SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-QSB

(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934

                     For the quarter ended November 30, 1997

                                       OR

[ ] TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
    OF 1934 

                 For the transition period from         to

                         Commission File Number 1-11047

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

               Delaware                                   22-2870438
    (State or other jurisdiction                       (I.R.S. Employer
   of incorporation or organization)                 Identification Number)


                              Bernal Corporate Park
                 7068 Koll Center Parkway, Pleasanton, CA 94566
                    (Address of principal executive offices)

                                 (510) 417-8812
                           (Issuer's telephone number)


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

As of November 30,  1997,  928,464  shares of Common  Stock,  122,583  shares of
Redeemable Convertible Preferred Stock and 28,068 shares of Series A Convertible
Redeemable Preferred Stock were outstanding.


<PAGE>


                           SPARTA SURGICAL CORPORATION

                                   Form 10-QSB


                                      INDEX


                                                                           Page
                                                                          Number

Part I.    Financial Information

           Item 1.    Financial Statements

                      Condensed Consolidated Balance
                      Sheet as of November 30, 1997                        1 - 2

                      Condensed Consolidated Statements
                      of Operations for the three months and
                      nine months ended November 30, 1997 and 1996             3

                      Condensed Consolidated Statements
                      of Cash Flows for the nine months
                      ended November 30, 1997 and 1996                         4

                      Notes to Financial Statements                            5

           Item 2.    Management's Discussion and
                      Analysis of Financial Condition
                      and Results of Operations                            6 - 9

Part II.   Other Information and Signatures                              10 - 13


<PAGE>


                           SPARTA SURGICAL CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET
                               November 30, 1997
                                   (Unaudited)

                                     ASSETS


Current Assets:
 Cash and cash equivalents ..................................       $        --
 Accounts receivable - trade, net of allowance
   for doubtful accounts of $34,131 .........................           374,402
 Inventories ................................................         2,161,036
 Prepaid expenses ...........................................            73,674
                                                                    -----------
    Total Current Assets ....................................         2,609,112
                                                                    -----------
Property and Equipment, at cost:
 Machinery and equipment ....................................           491,923
 Leasehold improvements .....................................            15,733
                                                                    -----------
                                                                        507,656
Less accumulated depreciation ...............................          (298,188)
                                                                    -----------
    Net Property and Equipment ..............................           209,468
                                                                    -----------
Other Assets:
 Intangible assets, net of
  accumulated amortization ..................................           928,027
 Deposits and other .........................................           139,604
 Notes receivable - related entities ........................           512,095
                                                                    -----------
     Total Other Assets .....................................         1,579,726
                                                                    -----------
     Total Assets ...........................................       $ 4,398,306
                                                                    ===========


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


                                       -1-


<PAGE>


                           SPARTA SURGICAL CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                 November 30, 1997
                                   (Unaudited)
                                   (Continued)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
 Accounts payable - trade ......................................    $   656,448
 Accrued expenses:
  Payroll taxes and wages ......................................         48,538
  Interest and other ...........................................          7,383
  Other liabilities ............................................        147,380
 Dividends payable .............................................          3,509
 Notes payable .................................................        165,000
 Royalties payable .............................................         40,465
 Current portion of long-term debt .............................        238,882
                                                                    -----------
     Total Current Liabilities .................................      1,307,605
                                                                    -----------
Long-Term Debt, net of current portion above:
 Obligations under capital leases ..............................         83,023
 Financial institutions and other ..............................      2,275,702
 Less current portion above ....................................       (238,882)
                                                                    -----------
       Total Long-Term Debt ....................................      2,119,843
                                                                    -----------
Other liabilities ..............................................        162,047
                                                                    -----------
Commitments and contingencies ..................................             --

Stockholders' Equity:
 Preferred stock: $4.00 par value, 750,000 shares authorized;
   Non-cumulative Convertible Redeemable Preferred Stock:
    165,000 shares authorized, 122,583 shares issued
     and outstanding ...........................................        490,332
   Series A Cumulative Convertible Preferred Stock:
    30,000 shares authorized, 28,068 shares issued
     and outstanding ...........................................        112,272
 Common Stock: $.002 par value, 8,000,000 shares authorized,
   928,464 shares issued and outstanding .......................          1,857
 Additional paid in capital ....................................      8,353,057
 Accumulated deficit ...........................................     (8,148,707)
                                                                    -----------
      Total Stockholders' Equity ...............................        808,811
                                                                    -----------
      Total Liabilities and Stockholders' Equity ...............    $ 4,398,306
                                                                    ===========


