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 September 30, 1997


                         Commission File Number 1-11831
                              SABRATEK CORPORATION
             (Exact name of registrant as specified in its charter)
                                   36-3700639
                     (I.R.S. Employer Identification Number)

                                    DELAWARE
         (State or Other Jurisdiction of Incorporation or Organization)

                             5601 West Howard Street
                              Niles, Illinois 60714
          (Address of Principal Executive Offices, Including Zip Code)

                                 (847) 647-2760
              (Registrant's Telephone Number, Including Area Code)


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

                                Yes X     No _____


As of October 31, 1997, 10,212,838 shares of Sabratek Corporation's Common Stock
were outstanding.



<PAGE>



                              SABRATEK CORPORATION

                                    FORM 10-Q
                For the Quarterly Period Ended September 30, 1997
                                TABLE OF CONTENTS


PART I      FINANCIAL INFORMATION
                                                                            Page
Item 1.     Financial Statements

            Balance Sheets
            September 30, 1997 (Unaudited) and December 31, 1996...........   3

            Statements of Operations
            Three Months and Nine Months Ended September 30, 1997
            and 1996 (Unaudited)...........................................   4

            Statements of Cash Flows
            Nine Months Ended September 30, 1997 and 1996 (Unaudited)......   5

            Notes to Financial Statements (Unaudited)......................   6

Item 2.     Management's Discussion and Analysis of Financial Condition and
            Results of Operations..........................................  10


PART II     OTHER INFORMATION

Item 1.     Legal Proceedings..............................................  15

Item 2.     Changes In Securities..........................................  15

Item 4.     Submission of Matters to a Vote of Security Holders............  15

Item 6.     Exhibits and Reports on Form 8-K...............................  16


                                      - 2 -

<PAGE>


<TABLE>
<CAPTION>

                              SABRATEK CORPORATION
                                 BALANCE SHEETS
                        (In thousands, except share data)

                                                                         September 30,                      December 31,
                                                                             1997                               1996
                                                                          ------------                      ------------
                             ASSETS                                       (Unaudited)
Current assets:
<S>                                                                              <C>                          <C>     
   Cash & cash equivalents                                                       $18,501                      $ 10,447
   Short-term investments in marketable securities                                 4,003                         4,352
   Receivables:
        Trade, net of allowance for doubtful accounts
        of $404 and $146 at September 30, 1997
        and December 31, 1996, respectively                                       14,622                         8,305
        Other                                                                        307                           125
                                                                                --------                       -------
   Total receivables                                                              14,929                         8,430
                                                                                 -------                       -------
   Inventories                                                                    10,720                         5,049
   Other current assets                                                            1,159                           586
                                                                                 -------                      --------
Total current assets                                                              49,312                        28,864
                                                                                 -------                       -------
Property, plant and equipment, net                                                 3,034                         1,775
Notes receivable                                                                     117                           200
Intangible assets, net                                                            11,390                            41
Long-term investments in marketable securities                                     2,003                         2,012
Other                                                                                 97                            59
                                                                               ---------                     ---------
                                                                                 $65,953                       $32,951
                                                                                 =======                       =======

                            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Short-term debt                                                               $     -                     $     168
   Current portion of capital lease obligation                                        43                           132
   Current portion of long-term debt                                                   2                             3
   Accounts payable                                                                1,780                         2,247
   Accrued expenses:
        Payroll & commissions                                                      1,793                         1,265
        Warranty                                                                     291                           236
        Other                                                                        316                            86
   Due to affiliated company                                                         123                           140
                                                                                  ------                        ------
Total current liabilities                                                          4,348                         4,277
                                                                                  ------                        ------
Long-term capital lease obligation                                                     7                            23
Long-term obligations                                                                148                             1
                                                                                 -------                      --------
Total liabilities                                                                  4,503                         4,301
                                                                                 -------                        ------
Stockholders' equity:
   Common stock, par value $.01, issued and                                          102                            82
     outstanding; 10,209,779 at September 30, 1997,
     8,196,981 at December 31, 1996
   Additional paid-in capital                                                     70,877                        42,891
   Deferred compensation                                                            (14)                          (17)
   Unrealized gains                                                                   44                             4
   Accumulated deficit                                                           (9,559)                      (14,310)
                                                                               ---------                      --------
Total stockholders' equity                                                        61,450                        28,650
                                                                                --------                       -------
                                                                                 $65,953                       $32,951
                                                                                ========                       =======
</TABLE>


                 See accompanying notes to financial statements

                                      - 3 -

<PAGE>



<TABLE>
<CAPTION>
                              SABRATEK CORPORATION
                            STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (UNAUDITED)


                                                                 Three Months Ended                  Nine Months Ended
                                                                    September 30,                      September 30,
                                                        ------------------------------------------------------------------------
                                                               1997              1996              1997             1996
                                                        ------------------------------------------------------------------------
<S>                                                              <C>               <C>               <C>              <C>    
Net sales                                                        $11,751           $ 4,874           $29,065          $11,589

Cost of sales                                                      5,231             2,487            12,416            5,832
                                                        ------------------------------------------------------------------------
Gross margin                                                       6,520             2,387            16,649            5,757

