<PAGE>   1
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(MARK ONE)

   X     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
-------  EXCHANGE ACT OF 1934
         
                 For the quarterly period ended August 31, 1996

         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

              For the transition period from _____________ to ____________

                         COMMISSION FILE NUMBER 0-20866

                           WILSHIRE TECHNOLOGIES, INC.
        (Exact name of small business issuer as specified in its charter)

<TABLE>
<CAPTION>
                        CALIFORNIA                                                 33-0433823
<S>                                                                 <C>    
(State or other jurisdiction of incorporation or organization)      (I.R.S. Employer Identification No.)
</TABLE>

                          5441 AVENIDA ENCINAS, STE. A
                           CARLSBAD, CALIFORNIA 92008
                    (Address of principal executive offices)

                                 (619) 929-7200
                           (Issuer's telephone number)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
                                                                      ---  --- 
         The number of shares outstanding of the registrant's only class of
Common Stock, no par value, was 12,931,885 on September 30, 1996.

         Transitional Small Business Disclosure Format.    Yes         No  X
                                                               ---         --- 
<PAGE>   2
                           WILSHIRE TECHNOLOGIES, INC.

                              INDEX TO FORM 10-QSB

<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION                                                    PAGE
<S>                                                                                 <C>
Item 1.           Financial Statements:

                           Condensed Consolidated Balance Sheets as of
                           August 31, 1996 and November 30, 1995                    3

                           Condensed Consolidated Statements of Operations
                           for the Quarter Ended August 31, 1996 and
                           August 31, 1995                                          5

                           Condensed Consolidated Statements of Operations
                           for the Nine Months Ended August 31, 1996 and
                           August 31, 1995                                          6

                           Condensed Consolidated Statements of Cash Flows
                           for the Nine Months Ended August 31, 1996 and
                           August 31, 1995                                          7

                           Notes to Condensed Consolidated Financial Statements     8

Item 2            Management's Discussion and Analysis
                  or Plan of Operation                                             12

PART II - OTHER INFORMATION

Item 1.           Legal Proceedings                                                16

Item 2.           Changes in Securities                                            16

Item 3.           Defaults Upon Senior Securities                                  16

Item 4.           Submission of Matters to a Vote of Security Holders              16

Item 5.           Other Information                                                16

Item 6.           Exhibits and Reports on Form 8-K                                 17

Signatures                                                                         18
</TABLE>

                                       2
<PAGE>   3
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                           WILSHIRE TECHNOLOGIES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                  August 31,       November 30,
                                                                    1996               1995
                                                                  ----------       ------------
                                                                  (Unaudited)         (Note)
<S>                                                               <C>              <C>       
ASSETS
Current assets:
     Cash                                                         $  253,000       $   18,000
     Accounts receivable trade, less allowance for doubtful
         accounts of $6,000 and $49,000 at August 31,
         1996 and  November 30, 1995, respectively                   360,000          675,000
     Inventories (Note 2)                                            895,000        1,085,000
     Current portion of note receivable from the sale
         of discontinued business (Note 7)                           173,000               --       
     Other current assets                                            180,000          259,000
                                                                  ----------       ----------
Total current assets                                               1,861,000        2,037,000

Property and equipment, less accumulated depreciation
     of $685,000 and $903,000 at August 31, 1996 and
     November 30, 1995, respectively                                 671,000          931,000
Note Receivable from Advanced Materials, Inc.,
     net of $750,000 deferred gain (Note 3)                               --        1,000,000
Note Receivable from the sale of discontinued business
     less current portion (Note 7)                                   340,000               --
License agreements (Note 5)                                               --          259,000
Goodwill, less accumulated amortization of $400,000
     and $350,000 at August 31, 1996 and November 30,
     1995, respectively                                              471,000          763,000
Other assets                                                         103,000          310,000
                                                                  ----------       ----------
                                                                  $3,446,000       $5,300,000
                                                                  ==========       ==========
</TABLE>

     Note:   The condensed consolidated balance sheet at November 30, 1995 has
             been derived from the audited financial statements at that date but
             does not include all of the information and footnotes required by
             generally accepted accounting principles for complete financial
             statements.

See accompanying notes.

                                        3
<PAGE>   4

                           WILSHIRE TECHNOLOGIES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                        August 31,         November 30,
                                                                            1996               1995
                                                                        ----------         ------------
                                                                       (Unaudited)           (Note)
<S>                                                                   <C>                 <C>         
LIABILITIES AND SHAREHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
     Accounts payable                                                 $    302,000        $    915,000
     Accrued expenses                                                      622,000           1,030,000
     Interest Payable                                                           --             989,000
     Line of Credit (Note 4)                                             1,000,000                  --
     Current portion of long-term debt (Note 4)                                 --               2,000
                                                                      ------------        ------------
Total current liabilities                                                1,924,000           2,936,000