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


                                      -2-


<PAGE>
<TABLE>


                                                     SPARTA SURGICAL CORPORATION
                                           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                             (Unaudited)

<CAPTION>
                                                                      Three Months Ended                   Nine Months Ended
                                                                         November 30,                          November 30,
                                                               ------------------------------        ------------------------------
                                                                    1997               1996               1997              1996
                                                                    ----               ----               ----              ----
<S>                                                            <C>                <C>                <C>                <C>
Net Sales ..............................................       $   609,199        $   581,683        $ 1,818,766        $ 1,639,314
Cost of sales ..........................................           299,451            245,084            884,287            685,821
                                                               -----------        -----------        -----------        -----------
     Gross Profit ......................................           309,748            336,599            934,479            953,493

Selling, general and administrative
 expenses ..............................................           365,918            418,890          1,190,195          1,483,182
Research and development expense .......................             2,582             13,352              7,687             39,852
Depreciation and amortization ..........................            83,724             59,599            228,973            177,826
Settlement of litigation ...............................                --            160,000                 --            855,712
                                                               -----------        -----------        -----------        -----------
  Income (Loss) From Operations ........................          (142,476)          (315,242)          (492,376)        (1,603,079)
                                                               -----------        -----------        -----------        -----------
Other Income (Expense):
  Interest and other income ............................                --              3,248             85,000             10,597
  Interest expense .....................................           (73,532)           (42,497)          (210,517)          (170,635)
                                                               -----------        -----------        -----------        -----------
     Total Other Income (Expense) ......................           (73,532)           (39,249)          (125,517)          (160,038)
                                                               -----------        -----------        -----------        -----------
Income (Loss) Before Provision
 for Income Taxes ......................................          (216,008)          (354,491)          (617,893)        (1,763,117)
Provision for income taxes .............................                --              4,703                 --              4,703
                                                               -----------        -----------        -----------        -----------
Net Income (Loss) ......................................          (216,008)          (359,194)          (617,893)        (1,767,820)
Preferred stock dividends ..............................            (3,509)            (3,509)           (24,560)           (96,594)
                                                               -----------        -----------        -----------        -----------
Net Income (Loss) Applicable to
 Common Stockholders ...................................       $  (219,517)       $  (362,703)       $  (642,453)       $(1,864,414)
                                                               ===========        ===========        ===========        ===========
Net Income (Loss) Per Share of
 Common Stock:
  Primary:
   Weighted average number of
    common shares outstanding ..........................           924,033            760,338            869,667            732,757
                                                               ===========        ===========        ===========        ===========
    Net income (loss) per common share .................       $      (.24)       $      (.48)       $      (.74)       $     (2.54)
                                                               ===========        ===========        ===========        ===========
  Fully diluted:
   Weighted average number of
    common shares outstanding ..........................           924,033            760,338            869,667            732,757
                                                               ===========        ===========        ===========        ===========
     Net income (loss) per common share ................       $      (.24)       $      (.48)       $      (.74)       $     (2.54)
                                                               ===========        ===========        ===========        ===========


