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 September 30, 1996...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 November 12, 1996
------------------------                        --------------------------------
Common Stock, par value                                 10,339,250 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 September 30, 1996 and 1995
           and Nine Months Ended September 30, 1996 and 1995                1

           Consolidated Balance Sheets -
           September 30, 1996 and December 31, 1995                         2-3

           Consolidated Statements of Changes in
           Shareholders' Deficit - Nine Months
           September 30, 1996 and 1995                                      4

           Consolidated Statements of Cash Flows-
           Nine Months Ended September 30, 1996 and 1995                    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 Proceeding                                                 9

  Item 3.  Defaults upon Senior Securities                                  11

  Item 5.  Other Information                                                11

  Item 6.  Exhibits and Reports on Form 8-K                                 11
<PAGE>
                         PART I - FINANCIAL INFORMATION
                     THE LEHIGH GROUP INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                Three Months Ended               Nine Months Ended
                                                                                   September 30,                    September 30,
                                                                                   ------------------------------------------------

                                                                               1996            1995            1996           1995
                                                                               ----            ----            ----           ----
<S>                                                                        <C>             <C>             <C>             <C>     
Net Sales                                                                  $  2,411        $  3,192        $  8,398        $  8,784


Cost of Sales                                                                 1,615           2,307           5,816           6,157
                                                                           --------        --------        --------        --------
Gross Profit                                                                    796             885           2,582           2,627

Selling, general and administrative expenses                                    929             977           2,898           3,130
                                                                           --------        --------        --------        --------
   Operating loss                                                              (133)            (92)           (316)           (503)

Other income (expense):

   Interest Expense                                                            (110)           (108)           (329)           (324)
   Interest and other income                                                    109             264             116             288
   Deffered finance charges                                                      (2)           --                (2)           --
                                                                           --------        --------        --------        --------
                                                                                 (3)            156            (215)            (36)
Income (Loss) from continuing operations
   before income taxes and extraordinary item                                  (136)             64            (531)           (539)

Income taxes                                                                      0               1               1               3
                                                                           --------        --------        --------        --------

Income (Loss) from continuing operations
   before extraordinary item                                                   (136)             63            (532)           (542)


Extraordinary item:
   Gain from discontinued operations                                            250            --               250            --


   Net Income (Loss)                                                       $    114        $     63        $   (282)       $   (542)
                                                                           ========        ========        ========        ========

Net Income (loss) per common share (Note 1):
 From continuing operations before extraordinary item                      $   (.01)       $    .01        $   (.05)       $   (.05)
 From extraordinary item                                                   $    .02            --          $    .02            --
                                                                           --------        --------        --------        --------

Net Income (loss) per common share                                         $    .01        $    .01        $   (.03)       $   (.05)
                                                                           ========        ========        ========        ========

Weighted average number of common shares
 and share equivalents outstanding
 Primary and Fully diluted                                                   10,339          10,339          10,339          10,339
                                                                           ========        ========        ========        ========
</TABLE>

                                        1
<PAGE>
                     THE LEHIGH GROUP INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)


                                                   September 30,  December 31,
                                                      1996            1995
                                                    ------          ------
                                                    (Unaudited)    (Audited)
ASSETS

CURRENT ASSETS:

  Cash and cash equivalents                         $  193          $  347
  Accounts receivable, net of
   allowance for doubtful account $144 & $174        4,186           4,335
  Inventories, net                                   1,547           1,823
  Prepaid expenses and other current assets            104              22
                                                    ------          ------

       Total current assets                          6,030           6,527

  Property, plant and equipment, net of
   accumulated depreciation and
    amortization                                        50              61


  Other assets                                          35              34


         Total assets                               $6,115          $6,622
                                                    ======          ======

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)
<TABLE>
<CAPTION>
                                                                         September 30,          December 31,
                                                                             1995                   1994
                                                                          ---------             ---------
                                                                          (Unaudited)            (Audited)
<S>                                                                       <C>                   <C>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:

Current maturities of long-term debt                                      $     501             $     510
Notes payable-bank                                                              360                   360
Accounts payable                                                              1,489                 1,839
Accrued expenses and other current liabilities                                1,735                 1,381


        Total current liabilities                                             4,085                 4,090
                                                                          ---------             ---------