Long-term debt, less current portion (Note 4)                                   --           7,637,000
Shareholders' equity (net capital deficiency)
     Preferred stock, no par value, 2,000,000 shares authorized
         and none issued and outstanding                                        --                  --
     Common stock, no par value, 50,000,000 shares
         authorized; 12,931,885 shares and 4,490,455 shares
         issued and outstanding at August 31, 1996 and
         November 30, 1995, respectively                                25,850,000          17,071,000
     Common stock warrants                                                 275,000             418,000
     Deficit                                                           (24,603,000)        (22,762,000)
                                                                      ------------        ------------
Total shareholders' equity (net capital deficiency)                      1,522,000          (5,273,000)
                                                                      ------------        ------------
                                                                      $  3,446,000        $  5,300,000
                                                                      ============        ============
</TABLE>

     Note:   The condensed consolidated balance sheet at November 30, 1995 has
             been derived from the audited financial statements at that date but
             does not include all of the information and footnotes required by
             generally accepted accounting principles for complete financial
             statements.

See accompanying notes.

                                        4
<PAGE>   5
                           WILSHIRE TECHNOLOGIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                  August 31,
                                                              ------------------
                                                           1996                1995
                                                           ----                ----
<S>                                                   <C>                 <C>         
Continuing operations:
     Net sales                                        $    712,000        $    684,000
     Cost of sales                                         639,000             566,000
                                                      ------------        ------------
     Gross profit                                           73,000             118,000
     Operating expenses:
         Marketing and selling                             146,000             116,000
         General and administrative                        526,000             438,000
         Research and development                          138,000                  --
         Loss from joint venture (Note 6)                       --             189,000
                                                      ------------        ------------
     Total operating expenses                              810,000             743,000
                                                      ------------        ------------
     Loss from operations                                 (737,000)           (625,000)
     Other expense                                          (2,000)             (1,000)
     Interest income (expense), net                        (27,000)           (206,000)
                                                      ------------        ------------
     Loss before provision
         for state income taxes                           (766,000)           (832,000)

     Provision for state income taxes - current                 --                  --
                                                      ------------        ------------
     Loss from continuing operations                  $   (766,000)       $   (832,000)

Gain from discontinued operations (Note 7)                  33,000                  --

                                                      ------------        ------------
Net loss                                              $   (733,000)       $   (832,000)
                                                      ============        ============
Weighted average shares outstanding                     12,931,885           4,490,455
                                                      ============        ============
Loss per share:
     Loss from continuing operations                  $      (0.06)       $      (0.19)
     Gain from discontined operations                           --                  --
                                                      ------------        ------------
     Net loss per share                               $      (0.06)       $      (0.19)
                                                      ============        ============
</TABLE>


See accompanying notes.

                                        5
<PAGE>   6

                           WILSHIRE TECHNOLOGIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                         Nine Months Ended August 31,
                                                         ----------------------------
                                                           1996                 1995
                                                           ----                 ----
<S>                                                   <C>                 <C>         
Continuing operations:
     Net sales                                        $  2,434,000        $  2,377,000
     Cost of sales                                       2,112,000           1,635,000
                                                      ------------        ------------
     Gross profit                                          322,000             742,000
     Operating expenses:
         Marketing and selling                             428,000             373,000
         General and administrative                      1,461,000           1,345,000
         Research and development                          394,000             339,000
         Loss from joint venture (Note 6)                       --             316,000
                                                      ------------        ------------
     Total operating expenses                            2,283,000           2,373,000
                                                      ------------        ------------
     Loss from operations                               (1,961,000)         (1,631,000)
     Other income (Note 3)                                 190,000                  --
     Interest income (expense), net                        (96,000)           (598,000)
                                                      ------------        ------------
     Loss before provision
         for state income taxes                         (1,867,000)         (2,229,000)
     Provision for state income taxes - current              1,000               1,000
                                                      ------------        ------------
     Loss from continuing operations                  $ (1,868,000)       $ (2,230,000)
Gain from discontinued operations (Note 7)                  27,000                  --
                                                      ------------        ------------
Net loss                                              $ (1,841,000)       $ (2,230,000)
                                                      ============        ============
Weighted average shares outstanding                     11,826,825           4,490,455
                                                      ============        ============
Loss per share:
     Loss from continuing operations                  $      (0.16)       $      (0.50)
     Gain from discontined operations                           --                  --
                                                      ------------        ------------
     Net loss per share                               $      (0.16)       $      (0.50)
                                                      ============        ============
</TABLE>


See accompanying notes.

