================================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           ---------------------------

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                        For Quarter Ended March 31, 1997
                         Commission File Number 1-12584

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


                       SHEFFIELD MEDICAL TECHNOLOGIES INC.
                    (Exact Name Of Registrant In Its Charter)


        DELAWARE                                         13-3808303
(State of Incorporation)                       (IRS Employer Identification No.)


30 ROCKEFELLER PLAZA, SUITE 4515
NEW YORK, NEW YORK                                             10112
(Address of Principal Executive Offices)                     (Zip Code)


       Registrant's telephone number, including area code: (212) 957-6600



            Indicate by check whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes /X/   No / /

            The number of shares  outstanding  of the  issuer's  Common Stock is
11,388,274 shares of Common Stock as of March 31, 1997.



================================================================================
<PAGE>
              SHEFFIELD MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                        (A DEVELOPMENT STAGE ENTERPRISE)

                                      INDEX

                                                                            Page
PART I.                 Financial Information
          ITEM 1.       Financial Statements.

                        Consolidated  Balance  Sheets -                        1
                        March 31, 1997 and December 31,
                        1996.

                        Consolidated   Statements   of                         2
                        Operations   for   the   three
                        months  ended  March 31,  1997
                        and  1996  and for the  period
                        from    October    17,    1986
                        (inception) to March 31, 1997.

                        Consolidated    Statements   of                        3
                        Cash   Flows   for  the  three
                        months  ended  March  31, 1997
                        and  1996  and for the  period
                        from    October    17,    1986
                        (inception) to March 31, 1997.

                        Notes to Consolidated Financial                        4
                        Statements.

          ITEM 2.       Management's   Discussion   and                        6
                        Analysis of Financial Condition
                        and Results of Operations.

PART II.                Other Information.                                     9

SIGNATURES                                                                    10
<PAGE>
               SHEFFIELD MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                        (A DEVELOPMENT STAGE ENTERPRISE)
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                                         March 31,      December 31,
                                                                                                           1997            1996
                                                                                                       ------------    ------------
                                                                                                       (Unaudited)
                                                               ASSETS
Current assets:
<S>                                                                                                    <C>             <C>
          Cash and cash equivalents                                                                    $  3,027,503    $  1,979,871
          Marketable securities                                                                             219,585         460,768
          Prepaid expenses and other current assets                                                          28,969          43,975
                                                                                                       ------------    ------------
               Total current assets                                                                       3,276,057       2,484,614
                                                                                                       ------------    ------------

Property and equipment:
          Laboratory equipment                                                                              185,852         185,852
          Office equipment                                                                                   80,157          89,019
          Leasehold improvements                                                                             61,390          61,390
                                                                                                       ------------    ------------
                                                                                                            327,399         336,261
          Less accumulated depreciation and amortization                                                    170,921         162,007
                                                                                                       ------------    ------------
               Net property and equipment                                                                   156,478         174,254
                                                                                                       ------------    ------------

Segregated cash                                                                                              75,000          75,000
Other assets                                                                                                 39,417          40,016
                                                                                                       ------------    ------------
               Total assets                                                                            $  3,546,952    $  2,773,884
                                                                                                       ============    ============

                              LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:
          Accounts payable and accrued liabilities                                                     $    332,565    $    446,965
          Sponsored research payable                                                                      1,172,310         580,157
          Capital lease obligation-current portion                                                           22,626          23,719
                                                                                                       ------------    ------------
               Total current liabilities                                                                  1,527,501       1,050,841

Capital lease obligation - non-current portion                                                               20,749          27,206

Cumulative convertible redeemable preferred stock, $.01 par value.  Authorized,
          3,000,000 shares; issued and outstanding, 35,700 and 0 shares, at
          March 31, 1997 and December 31, 1996, respectively                                                    357            --
Additional paid-in capital associated with cumulative convertible
          redeemable preferred stock                                                                      3,211,779            --

Stockholders' equity:
          Common stock, $.01 par value.  Authorized, 30,000,000 shares; issued and outstanding,
                  11,388,274 shares at March 31, 1997 and December 31, 1996                                 113,883         113,883
          Notes receivable in connection with sale of stock                                                (110,000)       (110,000)
          Additional paid-in capital                                                                     28,319,838      28,319,838
          Unrealized loss on marketable securities                                                         (280,415)        (39,232)
          Deficit accumulated during development stage                                                  (29,256,740)    (26,588,652)
                                                                                                       ------------    ------------
                                                                                                         (1,213,434)      1,695,837
                                                                                                       ------------    ------------
               Total liabilities and stockholders' equity                                              $  3,546,952    $  2,773,884
                                                                                                       ============    ============

