<PAGE>    1


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


                                 FORM 10-Q


[ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
       For the quarterly period ended June 30, 1999

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


                      Commission File Number:  0-28460

                      FUSION MEDICAL TECHNOLOGIES, INC.
            (Exact name of registrant as specified in its charter)


               Delaware                            94-3177221
  (State or other jurisdiction of       (I.R.S. Employer Identification No.)
  incorporation or organization)


                           1615 Plymouth Street
                         Mountain View, CA  94043
                 (Address of principal executive offices)


                              (650) 903-4000
            (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required 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 by check mark whether the registrant has filed all documents and
reports required by Section 12, 13, or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of the securities under a plan confirmed by
the Court.  Yes [ X ] No [   ]


The number of outstanding shares of the registrant's Common Stock was 9,077,872
as of August 11, 1999.

     This Report on Form 10-Q includes 62 pages with the Index to Exhibits
located on page 22.


<PAGE>   2


                     FUSION MEDICAL TECHNOLOGIES, INC.

                                 INDEX TO
                            REPORT ON FORM 10-Q
                      FOR QUARTER ENDED JUNE 30, 1999

<TABLE>
<CAPTION>
                                                                       Page
                                                                       ----

PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements:
          <S>                                                           <C>
           Condensed Consolidated Balance Sheets - June 30,
            1999 (unaudited) and December 31, 1998.....................  3

           Condensed Consolidated Statements of Operations -
            Three and Six Months Ended June 30, 1999 (unaudited)
            and 1998 (unaudited).......................................  4

           Condensed Consolidated Statements of Cash Flows -
            Six Months Ended June 30, 1999 (unaudited) and
            1998 (unaudited)...........................................  5

           Notes to Condensed Consolidated Financial Statements........  6


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

Item 3.   Quantitative and Qualitative Disclosures About Market Risk..  20


PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings...........................................  22

Item 2.   Changes in Securities.......................................  22

Item 4.   Submission of Matters to a Vote of Security Holders.........  22

Item 5.   Other Information...........................................  22

Item 6.   Exhibits and Reports on Form 8-K............................  22

          Signatures..................................................  24

</TABLE>

                                     2
<PAGE>   3


PART I-FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                     FUSION MEDICAL TECHNOLOGIES, INC.

                   CONDENSED CONSOLIDATED BALANCE SHEETS
                              (in thousands)


                                                 June 30        December 31
                                                   1999           1998 (1)
                                                ---------       -----------
                                               (unaudited)
<S>                                            <C>              <C>
                              ASSETS
Current assets:
   Cash and cash equivalents                    $  10,339        $   4,151
   Available-for-sale-securities                    1,000            3,013
   Inventory                                          227                -
   Other assets                                       203              135
                                                ---------        ---------

     Total current assets                          11,769            7,299

Property and equipment, net                           854              735
Long-term assets                                       54               54
                                                ---------        ---------

       Total assets                             $  12,677        $   8,088
                                                =========        =========

                   LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities                             $     791        $   1,057
Long-term obligations                                 146              204
                                                ---------        ---------

       Total liabilities                              937            1,261
                                                ---------        ---------

Common stock and other equity                      44,451           36,059
Accumulated deficit                               (32,711)         (29,232)
                                                ---------        ---------

       Total stockholders' equity                  11,740            6,827
                                                ---------        ---------

       Total liabilities and stockholders'
        equity                                  $  12,677        $   8,088
                                                =========        =========
</TABLE>

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

(1)  Data extracted from audited consolidated financial statements dated
     December 31, 1998 of Fusion Medical Technologies, Inc.

                                     3
<PAGE>   4

<TABLE>
<CAPTION>
                     FUSION MEDICAL TECHNOLOGIES, INC.

              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (in thousands except per share amounts)
                                (unaudited)

                                   Three Months Ended     Six Months Ended
                                        June 30               June 30
                                  --------------------   ------------------
                                    1999       1998        1999       1998
                                  --------   --------    --------   --------
<S>                              <C>        <C>        <C>        <C>
Revenues                          $     25   $      -   $     25   $      -
                                  --------   --------   --------   --------

Costs and expenses:

  Cost of goods sold and start-up
    manufacturing costs                145          -        145          -
  Research and development           1,247      1,648      2,374      3,220
  Marketing, selling, general
    and administrative                 665        616      1,199      1,197
                                  --------   --------   --------   --------

    Total costs and expenses         2,057      2,264      3,718      4,417
                                  --------   --------   --------   --------

    Operating loss                  (2,032)    (2,264)    (3,693)    (4,417)

Interest income                        146        170        225        327
Interest expense                        (7)         -        (14)         -
Other income (expense), net             (4)       (14)         3        (52)
                                  --------   --------   --------   --------

    Net loss                      $ (1,897)  $ (2,108)  $ (3,479)  $ (4,142)
                                  ========   ========   ========   ========

Basic and diluted net loss per
  share                           $  (0.21)  $  (0.29)  $  (0.43)  $  (0.58)
                                  ========   ========   ========   ========

Shares used in computing basic
  and diluted net loss per share     8,886      7,153      8,027      7,149
                                  ========   ========   ========   ========
</TABLE>


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

                                     4
<PAGE>   5

<TABLE>
<CAPTION>

                     FUSION MEDICAL TECHNOLOGIES, INC.