                                        6
<PAGE>   7

                           WILSHIRE TECHNOLOGIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     Nine Months Ended August 31,
                                                                     ----------------------------
                                                                     1996                 1995
                                                                     ----                 ----
<S>                                                                <C>                <C>         
OPERATING ACTIVITIES
Net loss                                                           $(1,841,000)       $(2,668,000)
Adjustments to reconcile net loss to net cash
         used in operating activities:
             Depreciation and amortization                             261,000            464,000
             Provision for loss on accounts receivable                 (23,000)           (51,000)
             Loss on sale of property and equipment                         --              5,000
             Gain on sale of discontinued operations                   (27,000)                --
             Gain on settlement of note receivable                    (190,000)                --
             Net change in operating assets and liabilities:
                  (Increase) decrease in accounts receivable            16,000             98,000
                  (Increase) decrease in inventories                  (122,000)          (117,000)
                  Decrease in other current assets                     408,000             12,000
                  Decrease in accounts payable and
                   accrued expenses                                   (761,000)          (346,000)
                  Increase in interest payable                         108,000            639,000
                  Decrease in amounts due to joint venture                  --             55,000
                                                                   -----------        -----------
Net cash used in operating activities                               (2,171,000)        (1,909,000)
                                                                   -----------        -----------
INVESTING ACTIVITIES
Purchase of equipment                                                 (104,000)            (8,000)
Proceeds from sale of property and equipment                                --              5,000
Decrease in other assets                                               320,000             35,000
                                                                   -----------        -----------
Net cash provided by (used in) investing activities                    216,000             32,000
                                                                   -----------        -----------
FINANCING ACTIVITIES

Proceeds from line of credit and long-term debt                      1,000,000          1,875,000
Proceeds from settlement of note receivable                          1,190,000                 --
Payments on notes payable and long-term debt                                --            (25,000)
                                                                   -----------        -----------
Net cash provided by financing activities                            2,190,000          1,850,000
                                                                   -----------        -----------
NET INCREASE (DECREASE) IN CASH                                        235,000            (27,000)
CASH - BEGINNING OF PERIOD                                              18,000             75,000
                                                                   -----------        -----------
CASH - END OF PERIOD                                               $   253,000        $    48,000
                                                                   ===========        ===========
</TABLE>

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
In January, 1996, the Company completed an Exchange Agreement with Trilon
Dominion Partners,LLC pursuant to which the Company exchanged long-term debt and
accrued interest for common stock (Note 4). In June, 1996, the Company completed
the sale of certain assets of the Medical Products division (Note 6).

See accompanying notes.                                         

                                       7
<PAGE>   8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Wilshire Technologies, Inc. (the "Company") develops, manufactures and markets
engineered polymer products for industrial clean room use. The Company, based in
Carlsbad, California, operates through two divisions - - Wilshire Contamination
Control ("WCC"), and Wilshire Gloves ("WGL"). The Company has divested the
Medical Products and Transdermal Products divisions, and will focus primarily on
products used in industrial clean rooms, such as gloves and contamination
control products.

The consolidated financial statements include the accounts of the Company's two
divisions. Significant intercompany amounts and transactions have been
eliminated.

BASIS OF PRESENTATION

The accompanying condensed consolidated unaudited financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB for quarterly
reports under Section 13 or 15(d) of the Securities Exchange Act of 1934.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the quarter ended August 31, 1996 are not necessarily
indicative of the results that may be expected for the fiscal year ending
November 30, 1996. For further information, refer to the financial statements
and footnotes thereto included in the Company's annual report on Form 10-KSB for
the fiscal year ended November 30, 1995.

The Company's financial statements have been presented on a going concern basis,
which contemplates the realization of assets and satisfaction of liabilities in
the normal course of business. The Company has incurred substantial losses since
its inception in 1990, including a loss of $1,841,000 for the nine months ended
August 31, 1996. In addition, there exist unsettled claims related to the breast
implant litigation (see Note 5).

In March 1996, the Board of Directors authorized management to proceed with the
sale of the assets of the Medical Products division which was completed on June
30, 1996, pursuant to a Purchase of Assets and Assumption of Sublease Agreement
with Acacia Laboratories of Texas, Inc., (See Note 7). The disposition of this
business has been accounted for as a discontinued operation. Accordingly, the
financial statements of all prior periods have been restated to exclude the
results of the Medical Products division from the results of continuing
operations.

In addition, management is attempting to raise additional capital to fund its
ongoing operations. While management believes it will be successful, there are
no assurances that sufficient funds will be available to meet the Company's
requirements to fund operations through fiscal year 1997. The ultimate outcome
of this uncertainty cannot be determined and the accompanying consolidated
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the outcome of this
uncertainty.

                                       8
<PAGE>   9
2.  FINANCIAL STATEMENT INFORMATION

Inventories consist of the following:

<TABLE>
<CAPTION>
                                            AUGUST 31,     NOVEMBER 30,
                                              1996             1995
                                           ----------       ----------
<S>                                        <C>              <C>       
        Raw materials                      $  342,000       $  411,000
        Work in process                       261,000          159,000
        Finished goods                        292,000          515,000
                                           ==========       ==========
                                           $  895,000       $1,085,000
                                           ==========       ==========
</TABLE>
                 
3.  NOTE RECEIVABLE

Pursuant to an Asset Purchase Agreement dated August 4, 1992 (the
"Divestiture"), the Company sold the assets of its foam products division to
Wilshire Advanced Materials, Inc. ("Advanced Materials"), assigned its Carson,
California and Dallas, Texas facilities to Advanced Materials, and subleased a
portion of the Dallas and Carson facilities back from Advanced Materials. In
connection with this purchase, Advanced Materials issued to the Company a
secured subordinated promissory note in the amount of $1.0 million requiring
quarterly payments of interest at prime plus 2% per annum with the principal due
in full on December 3, 1997.

