<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended June 30, 1998

                        Commission file number 000-21215

                                PROGENITOR, INC.
             (Exact name of registrant as specified in its charter)

           DELAWARE                                             31-1344193
(State or other jurisdiction of                              (I.R.S. employer
incorporation or organization)                            identification number)

                              4040 CAMPBELL AVENUE
                              MENLO PARK, CA 94025
                                 (650) 617-0880
          (Address, including zip code, and telephone number, including
             area code, of registrant's principal executive offices)

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:

           Class                                    Outstanding at July 31, 1998
-----------------------------                       ----------------------------
Common Stock, $.001 par value                           13,741,565 shares



<PAGE>   2

                                PROGENITOR, INC.

                                      INDEX

<TABLE>
<CAPTION>
                                                                                       PAGE
                                                                                       ----
<S>      <C>                                                                           <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

         Condensed Consolidated Balance Sheets -
           June 30, 1998 and September 30, 1997                                          3

         Condensed Consolidated Statements of Operations-three and nine month
           periods ended June 30, 1998 and June 30, 1997, and the period from
           May 8, 1992 (Date of Inception) to June 30, 1998                              4


         Condensed Consolidated Statements of Cash Flows-nine month periods
           ended June 30, 1998 and June 30, 1997, and the period from May 8,
           1992 (Date of Inception) to June 30, 1998                                     5


         Notes to the Unaudited Condensed Consolidated Financial Statements              6

Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                                     9

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                              13

Item 2.  Changes in Securities and Use of Proceeds                                      13

Item 5.  Other Matters                                                                  14

Item 6.  Exhibits and Reports on Form 8-K                                               14

SIGNATURES                                                                              15
</TABLE>

                                       2

<PAGE>   3
PART I.  FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

                 PROGENITOR, INC. (A DEVELOPMENT STAGE COMPANY)

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                           June 30,             September 30,
                                                            1998                    1997
                                                         ------------           ------------
<S>                                                      <C>                    <C>         
ASSETS

Current assets:
  Cash and cash equivalents                              $  6,202,000           $ 19,673,000
  Short-term investments                                    2,993,000                     --
  Accounts receivable                                         216,000                130,000
  Prepaid expenses and other current assets                   305,000                421,000
                                                         ------------           ------------
    Total current assets                                    9,716,000             20,224,000
                                                         ------------           ------------

Property and equipment, net                                 2,499,000              1,919,000
Notes receivable-employees, net                               197,000                480,000
Intangible assets, net                                        731,000                962,000
                                                         ------------           ------------
    Total assets                                         $ 13,143,000           $ 23,585,000
                                                         ============           ============


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                       $    304,000           $  1,793,000
  Accrued liabilities                                       2,724,000              4,148,000
  Current portion of long-term debt                           167,000                     --
  Capital lease obligations, current                          952,000                762,000
                                                         ------------           ------------
    Total current liabilities                               4,147,000              6,703,000
                                                         ------------           ------------

Long-term debt                                              1,583,000                    --
Capital lease obligations, non-current                      1,140,000                942,000
                                                         ------------           ------------
    Total liabilities                                       6,870,000              7,645,000
                                                         ------------           ------------

Stockholders' equity:
  Preferred stock                                                  --                     --
  Common stock                                                 14,000                 13,000
  Stock subscription promissory note receivable              (500,000)            (1,000,000)
  Additional paid-in-capital                               80,052,000             79,651,000
  Deficit accumulated during development stage            (73,293,000)           (62,724,000)
                                                         ------------           ------------
    Total stockholders' equity                              6,273,000             15,940,000
                                                         ------------           ------------
    Total liabilities and stockholders' equity           $ 13,143,000           $ 23,585,000
                                                         ============           ============

</TABLE>

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

                                       3

<PAGE>   4


                 PROGENITOR, INC. (A DEVELOPMENT STAGE COMPANY)

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                                                                               MAY 8, 1992
                                              THREE MONTHS ENDED                  NINE MONTHS ENDED              (DATE OF
                                                   JUNE 30,                            JUNE 30,                INCEPTION) TO
                                       ------------------------------      ------------------------------
                                           1998              1997              1998              1997          JUNE 30, 1998
                                       ------------      ------------      ------------      ------------      ------------
<S>                                    <C>               <C>               <C>               <C>               <C>         
Revenues                               $    105,000      $    232,000      $    365,000      $  1,091,000      $  5,660,000

