SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

         For Quarter Ended March 31, 1997...Commission File Number 1-155

                              THE LEHIGH GROUP INC.

             (Exact name of Registrant as specified in its charter)

          DELAWARE                                    13-1920670
--------------------------------------------------------------------------------
(State or other jurisdiction of                    (I.R.S. Employer
 Incorporation or Organization)                  Identification No.)

   810 SEVENTH AVENUE, NEW YORK, NY                       10019
--------------------------------------------------------------------------------
(Address of principal executive offices)                (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE                (212) 333-2620
--------------------------------------------------------------------------------


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

               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  and  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
                                                            -------       ------
Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

         CLASS                                 OUTSTANDING AT MAY 1, 1997
--------------------------------------------------------------------------------
Common Stock, par value                             11,276,750 shares
    $.001 per share
<PAGE>
                     THE LEHIGH GROUP INC. AND SUBSIDIARIES

                                      INDEX

                                                                            Page
                                                                          Number
                                                                          ------

PART I.       FINANCIAL INFORMATION

  Item 1.     Financial Statements

              Consolidated Statements of Operations -
              Three Months Ended March 31, 1997 and 1996                   1

              Consolidated Balance Sheets -

              March 31, 1997 and December 31, 1996                         2-3

              Consolidated Statement of Changes in
              Shareholder Equity (Deficit)

              Three Months Ended March 31, 1997 and 1996                   4

              Consolidated Statements of Cash Flows -

              Three Months Ended March 31, 1997 and 1996                   5

              Notes to Consolidated Financial Statements                   6

  Item 2.     Management's Discussion and Analysis of

              Financial Condition and Results of Operations                7-8

PART II.      OTHER INFORMATION

  Item 1.     Legal Proceedings                                            9

  Item 3.     Defaults upon Senior Securities                              9

  Item 6.     Exhibits and Reports on Form 8-K                             9
<PAGE>
                         PART I - FINANCIAL INFORMATION
                     THE LEHIGH GROUP INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

THREE MONTHS ENDED MARCH 31,                               1997           1996
--------------------------------------------------------------------------------

Revenues earned                                    $      2,525    $      3,120

Cost of revenues earned                                   1,605           2,203
                                                   ------------    ------------
  Gross profit                                              920             917

Selling, general and administrative expenses                845             994
                                                   ------------    ------------
  Operating income (loss)                                    75             (77)

Other income (expense):

  Interest expense                                         (119)           (107)
  Interest and other income                                   6               3
  Amortization of deferred finance                           (7)           --
                                                   ------------    ------------
                                                           (120)           (104)

Loss before income taxes                                    (45)           (181)
                                                   ------------    ------------


  Net Loss                                         $        (45)   $       (181)
                                                   ============    ============

Loss per share-Primary and Fully Diluted

  Net Loss                                         $      (0.01)   $      (0.02)


Weighted average Common Shares
 and share equivalents outstanding

 Primary and Fully diluted                           10,891,333      10,339,250
                                                   ============    ============


The accompanying notes to consolidated financial statements are an integral part
of these statements.

                                        1
<PAGE>

                     THE LEHIGH GROUP INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

                                                 March 31,          December 31,
                                                   1997                  1996
                                                 ---------          ------------
                                                (Unaudited)           (Audited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents                           $  586             $  471
Accounts receivable, net of
 allowance for doubtful
 accounts of $342 and $342                           4,051              3,581
Inventories, net                                     1,421              1,215
Prepaid expenses and other current assets              179                279
                                                    ------             ------

     Total current assets                            6,237              5,546

Property, plant and equipment, net of
 accumulated depreciation and

  amortization                                          51                 50


Other assets                                            29                 29
                                                    ------             ------

       Total assets                                 $6,317             $5,625
                                                    ======             ======


The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.

                                        2
<PAGE>
                     THE LEHIGH GROUP INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

                                                      March 31,    December 31,
                                                        1997            1996
                                                      ---------    ------------
                                                     (Unaudited)    (Audited)

LIABILITIES AND 
  SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:

Current maturities of long-term debt                    $     390     $     390
Accounts payable                                            1,394           954
Accrued expenses and other liabilities                      1,612         1,642
                                                        ---------     ---------

        Total current liabilities                           3,396         2,986
                                                        ---------     ---------

Long-term debt, net of current maturities                   2,752         2,725
                                                        ---------     ---------


Commitments and contingencies                                --            --

Preferred stock, par value $.001;
 authorized 5,000,000
 shares none issued

Common stock, par value $.001
  authorized shares 100,000,000,
  in 1996 and 1995; shares issued
  10,339,250 in 1996 and 1995
  which excludes 3,016,249 shares
  held as treasury stock in 1996 and 1995,
  respectively                                                 12            11
Additional paid-in capital                                106,893       106,594
Accumulated deficit from January 1, 1986                 (105,082)     (105,037)
Treasury stock - at cost                                   (1,654)       (1,654)
                                                        ---------     ---------
        Total shareholders' equity (deficit)                  169           (86)
                                                        ---------     ---------

        TOTAL LIABILITIES AND
         SHAREHOLDERS' EQUITY (DEFICIT)                 $   6,317     $   5,625
                                                        =========     =========


The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.

