UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                  FORM 10-QSB

  (Mark One)

  [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 
                           For the quarterly period ended: September 30, 1996

  [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 
                           For the transition period from           to        
   

                                     Commission file number:  0-25726


                              SEPRAGEN CORPORATION
       (Exact name of small business issuer as specified in its charter)

       California                                            68-0073366
  (State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                         Identification No.)

               30689 Huntwood Avenue, Hayward, California  94544
                    (Address of principal executive offices)

       (Issuer's telephone number (including area code):  (510) 476-0650

  (Former name, former address and former fiscal year if changed since last
    report)

  Check whether the issuer (1) has filed all reports required to be filed by
  Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
  such shorter period that the issuer was required to file such reports), and
  (2) has been subject to such filing requirements for the past 90 days.  
  Yes  X   No    


  State the number of shares outstanding of each of the registrant's classes
  of Common equity, as of the latest practicable date:


                                               October 31, 1996

                           Class A Common Stock          2,142,506
                           Class B Common Stock            713,925
                           Class E Common Stock          1,203,719


                   THIS REPORT INCLUDES A TOTAL OF  11 PAGES.
<PAGE>

  PART I - FINANCIAL INFORMATION

  Item 1.   Financial Statements

                              SEPRAGEN CORPORATION
                            CONDENSED BALANCE SHEETS

                                     ASSETS
                                    September 30, 1996      December 31, 1995
                                        (unaudited)   
  Current Assets:
     Cash and cash equivalents            $   790,796            $    23,364 
     Marketable securities                         --              3,586,145 
     Accounts receivable, less allowance 
       for doubtful accounts of $18,782 
       and $30,459 as of September 30, 1996
       and December 31, 1995, respectively    305,478                278,688 
     Inventories                              552,310                777,620 
     Prepaid expenses and other                11,733                 57,130 
        Total current assets                1,660,317              4,722,947 

  Furniture and equipment, net                417,187                252,150 
  Intangible assets                           111,709                111,709 
                                           $2,189,213             $5,086,806 

                      LIABILITIES AND SHAREHOLDERS' EQUITY

  Current Liabilities:
     Accounts payable                     $   69,186               $ 230,799 
     Accrued liabilities                      31,076                 174,395 
     Accrued payroll and benefits             88,211                  80,633 
     Interest payable                             --                   4,285 
       Total current liabilities             188,473                 490,112 

  Class E common stock, no par value - 
     1,600,000 shares authorized; 
     1,203,719 shares issued and outstanding 
     at September 30, 1996 and December 
     31, 1995; redeemable at $.01 per share       --                      -- 

  Shareholders' equity:
     Preferred stock, no par value - 
       5,000,000 shares authorized; none 
       issued or outstanding at September 30, 
       1996 and December 31, 1995                 --                      -- 
     Class A common stock, no par value -
       20,000,000 shares authorized; 2,142,506
       shares issued and outstanding at September 
       30, 1996 and December 31, 1995      8,774,283               8,353,737 
     Class B common stock, no par value -
       2,600,000 shares authorized; 
       713,925 shares issued and outstanding 
       at September 30, 1996 
       and December 31, 1995               4,139,410               4,559,956 
     Unrealized loss on 
       available-for-sale securities              --                 (14,462)
     Accumulated deficit                 (10,912,953)             (8,302,537)
     Total shareholders' equity            2,000,740               4,596,694 
                                          $2,189,213              $5,086,806 

           The accompanying notes are an integral part of these condensed
          financial statements.
<PAGE>

                              SEPRAGEN CORPORATION

                       CONDENSED STATEMENTS OF OPERATIONS
                                  (Unaudited)


                                      Three Months        Nine Months Ended
                                Ended September 30,      September 30, 1996
                                  1996        1995       1996          1995 

  Revenues:

     Net Sales              $   142,375   $ 90,711  $1,005,156    $ 888,643 

  Costs and expenses:

     Cost of goods sold         104,456    154,978     742,386      563,201 
     Selling, general and 
        administrative          563,917    593,778   1,789,267    1,463,382 
     Research and development
                                435,115    287,745   1,164,425      748,151 

   Total costs and expenses   1,103,488  1,036,501   3,696,078    2,774,734 

       Loss from operations    (961,113)  (945,790) (2,690,922)  (1,886,091)