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


                                                                 -3-


</TABLE>

<PAGE>


                           SPARTA SURGICAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                          Nine Months Ended
                                                             November 30,
                                                     --------------------------
                                                          1997          1996
                                                          ----          ----
Cash Flows From Operating Activities:
 Net income (loss) ...............................   $  (617,893)   $(1,767,820)
 Adjustments to reconcile net income (loss) to net
  cash provided (used) by operating activities:
    Depreciation and amortization ................       228,973        177,826
    Settlement of litigation .....................            --        433,212
    Reduction of accrued liabilities .............       (85,000)            --
    Changes in assets and liabilities:
     (Increase) in accounts receivable ...........       (52,725)       (25,005)
     Decrease in inventories .....................        99,423         75,444
     (Increase) Decrease in prepaid expenses
      and other ..................................       (31,404)        15,942
     (Increase) in deposits and other ............       (40,674)        (4,351)
     (Decrease) in accounts payable and
      accrued expenses ...........................      (357,465)      (284,117)
                                                     -----------    ----------- 
     Net Cash (Used) By Operating Activities .....      (856,765)    (1,378,869)
                                                     -----------    ----------- 
Cash Flows From Investing Activities:
 Capital expenditures ............................        (5,967)       (11,131)
 (Increase) in intangible assets .................      (116,868)       (31,951)
 (Increase) Decrease in receivables
  from related entities ..........................        17,267         (6,930)
 Principal payments received on notes receivable .       578,399             --
                                                     -----------    -----------
     Net Cash Provided (Used) By Investing
      Activities .................................       472,831        (50,012)
                                                     -----------    -----------
Cash Flows From Financing Activities:
 Proceeds from  borrowing ........................     4,118,482      3,186,542
 Principal payments on notes payable .............    (3,728,298)    (1,834,958)
 Principal payments on accrued royalties .........        (6,250)       (40,203)
 Issuance of common stock upon exercise
  of Warrants ....................................            --        117,500
                                                     -----------    -----------
     Net Cash Provided By Financing Activities ...       383,934      1,428,881
                                                     -----------    -----------
     Net Increase (Decrease) in Cash and
      Cash Equivalents ...........................            --             --
     Cash and Cash Equivalents at Beginning
      of Period ..................................            --             --
                                                     -----------    -----------
     Cash and Cash Equivalents at End of Period ..   $        --    $        --
                                                     ===========    ===========
Supplemental Disclosure of Cash Flow
 Information:
  Cash paid during the period for:
    Interest .....................................   $   140,030    $    98,211
    Income taxes .................................            --          4,703

Supplemental Disclosure of Noncash
 Investing and Financing Activities:
   Conversion of Preferred Stock
    into Common Stock ............................   $   152,380    $   522,088
   Dividends payable on Series A
    Convertible Preferred Stock ..................         3,509         21,677
   Stock dividends paid on Series A
    Convertible Preferred Stock ..................        21,051          3,509
   Stock dividends paid on Redeemable
    Preferred Stock ..............................            --         71,409
   Issuance of Common Stock and Warrants
    in payment of loan costs .....................       235,950             --


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


                                      -4-


<PAGE>


                           SPARTA SURGICAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.   The  accompanying  financial  information  of the  Company is  prepared  in
     accordance with the rules prescribed for filing condensed interim financial
     statements and,  accordingly,  does not include all disclosures that may be
     necessary for complete  financial  statements  prepared in accordance  with
     generally accepted  accounting  principles.  The disclosures  presented are
     sufficient,  in  management's  opinion,  to make  the  interim  information
     presented not misleading.  All adjustments,  consisting of normal recurring
     adjustments,  which are necessary so as to make the interim information not
     misleading,  have been made. Results of operations for the six months ended
     November 30, 1997 are not  necessarily  indicative of results of operations
     that  may be  expected  for  the  year  ending  February  28,  1998.  It is
     recommended  that this  financial  information  be read  with the  complete
     financial statements included in the Company's Annual Report on Form 10-KSB
     for the year ended February 28, 1997  previously  filed with the Securities
     and Exchange Commission.


                                      -5-


<PAGE>


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

Three months ended November 30, 1997
as Compared to Three months ended November 30, 1996

     Net sales for the three  months ended  November  30, 1997  ("Third  Quarter
Fiscal 1998") were $609,199,  a 4.7% increase from net sales of $581,683 for the
three month period ended November 30, 1996 ("Third  Quarter  Fiscal 1997").  The
net sales increase during the Third Quarter Fiscal 1998 as compared to the Third
Quarter  Fiscal 1997 is the result of a decrease of $53,258 or 16.9% in surgical
product  sales from  $315,967  to  $262,709  offset by an increase of $80,774 or
30.4% in  electrotherapy  product sales from $265,716 to $346,490.  The net loss
for the Third Quarter  Fiscal 1998 was  $216,008,  a decrease of $143,186 from a
net loss of $359,194 for the Third Quarter Fiscal 1997. The decrease in net loss
is primarily due to a one time $160,000  expense  related to the settlement of a
litigation proceeding which was incurred during the Third Quarter Fiscal 1997.