Selling, general and administrative expenses                       4,757             2,275            12,663            5,528


                                                        ------------------------------------------------------------------------
Operating income                                                   1,763               112             3,986              229
                                                        ------------------------------------------------------------------------
Other income (expense):

      Interest income                                                374               330               931              345

      Interest expense                                              (16)              (48)              (37)            (285)

      Stock appreciation rights                                        -                 -                 -          (1,628)

      Other                                                            -                 -              (32)                3
                                                        ------------------------------------------------------------------------
Net income (loss) before taxes                                     2,121               394             4,848          (1,336)



      Provision for income taxes                                      42                 -                97                -


                                                        ------------------------------------------------------------------------
Net income (loss)                                                  2,079               394             4,751          (1,336)
                                                        ========================================================================



Weighted average shares outstanding                               11,586             9,072            10,433            7,163
                                                        ========================================================================

Net income (loss) per share                                      $ 0.18             $ 0.04            $ 0.46          ($ 0.19)
                                                        ========================================================================
</TABLE>

                       See accompanying notes to financial statements.

                                      - 4 -

<PAGE>



<TABLE>
<CAPTION>
                              SABRATEK CORPORATION
                            STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (UNAUDITED)

                                                                                        Nine Months Ended
                                                                       ---------------------------------------------------
                                                                              September 30            September 30,
                                                                                  1997                     1996
                                                                       ---------------------------------------------------
Cash flows from operating activities:
<S>                                                                                  <C>                    <C>      
   Net income (loss)                                                                 $ 4,751                $ (1,336)
   Adjustments to reconcile net income (loss) to
   net cash used in operating activities:
      Depreciation and amortization                                                      697                      231
      Deferred compensation                                                                3                        2
      Stock appreciation rights expense                                                    -                    1,628
      Non-cash expense                                                                   179                        -
      Provision for bad debts                                                            198                       46
      Changes in assets and liabilities
         Receivables                                                                 (5,983)                  (4,477)
         Other receivable                                                              (182)                        -
         Deferred revenue                                                                 35                     (75)
         Inventories                                                                 (5,658)                  (2,166)
         Accounts payable                                                            (1,019)                    (877)
         Accrued expenses                                                                513                      263
         Due to affiliated company                                                      (25)                     (83)
         Other                                                                         (595)                    (431)
                                                                       ---------------------------------------------------
Net cash used in operating activities                                                (7,086)                  (7,275)
                                                                       ---------------------------------------------------

Cash flows from investing activities:
   Purchase of property, plant, equipment                                            (1,399)                    (196)
   Purchase of intangible assets                                                     (7,108)                        -
   Proceeds (purchase) of marketable securities, net                                     398                  (9,987)
   Purchase of Rocap, Inc., net of cash acquired                                     (1,433)                        -
   Collection of notes receivable, net                                                    83                        -
                                                                       ---------------------------------------------------
Net cash used in investing activities                                                (9,459)                 (10,183)
                                                                       ---------------------------------------------------

Cash flows from financing activities:
   Proceeds from issuance of short-term debt                                               -                      168
   Repayment of short-term debt                                                        (319)                    (621)
   Repayment of long-term debt                                                           (1)                    (351)
   Proceeds from issuance of long-term debt                                                -                    1,570
   Payment of stock appreciation rights                                                    -                  (1,628)
   Payments of capital lease, net                                                      (105)                    (138)
   Proceeds from exercise of stock options and warrants                                3,419                        -
   Proceeds from issuance of stock, net                                               21,605                   27,954
                                                                       ---------------------------------------------------
Net cash provided by financing activities                                             24,599                   26,954
                                                                       ---------------------------------------------------
Increase in cash                                                                       8,054                    9,496
Cash and cash equivalents at beginning of period                                      10,447                        8
                                                                       ---------------------------------------------------
Cash and cash equivalents at end of period                                          $ 18,501                  $ 9,504
                                                                       ===================================================

</TABLE>

                 See accompanying notes to financial statements

                                      - 5 -

<PAGE>



                              SABRATEK CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                           SEPTEMBER 30, 1997 and 1996
                                   (UNAUDITED)

(1)      Financial Statements

         The  financial  statements  included  herein have been  prepared by the
Company, without audit, and include all adjustments of a normal recurring nature
which are, in the opinion of management,  necessary for fair presentation of the
results of operations for the three month and nine month periods ended September
30, 1997 pursuant to the rules and  regulations  of the  Securities and Exchange
Commission.  Certain information and footnote  disclosures  normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles   have  been  condensed  or  omitted   pursuant  to  such  rules  and
regulations,  although  the  Company  believes  that  the  disclosures  in these
financial  statements  are  adequate  to  make  the  information  presented  not
misleading.  These financial  statements  should be read in conjunction with the
Company's  financial  statements and the notes thereto included in the Company's
Form 10-K filed by the Company with the Securities  and Exchange  Commission for
the year ended  December 31, 1996. The results of operations for the three month
and nine month periods ended September 30, 1997 are not  necessarily  indicative
of the results that may be expected for the year ending December 31, 1997.