Operating expenses:
  Research and development                2,990,000         1,147,000         8,510,000         3,298,000        30,078,000
  Write-off of acquired in-process
    research and development                     --                --                --                --        21,092,000
  General and administrative                828,000           469,000         2,772,000         1,695,000        11,438,000
  Nonrecurring expenses                          --                --                --                --         1,507,000

                                       ------------      ------------      ------------      ------------      ------------
    Total operating expenses              3,818,000         1,616,000        11,282,000         4,993,000        64,115,000
                                       ------------      ------------      ------------      ------------      ------------

Loss from operations                     (3,713,000)       (1,384,000)      (10,917,000)       (3,902,000)      (58,455,000)

Nonrecurring expense                             --                --                --                --          (974,000)
Interest and other income                   139,000                --           540,000                --           795,000
Interest expense - related party                 --          (249,000)               --          (514,000)       (1,940,000)
Interest expense - other                    (98,000)          (17,000)         (192,000)          (39,000)         (436,000)

                                       ------------      ------------      ------------      ------------      ------------
      Net loss                         $ (3,672,000)     $ (1,650,000)     $(10,569,000)     $ (4,455,000)     $(61,010,000)
                                       ============      ============      ============      ============      ============

Net loss per common share:
    Basic and diluted                  $      (0.27)     $      (0.57)     $      (0.78)     $      (1.54)
                                       ============      ============      ============      ============

Shares used in computing net
    loss per common share:
    Basic and diluted                    13,736,535         2,887,217        13,586,079         2,886,561
                                       ============      ============      ============      ============

</TABLE>

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


                                       4


<PAGE>   5


                 PROGENITOR, INC. (A DEVELOPMENT STAGE COMPANY)

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                          MAY 8, 1992
                                                           NINE MONTHS ENDED               (DATE OF
                                                                JUNE 30,                 INCEPTION) TO
                                                     ------------------------------
                                                         1998              1997          JUNE 30, 1998
                                                     ------------      ------------      ------------
<S>                                                  <C>               <C>               <C>          
Cash flows from operating activities:
Net loss                                             $(10,569,000)     $ (4,455,000)     $(61,010,000)
Adjustments to reconcile net loss to net cash
  used in operating activities:
  Depreciation and amortization                         1,100,000           221,000         2,970,000
  Gain on sale of equipment                                    --                --           (23,000)
  Noncash expense for anti-dilution
    stock issuances                                            --                --           763,000
  Write-off of acquired in-process
    research and development                                   --                --        21,092,000
  Changes in operating assets and liabilities:
    Accounts receivable                                   (86,000)               --          (216,000)
    Prepaid expenses and other current assets             116,000           (55,000)          (56,000)
    Notes receivable-employees, net                       283,000             1,000          (128,000)
    Accounts payable                                   (1,489,000)          399,000        (2,311,000)
    Accrued liabilities                                (1,424,000)         (195,000)        1,015,000
    Accrued interest-related party                             --           514,000         1,912,000
                                                     ------------      ------------      ------------
    Cash used in operating activities                 (12,069,000)       (3,570,000)      (35,992,000)
                                                     ------------      ------------      ------------

Cash flows from investing activities:
  Purchases of short-term investments                  (2,993,000)               --        (2,993,000)
  Purchases of property and equipment                  (1,448,000)         (206,000)       (3,859,000)
  Proceeds from sale of equipment                              --                --            54,000
  Advances under convertible bridge
    promissory note                                            --        (3,245,000)       (3,770,000)
  Cash paid in purchase of Mercator                            --                --          (763,000)
                                                     ------------      ------------      ------------
    Cash used in investing activities                  (4,441,000)       (3,451,000)      (11,331,000)
                                                     ------------      ------------      ------------

Cash flows from financing activities:
  Proceeds from note payable-related party                     --         4,813,000        20,555,000
  Proceeds from convertible debenture-related
    party                                                      --                --           437,000
  Proceeds from bridge loan-related party                      --         3,245,000         3,665,000
  Proceeds from long-term debt                          1,900,000                --         1,900,000
  Deferred offering and acquisition costs                      --        (1,059,000)               --
  Proceeds from issuance of stock, net                    251,000             6,000        25,246,000
  Proceeds from payments received on stock
    subscription note                                     500,000                --           500,000
  Proceeds from capital lease financings                  890,000           295,000         2,584,000
  Principal payments on capital lease financings         (502,000)         (251,000)       (1,362,000)
                                                     ------------      ------------      ------------
    Cash provided by financing activities               3,039,000         7,049,000        53,525,000
                                                     ------------      ------------      ------------