Long-term debt, net of current maturities                                     2,110                 2,080

Deferred credit applicable to sale of
  discontinued operations                                                     - 0 -                   250

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 1995 and in 1994;
  shares issued  10,339,000 in 1995 and in
  1994 which excludes  3,016,000 shares
  held as treasury stock in 1995 and 1994                                        11                    11
  Additional paid-in capital                                                106,594               106,594
  Accumulated deficit from January 1, 1986                                 (105,031)             (104,749)
  Treasury stock - at cost                                                   (1,654)               (1,654)
                                                                          ---------             ---------

        Total shareholders' equity (deficit)                                    (80)                  202
                                                                          ---------             ---------

        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)              $   6,115             $   6,622
                                                                          =========             =========
</TABLE>

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' 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, 1995        $    11        $106,594        $(104,441)          $ (1,654)          $    510

Net Loss                                                           (542)                                 (542)


Balance September 30, 1995     $    11        $106,594        $(104,983)          $ (1,654)          $    (32)
                               ========       ========        ==========          =========          =========

</TABLE>
<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

Private Placement                                 0                                                          0

Net Income                                                         (282)                                  (282)


Balance September 30, 1996     $    11        $106,594        $(105,031)          $ (1,654)              $ (80)
                               ========       ========        ==========          =========              ======
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.


                                        4
<PAGE>
                     THE LEHIGH GROUP INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
Increase/(Decrease) in Cash and Cash Equivalents

Nine Months Ended September 30,                                                           1996              1995
---------------------------------------------------------------------------------------------------------------------
                                                                                              (in thousands)
<S>                                                                                      <C>               <C>   
Cash flows from operating activities:
  Net loss                                                                               $(282)            $(542)
  Adjustments to reconcile net income (loss) to net
   cash provided by (used in) operating activities:

     Depreciation and amortization                                                          22                45
     Changes in assets and liabilities:
       Accounts Receivable, net                                                            149               170
       Deferred credit applicable to sales of discontinued operations                     (250)             --
       Inventories, net                                                                    276              (241)
       Prepaid and other current assets                                                    (82)               (4)


  Accounts payable                                                                        (350)              211
  Accrued expenses and other current liabilities                                           353               107
  Income taxes payable                                                                    --                --
                                                                                         -----             -----

     Net cash provided by (used in) operating activities                                  (164)             (254)
                                                                                         -----             -----

Cash flows from investing activities:
  Capital expenditures                                                                     (10)              (18)
  Other assets, net                                                                         (1)               (1)
                                                                                         -----             -----

     Net cash used in investing activities                                                 (11)              (19)
                                                                                         -----             -----

Cash flows from financing activities:
  Net payments under bank debt                                                            (270)             (180)
  Repayments of Capital Leases                                                              (9)              (11)
  Debenture                                                                                300              --
                                                                                         -----             -----

     Net cash provided by (used in) financing activities                                    21              (191)

Net changes in cash and cash equivalents                                                   154              (464)

Cash and cash equivalents at beginning of period                                           347               925
                                                                                         -----             -----

Cash and cash equivalents at end of period                                               $ 193             $ 461
                                                                                         =====             =====

</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  and nine  months  ended
September 30, 1996 and 1995 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, 1995 Report on Form 10-K.

     The results of  operations  for the nine month period ended  September  30,
1996 are not  necessarily  indicative of the results to be expected for the full
year.

     EARNINGS PER SHARE - Earnings per common  share is  calculated  by dividing
net income (loss)  applicable to common shares by the weighted average number of
common shares and share  equivalents  outstanding  during each period.  Excluded
from fully diluted  computations are stock options granted  (12,000,000  options
which are  contingently  exercisable  pending the  occurrence of certain  future
events).