                                        3
<PAGE>
                     THE LEHIGH GROUP INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENT OF CHANGES
                        IN SHAREHOLDERS' EQUITY (DEFICIT)
                                   (UNAUDITED)
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                         Additional        Accumulated         Treasury
                                            Common        Paid in          Deficit From         Stock
                                            Stock         Capital          Jan. 1, 1986        At Cost           Total
                                          --------       --------         ------------         -------          -------


<S>                                     <C>              <C>              <C>               <C>               <C>      
Balance January 1, 1996                 $      11        $ 106,594        $(104,749)        $  (1,654)        $     202


Net loss                                     --               --               (181)             --                (181)



Balance March 31, 1996                  $      11        $ 106,594        $(104,930)        $  (1,654)        $      21
                                        =========        =========        =========         =========         =========




Balance January 1, 1997                 $      11        $ 106,594        $(105,037)        $  (1,654)        $     (86)


Debenture Conversion                    $       1              299             --                --                 300


Net loss                                     --               --                (45)             --                 (45)



Balance March 31, 1997                  $      12        $ 106,893        $(105,082)        $  (1,654)        $     169
                                        =========        =========        =========         =========         =========
</TABLE>





The accompanying notes to consolidated financial statements are an integral part
of these statements.

                                        4
<PAGE>
                     THE LEHIGH GROUP INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

THREE MONTHS ENDED MARCH 31,                                                         1997                    1996
------------------------------------------------------------------------------------------------------------------
                                                                                            (in thousands)
<S>                                                                                   <C>                   <C> 
Cash flows from operating activities:

  Net loss                                                                           $ (45)               $(181)
Adjustments to reconcile net loss to net
    cash used in operating activities:

  Depreciation and amortization                                                          1                   11
  Changes in assets and liabilities:
     Accounts Receivable                                                              (470)                 (15)
     Inventories-net                                                                  (206)                  21
     Prepaid and other current assets                                                  100                  (21)
     Accounts payable                                                                  440                   77
     Accrued expenses                                                                  (30)                  74
                                                                                     -----                -----

     Net cash used in operating activities                                            (210)                 (34)
                                                                                     -----                -----

Cash flows from investing activities:

  Capital expenditures                                                                --                   --

     Net cash provided by (used in) investing activities                                (2)                  (1)
                                                                                     -----                -----

Cash flows from financing activities:

  Net borrowings from C.I.T. Revolver                                                  327                 --
  Net payments under bank debt                                                        --                    (90)
  Repayment of Capital leases                                                         --                     (4)
  Convertible Debenture                                                               --                    300
     Net cash provided by (used in) financing activities                               327                  206
                                                                                     -----                -----

Net changes in cash                                                                    115                  171
Cash at beginning of period                                                            471                  347
                                                                                     -----                -----

Cash at end of period                                                                $ 586                $ 518
                                                                                     =====                =====
</TABLE>





The accompanying notes to consolidated financial statements are an integral part
of these statements.

                                        5
<PAGE>
THE LEHIGH GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION

The financial  information for the three months ended March 31, 1997 and 1996 is
unaudited.  However, the information reflects all adjustments (consisting solely
of normal  recurring  adjustments)  which are,  in the  opinion  of  management,
necessary for the fair statement of results for the interim periods.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted.  These consolidated  financial statements should
be read in conjunction  with the consolidated  financial  statements and related
notes included in the Company's December 31, 1996 Report on Form 10-K.

The results of  operations  for the three month  period ended March 31, 1997 are
not necessarily indicative of the results to be expected for the full year.

Loss per common share is calculated by dividing net loss by the weighted average
number of common  shares  and share  equivalents  outstanding.  For the  periods
presented,  there were no common stock equivalents  included in the calculation,
since they would be antidilutive.

2.   SUPPLEMENTARY SCHEDULE

                                                          1997            1996
                                                          ----            ----
                                                             (in thousands)

Statement of cash flows
 Three months ended March 31,

Cash paid during the three months for:

 Interest                                                   $ 76          $ 64
 Income taxes                                                  1             4


Supplemental disclosure of non-cash financing activities:

On February 7, 1997, First Medical  Corporation elected to convert the debenture
into 937,500 shares of the Company's common stock.

                                        6
<PAGE>
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
FIRST QUARTER OF 1997 IN COMPARISON
WITH FIRST QUARTER OF 1996

      Revenues  earned  for the  first  quarter  of 1997 were  $2.5  million,  a
decrease of $595,000 or 19% compared to the first quarter of 1996. This decrease
in revenues was due to the sale of HallMark's export operation in Miami.

      Gross profit as a percentage  of revenues  earned  increased to 36% in the
first  quarter  of 1997,  from 29% in the first  quarter  of 1996 as a result of
closing  HallMark's  export  operation in Miami,  which  operated at lower gross
margins.