Net increase (decrease) in cash and cash
  equivalents                                         (13,471,000)           28,000         6,202,000
Cash and cash equivalents, beginning of period         19,673,000            22,000                --

                                                     ------------      ------------      ------------
Cash and cash equivalents, end of period             $  6,202,000      $     50,000      $  6,202,000
                                                     ============      ============      ============

</TABLE>

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


                                       5
<PAGE>   6

                 PROGENITOR, INC. (A DEVELOPMENT STAGE COMPANY)

       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


1.   Basis of Presentation

     The unaudited condensed consolidated financial statements included herein
have been prepared by Progenitor, Inc. (the "Company") in accordance with
generally accepted accounting principles for interim information and pursuant to
the rules and regulations of the Securities and Exchange Commission. In the
opinion of management, the accompanying unaudited condensed consolidated
financial statements include all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows of the Company. The condensed consolidated
financial statements included herein should be read in conjunction with the
audited consolidated financial statements and the notes thereto included in the
Company's Form 10-K for the fiscal year ended September 30, 1997. Results for
the interim period are not necessarily indicative of the results for any other
interim period or for the full fiscal year.

     The unaudited condensed consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. The Company
is in the development stage and has incurred losses from operations and an
accumulated deficit that raise substantial doubt about its ability to continue
as a going concern.

     The Company expects negative cash flow from operations to continue for the
foreseeable future. The Company will require substantial additional funds to
continue research and development, conduct preclinical studies and clinical
trials, conduct activities relating to commercialization of rights it has
retained in collaborative or license agreements, if any, and expand
administrative capabilities. The Company estimates that, at its planned rate of
spending, its existing cash and cash equivalents will be sufficient to meet its
funding requirements until approximately March 1999. In order to achieve this
result, however, the Company will need to closely manage the rate of
expenditures for all of its research programs. Although the Company anticipates
that its existing cash balances will be sufficient to meet its funding
requirements for its primary research programs for approximately the next nine
months, the Company may be required to curtail the expansion of, or to reduce
the level of expenditures for, certain of its other research programs in the
future or to seek corporate collaborations with respect to such programs at an
earlier stage than would be required if the Company had greater financial
resources or to obtain other funding. There can be no assurance that any such
corporate collaboration will be obtained on terms favorable to the Company or at
all or that any such funding will be available on terms favorable to the Company
or at all. In addition, there can be no assurance that the Company's assumptions
regarding its future levels of expenditures and operating losses will prove
accurate.

     The Company's future funding requirements will depend on many factors,
including any expansion or acceleration of the Company's research and
development programs; the results of research and development, preclinical
studies and clinical trials conducted by the Company or its collaborative
partners or licensees, if any; the acquisition and licensing of products and
technologies or businesses, if any; the Company's ability to establish and
maintain corporate relationships and academic collaborations; the Company's
ability to manage growth; competing technological and market developments; the
time and costs involved in filing, prosecuting, defending and enforcing patent
and intellectual property claims; the receipt of licensing or milestone fees
from any current or future collaborative and licensing arrangements, if
established; the continued funding of governmental research grants; the timing
of regulatory approvals, if any; and other factors. To the extent undertaken by
the Company, the time and costs involved in conducting preclinical studies and
clinical trials, seeking regulatory approvals, and 


                                       6

<PAGE>   7

scaling-up manufacturing and commercialization activities also would increase 
the Company's funding requirements.

     The Company will need to raise substantial additional capital to fund
operations beyond March 1999. The Company is currently seeking additional
funding through public or private equity or debt financing and collaborative
arrangements. There can be no assurance that additional financing will be
available when needed, or that, if available, such financing will be available
on terms acceptable to the Company. If additional funds are raised by issuing
equity securities, dilution to existing stockholders will result. In addition,
in the event that additional funds are obtained through collaborative or license
arrangements, such arrangements may require the Company to relinquish rights to
certain of its technologies or potential products that it would otherwise seek
to develop or commercialize itself. There can be no assurance that the Company
will be able to successfully consummate a debt or equity financing.

     These factors raise substantial doubt about the Company's ability to
continue as a going concern. Accordingly, the unaudited condensed consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. The effects of any such adjustments, if necessary,
could be material.