2.   SUPPLEMENTARY SCHEDULE
                                                    1996            1995
                                                       (in thousands)
Statement of cash flows
Nine months ended September 30,

Cash paid during the nine months for:
 Interest                                       $   199          $   210
 Income taxes                                         1                6


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

RESULTS OF OPERATIONS
THIRD QUARTER OF 1996 IN COMPARISON
WITH THIRD QUARTER OF 1995

      Sales for the third quarter of 1996 were $2.4 million,  a decrease of $0.6
million or 20%  compared to the third  quarter of 1995.  Most of the decrease in
sales occurred in the HallMark export  operation due in part to the departure of
certain clients of HallMark that left when there was a change in the sales force
and a change in market conditions that resulted when certain clients of HallMark
decided to purchase supplies directly from the manufacturers  instead of through
HallMark.  In June, 1996, the person in charge of HallMark's export operation in
Miami  and  another   employee  were   terminated.   HallMark  is  currently  in
negotiations to sell its export operation in Miami.  Management does not believe
the closure of the Miami export operation will have a material adverse effect on
the Company.  HallMark may continue its export operation from its home office in
New York.

      Gross profit as a percentage  of sales  increased  from 27.7% in the third
quarter of 1995, to 33% in the third quarter of 1996. This increase is primarily
due to rebates obtained by HallMark.

      Selling,  general and  administrative  expenses decreased by approximately
$48,000 or 4.9% in the third quarter of 1996 as compared to the third quarter of
1995.  This  decrease was  primarily the result of a reduction in legal fees and
over-head associated with the export operation.

      The factors  discussed  above  resulted in an operating  loss in the third
quarter of 1996 of $133,000 as compared to an  operating  loss of $92,000 in the
third quarter of 1995.

      Included in the  results  for the third  quarter of 1995 and 1996 is other
income of approximately  $260,000 and $359,000,  respectively which represents a
net adjustment to the value of certain items which  predominantly  relate to the
Company's 1991 Restructuring.

                                        7
<PAGE>
RESULTS OF OPERATIONS NINE MONTHS OF 1996
IN COMPARISON WITH NINE MONTHS OF 1995

      Sales for the first nine months of 1996 were $8.4  million,  a decrease of
$0.4 million or (0.04%) compared with the first nine months of 1995. Most of the
decrease in sales occurred in the HallMark  export  operation due in part to the
departure of certain  clients of HallMark that resulted when certain  clients of
HallMark decided to purchase supplies directly from the manufacturers instead of
through HallMark and also the departure of a member of HallMark's sales force in
the export sector and the  departure of certain  clients that have been obtained
by such  person.  In June,  1996,  the  person in charge  of  HallMark's  export
operation in Miami and another employee were  terminated.  HallMark is currently
in  negotiations  to sell its export  operation  in Miami.  Management  does not
believe the closure of the Miami export  operation will have a material  adverse
effect on the Company.  HallMark may continue its export operation from its home
office in New York.

      Gross profit as a  percentage  of sales  increased  from 29.9% in the nine
months ended September 30, 1995 to 30.75% in the nine months ended September 30,
1996.

      Selling,  general and  administrative  expenses decreased by approximately
$232,000 or 7.41% in the first nine months of 1996 as compared to the first nine
months of 1995.  This  decrease  was due in part to a decrease in the  over-head
associated with the HallMark  export  operation and a reduction in the Company's
legal fees.

      The factors  discussed  above  resulted in an  operating  loss in the nine
months ended  September 30, 1996 of $316,000 as compared to an operating loss of
$503,000 in the nine months of September 1995.

      Included in the nine  months  ended  September  30, 1995 and 1996 is other
income of approximately  $260,000 and $366,000,  respectively which represents a
net adjustment to the value of certain items which  predominantly  relate to the
Company's 1991 Restructuring.

LIQUIDITY AND CAPITAL RESOURCES

      At September 30, 1996,  the Company had working  capital of  approximately
$1.8 million  (including  cash and cash  equivalents  of $193,000),  compared to
working capital of $2.4 million at December 31, 1995.

                                        8
<PAGE>
      On June 11, 1996, the Company and DHB Capital Group Inc.  ("DHB") executed
a letter of intent  providing  for the  merger of DHB with a  subsidiary  of the
Company  (which  resulted in the execution of a definitive  merger  agreement on
July 8, 1996). Concurrent with the execution of the letter of intent, DHB made a
loan to the  Company  in the  amount  of  $300,000  pursuant  to the  terms of a
Debenture.  The Debenture  includes interest at the rate of two percent (2%) per
annum over the prime lending rate of Chase Manhattan Bank, N.A. payable monthly,
commencing  on the 1st day of each  subsequent  month next  ensuing  through and
including  June 1, 1998  when the  entire  principal  balance  plus all  accrued
interest is due and payable.