Pursuant to a second Asset Purchase Agreement dated November 23, 1993, the
Company sold its OEM medical division to Advanced Materials for a purchase price
of approximately $2.3 million, of which approximately $1.6 million was payable
shortly following the transfer of the division and $750,000 was represented by
an amendment and restatement of the existing secured subordinated promissory
note to increase the principal amount from $1.0 million to $1.75 million. The
amended note of $1.75 million was originally shown in the balance sheet net of
the $750,000 deferred gain on the transaction.

On July 3, 1996, pursuant to a Release Agreement, Advanced Materials, Inc. paid
the Company $1,190,000 in full and final payment of all remaining principal and
interest on the amended and restated secured subordinated promissory note dated
November 23, 1993. Accordingly, the Company released $190,000 of the reserve
against the note to state the note at its net realizable value which is included
in other income in the accompanying Statement of Operations.

4.  LONG-TERM DEBT

On January 5, 1996, the Company and Trilon Dominion entered an Exchange
Agreement to exchange the note payable dated May 13, 1994, the note payable
dated November 18, 1994 including the five amendments, and the accrued interest
on these notes, all of which totaled approximately $8.8 million, for 8,441,430
shares of common stock valued at $1.04 per share. In addition, Trilon Dominion
surrendered the warrants dated May 13, 1994 and November 18, 1994, entitling it
to purchase 1,507,398 shares (after dilution adjustments) of the Company's
common stock.

Also, on January 5, 1996, the Company and Trilon Dominion entered into a Credit
Agreement (the "Agreement") for a credit line of $1 million secured by the
Company's assets. Under the terms of the Agreement, the principal is due on June
30, 1996 and the interest is payable monthly at a rate of prime plus 3.75%. In
connection with the loan, the Company issued Trilon Dominion a five-year warrant
that entitles Trilon Dominion to purchase 100,000 shares of the Company's
authorized but unissued common stock at an exercise price of $0.75 per share,
subject to adjustment to protect against dilution. The warrant is exercisable
immediately and expires on January 5, 2001. Also, under the terms of the
Agreement, the Company issued Trilon Dominion a second five-year warrant which
only becomes exercisable if the Company does not pay Trilon Dominion the
principal and interest due on June 30, 1996. The second warrant entitles Trilon
Dominion to 


                                       9
<PAGE>   10
purchase 25,000 shares of the Company's authorized but unissued common stock at
an exercise price equal to the closing price on June 30, 1996, which was $1.75
per share and it expires on January 5, 2001. The holder of each of such
five-year warrants may, without payment to the Company, convert the warrant in
whole or in part into shares of the Company's common stock having a market value
equal to the difference between (x) the market value per share of common stock
multiplied by the number of warrants that are converted and (y) the warrant
exercise price, multiplied by the number of warrants that are converted.

Pursuant to the Agreement, the Company used part of the proceeds of the credit
line to repay the $400,000 borrowed from Trilon Dominion under the sixth
amendment to the November 18, 1994 Credit Agreement, plus the interest accrued
on that amount.

On June 30, 1996, the Company and Trilon Dominion entered into an Amendment to
the Agreement ("First Amendment") whereby the termination date was changed from
June 30, 1996, to December 31, 1996.

On September 30, 1996, the Company and Trilon Dominion entered into a Second
Amendment to the Agreement ("Second Amendment") whereby the amount of the credit
line was increased from $1,000,000 to $2,000,000 and the termination date was
extended from December 31,1996 to June 30, 1997. Pursuant to the Second
Amendment, the Company can draw on the additional credit line upon achievement
of certain milestones. In addition, two warrants were issued in connection with
the Second Amendment. The first warrant entitles Trilon Dominion to purchase
100,000 shares of the Company's authorized but unissued common stock at an
exercise price of $1.3125 per share, subject to adjustment to protect against
dilution. The warrant is exercisable immediately and expires on September 30,
2001. Also, under the terms of the Agreement, the Company issued Trilon Dominion
a second five-year warrant which only becomes exercisable if the Company does
not pay Trilon Dominion the principal and interest due on June 30, 1997. The
second warrant entitles Trilon Dominion to purchase 25,000 shares of the
Company's authorized but unissued common stock at an exercise price equal to the
closing price on June 30, 1997, and it expires on September 30, 2001. The holder
of each of such five-year warrants may, without payment to the Company, convert
the warrant in whole or in part into shares of the Company's common stock having
a market value equal to the difference between (x) the market value per share of
common stock multiplied by the number of warrants that are converted and (y) the
warrant exercise price, multiplied by the number of warrants that are converted.

5.  COMMITMENTS AND CONTINGENCIES

BREAST IMPLANT LITIGATION AND SHAREHOLDER LAWSUITS AND SEC INVESTIGATION

During the first nine months of 1996, there have been no significant
developments in the Breast Implant Litigation or the Shareholder Lawsuit. For
information regarding these legal proceedings, refer to the information
contained in the Company's Annual Report on Form 10-KSB for the Fiscal Year
Ended November 30, 1995, under Note 6 to the Financial Statements included
therein.

On September 24, 1996, the Securities and Exchange Commission ("SEC") entered an
order pursuant to Section 21C of the Securities Exchange Act ordering the
Company to cease and desist from committing or causing violation of certain
antifraud, reporting, record-keeping, and internal control provisions of the
Securities Exchange Act. The Company consented to the Order without admitting or
denying the SEC's findings.


                                       10
<PAGE>   11
LICENSE AGREEMENTS AND RELOCATION COSTS

In 1993, the Company entered into two ten year worldwide License Agreements for
a proprietary polyurethane material with Innovative Technologies, Ltd., ("IT") a
company based in the United Kingdom.

On April 18, 1996, the Company completed two additional Agreements with IT
related to the License Agreements noted above. Pursuant to these Agreements, the
Company transferred certain rights under the License Agreements back to IT, and
IT canceled $642,000 in minimum royalties which the Company had accrued under
the License Agreements. As a consequence of these additional Agreements, the
Company has written off the net book value of the License Agreements and has
deferred the gain against $450,000 of estimated relocation costs of the
developmental glove plant which will be relocated from the IT facility in the
United Kingdom.

6.  INVESTMENT IN JOINT VENTURE

On February 17, 1993 the Company and Intelligent Pharmaceuticals Corporation
("IPC") entered into an agreement forming Wilshire Transdermal Products, a 50/50
joint venture (the "JV"). The JV was established primarily to develop and
commercialize, on a worldwide basis, over-the-counter transdermal products in
the non-prescriptive market. In May, 1995, the JV received an approval from the
Mexican Ministry of Health for its first transdermal product, TrimPatch(TM).
TrimPatch(TM) is an appetite suppressant delivered through a transdermal patch
that has been in development for more than two years.

On October 31, 1995, the Company entered a buy-out agreement with IPC, whereby
the Company purchased all of IPC's interest in the joint venture. The purchase
price is equal to the amount of documented costs paid by IPC on behalf of the
joint venture, not to exceed $1,250,000. The total price would have been paid as
a percentage of TrimPatch(TM) sales and such payments charged against the
results of operations. Through August 31, 1996, there have been no sales of
TrimPatch(TM).

On September 30, 1996, the Company completed an Agreement of Purchase and Sale
of TrimPatch(TM) Business and Assets with IPC whereby IPC purchased from the
Company certain assets of its transdermal products business related to
TrimPatch(TM). The sale price of $3,130,000 will be paid out based on future
sales of TrimPatch(TM). The assets sold include all equipment, inventory,
patents, trademarks, trade names, and regulatory approvals used in the
TrimPatch(TM) business, which Wilshire previously has expensed in its financial
statements. If Intelligent Pharmaceuticals Corporation cannot sell the existing
inventory, the sale price will be adjusted to $1,868,000. Wilshire will
recognize the revenue from the sale over the period the proceeds are received.

7.  DISCONTINUED OPERATIONS

On June 30, 1996, pursuant to a Purchase of Assets and Assumption of Sublease
Agreement, the Company sold certain assets of the Wilshire Medical Products
division ("WMP") to Acacia Laboratories of Texas, Inc. ("Acacia"), a
wholly-owned subsidiary of Acacia Laboratories, Inc., a California corporation,
that does business under the name of Horizon Medical, Inc. The assets sold
consisted of equipment, inventory, accounts receivable, patents, trademarks,
trade names, and regulatory approvals used in the Medical Products business. The
purchase price of $1,082,000 consisted of $200,000 cash at closing, $342,000 in
accounts receivable to be collected by the Company, and $540,000 in a secured,
fully amortized, 36 month promissory note in favor of the Company, bearing
interest at the rate of 5% per annum.


                                       11
<PAGE>   12
Sales of WMP for the third quarter and nine months ended August 31, 1996, and
1995 were as follows:

<TABLE>
<CAPTION>
                      Three Months Ended August 31,              Nine Months Ended August 31,
                      -----------------------------              ----------------------------
                     1996                 1995                  1996                 1995
                     ----                 ----                  ----                 ----
<S>                   <C>                <C>                   <C>                 <C>       
   Net Sales          $--                $346,000              $888,000            $1,062,000
</TABLE>

The effect on the results of operations from the sale of the WMP division was as
follows:

<TABLE>
<CAPTION>
                                              Three Months Ended    Nine Months Ended
                                               August 31, 1996        August 31, 1996
                                              ------------------    -----------------
<S>                                                  <C>                <C>     
Income from operations of discontinued               $    --            $ 18,000
     business
Loss on disposal of discontinued                     $    --            $(24,000)
     business, net of estimated operating
     results of $67,000 during phase-out
     period
Gain from reversal of excess accrued
     expenses related to disposal of
     discontinued business                           $33,000             $33,000
                                                     -------            --------
         Total                                       $33,000            $ 27,000
</TABLE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

RESULTS OF OPERATIONS

NET SALES

Wilshire Contamination Control and Wilshire Gloves market their products
directly to end users through an internal sales force utilizing outside
distributors. Revenue for all sales is recognized when title transfers,
generally when products are shipped. Wilshire Transdermal Products did not
record sales in 1995, or the first nine months of 1996.

Quarter

Net Sales increased by $28,000 (4.1%) to $712,000 in the third quarter of 1996
from $684,000 in the third quarter of 1995, due to increased sales of gloves and
contamination control products.

Nine Months

Net Sales increased by $57,000 (2.4%) to $2,434,000 in the first nine months of
1996 from $2,377,000 in the first nine months of 1995, due to increased
shipments of gloves and contamination control products.

GROSS PROFIT

Quarter

Gross profit decreased by $45,000 to $73,000 in the third quarter of 1996 from
$118,000 in the third quarter of 1995 primarily due to the costs of the
developmental glove plant. Gross profit margin as a percent of sales decreased
to 10.3% in the third quarter of 1996 from 17.3% in the third quarter of 1995.
Excluding the impact of the glove sales and the related cost of sales on gross
profit, the gross profit margin as a percent of sales decreased to 25.3% in the
third quarter of 1996 from 36.9% in the third quarter of 1995.


                                       12
<PAGE>   13
Nine Months

Gross profit decreased $420,000 to $322,000 in the first nine months of 1996
from $742,000 in the first nine months of 1995, reflecting the costs of the
developmental glove plant. Gross profit margin as a percent of sales decreased
to 13.2% in the first nine months of 1996 from 31.2% in the first nine months of
1995. Excluding the impact of the glove sales and cost of sales on gross profit,
the gross profit margin as a percent of sales decreased to 32.7% in the first
nine months of 1996 from 36.9% in the first nine months of 1995.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses include additional costs related to
the Company's marketing activities and administrative costs (such as executive
and office salaries, related payroll expenses, investor relations, professional
fees, supplies and utilities).

Quarter

Selling, general and administrative expenses increased $118,000 (21.3%) to
$672,000 in the third quarter of 1996 from $554,000 in the third quarter of 1995
primarily due to lower expenses in 1995 related to the reduction in the
provision for bad debts, and higher salary expenses in 1996 related to the glove
business.

Nine Months

Selling, general and administrative expenses increased $171,000 (10.0%) to
$1,889,000 in the first nine months of 1996 from $1,718,000 in the first nine
months of 1995, primarily due to the accrual of relocation costs related to the
move of the developmental glove plant from the U.K. (See Note 5), and higher
trademark amortization expense.

RESEARCH AND DEVELOPMENT

Quarter

Research and development expenses were $138,000 in the third quarter of 1996.
There were no expenses reported in the third quarter of 1995 primarily due to
the reclassification of certain glove manufacturing costs from research and
development to cost of sales in 1995. As a percentage of sales, research and
development expenses were 19.4% in the third quarter of 1996.

Nine Months

Research and development expenses increased $55,000 ((16.2%) to $394,000 in the
first nine months of 1996 from $339,000 in the first nine months of 1995
primarily due to increased project expense.

OTHER INCOME (EXPENSE), NET

The other income in the and first nine months of 1996 was related to the gain
from the payment of the note receivable by Advanced Materials, Inc. (See Note
3).


                                       13
<PAGE>   14
INTEREST INCOME (EXPENSE), NET

The Company reported lower interest expense in the third quarter of 1996 and in
the first nine months of 1996 versus the same periods of 1995 due to reduced
debt outstanding. The interest expense was related primarily to the note
payable and line of credit due to Trilon Dominion Partners, LLC. (see Note 4).

INCOME TAXES

For the quarters ended August 31, 1996 and 1995, the Company sustained losses
for both financial reporting and income tax purposes. A tax provision of $1,000
related to state income taxes was recorded in the financial statements for 1996
and 1995.

LIQUIDITY AND CAPITAL RESOURCES

Management assesses the Company's liquidity by its ability to generate cash to
fund its operations. Significant factors in the management of liquidity are:
funds generated by operations; levels of accounts receivable, inventories,
accounts payable and capital expenditures; adequate lines of credit; and
financial flexibility to attract long-term capital on satisfactory terms.

During 1995 and the first nine months of 1996, the Company has not generated
sufficient cash from operations to fund its working capital requirements. Net
cash used in operating activities was $2,171,000 in the first nine months of
1996 versus $1,909,000 in the first nine months of 1995. The increase in the
cash used in operating activities was primarily due to payments of accounts
payable.

Net cash provided by investing activities was $216,000 in the first nine months
of 1996, versus net cash provided by investing activities of $32,000 in the
first nine months of 1995.

Net cash provided by financing activities was $2,190,000 in the first nine
months of 1996 versus $1,850,000 in the first nine months of 1995. The debt
financing in 1996 was obtained from Trilon Dominion Partners, LLC and the debt
financing in 1995 was obtained from Dominion Capital, Inc. The proceeds from the
settlement of the note receivable is described in note 3 to the financial
statements.

On January 5, 1996, the Company and Trilon Dominion entered an Exchange
Agreement to exchange the note payable dated May 13, 1994, the note payable
dated November 18, 1994 including the five amendments, and the accrued interest
on these notes, all of which totaled approximately $8.8 million, for 8,441,430
shares of common stock valued at $1.04 per share. In addition, Trilon Dominion
surrendered the warrants dated May 13, 1994 and November 18, 1994, entitling it
to purchase 1,507,398 shares (after dilution adjustments) of the Company's
common stock.

Also, on January 5, 1996, the Company and Trilon Dominion entered into a Credit
Agreement (the "Agreement") for a credit line of $1 million secured by the
Company's assets. Under the terms of the Agreement, the principal is due on June
30, 1996 and the interest is payable monthly at a rate of prime plus 3.75%. In
connection with the loan, the Company issued Trilon Dominion a five-year warrant
that entitles Trilon Dominion to purchase 100,000 shares of the Company's
authorized but unissued common stock at an exercise price of $0.75 per share,
subject to adjustment to protect against dilution. The warrant is exercisable
immediately and expires on January 5, 2001. Also, under the terms of the
Agreement, the Company issued Trilon Dominion a second five-year warrant which
only becomes exercisable if the Company does not pay Trilon Dominion the
principal and interest due on June 30, 1996. The second warrant entitles Trilon
Dominion to purchase 25,000 shares of the Company's authorized but unissued
common stock at an exercise price equal to the closing price on June 30, 1996,
and it expires on January 5, 2001.

                                       14
<PAGE>   15
Pursuant to the Agreement, the Company used part of the proceeds of the credit
line to repay the $400,000 borrowed from Trilon Dominion under the sixth
amendment to the November 18, 1994 Credit Agreement, plus the interest accrued
on that amount. Also, the Company used an additional $400,000 of the credit line
in January 1996 to pay past due accounts payable, and the final $200,000
available under the credit line in February 1996 to fund working capital
requirements.

On June 30, 1996, the Company and Trilon Dominion entered into an Amendment to
the Agreement whereby the termination date was changed from June 30, 1996, to
December 31, 1996.

On July 3, 1996, pursuant to a Release Agreement, Advanced Materials, Inc., paid
the Company $1,190,000 in full and final payment of all remaining principal and
interest on the amended and restated secured subordinated promissory note dated
November 23, 1993.

On June 30, 1996, pursuant to a Purchase of Assets and Assumption of Sublease
Agreement, the Company sold certain assets of the Wilshire Medical Products
division ("WMP") to Acacia Laboratories of Texas, Inc. The purchase price of
$1,082,000 consisted of $200,000 cash at closing, $342,000 in accounts
receivable to be collected by the Company, and $540,000 in a secured, fully
amortized, 36 month promissory note in favor of the Company, bearing interest at
the rate of 5% per annum.

On September 30, 1996, the Company and Trilon Dominion entered into a Second
Amendment to the Agreement ("Second Amendment") whereby the amount of the credit
line was increased from $1,000,000 to $2,000,000 and the termination date was
extended from December 31,1996 to June 30, 1997. Pursuant to the Second
Amendment, the Company can draw on the additional credit line upon achievement
of certain milestones. In addition, two warrants were issued in connection with
the Second Amendment. The first warrant entitles Trilon Dominion to purchase
100,000 shares of the Company's authorized but unissued common stock at an
exercise price of $1.3125 per share, subject to adjustment to protect against
dilution. The warrant is exercisable immediately and expires on September 30,
2001. Also, under the terms of the Agreement, the Company issued Trilon Dominion
a second five-year warrant which only becomes exercisable if the Company does
not pay Trilon Dominion the principal and interest due on June 30, 1997. The
second warrant entitles Trilon Dominion to purchase 25,000 shares of the
Company's authorized but unissued common stock at an exercise price equal to the
closing price on June 30, 1997, and it expires on September 30, 2001. The holder
of each of such five-year warrants may, without payment to the Company, convert
the warrant in whole or in part into shares of the Company's common stock having
a market value equal to the difference between (x) the market value per share of
common stock multiplied by the number of warrants that are converted and (y) the
warrant exercise price, multiplied by the number of warrants that are converted.

In addition to completing the above mentioned transactions, management is
attempting to raise additional capital to fund its ongoing operations. While
management believes it will be successful, there are no assurances that
sufficient funds will be available to meet the Company's requirements to fund
operations through fiscal year 1997. The ultimate outcome of this uncertainty
cannot be determined.

                                       15
<PAGE>   16
PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS:

           For information regarding legal proceedings, refer to the information
           contained in the Company's annual report on Form 10-KSB for the
           fiscal year ended November 30, 1995 under the heading, "Legal
           Proceedings" and Note 5 to the financial statements herein.

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:

           On September 24, 1996, the Securities and Exchange Commission ("SEC")
           entered an order pursuant to Section 21C of the Securities Exchange
           Act ordering the Company to cease and desist from committing or
           causing violation of certain antifraud, reporting, record-keeping,
           and internal control provisions of the Securities Exchange Act. The
           Company consented to the order without admitting or denying the SEC's
           findings.

