704
Advertising, Travel and Marketing            15,041            59,324             8,182            13,811
                                       ------------      ------------      ------------      ------------
      Total Expenses .............          515,304           702,726           264,882           303,237
                                       ------------      ------------      ------------      ------------
Other Income .....................               68             7,430              --               1,991
                                       ------------      ------------      ------------      ------------
Net Loss .........................     $    515,236      $   (695,296)     $    264,882      $    301,246
                                       ============      ============      ============      ============
Net Loss Per Common Share ........     $      (0.02)     $      (0.02)     $      (0.01)     $      (0.01)
                                       ============      ============      ============      ============
Weighted Average Number of
   Shares of Common Stock
   Outstanding ...................       34,976,951        34,853,063        35,010,285        34,933,618
                                       ============      ============      ============      ============

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                     MEDISCIENCE TECHNOLOGY CORP.
                                        STATEMENT OF CASH FLOWS
                           FOR THE SIX MONTHS ENDED AUGUST 31, 1998 AND 1997
                                              (UNAUDITED)



                                                                                1998           1997
                                                                             ---------      ---------
<S>                                                                          <C>            <C>       
CASH FLOWS FROM OPERATING ACTIVITIES
      Net Loss .........................................................     $(515,236)     $(695,296)
      Adjustment for Item Not Requiring Cash Outlay
           Depreciation ................................................         5,999         12,916
           Amortization ................................................          --           12,804
           Stock Issued for Services ...................................          --           93,750
           Stock Issued Upon Exercise of Stock Options at No Cost ......          --           41,666
                                                                             ---------      ---------
              Subtotal .................................................      (509,237)      (534,160)
      Changes in Assets and Liabilities:
           (Increase) in Prepaid Expenses ..............................          --          (19,793)
           Decrease (Increase) in Other Assets .........................        14,931        (36,101)
           (Increase) Decrease in Deferred Charges .....................          --                8
           Increase (Decrease) in Accounts Payable .....................         7,710        (75,968)
           Increase (Decrease) in Other Accrued Liabilities ............       430,761         73,162
                                                                             ---------      ---------
              Net Cash Flows Provided by (Used for) Operating Activities       (55,835)      (592,852)
                                                                             ---------      ---------
CASH FLOWS  FROM INVESTING ACTIVITIES
      Acquisition of Equipment .........................................          --          (12,882)
                                                                             ---------      ---------
CASH FLOWS FROM FINANCING ACTIVITIES
      Proceeds From Issuance of Common Stock ...........................        50,000           --
                                                                             ---------      ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .......................        (5,835)      (605,734)

CASH AND CASH EQUIVALENTS
      Beginning Balance ................................................        21,240        678,397
                                                                             ---------      ---------
      Ending Balance ...................................................     $  15,405      $  72,663
                                                                             =========      =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                    MEDISCIENCE TECHNOLOGY CORP.
                                                  STATEMENT OF STOCKHOLDERS' EQUITY
                                              FOR THE SIX MONTHS ENDED AUGUST 31, 1998
                                                             (UNAUDITED)






                                        Preferred                      Common
                                       Stock Number     Preferred    Stock Number   Common     Additional Paid   Accumulated
                                        of Shares         Stock      of Shares       Stock        in Capital        Deficit
                                       -----------      --------     ----------     --------     -----------     ------------
<S>                                    <C>              <C>          <C>            <C>          <C>             <C>
Balance February 28, 1998 ........           2,074      $     21     34,943,618     $349,436     $17,573,096     $(18,786,572)
Issuance of Common Stock for
      Cash .......................              --            --        200,000        2,000          48,000
Net Loss for the Six
      Months Ended August 31, 1998                                                                                   (515,236)
                                       -----------      --------     ----------     --------     -----------     ------------
Balance August 31, 1998 ..........           2,074      $     21     35,143,618     $351,436     $17,621,096     $(19,301,808)
                                       ===========      ========     ==========     ========     ===========     ============

</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 1998                  34,943,618                   -                    34,943,618
April 1998                  34,943,618                   -                    34,943,618
May 1998                    34,943,618                   -                    34,943,618
June 1998                   34,943,618                   -                    34,943,618
July 1998                   34,943,618                   -                    34,943,618
August 1998                 35,143,618                   -                    35,143,618               34,976,951


</TABLE>
<PAGE>
                          MEDISCIENCE TECHNOLOGY CORP.
                          NOTES TO FINANCIAL STATEMENTS
                                 AUGUST 31, 1998
                                   (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:

                  Legal and Professional Fees                $       332,850
                  Research & Development                             441,417
                  Salaries, Consulting and Other                     554,420
                                                             ---------------
                                                             $     1,328,687
                                                             ===============


NOTE 3     CANCELLATION OF STOCK OPTIONS

           In May 1997 a director of the Company  exercised  options for 166,666
           shares of the Company's common stock at no cost in consideration  for
           the  cancellation  of the  remaining  33,334  options  held  by  this
           individual.  The exercise price for these options was $0.25 per share
           and   accordingly,   the  Company   recorded  $41,666  as  additional
           compensation expense.

