<PAGE>
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                         SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549

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

                                     FORM 10-K
(MARK ONE)

  X      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                EXCHANGE ACT OF 1934

                      FOR THE FISCAL YEAR ENDED MARCH 31, 1998.

                                          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 1-10538.
                                          
                              GAMMA BIOLOGICALS, INC.
                                          
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               TEXAS                                      74-1668436
     (STATE OF INCORPORATION)                          (I.R.S. EMPLOYER
                                                       IDENTIFICATION NO.)

                  3700 MANGUM ROAD                                77092
                   HOUSTON, TEXAS                               (ZIP CODE)
     (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE IS (713) 681-8481

            SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                                        NAME OF EACH EXCHANGE
     TITLE OF EACH CLASS                                 ON WHICH REGISTERED
     -------------------                                -----------------------
     COMMON STOCK $.10 PAR VALUE                        AMERICAN STOCK EXCHANGE
     COMMON STOCK PURCHASE RIGHTS                       AMERICAN STOCK EXCHANGE

            SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                                        NONE

     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 reports), and (2) has been subject to such 
filing requirements for the past 90 days.

                                   YES  X  NO   .

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.

                                       [X]

     State the aggregate market value of the voting stock held by non-affiliates
of the Registrant. 

          As of June 22, 1998: Common Stock, $.10 par value -- $22,550,590

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

       As of June 22, 1998: Common Stock, $.10 par value -- 4,625,762 shares

                        DOCUMENTS INCORPORATED BY REFERENCE

Portions of the annual report to shareholders for the year ended March 31, 1998
are incorporated by reference into Part I and Part II.

     Portions of the proxy statement for the annual meeting to be held August
11, 1998 are incorporated by reference into Part III.

===============================================================================

<PAGE>

                                     P A R T  I

ITEM 1. BUSINESS.

     Gamma Biologicals, Inc. (which, together with its subsidiaries is herein
referred to as the "company" or "Gamma") manufactures reagents and systems used
for IN-VITRO diagnostic testing. The reagents are sold to transfusion
departments of hospitals, blood collection centers, medical laboratories and
research institutions where they are used to detect the presence of
diagnostically significant substances in biological fluids, primarily human
blood. The company also develops test systems, which use certain of the
company's reagents and serve to standardize test procedures. See "New Technology
- Gamma ReACT-TM- Test System".

     The company's current products are used in a number of applications,
including:

     -    grouping donor and patient bloods and performing compatibility tests
          prior to transfusion
     -    detecting hemolytic disease of the newborn
     -    identifying antibodies and certain inherited blood group antigens

     Gamma markets its products to over 3,500 hospitals, blood centers and
laboratories in the United States and Canada, and to dealers in approximately 50
countries. Domestic sales are made through the company's direct sales force, as
well as through independent distributors. Internationally, the company sells its
products and products manufactured by others through its subsidiary, Gamma
Biologicals, B.V., and independent distributors. 

CURRENT PRODUCTS

     Most of the company's sales are derived from products used in tests 
performed to determine the ABO and Rh groups of hospital patients and blood 
donors, to detect and identify antibodies, to confirm compatibility between 
blood donors and patients, and in routine prenatal care. Antibodies are serum 
components produced in reaction to the introduction of foreign substances 
into the body through transfusion, pregnancy or other mechanisms. The 
company's reagent red cell products are used to test patients' blood 
specimens for antibodies and, if antibodies are present, to determine their 
identity, thereby enabling suitable donor blood to be selected. The selection 
of proper donor blood is also aided by testing with the company's line of 
other blood grouping reagents. Blood grouping reagents are products prepared 
from serum (the liquid portion) of blood drawn from immunized human donors, 
from antibodies secreted by monoclonal cell lines (hybridomas), and from 
certain seed extracts (lectins). After an appropriate donor blood has been 
selected for transfusion to a patient, a direct test of compatibility is 
commonly performed using patient and donor bloods. The company's antiglobulin 
reagents (commonly known as "Coombs reagents") are used in all stages of 
these procedures beyond initial blood grouping.

     BLOOD BANK PRODUCTS. This group includes blood grouping reagents, Coombs
reagents, antibody potentiators, test cell products, the ReACT Test System,
quality control systems and certain specialty products.

     BLOOD GROUPING REAGENTS are used to determine the four major blood groups
(A, B, AB and O) and six factors in the Rh blood group system, and include other
products utilized to detect blood group factors in the eight other blood group
systems.

     COOMBS REAGENTS are used in blood grouping, antibody detection and
identification procedures and in the diagnosis of hemolytic disease of the
newborn, as well as autoimmune hemolytic anemia. The company presently markets
five Coombs products in three different specificities.


                                     -2-

<PAGE>

     ANTIBODY POTENTIATORS are solutions added to blood testing systems to
enhance their sensitivity. Improved sensitivity is also achieved by the use of
certain proteolytic enzymes. The company presently markets six antibody
potentiators and two enzyme reagents. 

     REAGENT RED CELL PRODUCTS are used in conjunction with Coombs reagents or
with the Gamma ReACT Test System to detect and identify antibodies during
pregnancy and in patient and donor blood serums. The company presently
manufactures and sells 34 test cell products processed from human blood.