              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (in thousands)
                                (unaudited)

                                                         Six Months Ended
                                                              June 30
                                                        --------   --------
                                                          1999       1998
                                                        --------   --------
<S>                                                    <C>        <C>
Cash flows used for operating activities:
  Net loss                                              $ (3,479)  $ (4,142)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
   Depreciation and amortization                             178        160
   Accretion of available-for-sale                            15         23
   Amortization of deferred compensation                      87         80
   Deferred compensation
   Change in assets and liabilities:
    Accounts receivable                                      (21)        21
    Inventory                                               (227)         -
    Prepaids and other current assets                        (91)       (23)
    Other assets                                              44         45
    Accounts payable                                         188        (94)
    Accrued expenses                                        (454)      (175)
                                                        --------   --------

   Net cash used in operating activities                  (3,760)    (4,105)
                                                        --------   --------

Cash flows from investing activities:
  Acquisition of property and equipment                     (297)      (104)
  Purchases of available-for-sale securities              (1,502)    (2,025)
  Sales and maturities of available-for-sale securities    3,500      5,953
                                                        --------   --------

   Net cash provided by investing activities               1,701      3,824
                                                        --------   --------

Cash flows from financing activities:
  Proceeds from issuance of note                               -        462
  Repayment of notes payable                                 (58)       (72)
  Proceeds from issuance of common stock                   8,163          -
  Proceeds from exercise of common stock options             142         59
                                                        --------   --------

   Net cash provided by financing activities               8,247        449
                                                        --------   --------

Net increase in cash and cash equivalents                  6,188        168
Cash and cash equivalents, beginning of period             4,151      7,473
                                                        --------   --------

Cash and cash equivalents, end of period                $ 10,339   $  7,641
                                                        ========   ========

Supplemental disclosure of cash flow information:
   Cash paid for interest                               $     14   $     80
                                                        ========   ========
   Adjustment for cancellation of stock options         $     79   $      -
                                                        ========   ========
   Issuance of stock options to outside consultants     $    135   $      -
                                                        ========   ========
</TABLE>


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

                                     5
<PAGE>   6

                     FUSION MEDICAL TECHNOLOGIES, INC.

           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               June 30, 1999
                                (Unaudited)


1.   Basis of presentation

The accompanying condensed consolidated financial statements of Fusion Medical
Technologies, Inc. (the "Company" or "Fusion") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions for Form 10-Q and Article 10 of Regulation S-X.  The
condensed consolidated balance sheet as of June 30, 1999, and the condensed
consolidated statements of operations for the three and six months ended June
30, 1999 and 1998, and the condensed consolidated statements of cash flows for
the six month periods ended June 30, 1999 and 1998 are unaudited but include
all adjustments (consisting of normal recurring adjustments) which the Company
considers necessary for a fair presentation of the financial position at such
dates and the consolidated operating results and cash flows for those periods.
Although the Company believes the disclosures in these condensed consolidated
financial statements are adequate to make the information presented not
misleading, certain information normally included in financial statements and
related footnotes prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission.  The accompanying condensed
consolidated financial statements should be read in conjunction with the
financial statements as contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.

Results for any interim period are not necessarily indicative of results for
any other interim period or for the entire year.


2.   Net loss per share

Basic and diluted loss per common share are computed using the weighted average
number of shares of common stock outstanding share. Common equivalent shares
from stock options are excluded from the computation of diluted net loss per
common share as their effect is anti-dilutive. Stock options to purchase
1,323,993 and 1,251,854 shares of common stock at prices ranging from $0.16 to
$11.50 per share were outstanding at June 30, 1999 and 1998, respectively, but
were not included in the computation of diluted income per share. At June 30,
1999 and 1998, there was one warrant outstanding to purchase 4,500 shares of
common stock at $4.00 per share but is excluded from the computation of diluted
net loss per common share as its effect is anti-dilutive.


3.   Cash, cash equivalents and available-for-sale securities

The Company classifies all highly liquid investments purchased with an original
maturity of three months or less as cash equivalents.  Cash and cash
equivalents include money market funds and various deposit accounts.


The Company classifies both short term and long term investments as available-
for-sale.  Such investments are recorded at fair market value and unrealized
gains and losses are recorded as a separate component of

                                     6
<PAGE>   7


                     FUSION MEDICAL TECHNOLOGIES, INC.

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               June 30, 1999
                                (Unaudited)

equity until realized.  Interest income is recorded using an effective interest
rate, with associated premium or discount amortized to interest income.  The
cost of securities sold is based upon the specific identification method.


4.   Inventory

As of March 31, 1999, the Company began capitalizing its inventories of raw
materials related to FloSealTM. Inventory is recorded at the lesser of cost or
market using the FIFO method.


<TABLE>
<CAPTION>
                                                     June 30   December 31
                                                       1999        1998
                                                     --------    --------
<S>                                                 <C>         <C>
Finished goods                                       $     31    $      -
Work in process                                            55           -
Raw materials                                             141           -
                                                     --------    --------

                                                     $    227    $      -
                                                     ========    ========
</TABLE>


5.   Debt

In December 1997, the Company signed an agreement for a bank loan facility to
finance existing equipment up to a total of $1,000,000, and future equipment
purchases for up to a total facility limit of $2,500,000. The facility is
secured by the equipment financed. The loan balance is subject to a floating
interest rate equal to the bank's prime rate plus 1.5% per annum (9.25% at June
30, 1999). The unused portion of the total loan facility commitments are
subject to a 0.5% quarterly commitment fee. As of June 30, 1999, the Company
had drawn down $262,758 on the existing equipment loan facility and had no draw
down on the new equipment loan facility. In connection with this loan facility,
the Company issued a warrant to purchase 4,500 shares of common stock at an
exercise price of $4.00 per share. This warrant expires in December 2002. These
facilities are subject to specific positive and negative covenants that include
restrictions on the declaration or payment of any dividend or any other
distribution on any of its capital stock.  The Company was in compliance with
those covenants at June 30, 1999.


6.   Stockholders' Equity

On April 6, 1999, the Company closed a follow-on public offering of 1.8 million
shares of its common stock that resulted in net proceeds to the Company of
approximately $8.3 million.