 
<PAGE>
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.

The Company has successfully  conducted pre clinical  investigations with tissue
from the upper  aerodigestive  tract,  the cervix,  the breast and the colon.  A
human  clinical  feasibility  study  was  successfully  completed  for the upper
aerodigestive  tract and  additional  human  clinical  feasibility  studies  are
scheduled for the breast and esophagus. Other possible application opportunities
will be evaluated  during 1998 and pre clinical  evaluations  are expected to be
undertaken  for the  more  promising  opportunities  before  moving  on to human
clinical studies.

The Phase I  clinical  feasibility  study of the upper  aerodigestive  tract was
carried out at Memorial  Sloan-Kettering  under the Principle  Investigation  of
Stimson P. Schantz,  M.D., Associate Professor of Surgery and Director of Cancer
Prevention.  It was  established  in  this  study  that  the  Company's  CD Scan
prototype product is able to distinguish  between cancerous and normal tissue in
the oral cavity using its native tissue fluorescence  spectroscopy technology. A
phase II clinical study in the upper  aerodigestive  tract is scheduled to begin
shortly.

At least two other clinical studies are also scheduled to begin during 1998. One
such clinical study is focused on diagnosis of breast cancer using the Company's
second prototype product,  CD Ratiometer.  This clinical study will be conducted
at Massachusetts General Hospital under the Principle Investigation of Daniel B.
Kopans,  M.D.,  Associate  Professor of Radiology,  Harvard  Medical  School and
Section Head,  Breast  Imaging,  Massachusetts  General  Hospital.  The clinical
feasibility  study will be sponsored by Mediscience and will be partially funded
by the United States Army Medical  Research  Acquisition  Activity.  The second,
planned,  phase I clinical feasibility study will be done at New York Hospital's
Cornell  Medical  Center to assess the  potential  utility of  Mediscience's  CD
Ratiometer with fiberoptic  probe adapted to a flexible  endoscope  furnished by
Pentax Precision Instrument Corporation for monitoring Barrett's Esophagus.

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  technologies.  The  Company  is  also  selectively  considering  other
non-medical   applications  of  its  technology   through  possible   partnering
arrangements.

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 14 patents and optional  rights to 25
pending  patents.  Mediscience  also  licensed  3 other  patents  from two other
institutions.
<PAGE>
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
Company had developed  three  prototype  products that employ the technology for
cancer diagnosis.  They include Cancer Detection Scan, CD Ratiometer and CD Map.
The CD Scan  product  prototype  is  oriented  toward  medical  research.  It is
designed to provide optical  scanning  capability of a broad spectrum of optical
wavelengths  for evaluation of tissue.  CD Ratiometer on the other hand is being
designed  as a simple,  compact  instrument  with  user  friendly  features  and
characteristics.  It is designed to optically  assess the scanned tissue only at
pre-established  optical  wavelengths  and report out  essentially  a yes, no or
maybe  result on a computer  screen,  instantaneously.  CD  Ratiometer  with its
anticipated  assortment of probe designs is expected to be the preferred product
for the medical practitioners use in the office or clinical setting. CD Map is a
vision  instrument that is being designed to optically  assess an area of tissue
rather than selective  individual points.  Although it is at an earlier stage of
design  than  either CD Scan or CD  Ratiometer,  it is  expected  to report  out
results similar to the CD Ratiometer but in pseudocolored  graphics (a "map") on
a computer screen distinguishing the normal areas from cancerous areas via color
differentiation.

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 ability of the Company to generate  significant  revenues from operations is
largely dependent upon obtaining  regulatory approval for the  commercialization
of its cancer detection  technology.  There can be no assurance as to whether or
when the various requisite  governmental approvals will be obtained or the terms
or scope of  these  approvals.  The  Company  intends  to  defray  the  costs of
obtaining  regulatory approval for the  commercialization  of such technology by
the  establishment  of clinical trial  arrangements  with medical  institutions,
similar to its agreement with Sloan  Kettering  Memorial  Hospital.  The Company
intends to continue to pursue the establishment of co-promotion arrangements for
the marketing,  distribution and commercial exploitation of its cancer detection
technology.  Such  arrangements,  if established,  may include up-front payments
sharing of sales revenues after  deduction of certain  expenses,  and/or product
development  funding.  Management of the Company  anticipates  that  substantial
resources  will be committed to a continuation  of its research and  development
efforts and to finance  government  regulatory  applications.  While  management
believes that the Company will obtain  sufficient funds to satisfy its liquidity
and capital  resource  needs for the short term, no assurances can be given that
additional  funding,  or  capital  from  other  sources,  such  as  co-promotion
arrangements, will be obtained on a satisfactory basis.
<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

           None
<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/PETER KATEVATIS  
                                                    ------------------ 
                                                    PETER KATEVATIS
                                                    Chairman/CEO

                                                By: /s/JOHN M. KENNEDY
                                                    ------------------          
                                                    JOHN M. KENNEDY
                                                    Treasurer
                                                    Chief Accounting Officer