(2)      Acquisition

         On February 25, 1997, the Company  purchased  substantially  all of the
assets of Rocap, Inc., a Massachusetts corporation ("Rocap"), which produces and
markets  pre-packaged  injectable  prescription  pharmaceuticals  and pre-filled
flush syringes. Terms of the purchase are summarized as follows:

          1)   $100,000 in cash.

          2)   Forgiveness  of $300,000 in debt owed to the Company as evidenced
               by a bridge loan agreement entered into on January 15, 1997.

          3)   $2,900,000  in common  stock of the  Company,  valued at  131,593
               shares.

          4)   Assumption of $257,218 in net liabilities.

         Using  the  purchase  method  of  accounting,  the  purchase  price was
allocated to assets  acquired and  liabilities  assumed based on their estimated
fair values.  This  treatment  resulted in the excess of the purchase price over
the  estimated  fair value of net tangible  assets  acquired  being  recorded as
goodwill of $4,564,062. The results of operations acquired have been included in
the statement of operations since the date of acquisition.

                                      - 6 -

<PAGE>



(3)      Public Offering

     In April,  1997,  the Company  completed a public  offering  for  1,291,486
primary shares of common stock and 176,574 shares of common stock by and for the
account  of  existing  stockholders  at a price to the  public  of  $18.00.  Net
proceeds to the Company were $21,604,652.

(4)      Intangible Assets

     Intangible  assets  are shown net of  amortization  and  include  goodwill,
prepaid  license  fees,  and  certain  costs  necessary  to secure  intellectual
property.

         In July,  1997, the Company  entered into a licensing  agreement with a
non-affiliated  company. Under the terms of the agreement,  the Company will pay
up to $7 million for a 15-year technology license. The Company also entered into
an option agreement with the  non-affiliate's  shareholders which gives Sabratek
the right to purchase the company beginning in the fourth quarter of 1999.

     In  August,  1997,  the  Company  entered  into a supply  and  distribution
agreement with a non-affiliated  company. Under the terms of the agreement,  the
Company  will  pay $4  million  for the  10-year  exclusive  rights  to  certain
products.  The  Company  also  entered  into an option  agreement  with the non-
affiliate's  shareholders which gives Sabratek the right to purchase the company
in the future.  Under certain  circumstances,  the non-affiliate's  shareholders
have the right,  exercisable  no earlier  than the  second  quarter of 1999,  to
require the Company to purchase their shares of the non-affiliate.

(5)      Supplemental Disclosures of Cash Flow Information

         Cash paid for interest  during the nine month periods  ended  September
30, 1997 and 1996 was $20,325 and $81,704, respectively.

(6)      Stock Options

     During the nine month period ended  September 30, 1997,  the Company issued
491,685 shares, in aggregate, of common stock upon the exercise of stock options
pursuant to the Sabratek Corporation Amended and Restated 1993 Stock Option Plan
(the  "Plan").  The option  exercises  resulted  in  proceeds  to the Company of
$2,971,632, in aggregate.

     Options for a total of 1,671,904 shares of common stock were granted during
the nine month  period  pursuant to the Plan at an  exercise  price equal to the
fair market value on the date of grant. The stock options vest over a multi-year
period.

(7)      Warrants

     During the nine month period ended  September 30, 1997,  the Company issued
105,517 shares, in aggregate, of common stock upon the exercise of warrants. The
warrant exercises resulted in proceeds to the Company of $446,890, in aggregate.


                                      - 7 -

<PAGE>



(8)      Credit Facility

         In March,  1997, the Company entered into a bank credit agreement which
matures  in April,  1999,  and  provides  for up to $9.5  million  of  available
borrowing at the bank's prime rate. As of September 30, 1997, no funds have been
borrowed under the agreement.

(9)      Foreign Currency Hedging

         In September, 1997, the Company initiated a hedging program through the
use of forward contracts to minimize foreign currency fluctuation exposure.  The
aggregate  U.S.  dollar amount of the contracts is $2,953,004 and such contracts
expire at various dates through September, 1998.

(10)     Weighted Average Shares

         Weighted average shares  outstanding for the three month and nine month
periods  ended  September  30,  1997 are  calculated  on a fully  diluted  basis
applying the treasury-stock method for options and warrants outstanding.

         Weighted average shares  outstanding for the three month and nine month
periods ended  September  30, 1996 are  calculated  pursuant to  Securities  and
Exchange  Commission  Staff  Accounting  Bulletin  No. 83 for stock  options and
warrants  outstanding  and  pro-rated  based on the date of the  initial  public
offering.  Other common stock equivalent  shares from stock options and warrants
are excluded from the computation because their effect is anti-dilutive.

(11)     Recent Accounting Pronouncements

         In February,  1997,  the Financial  Accounting  Standards  Board issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 128,  "Earnings  Per
Share"  ("EPS").  Implementation  of SFAS No. 128 is  required  for the  periods
ending  after  December  15,  1997.  The  standard  establishes  new methods for
computing  and  presenting  EPS and  replaces  the  presentation  of primary and
fully-diluted  EPS with  basic and  diluted  EPS.  The new  methods  under  this
standard  are not expected to have a  significant  impact on the  Company's  EPS
amounts.

         In  June,  1997,  the  Financial   Accounting  Standards  Board  issued
Statement of Financial  Accounting  Standards No. 130, "Reporting  Comprehensive
Income." The Company is required to adopt the new  standard  for periods  ending
after fiscal 1997.  This  statement  establishes  standards  for  reporting  and
display  of  comprehensive  income and its  components  in a full set of general
purpose financial statements.  The standard requires all items that are required
to be recognized  under  accounting  standards as  components  of  comprehensive
income  be  reported  in a  financial  statement  that  is  displayed  in  equal
prominence with the other financial statements.  The standard is not expected to
have a material impact on the Company's current presentation of income.

         In June,  1997, the Financial  Accounting  Standards  Board also issued
Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information." The Company is required to adopt this
new standard for periods ending after fiscal 1997.  This  statement  establishes
standards  for the way  companies  are to  report  information  about  operating
segments. It also

                                      - 8 -

<PAGE>



establishes  standards  for related  disclosures  about  products and  services,
geographic areas, and major customers.  The Company is currently  evaluating the
impact of this standard on its financial statements.


                                      - 9 -

<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

         The Company's  founding vision and strategic focus is the creation of a
virtual  hospital  room for the  alternate-site  health  care  market.  From its
inception in 1989 through mid-1992, the Company was in its development stage and
engaged  primarily  in  research  and  development,   product   engineering  and
activities  related to obtaining  clearance  from the FDA for its first product,
the 3030  Stationary  Pump. The Company has six years of operating  history and,
although  profitable  since the third quarter of 1996,  experienced  significant
operating  losses  from its  inception  through  mid-1996.  Upon  receiving  FDA
clearance  for the 3030  Stationary  Pump in mid-1992,  the Company  focused its
efforts on creating a domestic and international sales and marketing network, as
well as a manufacturing  capability,  to assist in the distribution of its first
product to the  alternate-site  health care market.  Concurrent with these sales
and  marketing   activities,   the  Company  continued  to  fund  the  research,
development  and  regulatory  clearance  activities of other device and software
products.

         The Company commercially  launched the 6060 Ambulatory Pump and related
disposable supplies in late 1995 and both MediVIEW and the PumpMaster(R) in late
1996.  Since then, the Company has continued its sales and marketing  activities
domestically  and  internationally  for the  distribution  of its  products  and
continued  to fund the research  and  development  of  additional  products.  On
February 25, 1997, the Company  acquired  substantially  all the assets of Rocap
which produces and markets pre- packaged injectable prescription pharmaceuticals
and pre-filled  flush syringes.  In addition,  the Company derives revenues from
the servicing of products and sale of accessories and extended warranties.

         The Company  sells its products  both  directly to  alternate-site  and
acute-care  providers,  as well as to  third-party  distributors.  The Company's
distributors  and customers may purchase  several months of inventory at any one
time which may cause  fluctuations  in  quarterly  revenues.  The  Company  also
markets and sells its products  internationally  and, as a result,  its revenues
may be affected by fluctuations in exchange rates.  Failure to obtain regulatory
approval for the  distribution of new products  domestically or in international
markets,  or adverse  regulatory  changes,  may also affect the  revenues of the
Company.

         The Company has entered into strategic partnerships,  including Unitron
and GDS,  which provide  components  of the virtual  hospital  room.  Management
intends to pursue additional  acquisition and partnering  opportunities in order
to further accelerate the development of the virtual hospital room.

Results of Operations

Three Months Ended  September 30, 1997 vs. Three Months Ended September 30, 1996
and Nine Months Ended  September  30, 1997 vs. Nine Months Ended  September  30,
1996

         Net sales.  Net sales  increased  $6.9 million to $11.8 million for the
three month period ended  September 30, 1997 as compared to $4.9 million for the
three month period ended  September 30, 1996, an increase of 141%. Net sales for
the nine month period ended  September 30, 1997 increased $17.5 million to $29.1
million as compared to $11.6  million for the nine month period ended  September
30, 1996, an increase of 151%. The increase is attributable to several  factors;
incremental  unit sales volume of the 3030  Stationary  Pump and 6060 Ambulatory
Pump and their respective disposables, an increase

                                     - 10 -

<PAGE>



in the  average per unit  selling  price due to a higher  ratio of direct  sales
versus dealer sales,  the addition of the Rocap product line in February,  1997,
the addition of the MediVIEW(R) and PumpMaster(R)  products, and the addition of
certain licensed products from GDS Technology, Inc.

         Cost of Sales. Cost of sales increased $2.7 million to $5.2 million for
the three month period ended  September 30, 1997 as compared to $2.5 million for
the three month period ended  September 30, 1996,  an increase of 110%.  Cost of
sales  increased  $6.6 million to $12.4  million for the nine month period ended
September  30, 1997 as compared to $5.8  million for the nine month period ended
September 30, 1996, an increase of 113%. The increase for the three month period
and the nine month  period is primarily  attributable  to direct  product  costs
associated  with  incremental  unit sales  volume of the 3030 and 6060  infusion
pumps and related  disposables,  as well as the  addition  of the Rocap  product
line.  To a lessor  extent,  the  increase  for the three  month and nine  month
periods  is  attributable  to costs  relating  to the  expansion  of  production
capacity.

         Gross Margin.  Gross margin  increased $4.1 million to $6.5 million for
the three month period ended  September 30, 1997 as compared to $2.4 million for
the three month period ended  September  30,  1996,  an increase of 173%.  Gross
margin  increase  $10.8 million to $16.6 million for the nine month period ended
September  30, 1997 as compared to $5.8  million for the nine month period ended
September  30,  1996,  an increase of 189%.  The increase for the three and nine
month periods is due primarily to the incremental  unit sales volume and the per
unit contribution thereon, including the allocation of fixed manufacturing costs
over a greater number of units.  Also  contributing  to the increase were higher
average  pricing levels and a more favorable  product mix of the 6060 Ambulatory
Pump units to 3030  Stationary  Pump units.  Gross  margin as a percent of sales
increased  to 56% and 57% for the  three  month  and nine  month  periods  ended
September 30, 1997, respectively, as compared to 49% and 50%, respectively,  for
the three month and nine month periods ended September 30, 1996.

         Selling  General  and  Administrative  Expenses.  Selling,  general and
administrative  expenses  increased  $2.5  million to $4.8 million for the three
month period ended  September 30, 1997 as compared to $2.3 million for the three
month period ended September 30, 1996, an increase of 109%. Selling, general and
administrative  expenses  increased  $7.2 million to $12.7  million for the nine
month period ended  September  30, 1997 as compared to $5.5 million for the nine
month period ended September 30, 1996, an increase of 129%. The increase for the
three month and nine month  periods is due  primarily  to the  expansion  of the
Company's  direct  sales force and  clinical  support  staff and the  associated
travel thereby as well as greater aggregate commissions paid in conjunction with
higher net sales. Contributing also to the increase for the three month and nine
month periods ended  September 30, 1997 was the assumption of expenses  relating
to the Rocap  product  line,  the  addition  of  administrative  and  management
personnel,  as well as the expansion of the Niles,  Illinois facility.  Expenses
relating  to SIMS  Deltec,  Inc.  litigation  were  approximately  $249,000  and
$533,000 for the three month and nine month  periods  ended  September 30, 1997,
respectively.  There were no SIMS Deltec litigation  expenses in 1996.  Selling,
general and  administrative  expenses as a percent of sales decreased to 40% and
44%, respectively for the three month and nine month periods ended September 30,
1997 as  compared  to 47% and 48%,  respectively,  for the three  month and nine
month periods ended September 30, 1996.

         Operating  Income.  Operating  income increased to $1.8 million for the
three month  period  ended  September  30, 1997 as compared to $112,000  for the
three month period ended  September 30, 1996,  an increase of 1,474%.  Operating
income  increased to $4.0 million for the nine month period ended  September 30,
1997 as compared to $229,000 for the nine month period ended September 30, 1996,
an

                                     - 11 -

<PAGE>



increase of 1,641%.  Operating income as a percent of sales increased to 15% and
14% for the  respective  three month and nine month periods ended  September 30,
1997 as  compared to 2% for both the three  month and nine month  periods  ended
September  30,  1996.  The  increase in  operating  income is due  primarily  to
incremental  gross margin  generated  by increased  unit sales volume of new and
existing products, as described above.

         Interest  Income.  Interest income  increased to $374,000 for the three
month  period  ended  September  30, 1997 as compared to $330,000  for the three
month period ended September 30, 1996. Interest income increased to $931,000 for
the nine month period ended  September  30, 1997 as compared to $345,000 for the
nine month period ended September 30, 1996. The increase for the three month and
nine month periods ended  September 30, 1997 is attributable to a higher average
amount of cash available for  investment as compared to that of the  comparative
periods  ended  September  30, 1996.  The Company  completed a secondary  public
offering  in  April,   1997  which  resulted  in  proceeds  to  the  Company  of
approximately  $22 million,  after  underwriting  discounts and commissions.  In
June,  1996, the Company  completed an initial public offering which resulted in
proceeds to the  company of  approximately  $26.7  million,  after  underwriting
discounts and commissions.

         Interest  Expense.  Interest expense decreased to $16,000 for the three
month period ended September 30, 1997 as compared to $48,000 for the three month
period ended September 30, 1996.  Interest expense  decreased to $37,000 for the
nine month period ended  September 30, 1997 as compared to $285,000 for the nine
month period ended  September 30, 1996.  The decrease for the three month period
ended  September  30, 1997 is  attributable  to the pay down of certain  capital
leases  and debt  obligations.  The  decrease  for the nine month  period  ended
September  30,  1997  is  primarily   attributable  to  the  conversion  of  all
convertible debt  outstanding at the Company's  initial public offering in June,
1996.

         Stock Appreciation Rights Expense. No stock appreciation rights expense
is recorded for the three and nine month  periods  ended  September  30, 1997 as
compared to $1.6 million for the nine month period ended September 30, 1996. The
stock appreciation  rights expense for the nine month period ended September 30,
1996 was non-recurring.

         Provision for Income  Taxes.  The provision for income taxes of $42,000
and  $97,000,  respectively,  for the three month and nine month  periods  ended
September 30, 1997 reflect an effective  rate for  Alternative  Minimum Tax. The
Company expects net operating loss carryforwards to offset pretax income for its
1997 tax year.  Due to net  losses for the three  month and nine  month  periods
ended  September 30, 1996, the Company did not incur any federal or state income
tax liability for the period.

         Net Income.  Net income  increased  to $2.1 million for the three month
period  ended  September  30, 1997 as  compared to $394,000  for the three month
period  ended  September  30,  1996,  an increase  of 428%.  Net income was $4.8
million for the nine month period ended  September 30, 1996 as compared to a net
loss of $1.3  million for the nine month period ended  September  30, 1996.  Net
income for the three month and nine month periods  ended  September 30, 1997 was
achieved  primarily  as a  result  of  incremental  gross  margin  generated  by
increased unit sales volume of new and existing  products,  as discussed  above.
Also  contributing  to net income for the nine month period ended  September 30,
1997 was the increase in interest  income due to the  investment of excess cash.
The nine month period ended September 30, 1996 included the non-recurring charge
for stock appreciation rights of $1.6 million.


                                     - 12 -

<PAGE>



Liquidity and Capital Resources

         In April,  1997, the Company  completed a public offering with proceeds
of approximately $22 million, after underwriters' discounts and commissions.  As
of September 30, 1997, cash balances were invested in U.S.  Treasury Bills, U.S.
Treasury  Notes,  certificates of deposit,  commercial  paper and a money market
account.

         As of September 30, 1997, the Company had  approximately  $24.5 million
in cash, cash  equivalents,  short-term and long-term  investments in marketable
securities,  and had net working  capital of  approximately  $45.0  million.  In
March,  1997,  the  Company  entered  into a credit  agreement  with a financial
institution  with up to $9.5 million of available  borrowing.  As of October 31,
1997, no borrowing has been made under the credit agreement.

         The Company used cash in its operations of  approximately  $7.1 million
for the nine months ended  September 30, 1997.  Cash used in operations  for the
period  exceeds  the  Company's  operating  income  for  the  same  period  due,
primarily,  to the growth in trade  accounts  receivable  and  inventories  as a
result of actual and anticipated growth in sales volume.

         During the third quarter of 1997,  the Company  entered into  strategic
partnerships with Unitron and GDS. The Company's agreements with Unitron and GDS
could  require the Company to pay up to $11.0  million in cash license  fees, in
aggregate.  In  addition,  should the Company  decide to  exercise  its right to
acquire  either  Unitron or GDS,  such  acquisitions  could  require  additional
outlays of cash.

         In September, 1997, the Company initiated a hedging program through the
use of forward contracts to minimize foreign currency fluctuation exposure.  The
aggregate  U.S.  dollar amount of the contracts is $2,953,004 and such contracts
expire at various dates through September, 1998.

         Future liquidity and capital resources could be adversely influenced by
certain factors, including the Company's dependence on a relatively new customer
base,  regulatory or  legislative  changes  pertaining  to health care,  product
liability  exposure  regarding the delivery of medication,  dependence on future
product development, and others. There can be no assurance that the Company will
not require  additional  financing  and, in the future,  seek  additional  funds
through  bank  facilities,  debt or  equity  offerings  and to the  extent  such
additional financing is not available, the Company could suffer material adverse
effects to its financial condition and the results of its operations.

Recent Developments

         In July,  1997,  the Company  entered into a licensing  agreement  with
Unitron Medical Communications, Inc. ("Unitron"), a privately held company which
has developed its Medical Oriented Operating Network ("MOON(TM)"), a proprietary
clinical  patient  information  management  network.  Under  the  terms  of this
agreement,  the  Company  will  pay  Unitron  up to  $7  million  for a  15-year
technology license for use of the continuous, real-time monitoring and reporting
software  which is a component  of  MOON(TM).  The Company  also entered into an
option agreement with the Unitron shareholders which gives Sabratek the right to
purchase Unitron beginning in the fourth quarter of 1999. The Company intends to
combine its proprietary  MediVIEW(R)  medical device management and telemedicine
software with Unitron's clinical patient  information  management  network.  The
Company believes that this

                                     - 13 -

<PAGE>



combination  is likely to  accelerate  the  realization  of the data  management
aspects of the virtual hospital room.

         In August,  1997,  the Company  entered into a supply and  distribution
agreement with GDS  Technology,  Inc.  ("GDS"),  a privately held medical device
company. Under the terms of this agreement,  the Company will pay GDS $4 million
for the 10-year exclusive rights to certain diagnostic  products,  including the
GDS  Stat-Site(sm)   point  of  care  diagnostic   testing  device  and  related
disposables for use in the  alternate-site  health care market. The Company also
entered into an option agreement with the GDS shareholders  which gives Sabratek
the right to purchase GDS in the future.  Under  certain  circumstances  the GDS
shareholders  have the right,  exercisable no earlier than the second quarter of
1999,  to require  the  Company to  purchase  their  shares of GDS.  The Company
intends to integrate the GDS Stat-Site(sm)  system and the data that it provides
with its other Sabratek  medical devices in order to enhance its capabilities to
serve the alternate-site health care market.

                                     - 14 -

<PAGE>



                                     PART II
                                OTHER INFORMATION

Item 1.  Legal Proceedings

                  On February  5, 1997,  SIMS  Deltec  filed a complaint  in the
United  States  District  Court for the  District  of  Minnesota  alleging  that
Sabratek's  manufacture,   use  and/or  sale  of  the  MediVIEW(R)  software  in
conjunction with its infusion pumps infringes on a patent entitled  "Systems and
Methods of Communicating  with Ambulatory  Medical Devices Such as Drug Delivery
Devices" previously issued to SIMS Deltec. Subsequently, SIMS Deltec filed other
pleadings  that  raised  additional  claims  against  Sabratek  and three of its
employees  including  trade  secret  misappropriation,  unfair  competition  and
interference with SIMS Deltec's customers.  SIMS Deltec seeks injunctive relief,
unspecified  monetary  damages and costs.  In addition,  SIMS Deltec filed for a
preliminary  injunction  against  Sabratek  seeking to prevent on a  preliminary
basis Sabratek's  manufacture and sale of the MediVIEW(R)  system.  On August 4,
1997,  the District  Court  denied the motion for  preliminary  injunction.  The
Company and the individual  defendants  intend to vigorously  defend against the
allegations made by SIMS Deltec.  Protracted litigation or an adverse outcome in
this matter  could have a material  adverse  impact on the  Company's  business,
financial condition and results of operations.

                  In  addition,  Sabratek  has filed a  complaint  against  SIMS
Deltec in the United States District Court for the Northern District of Illinois
alleging that SIMS Deltec  employees have made  misstatements  about  Sabratek's
products.  Sabratek has stated claims under the Federal  Lanham Act to stop SIMS
Deltec's  improper  disparagement  and has requested  preliminary  and permanent
injunctive relief, monetary damages and costs.

Item 2.  Changes In Securities

                  During the period  covered by this report,  the Company issued
the following  securities without registration under the Securities Act of 1933,
as amended.

                  From July 10,  1997 to August 18,  1997,  the  Company  issued
10,483  shares of common  stock upon the  exercise of warrants  not covered by a
registration  statement.  The Company received proceeds of approximately $48,425
upon the  exercise of such  warrants.  All such  issuances  of common stock were
exempt from registration pursuant to Section 4(2) of the Securities Act of 1933,
as amended.

Item 4.  Submission of Matters to a Vote of Securityholders

     (a) At the  Annual  Meeting  of  Stockholders  held on June 10,  1997,  the
following directors were elected:

                                          FOR                    WITHHELD
                                          ---                    --------
Francis V. Cook, M.D.                   7,837,610                110,474
L. Peter Smith                          7,837,610                110,474
Edson W. Spencer, Jr.                   7,837,610                110,474




                                                      - 15 -

<PAGE>



     (b) At the  Annual  Meeting  of  Stockholders  held on June 10,  1997,  the
following resolutions were passed:

          (i) RESOLVED,  that the Company adopt the Amendment to the Amended and
     Restated  1993 Stock  Option Plan to provide for the issuance of options to
     purchase up to 3,800,000  shares of Common Stock and to otherwise amend the
     Plan to conform to Section 16 of the  Securities  Exchange Act of 1934,  as
     amended, and the rules promulgated thereunder as now in effect.

          (ii) RESOLVED, that the Company adopt the 1997 Employee Stock Purchase
     Plan.

<TABLE>
<CAPTION>
                                                         Shares Voted
                              Shares Voted For               Against               Shares Abstained           Broker Non-Votes
                              ----------------               -------               ----------------           ----------------

<S>                               <C>                       <C>                         <C>                        <C>    
Resolution (i)                    4,940,672                 1,568,820                   947,853                    526,739
Resolution (ii)                   7,395,782                    17,060                    44,503                    526,739

</TABLE>


Item 6.  Exhibits and Reports on Form 8-K

(a)               Exhibits

<TABLE>
<CAPTION>
                                                                                           Page            Incorporation
    Exhibit                                                                             Number (if         by Reference
    Number                            Description of Documents                          applicable)       (if applicable)
    ------                            ------------------------                          -----------       ---------------
<S>               <C>                                                                      <C>                  <C>   
      3.1         Articles of Incorporation                                                                      +
      3.2         ByLaws                                                                                         +
     10.1         Agreement with Americorp Financial, Inc. re: Leasing                                           +
                  Services, dated March 22, 1995
    10.1.1        Amendment, dated September 16, 1996, to Agreement                                             +++
                  with Americorp Financial, Inc.
     10.2         Agreement with Clintec Nutrition Company re:                                                   +
                  Development Agreement, dated September 1, 1995
     10.3         Intentionally Omitted
     10.4         Intentionally Omitted
     10.5         Distributorship Agreement with CO-Medical, Inc.,                                               +
                  dated February 17, 1992
     10.6         Distributorship Agreement with Clinical Technology                                             +
                  Inc., dated August 1, 1992
     10.7         Intentionally Omitted
     10.8         Intentionally Omitted
     10.9         Distributorship Agreement with Advanced Medical,                                               +
                  Inc., dated September 1, 1991


                                     - 16 -

<PAGE>



                                                                                           Page            Incorporation
    Exhibit                                                                             Number (if         by Reference
    Number                            Description of Documents                          applicable)       (if applicable)
    ------                            ------------------------                          -----------       ---------------

     10.10        Distributorship Agreement with Healthcare                                                      +
                  Technology, dated October 9, 1991
     10.11        Intentionally Omitted
     10.12        Intentionally Omitted
     10.13        Pump Contract with Chartwell Home Therapies, dated                                             +
                  November 22, 1993
     10.14        Sales Agreement with Pharmacy Corporation of                                                   +
                  America, dated March 17, 1995
     10.15        Sales & Marketing Agreement with Alpha                                                         +
                  Group, dated November 6, 1995
     10.16        Foreign Distributorship Agreement with MED-O-GEN                                               +
                  INC., dated September 22, 1995
     10.17        Foreign Distributorship Agreement with Yoon Duk                                                +
                  Separation Technology, dated April 17, 1995
     10.18        Foreign Distributorship Agreement with Upwards                                                 +
                  Biosystems Ltd., dated March 8, 1995
     10.19        Foreign Distributorship Agreement with Grupo Grifols,                                          +
                  S.A., dated September 17, 1993
     10.20        Foreign Distributorship Agreement with JMS                                                     +
                  Company, dated March 22, 1996
     10.21        Foreign Distributorship Agreement with Brasimpex                                               +
     10.22        Foreign Distributorship Agreements with Medicare (s)                                           +
                  PTE LTD., dated February 10, 1995
     10.23        Intentionally Omitted
     10.24        Intentionally Omitted
     10.25        Master Lease Agreement with Comdisco, Inc., dated                                              +
                  August 9, 1994
     10.26        Stock Option Plan                                                                              +
     10.27        Lease for Real Property located at 5601 West Howard,                                           +
                  Niles, Illinois, dated as of May 31, 1994
    10.27.1       Amendment, dated October 30, 1996, to Lease for Real                                          +++
                  Property located at 5601 West Howard, Niles, Illinois
     10.28        Employment Agreement for K. Shan Padda                                                         +
     10.29        Employment Agreement for Anil Rastogi                                                          +
     10.30        Asset Purchase Agreement, dated February 25, 1997,                                            ++
                  by and among Sabratek Corporation; Rocap, Inc. and
                  Elliott Mandell
     10.31        Employment Agreement for Stephen L. Holden                                                   ++++


                                     - 17 -

<PAGE>




                                                                                           Page            Incorporation
    Exhibit                                                                             Number (if         by Reference
    Number                            Description of Documents                          applicable)       (if applicable)
    ------                            ------------------------                          -----------       ---------------
     10.32        Employment Agreement for Elliott Mandell                                                      ++
     10.33        Lease Agreement for property located at 11 Sixth                                             ++++
                  Road, Woburn, Massachusetts, dated February 1, 1997
     10.34        Lease Agreement for property located at 5 Constitution                                       ++++
                  Way, Woburn, Massachusetts, dated June 26, 1995
     10.35        Lease Agreement for property located at 1629 Prime                                           +++++
                  Court, Suite 100, Orlando, Florida, dated March 11,
                  1997
     11.1         Statement re: computation of per share earnings                           E-1
      27          Financial Data Schedule                                                   E-2

</TABLE>

+    Incorporated by reference to the Company's  Registration  Statement on Form
     S-1,  declared  effective  by the  Commission  on June 21,  1996  (File No.
     333-3866).

++   Incorporated by reference to the Company's Current Report on Form 8-K filed
     with the Commission on March 11, 1997.

+++  Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the fiscal year ended  December 31, 1996 filed with the Commission on March
     31, 1997.

++++ Incorporated by reference to the Company's  Registration  Statement on Form
     S-1,  declared  effective  by the  Commission  on April 4,  1997  (File No.
     333-23437).

+++++Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the quarter  ended March 31, 1997 filed with the  Commission on May 15,
     1997.


(b)      Reports on Form 8-K

         The  Company's  current  report on Form 8-K,  dated  February  25, 1997
(filed March 12, 1997), is incorporated herein by this reference.


                                     - 18 -

<PAGE>



                                   SIGNATURES



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


                                          SABRATEK CORPORATION





Date:  November 12, 1997                  By:     /s/ K. Shan Padda
                                                  -----------------------------
                                                  K. Shan Padda
                                                  Chairman and Chief Executive
                                                    Officer



         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this report has been signed by the undersigned, in his capacity as the principal
financial officer of the registrant.





Date:  November 12, 1997                   By:    /s/ Stephen L. Holden
                                                  ----------------------------
                                                  Stephen L. Holden
                                                  Principal Financial Officer



         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this report has been  signed by the  undersigned,  in his  capacity as the chief
accounting officer of the registrant.





Date:  November 12, 1997                    By:   /s/ Scott Skooglund
                                                  -----------------------------
                                                  Scott Skooglund
                                                  Chief Accounting Officer

                                     - 19 -