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, 1995

                                       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, 1995,  3,984,024  shares of Common Stock,  286,138  shares of
Redeemable Convertible Preferred Stock and 46,710 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, 1995                        1 - 2

                      Condensed Consolidated Statements
                      of Operations for the three months and
                      nine months ended November 30, 1995 and 1994            3

                      Condensed Consolidated Statements
                      of Cash Flows for the nine months
                      ended November 30, 1995 and 1994                     4 - 5

                      Notes to Financial Statements                            6

           Item 2.    Management's Discussion and
                      Analysis of Financial Condition
                      and Results of Operations                           7 - 10

Part II.   Other Information and Signatures                              11 - 14


<PAGE>


                           SPARTA SURGICAL CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                November 30, 1995
                                   (Unaudited)

                                     ASSETS


Current Assets:
 Cash and cash equivalents ..................................       $        -- 
 Accounts receivable - trade, net of allowance
   for doubtful accounts of $50,337 .........................         1,065,342
 Inventories ................................................         4,202,868
 Prepaid expenses ...........................................           122,295
                                                                    ------------
    Total Current Assets ....................................         5,390,505
                                                                    ------------
Property and Equipment, at cost:

 Machinery and equipment ....................................         1,857,372
 Other equipment ............................................           527,865
 Leasehold improvements .....................................            68,799
                                                                    ------------
                                                                      2,454,036
Less accumulated depreciation ...............................        (1,366,523)
                                                                    ------------
    Net Property and Equipment ..............................         1,087,513
                                                                    ------------
Other Assets:
 Intangible assets, net of
  accumulated amortization ..................................           887,805
 Deposits and other .........................................           113,880
 Notes receivable - related entities ........................           821,419
 Accounts receivable - officers .............................           120,757
                                                                    ------------
     Total Other Assets .....................................         1,943,861
                                                                    ------------
     Total Assets ...........................................       $ 8,421,879
                                                                    ============


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


                                      -1-


<PAGE>


                           SPARTA SURGICAL CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                November 30, 1995
                                   (Unaudited)
                                   (Continued)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

 Accounts payable - trade .......................................   $   807,621
 Accrued expenses:
  Payroll taxes and wages .......................................        85,307
  Interest and other ............................................        69,955
 Dividends payable ..............................................         5,839
 Notes payable ..................................................     2,050,000
 Current portion of accrued royalty payments ....................        44,277
 Current portion of long-term debt ..............................       842,841
                                                                    ------------
     Total Current Liabilities ..................................     3,905,840
                                                                    ------------
Long-Term Debt, net of current portion above:

 Obligations under capital leases ...............................       159,716
 Notes payable to officers ......................................        18,288
 Financial institutions and other ...............................     1,924,678
                                                                    ------------
       Total Long-Term Debt .....................................     2,102,682

Commitments and contingencies ...................................            --

Stockholders' Equity:

 Preferred stock: $4.00 par value, 5,000,000 shares authorized;
   Non-cumulative Convertible Redeemable Preferred Stock:
    1,500,000 shares authorized, 286,138 shares issued
     and outstanding ............................................     1,144,552
   Series A Cumulative Convertible Preferred Stock:
    250,000 shares authorized, 46,710 shares issued
     and outstanding ............................................       186,840
 Common Stock: $.002 par value, 30,000,000 shares authorized,
   3,984,024 shares issued and outstanding ......................         7,968
 Additional paid in capital .....................................     7,095,612
 Accumulated deficit ............................................    (6,021,615)
                                                                    ------------
      Total Stockholders' Equity ................................     2,413,357
                                                                    ------------
      Total Liabilities and Stockholders'  Equity ...............   $ 8,421,879
                                                                    ============