Nine months ended November 30, 1997
as Compared to Nine months ended  November 30, 1996

     Net sales for the nine months ended  November 30, 1997 ("Nine Months Fiscal
1998") were  $1,818,766,  a 11.0%  increase from net sales of $1,639,314 for the
nine months ended November 30, 1996 ("Nine Months Fiscal  1997").  The net sales
increase  during the Nine  Months  Fiscal  1998 as  compared  to the Nine Months
Fiscal 1997 is the result of an increase of $280,869 or 38.3% in  electrotherapy
product sales from $732,804 to $1,013,673 coupled with a decrease of $101,417 or
11.2% in surgical product sales from $906,510 to $805,093. The increase in sales
for the electrotherapy  product line can be primarily  attributed to the receipt
of two non-cancelable  purchase orders from Henley Healthcare  ("Henley") in the
approximate aggregate amount of $600,000. During the Nine Months Fiscal 1997 the
Company  had  approximately  $400,000  in sales to Henley.  Consistent  with the
Company's  efforts to increase sales, in August 1997, the Company signed a three
year $1,200,000  exclusive  manufacturing  agreement with Henley  appointing the
Company  as  the  sole   developer  and   manufacturer   of  Henley's   patented
SYNAPS/T.E.A.M.  Analgesia  unit.  The  Company  anticipates  it  will  commence
shipments under this agreement in April 1998.

     Since  the sale of the  wound  care  product  line in  December  1995,  the
Company's  acquisition search efforts have increased  significantly as the focus
remains in the identification and review of a number of candidates. In addition,
to help us grow through acquisitions,  in July 1997, the Company obtained a $2.5
million line of credit from NationsCredit Commercial Corporation,  A NationsBank
Company.

     Gross profit was $934,479 or 51.4% of net sales for the Nine Months  Fiscal
1998 as compared  to  $953,493 or 58.2% of net sales for the Nine Months  Fiscal
1997.  The decrease in gross profit  percentage is primarily due to the increase
in electrotherapy  product sales. In general,  the  electrotherapy  product line
generates lower gross profits than the surgical product line.

     Selling,  general and administrative  ("SG&A") expenses for the Nine Months
Fiscal 1998 were  $1,190,195,  a 19.8% decrease from SG&A expenses of $1,483,182
for the Nine Months  Fiscal  1997.  The  decrease in SG&A  expenses for the Nine
Months  Fiscal 1998 as compared to the Nine Months  Fiscal 1997 is primarily due
to legal  expenses  incurred  during the Nine Months  Fiscal 1997 which were not
repeated  during the Nine Months Fiscal 1998.  In addition,  lower SG&A expenses
were  experienced  for  the  Nine  Months  Fiscal  1998  due  to  the  Company's
implementation  in June 1997 of a  restructuring  plan  involving a reduction of
personnel, a Company wide reduction in salaries, and an overall cost containment
program.

     Research and development  ("R&D")  expenses for the Nine Months Fiscal 1998
were $7,687,  a 80.7%  decrease from R&D expenses of $39,852 for the Nine Months
Fiscal  1997.  In Fiscal  1997,  the  Company R&D  efforts  were  focused on its
redesign of the TENS units resulting in increased quality and lower product cost
for the electrotherapy product line.


                                      -6-


<PAGE>


     Depreciation and  amortization  ("D&A") expenses for the Nine Months Fiscal
1998 were $228,973,  a 28.8% increase from D&A expenses of $177,826 for the Nine
Months Fiscal 1997.  During the Nine Months Fiscal 1998, D&A expenses  increased
due to the amortization of $127,500,  over a two year period and $108,000 over a
four year  period,  resulting  from the issuance of common stock and warrants in
payment of loan costs. See "Liquidity and Capital Resources".