      Selling,  general and administrative expenses decreased by $149,000 in the
first  quarter of 1997 or 15% as  compared  to the first  quarter  of 1996.  The
decrease was due mostly to the sale of HallMark's export operation in Miami.

      The factors  discussed above resulted in an operating income of $75,000 in
the first  quarter of 1997,  as compared to an operating  loss of $77,000 in the
first quarter of 1996.

      There was no  provision  for income taxes in both 1997 and 1996 due to the
Company's operating losses.

LIQUIDITY AND CAPITAL RESOURCES

     At  March  31,  1997  the  Company  had  working  capital  of $2.8  million
(including  cash of  $586,000).  At  December  31,  1996 the Company had working
capital of $2.6 million (including cash of $471,000).

                                        7
<PAGE>

     On October 29, 1996 in connection with the execution of a definitive merger
agreement between the Company and First Medical Corporation,  the Company issued
a  convertible  debenture  in the amount of $300,000  plus  interest at two (2%)
percent per annum over the prime  lending  rate of Chase  Manhattan  Bank,  N.A.
payable  on the  1st day of each  subsequent  month  next  ensuing  through  and
including 24 months  thereafter.  On the 24th month,  the outstanding  principal
balance and all accrued interest shall become due and payable.

     The  proceeds  of the loan  from  First  Medical  Corporation  were used to
satisfy the loan the Company  previously  obtained from DHB on June 11, 1996. On
February 7, 1997,  First  Medical  Corporation  elected to convert the debenture
into 937,500 shares of the Company's common stock.

     The  Company  continues  to  be in  default  in  the  payment  of  interest
(approximately  $664,000  interest  was past due as of  March  31,  1997) on the
$390,000 aggregate principal amount of its 13-1/2% Senior Subordinated Notes due
May 15,1998  ("13-1/2% Notes") and 14-7/8%  Subordinated  Debentures due October
15, 1995 ("14-7/8% Debentures") that remain outstanding and were not surrendered
to the Company in connection  with its financial  restructuring  consummated  in
1991. The Company has been unable to locate the holders of the 13-1/2% Notes and
14-7/8%  Debentures  (with the  execption of certain of the 14-7/8  Subordinated
Debentures  which were retired during 1996). The Company does not presently have
sufficient funds to repay its outstanding  indebtedness  under the 13-1/2% Notes
and 14-7/8% Debentures.

     On April 10, 1995 a judgment  was entered  against the Company for $260,969
plus interest and legal fees (see "Part II, Item 1 Legal Proceedings").

                                        8
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     The State of Maine and  Bureau of Labor  Standards  commenced  an action in
Maine  Superior Court on or about November 29, 1990 against the Company and Dori
Shoe Company (an indirect  former  subsidiary)  to recover  severance  pay under
Maine's plant  closing law. The case was tried without a jury in December  1994.
Under that law, an  "employer"  who shuts down a large  factory is liable to the
employees  for  severance  pay at the rate of one  week's  pay for each  year of
employment.  Although  the law did not apply to the  Company  when the Dori Shoe
plant  was  closed  it was  amended  so as to  arguably  apply  to  the  Company
retroactively. In a prior case brought against the Company (then known as Lehigh
Valley  Industries)  and its former  subsidiary  under the Maine  severance  pay
statute prior to its amendment,  the Company was successful against the State of
Maine (see CURTIS V. LOREE FOOTWEAR AND LEHIGH VALLEY INDUSTRIES,  516 A. 2d 558
(Me. 1986).

     The Superior Court by decision docketed April 10, 1995 entered judgement in
favor of the former  employees  of Dori Shoe  Company  against Dori Shoe and the
Company in the amount of $260,969.11  plus  prejudgment  interest and reasonable
attorneys'  fees and costs to the Plaintiff upon their  application  pursuant to
Maine Rules of Civil  Procedure 54(b) (3) (d). The Company filed a timely appeal
appealing  that  decision  and the matter was  argued  before the Maine  Supreme
Judicial  Court on  December  7, 1995.  Prejudgment  interest  will accrue at an
annual rate of approximately $20,800 from November 29, 1990.

     On February  18, 1997,  the Supreme  Judicial  Court of Maine  affirmed the
Superior Court's decision. The Company is currently considering an appeal to the
United  States  Supreme  Court.  Approximately  $350,000 has been accrued by the
Company relating to this judgment.

     The  Company  is  involved  in  other  minor  litigation,  none of which is
considered  by  management  to be  material  to its  business  or, if  adversely
determined,  would have a material  adverse  effect on the  Company's  financial
condition.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     The  Company  continues  to  be in  default  in  the  payment  of  interest
(approximately  $664,989  interest is past due as of March 31, 1997) on $390,000
principal amount of 13- 1/2% Notes and 14-7/8 Debentures.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     No reports on Form 8-K were filed during the quarter ended March 31, 1997.

                                        9
<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.

                                      THE LEHIGH GROUP INC.



                                      By: /S/ Salvatore J. Zizza
                                          -------------------------------
                                          Salvatore J. Zizza
                                          Chairman of the Board, President
                                          and Chief Executive Officer

Dated:  May 1, 1997