     REAGENT QUALITY CONTROL (RQC-Registered Trademark-) KIT is a product
comprising three selected reagents, designed to enable hospital laboratories and
blood banks to test the effectiveness of reagents and to provide an organized
permanent record of the test results, as required by various regulatory
agencies.

     SPECIALTY REAGENTS include a screening test for the detection of
significant fetal-maternal hemorrhage, a self-evaluation system that is designed
both to determine technical proficiency and to provide educational content, a
simpler system for competency testing, and seven products for the resolution of
unusual blood groups or antibody detection problems.

                             GAMMA PRODUCT GROUP TABLE

<TABLE>
                          NUMBER OF 
  BASIC PRODUCT GROUPS    PRODUCTS              MAIN USE OF PRODUCTS
  --------------------    ---------             -------------------- 
<S>                       <C>      <C>
BLOOD GROUPING REAGENTS
     ABO                           
          Monoclonal         4     Routine testing of patients and donors and in
          Lectin             2     prenatal care.

     Rh                            
          Human source       5     Rh phenotyping in selected cases; routine
          Monoclonal         6     testing of patients and donors and in
                                   prenatal care.

     Rh Control              2     Routine control of Rh grouping tests.

     Other                         
          Human source       12    To aid in the selection of blood for patients
          Monoclonal         8     with blood group antibodies.
     
COOMBS REAGENTS                    
          Monoclonal         5     With other products, in routine antibody
                                   detection (including pretransfusion
                                   compatibility testing), antibody
                                   identification and the diagnosis of certain
                                   diseases.

ANTIBODY POTENTIATORS        6     With other products, in all antibody
                                   detection and identification tests.

REAGENT RED CELL PRODUCTS
     Serum ABO Grouping      4     With ABO blood grouping reagents, in routine
                                   ABO grouping tests.

     Antibody Detection      19    With Coombs reagents and antibody
                                   potentiators or with the ReACT-TM- system, in
                                   detection of antibodies in patients and
                                   donors, and in prenatal care.

                                   (TABLE CONTINUED ON FOLLOWING PAGE)


                                     -3-

<PAGE>
                          NUMBER OF 
  BASIC PRODUCT GROUPS    PRODUCTS              MAIN USE OF PRODUCTS
  --------------------    ---------             -------------------- 
REAGENT RED CELL PRODUCTS (continued)
     Antibody Identification  7     With Coombs reagents and antibody
                                    potentiators, in identification of
                                    antibodies detected in routine testing.

     Reagent Control          4     Routine control of all Coombs tests and
                                    control of the test for weak D (Du test), 
                                    mainly on donors.

REACT-TM- TEST SYSTEM         1     IgG antibody detection of sensitized red
                                    blood cells by adherence to Protein A and
                                    Protein G.  System consists of centrifuge,
                                    incubator, viewbox, test strips, workstation
                                    and diluent.

RQC-Registered Trademark-     1     Routine quality control of blood bank
 KIT                                reagents and procedures.

SPECIALTY REAGENTS
     Fetal Bleed Screen Kit   1     To detect excessive fetal-maternal
                                    hemorrhage in Rh-negative women.
     ELU-KIT-Registered             
      Trademark- II           1     To aid in identification of antibodies
                                    (especially those bound to red cells in the
                                    circulation).

     Blood Group Substances   2     To assist in antibody identification
                                    procedures.

     Enzymes                  2     To assist in antibody detection and
                                    identification.

     Gamma-Quin-Registered    1     To remove cell-bound antibody in some
      Trademark-                    disease states to enable patient cells to be
                                    tested with blood grouping reagents.

     EGA-TM-Kit               1     To remove cell-bound antibody in some
                                    disease states to enable patient cells to be
                                    tested with blood grouping reagents.

     Lectins                  2     For the investigation of polyagglutination.

     RiSE-TM-                 1     To determine technical proficiency and
                                    provide continuing education.

     Tech-Chek-TM-            1     To test technical staff for competency.

OTHER SPECIALTY ITEMS
     PV-Plates-TM-            2     Extended blood grouping on selected samples,
                                    for forensic use.

     SegmentSampler-TM-       1     Disposable blood handling safety device.

     Saber-TM-                1     Segment sampling device.

     SureClean                1     To disinfect and clean cell washers.
</TABLE>

                                     -4-

<PAGE>

NEW TECHNOLOGY

     GAMMA REACT-TM- TEST SYSTEM. Gamma has developed and received a patent, in
September 1997, on a microcolumn technology to be used for red cell affinity
testing. Products based on this technology should help Gamma compete with other
microcolumn tests marketed very successfully in Europe since 1988 and recently
introduced in the United States. The acronym ReACT (Red Cell AdherenCe
Technology) has been chosen as a commercial trade name for the product line. 

     The principle of ReACT is based on the affinity adherence of red cells to
an immunologically active matrix. The matrix consists of specially treated
agarose beads. Custom designed disposables and dedicated centrifuge equipment
have been developed to provide customers with an easy-to-use and inexpensive
testing system.

     The company's first ReACT products are used for antibody detection and
identification.  Products to be used for red cell antigen typing in the ReACT
Test System are currently under development.  The company has contracted with a
medical equipment manufacturer to provide automated dispensing and reading
devices for use with the ReACT Test System, and plans to develop a fully
automated system in the future.  Gamma received FDA clearance to market the
first ReACT products in the United States in September 1997.  Sales of ReACT to
international distributors began in September 1997; active U.S. sales efforts
began April 1, 1998, although a few systems were placed with U.S. customers late
in fiscal 1998.  See "Item 3. - Legal Proceedings" regarding a claim of patent
infringement by the company.