     Total  other  expense  for the Nine  Months  Fiscal  1998 was  $125,517,  a
decrease  of $34,521  from total other  expense of $160,038  for the Nine Months
Fiscal  1997.  The  decrease  in total  other  expense is  primarily  due to the
reduction of $85,000 in accrued  liabilities offset by an increase of $39,882 in
net interest expense  resulting  primarily from higher loan balances and banking
expenses to the Company's primary lender.

     As a result of the foregoing,  the net loss for the Nine Months Fiscal 1998
was  $617,893,  a decrease of $1,149,927  from a net loss of $1,767,820  for the
Nine Months  Fiscal 1997.  The  decrease in net loss for the Nine Months  Fiscal
1998 as compared to the Nine Months  Fiscal 1997 is primarily  due to a decrease
in SG&A expenses, a settlement expense in the amount of $855,712 incurred during
the Nine Months Fiscal 1997 which was not repeated during the Nine Months Fiscal
1998 and a decrease in total other expense as discussed above.

     Primary  and fully  diluted  loss per  share  was $.74 for the Nine  Months
Fiscal 1998 as compared to a primary and fully  diluted  loss per share of $2.54
for the Nine Months  Fiscal 1997.  The primary and fully  diluted loss per share
computation  for the Nine Months  Fiscal 1998 reflect  accrued  dividends on the
Series A Convertible Preferred Stock which were paid in December 1997.

LIQUIDITY AND CAPITAL RESOURCES

     Since inception, the Company's primary sources of working capital have been
revenues  from  operations,  bank and private  party loans and proceeds from the
sale of securities.

     As of November 30, 1997,  the Company had net operating loss carry forwards
of  approximately  $6,500,000.  Availability of the Company's net operating loss
carry forwards,  if not utilized,  will expire at various dates through the year
2012.

     The  Company's  working  capital at  November  30, 1997 was  $1,301,507  as
compared to  $1,066,176  at February 28, 1997.  The  Company's  working  capital
position increased by $235,331.

     On or about  November 20, 1996,  Tecnol  initiated  an  arbitration  action
against the Company before the American Arbitration Association. Tecnol asserted
claims  allegedly  arising out of Tecnol's  purchase  of the  Company's  medical
product  line in December  1995.  On March 12,  1997,  the  Company  settled the
arbitration  action initiated by Tecnol.  Under the settlement  agreement Tecnol
paid the Company $575,000 in  consideration  for the cancellation by the Company
of a $665,000  note due from  Tecnol and the  dismissal  with  prejudice  of the
arbitration action by both parties.

     On March 19,  1997,  the  Company  repaid  $575,000  against  the amount of
$740,000 in principal  and accrued  interest  owing under a $600,000  promissory
note issued to Halstead  LLC  ("Halstead")  a company  controlled  by Charles C.
Johnston ("Mr.  Johnston"),  a principal stockholder of the Company. This amount
was required to be paid by the Company upon the Company's negotiated  settlement
with Tecnol which resulted in Tecnol paying the Company  $575,000.  On that same
date, the Company issued Halstead a promissory  note in the principal  amount of
$165,000  bearing  12%  interest  per  annum due  December  1997.  The  $165,000
promissory note represents the remaining  principal  amount owed of $25,000 plus
the $140,000 in accrued interest under the $600,000 note. The promissory note is
personally guaranteed by Mr. Reiner. As of January 14, 1998, the Company had not
made any payments against the $165,000 promissory note.

     On March 20, 1997, the Company borrowed  $375,000 from J&C Resources,  Inc.
("J&C  Resources"),  a  company  controlled  by  Mr.  Johnston  evidenced  by  a
promissory note bearing 15% interest per annum due in March 1999. The promissory
note is personally  guaranteed by Mr. Reiner.  In connection with the financing,
the Company issued J&C Resources  50,000 shares of Common Stock and a warrant to
purchase up to 16,667 shares of its Common Stock  exercisable  at $.60 per share
at any time until March 17,  2001.  The  Company  also  entered  into a two year
consulting  agreement with J&C Resources in which the Company is required to pay
J&C Resources $50,000 per year for consulting services.