</TABLE>
                                       1

     See accompanying notes to unaudited consolidated financial statements.
<PAGE>
              SHEFFIELD MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                        (a development stage enterprise)
                     Consolidated Statements of Operations
   For the three months ended March 31, 1997 and 1996 and for the period from
           October 17, 1986 (inception) to March 31, 1997
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                      October 17, 1986
                                                                      Three months ended               (inception) to
                                                                          March 31,                      March 31,
                                                           ---------------------------------           ------------

                                                                1997                   1996                    1997
                                                                ----                   ----                    ----

Revenues:
<S>                                                        <C>                    <C>                   <C>         
        Sub-license revenue                                $       --             $      --             $    510,000
        Interest income                                          18,225                16,515                415,138
                                                           ------------           -----------           ------------ 

        Total revenue                                            18,225                16,515                925,138

Expenses:
        Research and development                              1,938,037             1,239,791             17,461,234
        General and administrative                              745,597               430,548             12,640,289
        Interest                                                  2,679                 1,829                123,142
                                                           ------------           -----------           ------------ 

        Total expenses                                        2,686,313             1,672,168             30,224,665
                                                           ------------           -----------           ------------ 

Loss before extraordinary item                               (2,668,088)           (1,655,653)           (29,299,527)
Extraordinary item                                                 --                    --                   42,787

                                                           ------------           -----------           ------------ 
Net loss                                                   $ (2,668,088)          $(1,655,653)          $(29,256,740)
                                                           ============           ===========           ============ 

Loss per share of common stock:
Loss before extraordinary item                             $      (0.23)          $     (0.17)          $      (6.62)
Extraordinary item                                                 --                    --                     0.01
                                                           ------------           -----------           ------------ 
Net loss                                                   $      (0.23)          $     (0.17)          $      (6.61)
                                                           ============           ===========           ============ 



Weighted average common shares outstanding                   11,388,274             9,656,540              4,426,210
                                                           ============           ===========           ============ 

</TABLE>

                                       2

     See accompanying notes to unaudited consolidated financial statements.
<PAGE>
              SHEFFIELD MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                        (a development stage enterprise)
                     Consolidated Statements of Cash Flows
   For the three months ended March 31, 1997 and 1996 and for the period from
           October 17, 1986 (inception) to March 31, 1996
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                   October 17, 1986
                                                                                        Three months ended          (inception) to
                                                                                             March 31,                 March 31,
                                                                                  -----------------------------      -----------
                                                                                     1997               1996            1997
                                                                                  ----------         ----------      -----------