2.   Short-Term Investments

     The Company has classified its short-term investments as
available-for-sale. Such investments are recorded at fair value and unrealized
gains and losses, when material, are reported as a separate component of
stockholders' equity. Realized gains and losses on sales of such securities are
reported in earnings and computed using the specific identification method.

3.   Net Loss per Share

     Effective December 31, 1997, the Company adopted Financial Accounting
Standards Board No. 128 "Earnings Per Share" (EPS) and, accordingly, all prior
periods have been restated. Basic EPS is computed as net income (loss) divided
by the weighted average number of common shares outstanding for the period.
Stock options to purchase 2,498,965 and 736,489 shares of common stock at prices
ranging from $0.20 to $1.875 and from $.20 to $5.50 were outstanding at June 30,
1998 and 1997, respectively, and were not included in the calculation of
earnings per share as their effect was anti-dilutive. Additionally, at June 30,
1997, 2,369,496 shares of convertible preferred stock, representing 3,074,767
shares of common stock on an as-converted basis, were excluded from the
calculation of earnings per share as their effect was anti-dilutive.

4.   Stock Subscription Promissory Note Receivable

     In December 1997, Amgen Inc. paid $500,000 of the outstanding balance of
its stock subscription promissory note receivable by the Company, in accordance
with the terms of the note. The remainder of the note is scheduled to be repaid
in December 1998.

5.   Long Term Financing Arrangements

     On May 13, 1998, the Company entered into two agreements with Transamerica
Business Credit ("Transamerica"). The first agreement relates to an equipment
lease line of $1.2 million, through which the Company has received $890,000 in a
sale-leaseback transaction. Under the second agreement, the Company received
$1.9 million, representing the total future license fees due under an agreement
which called for license fees to be received over six years. The Company has
pledged these guaranteed receipts as collateral for the loan along with certain
other personal and intellectual property. The note carries an interest rate of
14.75% per year. In conjunction with the agreement, the Company issued
Transamerica warrants to purchase 108,571 shares of common stock at a strike
price of $1.75 per share. The warrants had a fair value of approximately $1.38
per warrant at the time of issuance. The fair value has been reflected in the
financial statements as a 


                                       7

<PAGE>   8
discount to the debt and will be accreted and recorded as interest expense over
the life of the note. The warrants expire on May 13, 2005.

6.   Revenue

     Revenue in the three and nine month periods ended June 30, 1998 included
$19,000 in royalties under a licensing agreement with SmithKline Beecham
Clinical Laboratories. The Company recognizes revenue under the agreement when
earned. Also included in revenue in the three and nine month periods is $86,000
and $346,000, respectively, of grant revenue under the Company's ATP grant,
which expired in May 1998.


                                       8

<PAGE>   9

                 PROGENITOR, INC. (A DEVELOPMENT STAGE COMPANY)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
--------------------------------------------------------------------------------

     The following discussion is intended to assist in the understanding and
assessment of significant changes and trends related to the results of
operations and financial condition of Progenitor, Inc., ("Progenitor" or the
"Company"). This discussion and analysis should be read in conjunction with the
Company's Unaudited Condensed Consolidated Financial Statements and Notes
thereto included herein, and with the Consolidated Financial Statements and
Notes thereto included in the Company's Form 10-K for the fiscal year ended
September 30, 1997.

     In addition to historical information, the following management's
discussion and analysis includes certain forward-looking statements regarding
events and financial trends which may affect the Company's future operating
results and financial position. These forward-looking statements include but are
not limited to statements regarding: future sources of revenue; uncertainty of
product development; uncertainty of additional funding; and liquidity and
capital resources. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to publicly release the result of any revisions to
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.

     The forward-looking statements included herein are also subject to a number
of other risks and uncertainties that could cause the Company's actual results
and financial position to differ materially from those anticipated in the
forward-looking statements. Such risks and uncertainties include, but are not
limited to: uncertainties relating to the technological approaches of the
Company; history of operating losses and anticipation of future losses;
uncertainty of product development; need for additional capital and uncertainty
of additional funding; dependence on collaborators and licensees; intense
competition and rapid technological change; uncertainty of patents and
proprietary rights; management of growth, and risks of acquiring new
technologies; uncertainties related to clinical trials; government regulation
and uncertainty of obtaining regulatory approval; dependence on key personnel;
dependence on research collaborators and scientific advisors; control of the
Company by, and potential conflicts of interest with, Interneuron
Pharmaceuticals, Inc. ("Interneuron"); uncertainty of health care reform
measures and third-party reimbursement; risk of product liability; no assurance
of an active trading market and potential volatility of trading prices; possible
delisting from the Nasdaq National Market and market illiquidity; redemption of
warrants; current prospectus required to exercise the warrants; anti-takeover
considerations; hazardous and radioactive materials and environmental matters;
and the absence of dividends. Due to the foregoing factors, it is possible that
in some future period the Company's results of operations may be below the
expectations of public market analysts and investors. These and other risks and
uncertainties related to the Company's business are described in detail in the
Company's Form 10-K for the fiscal year ended September 30, 1997 under the
caption "Factors That May Affect Future Financial Results."

OVERVIEW

     A development stage company, Progenitor was incorporated in February 1992
and commenced operations in May 1992. Progenitor has devoted substantially all
of its resources since inception to research and development programs. To date,
all of Progenitor's revenues have resulted from payments from collaborators and
licensees and a grant from the U.S. Department of Commerce's National Institute
of Standards and Technology Advanced Technology Program ("ATP") that was awarded
to Progenitor in November 1994. Royalties, payments from collaborators, license
fees, payments under governmental grants and investment income, in each case, if
any, are expected to be the only sources 


                                       9

<PAGE>   10

of revenue for the foreseeable future. Certain payments under collaborative and
license arrangements are contingent upon the Company meeting certain milestones.
Payments under collaborative or licensing arrangements, if any, will be subject
to significant fluctuation in both timing and amount, and therefore the
Company's results of operations for any period may not be comparable to the
results of operations for any other period. The Company has not yet received any
significant royalties or other revenues from the sale of products or services
and does not expect to receive significant revenues from sales of products for
the next several years, if at all. As of June 30, 1998, Progenitor had total
stockholders' equity of $6.3 million, including an accumulated deficit of $73.3
million.

     Significant discovery, research and development efforts will be required
prior to the time any of the Company's gene discoveries may lead to product
candidates or result in products that may be brought to the market, if at all.
Products, if any, resulting from the Company's research and development programs
are not expected to be commercially available for a number of years, if at all,
even if any are successfully developed and proven safe and effective.
Significant additional research and development efforts and extensive
preclinical studies and clinical trials will be required prior to submission of
any regulatory application for commercial use.

RESULTS OF OPERATIONS

     The Company recognized ATP grant revenue of $86,000 and $346,000 in the
three and nine month periods ended June 30, 1998 respectively. In the comparable
periods of the prior year total revenue was $232,000 and $1,091,000,
respectively. Other than a $500,000 milestone payment from Chiron in the nine
month period ended June 30, 1997, revenues in the 1997 periods were derived from
the ATP grant. The Company's ATP grant expired in May 1998. Revenue in the three
and nine month periods of 1998 also included $19,000 in royalties under a
licensing agreement with SmithKline Beecham Clinical Laboratories.

     Research and development ("R&D") expenses increased 161% to $3.0 million in
the quarter ended June 30, 1998 from $1.1 million in the quarter ended June 30
1997. R&D expenses increased 158% to $8.5 million in the nine month period ended
June 30, 1998 from $3.3 million in the comparable period in the prior year. The
increase is primarily the result of increased staffing and research activity due
to the acquisition of Mercator Genetics, Inc. ("Mercator"). The Company expects
R&D expenses in the remainder of fiscal 1998 to continue to exceed 1997 levels
as a result of the Mercator acquisition. Further increases in R&D expenses in
future periods based on the expansion or proliferation of research programs will
depend on the availability of capital.

     General and administrative ("G&A") expenses increased 77% to $828,000 in
the quarter ended June 30, 1998 from $469,000 in the quarter ended June 30,
1997. G&A expenses increased 64% to $2.8 million in the nine month period ended
June 30, 1998 from $1.7 million in the comparable period in the prior year. The
increase is due to higher headcount resulting from the Mercator acquisition, as
well as incremental corporate expenses incurred as a result of operating as a
publicly held company. The Company expects G&A expenses to continue to increase
in the future, depending on the level of R&D spending.

     Related party interest expense of $249,000 and $514,000 in the three and
nine month periods ended June 30 1997, respectively, arose from a promissory
note owed Interneuron until the Company's initial public offering (the
"Offering") in August 1997. Other interest expense increased to $98,000 and
$192,000 in the three and nine month periods ended June 30, 1998, respectively,
from $17,000 and $39,000 in the comparable three and nine month periods,
respectively, in the prior year, due to the Company's assumption of Mercator's
capital lease obligations, and, to a lesser extent, the new long term financing
obligations entered into with Transamerica in May 1998 (see note 5 in Notes to
Condensed Consolidated Financial Statements in Part I, Item 1). During the three
and 


                                       10

<PAGE>   11

nine month periods ended June 30, 1998 the Company recorded $139,000 and
$540,000, respectively, of interest and other income primarily from interest
earned on cash balances.


LIQUIDITY AND CAPITAL RESOURCES

     As of June 30, 1998, the Company had cash, cash equivalents and short-term
investments of $9.2 million, a decrease of $10.5 million from September 30,
1997. The Company used $12.1 million of cash to fund operating activities, and
purchased property and equipment of $1.4 million. The Company received proceeds
of $2.8 million from long term debt and capital lease financings from
Transamerica. Accounts payable and accrued liabilities decreased $2.9 million in
the nine month period ended June 30, 1998, resulting from the payment of
liabilities outstanding at the end of the 1997 fiscal year relating to the
Mercator acquisition and the Offering, both of which were completed in the
fourth quarter of fiscal 1997.

     The Company expects negative cash flow from operations to continue for the
foreseeable future. The Company will require substantial additional funds to
continue research and development, conduct preclinical studies and clinical
trials, conduct activities relating to commercialization of rights it has
retained in collaborative or license agreements, if any, and expand
administrative capabilities. The Company estimates that, at its planned rate of
spending, its existing cash and cash equivalents will be sufficient to meet its
funding requirements until approximately March 1999. In order to achieve this
result, however, the Company will need to closely manage the rate of
expenditures for all of its research programs. Although the Company anticipates
that its existing cash balances will be sufficient to meet its funding
requirements for its primary research programs for approximately the next nine
months, the Company may be required to curtail the expansion of, or to reduce
the level of expenditures for, certain of its other research programs in the
future or to seek corporate collaborations with respect to such programs at an
earlier stage than would be required if the Company had greater financial
resources or to obtain other funding. There can be no assurance that any such
corporate collaboration will be obtained on terms favorable to the Company or at
all or that any such funding will be available on terms favorable to the Company
or at all. In addition, there can be no assurance that the Company's assumptions
regarding its future levels of expenditures and operating losses will prove
accurate.

     The Company's future funding requirements will depend on many factors,
including any expansion or acceleration of the Company's research and
development programs; the results of research and development, preclinical
studies and clinical trials conducted by the Company or its collaborative
partners or licensees, if any; the acquisition and licensing of products and
technologies or businesses, if any; the Company's ability to establish and
maintain corporate relationships and academic collaborations; the Company's
ability to manage growth; competing technological and market developments; the
time and costs involved in filing, prosecuting, defending and enforcing patent
and intellectual property claims; the receipt of licensing or milestone fees
from any current or future collaborative and licensing arrangements, if
established; the continued funding of governmental research grants; the timing
of regulatory approvals, if any; and other factors. To the extent undertaken by
the Company, the time and costs involved in conducting preclinical studies and
clinical trials, seeking regulatory approvals, and scaling-up manufacturing and
commercialization activities also would increase the Company's funding
requirements.

     The Company will need to raise substantial additional capital to fund
operations beyond March 1999. The Company is currently seeking additional
funding through public or private equity or debt financing and collaborative
arrangements. There can be no assurance that additional financing will be
available when needed, or that, if available, such financing will be available
on terms acceptable to the Company. If additional funds are raised by issuing
equity securities, dilution to existing stockholders will result. In addition,
in the 


                                       11

<PAGE>   12

event that additional funds are obtained through collaborative or license
arrangements, such arrangements may require the Company to relinquish rights to
certain of its technologies or potential products that it would otherwise seek
to develop or commercialize itself. There can be no assurance that the Company
will be able to successfully consummate a debt or equity financing.

IMPACT OF THE YEAR 2000 ISSUE

    The Year 2000  issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any programs that
have time-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a major system failure or
miscalculations. The Company is currently engaged in a two-phase process to
evaluate its internal status with respect to the Year 2000 issue. In the first
phase, which the Company expects to complete in the first quarter of fiscal
1999, the Company is conducting an evaluation of its systems, including both
information technology ("IT") systems and non-IT systems such as hardware
containing embedded technology, for Year 2000 compliance. The Company has
completed a significant portion of this phase to date, and systems that have
been evaluated are either Year 2000 compliant or are expected to be made
compliant at an immaterial cost to the Company. Although the Company does not
expect that the impact of the Year 2000 issue will be material in systems still
under evaluation, there can be no assurance that the Company will not discover
Year 2000 issues in the course of its evaluation process that would have a
material adverse effect  on the business, financial condition or results of
operations of the Company. 

