FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
(Mark One)
[ X ]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1999
                ...............................................................

                                       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   0-23776
                         .......................................................

                                  HemaSure Inc.
 ................................................................................
             (Exact name of registrant as specified in its charter)

      Delaware                                              04-3216862
 .............................................    ...............................
(State or other jurisdiction of incorporation           (I.R.S. Employer
             or organization)                         Identification No.)

               140 Locke Drive, Marlborough, Massachusetts 01752
 ................................................................................
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (508) 490-9500
 ................................................................................
              (Registrant's telephone number, including area code)

                                 Not Applicable
 ................................................................................
(Former name,former address and former fiscal year,if changed since last report)

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


Yes   X    No

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

Common Stock, par value $.01 per share                      15,107,914
--------------------------------------                 -------------------
                Class                             Outstanding at August 6, 1999


860102.1

<PAGE>



HemaSure Inc.

                                      INDEX

                                                                           Page
PART I     Financial Information

Item 1. Financial Statements. ................................................1

        Consolidated Balance Sheets as of June 30, 1999 and December 31, 1998.1

        Consolidated Statements of Operations for the Three
        and Six Month Periods Ended June 30, 1999 and 1998 ...................2

        Consolidated Statements of Cash Flows for the six month
        Periods Ended June 30, 1999 and 1998 .................................3

        Notes to Consolidated Financial Statements ...........................4

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations.............................................7

Item 3. Quantitative and Qualitative Disclosures About Market Risk...........10

PART II Other Information

Item 1. Legal Proceedings....................................................11

Item 2. Changes in Securities and use of Proceeds............................11

Item 3. Defaults Upon Senior Securities......................................12

Item 4. Submission of Matters to a Vote of Security Holders..................12

Item 5. Other Information....................................................12

Item 6. Exhibits and Reports on Form 8-K.....................................13

Signatures..................................................................S-1




860102.1

<PAGE>



                         Part I - FINANCIAL INFORMATION

Item 1. Financial Statements.





                                  HemaSure Inc.
                           Consolidated Balance Sheets
                                   (Unaudited)

(In thousands)                                        June 30,     December 31,
                                                        1999          1998
                                                      -------      ------------

ASSETS

Current assets:
  Cash and cash equivalents                            $7,398         $1,827
  Accounts receivable                                       6              -
  Inventories                                             255            206
  Deferred financing costs                              1,024          1,024
  Prepaid expenses                                        358            326
                                                       ------         ------

  Total current assets                                  9,041          3,383

Property and equipment, net                             1,388          1,505

Deferred financing costs long-term                        213            725
Other assets                                               50             42
                                                       ------         ------

  Total assets                                        $10,692         $5,655
                                                      =======         ======


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
  Accounts payable                                       $934         $1,542
  Accrued expenses                                      1,704          1,549
  Note payable - current portion                           61             27
  Capital lease obligations-current portion               185            228
                                                        -----         ------

 Total current liabilities                              2,884          3,346

Capital lease obligations                                   7             68
Note payable                                            5,050          5,073
                                                        -----          -----

 Total liabilities                                      7,941          8,487
                                                        -----          -----

Stockholders' equity (deficit):
  Common stock                                            149             91
  Additional paid-in capital                           82,500         71,584
  Accumulated deficit                                 (79,898)       (74,507)
                                                     --------       --------

 Total stockholders' equity (deficit)                   2,751         (2,832)

 Total liabilities and stockholders' equity (deficit) $10,692         $5,655
                                                      =======         ======

    The accompanying notes are an integral part of the financial statements.






                                       1

860102.1

<PAGE>

<TABLE>
<CAPTION>

                                  HemaSure Inc.
                      Consolidated Statements of Operations
                    For The Three and Six Month Periods Ended
                             June 30, 1999 and 1998
                                  (Unaudited)

(In thousands, except
per share amounts)
                                                      Three-month periods                            Six-month periods
                                                         ended June 30,                                ended June 30,
                                                 1999                   1998                    1999                 1998
                                                 ----                   ----                    ----                 ----

<S>                                                <C>                    <C>                    <C>                  <C>
Revenues                                           $9                     $-                     $13                  $25

Costs and expenses:

  Cost of products sold                           448                      -                     783                  657
  Research & development                          526                  1,249                   1,050                2,011
  Legal expense related to patents                352                    394                   1,192                1,456
  Selling, general and administrative             856                  1,252                   1,705                2,263
                                                  ---                  -----                   -----                -----

        Total costs and expenses                2,182                  2,895                   4,730                6,387
                                                -----                  -----                   -----                -----

Loss from operations                          (2,173)                (2,895)                 (4,717)              (6,362)

  Interest income                                 48                     46                      59                  120
  Interest expense                              (348)                   (14)                   (733)                 (50)
                                                -----                   ----                  -----                 ----


Net (loss)                                   $(2,473)               $(2,863)                $(5,391)             $(6,292)
                                             ========               ========                ========             ========


  Net (loss) per share  -  basic and diluted  $(0.17)                $(0.32)                 $(0.45)              $(0.70)
                                              =======                =======                 =======              =======

Weighted average number of shares of common   14,830                  9,008                   12,041               9,000
stock outstanding - basic and diluted

    The accompanying notes are an integral part of the financial statements.

</TABLE>
                                       2


860102.1


<PAGE>


<TABLE>
<CAPTION>

                                  HemaSure Inc.
                      Consolidated Statements of Cash Flows
                                   (Unaudited)

(In thousands)                                                          Six-month periods
                                                                           ended June 30,
                                                                   1999                     1998
                                                                   ----                     ----
<S>                                                              <C>                      <C>
Cash flows from operating activities:
  Net loss                                                     $(5,391)                 $(6,292)
  Adjustments to reconcile net loss to net cash
   used in operating activities
    Financing costs related to warrants                             512                       -
    Depreciation and amortization                                   228                     284
    Accretion of marketable securities discount                       -                      20
    Loss on disposal of equipment                                     -                       5
  Changes in operating assets and liabilities:
    Accounts receivable                                             (6)                     436
    Inventories                                                    (49)                    (125)
    Prepaid expenses                                               (32)                     (15)
    Accounts payable and accrued expenses                         (453)                    (419)
                                                                -------                  -------

  Net cash used in operating activities                         (5,191)                  (6,106)
                                                                =======                  =======

Cash flows from investing activities:
  Purchase of available-for-sale marketable securities               -                  (20,255)
  Maturities of available-for-sale marketable securities             -                   27,118
  Additions to property and equipment                             (111)                    (167)
  (Increase) in other assets                                        (8)
                                                                ------                   -------

  Net cash (used in) provided from investing activities           (119)                   6,696
                                                                ------                   -------

Cash flows from financing activities:
  Proceeds from issuance of common stock                        10,974                       42
  Repayments of notes payable                                       11                      (18)
  Repayments of capital lease obligations                         (104)                    (106)
                                                                 ------                  -------

  Net cash provided from (used in) financing activities         10,881                      (82)
                                                                 ------                  -------

Net increase in cash and cash equivalents                        5,571                      508
Cash and cash equivalents at beginning of period                 1,827                    1,274
                                                                 ------                  ------
Cash and cash equivalents at end of period                      $7,398                   $1,782
                                                                 ======                  ======

    The accompanying notes are an integral part of the financial statements.

</TABLE>


                                       3

860102.1


<PAGE>



                                  HemaSure Inc.
                   Notes To Consolidated Financial Statements


1.      Basis of Presentation

        The  accompanying  financial  statements  are  unaudited  and have  been
        prepared on a basis substantially  consistent with the audited financial
        statements.

        Certain  information and footnote  disclosures  normally included in the
        Company's  annual  statements  have  been  condensed  or  omitted.   The
        condensed  interim financial  statements,  in the opinion of management,
        reflect all adjustments  (including normal recurring accruals) necessary
        for a fair  statement of the results for the interim  periods ended June
        30, 1999 and 1998.

        The results of operations  for the interim  periods are not  necessarily
        indicative  of the results of  operations  to be expected for the fiscal
        year. These interim  financial  statements should be read in conjunction
        with the audited  financial  statements  for the year ended December 31,
        1998,  which are contained in the Company's Form 10K (File No. 0-23776),
        filed with the Securities and Exchange Commission on March 31, 1999.

2.      Inventories

        Inventories consist of the following:
<TABLE>
<CAPTION>

                                                    June 30, 1999   December 31, 1998
                                                    -------------   -----------------

<S>                                                          <C>          <C>
        Raw Materials                                        $255         $206
        Work in progress                                        -            -
        Finished goods                                          -            -
                                                            -----         ----


                                                             $255         $206
                                                            -----         ----

3.      Property and Equipment

        Property and equipment consists of the following:

                                                     June 30, 1999   December 31, 1998
                                                     -------------   -----------------

        Property and equipment                             $2,937      $2,904

        Less accumulated depreciation and amortization    $(2,077)    $(1,849)
                                                          --------    --------

                                                             $860      $1,055

        Construction in progress                             $528        $450
                                                             ----        ----

                                                           $1,388      $1,505
                                                           ------      ------
</TABLE>


4.      Stockholders' Equity

        In March 1999, the Company completed a private placement  financing with
        Sepracor  in which the  Company  received  $2,000,000  in  exchange  for
        1,333,334 shares of common stock of the Company and warrants to purchase
        an  additional  667,000  shares of common stock at $1.50 per share.  The
        warrants  expire in the year 2004 and have certain  registration  rights
        associated   with   them.  In   certain    circumstances,  HemaSure  may
        require  Sepracor to exercise these warrants.

                                       4

860102.1

<PAGE>



        On May 3, 1999, the Company completed a private placement financing with
        COBE Laboratories,  Inc. ("COBE").  The financing agreement provides for
        an initial  investment of $9,000,000 in exchange for 4,500,000 shares of
        the  Company's  common stock.  The agreement  also provides COBE with an
        option to  purchase  an  additional  $3,000,000  of common  stock of the
        Company at any time between August 3, 1999 and May 3, 2000.  Should COBE
        exercise  its  option,  the number of shares to be issued  will be based
        upon the average  closing  price of the  Company's  common stock for the
        thirty-day  period  prior  to  the  exercise.  The  financing  agreement
        provides that COBE will have  representation  on the Company's  Board of
        Directors and its  representative  committees  and contains  among other
        things  various  registration  rights and  anti-dilution  and standstill
        provisions customary in such agreements.

        In connection with the financing,  the Company  completed an Amended and
        Restated  Exclusive   Distribution  Agreement  with  COBE.  The  amended
        distribution   agreement  expands  the  territory  in  which  COBE  will
        distribute the Company's products to make it worldwide,  excluding sales
        to the American Red Cross. In addition, the agreement provides for joint
        efforts   related  to  the  defense  of  HemaSure's   products   against
        intellectual  property claims made by third parties.  As in the original
        agreement,  there  is a  provision  for the  development  of  additional
        products to be  incorporated  by COBE into its automated blood component
        equipment.

        In January 1997, the Company entered into a  Restructuring  Agreement of
        the debt related to its  acquisition of Novo Nordisk's  plasma  products
        unit.  The amount  included  in the balance  sheet at December  31, 1997
        includes the effect of the Restructuring  Agreement. On January 6, 1998,
        $8,687,000 of debt, which is net of a $3,000,000  contingency  amount to
        reflect the most probable  result of the Company's  decision to exit the
        plasma  business,  was converted into Common Stock at a conversion price
        of $10.50 per share,  or 827,375  shares,  pursuant  to the terms of the
        note.  The holder of the note has contested the  conversion of the note,
        including the forgiveness of the $3,000,000 amount.

5.      Net loss per share

        The net loss per share is based on the weighted average number of common
        stock  outstanding  during the period.  Common Share equivalents are not
        included  in the  per  share  calculation  where  the  effect  of  their
        inclusion would be antidilutive. Common Share equivalents of the Company
        consist of common  stock  warrants  and stock  options.  The Company had
        5,050,028 and 2,480,903  Common Share  equivalents  at June 30, 1999 and
        1998, respectively.

6.      Litigation

        The Company is a defendant in two lawsuits  brought by Pall  Corporation
        ("Pall") on its LeukoNet Prestorage  Leukoreduction  Filter, which is no
        longer made or sold by the Company. In complaints filed in February 1996
        and November  1996,  Pall alleged that the  Company's  manufacture,  use
        and/or sale of the LeukoNet product infringes upon three patents held by
        Pall.

        On  October 14, 1996, in   connection  with the first action  concerning
        U.S.  Patent No.  5,451,321  (the "'321  Patent"),  the Company  filed a
        motion  for  summary  judgment of  non-infringement. Pall  filed a cross
        motion  for  summary  judgment  of infringement at the same time.

        In October 1997, the Eastern District of New York granted in part Pall's
        summary judgment motion and held that the LeukoNet  product  infringes a
        single  claim  from  the  '321  patent.   The  Company   terminated  the
        manufacture,  use, sale and offer for sale of the filter  subject to the
        court's  order.  The Company  appealed the October 1997  decision to the
        Court of Appeals for the Federal  Circuit.  In June 1999, the U.S. Court
        of Appeals  determined that the LeukoNet  product did not infringe claim
        39 of Pall Corporation's '321 patent.

        With respect to the second action concerning U.S. Patent Nos.  4,952,572
        (the "'572 patent"), the Company has answered the complaint stating that
        it does not  infringe  any claim of the asserted  patent.  Further,  the
        Company has  counterclaimed  for  declaratory  judgment  of  invalidity,
        non-infringement  and  unenforceability

                                       5

860102.1

<PAGE>


        of the '572 patent.  Pall has amended its Complaint to add Lydall,  Inc.
        whose subsidiary  supplied filter media for the LeukoNet  product,  as a
        co-defendant.   The   Company   has  filed  for   summary   judgment  of
        non-infringement,  and Pall has  cross-filed  for summary  judgement  of
        infringement at the same time. Lydall supported the Company's motion for
        summary judgment of non-infringement, and has filed a motion for summary
        judgment  that the  asserted  claims of the '572 patent are invalid as a
        matter  of law.  The  Company  supported  Lydall's  motion  for  summary
        judgment  that the  asserted  claims  of the '572  patent  are  invalid.
        Discovery has been completed in the action.

        On April 5, 1999,  the Company and COBE BCT,  Inc.  ("COBE BCT") filed a
        complaint for declaratory relief against Pall in the U.S. District Court
        of  Colorado.  The  Company  and COBE BCT seek  declaratory  relief that
        Pall's U.S. Patent No's.  4,925,572,  5,229,012,  5,344,561,  5,451,321,
        5,501,795  and  5,863,436 are invalid and not infringed by the Company's
        r\LS filter and methods of using the r\LS filter. Pall moved to dismiss,
        transfer to the Eastern District of New York or, in the alternative,  to
        stay this action.  The Company and COBE BCT opposed  Pall's  motion.  On
        July 16, 1999, the U.S.  District Court of Colorado denied Pall's motion
        to transfer or, in the alternative, to stay the action.

        On April 23,  1999 Pall filed a  complaint  against the Company and COBE
        BCT, Inc. in the Eastern  District of New York alleging that  HemaSure's
        r\LS filter  infringes  Pall's '572 patent,  tortuously  interfered  and
        unfairly  competed with Pall's  business.  On May 19, 1999, Pall amended
        its  Complaint  and added COBE  Laboratories,  Inc.,  Gambro  A.B.,  and
        Sepracor  Inc.  as  defendants.  The  Company and COBE BCT have moved to
        dismiss, transfer or stay the action and Pall has opposed the motion.

        The  Company  believes,  based on advice of its patent  counsel,  that a
        properly informed court should conclude that the manufacture, use and/or
        sale by the Company or its  customers  of the  LeukoNet  product and the
        r\LS filter do not  infringe  any valid  enforceable  claims of the Pall
        patents.  However,  there  can be no  assurance  that the  Company  will
        prevail in the pending  litigations,  and an adverse outcome in a patent
        infringement  action  would  have  a  material  adverse  effect  on  the
        Company's financial condition and future business and operations.


                                       6

860102.1

<PAGE>


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


Results of Operations

Overview

HemaSure  was  established  in December  1993 as a wholly  owned  subsidiary  of
Sepracor Inc. ("Sepracor").  The Company is utilizing its proprietary filtration
technologies to develop  products to increase the safety of donated blood and to
improve  certain  blood  transfusion  procedures.  The  Company's  products  are
designed for use in blood centers and hospital blood banks worldwide.

In June 1995 the Company received 510(K) premarket  notification  clearance from
the  United  States  Food  and  Drug  Administration  for its  first  generation
leukoreduction system, the LeukoNet Pre-Storage Leukoreduction System ("LeukoNet
System") and began commercialization of this product in the second half of 1995.
In February  1998,  the Company  determined  to  discontinue  manufacturing  the
LeukoNet   System  and  focus  on  the  completion  of  development  and  market
introduction  of its  next-generation  red  cell  filtration  product,  the r\LS
System.  In  May  1998,  the  Company  filed  a  510(K)  premarket  notification
application for the r\LS System. The Company began accepting orders for the r\LS
outside of the U.S. in the first quarter 1999. In May 1999, the Company received
510(K)  premarket  notification  clearance  from the United States Food and Drug
Administration  for  its  r\LS  System.  All  of  the  Company's  other  planned
blood-related products are in the research and development state, and certain of
these products may require  preclinical and clinical testing prior to submission
of any regulatory  application  for commercial  use. The Company's  success will
depend on development and commercial acceptance of these blood-related products.

The  Company  is  subject  to risks  common to small  companies  in the  medical
technology industry,  including,  but not limited to, development by the Company
or  its  competitors  of  new  technological  innovations,   dependence  on  key
personnel,  access to sources of capital,  protection of proprietary  technology
and compliance with FDA regulations.

Three and six months ended June 30, 1999 and 1998

The  Company  recorded  revenues of $9,000 for the quarter  ended June  30, 1999
compared to no revenues in the same period in 1998.  Revenues  were  $13,000 for
the first six months of 1999  compared  to  $25,000  for the first six months of
1998.  Revenues  for all  periods  presented  represent  sales of the  Company's
leukocyte filtration products.

Total cost of products sold  exceeded  total product sales in all periods due to
the high costs associated with low-volume production.

Research and  development  expenses were $526,000 in the second  quarter of 1999
compared to $1,249,000 in the second quarter of 1998, and were $1,050,000 in the
six months ended June 30, 1999  compared to  $2,011,000  in the six months ended
June 30, 1998. The decrease in both the three and six month periods is primarily
attributable  to costs  associated  with the  development  of the Company's next
generation red cell filtration  system, the r\LS system, for which a majority of
the effort was expended in the 1998 period.

Legal  expenses  related to patents were $352,000 in the second  quarter of 1999
compared to $394,000 in the second quarter of 1998,  and were  $1,192,000 in the
six months ended June  30, 1999  compared to  $1,456,000 in the six months ended
June 30, 1998.  The expenses in both the three and six month periods are related
to  costs  associated  with  defending  the  Company's  patent  position  in its
outstanding litigation with Pall Corporation. The Company anticipates such costs
in 1999 to continue to decline  from the 1998  levels as  litigation  activities
related to our former product are expected to diminish.

Selling,  general and administrative  expenses were $856,000 in the three months
ended June 30, 1999  compared to  $1,252,000  in the three months ended June 30,
1998, and were $1,705,000 in the first six months of 1999 compared to $2,263,000
in the first six months of 1998. The decrease in the three and six month periods
is primarily

                                       7

860102.1

<PAGE>



attributable  to lower sales and marketing  costs  associated with the Company's
decision in 1998 to discontinue  making and selling the LeukoNet  filter.  Sales
and marketing  costs may increase in future  periods from current  levels as the
Company continues its efforts to expand sales of its blood filtration products.

Interest income for the six month period ended June 30,1999  decreased  compared
to the six months ended June 30, 1998 due to lower  average cash and  marketable
securities balances available for investment. Interest expense for the three and
six month periods ended June 30, 1999 increased  compared to the same periods in
1998 related to a note payable and the amortization of deferred  financing costs
which were not in existence in 1998 offset,  in part, by a lower average capital
lease obligation balance.

Liquidity and Capital Resources

The net  increase in cash and cash  equivalents  for the three  months ended was
$5,571,000.  This increase is  attributable  primarily to net cash provided from
financing activities of $10,881,000 offset in part by net cash used in operating
activities of $5,191,000 and net cash used in investing activities of $119,000.

Net cash provided from financing  activities  relates primarily to proceeds from
the issuance of common stock of $2,000,000  in March 1999 and  $9,000,000 in May
1999. Net cash used in operating activities is primarily attributable to the net
loss of  $5,391,000  and a decrease  in accounts  payable  and  accrued  expense
balances of $453,000,  offset in part by financing  costs related to warrants of
$512,000  and  depreciation  and  amortization  of  $228,000.  Net cash  used in
investing activities relates primarily to the addition of property and equipment
of $111,000.

In January 1997, the Company entered into a Restructuring  Agreement of the debt
related to its  acquisition of Novo Nordisk's  plasma  products unit. The amount
included in the balance  sheet at December  31, 1997  includes the effect of the
Restructuring Agreement. On January 6, 1998, $8,687,000 of debt, which is net of
a  $3,000,000  contingency  amount to reflect  the most  probable  result of the
Company's decision to exit the plasma business,  was converted into Common Stock
at a conversion  price of $10.50 per share, or 827,375  shares,  pursuant to the
terms of the note.  The holder of the note has contested  the  conversion of the
note, including the forgiveness of the $3,000,000 amount.

In March 1999, the Company completed a private placement financing with Sepracor
in which the Company  received  $2,000,000 in exchange for  1,333,334  shares of
common  stock of the Company and  warrants  to  purchase an  additional  667,000
shares of common stock at $1.50 per share.  The warrants will expire in the year
2004 and have  certain  registration  rights  associated  with them.  In certain
circumstances, HemaSure may require Sepracor to exercise these warrants.

On May 3, 1999, the Company completed a private  placement  financing with COBE.
The  financing  agreement  provides for an initial  investment  of $9,000,000 in
exchange for 4,500,000  shares of the Company's common stock. The agreement also
provides  COBE with an option to purchase  an  additional  $3,000,000  of common
stock of the Company at any time between August 3, 1999 and May 3, 2000.  Should
COBE exercise its option, the number of shares to be issued will be based on the
average  closing price of the Company's  common stock for the thirty-day  period
prior to the  exercise.  The  financing  agreement  provides that COBE will have
representation  on the  Company's  Board  of  Directors  and its  representative
committees and contains,  among other things,  various  registration  rights and
anti-dilution and standstill provisions customary in such agreements.

The Company  believes,  based on its current  operating  plan,  that its current
available cash balances together with the private placement  financing completed
in May 1999 with COBE will be  sufficient  to fund its  operations  through  the
first  quarter  of the year  2000.  The  Company's  cash  requirements  may vary
materially  from  those  now  planned  because  of  factors  such as  successful
development of products, results of product testing, approval process at the FDA
and similar  foreign  agencies,  commercial  acceptance of its products,  patent
developments and the introduction of competitive products.

                                       8

860102.1

<PAGE>



Readiness for Year 2000

        The "Year 2000" issue  results  from the use in  computer  hardware  and
software of two digits  rather than four digits to define the  applicable  year.
When computer  systems must process dates both before and after January 1, 2000,
two-digit year "fields" may create processing  ambiguities that can cause errors
and system failures. The results of these errors may range from minor undetected
errors to complete shutdown of an affected system.  These errors or failures may
have  limited  effects,  or the  effects  may be  widespread,  depending  on the
computer chip, system or software, and its location and function. The effects of
the Year 2000 problem are exacerbated because of the interdependence of computer
and  telecommunications  systems in the United States and  throughout the world.
Because  of this  interdependence,  the  failure  of one  system may lead to the
failure of many other systems even though the other systems are themselves "Year
2000  compliant."  The Company has reviewed the Year 2000 issue as it may affect
the Company's business activity.

        The Company is a developer and supplier of medical devices for the blood
transfusion industry.  Currently, the Company has only one product available for
sale  outside of the  United  States and is  awaiting  approval  for sale in the
United States. The Company is reliant on a small number of vendors to supply the
critical  components  for making this product,  but has  identified  alternative
suppliers as a contingency  plan. Only final assembly of this product is done at
the Company's  Marlborough,  MA facility.  The Company sells  primarily to blood
centers and hospital blood banks and through an international  distributor,  and
therefore  there are a limited number of customers.  For internal  systems,  the
Company  uses  standardized  software  from  large   well-established   software
providers  on PCs  for  inventory  management,  financial  systems  and  general
communications purposes.

        The  Company  has  implemented  a Year 2000 plan (the  "Plan")  which is
designed  to cover all of the  Company's  activities,  which will be modified as
circumstances  change.  Under  the  Plan,  the  Company  is  using a  five-phase
methodology  for  addressing the issue.  The phases are  Awareness,  Assessment,
Correction,  Validation and Implementation.  A heightened emphasis on completion
will continue through the third quarter. Awareness consists of defining the Year
2000 problem and gaining  executive level support and  sponsorship.  A Year 2000
program  team has been  established  and an  overall  strategy  created.  During
Assessment,  all internal systems,  products and supply chain partners have been
inventoried  and  prioritized  for  renovation.  The  Company  believes  it  has
completed a majority of the Awareness and Assessment  phases,  however,  ongoing
work will be required in these areas as the Company  completes its assessment of
existing supply chain partners and enters into new supply chain relationships in
the ordinary course of business.  Renovation consists of converting,  replacing,
upgrading  or  eliminating  systems  that have Year  2000  problems.  Validation
involves  ensuring that  hardware and software  fixes will work properly in 1999
and beyond and can occur both before and after  implementation.  Validation will
continue  through  1999 to allow for  thorough  testing  before  the Year  2000.
Implementation is the installation of hardware and software components in a live
environment.

        The Company has completed the installation of an upgraded  manufacturing
system,  which is Year 2000  compliant.  Validation  of this  system is ongoing.
Installation of its Year 2000 compliant internal  communications system has also
been completed.  The Company's  financial  reporting system is already Year 2000
compliant.  The  Company  continues  to assess all of its  internal  systems for
operational effectiveness and efficiency beyond Year 2000 concerns.

        The impact of Year 2000  issues on the  Company  will depend not only on
corrective actions that the Company takes but also on the way in which Year 2000
issues are addressed by governmental agencies,  business and other third parties
that provide  services or data to, or receive services or data from the Company,
or whose  financial  condition  or  operational  capability  is important to the
Company.  To reduce  this  exposure,  the  Company  has an  ongoing  process  of
identifying  and  contacting  mission-critical  third  party  vendors  and other
significant  third parties to determine  their Year 2000 plans and target dates.
To date,  the  Company is not aware of any  critical  vendors or  customers  who
either are not  addressing the Year 2000 issue or have indicated that there will
be a problem.

         Risks associated with any such third parties located outside the United
States may be higher insofar as it is generally  believed that non-United States
businesses may not be addressing  their Year 2000 issues on as timely a basis as
United States businesses. Notwithstanding the Company's efforts, there can be no
assurance that the

                                       9

860102.1

<PAGE>



Company, mission-critical third party vendors or other significant third parties
will adequately address their Year 2000 issues.

         The Company is developing contingency plans for implementation in event
that the  Company,  mission-critical  third party  vendors or other  significant
third  parties  fail  to  adequately  address  Year  2000  issues.   Such  plans
principally  involve identifying  alternative  vendors or internal  remediation.
There can be no  assurance  that any such  plans will  fully  mitigate  any such
failures or problems.  Furthermore, there  may be certain mission-critical third
parties,  such as utilities,  telecommunication  companies,  or material vendors
where alternative arrangements or sources are limited or unavailable.

         Although it is difficult  to estimate  the total costs of  implementing
the Plan,  through June 1999 and beyond, the Company's  preliminary  estimate is
that such  costs will total less than  $100,000.  However,  although  management
believes  its  estimates  are  reasonable,  there can be no  assurance,  for the
reasons stated in the next paragraph,  that the actual costs of implementing the
Plan would not differ  materially  from the  estimated  costs.  The  Company has
incurred approximately $50,000 through June 30, 1999 on this project, which does
not include the costs to re-deploy existing staff.

The Company does not believe that the redeployment of existing staff will have a
material  adverse  effect on its  business,  results of  operations or financial
position. Incremental expenses related to the Year 2000 project are not expected
to  materially  impact  operating  results  in any one  period.  The  extent and
magnitude of the Year 2000  problem as it will affect the  Company,  both before
and for some period after January 1, 2000,  are difficult to predict or quantify
for a number of  reasons.  Among the most  important  are lack of  control  over
systems  that  are used by  third  parties  who are  critical  to the  Company's
operation,  dependence  on third  party  software  vendors to deliver  Year 2000
upgrades in a timely manner,  complexity of testing inter-connected networks and
applications that depend on third party networks and the uncertainty surrounding
how others will deal with liability issues raised by Year 2000 related failures.
There can be no assurance,  for example, that systems used by third parties will
be adequately remediated so that they are Year 2000 ready by January 1, 2000, or
by some earlier date, so as not to create a material disruption to the company's
business.  Moreover,  the estimated costs of  implementing  the Plan do not take
into account the costs,  if any, that might be incurred as a result of Year 2000
related failures that occur despite the Company's implementation of the Plan.

         Although the  Company is  not aware  of any material operational issues
associated  with  preparing its internal  systems for the Year 2000, or material
issues with respect to the  adequacy of  mission-critical  third party  systems,
there  can be no  assurance  that  the  Company  will  not  experience  material
unanticipated  negative  consequences and/or material costs caused by undetected
errors or defects  in such  systems or by the  Company's  failure to  adequately
prepare for the results of such  errors or defects,  including  costs of related
litigation,  if any.  The  impact of such  consequences  could  have a  material
adverse  effect on the  Company's  business,  financial  condition or results of
operations.  A more complete discussion of risks and uncertainties involving the
Company's  business is contained in the Company's Annual Report in Form 10-K for
the fiscal year ended  December  31, 1998 under the  heading  "Factors  That May
Affect Future Results of Operations."

         Because of the foregoing factors,  past financial results should not be
relied upon as an indication of future  performance.  The Company  believes that
period-to-period   comparisons  of  its  financial   results  to  date  are  not
necessarily  meaningful and expects that its results of operations may fluctuate
from period to period in the future. See "-- Overview."


Item 3. Quantitative and Qualitative Disclosure About Market Risk.

         Not applicable
                                       10

860102.1

<PAGE>


                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The  Company is a  defendant  in two  lawsuits  brought by Pall on its  LeukoNet
Prestorage  Leukoreduction  Filter,  which  is no  longer  made  or  sold by the
Company.  In complaints  filed in February 1996 and November 1996,  Pall alleged
that  the  Company's  manufacture,  use  and/or  sale  of the  LeukoNet  product
infringes upon three patents held by Pall.

On October 14, 1996, in  connection  with the first action  concerning  the '321
Patent, the Company filed a motion for summary judgment of non-infringement.Pall
filed a cross motion for summary judgment of infringement at the same time.

In October 1997, the Eastern District of New York granted in part Pall's summary
judgment motion and held that the LeukoNet product infringes a single claim from
the '321 patent. The Company terminated the manufacture, use, sale and offer for
sale of the filter  subject to the  court's  order.  The  Company  appealed  the
October 1997 decision to the Court of Appeals for the Federal  Circuit.  In June
1999, the U.S.  Court of Appeals  determined  that the LeukoNet  product did not
infringe claim 39 of Pall Corporation's '321 patent.

With respect to the second action  concerning  the '572 patent,  the Company has
answered  the  complaint  stating  that it does not  infringe  any  claim of the
asserted  patent.  Further,  the  Company  has  counterclaimed  for  declaratory
judgment of invalidity, non-infringement and unenforceability of the'572 patent.
Pall has amended its Complaint to add Lydall,  Inc.  whose  subsidiary  supplied
filter media for the LeukoNet product, as a co-defendant.  The Company has filed
for summary judgment of  non-infringement,  and Pall has cross-filed for summary
judgment  of  infringement  at the same time.  Lydall  supported  the  Company's
motion for  summary  judgment  of  non-infringement,  and has filed a motion for
summary  judgment  that the asserted  claims of the '572 patent are invalid as a
matter of law. The Company  supported  Lydall's motion for summary judgment that
the asserted claims of the '572 patent are invalid. Discovery has been completed
in the action.

On April 5,  1999,  the  Company  and  COBE  BCT,  Inc.  filed a  complaint  for
declaratory  relief  against Pall in the U.S.  District  Court of Colorado.  The
Company and COBE BCT, Inc. seek declaratory relief that Pall's U.S. Patent No's.
4925,572, 5,229,012,  5,344,561,  5,451,321, 5,501,795 and 5,863,436 are invalid
and not  infringed  by the  Company's  r\LS filter and methods of using the r\LS
filter. Pall moved to dismiss,  transfer to the Eastern District of New York or,
in the alternative, to stay this action. The Company and COBE BCT opposed Pall's
motion.  On July 16, 1999,  the U.S.  District  Court of Colorado  denied Pall's
motion to transfer or, in the alternative, to stay the action.

On April 23, 1999 Pall filed a complaint  against the Company and COBE BCT, Inc.
in the  Eastern  District  of New York  alleging  that  HemaSure's  r\LS  filter
infringes Pall's '572 patent,  tortuously  interfered and unfairly competed with
Pall's  business.  On May 19, 1999,  Pall amended its  Complaint  and added COBE
Laboratories,  Inc.,  Gambro A.B., and Sepracor Inc. as defendants.  The Company
and COBE BCT have  moved to  dismiss,  transfer  or stay the action and Pall has
opposed the motion.

The Company  believes,  based on advice of its patent  counsel,  that a properly
informed  court should  conclude  that the  manufacture,  use and/or sale by the
Company or its  customers  of the  LeukoNet  product  and the r\LS filter do not
infringe any valid enforceable claims of the Pall patents. However, there can be
no assurance  that the Company will prevail in the pending  litigations,  and an
adverse outcome in a patent  infringement  action would have a material  adverse
effect on the Company's financial condition and future business and operations.


Item 2. Changes in Securities and Use of Proceeds.

On March 23, 1999,  the Company  completed a private  placement  financing  with
Sepracor in which the Company  received  $2,000,000  in exchange  for  1,333,334
shares of common  stock of the  Company and  warrants to purchase an  additional
667,000  shares of common stock at $1.50 per share.  The warrants will expire in
the year 2004 and

                                       11

860102.1

<PAGE>



have   certain  registration    rights    associated  with    them.  In  certain
circumstances, HemaSure may require Sepracor to exercise these warrants.

On May 3, 1999, the Company completed a private  placement  financing with COBE.
The  financing  agreement  provided for an initial  investment  of $9,000,000 in
exchange for 4,500,000  shares of the Company's common stock. The agreement also
provided  COBE with an option to  purchase,  subject to certain  conditions,  an
additional  $3,000,000 of common stock of the Company at any time between August
3, 1999 and May 3, 2000.  The number of shares to be issued will be based on the
average  closing price of the Company's  common stock for the thirty-day  period
prior to the exercise.

         In each  case set  forth in this  Item 2, the  securities  were  issued
pursuant to exemptions from the registration  requirements of the Securities Act
of 1933, as amended, under Section 4(2).


Item 3. None

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

At the  Company's  Annual  Meeting of  Stockholders  held on June 10, 1999,  the
following proposals were adopted by the vote specified below.

                   Proposal                                 For         Withheld

             Election of Directors

           Timothy J. Barberich                          9,042,296        10,700
           John F. McGuire, III                          9,042,296        10,700
           Rolf S. Stutz                                 9,042,296        10,700
           David S. Barlow                               9,042,296        10,700
           Justin E. Doheny                              9,042,296        10,700
           Edward C. Wood                                9,042,296        10,700
           Frank Corbin                                  9,042,296        10,700

<TABLE>
<CAPTION>

                                                            For           Against        Abstain         Broker Nonvotes (1)
                                                            ---           -------        -------         -------------------

<S>                                                         <C>            <C>            <C>                 <C>
Amendments to the Company's 1995
  Employee Stock Purchase Plan                           5,485,721        42,050         16,946              3,508,279

Amendments to the Company's 1994
       Stock Option Plan
                                                         5,437,263        94,934         12,520              3,508,279

Amendment to the Company's
  Certificate of Incorporation                           9,014,026        28,650         10,320


</TABLE>


(1) Votes  counted for purposes of  determining  whether a quorum is present for
the meeting but indicates  that the broker or other holder was not authorized by
the beneficial  owner to cast a vote on certain  proposals but was authorized to
cast (and did cast) a vote on at least one other proposal.

Item 5. None

                                       12

860102.1

<PAGE>



Item 6.    Exhibits and Reports on Form 8-K

           Exhibit Index

(a) The following  exhibits are filed as part of this  Quarterly  Report on Form
10-Q.

<TABLE>
<CAPTION>

Exhibit No.                    Description

<S>       <C>
2.1(2)  Heads of Agreement, dated as of January 31, 1996, between the Company and Novo Nordisk A/S.
3.1(1)  Certificate of Incorporation of the Company.
3.2(1)  By-Laws of the Company.
4.1(1)  Specimen Certificate for shares of Common Stock, $.01 par value, of the Company.
4.2(3)  Registration Rights Agreement, dated January 23, 1997, by and among the Company and Novo Nordisk  A/S
4.3(4)  Registration Rights Agreement, dated as of September 15, 1998, between the Company and Sepracor.
4.4(4)  Warrant  Agreement,  dated as of  September  15,  1998, between the Company and Sepracor.
4.5(4)  Warrant Certificate, dated as of September 15, 1998, between the Company and Sepracor.
4.6(4)  Registration Rights Agreement, dated as of March 23, 1999, between the Company and Sepracor.
4.7(5)  Warrant Agreement, dated as of March 23, 1999, between the Company and Sepracor.
4.8(5)  Warrant Certificate, dated as of March 23, 1999, between the Company and Sepracor.
4.9(6)  Stock Subscription Agreement, dated as of May 3, 1999, between the Company and COBE.
4.10(6) Stockholder's Agreement, dated as of May 3, 1999, between the Company and COBE.
10.1(5) Securities Purchase Agreement, dated as of March 23, 1999, between the Company and Sepracor.
10.2(6) Amended and Restated Exclusive Distribution Agreement, dated as of May 3, 1999, between the Company and COBE.
10.3(6) Senior Management Retention Agreement, dated as of December 7, 1998, between the Company and John F. McGuire.
10.4(6) Senior Management Retention Agreement, dated as of December 15, 1998, between the Company and James B. Murphy.
10.5(6) Senior Management Retention Agreement, dated as of December 22, 1998, between the Company and Peter C. Sutcliffe.
10.6    Master Purchase Agreement, dated as of July 1, 1999, between the Company and The American National Red Cross.
27.1    Financial Data Schedule.

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

1       Incorporated herein by reference to the Company's Registration Statement on Form S-1, as amended (File No. 33-75930).
2       Incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
3       Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1996.
4       Incorporated by reference to the Company's  Quarterly  Report on Form 10-Q for the quarter ended September 30, 1998.
5       Incorporated  herein by reference to the Company's  Annual  Report on Form 10-K for the year ended  December  31, 1998.
6       Incorporated  herein by reference to the Company's Quarterly Report of Form 10-Q for the quarter ended March 31, 1999.

(b)     Reports on Form 8-K -  None


</TABLE>

                                       13

860102.1

<PAGE>


                                  SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                  HemaSure Inc.


Date:   August  16, 1999                         /s/ John F. McGuire
                                  ----------------------------------------------
                                                John F. McGuire
                                     President and Chief Executive Officer
                                           (Principal Executive Officer)


Date:   August  16, 1999                          /s/ James B. Murphy
                                    --------------------------------------------
                                                  James B. Murphy
                                           Senior Vice President Finance
                                                 and Administration
                                           (Principal Financial Officer)



                                       S-1

860102.1