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                       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, 2001

                                       OR

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

                        For the transition period from to

                           Commission File No. 1-11047

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

                Delaware                                  22-2870438
      (State or other jurisdiction of                  (I.R.S. Employer
       incorporation or organization)                 Identification No.)

                              849 E. Stanley Blvd.
                               Livermore, CA 94550
                    (Address of principal executive offices)

                                 (925) 373-0374
                           (Issuer's telephone number)

                                  Olsen Centre
                   2100 Meridian Park Blvd., Concord, CA 94520
                 (Former address of principal executive offices)


     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the Securities 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, 2001,  11,984,921 shares of Common Stock,  82,533 shares
of Redeemable Convertible Preferred Stock, 27,818 shares of Series A Convertible
Redeemable Preferred Stock.

================================================================================

<PAGE>


                           SPARTA SURGICAL CORPORATION

                                   Form 10-QSB


                                      INDEX


                                                                         Page
                                                                        Number
                                                                        ------
Part I.   Financial Information

          Item 1.     Financial Statements

                      Consolidated Balance                               3
                      Sheet as of November 30, 2001

                      Consolidated Statements                            4
                      of Operations for the three months and nine
                      months ended November 30, 2001 and 2000

                      Consolidated Statements                            5
                      of Cash Flows for the nine months
                      ended November 30, 2001 and 2000

                      Notes to Consolidated Financial Statements         6

          Item 2.     Management's Discussion and                     7 - 18
                      Analysis of Financial Condition
                      and Results of Operations

Part II.  Other Information and Signatures                           19 - 20




                                       2
<PAGE>









<TABLE>
<CAPTION>


                                   SPARTA SURGICAL CORPORATION
                                    CONSOLIDATED BALANCE SHEET
                                        November 30, 2001
                                           (Unaudited)


                                              ASSETS
<S>                                                                                <C>
Current Assets:
  Cash                                                                              $       --
  Accounts receivable, net of allowance for doubtful accounts of $42,000                 125,000
  Inventories                                                                          1,893,000
  Other                                                                                   44,000
                                                                                    ------------

Total Current Assets                                                                   2,062,000
                                                                                    ------------

Property and equipment, at cost-net                                                      115,000
                                                                                    ------------

Other Assets:
 Intangible assets, net                                                                   58,000
 Other                                                                                     6,000
                                                                                    ------------

Total Other Assets                                                                        64,000
                                                                                    ------------

Total Assets                                                                        $  2,241,000
                                                                                    ============

                              LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
 Current portion of long-term debt                                                  $    618,000
 Notes payable                                                                            60,000
 Accounts payable - trade                                                                887,000
 Accrued expenses                                                                        144,000
                                                                                    ------------

Total Current Liabilities                                                              1,709,000
                                                                                    ------------

Long-term debt, net of current portion above                                              50,000
                                                                                    ------------

Stockholder's Equity:
 Preferred stock: $ 4.00 par value, 2,000,000 shares authorized;
  1992 non-cumulative convertible redeemable preferred stock: 165,000 shares
  authorized, 82,533 shares issued and outstanding                                       330,000
  Series A cumulative convertible redeemable preferred stock: 30,000 shares
  authorized, 27,818 shares issued and outstanding                                       111,000
  Series AA cumulative convertible redeemable preferred stock: 875,000 shares
  authorized, none issued and outstanding                                                   --
 Common stock: $0.002 par value, 25,000,000 shares authorized, 11,984,921
 shares issued and outstanding                                                            15,000
 Additional paid in capital                                                           14,527,000
 Accumulated deficit                                                                 (14,501,000)
                                                                                    ------------

Total Stockholders' Equity                                                               482,000
                                                                                    ------------

Total Liabilities and Stockholders' Equity                                          $  2,241,000
                                                                                    ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                                3
<PAGE>
<TABLE>
<CAPTION>

                                                SPARTA SURGICAL CORPORATION
                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                                        (Unaudited)



                                                                      Three Months Ended             Nine Months Ended
                                                                         November 30,                   November 30,
                                                                   ------------------------      ------------------------

                                                                     2001           2000            2001          2000
                                                                   ---------      ---------      ---------     ----------
<S>                                                               <C>           <C>             <C>           <C>
Net sales                                                        $   501,000    $   903,000    $ 2,181,000    $ 2,684,000
Cost of sales                                                        204,000        320,000        824,000      1,150,000
                                                                   ---------      ---------      ---------     ----------

Gross Profit                                                         297,000        583,000      1,357,000      1,534,000


Selling, general and administrative expenses                         291,000        585,000      1,359,000      1,557,000
Research, development and engineering                                 14,000        103,000        197,000        325,000
Depreciation and amortization expenses                                57,000        100,000        310,000        380,000
                                                                   ---------      ---------      ---------     ----------


Income (Loss) From Operations                                        (65,000)      (205,000)      (509,000)      (728,000)
                                                                   ---------      ---------      ---------     ----------

Other Income (Expense):
Gain on sale of assets                                                85,000           --           85,000           --
Forgiveness of debt                                                  132,000           --          132,000           --
Interest expense                                                     (46,000)       (91,000)      (260,000)      (256,000)
                                                                   ---------      ---------      ---------     ----------

Total Other Income (Expense)                                         171,000        (91,000)       (43,000)      (256,000)
                                                                   ---------      ---------      ---------     ----------

Net Income (Loss)                                                    106,000       (296,000)      (552,000)      (984,000)

Preferred stock dividends                                             (4,000)        (4,000)       (25,000)       (25,000)
                                                                   ---------      ---------      ---------     ----------

Net Income (Loss) Applicable to Common Stockholders              $   102,000    $  (300,000)   $  (577,000)   $(1,009,000)
                                                                   =========      =========      =========     ==========

Weighted  average  shares used to calculate  basic and diluted
net income (loss) per common share                                 9,964,626      6,978,146      8,608,788      6,607,028
                                                                   =========      =========      =========     ==========

Basic and diluted net income (loss) per common share             $      0.01    $     (0.04)   $     (0.07)   $     (0.15)
                                                                   =========      =========      =========     ==========

</TABLE>



 See accompanying notes to consolidated financial statements.