    Phase two of the process, which is expected to be completed during the
fourth quarter of fiscal 1999, will involve taking any needed corrective action
to bring systems into compliance and to develop a contingency plan in the event
any non-compliant critical systems remain by January 1, 2000. As part of this
phase, the Company will attempt to quantify the impact, if any, of the failure
to complete any necessary corrective action. Although the Company cannot
currently estimate the magnitude of such impact, if systems material to the
Company's operations have not been made Year 2000 compliant upon completion of
this phase, the Year 2000 issue could have a material adverse effect on the
Company's business, financial condition and results of operations.

    To date, the costs incurred by the Company with respect to this process have
not been material. Future costs will remain difficult to estimate until the
completion of phase one; however, the Company does not currently anticipate that
such costs will be material.

    Concurrently with the two-phase analysis of its internal systems, the
Company has begun to survey third-party entities with which the Company
transacts business, including critical vendors and financial institutions, for
Year 2000 compliance. The Company expects to complete this survey in the second
quarter of fiscal 1999. At this time the Company cannot estimate the effect, if
any, that non-compliant systems at these entities could have on the business,
financial condition or results of operations of the Company, and there can be no
assurance that the impact, if any, will not be material.



                                       12

<PAGE>   13



PART II.  OTHER INFORMATION
--------------------------------------------------------------------------------

Item 1. LEGAL PROCEEDINGS

     The Company is not currently a party to any litigation that could have a
material adverse effect on its business, financial condition or results of
operations. However, from time to time the Company may be threatened with, or
named as a defendant in, lawsuits, including administrative claims and lawsuits
brought by employees or former employees.

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     (d)  Use of Proceeds

     As described above in "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the Company has completed the Offering.
The following information relates to the use of proceeds of the Offering:

     (1) Effective Date of Registration Statement and Commission File Number.
The Company's Registration Statement on Form S-1, File No. 333-05369 (the
"Registration Statement"), relating to the Offering, became effective on August
6, 1997.

     (2) Offering Date. The initial closing date of the Offering was August 12,
1997. A subsequent closing in connection with the partial exercise by the
Underwriters of the Offering of their over-allotment option occurred on
September 10, 1997.

     (3) Managing Underwriters. Lehman Brothers Inc.

     (4) Securities Registered and Proposed Aggregate Offering Price. The
Company registered a total of 3,162,500 Units, each Unit consisting of one share
of Common Stock ("Unit Share") and one Warrant, and 3,162,500 shares of Common
Stock issuable upon exercise of the Warrants (the "Warrant Shares"). The
proposed maximum aggregate offering price was $37,950,000 for the Units and
$56,925,000 for the Warrant Shares.

     (5) Securities Sold. A total of 2,875,000 Units were sold pursuant to the
Offering. This consisted of 2,750,000 Units sold on August 12, 1997 upon the
initial closing of the Offering, and 125,000 Units sold on September 10, 1997
pursuant to the partial exercise, at the request of Lehman Brothers Inc. as
managing underwriter, of the over-allotment option granted to the Underwriters.
None of the Warrants had been exercised as of August 14, 1998, and consequently
no Warrant Shares had been sold. The Company intends to maintain the
effectiveness of the Registration Statement to the extent required by the terms
of the Warrants with respect to the 2,875,000 Warrant Shares issuable upon
exercise of the Warrants actually sold.

     (6) Aggregate Gross Proceeds, Expenses and Aggregate Net Proceeds. The sale
of the 2,875,000 Units generated aggregate gross proceeds of $20,125,000,
consisting of $15,453,125 from the sale of the Unit Shares (at a price of $5.375
per share) and $4,671,875 from the sale of the Warrants (at a price of $1.625
per Warrant). The aggregate net proceeds to the Company from the sale of the
2,875,000 Units were approximately $17,200,000, after deducting underwriting
discounts and commissions of approximately $1,200,000 and estimated expenses of
the Offering of approximately $1,700,000 payable by the Company. The Company
also received $4,500,000 in cash and a $1,000,000 promissory note from the sale
of the Amgen Shares ($500,000 of which was paid by Amgen in December 1997), and
approximately $67,000 in cash from the sale of 25,000 shares of Common Stock to
The Ohio University Foundation, pursuant to a stock purchase right.

     (7) Use of Proceeds. Through June 30, 1998, the Company used $9,529,000 of
the net proceeds of the Offering, together with the cash proceeds received from
the sale of the 


                                       13

<PAGE>   14

Amgen Shares and the sale of 25,000 shares of Common Stock to The Ohio
University Foundation, for research and development, and $3,053,000 of such
proceeds for administration. In addition, the Company used a portion of such net
proceeds as follows: (i) approximately $579,000 to pay expenses relating to
employee benefit and retention plans relating to the Acquisition; (ii)
approximately $2,776,000 legal, accounting and other costs incurred in the
Acquisition and related Form S-4 registration statement; (iii) approximately
$372,000 to facilitate employee relocation to Mercator's facility in California;
(iv) approximately $389,000 for other costs such as benefit costs, the
consolidation of operations, the elimination of duplicate systems and
facilities, and other integration costs; and (v) approximately $1,448,000 for
purchases of property and equipment. The Company anticipates using the balance
of such net proceeds primarily for research and development, and also for the
expansion or upgrade of facilities for the acquisition of equipment and for
working capital and other general corporate purposes. The Company also may use
such proceeds for other purposes, including the acquisition of technology
rights, products, equipment, businesses or assets of other companies. At June
30, 1998, the Company had approximately $4,852,000 of such proceeds remaining,
held in cash and cash equivalents.

     The amounts actually expended for each purpose, including the allocation of
funding among the Company's research programs, will depend on numerous factors,
including any expansion or acceleration and the breadth of the Company's
research and development programs; the results of research and development,
preclinical studies and clinical trials conducted by the Company or its
collaborative partners or licensees, if any; the acquisition and licensing of
products and technologies or businesses, if any; the Company's ability to
establish and maintain corporate relationships and academic collaborations; the
Company's ability to manage growth; competing technological and market
developments; the time and costs involved in filing, prosecuting, defending and
enforcing patent and intellectual property claims; the receipt of licensing or
milestone fees from any current or future collaborative and license
arrangements, if established; the continued funding of governmental research
grants; the timing of regulatory approvals; and other factors.

ITEM 5. OTHER MATTERS

     Any stockholder proposal submitted with respect to the Company's 1999
Annual Meeting of Stockholders, which proposal is submitted outside the
requirements of rule 14a-8 under the Securities Exchange Act of 1934, will be
considered untimely for purposes of Rule 14a-4 and Rule 14a-5 if notice
thereof is received by the Company after December 19, 1998.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          EXHIBIT INDEX

<TABLE>
<CAPTION>
          Exhibit No.         Description
          -----------         -----------
<S>                     <C>
             4.7        Stock Subscription Warrant issued to Transamerica
                        Business Credit Corporation, dated May 13, 1998

            10.45       Master Lease Agreement, dated as of May 1, 1998, by
                        and between the Company and Transamerica Business
                        Credit Corporation.

            10.46       Security Agreement, dated as of May 4, 1998, by and
                        between the Company and Transamerica Business Credit
                        Corporation.

            10.47       Sale and Leaseback Agreement, dated as of May 6, 1998,
                        by and between the Company and Transamerica Business
                        Credit Corporation.

            27.1        Financial Data Schedule
</TABLE>


     (b)  Reports on Form 8-K

          None.


                                       14

<PAGE>   15

                                   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.

                                           PROGENITOR, INC.

August 14, 1998                            /s/ Mark N.K. Bagnall
---------------                            ---------------------------
      Date                                 Mark N.K. Bagnall
                                           Vice President, Finance
                                           and Chief Financial Officer



                                       15

<PAGE>   16

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit No.                   Description
-----------                   -----------
<S>                    <C>
 4.7        Stock Subscription Warrant issued to Transamerica
            Business Credit Corporation, dated May 13, 1998.

10.45       Master Lease Agreement, dated as of May 1, 1998, by
            and between the Company and Transamerica Business
            Credit Corporation.

10.46       Security Agreement, dated as of May 4, 1998, by and
            between the Company and Transamerica Business Credit
            Corporation.

10.47       Sale and Leaseback Agreement, dated as of May 6, 1998,
            by and between the Company and Transamerica Business
            Credit Corporation.

27.1        Financial Data Schedule.
</TABLE>


                                       16