7.   Segment Reporting

The Company operates in one reportable segment: surgical sealants and topical
hemostat products. The Company is compliant with the segment reporting
requirements of SFAS No.131 "Disclosures about Segments of an Enterprise and
Related Information," which establishes annual and interim reporting

                                     7
<PAGE>   8


                     FUSION MEDICAL TECHNOLOGIES, INC.

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               June 30, 1999
                                (Unaudited)

standards for an enterprise's business segments and related disclosures about
its products, services, geographic areas and major customers. Adoption of this
statement has not impacted the Company's consolidated financial position,
results of operations or cash flows.


8.   Recent Accounting Pronouncements

In June 1998, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities",
which establishes accounting and reporting standards for derivative instruments
and hedging activities.  It requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. The Company, to date, has not engaged
in derivative and hedging activities.  The Company will adopt SFAS No. 133 as
required for its first quarterly filing of calendar year 2001.

                                     8
<PAGE>   9



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


This Report on Form 10-Q contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties.  The Company's
actual results could differ materially from those anticipated by these forward-
looking statements as a result of certain factors, including those set forth in
"Additional Factors That Might Affect Future Results" commencing on page 12 and
those set forth under Item 1 in the Company's Annual Report filed on Form 10-K
for the Year Ended December 31, 1998.


OVERVIEW

     Since inception in October 1992, we have been primarily engaged in the
research and development of surgical sealants and topical hemostats. As of June
30, 1999, we had an accumulated deficit of $32.7 million. Operating losses are
expected to continue at least through 2001.

     We commenced selling our first product, the RapiSeal patch, in late 1996.
After careful consideration, we reallocated our capital resources to the
development of FloSeal and in late 1997 discontinued sales of the RapiSeal
patch and disbanded our sales force.

     In 1998, we conducted a ten-center, 309-patient pivotal clinical trial to
demonstrate the safety and effectiveness of FloSeal. We received a CE mark
providing European regulatory clearance on April 20, 1999. Our premarket
approval application for FloSeal was accepted for filing by the FDA and given
streamlined review status on April 27, 1999. We completed the expansion of our
manufacturing facility to meet the anticipated product supply requirements for
commercial sale of FloSeal. We spent a total of approximately $150,000 for the
purchase of production equipment and approximately $380,000 for the facilities'
upgrade.

     In July 1999, we signed a multi-year distribution agreement with
Minneapolis-based Sulzer Spine-Tech. Founded in 1991, Sulzer Spine-Tech is a
business unit of Sulzer Medica AG whose total annual sales exceed $1 billion
US. Under the agreement, Sulzer Spine-Tech becomes a worldwide distributor of
FloSeal for all spinal and cranial applications. The distribution agreement
covers most global markets with the primary exception of Japan.

     Future revenues, if any, and our results of operations may fluctuate
significantly from quarter-to-quarter and will depend upon the following, among
other factors:

     o our ability to obtain regulatory clearances for FloSeal,
     o our ability to successfully commercialize the product,
     o the speed with which the Company's future products proceed through
       clinical trials and the preparation of related regulatory
       submissions,
     o the speed with which regulatory agencies review and potentially clear
       the Company's products,
     o the rate at which the Company or its corporate partners for
       distribution establish product distribution networks and mobilize the
       available sales forces,

                                     9
<PAGE>   10


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (CONTINUED)

     o the rate at which the Company's products gain market acceptance,
     o the timing and impact of the introduction of competitive products for
       surgical sealant functions, and
     o other factors relating to the commercialization of medical products.



RESULTS OF OPERATIONS


Three and Six Months Ended June 30, 1999 and 1998


NET SALES

     Net sales for the three and six months ended June 30, 1999 were
$25,000 and represented the initial revenues resulting from the introduction of
our new product line, FloSeal, in Europe. Due to our exit of the RapiSeal Patch
business in 1997 and our current focus on the development of FloSeal, the
Company had limited revenues in the three and six months ended June 30, 1999
and no revenues in the same periods of 1998, respectively. We filed for
European regulatory clearance and received CE mark clearance on April 20, 1999.

RESEARCH AND DEVELOPMENT

     Research and development expenses decreased 24% to $1.2 million in the
three months ended June 30, 1999 compared to $1.6 million in the three months
ended June 30, 1998. For the six months ended June 30, 1999, research and
development expenses decreased 26% to $2.4 million compared to expenses of $3.2
million for the six months ended June 30, 1998.  The decrease for the three and
six months ended June 30, 1999 is primarily attributable to completion of the
309 patient FloSeal clinical trial in December 1998. For the full fiscal year
1999, the Company believes research and development expenses are not likely to
exceed those of 1998. However, as the Company devotes more resources to the
support of new products based on the FloSeal Matrix technology, quarterly
research and development expenses should increase in the third quarter of 1999.


MARKETING, SELLING, GENERAL AND ADMINISTRATIVE

     Marketing, selling, general and administrative expenses increased 8% to
$665,000 in the three months ended June 30, 1999, compared to $616,000 for the
three months ended June 30, 1998. Marketing, selling, general and
administrative expenses were $1.2 million for the six months ended June 30,
1999 and 1998. The increase for the three months ended June 30, 1999, compared
to the year earlier period, was primarily the result of increases in marketing
and selling expenses associated with commercialization of FloSeal.


INTEREST INCOME

                                     10
<PAGE>   11


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (CONTINUED)

     Interest income decreased 14% to $146,000 for the three months ended June
30, 1999 compared to $170,000 for the three months ended June 30, 1998. For the
six months ended June 30, 1998, interest income decreased 31% to $225,000
compared to $327,000 in the prior year.  The decrease for the three and six
months ended June 30, 1999 was attributable primarily to the declining balance
of the Company's interest-bearing investment portfolio through April 6, 1999
(see "Liquidity and Capital Resources").