PRODUCTS UNDER DEVELOPMENT

     GAMMA-CLONE-Registered Trademark- (MONOCLONAL) REAGENTS.  The development
of hybridoma technology has led to a ready availability of monoclonal
antibodies, which have had a major impact on the design and manufacture of
immunodiagnostic reagents. The company has recognized the potential for the
application of this new technology to several of its blood bank product lines,
and has pursued a program of introducing monoclonal-based products wherever the
technology proves to be advantageous.

     The company currently markets eighteen FDA-licensed blood grouping reagents
manufactured by hybridoma technology. Its five monoclonal Coombs reagents
include the first FDA-licensed Anti-IgG. The company owns or has exclusive use
of the raw material sources (clones) for twelve of the blood grouping reagents
and all of the Coombs products; these clones are grown in-house to produce
source material for manufacturing the relevant products. A license supplement
was approved during fiscal 1998 for an Anti-e reagent manufactured from raw
material purchased from another company. Raw materials for the remaining
products are also purchased from a single supplier. Should the supply of these
materials from this source be interrupted, the company anticipates that it could
locate alternative sources of supply. The company is committed to a program
aimed at developing clones for all blood grouping reagents.

     In May 1996, Gamma filed a license application for a monoclonal Anti-c
reagent based on a cell line of which the company has exclusive use.  This
application is still awaiting approval.  The company's premarket notification
submission for a product intended to assist in the testing of patients with
auto-immune hemolytic anemia (EGA-TM-Kit) has been cleared by the FDA, along
with the non-licensable components of the ReACT Test System.  

     We have contracted with Olympus America, Inc. to develop blood grouping
reagents and reagent red blood cells ready to use on that company's PK7200
immunohematology analyzers.  Applications for the necessary license supplements
were made before the end of calendar 1997.  Reagents for Rh phenotyping and
typing for the K antigen on the PK7200 have been developed, and field-test
studies to provide data to support an application to the FDA started in June 
1998.


                                     -5-

<PAGE>

PRODUCTION AND QUALITY CONTROL

     The company believes that its reputation in the industry as a source of
quality products and services is largely attributable to the expertise of its
technical employees and its maintenance of rigid quality control procedures at
every step of the manufacturing process.

     Raw materials for the FDA-licensed products manufactured and sold by the
company are obtained from several sources. The sources for many of the company's
blood grouping reagent products are human plasma obtained from FDA-licensed
establishments and monoclonal antibodies. Test cell products are manufactured
from whole blood drawn from local donors or purchased from licensed blood banks.
The company believes that the available sources of supply for all raw materials
are adequate for its present and anticipated needs. The company is not dependent
on any single source for any of its raw materials, other than six of its current
Gamma-clone-Registered Trademark- products (see above).

     Once received, raw materials are subjected to a series of manufacturing and
quality control steps, which vary according to the product. FDA regulations
require samples of each finished lot of all blood grouping and Coombs reagents
to be submitted to the Center for Biologics Evaluation and Research for approval
of release prior to shipment. The FDA has granted the company exemptions from
the lot release requirements for Coombs reagents, for one of its Rh reagents,
for three of its other monoclonal blood grouping reagents, and also for two of
its monoclonal ABO reagents. The remaining blood grouping reagents remain
subject to this provision of the regulations. Test cell products, though also
licensed, do not require prior FDA approval on a lot-by-lot basis.

     The products sold by the company that are not required to be licensed by
the FDA (including antibody potentiators, diagnostic and specialty reagents)
fall into two categories: those manufactured by the company from raw materials
acquired from various sources, and those purchased from outside manufacturers
for distribution by the company. All such products are manufactured in
accordance with a Quality System as promulgated by the FDA. See "Regulation". 
The company is actively pursuing ISO 9001 certification and expects to obtain
certification by the end of fiscal 1999.

     The company maintains product liability insurance against bodily injury and
property damage in the amount of $10,000,000. 

MARKETING AND SERVICES

     The company's marketing strategy is to build a broad base of customer
loyalty by providing a wide variety of quality products, marketed by a highly
qualified sales force and supported by in-house technical assistance. The
company believes that responsiveness to customer needs, both in the provision of
services and the introduction of new products, is the key to success.

     The company sells its products to hospitals, blood banks, the United States
armed forces, and university and private research institutions throughout the
world. In the United States and Canada, the company is directly represented by
19 full-time salespersons. Most members of the sales force have degrees in
medical technology or blood banking experience. Each salesperson makes direct
calls on pathologists, chief blood bank technologists and purchasing agents at
institutions in defined geographic areas. The company also markets its products
domestically through selected distributors, who sell to small hospitals,
laboratories and doctors' offices. Internationally, the company is represented
by its subsidiary, Gamma Biologicals, B.V., and independent dealers.

     Management believes that timely delivery of its products to customers is an
important element of its marketing and sales strategy. The company maintains an
inventory sufficient to allow prompt response to customer needs. The company
sells test cell products and its RQC and Tech-Chek Kits on standing orders for
shipment every two, three or four weeks. The RiSE educational product is shipped
quarterly. All contracts for company products may be terminated at any time
without penalty by either the customer or the company.


                                     -6-

<PAGE>

     To support its sales force and dealers, the company participates in a
number of educational programs, with management and employees serving as
speakers or faculty members in numerous domestic and international workshops and
conventions. This participation provides visibility for the company and enhances
its reputation in the scientific community. The company also conducts in-house
training programs for blood bank personnel. In addition, the company maintains a
reference laboratory, recognized by the American Association of Blood Banks,
which employs four persons (including two persons registered as blood bank
specialists by the American Society of Clinical Pathologists) and provides
consulting services for hospitals and blood banks with rare or difficult blood
testing problems. The reference laboratory often serves as a means of
introducing the company and its products to potential customers, generating new
products in response to customer needs and providing ongoing quality control of
the company's blood bank products. New discoveries made in the course of
investigating problems referred for consultation are regularly reported in
scientific literature or at scientific meetings.

     Sales to the company's six largest domestic customers (two of which are
regional laboratory supply dealers) represented 5.5% of the company's net sales
for fiscal 1998, 5.7% for fiscal 1997 and 5.8% for fiscal 1996.

     Approximately 35% of the company's net sales in fiscal 1998 were made to
foreign customers. In fiscal 1998 the company's export sales were to customers
in Japan ($781,000), the Netherlands ($688,000), Spain ($559,000), Italy
($417,000), Brazil ($396,000), and over 50 other countries worldwide. 

REGULATION

     The company operates under U.S. Government Establishment License No. 435,
granted by the National Institutes of Health in 1971. The terms of the license
subject the company to stringent manufacturing and quality control standards,
and the license may be suspended or revoked by the FDA for cause at any time.
Such revocation would cause the company to cease business. The company's blood
grouping and Coombs reagents, as well as its test cell products, must be
licensed by the FDA pursuant to the Public Health Service Act and are
manufactured in accordance with defined standards.

     In addition, the Federal Food, Drug and Cosmetic Act and the Safe Medical
Devices Act, together with regulations issued or authorized thereunder, provide
for regulation by the FDA of the marketing, manufacture, labeling, packaging and
distribution of medical devices, including most of the company's non-licensed
products. Among the applicable regulations are requirements that medical device
manufacturers register with the FDA, list devices manufactured by them, and file
various reports. Regulations covering The Quality System for Medical Devices set
forth requirements for, among other things, the company's manufacturing
processes and associated record-keeping and maintenance. Certain requirements
must be met before initial marketing of medical devices, ranging from a minimum
obligation to notify the FDA before commencing marketing of a product
substantially equivalent to devices already in commerce, to a maximum obligation
to comply with the potentially expensive and time-consuming process of testing
necessary to support an application for premarket approval. The FDA also has the
authority, which it has so far exercised only to a limited degree, to issue
performance standards to be met by most of the types of non-licensed products
manufactured by the company. The company anticipates no difficulty in meeting
the performance standards for the products as promulgated by the FDA.


                                     -7-

<PAGE>

     None of the company's current or proposed products, except those labeled
for forensic use only, can be marketed in the United States without the licenses
or registrations required by the FDA. Unscheduled FDA inspections of the
company's facilities occur from time to time to determine compliance with
applicable FDA regulations. To date, the company believes that it has
satisfactorily complied with requirements imposed by the FDA, OSHA, EEOC and
other government agencies. The company also believes that the manufacturing and
quality control procedures it employs conform to requirements of the Quality
System regulations.

MARKETS AND COMPETITION

     Management believes that the world market for blood bank reagent products
is more than $160 million per year, with about 40% of the market being in the
United States. There are three other domestic companies that actively compete
with the company, one of which is Ortho Diagnostic Systems, a division of
Johnson and Johnson, Inc., which the company believes accounts for about 50% of
all domestic sales. Other competitors include Immucor, Inc. and BCA, a division
of Biopool International.

     Competition is based on quality of product, price, the size and talent of
sales forces, ability to furnish a range of existing and new products, customer
services and continuity of product supply. During the past several years, the
industry has experienced aggressive price competition, particularly among
manufacturers that target large hospitals and institutions as key customers. In
spite of this competitive environment, the company has maintained its worldwide
sales and increased market share outside the U.S., particularly in Latin
America. Management believes that this is due to the company's emphasis on
product quality, the introduction of new products, specialty products, customer
service and training.

RESEARCH AND DEVELOPMENT

     The company's strategy for growth includes internal research and
development, technology acquisition and worldwide marketing. The research and
development program is based upon the allocation of available resources among
new product development, process development, product and process improvement,
and technical services to manufacturing and marketing.

     Any new product developed by the company will require, prior to its
domestic sale, licensing or clearance to market by the FDA. There can be no
assurance that any such product will be so licensed or cleared, or that it will
gain acceptance in the marketplace.

     In fiscal 1998, 1997, and 1996, the company expended $1,247,000, 
$1,449,000, and $1,349,000 respectively, for research and development on 
monoclonal, microcolumn and electro-biosensor technologies. The company 
engaged in no customer-sponsored research during these periods.  

     The company's funding of electro-biosensor research at the University of
Wollongong, Australia, was discontinued in fiscal 1998.  Although feasibility
and specificity of the test system were proven in a laboratory setting,
estimates of additional time and cost required to commercialize the technology
exceeded the company's expectations.  Management believes that currently
available resources will be better utilized in projects with greater short and
intermediate term potential, such as the development of additional microcolumn
products and the automation of the ReACT Test System.

PATENTS AND TRADEMARKS

     In May 1994, the company applied for United States and international
patents covering a new antigen/antibody detection procedure using an affinity
adherence technology; the U.S. patent was issued in September 1997.   See "New
Technology- Gamma ReACT-TM- Test System"and "Item 3. - Legal Proceedings"
regarding a claim of patent infringement by the company.  An additional patent
application has been submitted covering the ReACT technology. 


                                     -8-

<PAGE>

     The company's trademark rights to the mark "Gamma" have been federally
registered. The company holds nine different trademark registrations for various
uses of "Gamma" and claims trademark rights in respect of other brand names
utilized to identify the company's products. The company presently owns a number
of federal and state registrations and has an aggressive policy of registering
its trademark rights, where such is deemed available. There can be no assurance
that any of the company's registrations will be enforceable.

EMPLOYEES

     The company has 134 full-time employees, of whom 38 hold advanced technical
degrees or certifications in medical technology. Of the total, 45 are sales,
marketing and customer-support personnel, 58 are engaged in manufacturing and
quality control, and the remainder serve in other capacities. The company has
experienced a low turnover rate among its employees and considers its employee
relations to be excellent. None of the company's employees is represented by a
union.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

     The company operates in one industry segment and two geographic areas, the
United States and Europe. 

ITEM 2. PROPERTIES.

     The principal manufacturing, research, shipping, sales and administrative
functions of the company are conducted in a 41,000 square foot building located
in northwest Houston on a three-acre tract of land owned by the company. The
land and building are subject to a first lien mortgage. Management believes that
the facility is both suitable and adequate for current production needs and has
no plans for expanding its domestic facilities in fiscal 1999.  Gamma
Biologicals, B.V. leases approximately 900 square feet of office and warehouse
space in Amsterdam, the Netherlands, which management believes is adequate for
current needs.

ITEM 3. LEGAL PROCEEDINGS.

     On May 12, 1998, the company received notification that a claim of patent
infringement had been filed on that date in U.S. District Court, Southern
District of Florida, Miami Division, by Micro Typing Systems, Inc. and Stiftung
fur Diagnostiche Forschung (the Foundation).  The claim alleges that the
recently introduced Gamma ReACT Test System (See "New Technology - Gamma
ReACT-TM- Test System") infringes U.S. patent No. 5,512,432 granted to the
Foundation April 30, 1996.  The plaintiffs seek a preliminary and permanent
injunction against the continued alleged infringement by the company, an award
of treble damages, with interest and costs and reasonable attorney's fees. 
Management is confident that the ReACT technology does not infringe any claims
made in the Foundation's patent; however, an unfavorable outcome in this action
could have a material adverse effect upon the business and the results of
operations in a given reporting period.  Since this matter is in the earliest
stage of proceedings and due to uncertainties involved in litigation, management
cannot predict the likelihood of a particular outcome or estimate the financial
impact of an unfavorable resolution.

     On January 23, 1998, a former employee filed a suit in the District Court
of Harris County, Texas, alleging that the company breached a verbal contract to
provide certain post-employment benefits.  The plaintiff seeks specific
performance of the contract or, in the alternative, money damages in an amount
not less than $1,500,000.  Management denies that it has breached any
obligations to the plaintiff, and believes that it is unlikely that the outcome
of this case will have a material impact on the financial condition of the
company.  The Company is vigorously contesting this claim and believes that its
positions are sustainable.


                                     -9-

<PAGE>

     The company is involved in various other legal actions that are in various
stages of litigation and investigation by the company and its legal counsel.
After reviewing all other actions pending or threatened involving the company,
management believes that while the resolution of any matter may have an impact
on the financial results of the period in which the matter is settled, their
ultimate resolution will not have any material adverse effect upon the business
or consolidated financial position of the company. Since these matters are in
various stages of proceedings, future developments could cause management to
revise its assessment of these matters.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     During the fourth quarter of fiscal 1998, no matter was submitted to a vote
of security holders of the company.

                                    P A R T  II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

     The information contained under "Market for Registrant's Common Equity and
Related Shareholder Matters" on page 36 of the company's annual report to
shareholders for the year ended March 31, 1998, is incorporated herein by
reference. See also Notes 6 and 7 of Notes to Consolidated Financial Statements
on pages 30 and 31 of the company's annual report to shareholders for the year
ended March 31, 1998, which is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA.

     The information contained under "11-year Summary of Selected Financial
Data" on the inside front cover and page 1 of the company's annual report to
shareholders for the year ended March 31, 1998, is incorporated herein by
reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

     The information contained under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 17 through 22 of the
company's annual report to shareholders for the year ended March 31, 1998, is
incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The following consolidated financial statements of the company and its
subsidiaries, included on pages 23 through 35 of the company's annual report to
shareholders for the year ended March 31, 1998, are incorporated herein by
reference:

     Statements of Consolidated Income -- Years ended March 31, 1998, 1997 and
     1996

     Consolidated Balance Sheets -- March 31, 1998 and 1997

     Statements of Changes in Shareholders' Equity -- Years ended March 31,
     1998, 1997 and 1996

     Statements of Consolidated Cash Flows -- Years ended March 31, 1998, 1997
     and 1996

     Notes to Consolidated Financial Statements

     The information contained under "Quarterly Financial Data (unaudited)" on
page 36 of the company's annual report to shareholders for the year ended March
31, 1998, is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

               None.


                                    -10-

<PAGE>

                                    P A R T  III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The information contained under "Proposal No. 1 - Election of Directors",
"Executive Officers" and "Section 16(a) Beneficial Ownership Reporting
Compliance" on pages 3, 4, 5, 6 and 12 of the company's proxy statement dated
June 30, 1998, which has been filed with the Securities and Exchange Commission,
is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION.

     The information contained under "Executive Officers", "Severance
Agreements", and "Split-Dollar Agreements" on pages 5 through 12 (except for the
Compensation/Stock Option Committee Report and Performance Graph therein) of
the company's proxy statement dated June 30, 1998, which has been filed with the
Securities and Exchange Commission, is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information contained under "Common Stock Outstanding and Principal
Holders Thereof" on pages 2 and 3 of the company's proxy statement dated June
30, 1998, which has been filed with the Securities and Exchange Commission, is
incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information contained under "Certain Relationships and Related
Transactions" on page 12 of the company's proxy statement dated June 30, 1998,
which has been filed with the Securities and Exchange Commission, is
incorporated herein by reference.

                                    P A R T  IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a)  (1) AND (2) FINANCIAL STATEMENTS AND RELATED SCHEDULES
          The response to this portion of Item 14 is submitted as a separate
          section of this report.
          (3)  EXHIBITS
          The response to this portion of Item 14 is submitted as a separate
          section of this report.

     (b)  REPORTS ON FORM 8-K
          No Report on Form 8-K was filed by the company during the quarter 
          ended March 31, 1998.
               
     (c)  EXHIBITS
          See Item 14(a)(3), above.

     (d)  FINANCIAL STATEMENT SCHEDULES
          Such schedules are not required or are disclosed in the financial
          statements.


                                    -11-

<PAGE>

                                     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.

                           GAMMA BIOLOGICALS, INC.


                           By: DAVID E. HATCHER
                              --------------------------------------------------
                           (DAVID E. HATCHER, CHAIRMAN OF THE BOARD
                            OF DIRECTORS, PRESIDENT AND CHIEF EXECUTIVE OFFICER)


Dated: June 26, 1998

     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
          SIGNATURES                  TITLE                              DATE
          -----------                 -----                              ---- 
       <S>                  <C>                                       <C>
       DAVID E. HATCHER     Chairman of the Board of Directors,       June 26, 1998
      ------------------    President and Chief Executive Officer
      (DAVID E. HATCHER)    (Principal executive officer)


    MARGARET J. O'BANNION   Senior Vice President--Finance and        June 26, 1998
    ---------------------   Chief Financial Officer (Principal
   (MARGARET J. O'BANNION)  financial and accounting officer)


    BETTY FRANCIS HATCHER    Director and Executive Vice              June 26, 1998
    ----------------------   President
   (BETTY FRANCIS HATCHER)


       BRYAN J. BRIEDEN      Director                                 June 26, 1998
      ------------------    
      (BRYAN J. BRIEDEN)


      HAYLE B. RANDOLPH      Director                                 June 26, 1998
     ------------------
     (HAYLE B. RANDOLPH)


    RICHARD H. ASTER, M.D.   Director                                 June 26, 1998
   ------------------------
   (RICHARD H. ASTER, M.D.)


     H. H. (WILL) HARDEE     Director                                 June 26, 1998
    --------------------- 
    (H. H. (WILL) HARDEE)
</TABLE>


                                     -12-

<PAGE>

                         ANNUAL REPORT ON FORM 10-K

                           ITEM 14(a)(1) and (2)

                  GAMMA BIOLOGICALS, INC. AND SUBSIDIARIES

                               MARCH 31, 1998


List of Financial Statements and Financial Statement Schedules

     The following consolidated financial statements of the registrant and its
subsidiaries, included on pages 23 through 35 of the annual report of the
registrant to its shareholders for the year ended March 31, 1998, are
incorporated by reference in Item 8.

     Statements of Consolidated Income -- Years ended March 31, 1998, 1997 and
     1996

     Consolidated Balance Sheets -- March 31, 1998 and 1997

     Statements of Changes in Shareholders' Equity -- Years ended March 31,
     1998, 1997 and 1996

     Statements of Consolidated Cash Flows -- Years ended March 31, 1998, 1997
     and 1996

     Notes to Consolidated Financial Statements

     All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have been
omitted.

<PAGE>

                             ANNUAL REPORT ON FORM 10-K
                                          
                                   ITEM 14(a)(3)

                                   EXHIBIT INDEX

                                     EXHIBITS

                             YEAR ENDED MARCH 31, 1998

                              GAMMA BIOLOGICALS, INC.

                                  HOUSTON, TEXAS

<PAGE>

                             ANNUAL REPORT ON FORM 10-K

                                   ITEM 14(a)(3)

                      GAMMA BIOLOGICALS, INC. AND SUBSIDIARIES

                                    MARCH 31, 1998


 EXHIBIT 
 NUMBER 
------- 
  3(a)     --   Restated Articles of Incorporation of the Company dated June
                20, 1996.  Incorporated by reference to Exhibit 3(a) to the
                Company's Annual Report on Form 10-K for the year ended March
                31, 1996 (the "1996 Form 10-K").

   (b)     --   Amended and Restated Bylaws of the Company dated April 13,
                1990. Incorporated by reference to Exhibit 3(b) to the
                Company's Annual Report on Form 10-K for the year ended March
                31, 1990 (the "1990 Form 10-K").

  4(a)     --   Specimen Common Stock certificate of the Company. Incorporated
                by reference to Exhibit 4(a) to the 1990 Form 10-K.

   (b)     --   Shareholder Rights Plan dated as of September 5, 1989.
                Incorporated by reference to Exhibit 4.1 to the Company's
                Current Report on Form 8-K dated September 5, 1989.

 10(a)     --   Restated and Amended Split-Dollar Agreement dated May 29, 1990
                between the Company and David E. Hatcher. Incorporated by
                reference to Exhibit 10(a) to the 1990 Form 10-K.

   (b)     --   Restated and Amended Split-Dollar Agreement dated May 29, 1990
                between the Company and Betty F. Hatcher. Incorporated by
                reference to Exhibit 10(b) to the 1990 Form 10-K.

   (c)     --   Restated and Amended Split-Dollar Agreement dated May 29, 1990
                between the Company and Bryan J. Brieden. Incorporated by
                reference to Exhibit 10(c) to the 1990 Form 10-K.

   (d)     --   Restated and Amended Split-Dollar Agreement dated May 29, 1990
                between the Company and Larry E. Letwin. Incorporated by
                reference to Exhibit 10(d) to the 1990 Form 10-K.

   (e)     --   Amendment to Restated and Amended Split-Dollar Agreement dated
                May 8, 1991 between the Company and David E. Hatcher.
                Incorporated by reference to Exhibit 10(e) to the Company's
                Annual Report on Form 10-K for the year ended March 31, 1991
                (the "1991 Form 10-K").

   (f)     --   Amendment to Restated and Amended Split-Dollar Agreement dated
                May 8, 1991 between the Company and David E. Hatcher.
                Incorporated by reference to Exhibit 10(f) to the 1991 Form  
                10-K.

<PAGE>

 EXHIBIT 
 NUMBER 
-------- 
   (g)     --   Amendment to Restated and Amended Split-Dollar Agreement dated
                May 8, 1991 between the Company and Betty F. Hatcher.
                Incorporated by reference to Exhibit 10(g) to the 1991 Form 
                10-K.

   (h)     --   Amendment to Restated and Amended Split-Dollar Agreement dated
                May 8, 1991 between the Company and Betty F. Hatcher.
                Incorporated by reference to Exhibit 10(h) to the 1991 Form 
                10-K.

   (i)     --   Amendment to Restated and Amended Split-Dollar Agreement dated
                May 8, 1991 between the Company and Bryan J. Brieden.
                Incorporated by reference to Exhibit 10(i) to the 1991 Form 
                10-K.

   (j)     --   Amendment to Restated and Amended Split-Dollar Agreement dated
                May 8, 1991 between the Company and Larry E. Letwin.
                Incorporated by reference to Exhibit 10(j) to the 1991 Form 
                10-K.

   (k)     --   Split-Dollar Agreement dated March 25, 1993 between the Company
                and Margaret J. O'Bannion. Incorporated by reference to Exhibit
                10(l) to the Company's Annual Report on Form 10-K for the year
                ended March 31, 1993 (the "1993 Form 10-K").

   (l)     --   Split-Dollar Agreement dated March 25, 1993 between the Company
                and Jimmie L. Turner. Incorporated by reference to Exhibit
                10(m) to the 1993 Form 10-K.

   (m)     --   Split-Dollar Agreement dated March 25, 1993 between the Company
                and Jimmie L. Turner. Incorporated by reference to Exhibit
                10(n) to the 1993 Form 10-K. 

   (n)     --   Split-Dollar Agreement dated May 5, 1995 between the Company
                and Gary L. Parrish.  Incorporated by reference to Exhibit
                10(o) to the 1996 Form 10-K.

   (o)     --   Split-Dollar Agreement dated October 23, 1996 between the
                Company and Raul Alvarez.  Incorporated by reference to Exhibit
                10(p) to the Company's Annual Report on Form 10-K for the year
                ended March 31, 1997 (the "1997 Form 10-K").

   (p)     --   Split-Dollar Agreement dated October 21, 1996 between the
                Company and Susan A. Batcha.  Incorporated by reference to
                Exhibit 10(q) to the 1997 Form 10-K.

   (q)     --   Split-Dollar Agreement dated October 17, 1996 between the
                Company and Thomas H. Frame.  Incorporated by reference to
                Exhibit 10(r) to the 1997 Form 10-K.

   (r)     --   Split-Dollar Agreement dated October 17, 1996 between the
                Company and Marilyn K. Moulds.  Incorporated by reference to
                Exhibit 10(s) to the 1997 Form 10-K.

   (s)     --   Incentive Stock Option Plan of the Company. Incorporated by
                reference to the Company's Proxy Statement dated June 25, 1987,
                Exhibit A.

<PAGE>

 EXHIBIT 
 NUMBER 
-------- 

   (t)     --   1991 Employee Stock Option Plan of the Company. Incorporated by
                reference to Exhibit 28.2 to the Company's Registration 
                Statement on Form S-8 (File No. 33-44950) dated January 6,
                1992.

   (u)     --   1991 Outside Director Stock Option Plan of the Company.
                Incorporated by reference to Exhibit 28.3 to the Company's
                Registration Statement on Form S-8 (File No. 33-44950) dated
                January 6, 1992.

   (v)     --   1995 Employee Stock Option Plan of the Company. Incorporated by
                reference to the Company's Registration Statement on Form S-8
                (File No. 333-01147) dated February 21, 1996.

   (w)     --   1997 Outside Director Stock Option Plan of the Company. 
                Incorporated by reference to Exhibit 99.1 to the Company's
                Registration Statement on Form S-8 (File No. 333-40367) dated
                November 17, 1997. 

   (x)     --   401(k) Retirement Savings Plan of the Company adopted July 1,
                1992. Incorporated by reference to Exhibit 10(r) to the 1993
                Form 10-K. 

   (y)     --   Patent License Agreement effective May 12, 1997 between the
                Company and Pasteur Sanofi Diagnostics.  Incorporated by
                reference to Exhibit 10(y) to the 1997 Form 10-K.

   (z)     --   Warrant to Purchase Common Stock dated June 19, 1997. 
                Incorporated by reference to Exhibit 10(a) to the Company's
                Quarterly Report on Form 10-Q for the quarterly period ended
                June 30, 1997 (the "June 30, 1997 Form 10-Q").

   (aa)    --   Registration Rights Agreement dated June 19, 1997 between the
                Company and Cyn Del & Company, Inc. Incorporated by reference
                to Exhibit 10(b) to the June 30, 1997 Form 10-Q.

   (bb)    --   Term and Revolving Line of Credit Loan Agreement dated August
                17, 1990 between Sterling Bank and the Company. Incorporated by
                reference to Exhibit 10(v) to the 1991 Form 10-K.

   (cc)    --   Promissory Note dated November 2, 1990 payable to the order of
                Sterling Bank by the Company. Incorporated by reference to
                Exhibit 10(w) to the 1991 Form 10-K.

   (dd)    --   Employment Contract dated January 29, 1976 between the Company
                and John Case. Incorporated by reference to Exhibit 10(aa) to
                the Company's Annual Report on Form 10-K for the year ended
                March 31, 1986.

   (ee)    --   Amended and Restated Severance Agreement dated February 19,
                1996 between Betty F. Hatcher and the Company.  Incorporated by
                reference to Exhibit 10(y) to the 1996 Form 10-K.

   (ff)    --   Amended and Restated Severance Agreement dated February 19,
                1996 between David E. Hatcher and the Company.  Incorporated by
                reference to Exhibit 10(aa) to the 1996 Form 10-K.

<PAGE>

 EXHIBIT 
 NUMBER
-------- 

   (gg)    --   Amended and Restated Severance Agreement dated
                February 19, 1996 between Margaret J. O'Bannion and the
                Company.  Incorporated by reference to Exhibit 10(bb) to the
                1996 Form 10-K.

   (hh)    --   Amended and Restated Severance Agreement dated February 19,
                1996 between Jimmie L. Turner and the Company.  Incorporated
                by reference to Exhibit 10(cc) to the 1996 Form 10-K.

   (ii)    --   Severance Agreement dated December 19, 1995 between Gary L.
                Parrish and the Company.  Incorporated by reference to Exhibit
                10(dd) to the 1996 Form 10-K.

   (jj)    --   Severance Agreement dated August 12, 1996 between Raul F.
                Alvarez and the Company.  Incorporated by reference to Exhibit
                10(ii) to the 1997 Form 10-K.

   (kk)    --   Severance Agreement dated August 12, 1996 between Susan A.
                Batcha and the Company.  Incorporated by reference to Exhibit
                10(jj) to the 1997 Form 10-K.

   (ll)    --   Severance Agreement dated August 12, 1996 between Thomas H.
                Frame and the Company.  Incorporated by reference to Exhibit
                10(kk) to the 1997 Form 10-K.

   (mm)    --   Severance Agreement dated August 12, 1996 between Marilyn K.
                Moulds and the Company.  Incorporated by reference to Exhibit
                10(ll) to the 1997 Form 10-K.

11         --   Statement Regarding Computation of per Share Earnings.
                Incorporated by reference to the Company's Statements of
                Consolidated Income for the years ended March 31, 1998, 1997
                and 1996 on page 23 of the Company's Annual Report to
                Shareholders for the year ended March 31, 1998 and to Note 1 of
                Notes to Consolidated Financial Statements on pages 27 and 28
                of the Company's Annual Report to Shareholders for the year
                ended March 31, 1998.

13         --   The Company's Annual Report to Shareholders for the year ended
                March 31, 1998.

21         --   Subsidiaries of the Company.

23         --   Consent of Deloitte & Touche LLP.

27 (a)     --   Financial Data Schedule for the year ended March 31, 1998

   (b)     --   Restated Financial Data Schedule for the six months ended
                September 30, 1995.