                                      -7-


<PAGE>



     In April 1997, the Company entered into a debt repayment agreement with Mr.
Reiner. The amounts owed by Mr. Reiner will be repaid at varying amounts through
April 2004.  In addition,  all amounts owed by Mr.  Reiner are extended to April
2004 and no  interest  will be charged  on the notes owed by Mr.  Reiner and the
Company will reimburse Mr. Reiner for certain income tax related considerations.
In June 1997, the Company  amended its debt repayment  agreement with Mr. Reiner
increasing  the repayment  amount for the next twelve months from  approximately
$24,000 to  $50,000.  Due to the  increase in  payments  from Mr.  Reiner to the
Company,  the notes and accounts  receivable from Mr. Reiner are being presented
as a long term asset  rather than a  reduction  of  stockholders'  equity in the
financial  statements as presented on the Company's Annual Report on Form 10-KSB
for the year ended  February 28, 1997  previously  filed with the Securities and
Exchange Commission. As of January 14, 1998, Mr. Reiner had repaid approximately
$21,000 to the Company.

     In May 1997, the Company  entered into a working  capital  credit  facility
agreement with Mr. Reiner  pursuant to which Mr. Reiner is providing the Company
with up to $200,000 in working  capital on an as needed basis.  Working  capital
advances are evidenced by demand promissory notes bearing 12% interest per annum
due the  earlier of (i) thirty (30)  calendar  days from the  advance;  (ii) the
closing of a minimum of $1,000,000  equity or debt financing by the Company;  or
(iii) Mr. Reiner's demand with a five day notice to the Company.  The promissory
notes are  subordinated to the Company's senior lender with a junior lien on all
assets of the Company.  In connection  with the financing,  the Company gave Mr.
Reiner the right to convert any portion of the outstanding  amount owed into the
Company's  Common Stock at 75% of the average  closing bid price during the five
(5) business days prior to the  conversion  as reported by Nasdaq.  In addition,
the Company  issued Mr.  Reiner a warrant to purchase up to 97,000 shares of its
common stock  exercisable  at $1.28 per share at any time until May 21, 2002. As
of January 14, 1998,  the  outstanding  balance on the loans from Mr. Reiner was
$66,500.

     On  July  25,   1997,   NationsCredit   Commercial   Funding   Division  of
NationsCredit  Commercial Corporation,  A NationsBank Company  ("NationsCredit")
provided  the  Company  with  a  48-month  Revolving  Line  of  Credit  of up to
$2,500,000 (the "Loan"). The Company agreed to pay NationsCredit interest on the
average  outstanding  principal  amount of the Loan at a per annum rate of prime
plus 3%. The Loan is advanced to the Company  based on a percentage  of eligible
assets and is secured by a first position security interest on all of the assets
of the Company.  In addition,  $250,000 of the Loan is personally  guaranteed by
Thomas F. Reiner, the Company's Chairman, President and Chief Executive Officer.
As of November 30, 1997, the outstanding  balance on the Loan was $1,568,534 and
approximately $25,000 in credit was available. The Loan is being used to provide
working capital for current operations.

     In  connection  with the  financing,  the Company  issued  NationsCredit  a
warrant to purchase up to 42,500 shares of its Common Stock exercisable at $1.11
per share at any time until  July 25,  2002.  In  consideration  for Mr.  Reiner
providing his personal  guarantee for the NationsCredit  Loan, on July 25, 1997,
the Company  issued to Mr. Reiner 80,000 shares of Common Stock and an option to
purchase up to 150,000 of its Common Stock exercisable at $1.25 per share at any
time until July 25, 2004.

     On August 22,  1997,  the Nasdaq Stock Market  received  approval  from the
Securities  and  Exchange  Commission  for the  proposed  changes to its listing
requirements.  These changes materially enhance the threshold criteria necessary
to qualify for listing on the Nasdaq  National  and  SmallCap  Markets.  The new
listing requirements for continued listing will become effective on February 23,
1998.   Currently  the  Company  does  not  meet  the  new  net  tangible/market
capitalization/net  income  requirements  for  continued  listing  on the Nasdaq
SmallCap  Market and no assurance  can be given that the Company will be able to
meet  such  requirement.  If the  Company  is  unable  to meet  the new  listing
requirements,  its  securities  will be  subject  to  delisting  from the Nasdaq
SmallCap Market.  Trading, if any, in the Company's  securities would thereafter
be  conducted  in the OTC Bulletin  Board which could  substantially  reduce the
markets for the Company's securities.