                     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,
                                                               ------------------------------       -------------------------------
                                                                   1995               1994               1995               1994
                                                                   ----               ----               ----               ----   
<S>                                                            <C>                <C>                <C>                <C>        
Net Sales ..............................................       $ 1,549,326        $ 1,929,958        $ 5,250,269        $ 5,784,644
Cost of sales ..........................................           779,242            873,443          2,495,461          2,526,908
                                                               -----------        -----------        -----------        -----------
     Gross Profit ......................................           770,084          1,056,515          2,754,808          3,257,736
                                                               -----------        -----------        -----------        -----------
Selling, general and administrative
expenses ...............................................           575,303            831,752          1,748,450          2,327,229
Research and development expense .......................             5,337             22,550             52,415             73,351
Depreciation and amortization ..........................           123,291            163,840            452,321            520,784
                                                               -----------        -----------        -----------        -----------
  Income From Operations ...............................            66,153             38,373            501,622            336,372
                                                               -----------        -----------        -----------        -----------
Other Income (Expense):
  Interest and other income ............................             1,639              8,852              9,827             33,652
  Interest expense .....................................           (68,900)          (201,190)          (469,090)          (583,441)
                                                               -----------        -----------        -----------        ----------- 
     Total Other Income (Expense) ......................           (67,261)          (192,338)          (459,263)          (549,789)
                                                               -----------        -----------        -----------        ----------- 
Income (Loss) Before Provision for
Income Taxes ...........................................            (1,108)          (153,965)            42,359           (213,417)
Provision for income taxes .............................                --                 --                 --                 --
                                                               -----------        -----------        -----------        -----------
Net Income (Loss) ......................................            (1,108)          (153,965)            42,359           (213,417)
Preferred stock dividends ..............................            (5,839)           (17,589)           (44,184)           (50,589)
                                                               -----------        -----------        -----------        ----------- 
Net Income (Loss) Applicable to
Common Stockholders ....................................       $    (6,947)       $  (171,554)       $    (1,825)       $  (264,006)
                                                               ===========        ===========        ===========        =========== 
Net Income (Loss) Per Share of
 Common Stock:
  Primary:
   Weighted average number of
    common shares outstanding ..........................         3,773,853          2,955,644          3,592,508          2,315,898
                                                               ===========        ===========        ===========        ===========
    Net income (loss) per common share .................       $        --        $      (.06)       $        --        $      (.11)
                                                               ===========        ===========        ===========        =========== 
  Fully diluted:
   Weighted average number of
    common shares outstanding ..........................         3,773,853          2,955,644          3,934,631          2,315,898
                                                               ===========        ===========        ===========        ===========
    Net income (loss) per common share .................       $        --        $      (.06)       $        --        $      (.11)
                                                               ===========        ===========        ===========        =========== 


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


                                                                -3-
</FN>
</TABLE>


<PAGE>


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


                                                           Nine Months Ended
                                                              November 30,
                                                     --------------------------
                                                           1995          1994
                                                           ----          ----
Cash Flows From Operating Activities:
 Net income (loss) ...............................   $    42,359    $  (213,417)
 Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
    Depreciation and amortization ................       452,321        520,784
    Forgiveness of debt by officers ..............            --         (1,053)
    Gain on disposal of equipment ................            --         (9,250)
    Reduction of expenses on settlement of
     Storz claim .................................      (135,184)            --
    Changes in assets and liabilities:
     (Increase) in accounts receivable ...........       (42,836)      (196,559)
     (Increase) decrease in inventories ..........        79,596       (144,454)
     (Increase) decrease in prepaid expenses
      and other ..................................        39,008        (77,450)
     (Increase) in deposits and other ............       (66,253)        (7,203)
     (Decrease) in accounts payable and
      accrued expenses ...........................      (518,516)      (497,092)
                                                     -----------    ----------- 

     Net Cash (Used) By Operating Activities .....      (149,505)      (625,694)
                                                     -----------    ----------- 