<S>                                                                              <C>                <C>             <C>
Cash outflows from development stage activities and
 extraordinary gain:
   Loss before extraordinary item                                                $(2,668,088)       $(1,655,653)    $(29,299,527)
  Extraordinary gain on extinguishment of debt                                          --                 --             42,787
                                                                                  ----------         ----------      ----------- 
   Net loss                                                                       (2,668,088)        (1,655,653)     (29,256,740)
Adjustments to reconcile net loss to net cash used by
 development  stage activities:
  Issuance of common stock, stock options/warrants for services                         --                 --          1,541,003
  Non-cash interest expense                                                             --                 --             50,000
  Issuance of common stock for license                                                  --                 --              5,216
  Securities acquired under sub-license agreement                                       --                 --           (500,000)
  Issuance of common stock for intellectual property rights                             --                 --            866,250
  Amortization of organizational and debt issuance costs                                --                 --             77,834
  Depreciation                                                                        12,659             18,537          154,203
  Amortization                                                                         5,116               --             25,579
  Increase in debt issuance and organizational costs                                    --                 --            (77,834)
  Decrease (increase) in prepaid expenses and other current assets                    15,006             91,684          (88,010)
  Decrease (increase) in other assets                                                    600           (116,720)          19,625
  Decrease in accounts payable, accrued liabilities                                 (114,400)           (26,576)        (244,505)
  Increase in sponsored research payable                                             592,153             17,537        1,749,380
                                                                                  ----------         ----------      ----------- 
    Net cash used by development stage activities                                 (2,156,954)        (1,671,191)     (25,677,999)
                                                                                  ----------         ----------      ----------- 
Cash flows from investing activities:
 Acquisition of laboratory and office equipment                                         --              (44,314)        (263,809)
 Increase in segregated cash                                                            --                 --            (75,000)
 Increase in notes receivable in connection with sale of stock                          --                 --           (240,000)
 Payments of notes receivable                                                           --                 --            130,000
                                                                                  ----------         ----------      ----------- 
   Net cash used by investing activities                                                --              (44,314)        (448,809)
                                                                                  ----------         ----------      ----------- 
Cash flows from financing activities:
 Principal payments under capital lease                                               (7,550)            (5,491)         (29,078)
 Conversion of convertible, subordinated notes                                          --                 --            749,976
 Proceeds from issuance of debt                                                         --                 --            550,000
 Proceeds from issuance of common stock                                                 --                 --         13,268,035
 Proceeds from issuance of  cumulative convertible redeemable
  preferred stock                                                                  3,212,136               --          3,212,136
 Proceeds from exercise of stock options                                                --              137,175        1,337,677
 Proceeds from exercise of warrants                                                     --            1,766,003       10,064,481
                                                                                  ----------         ----------      ----------- 
    Net cash and cash equivalents provided by financing activities                 3,204,586          1,897,687       29,153,227
                                                                                  ----------         ----------      ----------- 
    Net increase in cash and cash equivalents                                      1,047,632            182,182        3,026,419
Cash and cash equivalents at beginning of period                                   1,979,871          1,860,577            1,084
                                                                                  ----------         ----------      ----------- 
Cash and cash equivalents at end of period                                       $ 3,027,503        $ 2,042,759     $  3,027,503
                                                                                 ===========        ===========     ============
Noncash investing and financing activities:
 Common stock, stock options and warrants issued for services                    $      --          $      --       $  1,541,003
 Common stock issued for license                                                        --                 --              5,216
 Common stock issued for intellectual property rights                                   --                 --            866,250
 Common stock issued to retire debt                                                     --                 --            600,000
 Securities acquired under sub-license agreement                                        --                 --            500,000
 Unrealized depreciation of investments                                              241,183               --            280,415
 Equipment acquired under capital lease                                                 --               72,453           72,453
 Notes payable converted to common stock                                                --                 --            749,976
                                                                                 ===========        ===========     ============

Supplemental disclosure of cash flow information:
 Interest paid                                                                   $     2,679        $     1,829     $    123,142
                                                                                 ===========        ===========     ============
</TABLE>

                                       3

     See accompanying notes to unaudited consolidated financial statements.
<PAGE>
              SHEFFIELD MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                        (a development stage enterprise)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1997
                                   (UNAUDITED)



1.          CONSOLIDATED FINANCIAL STATEMENTS

            The  accompanying  consolidated  balance sheets as of March 31, 1997
            and December 31, 1996 and the accompanying  consolidated  statements
            of  operations  and cash flows for the three  months ended March 31,
            1997 and 1996 and for the period from  October 17, 1986  (inception)
            to  March  31,  1997,  have  been  prepared  by  Sheffield   Medical
            Technologies Inc. (the "Company"),  without audit. In the opinion of
            management,  all adjustments  (consisting  only of normal  recurring
            accruals)  necessary  to  present  fairly  the  financial  position,
            results of  operations,  and changes in cash flows at March 31, 1997
            and for all periods presented have been made.

            Certain  information and footnote  disclosures  normally included in
            financial  statements prepared in accordance with generally accepted
            accounting   principles  have  been  condensed  or  omitted.  It  is
            suggested that these  consolidated  financial  statements be read in
            conjunction with the financial statements and notes thereto included
            in the  Company's  annual  report on Form  10-KSB for the year ended
            December 31, 1996.  The results of  operations  for the three months
            ended March 31, 1997 and 1996 are not necessarily  indicative of the
            operating results for the full years.