      The  proceeds  of the  loan  from DHB were  used to  satisfy  the loan the
Company previously obtained from Macrocom Investors, LLC on March 28, 1996.

      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.

      The  Company  continues  to be in  default  in  the  payment  of  interest
(approximately  $761,000 in interest was past due as of  September  30, 1996) on
$500,000 principal amount of 13-1/2% Senior Subordinated Notes ("13-1/2% Notes")
and 14-7/8% Subordinated Debentures ("14-7/8 Debentures").

      On November 6, 1996,  HallMark  paid off its  installment  loan with Banca
Nazionale Del Lavoro,  SPA and entered into a 3 year new revolving loan with The
CIT Group/Credit Finance, Inc. in the amount of $5 million.

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

                                        9
<PAGE>
                           PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

      On April 10, 1995 a judgment was entered in Kennebec County, Maine against
the Company and Dori Shoe Company (a former  indirect  subsidiary) in the amount
of $260,969, plus interest and legal fees.

      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 (Me.
1986)).

      The  Company's  counsel in Maine believe that the  application  of Maine's
amended  severance  pay  statute  is  unconstitutional  under both the Maine and
United  States  constitutions.  The Company  has  appealed  the  judgment to the
Supreme  Judicial  Court of Maine.  While the  Company  believes it has a strong
defense, the outcome of this appeal cannot presently be determined.

      On  or  about  October  1,  1996,  Southwicke  Corporation  ("Southwicke")
commenced an action  against the Company and all of the  Company's  directors in
the Supreme Court of the State of New York in the County of New York.

      Southwicke,  a shareholder of the Company, alleges three causes of action.
The first cause of action alleges, among other things, that the directors of the
Company have breached  their  fiduciary  duty to the Company's  stockholders  by
entering into a merger agreement with DHB Capital Group Inc. The second cause of
action is for  declaratory  judgment  declaring that the options and/or warrants
granted to DHB and the DHB options in  connection  with the proposed  merger are
invalid  and with  respect  to the third  cause of action  declaring  the bylaws
passed  are  invalid.  Southwicke  is also  seeking  damages  for no  less  than
$500,000.

      The Company's  management  and its outside  counsel  believe  Southwicke's
action is  meritless.  While the  Company  believes it has strong  defenses,  no
assurance can be given regarding the outcome of this action.



                                       10
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     The  Company  continues  to  be in  default  in  the  payment  of  interest
(approximately  $761,000  interest  is past  due as of  September  30,  1996) on
$500,000 principal amount of 13-1/2% Notes and 14-7/8% Debentures.

ITEM 5.  OTHER INFORMATION

     On October 11, 1996, DHB Capital Group,  Inc.  notified the Company that it
was terminating the Agreement and Plan of  Reorganization  that was entered into
between the parties on July 8, 1996.

     On October 29, 1996 the Company and first  Medical  Corporation  executed a
merger  agreement  as more  fully  disclosed  in the  Company's  Form 8-K  dated
November 7, 1996.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     A.  Exhibits

         See Exhibit Index.

     B.  Reports on Form 8-K

         During  the third  quarter of 1996,  the  Company  filed the  following
     reports on Form 8-K:

          (i)  Current  Report on Form 8-K dated July 16,  1996  (filed July 17,
     1996) reporting  under Item 5, a press release  announcing that the Company
     and DHB Capital Group Inc., executed a definitive merger agreement.

          (ii) Current  Report on Form 8-K dated August 2, 1996 (filed August 2,
     1996)  reporting  under Item 5, that the Company  amended and  restated its
     bylaws.



                                       11
<PAGE>
                                  EXHIBIT INDEX


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



         3(ii)                      Amended and  Restated  Bylaws  (incorporated
                                    herein by reference to Exhibit  3(ii) to the
                                    Company's Form 8-K dated August 2, 1996).

         27.1                       Financial Data Schedule

         99                         Press    release    dated   July   9,   1996
                                    (incorporated herein by reference to Exhibit
                                    99 to the Company's  Form 8-K dated July 16,
                                    1996).


                                       12
<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 Oficer



Dated:  November 14, 1996


                                       13