           On September 30, 1996, the Company completed an Agreement of Purchase
           and Sale of TrimPatch(TM) Business and Assets with IPC whereby IPC
           purchased from the Company certain assets of its transdermal products
           business related to TrimPatch(TM). The sale price of $3,130,000 will
           be paid out based on future sales of TrimPatch(TM). The assets sold
           include all equipment, inventory, patents, trademarks, trade names,
           and regulatory approvals used in the TrimPatch(TM) business, which
           Wilshire previously has expensed in its financial statements. If
           Intelligent Pharmaceuticals Corporation cannot sell the existing
           inventory, the sale price will be adjusted to $1,868,000. Wilshire
           will recognize the revenue from the sale over the period the proceeds
           are received.

           On September 30, 1996, the Company and Trilon Dominion entered into a
           Second Amendment to the Agreement ("Second Amendment") whereby the
           amount of the credit line was increased from $1,000,000 to $2,000,000
           and the termination date was extended from December 31,1996 to June
           30, 1997. Pursuant to the Second Amendment, the Company can draw on
           the additional credit line upon achievement of certain milestones. In
           addition, two warrants were issued in connection with the Second
           Amendment. The first warrant entitles Trilon Dominion to purchase
           100,000 shares of the Company's authorized but unissued common stock
           at an exercise price of $1.3125 per share, subject to adjustment to
           protect against dilution. The warrant is exercisable immediately and
           expires on September 30, 2001. Also, under the terms of the
           Agreement, the Company issued Trilon Dominion a second five-year
           warrant which only becomes exercisable if the Company does not pay
           Trilon Dominion the principal and interest due on June 30, 1997. The
           second warrant entitles Trilon Dominion to purchase 25,000 shares of
           the Company's authorized but unissued common stock at an exercise
           price equal to the closing price on June 30, 1997, and it expires on
           September 30, 2001. The holder of each of such five-year warrants
           may, without payment to the Company, convert the warrant in whole or
           in part into shares of the 


                                       16
<PAGE>   17
           Company's common stock having a market value equal to the difference
           between (x) the market value per share of common stock multiplied by
           the number of warrants that are converted and (y) the warrant
           exercise price, multiplied by the number of warrants that are
           converted.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a)  EXHIBITS:

           10.83    Addendum Agreement dated July 26, 1996 to the Manufacturing
                    and Supply Agreement dated April 11, 1996 between Advanced
                    Barrier Technologies, Inc. and the Registrant.

           10.84    Bailment Agreement dated September 6, 1996 between Coastline
                    de Mexico S.A. de C.V., Advanced Barrier Technologies, Inc.
                    and the Registrant.

           10.85    Offer of Settlement of Wilshire Technologies, Inc. dated
                    August 5, 1996 to the U.S. Securities and Exchange
                    Commission.

           10.86    Order Instituting Proceedings Pursuant to Section 21C of the
                    Securities Exchange Act of 1934, Making Findings and
                    Imposing a Cease and Desist Order, dated September 24, 1996
                    entered by the U.S. Securities and Exchange Commission
                    against the Registrant.

           10.87    Agreement of Purchase and Sale of TrimPatch(TM) Business and
                    Assets dated September 30, 1996 between Intelligent
                    Pharmaceuticals Corporation and the Registrant.

           (b)  REPORTS ON FORM 8-K:

                The Registrant filed a report on Form 8-K on August 15, 1996,
                which described the resignation of the Company's Chief Executive
                Officer, the appointment of a new Chief Executive Officer, the
                resignation of a director of the Company, and the election of a
                new director of the Company.


                                       17
<PAGE>   18
SIGNATURES

In accordance with requirements of the Securities Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                                          WILSHIRE TECHNOLOGIES, INC.

Dated: October 11, 1996                    By:  James W. Klingler
                                              ---------------------
                                              James W. Klingler
                                              Chief Financial Officer
                                              (Principal Financial Officer and
                                              Principal Accounting Officer)


                                       18
<PAGE>   19

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit                                                                                Sequentially
Number                                         Description                             Numbered Page
------                                         -----------                             -------------
<S>                 <C>                                                                <C>                          
10.83               Addendum Agreement dated July 26, 1996 to the Manufacturing and
                    Supply Agreement dated April 11, 1996 between Advanced Barrier
                    Technologies, Inc. and the Registrant.

10.84               Bailment Agreement dated September 6, 1996 between Coastline de
                    Mexico S.A. de C.V., Advanced Barrier Technologies, Inc. and the
                    Registrant.

10.85               Offer of Settlement of Wilshire Technologies, Inc. dated August
                    5, 1996 to the U.S. Securities and Exchange Commission.

10.86               Order Instituting Proceedings Pursuant to Section 21C of the
                    Securities Exchange Act of 1934, Making Findings and
                    Imposing a Cease and Desist Order, dated September 24, 1996
                    entered by the U.S. Securities and Exchange Commission
                    against the Registrant.

10.87               Agreement of Purchase and Sale of TrimPatch(TM)Business and Assets
                    dated September 30, 1996 between Intelligent Pharmaceuticals
                    Corporation and the Registrant.

10.88               Second Amendment dated September 30, 1996 to Credit
                    Agreement and Grid Promissory Note dated January 5, 1996,
                    between Trilon Dominion Partners, LLC, and the Registrant.
</TABLE>

                                       21