         The Company  relies on outside  suppliers  for many  components  of its
products.  From  time  to time  the  Company  has  experienced  difficulties  in
obtaining some components,  and there can be no assurance that its manufacturing
sources will be able to meet the Company's  product needs on a timely basis.  At
present  the  Company  obtains  its  TENS  units  and  certain  of its  surgical
disposables  from single sources.  Although the Company  procures its TENS units
under a  manufacturing  agreement,  a lack of  availability  of product from its
current  supplier  would  have  a  material  adverse  effect  on  the  Company's
operations.

                                      -8-


<PAGE>


         Net sales to Henley  accounted for  approximately  22% of the Company's
revenues for the Nine Month Fiscal 1998. Although the Company has non-cancelable
purchase orders and a manufacturing  contract from Henley for its electrotherapy
products,  the loss of Henley as a customer would have a material adverse effect
on the Company's operations.

     The Company may make  additional  acquisitions  of companies,  divisions of
companies  or  products  in the  future.  Acquisitions  entail  numerous  risks,
including  difficulties  or an inability  to  successfully  assimilate  acquired
operations  and products,  diversion of  management's  attention and loss of key
employees of acquired businesses,  all of which the Company has encountered with
previous  acquisitions.  Future acquisitions by the Company may require dilutive
issuances of equity  securities and the  incurrence of additional  debt, and the
creation  of  goodwill  or  other   intangible   assets  that  could  result  in
amortization expense.  These factors could have a material adverse effect on the
Company's business, operating results and financial condition.

     The Company's current operations continue to be cash flow negative, further
straining the Company's working capital resources.  The Company's future capital
requirements will depend on numerous  factors,  including the acquisition of new
product lines and/or other business operations and the continued  development of
existing  product sales,  distribution and marketing  capabilities.  In order to
continue its current level of  operations,  it will be necessary for the Company
to obtain additional working capital, from either debt or equity sources. If the
Company is unable to obtain such additional working capital, it may be necessary
for  the  Company  to   restructure   its   operations  to  reduce  its  ongoing
expenditures.

     Except for the historical  information  contained  herein,  the matters set
forth in this report are  forward-looking  statements  within the meaning of the
"safe harbor"  provisions  of the Private  Securities  Litigation  Reform Act of
1995. These  forward-looking  statements are subject to risks and  uncertainties
that may cause  actual  results to differ  materially.  These risks are detailed
from time to time in the Company's  periodic  reports filed with the  Securities
and Exchange  Commission,  including the Company's Annual Report on Form 10-KSB,
Quarterly   Reports  on  Form   10-QSB  and  other   periodic   filings.   These
forward-looking  statements  speak  only  as of the  date  hereof.  The  Company
disclaims any intent or obligation to update these forward-looking statements.


                                      -9-


<PAGE>


Part II. Other Information

Item 1. Legal Proceedings
          None 

Item 2. Changes in Securities
          None 

Item 3. Defaults Upon Senior Securities
          None

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

          The Annual  Meeting of  Stockholders  was held on November 25, 1997 in
          which  shareholders  of the Company  approved all three  matters voted
          upon at the  meeting.  The matters  voted upon and the number of votes
          cast  for,  against,  abstain,  broker  non-votes  (which  occur  if a
          beneficial owner of stock where shares are held in a brokerage or bank
          account fails to provide the broker or the bank voting instructions as
          to such shares) and unvoted as to each such matter follows:

          1.   To elect three (3) directors of the Company;
          2.   To  approve  the  creation  of  the  Company's  1997  Annual  and
               Long-Term Incentive-Performance Plan; and
          3.   To ratify the  appointment of Grant Thornton LLP as the Company's
               independent   public  accountants  for  the  fiscal  year  ending
               February 28, 1998.