Cash Flows From Investing Activities:
 Proceeds from disposal of equipment .............            --         61,950
 Capital expenditures ............................       (18,048)      (195,052)
 Increase in intangible assets ...................        (1,042)        (1,537)
 Increase in receivables from related entities ...        (8,461)       (80,689)
                                                     -----------    ----------- 
     Net Cash (Used) By Investing Activities .....       (27,551)      (215,328)
                                                     -----------    ----------- 
Cash Flows From Financing Activities:
 Proceeds from  borrowing ........................     5,590,030      7,036,674
 Principal payments on notes payable .............    (5,331,230)    (6,762,415)
 Principal payments on accrued royalties .........       (87,270)       (65,251)
 Debt issuance cost ..............................            --        (86,531)
 Offering costs incurred .........................            --       (795,486)
 Issuance of common stock upon exercise
  of Warrants ....................................            --        207,631
 Proceeds from public offering ...................            --      1,650,000
                                                     -----------    -----------
     Net Cash Provided By Financing Activities ...       171,530      1,184,622
                                                     -----------    -----------
     Net Increase in Cash and Cash Equivalents ...        (5,526)       343,600
     Cash and Cash Equivalents at Beginning
      of Period ..................................         5,526         13,796
                                                     -----------    -----------
     Cash and Cash Equivalents at End of Period ..   $        --    $   357,396
                                                     ===========    ===========


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


                                      -4-


<PAGE>


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


                                                            Nine Months Ended
                                                               November 30,
                                                         -----------------------
                                                              1995       1994
                                                              ----       ----

Supplemental Disclosure of Cash Flow Information:
  Cash paid during the period for:
    Interest .........................................   $  469,090   $  410,777
    Income taxes .....................................           --           --

Supplemental Disclosure of Noncash Investing and
 Financing Activities:
   Conversion of Preferred Stock into Common Stock ...   $  670,516   $   97,160
   Conversion of notes payable into Common Stock .....           --    1,163,192
   Dividends payable on Series A Convertible
    Preferred Stock ..................................       31,381       17,589
   Stock dividends paid on Series A Convertible
    Preferred Stock ..................................        6,964       33,000
   Stock dividends paid on Redeemable Convertible
    Preferred Stock ..................................           --      145,667
   Deferred offering costs offset against proceeds
    of public offering ...............................           --      186,710
   Reduction of intangibles due to adjustment in
    acquisition cost .................................           --       32,437
   Reduction of note payable due to settlement
    of Storz claim ...................................      400,000           --
   Reduction of royalties payable due to settlement
    of Storz claim ...................................       62,495           --
   Reduction of intangibles due to settlement of
    Storz claim ......................................      223,210           --


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


                                      -5-


<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 nine months ended
     November 30, 1995 are not  necessarily  indicative of results of operations
     that  may be  expected  for  the  year  ending  February  28,  1996.  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, 1995  previously  filed with the Securities
     and Exchange Commission.


                                      -6-


<PAGE>


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


RESULTS OF OPERATIONS

Three Months Ended November 30, 1995
as Compared to Three Months Ended November 30, 1994

Net sales for the three months ended  November 30, 1995 ("Third  Quarter  Fiscal
1996") were  $1,549,326,  a 19.7%  decrease from net sales of $1,929,958 for the
three month period ended November 30, 1994 ("Third  Quarter  Fiscal 1995").  The
net sales decrease during the Third Quarter Fiscal 1996 as compared to the Third
Quarter  Fiscal  1995 is the result of a 7.5%  decrease in sales for the medical
product  line  coupled  with a 33.3%  decrease  in sales  for the  surgical  and
electrotherapy product lines. The net loss for the Third Quarter Fiscal 1996 was
$1,108 as compared to a net loss of $153,965 for the Third Quarter  Fiscal 1995.
The  decrease in net loss for the Third  Quarter  Fiscal 1996 as compared to the
Third Quarter Fiscal 1995 is primarily due to a decrease in selling, general and
administrative  expense  ("SG&A"),  research and development  expenses  ("R&D"),
depreciation and amortization and interest expenses in the approximate aggregate
amount of $439,288  offset by the gross profit effect of the net sales  decrease
during the Third Quarter Fiscal 1996. The decrease in operating expenses for the
Third  Quarter  Fiscal  1996 as  compared  to the Third  Quarter  Fiscal 1995 is
primarily  due  to  a  company-wide   cost  reduction  program  which  has  been
implemented  since  the  beginning  of the  current  fiscal  year  and  with the
elimination of all accrued interest,  royalty and legal expenses for the current
fiscal  year in the  approximate  aggregate  amount of  $135,184  related to the
Company's  settlement of its claim against Storz Instrument Company ("Storz") on
October 17, 1995. See "- Liquidity and Capital Resources."