NET LOSS

     As a net result of the items discussed above, the net loss was $1.9
million for the three months ended June 30, 1999.  This is an improvement of
10% or $211,000 over the net loss of $2.1 million for the three months ended
June 30, 1998. The net loss was $3.5 million for the six months ended June 30,
1999.  This is an improvement of 16% or $663,000 over the net loss of $4.1
million for the six months ended June 30, 1998.


LIQUIDITY AND CAPITAL RESOURCES

     At June 30, 1999, our cash, cash equivalents and available-for-sale
securities were $11.3 million compared to $7.2 million at December 31, 1998.
Since our inception, we have funded the business with proceeds from private
security placements, our initial public offering of common stock and, most
recently, with a follow-on public offering of 1.8 million shares of our common
stock on April 6, 1999.

     For the six months ended June 30, 1999 and 1998, our operations consumed
cash of $3.8 million and $4.1 million, respectively.  The decrease in cash
consumed by operations was due primarily to a decrease in personnel costs, and
a reduction in overall administrative spending.  We expect the use of cash in
operating activities to increase through calendar year 1999 and into 2000 as we
continue to devote resources to the commercialization of FloSeal Matrix and
develop other products based on the FloSeal Matrix technology.

     For the six months ended June 30, 1999 and 1998, investing activities
provided net cash of $1.7 million and $3.8 million, respectively. Sales and
maturities of available-for-sale securities of $3.5 million and $6.0 million
for the six months ended June 30, 1999 and 1998, respectively, more than offset
purchases of available-for-sale securities of $1.5 million and $2.0 million in
the comparable periods, respectively.

     For the six months ended June 30, 1999 and 1998, financing activities
provided net cash of $8.2 million and $449,000 for the six months ended June
30, 1999 and 1998, respectively. The increase in cash provided by financing
activities was due primarily to proceeds from the issuance of common stock
which totaled $8.2 million for the six months ended June 30, 1999 compared to
$59,000 in proceeds from the exercise of common stock options for the prior
year period.

     In December 1997, we signed an agreement for a bank loan facility to
finance existing equipment up to a total of $1,000,000, and future equipment
purchases for up to a total facility limit of $2,500,000. The facility is
secured by the equipment financed. The loan balance is subject to a floating
interest rate equal to the bank's prime rate plus 1.5% per annum (9.25% at June
30, 1999). The unused portion of the total loan facility commitments are
subject to a 0.5% quarterly commitment fee. As of June 30, 1999, we had drawn
down $262,758 on the existing equipment loan facility and had no draw down on
the new equipment loan facility. In connection with this loan facility, we
issued a warrant to purchase 4,500 shares

                                     11
<PAGE>   12


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (CONTINUED)

of common stock at an exercise price of $4.00 per share. This warrant expires
in December 2002. These facilities are subject to specific positive and
negative covenants that include restrictions on the declaration or payment of
any dividend or any other distribution on any of its capital stock. The Company
was in compliance with those covenants at June 30, 1999.

     We closed a follow-on public offering of 1.8 million shares of our common
stock on April 6, 1999. The follow-on offering resulted in net proceeds to us
of approximately $8.3 million. We believe net proceeds from the follow-on
public offering, together with existing cash, cash equivalents and available-
for-sale securities will be sufficient to fund our operations into the third
quarter of the year 2000. However, the amount and timing of our capital
requirements cannot be predicted with certainty. Our future capital
requirements will depend on numerous factors, including the following:

     o timing of regulatory actions on FloSeal,
     o our ability to enter into additional distribution agreements,
     o the timing of our manufacturing scale-up,
     o the extent and timing of any future FloSeal sales, and
     o the nature, timing and success of other products under development.

     We expect to commit substantial capital resources to the development of
commercial-scale manufacturing for FloSeal. The working capital requirements
for the development and commercial launch of our other products are also
expected to be substantial. If we are unable to secure corporate partners to
distribute our products, we will incur substantial additional expenditures in
sales and marketing capability. Given these factors, we anticipate that we will
need additional financing before the end of the second quarter of the year
2000.


ADDITIONAL FACTORS THAT MIGHT AFFECT FUTURE RESULTS

This Report on Form 10-Q contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties.  The Company's
actual results could differ materially from those anticipated by these forward-
looking statements as a result of certain factors, including those set forth
under Item 1 in the Company's Annual Report filed on Form 10-K for the Year
Ended December 31, 1998.


The Year 2000 Computer Problem

     We may be adversely affected by the Year 2000 computer problem.

     Beginning on January 1, 2000, computer systems and software will produce
erroneous results or fail unless they have been modified or upgraded to process
date information correctly. Our primary exposure with respect to this problem
involves third party software we have purchased or licensed for our financial
systems, network and telecommunications equipment. Our financial systems
software is Year 2000 compliant. We have obtained the software needed to make
our network Year 2000 compliant. We have analyzed the Year 2000 risk with
regard to our telecommunications equipment and have concluded that there is no
material Year 2000 risk. We have surveyed all our major vendors and have found
their

                                     12
<PAGE>   13



ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (CONTINUED)

preparedness to be sufficient. We have expended approximately $15,000 in our
internal review and will continue to make certain investments, estimated not to
exceed $50,000, in our software systems and applications to ensure our
information systems are ready for the year 2000.  The necessary funds to
support these renovations have come from our operating budget and we do not
anticipate that we will need to allocate special future funding outside of
historical levels for this item.  The financial impact of our year 2000
readiness effort has not been and is not anticipated to be material to our
financial position or results of operations in any given year.

     To date, we have not encountered any material Year 2000 problems with
software and information systems provided to us by third parties. We have
contacted our suppliers of bovine hides and thrombin, the two essential
supplies we require for FloSeal and have confirmed that there is no material
Year 2000-associated risk of a delay in supply from these sources. We could be
materially adversely affected if third parties, upon whom we depend in order to
run our day-to-day business, experience Year 2000 problems. A worst case
scenario would involve a complete disruption in the delivery of materials,
power, heat and water to our facilities, which would prevent us from being able
to manufacture and ship our products. We have not developed contingency plans
for operation of our business in the event of a complete disruption of
utilities and other services nor do we believe it is feasible to do so. Other
than problems that would be experienced by businesses generally, we do not
anticipate any Year 2000 problems unique to our company.


We did not generate any revenues in 1998 and have generated only limited
revenues so far in 1999; we have a history of losses and we expect losses to
continue in the future.

     We have not achieved profitability and expect to incur net losses through
at least 2001. We incurred net losses of $7.0 million, $10.0 million and $7.7
million for the years ended December 31, 1996, 1997 and 1998, respectively. As
of June 30, 1999, we had an accumulated deficit of $32.7 million. We have not
had significant revenues in any period since our inception. We expect to
increase our operating expenses in the near future, including sales and
marking, manufacturing and research and development expenses, as we approach
commercialization of FloSeal and continue development of our other products. As
a result, we will need to generate significant revenues to achieve and maintain
profitability. The amount of future net losses and the time required to achieve
profitability are highly uncertain. If we do achieve profitability in any
period, we cannot be certain that we will sustain or increase such
profitability on a quarterly or annual basis.

If we do not successfully commercialize FloSeal, our business will suffer.

     We are dependent upon the success of our lead product under development,
FloSeal. We have not yet received necessary regulatory approval for the
commercial sale of FloSeal in the United States. We received a CE mark
providing European regulatory clearance on April 20, 1999.  We have completed
submission of our premarket approval application for FloSeal was accepted for
filing by the FDA and given streamlined review status on April 27, 1999.  Our
success after regulatory approvals, if any, will depend on the medical
community's acceptance of FloSeal and our ability to successfully scale up
commercial manufacturing and develop an effective sales, marketing and
distribution capability. We cannot predict how quickly, if at all, the medical
community will accept FloSeal, or if accepted, the extent of its use. A
surgeon's use of FloSeal will require the surgeon to change from his or her
usage of currently available products with which they are familiar. For FloSeal
to achieve market acceptance, it will have to be priced competitively and offer
clinically significant advantages over other

                                     13
<PAGE>   14


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (CONTINUED)

commercially available products. Even if the market generally accepts FloSeal,
surgeons may choose to use it in fewer procedures than projected. If FloSeal
does not achieve significant market adoption, our business will be materially
and adversely affected.

Significant increases in operating expenses in the future may adversely effect
our operating results and financial condition.

     We plan to significantly increase our operating expenses to expand our
sales and marketing operations and broaden our customer support capabilities as
we approach commercial introduction of FloSeal and fund greater levels of
product development. Our operating expenses, which include sales and marketing,
research and development, and general and administrative expenses, are based on
our expectations of future revenues and are relatively fixed in the short term.
If revenues fall below our expectations, we will not be able to quickly reduce
our spending in response, which would materially adversely affect our operating
results and financial condition.

Our limited operating history, dependence upon an unapproved product and lack
of experience in manufacturing and marketing FloSeal may result in significant
fluctuations of our financial results.

     Our limited operating history, dependence upon FloSeal, currently an
unapproved medical device except in Europe, to provide future revenue and our
lack of experience in manufacturing and marketing FloSeal may likely cause our
operating results to fluctuate dramatically. As a result of these fluctuations
and uncertainties in our operating results, we believe quarter-to-quarter or
annual comparisons of our operating results are not a good indication of our
future performance. In addition at some point in the future, these fluctuations
may likely cause us to perform below the expectations of public market analysts
and investors. If our results were to fall below market expectations, the price
of our common stock would likely fall. Our limited operating results have
varied widely in the past, and we expect they will continue to vary
significantly from quarter-to-quarter as we attempt to commercially produce and
establish our products in the market after the appropriate governmental
approvals, are received.

     We received net proceeds of approximately $8.3 million on April 7, 1999
from our follow-on public offering of common stock. In addition to our current
cash and cash equivalents, these proceeds should be sufficient to fund our
planned operations through the second quarter of the year 2000, which is prior
to the time we expect to achieve profitability. As a result, we must raise
additional funds in order to be successful. Future financing strategies may
include, but are not limited to:

     o partnering relationships with larger medical device companies,
     o bank facilities, or
     o debt or additional equity offerings.

     If we are unable to raise additional funds when needed, we may not be able
to market FloSeal as planned, or continue development of our other products,
which would materially and adversely affect our business.

We will need to raise additional money before we expect to achieve
profitability. If we fail to raise such additional money, our business will
suffer.

                                     14
<PAGE>   15


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (CONTINUED)

     In addition to our current cash and cash equivalents, we will need to
raise additional money in order to run our planned operations until the time we
expect to achieve profitability. We must raise additional funds to be
successful. Alternative financing strategies may include, but are not limited
to:

     o bank facilities,
     o debt or additional equity offerings, or
     o partnering relationships with larger medical device companies.

If we are unable to raise additional funds when needed, we may not be able to
market FloSeal as planned, or continue development of our other products, which
would materially and adversely affect our business.

Additional funding may not be available to us or, if available, may not be
available on commercially reasonable terms.

     When we need to raise additional money to fund our operations, we cannot
be certain funding from any source will be available to us on acceptable terms,
or at all. The amount and the timing of raising additional funds will depend
primarily upon our ability to obtain needed regulatory clearances and generate
revenues from the sale of FloSeal. Our inability to obtain any additional
funding on reasonable terms will materially and adversely affect our business.

If we do not obtain FDA approval, we cannot sell FloSeal in the United States,
which would significantly harm our business.

     FloSeal is considered to be a medical device and will be subject to
extensive regulation in the United States. Before we can market FloSeal or any
of our other products under development in the United States, we must show in
clinical trials our products are safe and effective, and obtain approval from
the FDA, which cannot be guaranteed. Clinical trial data can also be the
subject of differing interpretation. There is no assurance FDA will interpret
our clinical data the same way we do, or that FDA will not require additional
clinical data to support approval.

     We must obtain premarket approval from the FDA for FloSeal before we can
market it. In 1998, we conducted a ten-center, 309-patient pivotal clinical
trial to demonstrate the safety and effectiveness of FloSeal. Our premarket
approval application for FloSeal was accepted for filing by the FDA and given
streamlined review status on April 27, 1999.  We cannot guarantee either the
timing or receipt of approval. The FDA may also limit the uses of FloSeal or
any of our other products during the approval process. Delays in the FloSeal
approval process, limitation of its labeling claims or denial of our premarket
approval application would cause our business to be materially and adversely
affected. We will face a similar process and similar risks for each product we
wish to market, including SinuSeal.

We may have to incur significant costs in attaining and maintaining compliance
with regulations governing our manufacturing operations.

     We are also required to demonstrate compliance with Quality System
regulations before approval of FloSeal, and maintain compliance after approval.
The Quality System regulations are similar to good

                                     15
<PAGE>   16



ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (CONTINUED)

manufacturing practices and relate to product testing and quality assurance, as
well as the maintenance of records and documentation. The FDA enforces the
Quality System regulations through pre-approval and periodic post-approval
inspections. We have never been through a Quality System inspection by the FDA,
and we can provide no assurance we will be able to pass such an inspection or
maintain compliance. If we or any third party manufacturer of our products do
not conform to the Quality System regulations and cannot be brought up to such
a standard, we will be required to find alternative manufacturers do conform.
This may be a long and difficult process. We may have to incur significant
costs to comply with such laws and regulations and our failure to comply with
them could lead to penalties that could have a material and adverse affect on
our business.

International sales of our products will also be subject to extensive
regulation.

     In order to market our products in the member countries of the European
Union, we are required to obtain CE mark certification. We obtained required CE
mark certification for FloSeal in April 1999. CE mark certification is an
international symbol of adherence to certain quality assurance standards and
compliance with the European Medical Devices Directives.

If we fail to maintain regulatory approvals after FloSeal is commercialized,
our business will suffer.

     If we get approval, whether in the United States or internationally, we
will continue to be subject to extensive regulatory requirements. These
regulations are wide-ranging and govern, among other things:

     o product changes or modifications,
     o product manufacturing,
     o Quality System requirements,
     o Medical Device Reporting regulations,
     o FDA's restrictions on promoting products for unapproved, off-label
       uses, and
     o product sales and distribution.

     If we fail to comply or maintain compliance with medical device laws or
regulations, we may be fined and barred from selling our products. If the FDA
believes we are not in compliance with the law, it can:

     o retain or seize our products,
     o issue a recall,
     o stop future violations, and
     o assess civil and criminal penalties against us.

     Our failure to comply with regulatory requirements could have a material
adverse effect on our business. Regulations are also subject to change. We
cannot predict the effect, if any, such changes might have on our business.

                                     16
<PAGE>   17


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (CONTINUED)

Our ability to achieve any significant revenue will depend on our ability to
establish effective sales, marketing and distribution capabilities.

     If we fail to establish a sufficient marketing and distribution or direct
sales force to commercialize FloSeal or any of our other products, our ability
to enter new or existing markets will be impaired. Our inability to effectively
enter these markets would materially and adversely affect our business. The
alternatives for selling our products are:

     o distribution agreements,
     o collaborative arrangements with corporate strategic partners, or
     o our own direct sales force.

     We have not and we cannot be certain we will be able to enter into
additional distribution agreements or collaborative arrangements on a timely
basis or at all, or these relationships will be successful. We have only
limited experience in establishing and managing a direct sales force, from
selling the RapiSeal patch, a prior product line, and we cannot be certain we
can establish and manage a direct sales force for FloSeal. Our ability to
achieve any significant revenue will depend heavily upon our success in
establishing effective sales and marketing capabilities, either through
distribution or collaboration arrangements, a direct sales force or a
combination of these.

We may be unable to effectively commercialize FloSeal because the market for
surgical bleeding control products is highly competitive.

     The market for products that control surgical bleeding is highly
competitive. A wide variety of approved products such as Gelfoam plus thrombin
and fibrin glues, exist today that will compete directly with FloSeal, which
has not yet received approval for domestic sale. Many competitive products are
produced by companies that have competitive advantages over us, such as:

     o greater name recognition,
     o broader product lines,
     o greater distribution capabilities,
     o substantially greater capital resources, and
     o larger marketing, research and development staffs and facilities.

     Such companies include, for example Upjohn, Inc. and Johnson & Johnson. We
cannot be certain FloSeal or our other products will be able to successfully
compete against these products and companies, or any other companies which may
enter the marketplace. In addition, we cannot be certain current competitors or
other companies will not succeed in developing technologies and other products
are more effective or would render our technology or products obsolete or
unable to compete.

We have five pending patent applications. Our failure to obtain issued patents
and, consequently, to protect our proprietary technology, could impair our
competitive position.

                                     17
<PAGE>   18


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (CONTINUED)

     We regard elements of FloSeal as proprietary and we attempt to protect
them through patent and trade secret laws and restrictions, as well as licenses
and contractual confidentiality provisions. Any steps we take to protect our
intellectual property may be inadequate and expensive. Despite our efforts, we
may be unable to prevent third parties from infringing upon or misappropriating
our intellectual property. We have five pending U.S. patent applications
relating to FloSeal and other products under development, and one issued U.S.
patent. We also have two corresponding international patent applications filed
under the Patent Cooperation Treaty and may file additional patent applications
outside the United States at a later date. Obtaining foreign patents may be
more difficult than obtaining domestic patents because of differences in patent
laws. Protection provided by foreign patents, if obtained, and any other
foreign intellectual property protection may be weaker than provided
domestically. Any existing or new patent applications, domestic or
international, may not result in:

     o the priority of our patent applications over others' applications or
       issued patents,
     o the issuance of any patents, or
     o any competitive advantage.

     Furthermore, our competitors may independently develop similar technology
in the future that substantially limits the value of our intellectual property.

We may not be able to commercialize FloSeal or our other products under
development if they infringe existing patents or patents that have not yet
issued, which would materially harm our business.

     We have conducted searches to determine whether our patent applications
interfere with existing patents. Based upon these searches, we believe our
patent applications and products do not interfere with existing patents.
However, we cannot be sure relevant patents have not been issued that could
block our ability to obtain patents or commercialize our products. Moreover,
since U.S. patent applications are not a matter of public record, a patent
application could currently be on file that would stand in our way of obtaining
an issued patent. In addition, a number of medical device and other companies,
universities and research institutions have filed patent applications or have
issued patents relating to compositions and methods for surgical sealing. The
issuance of any of these potentially competing patents could materially and
adversely affect our business.

The European fear of "mad cow disease" could adversely impact acceptance of our
products in Europe.

     There is uncertainty as to the European acceptance of products that
incorporate elements derived from cows. This uncertainty is due to concerns
over transmission of disease from cows to humans. This disease in cows is
commonly referred to as "mad cow disease." Transmission of this disease to
humans may cause serious illness or death. FloSeal and our other products under
development contain thrombin and gelatin derived from bovine tissue only from
traceable U.S. herds. There have been no cases of mad cow disease associated
with cattle from traceable U.S. herds. Despite this fact, concerns over
transmission of this disease to humans may prevent or substantially delay the
acceptance of FloSeal in Europe. A delay could materially and adversely affect
our business.

                                     18
<PAGE>   19


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (CONTINUED)

We cannot be certain we will be able to manufacture FloSeal in high volumes at
commercially reasonable costs.

     We have produced FloSeal for use in Canada and for our U.S. clinical
trial. However, we have no experience manufacturing FloSeal or any of our other
products under development in the amounts necessary to achieve significant
commercial sales. We have expanded our manufacturing capacity, but we cannot be
certain we will be capable of reliable, high-volume manufacturing at
commercially reasonable costs. We believe our manufacturing capacity will be
sufficient through 2000. However, we could encounter problems related to:

     o capacity constraints,
     o production yields,
     o quality control, and
     o shortages of qualified personnel.

     Such problems could affect our ability to adequately scale-up production
of our products and fulfill customer orders on a timely basis, which could
materially and adversely affect our business.

     Our manufacturing facilities will be subject to Quality System
regulations, international quality standards and other regulatory requirements,
including pre-approval inspection for FloSeal and periodic post-approval
inspections for all products. We have never undergone a Quality System
inspection by FDA, and cannot guarantee we will pass such an inspection. Our
failure to implement and maintain our facilities in accordance with these
regulatory requirements and standards will result in a delay or termination of
production. Any delay or termination of production would materially and
adversely affect our business.

We do not have long-term supply arrangements with our key suppliers. There is a
risk we could lose one or more of our key suppliers, which would disrupt our
business.

     We currently purchase bovine hides and thrombin, essential elements of
FloSeal, as well as sterilization services for the end product, from single
suppliers. We purchase bovine hides from Spear Products and thrombin from
GenTrac, Inc. We do not have long-term supply arrangements with any of these
suppliers. In the event any of our current single source suppliers become
unavailable for any reason, we will be required to obtain regulatory approval
of alternative suppliers and our business would be disrupted. Any disruption
caused by a loss of one of these suppliers could materially and adversely
affect our business.

Failure of our end-users to obtain adequate third party reimbursement for the
procedures utilizing FloSeal or our other products could adversely affect our
business.

     In the United States, health care providers that purchase medical devices,
such as FloSeal and our other products under development, generally rely on
third party payors, such as federal Medicare, state Medicaid and private health
insurance plans, to reimburse some or all of the cost of the procedure in which
the medical device was used. We expect in a prospective payment system, such as
the one utilized by the Health Care Financing Administration which manages the
federal Medicare program, and whose polices are followed by state Medicaid and
private third party payors, our products' costs will be incorporated into the
overall cost of the procedures, and there will not be separate reimbursement
for our products. Our

                                     19
<PAGE>   20


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (CONTINUED)

success depends, in part, upon health care providers obtaining satisfactory
reimbursement from third party payors for surgical procedures that may use
FloSeal and our other products under development. Failure by our products'
users to obtain sufficient reimbursement from third party payors for procedures
in which our products are used or adverse changes in governmental and private
third party payors' policies toward reimbursement for such procedures could
mean that they reduce or eliminate purchases of our products, which would
materially and adversely affect our business.

     If we obtain the necessary foreign regulatory approvals, international
market acceptance of our products would be dependent, in part, upon the
availability of reimbursement for our products or procedures that use our
products by the prevailing health care payment systems. Reimbursement and
health care payment systems in international markets vary significantly by
country and include both government-sponsored health care and private
insurance. We intend to seek international reimbursement approvals where
applicable. We cannot be certain any such approvals will be obtained in a
timely manner, if at all. Failure to receive international reimbursement
approvals could materially and adversely affect our business.

We may face product liability claims related to the use or misuse of our
products.

     We face an inherent business risk of product liability claims in the event
the use or misuse of our products results in personal injury or death. We have
not experienced any such claims to date, but we cannot be certain, in
particular after commercial introduction of our products, that we will not
experience losses due to product liability claims. We currently maintain
liability insurance with combined coverage limits of $3.0 million on a claims-
made basis. We cannot be certain that the insurance policies' coverage limits
are adequate. The insurance is expensive, difficult to obtain and may not be
available in the future on acceptable terms, or at all. Any claims against us,
regardless of their merit, could materially and adversely affect our business.

Trading in our shares could be subject to extreme price fluctuations which
could adversely affect your investment.

     The market price of our common stock has fluctuated widely in the past and
is likely to fluctuate in the future. We discuss the fluctuations in the price
of our stock in the section entitled "Price Range of Common Stock" in our
Annual Report on Form 10-K. The stock prices of medical device companies over
the last few years have been volatile and difficult to predict.

We have implemented anti-takeover provisions, any of which may reduce the
market price of our common stock.

     Provisions of our Certificate of Incorporation and Bylaws and Delaware
law, as well as our Preferred Shares Rights Agreement could make it more
difficult for a third party to acquire us, even if the acquisition would be
beneficial to our stockholders. We discuss these provisions in detail in the
section entitled "Description of Capital Stock" in our Annual Report on Form
10-K.

     The issuance of preferred stock with special voting and dividend
privileges under the terms of the Preferred Shares Rights Agreement may have
the effect of delaying, deferring or preventing a change in control without any
further action by the stockholders. Any such issuance may materially and
adversely affect the price of the common stock. The preferred stock may also
result in the loss of the voting control of the holders of common stock to the
holders of the preferred stock.

                                     20
<PAGE>   21


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (CONTINUED)

     We also have a staggered board of directors. The board of directors
consists of seven authorized members and three classes with only one class
being elected in any one year. This staggered board could make it more
difficult for a third party to acquire us, even if the acquisition would be
beneficial to our stockholders.

Our actual results could differ materially from those anticipated in our
forward-looking statements.

     This Report on Form 10-Q contains forward-looking statements that involve
risks and uncertainties. Discussions containing forward-looking statements may
be found in the material set forth under the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" as
well as in the report generally. We used words such as "believes," "intends,"
"expects," "anticipates," "plans," and similar expressions identify forward-
looking statements. This Report on Form 10-Q also contains statements regarding
the cardiovascular, spinal and vascular surgery markets, as well as the suture
and staples market and topical hemostat market. You should not place undue
reliance on these forward-looking statements. Our actual results could differ
materially from those anticipated in the forward-looking statements for the
reasons described above and elsewhere in this prospectus.



ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Reference is made to Part II, Item 7A, "Quantitative and Qualitative
Disclosures About Market Risk", in the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1998. The average interest rate for our
available-for-sale securities, as of June 30, 1999, was 4.93% compared to 7.72%
reported in the Form 10-K for the year ended December 31, 1998. No other
material changes have occurred since the filing by the Registrant on Form 10-K
for the year ended December 31, 1998.

Fusion Medical Technologies Inc. and RapiSeal are registered trademarks of
Fusion Medical Technologies, Inc. FloSeal Matrix and FloSeal are trademarks of
Fusion Medical Technologies, Inc.

                                     21
<PAGE>   22


PART II-OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

           None.


ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS


           The Registrant closed a follow-on public offering of 1.8 million
           shares of our common stock on April 6, 1999. The follow-on
           offering resulted in net proceeds to the Registrant of
           approximately $8.3 million.

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

           The Company's Annual Meeting of Shareholders (the "Annual
           Meeting") was held on May 20, 1999 at 10:00 a.m. local time, at
           its principal corporate offices located at 1615 Plymouth Street,
           Mountain View, California. The Annual Meeting was held for the
           purpose of (a) electing one Class I Director to serve for three
           years expiring upon the 2002 Annual Meeting of the Stockholders,
           (b) approving an amendment to the Company's 1993 Stock Option
           Plan (c) ratifying the appointment of PricewaterhouseCoopers LLP
           as the Company's independent accountants for the fiscal year
           ending December 31, 1999 and (d) transacting such other business
           as may properly come before the Annual Meeting. The three matters
           below were voted upon and approved:

            o Olav B. Bergheim was duly elected as a Class I Director to
              serve for three years expiring upon the 2002 Annual Meeting of
              the Stockholders, or until a successor is duly elected and
              qualified, with 3,752,189 votes cast for election and 80,700
              votes withheld.

            o The Amendment to the 1993 Stock Option Plan increasing the
              number of shares of Common Stock authorized for issuance by
              750,000 shares to 2,640,492 shares was approved with 3,171,713
              votes cast for the amendment, 660,976 votes against, and 200
              votes abstained.

            o PricewaterhouseCoopers LLP was appointed as Independent
              Accountants for the fiscal year ended December 31, 1999 with
              3,832,489 votes cast for the appointment, 300 against, and 100
              abstained.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (a)   Exhibits.
           --------

<TABLE>
<CAPTION>
              Exhibit
              Number                  Description
              ------   -------------------------------------------------

              <S>     <C>
               10.1*   Purchase Agreement dated July 1, 1999 between the
                       Registrant and Sulzer Spin-Tech, Inc.

               27.1    Financial Data Schedule.

* Confidential treatment requested for portions of this Exhibit.

</TABLE>

                                      22
<PAGE>   23


     (b)   Reports on Form 8-K. The Company did not file any Reports on Form
           -------------------
           8-K during the quarter ended June 30, 1999.

                                     23
<PAGE>   24



                                 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.



                                      FUSION MEDICAL TECHNOLOGIES, INC.
                                                 (Registrant)


Date:     August 16, 1999             By:   /s/ LARRY J. STRAUSS
                                         -------------------------------
                                               Larry J. Strauss

                                              Vice President and
                                            Chief Financial Officer
                                            (Authorized Officer and
                                           Principal Financial Officer)

                                     24
<PAGE>   25