                                                              Broker
                Proposal          For     Against   Abstain  Non-votes   Unvoted
                --------          ---     -------   -------  ---------   -------
          Proposal No. 1
            Thomas F. Reiner    777,487    19,686        0          0    163,847
            Michael Y. Granger  779,200    17,973        0          0    163,847
            Allan J. Korn       779,034    18,139        0          0    163,847
          Proposal No. 2        320,852    37,659    3,247    435,415    163,847
          Proposal No. 3        788,391     5,767    3,014          0    163,847

Item 5. Other Information
          None

Item 6. Exhibits and Reports on Form 8-K

          A.   Exhibits

               Computation of Primary Earnings Per Share (Page 11)
               Computation of Fully Diluted Earnings Per Share (Page 12)
               Exhibit 27 - Financial Data Schedule

          B.   Reports on Form 8-K

               The Company filed a Form 8-K dated October 9, 1997 which reported
               the  dismissal  of Angell & Deering  as the  Company's  principal
               independent  accountant engaged to audit the Company's  financial
               statements  and the  appointment of Grant Thornton LLP as its new
               independent accountants.


                                      -10-


<PAGE>

<TABLE>


                                                     SPARTA SURGICAL CORPORATION
                                              COMPUTATION OF PRIMARY EARNINGS PER SHARE

<CAPTION>
                                                                       Three Months Ended                    Nine Months Ended
                                                                           November 30,                         November 30,
                                                                  -----------------------------       -----------------------------
                                                                      1997              1996              1997               1996
                                                                      ----              ----              ----               ----
<S>                                                               <C>               <C>               <C>               <C>
Shares outstanding at beginning of period ..................          915,904           756,459           764,249           641,138

Shares issued during the period
(weighted average) .........................................            8,129             3,879           105,418            91,619

Dilutive shares contingently issuable upon
exercise of options and warrants (weighted
average) ...................................................               --                --                --                --

Less shares assumed to have been purchased for
treasury with assumed proceeds of stock warrants
and options (weighted average) .............................               --                --                --                --
                                                                  -----------       -----------       -----------       -----------
Total Primary Shares .......................................          924,033           760,338           869,667           732,757
                                                                  ===========       ===========       ===========       ===========
Net Income (Loss) Applicable to Common Stockholders ........      $  (219,517)      $  (362,703)      $  (642,453)      $(1,864,414)
                                                                  ===========       ===========       ===========       ===========
Net Income (Loss) Per Primary Share ........................      $      (.24)      $      (.48)      $      (.74)      $     (2.54)
                                                                  ===========       ===========       ===========       ===========


                                                                -11-


</TABLE>

<PAGE>
<TABLE>


                                                     SPARTA SURGICAL CORPORATION
                                           COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE

<CAPTION>
                                                                       Three Months Ended                    Nine Months Ended
                                                                           November 30,                         November 30,
                                                                  -----------------------------       -----------------------------
                                                                      1997              1996              1997               1996
                                                                      ----              ----              ----               ----
<S>                                                               <C>               <C>               <C>               <C>
Shares outstanding at beginning of period ..................          915,904           756,459           764,249           641,138

Shares issued during the period
(weighted average) .........................................            8,129             3,879           105,418            91,619

Dilutive shares contingently issuable upon
exercise of options and warrants (weighted
average) ...................................................               --                --                --                --

Less shares assumed to have been purchased for
treasury with assumed proceeds of stock warrants
and options (weighted average) .............................               --                --                --                --
                                                                  -----------       -----------       -----------       -----------
Total Fully Diluted Shares .................................          924,033           760,338           869,667           732,757
                                                                  ===========       ===========       ===========       ===========
Net Income (Loss) Applicable to Common Stockholders ........      $  (219,517)      $  (362,703)      $  (642,453)      $(1,864,414)
                                                                  ===========       ===========       ===========       ===========
Net Income (Loss) Per Fully Diluted Share ..................      $      (.24)      $      (.48)      $      (.74)      $     (2.54)
                                                                  ===========       ===========       ===========       ===========


                                                                -12-


</TABLE>

<PAGE>


                                   SIGNATURES


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


Sparta Surgical Corporation



    Thomas F. Reiner
---------------------------
Thomas F. Reiner
Chairman of the Board
President & CEO


    Wm. Samuel Veazey
---------------------------
Wm. Samuel Veazey
Vice President of Finance
and Administration


January 15, 1998


                                      -13-