Nine Months Ended November 30, 1995
as Compared to Nine Months Ended November 30, 1994

Net sales for the nine months  ended  November  30, 1995  ("Nine  Months  Fiscal
1996") were  $5,250,269,  a 9.2% decrease  from net sales of $5,784,644  for the
nine months ended November 30, 1994 (" Nine Months Fiscal 1995").  The net sales
decrease  during the Nine  Months  Fiscal  1996 as  compared  to the Nine Months
Fiscal 1995 is the result of a 0.8%  decrease  in sales for the medical  product
line coupled with a 19.5% decrease in sales for the surgical and  electrotherapy
product lines. The decrease in sales for the surgical and electrotherapy product
lines can be  primarily  attributed  to the  decrease in the  Company's  working
capital  which  resulted in the  shifting of financial  resources  and sales and
marketing  efforts more towards the medical  product line and its  manufacturing
operation.  In  addition,  in  October  1994  the  Company  signed  a one  year,
non-cancelable  $500,000 contract with Henley Healthcare ("Henley") in which the
Company  provided Henley with its Spectrum Max-SD TENS unit. The Henley contract
was completed in July 1995. The Company is currently  negotiating a new contract
with Henley and expects  negotiations to be finalized by the current fiscal year
end.

On December  7, 1995,  the Company  sold its wound care  product  line to Tecnol
Medical Products, Inc. The wound care product line, which consisted primarily of
wound care gauze dressings,  generated approximately  $3,150,000 or 60.0% of the
Company's  revenues  for the Nine Months  Fiscal 1996.  However,  because of its
relatively  high  overhead,  historically  this  line  has  contributed  a small
percentage  towards  the  Company's  net  income.  The wound care  product  line
required  considerable  capital  investment to maintain its  operations  and its
growth. The Company believes that the sale will enable it to concentrate on more
profitable  product  lines,  such as  microsurgical  instruments,  critical care
disposables,  oral maxillofacial plating systems and electrotherapy products. In
addition,  the Company  intends to consider growth through  selective  strategic
acquisitions in  complementary  lines of business.  See "- Liquidity and Capital
Resources."


                                      -7-


<PAGE>


Gross  profit was  $2,754,808  or 52.5% of net sales for the Nine Months  Fiscal
1996 as compared to  $3,257,736 or 56.3% of net sales for the Nine Months Fiscal
1995.  The decrease in gross profit  percentage  is primarily  due to a shift in
product sales mix towards  private label sales which  generally have lower gross
profit  margins than other sales.  In addition,  as a result of changing  market
conditions,  the sales  prices on  certain  products  have  been  lowered  which
resulted in reduced gross profit margins.  Although private label sales generate
lower gross  profit  margins  they  provide  benefits  as they better  allow for
long-range planning of production schedules and overall factory utilization.

Selling, general and administrative ("SG&A") expenses for the Nine Months Fiscal
1996 were  $1,748,450,  a decrease of  $578,779  or 24.9% from SG&A  expenses of
$2,327,229  for the Nine Months  Fiscal 1995.  The decrease in SG&A expenses for
the Nine  Months  Fiscal  1996 as  compared  to the Nine  Months  Fiscal 1995 is
primarily  due  to  a  company-wide   cost  reduction  program  which  has  been
implemented  since the  beginning  of the current  fiscal year  coupled with the
elimination  of all accrued  royalty and legal  expenses for the current  fiscal
year in the  approximate  aggregate  amount of $59,059  related to the Company's
settlement of its claim against Storz on October 17, 1995.  See "- Liquidity and
Capital Resources."