  Other income, net               9,954     72,471      80,505       12,960 

     Net loss                $ (951,159) $(873,319)$(2,610,417) $(1,873,131)

  Net loss per common and 
     common equivalent share      $(.33)     $(.31)      $(.91)        $(.87)

  Weighted average shares 
     outstanding              2,856,431  2,855,032   2,856 431     2,141,595 


          The accompanying notes are an integral part of these condensed
          financial statements.
<PAGE>


                              SEPRAGEN CORPORATION
                       CONDENSED STATEMENTS OF CASH FLOWS
                                 (Unaudited)   
                                         Nine Months Ended September 30,
                                                  1996              1995
  Cash flows from operating activities:
     Net loss                            $  (2,610,417)   $  (1,873,131)
     Adjustments to reconcile net loss to net 
       cash used in operating activities:
       Depreciation                             65,085           18,356 
       Changes in assets and liabilities:
            Accounts receivable                (26,790)         (38,896)
            Inventories                        225,310         (449,547)
            Prepaid expenses and other          45,397           45,341 
            Accounts payable                  (161,613)        (161,811)
            Accrued liabilities               (143,319)        (213,077)
            Accrued payroll and benefits         7,578           (7,250)
            Interest payable                    (4,285)         (18,667)
    Net cash used in operating activities   (2,603,054)      (2,698,682)

  Cash flows from investing activities:
     Acquisition of furniture and equipment
                                              (230,122)         (60,162)
     Acquisition of marketable securities     (549,514)              -- 
     Proceeds from sale of marketable 
       securities                            4,150,122               -- 
       Net cash provided by (used in) 
       investing activities                  3,370,486          (60,162)

  Cash flows from financing activities:
     Proceeds from issuance of common stock         --        8,832,231 
     Repayment of bridge notes payable              --       (1,550,000)
     Repayment of notes payable                     --          (25,000)
     Repayment of convertible note 
       payable to shareholder                       --          (25,000)
     Repayment of convertible note                  --          (65,000)
    Net cash provided by financing activities
                                                    --        7,167,231 
  Net increase in cash                         767,432        4,408,387 

  Cash and cash equivalents at the beginning 
     of the period                              23,364          240,472 

  Cash and cash equivalents at the 
     end of the period                       $ 790,796      $ 4,648,859 

  Supplemental disclosure of non-cash financing activities:
     Conversion of note payable to shareholder 
       and related interest to common stock
                                                    --      $   794,909 
     Deferred costs of securities registration 
       offset against proceeds from issuance of 
       common stock                                 --      $   478,494 
     Conversion of convertible note payable 
       to shareholder and related interest 
       to common stock                              --      $    27,332 




           The accompanying notes are an integral part of these condensed
          financial statements.
<PAGE>
                              SEPRAGEN CORPORATION

                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                   NINE MONTH PERIOD ENDED SEPTEMBER 30, 1996
                                  (Unaudited)

  Note 1 - Interim Financial Reporting.

     The accompanying unaudited interim financial statements have been
  prepared pursuant to the rules and regulations for reporting on Form 10-
  QSB.  Accordingly, certain information and footnotes required by generally
  accepted accounting principles have been condensed or omitted.  These
  interim statements should be read in conjunction with the financial
  statements and the notes thereto, included in the Sepragen Corporation's
  (the "Company's") Annual Report on Form 10-KSB for the year ended December
  31, 1995.

     The December 31, 1995 balance sheet was derived from audited financial
  statements, but does not include all disclosures required by generally
  accepted accounting principles.  The unaudited interim condensed financial
  statements have been prepared on the same basis as the audited annual
  financial statements, and in the opinion of management, contain all
  adjustments (consisting of only normal recurring adjustments) necessary to
  present fairly the financial information set forth therein, in accordance
  with generally accepted accounting principles.  The Company's quarterly
  results may be subject to fluctuations.  As a result, the Company believes
  its results of operations for the interim period are not necessarily
  indicative of the results expected for any future period.

     The Company will be required to conduct significant research, develop-
  ment and testing activities which, together with expenses to be incurred
  for manufacturing, the establishment of a large marketing and distribution
  presence and other general and administrative expenses, are expected to
  result in operating losses for the next few years.  Accordingly, there can
  be no assurance that the Company will ever achieve profitable operations. 
  The Company will have to obtain additional financing to support its
  operating needs beyond December 31, 1996.  There can be no assurance that
  such additional financing will be obtained.