            The Company was  incorporated on October 17, 1986,  under the Canada
            Business  Corporations Act. The Company's  wholly-owned  subsidiary,
            U-Tech Medical Corporation  ("U-Tech") was incorporated in the state
            of Texas on January 13, 1992 and is inactive at March 31,  1997.  On
            January 10, 1996, Ion Pharmaceuticals,  Inc., a Delaware corporation
            ("Ion"), was formed as a wholly-owned  subsidiary of the Company. At
            that time,  Ion  acquired the  Company's  rights with respect to its
            anti-proliferative   technology.   Unless   the   context   requires
            otherwise,  Sheffield,  U-Tech  and  Ion  are  referred  to as  "the
            Company". The Company commenced its biotechnology  operations in the
            United  States in January 1992 under new  management  and  Sheffield
            became  domesticated  as a Wyoming  corporation  in May 1992. At the
            Annual  Meeting of  shareholders  of the Company held on January 26,
            1995,   the   Company's   shareholders   approved  the  proposal  to
            reincorporate  the Company in  Delaware,  which was effected on June
            13, 1995. All significant  intercompany  transactions are eliminated
            in consolidation.

            The  Company  is in the  development  stage  and as  such  has  been
            principally  engaged in licensing and research efforts.  The Company
            has  generated  minimal  operating  revenue and requires  additional
            capital, which the Company intends to obtain through equity and debt
            offerings to continue to operate its business. The Company's ability
            to meet its  obligations  as they  become due and to  continue  as a
            going   concern  must  be  considered  in  light  of  the  expenses,
            difficulties  and delays  frequently  encountered  in starting a new
            business,  particularly  since the Company  will focus on  research,
            development  and  unproven  technology  which may  require a lengthy
            period of time and substantial expenditures to complete. Even if the
            Company  is  able  to   successfully   develop   new   products   or
            technologies,  there can be no assurance  the Company will  generate
            sufficient  revenues from the sale or licensing of such products and
            technologies  to  be  profitable.   Management   believes  that  the
            Company's  ability to meet its obligations as they become due and to
            continue as a going concern through December 1997 are dependent upon
            obtaining additional financing.

                                       4
<PAGE>
              SHEFFIELD MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                        (a development stage enterprise)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1997
                                   (UNAUDITED)


2.          NET LOSS PER COMMON SHARE

            Net loss  per  common  share  is based on net loss for the  relevant
            period  divided by the weighted  average number of shares issued and
            outstanding during the period. Stock options,  common stock issuable
            upon  conversion  of warrants  and common  stock  issuable  upon the
            conversion of cumulative  convertible redeemable preferred stock are
            not reflected as their effect would be antidilutive for both primary
            and fully diluted earnings per share computations.

            In February 1997, the Financial  Accounting  Standards  Board issued
            Statement  No.  128,  EARNINGS  PER SHARE,  which is  required to be
            adopted on December  31,  1997.  At that time,  the Company  will be
            required to change the method currently used to compute earnings per
            share and to restate all prior periods.  The impact of Statement 128
            on the  calculation of primary and fully diluted  earnings per share
            is not expected to be material.



3.          PRIVATE PLACEMENT

            On February  28, 1997, the Company completed a private  placement of
            35,700 shares of its 7% Series A Cumulative  Convertible  Redeemable
            Preferred Stock (the "Series A Preferred Stock"), which raised total
            gross  proceeds of $3.5  million.  The proceeds of this offering are
            being used to fund research and development,  patent prosecution and
            for working capital and general  corporate  purposes,  including the
            possible  acquisition of rights in new technologies in the Company's
            ordinary course of business.

            Dividends on the Series A Preferred  Stock are  cumulative  from the
            date of original  issue at an annual rate of 7% per share payable in
            common stock on the date of each  conversion at the then  applicable
            conversion  rate. The Series A Preferred  Stock is redeemable by the
            holders  under  certain  circumstances  through  February  28, 1999.
            Holders of Series A  Preferred  Stock also have the right to convert
            any or all shares of Series A Preferred  Stock into shares of common
            stock at a defined  conversion rate ending on February 28, 1999. The
            Series A Preferred  Stock had a  liquidation  value of $3,570,000 at
            March 31, 1997.



4.          SUPPLY AND LICENSE AGREEMENTS

            In March 1997,  the Company  exercised  its option and entered  into
            exclusive supply and license agreements for the world-wide rights to
            the  multi-dose   inhaler  technology  (MSI)  of  Siemens  A.G.  The
            agreements call for Siemens to be the exclusive  supplier of the MSI
            system, a hand-held, portable pulmonary deliverysystem.  The Company
            paid a license fee of $1.1 million in April 1997 to Siemens pursuant
            to its  agreements  and is required to make  additional  payments to
            Siemens of DM 2.0 million on January 1, 1998 and 1999.



5.          SUBSEQUENT EVENT

            On April 25, 1997, the Company acquired Camelot  Pharmacal,  L.L.C.,
            of St. Louis,  Missouri,  a privately  held emerging  pharmaceutical
            company.   The  members  of  Camelot's  management  team  have  been
            appointed officers of the Company and Loren G. Peterson, a principal
            of Camelot,  has been named Chief  Executive  Officer of the Company
            and has joined the Company's Board of Directors.  Consideration  for
            this  transaction  was 600,000  shares of Company  common stock.  In
            addition,  the  members  of the  Camelot  management  team have been
            granted options to acquire 1.2 million common shares  exercisable at
            market price as of the date of grant.

                                       5
<PAGE>
              SHEFFIELD MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                        (a development stage enterprise)



ITEM 2:

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The Company,  being a development stage  enterprise,  has incurred a net loss in
each of the  fiscal  years  since its  inception  and has had to rely on outside
sources of funds to maintain its  liquidity.  Substantial  operating  losses are
expected to be incurred  for the next several  years as the Company  expends its
resources  for product  acquisition,  sponsored  research  and  development  and
preclinical and clinical testing.

As a development  stage company without  significant  revenues,  the Company has
financed its technology  development activities and operations primarily through
public  and  private  offerings  of  securities,  from  which it has  raised  an
aggregate of approximately $28.4 million through March 31, 1997. On February 28,
1997, the company completed a private offering of 35,000 shares of its 7% Series
A Cumulative  Convertible  Redeemable  Preferred Stock, which raised total gross
proceeds of $3.5  million.  The proceeds of this offering are being used to fund
research and development, patent prosecution and for working capital and general
corporate  purposes,  including  the  possible  acquisition  of  rights  in  new
technologies in the Company's ordinary course of business.  Management estimates
that  based on its  successful  history of  raising  capital,  its plans to seek
additional  funds through planned  offerings and the continued focus on selling,
licensing  and  commercialization  of its  technologies,  the Company  will have
sufficient resources to fund its activities for at least the next twelve months.
There can be no assurance  that planned  securities  offerings will be completed
or, if not  completed as planned,  that other sources of capital can be obtained
in amounts  and upon terms  acceptable  to the Company  during the twelve  month
period. In the event that such funds are not available when needed,  the Company
would be required to reduce or delay its  funding of current  research  projects
and delay  making  commitments  for  future  research  projects.  The  Company's
operating  results have fluctuated  significantly  during each quarter since its
reorganization,  and the Company  anticipates  that such  fluctuations,  largely
attributable  to varying  sponsored  research and  development  commitments  and
expenditures, will continue into the foreseeable future.

The  Company  continues  to  conduct  scientific   research,   clinical  trials,
development, and intellectual property protection. During the three months ended
March 31, 1997, the Company funded $1.9 million for research and  development on
its projects of which $1.1 million  represents the license fee for entering into
exclusive  supply and license  agreements for the world-wide  rights to Siemens'
multi-dose inhaler (MSI). During the succeeding  12-month period,  approximately
$6.3 million in  additional  funding is projected to be incurred on clinical and
laboratory research and development.  Of this estimated funding of $6.3 million,
approximately  $150,000  is  expected  to be applied to the  HIV/AIDS  Vaccines,
$150,000 to the UGIF Technology-Prostate Cancer, $250,000 to the Membrane Attack
Complex  (MAC)/Complement  Technology,   $950,000  to  the  Ion  Pharmaceuticals
Technologies and $4,800,000 to the MSI.

In addition to clinical and laboratory research development, the Company expects
to incur ongoing costs in connection with its intellectual  property  protection
and patent  prosecution,  which costs are expected to approximate  $100,000 over
the next 12 months.


                                       6
<PAGE>
              SHEFFIELD MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                        (a development stage enterprise)



REVENUES AND EXPENSES

Revenues:

From  inception  through the period ended March 31, 1997, the Company has earned
sub-license revenue of $510,000 primarily from the sub-license agreement for its
liposome-CD4 technology.

From  inception  through the period ended March 31, 1997, the Company has earned
interest  income  of  $415,138  and an  extraordinary  item  from  gain on early
extinguishment  of debt of $42,787.  The Company's  ability to generate material
revenues is contingent on the successful  commercialization its technologies and
other  technologies which it may acquire,  followed by the successful  marketing
and  commercialization of such technologies through licenses,  joint ventures or
other arrangements.