                                                            4
<PAGE>

<TABLE>
<CAPTION>

                                      SPARTA SURGICAL CORPORATION
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (Unaudited)


                                                                                Nine Months Ended
                                                                                    November 30,
                                                                            --------------------------
                                                                                2001          2000
                                                                            -----------    -----------
<S>                                                                         <C>            <C>
Cash Flows From Operating Activities:
 Net loss                                                                   $  (552,000)   $  (984,000)
 Adjustment to reconcile net loss to net cash (used) by
 operating activities:
   Depreciation and amortization                                                310,000        380,000
   Forgiveness of debt                                                         (132,000)          --
   Gain on sale of assets                                                       (85,000)          --
   Changes in operating assets and liabilities:
     Accounts receivable                                                        294,000       (125,000)
     Inventories                                                                  3,000         98,000
     Other assets                                                               (39,000)       258,000
     Account payable and accrued expenses                                        64,000       (336,000)
                                                                            -----------    -----------

Net Cash (Used) By Operating Activities                                        (137,000)      (709,000)
                                                                            -----------    -----------

Cash Flows From Investing Activities:
 Proceeds from sale of Sparta Olsen assets                                    1,825,000           --
 Payment for costs of sale of Sparta Olsen                                     (163,000)          --
 Capital expenditures                                                            (9,000)       (17,000)
 Increase in intangible assets                                                     --         (156,000)
                                                                            -----------    -----------

Net Cash Provided (Used) By Investing Activities                              1,653,000       (173,000)
                                                                            -----------    -----------

Cash Flows From Financing Activities:
 Proceeds from sale of common stock                                             170,000        381,000
 Repurchase common stock                                                        (10,000)          --
 Borrowing (repayment) on lines of credit, net                               (1,481,000)     3,193,000
 Principal payments on long-term debt                                          (195,000)    (2,753,000)
                                                                            -----------    -----------

Net Cash Provided By Financing Activities                                    (1,516,000)       821,000
                                                                            -----------    -----------

Net Change In Cash and Cash Equivalents                                            --          (61,000)

Cash and Cash Equivalents at Beginning of Period                                   --           61,000
                                                                            -----------    -----------

Cash and Cash Equivalents at End of Period                                  $      --      $      --
                                                                            ===========    ============

Supplemental Disclosure of Cash Flow Information:
------------------------------------------------
 Cash paid during the period for:
   Interest                                                                 $   230,000    $   195,800
   Income taxes                                                                    --             --

Supplemental Disclosure Non-Cash Investing and Financing Activities:
-------------------------------------------------------------------
 Dividends paid on Series A convertible redeemable preferred stock               45,000         63,000
 Conversion of debt into common stock                                              --          200,000
 Contributed capital for forgiveness of salary and interest by an officer       171,000           --



</TABLE>

                                                   5
<PAGE>


                           SPARTA SURGICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.   The accompanying  consolidated financial statements as of November 30, 2001
     and for the three and nine  months  ended  November  30, 2001 and 2000 have
     been prepared on the same basis as the audited financial statements. In the
     opinion of management,  such unaudited information includes all adjustments
     (consisting  only  of  normal  recurring  accruals)  necessary  for a  fair
     presentation of this interim information.  Operating results and cash flows
     for  interim  periods  are not  necessarily  indicative  of results for the
     entire  year.  The  information  included in this report  should be read in
     conjunction  with  our  audited  financial  statements  and  notes  thereto
     included in our Annual  Report on Form  10-KSB for the year ended  February
     28, 2001, previously filed with the Securities and Exchange Commission.

2.   Basic  income  (loss) per share is based upon  weighted  average  number of
     common  shares  outstanding  during the period.  Diluted  income (loss) per
     share is computed  using the weighted  average  number of common shares and
     potentially dilutive securities outstanding during the period.  Potentially
     dilutive   securities  include  incremental  common  shares  issuable  upon
     conversion of convertible  securities  (using the if-converted  method) and
     shares  issuable upon the exercise of stock options and warrants (using the
     if-converted method). Potentially dilutive securities are excluded from the
     computation if their effect is anti-dilutive.  Contingently issuable shares
     are included in diluted earnings per share when the related  conditions are
     satisfied.  Potentially  dilutive  securities,  excluded  because  of their
     anti-dilutive  effect,  are 4,551,538  options and warrants,  and 4,487,540
     options  and  warrants at November  30,  2001 and 2000,  respectively.  The
     following  table sets forth the computation of basic and diluted net income
     (loss) per common share:

<TABLE>
<CAPTION>


                                                       Three Months Ended       Nine Months Ended
                                                          November 30,             November 30,
                                                   -----------------------  ------------------------
                                                       2001        2000          2001        2000
<S>                                                <C>         <C>          <C>          <C>
Numerator:
  Net income (loss)                                $  102,000  $  (300,000) $  (577,000) $(1,009,000
  applicable to common shareholders                ==========  ===========  ===========  ===========

Denominator:
  Weighted average common shares
  outstanding during the period                    11,867,612    8,881,132   10,511,774    8,510,914

Less shares in escrow                               1,902,986    1,902,986    1,902,986    1,902,986
                                                    ---------    ---------    ---------    ---------

Shares used in computing basic income
  (loss) per common share                           9,964,626    6,978,146    8,608,788    6,607,928

Dilutive effect of conversion of preferred stock         --           --           --           --
Dilutive effect of options and warrants                  --           --           --           --
Dilutive effect of convertible debt                      --           --           --           --
                                                    ---------    ---------    ---------    ---------
Shares used in computing diluted income
  (loss) per common share                           9,964,626    6,978,146    8,608,788    6,607,928
                                                   ==========  ===========  ===========  ===========



</TABLE>

                                       6
<PAGE>


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

     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 our periodic reports filed with the Securities and Exchange
Commission,  including  our 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. We disclaim any intent or obligation to update these
forward-looking statements.

     These statements  relate to future events in future  financial  performance
and involve known and unknown risks,  uncertainties  and other factor's that may
cause our or our industry's  actual  results,  performance or achievements to be
materially  different  from these  expressed  or implied by any  forward-looking
statements.  All of  these  matters  are  difficult  or  impossible  to  predict
accurately and many of which may be beyond our control. Although we believe that
the assumptions underlying our forward-looking statements are reasonable, any of
the assumptions could be inaccurate therefore there can be no assurance that the
forward-looking  statements  included  in this  Form  10-QSB  will  prove  to be
accurate.  The  following  discussions  should be read in  conjunction  with the
Financial Statements and notes thereto, appearing elsewhere herein.

Risk Factors Affecting Future Operating Results

     The following important factors,  among others,  could cause actual results
to differ materially from those contained in forward-looking  statements made in
this Form 10-QSB,  or presented  elsewhere by  management  from time to time. We
wish to caution stockholders and investors that the following important factors,
among others, in some cases have affected,  and in the future could affect,  our
actual  results and could  cause our actual  results to differ  materially  from
those  expressed in any  forward-looking  statements  made by us. The statements
under this caption are  intended to serve as  cautionary  statements  within the
scope of the Private  Securities  Litigation  Reform Act of 1995.  The following
information  is not intended to limit in any way the  characterization  of other
statements or information under other caption as cautionary  statements for such
purpose.  These  factors could have a material  adverse  effect on our business,
operating results and financial condition.

     We are engaged in the research, development, manufacturing and marketing of
microsurgical   hand  instruments  and   accessories,   critical  care  hospital
disposables and electromedical  equipment and supplies worldwide. Our results of
operations vary significantly from year to year and from quarter to quarter, and
in the past have  depended on, among other  factors,  developing  new  products,
demand for our products and  significantly  depend on  availability of materials
from  our  suppliers  and  dependence  on  our  customers   including  hospital,
physicians,  medical distributors and OEM accounts.  We have incurred net losses
in prior years and can't assure future  profitability.  At February 28, 2001 our
accumulated  deficit was  approximately  $13,928,000.  At November  30, 2001 our
accumulated deficit was approximately $14,501,000.



                                        7
<PAGE>

     There can be no assurance that we (i) can predict the market  acceptance of
our  products,  (ii) will not face intense  competition  and if we are unable to
compete  effectively,  we may be  unable  to  maintain  or  expand  the  base of
purchasers for our devices and we may lose market share or be required to reduce
prices,  (iii) will be able to obtain  patent  protection  for our  products and
preserve  our trade  secrets  and  safeguard  the  security  and  privacy of our
confidential  technology,  (iv) will  continue  our  operations,  as we may need
additional  financing  and such  financing may not be available as we are highly
leveraged and may be unable to service our debt, (v) will be successful  because
we are subject to stringent and continuing  applicable federal  regulations that
there could be changes in the political,  economical,  or regulatory  healthcare
and may be subject to product liability  claims,  (vi) will be able to retain or
hire key personnel, and (vii) will not lose a key manufacturer, distributor or a
customer  which  could  result in a  significant  reduction  in the  revenue  we
generate,  (viii) can anticipate unexpected events and if any of these events of
a significant magnitude were to occur, the extent of our losses could exceed the
amount of insurance we carry to  compensate us for any losses.  In addition,  we
sold  substantially  all of the assets of our wholly  owned  subsidiary,  Sparta
Olsen  Electrosurgical  Inc.  ("Sparta  Olsen"),  in  October  2001  and we will
continue  to  incur  significant   operating  losses.   Sparta  Olsen  also  has
substantial  obligations  under its long-term  lease  facility  agreement  which
expires  on July 2004 and other  related  unsecured  debts,  including  accounts
payable  and bank debt which are past due and  therefore  it will not be able to
service its debts and/or pay its past due obligations  including all outstanding
taxes.  On November  21,  2001,  as a result of the sale of the assets of Sparta
Olsen and its business,  the operation  ceased and all of Sparta Olsen employees
were terminated.  In addition,  on December 21, 2001, Allan Korn,  Secretary and
Director  resigned  from his position and is no longer acting in any capacity as
an officer, director and/or agent for Sparta Olsen.

     We 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  we  have   encountered   with  previous
acquisitions. Future acquisitions by us 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 or future
impairment  expense.  These  factors  described  herein  could  have an  adverse
material effect on our business, operating results and financial condition.

     In recent years we have experienced  losses from operations and continue to
suffer from a deficiency in available working capital.  We had a working capital
of $353,000 as of November 30, 2001. Management intends to continue the steps it
has  taken  to  improve  operations  and  aggressively  pursue  capital  for its
acquisition program through debt and equity securities offerings, however, there
can be no assurance that it will be successful.  We may need to raise additional
funds in order to continue our business plan, to fund more aggressive  marketing
programs or to acquire complementary  businesses,  technologies or services. Any
required  additional  funding may be unavailable on terms satisfactory to us, or
at all.  If we raise  additional  funds by  issuing  equity  securities,  we may
experience  significant  dilution and such  securities may have rights senior to
those of the holders of common stock.

     Our  ability to meet our  planned  growth  will  require  substantial  cash
resources.  The  timing  and  amount of  future  capital  requirements  may vary
significantly  depending on numerous factors  including  regulatory,  technical,


                                       8
<PAGE>

competitive and other developments in the healthcare industry.  Any expansion of
our  operations  will  place  a  significant  strain  on  management,  financial
controls,  operating system,  personnel and other resources.  The success of our
products  depends  on  several  uncertain  events and  factors,  including:  the
effectiveness  of our  marketing  strategy and efforts,  our product and service
differentiation and quality, the extent of our network coverage,  our ability to
provide  timely,  effective  customer  support,  our  distribution  and  pricing
strategies,  as compared to our competitors,  our failure to adequately  protect
our proprietary rights may harm our competitive position.

     The  following  are  important  factors that could cause actual  results to
differ materially from those anticipated in any forward-looking  statements made
by or on behalf of us.

     We have incurred significant  operating losses and may not be profitable in
the future.

     We have reported net losses of  $2,308,000  and  $1,744,000  for the fiscal
years ended February 29, 2000 and February 28, 2001,  respectively  and $552,000
for the nine months  ended  November  30,  2001.  We cannot  assure that we will
report profits in the future.

     Our  operations  continue  to be cash flow  negative,  and we have  limited
working capital as of November 30, 2001.

     Our current operations continue to be cash flow negative, further straining
our  working  capital  position.  In  order to  continue  our  current  level of
operations,  it will be necessary for us to obtain  additional  working capital,
from either debt or equity sources.  Our 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 products, as well
as our distribution and marketing  efforts.  Our principal working capital needs
are to fund inventory  purchases and accounts receivable and to pay our debts in
a timely  manner.  There  can be no  assurance  we will be able to  obtain  this
financing  or any other  financing  in the future on terms  satisfactory  to us.
These  factors or others could have a material  adverse  affect on our business,
operating results and financial condition.

     We face intense  competition  which could reduce our product prices and may
result in a decline in our revenues.

     The medical product  industry is intensely  competitive.  We compete in all
aspects  of our  business  with  numerous  medical  products  manufacturers  and
distributors, many of whom have substantially greater market share and financial
and other  resources  than we do. We believe that the  principal  factors in our
market are selection,  price,  customer  service,  continuing  product  quality,
reliability  and speed of order  fulfillment.  We compete with companies such as
Johnson & Johnson and Storz Instruments  division of Bausch & Lomb. In addition,
our competitors  are often able to offer lower prices to customers.  Competition
from these  competitors  could limit our market  penetration  and market  share.
These factors may have an adverse impact on our business.


                                       9
<PAGE>

     It is costly for us to comply with government regulations.

     Our  operations  are regulated by the Federal Food and Drug  Administrative
and other agencies in California.  Compliance with medical  product  regulations
are costly and time  consuming,  and if we do not remain in compliance we may be
unable to sell some or all of our products. Legislative proposals continue to be
introduced  or proposed in Congress and in state  legislature  that would effect
major changes in the health care system nationally and on the state level. Among
the  proposals  are cost  controls  on  hospitals,  changes in health  insurance
coverages, reduction in reimbursement for medical treatments and the creation of
government  health  insurance  plans. It is not clear what effect such proposals
would have on our business.  Certain proposals, such as cutbacks in Medicare and
Medicaid  programs,  containment  of health  case  costs and  permitting  states
greater flexibility in the administration of Medicaid, could reduce our revenues
or increase our costs.  In addition,  concern about proposed reform measures and
their  potential  effects has  contributed  to the volatility of stock prices of
companies in health care and related  industries  and may  similarly  affect the
price of our common stock.

     We depend  upon  others to  manufacture  many of our  products  or  product
components on a timely and cost-effective basis.

     From time to time,  we have  experienced  difficulties  in  obtaining  some
products or components, and there can be no assurance that our suppliers will be
able to meet our product  needs on a timely  basis.  A lack of  availability  of
components  or products  could cause  production  delays,  increase  our product
costs,  affect our quality  control  efforts and  interfere  with our ability to
maintain production and delivery schedules.

     We are dependant on our management and key personnel to succeed.

     Our ability to manufacture and market our medical products depends upon our
ability  to  attract,  hire and  retain  qualified  personnel.  We depend on the
extensive  experience in sales of medical  products on our  principal  executive
officers and key personnel. Competition for this personnel is intense, and there
can be no assurance  that we will be able to attract and retain such  personnel,
which  could  impede  the  achievement  of our  business  objectives  and have a
material adverse effect on our business. We are also dependent upon the services
of Thomas F. Reiner,  our Chairman,  Chief Executive Officer and President.  The
loss of Mr. Reiner's  services would also have a material  adverse effect on our
business.

     We are faced with significant  reduction of revenues and continued  ongoing
significant  operating  expenses  as a result of the sale of the  assets and the
electrosurgical business by our wholly-owned subsidiary, Sparta Olsen.

     Due to the sale of the  assets of Sparta  Olsen,  our  consolidated  annual
revenues will decline significantly during fiscal year ended 2002. However, with
the sale of the assets and  elimination  of all of the  Sparta  Olsen  revenues,
Sparta Olsen will continue to have significant  ongoing  operating  expenses and
obligations,  including  certain equipment and facilities leases under long-term
leasing  agreements and other certain  unsecured  debts and related  general and
administrative  expenses.  On December 17, 2001 a demand notice for payment of a
loan was made by Wells Fargo Bank to Sparta Olsen and Mr.  Reiner as  guarantors
of our unsecured Note in the approximate amount of $45,000.


                                       10
<PAGE>

     Shares of our  Common  Stock  which are  eligible  for  future  sale by our
stockholders may decrease the price of our common stock.

     As of November  30,  2001,  we had  11,984,921  shares of our common  stock
outstanding. If holders of our securities sell substantial amounts of our common
stock,  the  market  price  of  our  common  stock  could  decrease.  We  have a
significant  number  of  stock  options,  warrants  and  convertible  securities
outstanding,  which could  significantly  depress our common stock price if they
were exercised and sold.

     As of November  30,  2001,  we have  outstanding  options  and  warrants to
purchase approximately 4,551,538 shares of our common stock and other securities
convertible  into shares of common stock.  The holders of these  securities  may
exercise or convert  them at any time at exercise or  conversion  price  ranging
from $0.15 per share to $13.50 per share.  Although  restrictions  under federal
securities  laws limit the  ability of the shares of our common  stock  issuable
upon  exercise  or  conversion  of these  securities  to be resold in the public
market upon issuance,  these  restrictions may not apply or may only apply for a
period of one year from the date on which  these  securities  are  exercised  or
converted.  The sale of shares  underlying  these stock  options,  warrants  and
convertible  securities  could  significantly  depress the common  stock  market
price.

     There is no significant trading market for our common stock.

     Our common  stock was not  eligible for trading on any national or regional
exchange as we were delisted from the OTC Bulletin  Board ("OTC BB") on July 21,
2001. Our common stock had no trading activity on the non NASDAQ Other OTC (Pink
Sheet  unqualified)  pursuant to Rule 15c2-11 of the Securities  Exchange Act of
1934. On December 10, 2001 Wien Securities, on our behalf, applied to NASDAQ for
re-listing of our Common Stock on the NASDAQ: OTC BB. On January 3, 2002, NASDAQ
approved the application and we are now re-listed and trading on the NASDAQ: OTC
BB. However, there can be no assurance that we will continue to be listed on the
OTC BB. This market tends to be highly illiquid,  in part because there is not a
national  quotation  system by which  potential  investors  can trace the market
price of shares except  through  information  received or generated by a limited
number of broker-dealers that make a market in that particular stock. There is a
greater chance of market volatility for securities that trade on the Pink Sheets
or  OTC  BB as  opposed  to a  national  exchange  or  quotation  systems.  This
volatility may be caused by a variety of factors, including:

o    the lack of readily available price quotations;
o    the absence of  consistent  administrative  supervision  of "bid" and "ask"
     quotations;
o    lower trading volume;
o    and market conditions.

     Because  our  common  stock is  classified  as "penny  stock",  trading  is
limited, and the common stock price could decline.


                                       11
<PAGE>

     Because our common stock falls under the  definition of "penny  stock," the
trading in our common stock is limited  because  broker-dealers  are required to
provide their  customers  with  disclosure  documents  prior to allowing them to
participate  in  transactions  involving  our  common  stock.  These  disclosure
requirements  are  burdensome to  broker-dealers  and may  discourage  them from
allowing their  customers to participate  in  transactions  involving our common
stock.

     "Penny  stocks" are equity  securities  with a market price below $5.00 per
share other than a security that is registered on a national exchange;  included
for quotation in the NASDAQ system;  or whose issuer has set tangible  assets of
more than $2,000,000 and has been in continuous operation for greater than three
years.  Issuers who have been in  operation  less than three years must have net
tangible assets of at least $5,000,000.

     Rules  promulgated by the Securities and Exchange  Commission under Section
15(g) of the Exchange Act require  broker-dealers  engaging in  transactions  in
"penny  stocks," to first provide to their customers a series of disclosures and
documents including:

o    a standard  risk  disclosure  document  identifying  the risks  inherent in
     investment in "penny stocks;
o    all  compensation  received by the  broker-dealer  in  connection  with the
     transaction;
o    current quotation prices and other relevant market data; and,
o    monthly  account  statements  reflection  the  fair  market  value  of  the
     securities.

     In addition,  these rules require that a broker-dealer obtain financial and
other information from a customer,  determine that transactions in "penny stock"
are suitable for such customer and deliver a written  statement to such customer
setting forth the basis for this determination.

     Our preferred  stock and status as a Delaware  corporation may make a third
party acquisition of our company more difficult.

     Our certificate of incorporation authorizes our Board of Directors to issue
up to  2,000,000  shares  of  preferred  stock  having  such  rights  as  may be
designated  by our  Board  of  Directors,  without  stockholder  approval.  This
issuance of preferred  stock could inhibit a change in control by making it more
difficult to acquire the majority of our voting stock. In addition, the Delaware
General Corporation law restricts certain business  combinations with interested
stockholders.  This statute may have the effect of  inhibiting a  non-negotiated
merger or other business combination.

     We do not anticipate paying dividends

     We have not paid any cash dividends on our common stock since our inception
and we do not anticipate  paying cash dividends in the foreseeable  future.  Any
dividends  which we may pay in the future will be at the discretion of our Board
of Directors and will depend on our future earnings,  any applicable  regulatory
considerations,  our financial  requirements  and other similarly  unpredictable
factors.  For the  foreseeable  future,  we  anticipate  that we will retain any
earnings we may generate from our operations to finance and develop our growth.


                                       12
<PAGE>

     One  of  our  current  stockholders  has  significant  influence  over  our
management and operations.

     Thomas F. Reiner, our Co-Founder,  Chairman, CEO and President beneficially
owns  approximately 74% of our common stock as of November 30, 2001.  Therefore,
Mr. Reiner will be able among other things, to elect directors.

     Our quarterly  results could fluctuate and may negatively  affect our stock
price.

     The Company's  quarterly  operating results could fluctuate due to a number
of factors.  These factors include the degree to which we encounter  competition
in our markets, as well as other general economic conditions.  We may experience
variability  in our net sales and  operating  profit on a  quarterly  basis as a
result of many factors,  including, among other things, the buying habits of our
customers, size and timing of orders by certain customers, technological changes
and industry announcements of new products. If revenues do not meet expectations
in any given  quarter  and year,  our stock  price may be  materially  adversely
affected.

                              RESULTS OF OPERATIONS

Three Months Ended November 30, 2001
as Compared to Three Months Ended November 30, 2000

     Net sales for the Three  Months Ended  November  30, 2001  ("Third  Quarter
Fiscal 2002") were  $501,000,  a decrease of $402,000 from net sales of $903,000
for the Three Months Ended November 30, 2000 ("Third Quarter Fiscal 2001").  The
decrease in net sales  during the Third  Quarter  Fiscal 2002 as compared to the
Third  Quarter  Fiscal  2001 is  primarily  due to the sale of the assets of our
wholly-owned subsidiary Sparta Olsen and its electrosurgical business in October
2001.

     Gross profit for the Three Months Ended  November 30, 2001 ("Third  Quarter
Fiscal 2002") was $297,000 or 59% of net sales as compared to $583,000 or 65% of
net sales for the Three Months Ended  November 30, 2000 ("Third  Quarter  Fiscal
2001").  The decrease in gross profit is primarily due to the sale of the assets
of  our  wholly-owned  Sparta  Olsen  and  its  electrosurgical  business  which
generated a higher gross profit than other product lines.

     Selling, general and administrative ("SG&A") expenses for the Third Quarter
Fiscal 2002 were  $291,000,  a decrease of $294,000 as compared to $585,000  for
the Third  Quarter  Fiscal  2001.  The  decrease in SG&A  expenses for the Third
Quarter   Fiscal  2002  is  primarily   due  to  the  sale  of  the  assets  and
electrosurgical business of Sparta Olsen.

     Research,  development  and  engineering  ("RD&E")  expenses  for the Third
Quarter Fiscal 2002 were $14,000,  a decrease of $89,000 as compared to $103,000
for the Third Quarter Fiscal 2001.

     Depreciation and Amortization  ("D&A) expenses for the Third Quarter Fiscal
2002 were  $57,000,  a decrease of $43,000 from D&A expenses of $100,000 for the
Third Quarter  Fiscal 2001 due to the reduction of D&A expenses  resulting  from
the sale of the Sparta Olsen assets and its electrosurgical business.


                                       13
<PAGE>

     Total  Other  Income for the Third  Quarter  Fiscal 2002 was  $171,000,  an
increase of $262,000 from Total Other  Expenses of $91,000 for the Third Quarter
Fiscal 2001. The decrease in Total Other Expenses is primarily due to the payoff
of the credit  facility  with BofA in  October  2001 and the gain on sale of the
assets and electrosurgical business of Sparta Olsen.

     As a result of the  foregoing,  the net income for the Third Quarter Fiscal
2002 was  $106,000  an  increase of $402,000 as compared to net loss of $296,000
for the Third  Quarter  Fiscal  2001.  The  increase in net income for the Third
Quarter  Fiscal 2002 as compared to the Third Quarter  Fiscal 2001, is primarily
due to the reduction in operating and other expenses as discussed  above and the
gain on sale of the assets of Sparta Olsen and  forgiveness  of debt  recognized
upon the payoff of the credit facility with BofA.

Nine Months Ended November 30, 2001
as Compared to Nine Months Ended November 30, 2000

     Net sales for the Nine Months Ended  November 30, 2001 ("Nine Months Fiscal
2002") were $2,181,000,  a decrease of $503,000 from net sales of $2,684,000 for
the Nine Months  Ended  November  30,  2000 ("Nine  Months  Fiscal  2001").  The
decrease in net sales during the Nine Months Fiscal 2002 as compared to the Nine
Months Fiscal 2001 can be primarily  attributed to the sale of substantially all
of the assets and electrosurgical business of Sparta Olsen.

     Gross profit was $1,357,000, or 62% of net sales for the Nine Months Fiscal
2002 as compared to  $1,534,000  or 57% of net sales for the Nine Months  Fiscal
2001. The increase in gross profit is primarily due to the increased margin from
the electrosurgical business product line.

     Selling,  general and administrative  ("SG&A") expenses for the Nine Months
Fiscal 2002 were $1,359,000,  a decrease of $198,000,  as compared to $1,557,000
for the Nine Months  Fiscal  2001.  The  decrease in SG&A  expenses for the Nine
Months  Fiscal  2002 as compared  to the Nine  Months  Fiscal 2001 is  primarily
attributed to the sale of  substantially  all of the assets and  electrosurgical
business of Sparta Olsen.

     Research,  development and engineering ("R&D") expenses for the Nine Months
Fiscal 2002 were $197,000,  a decrease of $128,000,  as compared to $325,000 for
the Nine Months Fiscal 2001.

     Depreciation and  Amortization  ("D&A") expenses for the Nine Months Fiscal
2002 were $310,000,  a decrease of $70,000 from D&A expenses of $380,000 for the
Nine Months Fiscal 2001 is due to the reduction of D&A expenses  resulting  from
the sale of Sparta Olsen assets and its electrosurgical business.


                                       14
<PAGE>

     Total Other  Expenses  for the Nine  Months  Fiscal  2002 were  $43,000,  a
decrease of $213,000,  as compared to $256,000 for the Nine Months  Fiscal 2001.
The  decrease in Total  Other  Expenses  is  primarily  due to the payoff of the
credit facility with BofA in October 2001 and the gain on sale of the assets and
electrosurgical business of Sparta Olsen.

     As a result of the foregoing,  the net loss for the Nine Months Fiscal 2002
was $552,000, a decrease of $432,000,  as compared to a loss of $984,000 for the
Nine Months Fiscal 2001. The decrease in the net loss for the Nine Months Fiscal
2002, as compared to Nine Months Fiscal 2001, is primarily as discussed above.

                         LIQUIDITY AND CAPITAL RESOURCES

     Since  inception,  we  have  been  undercapitalized  and  have  experienced
financial  difficulties.  Our  primary  sources  of  working  capital  have been
revenues  from  operations,  bank and private  party loans and proceeds from the
sale of securities.  Many of the bank and private party loans and certain of our
other obligations have required personal  guarantees from Mr. Reiner,  for which
he has been  compensated  by us.  In  addition,  from time to time,  the  Reiner
Facility has provided us with a working  capital credit facility up to a maximum
amount of  $800,000 in order to  continue  to operate  our  business.  In recent
years, we have  experienced  losses from operations and suffer from a deficiency
in available working capital. In addition,  we are subject to pending litigation
relating to an alleged product  liability claim and complaint for alleged breach
of contract.  Revenues from existing  product lines have  historically  not been
sufficient to generate  adequate  working  capital.  On October 9, 2001,  Sparta
Olsen sold substantially all of its assets and electrosurgical business in order
to pay-off  our senior  bank debt and other  obligations  in order to settle our
disputes with our senior lender.  Thomas F. Reiner, our Chairman,  President and
CEO at his sole discretion agreed to reimburse us for approximately  $141,000 of
salary  previously  paid to him, and such amount was offset against amounts owed
by us under the  Reiner  Facility.  Therefore,  Mr.  Reiner  has not been paid a
salary  since July 1, 2001.  Mr.  Reiner  also  returned  approximately  $30,000
consisting  of  interest  paid to him.  The  forgiveness  of  these  amounts  is
reflected  as a  contribution  to  capital  in the  financial  statements  as of
November 30, 2001. Mr. Reiner also agreed to reduce his annual salary to $60,000
per annum and to defer future salary  payments until further  notice.  Mr.Reiner
further agreed to cancel approximately 1,073,385 stock options granted to him in
order to reduce possible dilution of shares.

     Management  has  retained  the  services of a  financial  advisor to pursue
capital through  private equity and debt  offerings.  Management also intends to
continue to pursue viable acquisition candidates. There can be no assurance that
we will be able to  complete  planned  debt  or  equity  offerings  or  targeted
acquisitions.  We will need to generate cash flows from operations  and/or raise
additional  funds in order to maintain our  operations  at current  levels.  The
failure  to  finalize  additional  financing  and other  factors,  could  have a
material  adverse  effect  on our  business,  operating  results  and  financial
condition.

     Since  inception,  our primary  sources of working  capital  have been from
operations,  bank  and  private  party  loans  and  proceeds  from  the  sale of
securities.  At February  28,  2001,  we had federal  net  operating  loss carry
forwards of  approximately  $11,200,000  which will expire from 2007 to 2021. We
also had $2,300,000 of state net operating loss carry forwards for tax reporting
purposes  which will  expire  from 2002 to 2006.  Our net  operating  loss carry
forwards, if not utilized, will expire at various dates through the year 2019.


                                       15
<PAGE>

     Our working  capital at February  28,  2001 was  ($744,000)  as compared to
$1,633,000   at  February   29,   2000,   a  decrease  of   $2,377,000   due  to
reclassification  of (i) our long  term  bank  debt to short  term debt and (ii)
Reiner Facility term debt which is due February 27, 2002. We had working capital
at November 30, 2001 in the amount of $353,000.

     Our current operations continue to be cash flow negative, further straining
our working  capital  resources,  even though we  eliminated  our debts with our
primary lender. Our 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 market
capabilities.  In order to continue our current level of operations,  it will be
necessary  for us to obtain  additional  working  capital,  from  either debt or
equity sources. If we are unable to obtain additional working capital, it may be
necessary  for  us  to   restructure   our  operations  to  reduce  our  ongoing
expenditures.  Our  principal  capital  requirements  have been to fund  working
capital needs to support officers' salaries, internal growth for acquisition and
for capital expenditures.

     Our principal working capital needs are for inventory,  accounts receivable
and payment of accounts payable. Management attempts to control inventory levels
in order to minimize carrying costs and maximize  purchasing  opportunities.  We
sell to our  customers  on various  payment  terms.  This  requires  significant
working capital to finance inventory  purchases and entails accounts  receivable
expenses  in  the  event  any  of  our  major  customers   encounters  financial
difficulties.   Although  management  monitors  the  credit  worthiness  of  its
customers,  management cannot assume that we will not incur some collection loss
on customer accounts receivables or loss in customer base in the future.

     On March 6, 2001, we completed an equity and debt financing from a group of
investors.   The  equity  financing   consisted  of  the  sale  of  our  484,034
unregistered  shares of Common  Stock.  In  addition,  we also  completed a debt
financing in the amount of $150,000 ("Note").  The subordinated  secured Note is
at 8% interest per annum,  and is due and payable on August 20, 2001.  On August
20,  2001,  we extended  the Note and on October 11,  2001,  we paid the Note in
full.  On October 12, 2001,  we completed an  additional  debt  financing in the
amount of $60,000.  The  subordinated  secured Note is at 8% interest per annum,
and is due and payable on April 12, 2002. At our option,  we may also extend the
Note for an additional six months.

     On March 20, 2000, Bank of America  Commercial  provided us with an amended
24-month Revolving Line of Credit of up to $2,500,000 ("Loan"). We agreed to pay
Bank of America Commercial interest on the average outstanding  principal amount
of the Loan at a per annum  rate of prime  plus 3%.  The Loan was being  used to
provide working capital for our operations. The Loan was advanced to us based on
a percentage  of eligible  assets and was secured by a first  position  security
interest  on all of our  assets.  As of October 9, 2001,  the  outstanding  Loan
balance was  approximately  $1,721,000  and we paid all amounts  owed to Bank of
America pursuant to the Settlement Agreement. The Loan was being used to provide
working capital for our operations.  On October 10, 2001, Sparta Olsen completed
the sale of substantially all of the assets of the electrosurgical business (the
"Sale"), including inventory,  machinery and equipment and all intangible assets


                                       16
<PAGE>

(excluding cash and accounts receivable) for the amount of $1,815,528 in cash to
Kentucky  Packaging Service LP, DBA Q2 Medical ("Q2 Medical").  At the same time
we entered into a Transition Agreement whereby Q2 Medical agreed to reimburse us
on a monthly basis  approximately  $70,830 for expenses relating to the transfer
of the business.  Sparta Olsen remains obligated under a long-term lease for our
facility,  which expires on July of 2004.  Sparta Olsen has retained a broker to
sublet  its  facility.  There can be no  assurance  that  Sparta  Olsen  will be
successful  in  subleasing  its  facility  and be able to stay  current with its
substantial rent obligations and pay all of the accounts payable and all related
taxes  which are past due as a result of the sale of Sparta  Olsen's  assets and
all of its business.

     In  connection  with the  Sale,  we paid to Bank of  America  ("BofA")  all
amounts required  pursuant to a Settlement  Agreement  ("Parties") BofA released
all  security  interests  in all of our assets,  and also  released the personal
guarantee of Thomas F. Reiner, our Chairman,  CEO and President.  The Settlement
Agreement also contained  customary  releases and forever  discharges each other
from any and all  claims  and  demands of every  kind and  nature.  The  Parties
dismissed their suits initiated against each other.

     On May 23,  1997,  we entered  into the  $200,000  Working  Capital  Credit
Facility  ("Reiner  Facility")  and  subsequently  was  increased to $400,000 by
Thomas F. Reiner and his Assignee E. Reiner  ("Reiner").  On August 2, 2001,  we
amended the Reiner Facility. Under the terms of the amended Reiner Facility, the
credit  facility  amount was  increased up to a maximum of  $700,000.  Under the
Reiner Facility,  we are able to draw on the credit facility based only upon the
sole  discretion  and  approval of Reiner.  The Reiner  Facility is secured by a
first position security interest in all of our assets. The Reiner Facility bears
interest at 14% per annum,  and is payable monthly in arrears.  However,  due to
our  limited  working  capital,  we have been  unable to pay some of the accrued
interest  due under the Reiner  Facility.  As of  November  2, 2001,  the Reiner
Facility was over  advanced and in default,  however,  the default was waived by
Reiner and the Reiner Facility amount was increased up to a maximum of $800,000.
The borrowings under the Reiner Facility are used primarily for working capital,
including payroll,  inventory,  purchases and rent payments. The Reiner Facility
expires on  February  27,  2002,  and it is due and  payable on demand  upon the
earlier of (i) February 27, 2002,  or (ii) upon demand by Reiner with a five day
notice to us, or (iii) if an order is entered  for  relief  against us or we are
insolvent,  or if we voluntarily  file for bankruptcy,  or (iv) if we default in
any other terms, or in any other obligations, or agreements between the parties,
or (v) if a receiver,  trustee,  custodian is appointed, or (vi) if a proceeding
is brought under the federal  bankruptcy code, and we fail to file proper answer
thereto  within 30 days of  receipt of notice of  proceedings,  or (vii) upon an
event of  default,  as set  forth  under the Note,  the whole  unpaid  principal
balance of the loan and accrued  interest  thereon  shall become due and payable
immediately  without  demand,   notice  or  protest.   The  Reiner  Facility  is
convertible  at any time at the option of Reiner into shares of Common  Stock at
$0.16 per share  subject to  adjustments  as defined  under the  Amended  Reiner
Facility dated August 2, 2001

     At November 30, 2001,  the Reiner  Facility loan balance was  approximately
$522,000. On November 29, 2001, in an effort to provide some assistance with our
continued  negative  cash flow  position  and to  further  improve  our  overall
financial  condition,   Reiner  returned  approximately  $30,000  consisting  of



                                       17
<PAGE>

interest paid due under the Reiner Facility. Mr. Reiner also agreed to reimburse
and cancel approximately $141,000 of his previously paid salary through November
30, 2001.  As a result,  the  forgiveness  of salary and interest by Mr.  Reiner
contributed  $171,000  to our  capital.  He further  agreed to reduce his annual
salary to $60,000 per annum and to defer future  salary  payments  until further
notice.  On  November  30,  2001,  Mr.  Reiner  agreed to  cancel  approximately
1,073,335  stock options  previously  granted to him in order to reduce possible
dilution of shares.  On December  21, 2001,  Reiner  agreed to extend the Reiner
Facility until February 27, 2002.

     On May 31, 2001 we entered into a non-binding letter of intent for the sale
of certain assets of the electrosurgical  business for approximately  $1,811,000
in cash and  subsequently  we executed an Asset  Purchase  Agreement  subject to
certain conditions.  The assets to be sold include  substantially all the assets
of the  electrosurgical  business  (excluding  cash  and  accounts  receivable),
including  inventory,  machinery and equipment and all intangible  assets of the
electrosurgical  business.  On October 10, 2001,  all of the  conditions  of the
Asset Purchase  Agreement were met by and between Kentucky Packaging Service LP,
DBA Q2 Medical ("Q2  Medical")  and Sparta  Olsen.  Under the terms of the Asset
Purchase  Agreement,  Sparta Olsen made  certain  customary  representation  and
warranties and Sparta Surgical  Corporation also guaranteed  these  obligations,
and further Sparta Olsen agreed to indemnify, defend and hold Q2 Medical and its
shareholders,  directors and officers,  harmless,  from any and all judgments as
the result of or arising from any material breaches,  misstatement,  inaccuracy,
error or omission of any of the  representation  and  warranties  made by Sparta
Olsen  contained  in the Asset  Purchase  Agreement  which  either  singly or in
aggregate  exceed  $25,000 in amount as the result of or arising from any suits,
claims,  damages of any kind or  nature,  known or  unknown  which are  asserted
against  Q2  Medical,  including  the  failure of Sparta  Olsen to assume,  pay,
perform or  discharge  any or all of the excluded  liabilities,  and or employee
obligations and to comply with bulk transfers in connection with the transfer of
the Sparta Olsen assets to Q2 Medical of which there can be no assurance that we
will not incur  additional  expenses  or  liabilities  under the Asset  Purchase
Agreement  in the  future.  In  addition,  as a result of the sale of the Sparta
Olsen  assets  and  its  electrosurgical  business,  we  further  downsized  and
relocated  our  current  operation  to a  smaller  facility,  due to our lack of
working capital.

     On January 4, 2002, we entered into a non-binding  letter of intent ("LOI")
to merge with Shepard Medical Products Inc.,  ("Shepard") a leading manufacturer
and marketer of premium  infection control  disposable and  biodegradable  glove
products and  accessories  worldwide  since 1986.  For its most recent 12 months
ended December 31, 2001,  Shepard's revenues were  approximately  $12.2 million.
The LOI is subject to completion of due  diligence  and  preparation  of a Stock
Exchange  Agreement and Irrevocable Voting Trust Agreement which will be entered
into when all due  diligence and other  conditions  are  satisfied.  Sparta will
acquire 100% of the  outstanding  common stock of Shepard in exchange for common
stock of Sparta and $500,000 in cash. Following the restructuring, Sparta common
stock will be held by the former shareholders of Shepard and the shareholders of
Sparta in the ratio of 55% and 45%  respectively.  The Stock Exchange  Agreement
will  specify  the  amount  of  Sparta  Common  Stock to be  issued to the prior
shareholders of Shepard.  Under the Stock Exchange Agreement,  Thomas F. Reiner,
our  Co-Founder,  Chairman and CEO, and the  Shareholders of Shepard shall enter
into an Irrevocable  Voting Trust  Agreement  which shall  provide,  among other


                                       18
<PAGE>

things,  that the common stock of Sparta beneficially owned or controlled by the
Shepard shareholders after the Exchange,  would be held in trust, over which Mr.
Reiner would have voting authority as trustee.  Mr. Reiner shall remain Chairman
and CEO upon completion of the merger.

Part II. Other Information
         -----------------

Item 1.  Legal Proceedings

     On September  25,  2001,  we were served with a complaint in a civil action
titled  Nancy  Perlman,  M.D.   ("Plaintiff")  vs.  Virtua  Health,  Inc.,  Tyco
International Ltd., Valleylab Inc., General Electric Medical Systems Information
Technologies, Inc., Sparta Surgical Corporation and Sparta Olsen Electrosurgical
Inc.,  et al,  filed  in the  U.S.  District  Court  of New  Jersey  (Case # No.
01-00651SHO).  The  complaint  alleges  product  liability and the relief sought
exceeds  $75,000.  On December 21, 2001, the Plaintiff  agreed to dismiss Sparta
Surgical  Corporation  for the  action as it has been  wrongfully  joined in the
suit.

     On November 5, 2001, we were served with a complaint in civil action titled
Eugene Olsen  ("Olsen") vs. Thomas Reiner,  Sparta  Surgical Corp.  and.  Sparta
Olsen  Electrosurgical  Company,  filed in the U.S. District Northern California
(Case #CO14053 MEJ).  The complaint  alleges breach of contract  relating to the
cancellation  of a Consulting  Agreement.  We believe the claim has no merit and
accordingly we intend to vigorously defend it.

Item 2.  Changes in Securities
         ---------------------

     None

Item 3.  Defaults Upon Senior Securities
         -------------------------------

     None

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

     None

Item 5.  Other Information
         -----------------

     None

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

A.   Reports on Forms 8-K

     We  filed a Form  8-K  dated  October  11,  2001 and  October  16,  2001 in
     connection with the sale of substantially all of the assets of Sparta Olsen
     and we also  entered into a  Settlement  Agreement  with B/A and repaid all
     amounts owed to B/A.

     We filed a Form 8-K dated  December 12, 2001 in  connection  with Thomas F.
     Reiner and his  Assignee  E. M.  Reiner  reimbursing  salary and  returning
     interest  previously  paid or  accrued  to the  Company in order to provide
     assistance  with our negative cash flow and to further  improve our overall
     financial condition.



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<PAGE>

     We filed a Form 8-K dated  November 5, 2001 in connection  with a complaint
     filed  by  Eugene  Olsen  against   Thomas  F.  Reiner,   Sparta   Surgical
     Corporation,  and Sparta  Olsen  Electrosurgical,  Inc.,  et al for alleged
     breach of contract.

     We filed a Form 8-K dated January 6, 2002 in connection  with entering into
     a  non-binding  letter of intent to merge with  Shepard  Medical  Products,
     Inc.,  which is also  subject  to  completion  of due  diligence  and other
     conditions.

     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

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


     /s/ Joseph A. Salim
     -------------------------------
     Joseph A. Salim
     Director of Finance
     (Principal Accounting Officer)

     January 18, 2002




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