  Note 2 - Initial Public Offering.

     The Company's initial public offering was declared effective by the
  Securities and Exchange Commission on March 23, 1995.  The offering of
  1,800,000 Units, each consisting of one share of Class A common stock, one
  redeemable five year Class A warrant and one redeemable five year Class B
  warrant, provided net proceeds of $7,242,351 to the Company.  On the
  effective date of the offering, the Company issued 57,224 shares of Class B
  common stock and 88,039 shares of Class E common stock in exchange for the
  cancellation of a note payable to a shareholder of $727,000 and related
  accrued interest of $67,909.  In May, 1995 the underwriter exercised its
  overallotment option for 270,000 Units, generating an additional $1,181,386
  of net proceeds to the Company.
<PAGE>
                              SEPRAGEN CORPORATION

                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                   NINE MONTH PERIOD ENDED SEPTEMBER 30, 1996
                                  (Unaudited)

  Note 3 - Net Loss Per Share.

     Net loss per common and common equivalent share is computed using the
  weighted average number of common shares and common equivalent shares
  outstanding during each period.  Restricted shares issued as Class E common
  shares and contingent options are considered contingently issuable and,
  accordingly, are excluded from the weighted average number of common and
  common equivalent shares outstanding.  For the periods ended September 30,
  1996 and 1995 common equivalent shares relating to options have been
  excluded as they are anti-dilutive.

  Note 4 - Inventory.

     Inventories consist of the following:
                                           9/30/96  12/31/95
     Raw Materials                        $310,530  $459,474
     Finished Goods                        241,780   318,146
                                          $552,310  $777,620

  Note 5 - Stock Option Plan

     Effective June 28, 1996, the Company adopted a new 1996 Stock Option
  Plan which reserves an additional 250,000 shares of Class A common stock
  for future grant.  The terms of this plan are similar to the 1994 Stock
  Option Plan. Options to purchase 134,524 shares have been granted under the
  plan.
<PAGE>


  Item 2.   Management's Discussion and Analysis.


  First nine months of 1996 compared to first nine months of 1995

       Net sales increased by $117,000 or 13% from the first nine months of
  1995.  This increase in sales is due primarily to the shipment of two large
  QuantaSeps, a computer controlled liquid chromatography system.

       Gross margin decreased by $63,000 or 19% from the first nine months of
  the prior year, and as a percent of sales, decreased from 37% to 26%.  This
  decrease was attributable to higher material cost and development of
  software for the large QuantaSeps.

       Selling, general and administrative expenses increased by $326,000
  from $1,463,000 in the first nine months of 1995 to $1,789,000 in the first
  nine months of 1996.  The increase was primarily due to: the hiring of
  additional personnel in sales and marketing, corporate development and
  administration; additional expenses related to training, advertising and
  promotion, public relations, product evaluation and demonstration; and
  increased legal, accounting, insurance costs.

       Research and development expenses increased by $416,000 or 56% from
  $748,000 in the first nine months of 1995 to $1,164,000 in the first nine
  months of 1996.  The increase was attributable to expenditures related to
  the development of the Sepralac  process for dairy whey fractionation and
  expenditures related to the development of a special adsorbent SepraSorb 
  media.


  Third quarter 1996 compared to third quarter 1995.

       Net sales increased by $52,000 or 57% from the third quarter of 1995.
  The increase in sales was due to fees paid for evaluation of the whey
  process.

       Gross margin increased by $102,000 from a negative margin of $64,000
  in the third quarter of 1995 to a positive margin of $38,000 in the third
  quarter of 1996.  The increase was due to lower inventory reserves for slow
  moving inventory and the low cost of goods associated with the income
  derived from evaluation of the whey process.

       Selling, general and administrative expenses decreased by $30,000 from
  $594,000 in the third quarter of 1995 to $564,000 in the third quarter of
  1996.  The decrease was mainly due to reduction of the number of sales and
  marketing personnel compared to the number of personnel in 1995.

       Research and development expenses increased by $147,000 from $288,000
  in the third quarter of 1995 to $435,000 in the third quarter of 1996.  The
  increase was attributable to additional expenditures related to the
  development of Sepralac, SepraSorb and completion of the QuantaSep software
  and other related products.

  Inflation

       The Company believes that the impact of inflation on its operations
  since its inception has not been material. 


  Liquidity and Capital Resources.

       The Company had working capital of $1,472,000 on September 30, 1996
  and $4,233,000 on December 31, 1995.  The decrease in the working capital
  of $2,761,000 reflects the use of net cash in operating activities and
  leasehold improvements.

       Since the IPO, the Company has funded its working capital requirements
  substantially from the net cash proceeds from the IPO.  Prior to the IPO,
  the Company had funded its activities primarily through sales of its
  SuperfloR columns and QuantaSepR systems, loans from its principal share-
  holders, and private placements of securities.  The IPO generated net
  proceeds of $7,242,000 and the exercise by the underwriter of its over-
  allotment option generated additional net proceeds of $1,111,000.  

       From its inception in 1985 until the IPO, the Company's expenditures
  have exceeded its revenues.  Prior to the IPO, the Company financed its
  operations primarily through private equity placements in an aggregate
  amount of approximately $3,971,000, a substantial portion of which was
  purchased by H. Michael Schneider, the secretary and a director of the
  Company until October 1, 1995, and his affiliates, including Romic Environ-
  mental Technologies Corporation ("Romic"), an entity controlled by Mr.
  Schneider.  In addition, the Company has historically relied on customers
  to provide purchase price advances for development and scale-up of its
  radial flow chromatography columns.  As of September 30, 1996, the Company
  had shareholders' equity of approximately $2,001,000. 

       As of September 30, 1996, the Company had a working capital balance of
  approximately $1,472,000.  For the nine months of 1996, net cash used in
  operating activities was $2,603,000.  This negative cash out flow of
  working capital from operations must be reversed and working capital
  increased significantly in order for the Company to fund the level of
  manufacturing and marketing required to meet the anticipated growth in
  demand for its products from the pharmaceutical and biotechnology indus-
  tries during the next two years.  Moreover, the Company requires additional
  funds to extend the use of its technology to new applications within the
  pharmaceutical and biotechnology industries as well as to applications
  within the food and dairy and environmental industries and to attract the
  interest of strategic partners in one or more of these markets. 

       The decrease of $225,000 in inventory from December 31, 1995 to
  September  30, 1996 was due primarily to the shipment of two large Quanta-
  Sep Systems and the booking of inventory reserves for slow moving and
  demonstration inventory.

       As of September 30, 1996, the Company had no borrowings.  During
  fiscal year 1996, the Company is committed to pay approximately $245,000 as
  compensation for its current executive officers.  The Company expects to
  hire additional executive officers as the need arises.

       The Company's financing requirements may vary materially from those
  now planned because of results and changes in the focus and direction of
  research and development programs, relationships with strategic partners,
  competitive advances, technological change, changes in the Company's mar-
  keting strategy and other factors, many of which will be beyond the
  Company's control.  Based on the Company's current operating plan, the
  Company believes that its cash and cash equivalents, together with trade
  credit arrangements and cash flow generated from operations, will be
  sufficient to fund the Company's operations for the three month period
  following September 30, 1996.  Accordingly, the Company will have to obtain
  additional financing to support its operations.  There is no assurance,
  however, that such financing will be obtained.

       The Company's cash requirements may vary materially from those planned
  because of factors such as the timing of significant product orders,
  commercial acceptance of new products, patent developments and the intro-
  duction of competitive products.  The Company currently has no credit
  facility with a bank or other financial institution.  Historically, the
  Company and certain of its customers have jointly borne a substantial
  portion of developmental expenses on projects with such customers.  There
  can be no assurance that such sharing of expenses will continue.  The
  Company continues its efforts to increase sales of its existing products
  and to complete development and initiate marketing of its products and
  processes now under development. 

       The Company is seeking to enter into strategic alliances with corpo-
  rate partners in the industries comprising its primary target markets
  (biopharmaceutical, food, dairy and environmental management).  The Company
  hopes to enter into alliances that will provide funding to the Company for
  the development of new applications of its radial flow chromatography
  technology in return for royalty bearing licenses to the developed applica-
  tions.  No assurance can be given, however, that the terms of any such
  alliance will be successfully negotiated or that any such alliance will be
  successful. 

       The Company's Class A Common Stock, Class A Warrants, Class B Warrants
  and Units are quoted on the NASDAQ SmallCap Market and are listed on the
  Pacific Stock Exchange (Tier II).

       The Company entered into a lease for new facilities in Hayward,
  California with annual rent of $76,900 and relocated its facilities in
  February 1996.

       From time to time, the Company may publish forward-looking statements
  relating to such matters as anticipated financial performance, business
  prospects, technological developments, new products, research and develop-
  ment activities and similar matters.  The Private Securities Litigation
  Reform Act of 1995 provides a safe harbor for forward-looking statements. 
  In order to comply with the terms of the safe harbor, the Company notes
  that a variety of factors could cause the Company's actual results and
  experience to differ materially from the anticipated results or other
  expectations expressed in the Company's forward-looking statements.  The
  risks and uncertainties that may affect the operations, performance,
  development and results of the Company's business include the following: 
  the volatility of revenues and negative cash out flow discussed above; and
  changes in the focus and direction of research and development programs,
  relationships with strategic partners, competitive advances, technological
  change, changes in the Company's marketing strategy and other factors, many
  of which will be beyond the Company's control.




                          PART II - OTHER INFORMATION

  Item 1    Legal Proceedings.                 Not Applicable.

  Item 2.   Changes in Securities                   Not Applicable.

  Item 3.   Defaults Upon Senior Securities         Not Applicable.

  Item 4.   Submission of Matters to a Vote of Security Holders.   Not
  Applicable

  Item 5.   Other Information.                 Not Applicable.

  Item 6.   Exhibits and Reports on Form 8-K

         (a)     Exhibits.
            The following exhibits are filed as part of this Report:
                    3.1(1)         Restated Articles of Incorporation of the
                                   Company, as amended to date
                    3.2(2)         Restated Bylaws, as amended to date
                    4.1(1)         Form of Warrant Agreement among the Com-
                                   pany, the Underwriter and American Stock
                                   Transfer Company, including Forms of Class
                                   A Warrant Certificates and Class B Warrant
                                   Certificates
                    4.2(1)         Form of Unit Option Agreement between the
                                   Company and the Underwriter
                    4.3(1)         Form of Specimen Class A Common Stock Cer-
                                   tificate
                    4.4(1)         Form of Specimen Class B Common Stock
                                   Certificate
                    4.5(1)         Form of Specimen Class E Common Stock
                                   Certificate
                    4.6(1)         Bridge Warrant Agreement, including forms
                                   of Bridge Warrant Certificate
                    10.1(2)        Lease dated July 3, 1995 between Hayward
                                   Business Park, Inc. and the Company
                    10.2(1)        Employment Agreement between the Company
                                   and Vinit Saxena effective September 1,
                                   1994
                    10.3(1)        Employment Agreement between the Company
                                   and Q. R. Miranda effective September 1,
                                   1994
                    10.4(1)        Form of Indemnification Agreement between
                                   the Company and each director and officer
                                   of the Company
                    10.5(1)        Convertible Promissory Notes and Warrants
                    10.6(1)        1994 Stock Option Plan
                    10.7(3)        Master Purchasing Agreement with Thermax
                                   Limited dated April 23, 1996
                    10.6(4)        1996 Stock Option Plan


                    (1)   These exhibits which are incorporated herein by
                          reference were previously filed by the Company as
                          exhibits to its Registration Statement on Form SB-
                          2 and Amendments Nos. 1, 2, 3, 4 and 5 and Post
                          Effective No. 1 (File No. 33-86888).
                    (2)   These exhibits which are incorporated herein by
                          reference were previously filed by the Company as
                          exhibits to its Quarterly Report on Form 10-QSB
                          for the quarter ended September 30, 1995.
                    (3)   This exhibit which is incorporated herein by
                          reference was previously filed by the Company as
                          an exhibit to its Quarterly Report on Form 10-QSB
                          for the quarter ended March 31, 1996.
                    (4)   This exhibit which is incorporated herein by
                          reference was previously filed by the Company as
                          an exhibit to its Quarterly Report on Form 10-QSB
                          for the quarter ended June 30, 1996.

                    Exhibits not listed above have been omitted because they
                    are inapplicable or because the required information is
                    given in the financial statements or notes thereto.

                (b)  Reports on Form 8-K.

                No reports on Form 8-K were filed during the quarter for
          which this report is filed.



                                      SIGNATURES

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



                                        SEPRAGEN CORPORATION

          Date: November 14, 1996       By:    /s/Vinit Saxena                
                              
                                        Vinit Saxena
                                        Chief Executive Officer, President
                                        and Principal Financial and Chief
                                        Accounting Officer