Interest  income for the three months ended March 31, 1997 was $18,225  compared
to $16,515 for the same period  ended March 31,  1996.  The increase in interest
earned is attributable to an increase of cash invested in short-term investments
Except for the sub-license revenue mentioned above,  interest income represented
all of the Company's income in each of the prior periods.

Operating Expenses:

From  inception  through the period ended March 31, 1997,  the Company  incurred
$30,224,665  of operating  expenses.  Of the total  operating  expenses for that
period,  $17,461,234  were costs of research and  development  for the Company's
technologies.  The  remainder  of expenses  for the same  period  were  incurred
principally  as  consulting  costs,   costs  of  management,   legal  and  other
professional fees and expenses relating to the Company's  technologies,  and for
its completed and proposed  financing plans.  Research and development costs are
expected to remain high as the Company implements  later-stage research projects
of its  technologies  and such costs will  continue to be expensed for financial
reporting purposes.

Operating  expenses for the three months ended March 31, 1997,  were  $2,686,313
compared to $1,672,168 for the same period ended March 31, 1996. The increase in
research  and  development  expenses  was  primarily  due to the payment of $1.1
million for the acquisition of an exclusive supply and license agreement for the
world-wide rights to Siemens'  multi-dose inhaler (MSI). The increase in general
and  administrative  expenses was primarily due to increased salary expense as a
result of the additions to the Company's management team and higher professional
fees.

LIQUIDITY AND CAPITAL RESOURCES

In  February  1993,  the Company  conducted  its initial  United  States  public
offering of 833,334  Units,  each Unit  consisting of two shares of Common Stock
and one Redeemable  Common Stock Purchase  Warrant  exercisable for one share of
Common  Stock  at  a  price  of  $3.75,   subject  to   adjustment   in  certain
circumstances,  at any time until February 10, 1998 (the "public offering"). The
net  proceeds  of  the  public  offering  to  the  Company,   after  payment  of
Underwriter's   discounts   and   commissions,   non-accountable   expenses  and
reimbursable  expenses,  and  other  expenses  of  the  public  offering,   were
approximately  $4,190,000.  Also,  during fiscal year 1993, the Company received
$762,833 in total proceeds from the exercise of warrants.  In March 1994 a total
of  $3,121,164  was  received  from the  exercise  of 832,324  of the  Company's
Redeemable  Stock Purchase  Warrants.  Each such warrant was exercisable for one
share of Sheffield's Common Stock at an exercise price of $3.75.

In April 1995,  the Company  completed a private  placement of 410,075  units to
accredited  investors  at a price  of  $8.00  per unit  for  gross  proceeds  of
$3,280,600. Each such unit consists of two shares of the Company's common


                                       7
<PAGE>
              SHEFFIELD MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                        (a development stage enterprise)


stock and a warrant to purchase one share of common stock at a price of $5.00 at
any time to and including  February 10, 2000. The warrants are redeemable by the
Company  under  certain  circumstances.  In July 1995,  the Company  completed a
second  private  placement of 1,375,000  units at $4.00 per unit,  which grossed
$5,500,000.  Each such unit consists of one share of the Company's  common stock
and one warrant to purchase one share of common stock at a price of $4.50 at any
time from March 1, 1996 to and  including  February 10,  2000.  The warrants are
subject to redemption under certain conditions.

On April 30, 1996,  the Company  completed a warrant  discount  program  through
which the  Company  offered  holders of  warrants  issued in private  placements
completed in 1995 the  opportunity  to exercise such warrants at up to a 12 1/2%
discount  from the  actual  exercise  prices of such  warrants.  A total of $5.6
million was received from the exercise of such warrants and the related issuance
of 1,373,250 shares of common stock.

On February 28, 1997, the Company  completed a private offering of 35,000 shares
of its 7% Series A Cumulative  Convertible  Redeemable  Preferred  Stock,  which
raised total gross  proceeds of $3.5 million.  The proceeds of this offering are
being used to fund research and development,  patent prosecution and for working
capital and general corporate  purposes,  including the possible  acquisition of
rights in new technologies in the Company's ordinary course of business.

In March 1997,  the Company  exercised  its option and  entered  into  exclusive
supply and license  agreements for the world-wide rights to Siemens'  multi-dose
inhaler (MSI).  The agreements call for Siemens to be the exclusive  supplier of
the MSI system, a hand-held,  portable  pulmonary  delivery system.  The Company
paid  Siemens  a license  fee of $1.1  million  in April  1997  pursuant  to its
agreements  and is  required  to make  additional  payments of DM 2.0 million on
January 1, 1998 and 1999.

In addition to the potential commercialization of its technologies,  the Company
plans to seek  additional  funds  through  financings,  joint  ventures or other
commercial arrangements to obtain necessary working capital. It is not uncommon,
for  instance,  for a  third-party  commercial  partner  to enter into a license
agreement  with a  development  company,  on the merits of  successful  research
relating to a given  technology,  which would yield up-front royalty advances to
such company before market-ready products are developed. It is also not uncommon
for a  third-party  commercial  partner  to  enter  into  an  agreement  with  a
development  company whereby a third party will  contribute  funds in support of
the research and operating needs of such development  companies in consideration
for rights related to the technologies.

At March 31, 1997, the Company's  assets were $3.5 million of which $3.2 million
was cash and cash equivalents and marketable securities.


THIS REPORT CONTAINS CERTAIN  FORWARD-LOOKING  STATEMENTS  WITHIN THE MEANING OF
SECTION 27A OF THE  SECURITIES  ACT OF 1933, AS AMENDED,  AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, WHICH ARE INTENDED TO BE COVERED BY
THE SAFE HARBORS CREATED HEREBY.  ALL  FORWARD-LOOKING  STATEMENTS INVOLVE RISKS
AND UNCERTAINTY,  INCLUDING WITHOUT LIMITATION,  THE SUCCESSFUL  DEVELOPMENT AND
LICENSING OF THE COMPANY'S TECHNOLOGIES AND THE SUCCESSFUL COMPLETION OF PLANNED
FINANCINGS.  ALTHOUGH THE COMPANY  BELIEVES THAT THE ASSUMPTIONS  UNDERLYING THE
FORWARD-LOOKING   STATEMENTS  CONTAINED  HEREIN  ARE  REASONABLE,   ANY  OF  THE
ASSUMPTIONS COULD BE INACCURATE,  AND THEREFORE,  THERE CAN BE NO ASSURANCE THAT
THE  FORWARD-LOOKING  STATEMENTS  INCLUDED  IN  THIS  REPORT  WILL  PROVE  TO BE
ACCURATE.   IN  LIGHT  OF  THE   SIGNIFICANT   UNCERTAINTIES   INHERENT  IN  THE
FORWARD-LOOKING  STATEMENTS  INCLUDED HEREIN,  THE INCLUSION OF SUCH INFORMATION
SHOULD NOT BE REGARDED AS A  REPRESENTATION  BY THE COMPANY OR ANY OTHER  PERSON
THAT THE OBJECTIVES AND PLANS OF THE COMPANY WILL BE ACHIEVED.


                                       8
<PAGE>
              SHEFFIELD MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                        (a development stage enterprise)


PART II:    OTHER INFORMATION


ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K.

            EXHIBITS

            NO.          DESCRIPTION

            10.1         Agreement  and Plan of  Merger  Among the  Company,  CP
                         Pharmaceuticals,  Inc. Camelot Pharmacal, L.L.C., David
                         A. Byron, Loren G. Peterson and Carl S. Siekmann, dated
                         April 25, 1997.

            10.2         Employment Agreement dated as of April 25, 1997 between
                         the Company and David A. Byron.


            10.3         Employment Agreement dated as of April 25, 1997 between
                         the Company and Loren G. Peterson.


            10.4         Employment Agreement dated as of April 25, 1997 between
                         the Company and Carl S. Siekmann


            27           Financial Data Schedule


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





                                        9
<PAGE>
              SHEFFIELD MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                        (a development stage enterprise)


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


                                   SHEFFIELD MEDICAL TECHNOLOGIES INC.

Dated:  May 14, 1997               /S/ LOREN G. PETERSON
                                   ----------------------
                                   Loren G. Peterson
                                   Chief Executive Officer


Dated:  May 14, 1997               /S/ GEORGE LOMBARDI
                                   -------------------
                                   George Lombardi
                                   Vice President & Chief Financial Officer
                                   (Principal Financial and Accounting Officer)