Research and development  ("R&D")  expenses for the Nine Months Fiscal 1996 were
$52,415,  a 28.5%  decrease  from R&D  expenses  of $73,351  for the Nine Months
Fiscal 1995.  R&D for the Nine Months Fiscal 1996 includes  expenses  related to
the completion of the development and the preparation for market introduction of
the new Hydrogel  Wound  Dressing  and  expenses  related to the redesign of the
Company's  TENS  units  in an  effort  to  reduce  the  cost  of  goods  for the
electrotherapy product line.

Depreciation and  amortization  ("D&A") expenses for the Nine Months Fiscal 1996
were  $452,321,  a 13.1%  decrease  from D&A  expenses of $520,784  for the Nine
Months Fiscal 1995.  During the Nine Months Fiscal 1996, D&A expenses  decreased
due to the complete amortization of certain loan costs and the full depreciation
of certain assets.

Net  interest  expense for the Nine Months  Fiscal  1996 was  $459,263,  a 16.5%
decrease from net interest  expense of $549,789 for the Nine Months Fiscal 1995.
The decrease in net interest  expense is primarily due to the elimination of all
accrued interest for the current fiscal year in the approximate aggregate amount
of $76,125 in  connection  with the  Company's  settlement  of its claim against
Storz on October 17, 1995 partially offset by interest paid in connection with a
$1,000,000  loan  received  in  November  1994.  See "-  Liquidity  and  Capital
Resources."

As a result of the  foregoing,  net income for the Nine  Months  Fiscal 1996 was
$42,359, an increase of $255,776 from a net loss of $213,417 for the Nine Months
Fiscal  1995.  The  increase  in net income for the Nine  Months  Fiscal 1996 as
compared  to the Nine  Months  Fiscal  1995 is  primarily  due to a decrease  in
operating  expenses as partially  offset by the gross  profit  effect of the net
sales decrease during the Nine Months Fiscal 1996.

Primary loss per share was $.00 for the Nine Months Fiscal 1996 as compared to a
primary loss per share of $.11 for the Nine Months  Fiscal 1995.  Fully  diluted
loss per share,  which assumes all dilutive  preferred share conversions and the
exercise  of all  dilutive  stock  options and  warrants,  was $.00 for the Nine
Months Fiscal 1996 as compared to a fully diluted loss of $.11 per share for the
Nine  Months  Fiscal  1995.  The  primary  and fully  diluted  income  per share
computations  reflect  dividends  paid or accrued  on the  Series A  Convertible
Preferred Stock.

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.


                                      -8-


<PAGE>


As of February 28, 1995,  the Company had net operating  loss carry  forwards of
approximately $6,000,000. Availability of the Company's net operating loss carry
forwards, if not utilized, will expire at various dates through the year 2010.

The Company's working capital at November 30, 1995 was $1,484,665 as compared to
$2,335,067  at  February  28,  1995 . The  Company's  working  capital  position
decreased by $850,402 primarily due to the reclassification of a note payable to
Storz from long term to short term.

On October 4, 1993, the Company entered into a financing agreement with Congress
Financial  Corporation  ("Congress")  pursuant to which  Congress  provided  the
Company with a Revolving  Loan  Facility of up to $5,000,000  (the "Loan").  The
Company  agreed to pay Congress  interest on the average  outstanding  principal
amount of the Loan at a per annum rate of prime plus 3%. In addition,  beginning
in March 1994,  the Company agreed to pay Congress a minimum  borrowing  monthly
fee equal to the difference  between the interest  actually paid with respect to
the Loan and the interest which would have been paid if the principal  amount of
the Loan had equaled $3,500,000.  The Loan is advanced to the Company based on a
percentage  of  eligible  assets  and is  secured  by a first lien on all of the
assets of the Company. Accordingly, the amount of available funds under the loan
may be substantially less than $5,000,000.  In addition,  the Loan is subject to
certain  financial  covenants  related to working capital and tangible net worth
and is personally  guaranteed by Thomas F. Reiner, the Company's Chief Executive
Officer and Chairman.  As of November 30, 1995, the  outstanding  balance on the
Loan was $2,209,302 and approximately  $17,000 in credit was available under the
Loan. On December 8, 1995 the Company  repaid  substantially  all of the amounts
owing under its Loan from Congress.

On January 20, 1994, Sparta  Maxillofacial  Products,  Inc.  ("SMPI"),  a wholly
owned subsidiary of the Company purchased certain assets of the OMF product line
of Storz, a subsidiary of American  Cyanamid Company,  for $1,550,000  including
$100,000  in cash and the  issuance  of a  $1,450,000  promissory  note to Storz
bearing  interest at 9% per annum due January  20, 2002 (the  "January  20, 1994
Agreement"). On September 8, 1994, SMPI filed a claim against Storz with the New
York Office of the  American  Arbitration  Association.  The claim  alleged that
certain  material  misrepresentations  and  omissions  were  made  by  Storz  in
connection  with the Company's  purchase of certain assets of Storz' OMF product
line on January 20, 1994 and sought to recover an as yet undetermined  amount of
damages it sustained.  In October 1994,  Storz filed a response and counterclaim
to the  Company's  action  seeking  to  accelerate  all  amounts  due  under the
$1,450,000 promissory note issued to it by the Company. On October 17, 1995, the
Company settled its claim against Storz.  The terms of the settlement  agreement
consisted of a reduction of the Company's note payable to Storz from  $1,450,000
to $1,050,000.  In addition, all accrued interest,  accrued royalties and future
royalties in connection  with the  acquisition of the product line were forgiven
by Storz.  The net impact of this  settlement  to the  Company is  approximately
$700,000  which  consists of a reduction  in the note  payable and  goodwill and
eliminated all accrued  interest,  royalty and legal  expenses.  On December 13,
1995 the Company repaid $600,000 to Storz in connection with the note payable.

On December 7, 1995, the Company sold its impregnated wound care gauze dressings
product line to Tecnol Medical Products,  Inc., a medical products  manufacturer
headquartered in Fort Worth,  Texas (the "Tecnol Sale").  The purchase price was
$5,675,000, of which approximately $5,000,000 was paid in cash, with the balance
being paid primarily in the form of a promissory note bearing  interest at prime
rate and due on September 1997 upon certain conditions being met. In addition to
wound care inventory,  equipment and other assets,  the Company's  operations in
Hammonton, New Jersey were included in the sale.

The Company  has used or will use the cash  proceeds of the Tecnol Sale to repay
most of its outstanding debt including (i) $2,282,505 owed to Congress Financial
Corporation  under a  revolving  credit  facility;  (ii)  $111,602  owed for the
purchase of certain manufacturing  equipment which was subject to a lease; (iii)


                                      -9-


<PAGE>


$469,710  owed to Asset  Factoring,  Inc.,  consisting  of the  principal due on
certain  promissory  note plus accrued  interest;  (iv)  $600,000  owed to Storz
Instrument  Company relating to a $1,050,000 note payable in connection with the
Company's  acquisition  of certain assets of Storz' Oral  Maxillofacial  product
line; and (v) $1,000,000 to Arbora,  A.G.  ("Arbora") as of December 14, 1995 as
principal  consideration  to redeem  4,761,842  shares of the  Company's  common
stock, which shares were issued to Arbora on December 4, 1995 as a result of the
conversion  of a $1,000,000  note into equity  pursuant to an agreement  reached
between it and the Company.  In connection  with this  transaction,  the Company
canceled a warrant to purchase 1,000,000 shares of the Company's common stock at
$1.40 per share  held by Arbora and issued  Arbora a warrant to  purchase  up to
500,000 shares of the Company's  common stock at $.47 per share. In addition,  a
voting trust was entered into which provided the Company's  Chairman,  President
and Chief  Executive  Officer,  Thomas F. Reiner,  with voting rights as to such
shares.

On March 21, 1995, the Company  commenced an offering (the "Offering")  pursuant
to a registration statement effective on that date on the NASDAQ SmallCap Market
("NASDAQ")  of 1,600,000  Units of its  securities  through  Coleman and Company
Securities,  Inc.  ("Coleman").  On the same date,  approximately one hour after
trading in the Units was  initiated on NASDAQ,  NASDAQ  suspended the listing of
the Units and  Warrants  and  reported to the  Company  that it took such action
because it believed that the Units and/or  Warrants did not meet certain  NASDAQ
listing  criteria.  Promptly  after the NASDAQ  action,  Coleman  terminated the
Underwriting  Agreement  with  the  Company,  and all  sales of the  Units  were
rescinded. On March 22, 1995, NASDAQ determined that it would permit the Company
to list the Units and Warrants and so advised the  Company.  Following  NASDAQ's
decision to list the Units and  Warrants,  the Company and Coleman  attempted to
resume the Offering on the same terms and  conditions  as indicated in the March
21, 1995 Registration  Statement. On March 31, 1995, Coleman advised the Company
that it would not  resume  the  Offering  and,  accordingly,  the  Offering  was
terminated.

On June 7, 1995,  the Company  served upon Coleman a demand  letter which sought
payment to the Company in the amount of  $631,229.  This amount was equal to the
expenses  incurred by the Company in the Offering,  which were being sought from
Coleman due to its breach of the underwriting agreement governing that Offering.
Thereafter, on July 28, 1995 the Registrant was served with a complaint filed by
Coleman claiming  approximately  $5,100,000 in punitive and compensatory damages
against the Company as a result of certain alleged  material  misrepresentations
and omissions made in connection with the information provided to Coleman by the
Company  for  purposes  of the  Offering,  and a breach  by the  Company  of its
underwriting  agreement with Coleman.  The Company regarded these allegations as
entirely  meritless  and  frivolous.  On August 25,  1995,  the Company  filed a
response and counterclaim against Coleman and certain of its officers, directors
and agents in the approximate  amount of $12.5 million in  compensatory  damages
and an additional $12.5 million in punitive  damages.  On December 27, 1995, the
Company and Coleman settled the suit between them. No consideration  was paid in
connection with such settlement however, both parties exchanged mutual releases.

On September 28, 1995,  the Company filed suit against the National  Association
of Securities Dealers ("NASD") and The NASDAQ Stock Market, Inc. ("NASDAQ"). The
lawsuit seeks damages of more than $12.5  million,  relating to the  defendants'
alleged mishandling of the Offering in March 1995. In the complaint, the Company
alleges that the  defendants  misrepresented  the status of the Company's  stock
listings,   misapplied  NASD  regulations  and  interfered  with  the  Company's
relationships with its underwriters and investors.

The Company  anticipates that its existing  capital  resources will enable it to
maintain its current and planned operations for at least 12 months from the date
hereof.  The Company's  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.


                                      -10-


<PAGE>


Part II. Other Information

Item 1. Legal Proceedings
               In the period covered by this report, the Company settled certain
               litigation  involving the Company and (i) Storz and (ii) Coleman.
               See "Management's  Discussion and Analysis of Financial Condition
               and Results of Operations - Liquidity and Capital Resources."


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.     Exhibits

               Computation of Primary Earnings Per Share (Page 12).

               Computation of Fully Diluted Earnings Per Share (Page 13).

               Exhibit 27 - Financial Data Schedule

        B.     Reports on Form 8-K

               The Company  filed a Form 8-K dated  December  22, 1995 to report
               that on December 7, 1995, the Company sold its impregnated  wound
               care gauze  dressings  product line to Tecnol  Medical  Products,
               Inc.,  a  medical  products  manufacturer  headquartered  in Fort
               Worth,   Texas  (the  "Tecnol  Sale").  The  purchase  price  was
               $5,675,000,  of which approximately  $5,000,000 was paid in cash,
               with the balance being paid primarily in the form of a promissory
               note  bearing  interest at prime rate and due on  September  1997
               upon  certain  conditions  being met.  In  addition to wound care
               inventory,  equipment and other assets, the Company's  operations
               in Hammonton, New Jersey were included in the sale.


                                      -11-


<PAGE>
<TABLE>


                                                     SPARTA SURGICAL CORPORATION
                                              COMPUTATION OF PRIMARY EARNINGS PER SHARE

<CAPTION>
                                                                          Three Months Ended                Nine Months Ended
                                                                              November 30,                     November 30,
                                                                       --------------------------        --------------------------
                                                                          1995            1994             1995             1994
                                                                          ----            ----             ----             ----
<S>                                                                  <C>              <C>              <C>              <C>         
Shares outstanding at beginning of period ......................       3,892,279        3,050,558        3,228,408        1,726,977

Shares issued during the period (weighted average) .............          69,074           92,586          551,600        1,001,075

Shares repurchased during the period (weighted average) ........              --               --               --         (224,654)

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) .............................................              --               --               --               --

Less shares placed in escrow which are issuable only
if certain  income or stock price criteria are met
(weighted average) .............................................        (187,500)        (187,500)        (187,500)        (187,500)
                                                                     -----------      -----------      -----------      ----------- 
Total Primary Shares ...........................................       3,773,853        2,955,644        3,592,508        2,315,898
                                                                     ===========      ===========      ===========      ===========
Net Income (Loss) Applicable to Common Stockholders ............     $    (6,947)     $  (171,554)     $    (1,825)     $  (264,006)
                                                                     ===========      ===========      ===========      =========== 
Net Income (Loss) Per Primary Share ............................     $        --      $      (.06)     $        --      $      (.11)
                                                                     ===========      ===========      ===========      =========== 

</TABLE>

                                                                -12-


<PAGE>
<TABLE>


                                                     SPARTA SURGICAL CORPORATION
                                           COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE

<CAPTION>
                                                                            Three Months Ended                Nine Months Ended
                                                                               November 30,                      November 30,
                                                                       --------------------------        --------------------------
                                                                          1995             1994             1995             1994
                                                                          ----             ----             ----             ----
<S>                                                                  <C>              <C>              <C>              <C>         
Shares outstanding at beginning of period ......................       3,892,279        3,050,558        3,228,408        1,726,977

Shares issued during the period (weighted average) .............          69,074           92,586          706,223        1,001,075

Shares repurchased during the period (weighted average) ........              --               --               --         (224,654)

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) .................................              --               --               --               --

Less shares placed in escrow which are issuable
only if certain  income or stockprices are met,
as they are anti-dilutive (weighted average) ...................        (187,500)        (187,500)              --         (187,500)
                                                                     -----------      -----------      -----------      ----------- 
Total Fully Diluted Shares .....................................       3,773,853        2,955,644        3,934,631        2,315,898
                                                                     ===========      ===========      ===========      ===========
Net Income (Loss) Applicable to Common Stockholders ............     $    (6,947)     $  (171,554)     $    (1,825)     $  (264,006)
                                                                     ===========      ===========      ===========      =========== 
Net Income (Loss) Per Fully Diluted Share ......................     $        --      $      (.06)       $      --      $      (.11)
                                                                     ===========      ===========      ===========      =========== 

</TABLE>

                                                            -13-

<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



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


   /s/ W. