SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________TO _________ .

                        Commission file number: 33-43389

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


                  California                         77-0170932
        (State or other jurisdiction of           (I.R.S. Employer
        incorporation or organization)         Identification Number)

              549 Weddell Drive
            Sunnyvale, California                      94089
   (Address of principal executive offices           (Zip Code)


       Registrant's telephone number, including area code: (408) 541-8660


        Check whether the issuer (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 as of October 29,
1996 was 161,205,315.

                                  Page 1of 10

<PAGE>

PART 1 - FINANCIAL INFORMATION

Item 1.       Financial Statements


<TABLE>
                               DOCUMENT TECHNOLOGIES, INC.
                                      BALANCE SHEET


<CAPTION>
                                                            September 30,   December 31,
                                                                1996            1995
                                                            ------------    ------------
                                                             (Unaudited)
<S>                                                         <C>             <C>
ASSETS                                                       
Current assets:
 Cash                                                       $     40,000    $     29,000
 Accounts receivable, less allowance
  for doubtful accounts of $6,000 in 1996 and 1995                14,000          10,000
 Note receivable                                                      --          17,000
 Inventories                                                     531,000         171,000
 Other current assets                                             21,000          19,000
                                                            ------------    ------------
    Total current assets                                         606,000         246,000

Property and equipment, net                                       23,000          27,000
                                                            ------------    ------------
                                                            $    629,000    $    273,000
                                                            ============    ============


LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
 Accounts payable                                           $    127,000    $     84,000
 Accrued compensation                                             44,000          35,000
 Accrued liabilities                                             118,000         132,000
 Notes payable to shareholders                                   922,000       4,546,000
 Interest payable to shareholders                                 22,000         236,000
 Notes payable to vendors                                          9,000          96,000
                                                            ------------    ------------
    Total current liabilities                                  1,242,000       5,129,000

 Notes payable to vendors                                             --           2,000
                                                            ------------    ------------
    Total liabilities                                          1,242,000       5,131,000
                                                            ------------    ------------

Shareholders' deficit:
 Preferred Stock, no par value, 5,000,000
  shares authorized                                                  --               --
 Common Stock, no par value, 200,000,000 shares
  authorized; 161,205,315 shares and 2,950,202
  shares issued and outstanding in 1996 and 1995              19,009,000      13,470,000
 Accumulated deficit                                         (19,622,000)    (18,328,000)
                                                            ------------    ------------
    Total shareholders' deficit                                 (613,000)     (4,858,000)
                                                            ------------    ------------
                                                            $    629,000    $    273,000
                                                            ============    ============


<FN>
       The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>

                                            2

<PAGE>


<TABLE>
                                         STATEMENT TECHNOLOGIES, INC.
                                           STATEMENT OF OPERATIONS
                                                (UNAUDITED)


<CAPTION>
                                    Three Months Ended September 30,    Nine Months Ended September 30,
                                    --------------------------------    -------------------------------
                                         1996                1995            1996              1995
                                    -------------        -----------    --------------     ------------

<S>                                 <C>                  <C>            <C>                <C>
Net sales                           $    41,000          $    12,000    $    263,000       $   150,000
                                    -------------        -----------    --------------     ------------

Costs and expenses:
  Cost of sales                          85,000               58,000         350,000           254,000
  Research and development               89,000               88,000         296,000           260,000
  Marketing and sales                   193,000              190,000         532,000           613,000
  General and administrative             70,000               66,000         222,000           212,000
                                    -------------        -----------    --------------     ------------
                                        437,000              402,000       1,400,000         1,339,000
                                    -------------        -----------    --------------     ------------

Loss from operations                   (396,000)            (390,000)     (1,137,000)       (1,189,000)

Interest and other expense, net         (10,000)             (72,000)       (157,000)         (182,000)
                                    -------------        -----------    --------------     ------------

Net loss                            $  (406,000)         $ (462,000)    $ (1,294,000)      $(1,371,000)
                                    =============        ===========    ==============     ============

Net loss per share                  $     (0.00)         $    (0.16)    $      (0.02)      $     (0.46)

Weighted average common shares      161,205,315           2,950,202       75,411,334         2,950,202

 
<FN>
            The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>
                                           3


<PAGE>


                           DOCUMENT TECHNOLOGIES, INC.
                             STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
                                                                              
                                                 Nine Months Ended September 30,
                                                 -------------------------------
                                                    1996             1995
                                                    ----             ----
Cash flows from operating activities:                                         
 Net loss                                      $ (1,294,000)     $ (1,371,000)
 Adjustments to reconcile net loss to
  net cash used in operating activities:                                     
   Depreciation and amortization                     26,000            18,000  
   Interest on notes to shareholders                154,000            93,000  
Changes in assets and liabilities:                                       
   Accounts receivable                               (4,000)          146,000  
   Notes receivable                                  17,000            57,000  
   Inventories                                     (360,000)           74,000  
   Other current assets                              (2,000)           46,000  
   Accounts payable                                  43,000            15,000  
   Accrued compensation                               9,000            18,000  
   Accrued liabilities                              (14,000)          (11,000)
                                               ------------       ----------- 
    Net cash used in operating activities        (1,425,000)         (915,000)
                                               ------------       ----------- 
                                                                         

Cash flows used in investing activities for                              
 acquisition of property and equipment              (22,000)          (11,000)
                                               ------------       -----------
                                                                         
Cash flows from financing activities:
 Proceeds from notes payable to shareholders      1,547,000         1,071,000  
 Repayment of notes payable to vendors              (89,000)          (97,000)
                                               ------------       -----------
      Net cash provided by financing    
       activities                                 1,458,000           974,000
                                               ------------       -----------

Net increase in cash                                 11,000            48,000  
Cash at beginning of period                          29,000            21,000
                                               ------------       -----------
Cash at end of period                          $     40,000       $    69,000
                                               ============       ===========

Supplemental disclosure of cash flow
 information:
 Cash paid during the period for interest       $     2,000      $      9,000
 Conversion of notes payable and accrued
  interest to shareholders to Common Stock      $ 5,539,000                --
    



The accompanying notes are an integral part of these financial statements
                                        4


<PAGE>


                           DOCUMENT TECHNOLOGIES, INC.
                     CONDENSED NOTES TO FINANCIAL STATEMENTS


NOTE 1 - GENERAL

The  information  contained  in  the  following  Condensed  Notes  to  Financial
Statements  is condensed  from that which would  appear in the annual  financial
statements;  accordingly,  the financial  statements  contained herein should be
reviewed  in  conjunction  with the  Company's  Form  10-KSB  for the year ended
December 31, 1995.

The results of operations for the interim periods  presented are not necessarily
indicative of the results expected for the entire year.

The financial  information  for the periods  ended  September 30, 1996 and 1995,
included herein is unaudited but includes all adjustments  which, in the opinion
of  management  of the Company,  are  necessary to present  fairly the financial
position of the Company at September 30, 1996, and the results of its operations
and its cash flows for the nine month periods ended September 30, 1996 and 1995.


NOTE 2 - INVENTORIES

The components of inventory were as follows:
                                                September 30,     December 31,
                                                    1996             1995
                                                    ----             ----
         Purchased component parts and
           subassemblies                          $ 469,000       $ 150,000
         Finished goods                              47,000           8,000
         Demonstration inventory                     15,000          13,000
                                                  ---------       ---------
                                                  $ 531,000       $ 171,000
                                                  =========       =========


NOTE 3 - RELATED PARTY TRANSACTIONS

At  September  30,  1996,  the Company had issued  $922,000 of interest  bearing
convertible  demand notes to  shareholders,  which are due on or before 180 days
after  issuance and are  convertible  to Common Stock at a price equal to 75% of
the quoted closing bid price on the date that the shareholder elects to convert.
These notes are  secured by the  Company's  assets and bear  annual  interest of
7.07%,  payable  at their  maturity  dates,  or date of  payment  or  conversion
whichever is earlier.


                                       5


<PAGE>


NOTE 4 - NET LOSS PER SHARE

Net loss per share  amounts were computed by dividing net loss over the weighted
average number of common shares outstanding. Common stock equivalent shares from
convertible  notes  payable,  stock  options and warrants are excluded  from the
computation  for the three and nine month periods  ended  September 30, 1996 and
1995 as their effects are anti-dilutive.


                                       6


<PAGE>


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

Except  for  historical  information  contained  herein,  this  Report  contains
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of  1933  and  Section  21E of the  Securities  Exchange  Act of  1934.  The
forward-looking  statements  contained  herein are subject to certain  risks and
uncertainties,  including  those  discussed  herein and in the Company's  Annual
Report on Form 10-KSB for the fiscal year ended  December 31,  1995,  that could
cause actual  results to differ  materially  from those  projected or discussed.
Investors  are cautioned  not to place undue  reliance on these  forward-looking
statements,  which reflect management's analysis only as of the date hereof. The
Company undertakes no obligation to publicly release the results of any revision
to these  forward-looking  statements  that  may be made to  reflect  events  or
circumstances   after  the  date  hereof  or  to  reflect  the   occurrence   of
unanticipated events.


Results of Operations

Third quarter 1996 compared to third quarter 1995

For the quarter ended  September 30, 1996,  sales  totaled  $41,000  compared to
sales of $12,000 for the quarter  ended  September 30, 1995.  This  represents a
242%  increase in sales  between  periods.  This increase is due to higher sales
volumes of the EasyRead 240. Sales to four customers  accounted for 68% of sales
for the third quarter in 1996, and sales to five customers accounted for 100% of
sales for the third quarter in 1995.

Cost of sales  represented  207% and 483% of related sales for the third quarter
of 1996 and 1995, respectively.  These percentages were high due to modest sales
volumes during the periods in relation to fixed overhead costs  associated  with
maintaining  the  Company's  manufacturing  capability.  To  improve  its  gross
margins, the Company will need to substantially increase its sales to more fully
absorb fixed manufacturing  costs.  However, for more than two years the Company
has been  unsuccessful in its efforts to do so despite  diligent  efforts on the
part  of  management,  and  there  is no  assurance  that  the  Company  will be
successful in increasing sales in the foreseeable future.

Research and development  expenses  remained  fairly constant  between the third
quarter  of 1996 and the third  quarter  of 1995.  The  Company  has  maintained
spending  levels  on  hardware  development  and  software  development  for the
Company's PCI version of the EasyRead 240.

Marketing and sales expenses also remained relatively constant between the third
quarter of 1996 and the third  quarter of 1995.  Although  the  Company  did not
increase marketing costs significantly during the third quarter of 1996 compared
to the same time  period in 1995,  management  believes  that it is  critical to
invest as much of its resources as possible on product marketing to increase its
revenues.  However,  there can be no  assurance  these  efforts  will  result in
increased sales in future periods.

General and administrative costs remained relatively unchanged between the third
quarter  of 1996 and the  third  quarter  of 1995 due to the  Company's  ongoing
efforts to control spending.


                                       7


<PAGE>


Interest and other expense,  net, decreased by $61,000, or 86% to $10,000 in the
third quarter of 1996 from $72,000 in the third  quarter of 1995.  This decrease
is  primarily  a result of a decrease  in  interest  expense  accruing  to lower
amounts  outstanding  on  shareholder  notes due to the  conversion  of notes of
$5,171,000 to Common Stock during the second  quarter of 1996 and a reduction of
interest expense on note payable to vendors.

As a result of the  foregoing,  the  Company  incurred a net loss of $406,000 or
less than $0.01 per share in the third  quarter of 1996,  compared to a net loss
of  $462,000  or $0.16 per share in the  comparable  1995  period.  The  Company
anticipates that it will continue to incur losses in the forseeable future.

Nine months ended September 30, 1996 compared to nine months ended
September 30, 1995

For the nine months ended September 30, 1996, sales totaled $263,000 compared to
$150,000  during the nine months ended September 30, 1995. This represents a 75%
increase in sales between periods.  This increase is due to higher sales volumes
of the EasyRead 240. Sales to two customers accounted for 57% of total sales for
the nine month period in 1996,  and sales to two customers  accounted for 74% of
sales for the nine month period in 1995.

Cost of sales  represented  133% and 169% of related  sales for the nine  months
ended  September  30, 1996 and 1995,  respectively.  Costs were high compared to
related sales due to the fixed overhead costs  associated  with  maintaining the
Company's manufacturing capability in a period of modest sales volumes.

Costs for  research  and  development  were  $296,000  for the nine months ended
September 30, 1996, compared to $260,000 for the nine months ended September 30,
1995.  This  represents  a increase of 14% which is  primarily  due to increased
spending on hardware  development  for the Company's PCI version of the EasyRead
240. In previous periods the Company had focused on software  development  which
requires less funding than does hardware development.

Marketing and sales expenses  decreased to $532,000 during the nine months ended
September 30, 1996,  from $613,000 for the nine months ended September 30, 1995.
This represents an decrease of 13% and is the result of a reduction in headcount
and decreased spending on outside consulting services.

General and administrative  expenses increased to $222,000 from $212,000 for the
nine  months  ended  September  30,  1996 and 1995,  respectively.  General  and
administrative  costs have  remained  fairly stable  between  periods due to the
Company's ongoing efforts to control spending.

Interest and other  expense,  net for the nine months ended  September 30, 1996,
and 1995  decreased by 14%. This decrease is primarily a result of a decrease in
interest expense accruing to lower amounts  outstanding on shareholder notes due
to the conversion of the notes during the second quarter of 1996 and a reduction
of interest expense on note payable to vendors.

As a result of the foregoing,  the Company  incurred a net loss of $1,294,000 or
$0.02 per share for the nine months ended September 30, 1996,  compared to a net
loss of $1,371,000 or $0.46 per share in the comparable 1995 period. The Company
anticipates that it will continue to incur significant  losses in the forseeable
future.


                                       8


<PAGE>


Factors That May Affect Future Results

Future  operating  results  of  Document  Technologies,  Inc.  may be  adversely
affected by sudden  fluctuations in product demand,  the ability of suppliers to
deliver  components  and  integral   subassemblies  in  time  to  meet  critical
manufacturing  and  distribution  schedules  and the  capability  to secure  and
maintain intellectual property rights.

The Company  continues its efforts to expand into the  third-party  distribution
channels and may be adversely  affected by the  financial  health and loyalty of
these  resellers.  Some of these  companies  are thinly  capitalized  and may be
unable to withstand changes in business conditions.

While the Company  attempts to identify and respond to rapidly  changing  events
and  conditions,  as soon as possible,  there are no assurances that the Company
will be successful in its efforts.

Liquidity and Capital Resources

Working  capital at September 30, 1996 was a deficit of $636,000,  a decrease in
the deficit of $4,247,000 from the December 31, 1995 deficit of $4,883,000. This
reduction in the working  capital deficit was primarily due to the conversion of
$5,171,000 of notes  payable to  shareholders  and $368,000 of accrued  interest
into  158,255,113  shares of Common Stock  during the second  quarter of 1996. A
portion of the  reduction  in working  capital  deficit was offset by  operating
losses which were funded in part by additional advances from shareholders in the
form of notes.

At September 30, 1996,  the Company had no  significant  backlog of orders.  The
Company  normally ships products within 30-45 days after receipt of an order and
typically  has no more than one to two  month's  sales in  backlog  at any time.
Product orders  included in backlog are subject to change or cancellation at the
option  of  the  purchaser  without  significant  penalty.  Backlog  as  of  any
particular date may not be a reliable measure of sales for any future period.

At September 30, 1996, the Company continues to be in default of the total asset
requirement  and the  capital  surplus  requirements  for  listing on the Nasdaq
market.  This  failure  of the  Company  to meet  the  maintenance  requirements
resulted in the Company's  securities being delisted from Nasdaq.  The Company's
securities  now  trade  on  the  OTC  Bulletin  Board  or on the  "pink  sheets"
maintained by the National  Quotation  Bureau,  Inc. As a result,  investors may
find it more  difficult to dispose of, or obtain  accurate  quotations as to the
price of the Company's securities.

The Company has continued to incur operating losses.  Unless additional  working
capital is raised,  the  Company  may not be able to  continue  its  operations.
Although the Company has secured  additional working capital in the past through
shareholder  notes, there is no assurance that it will continue to be successful
in its efforts in the future.


                                       9

<PAGE>


                                     PART II



                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned thereunto duly authorized.

                             DOCUMENT TECHNOLOGIES, INC.



Dated November 7, 1996       By:_________________________________
                                      Robert J. Wallace
                             President and Chief Operating and Financial Officer
                             (Principal Executive and Accounting Officer)




                                       10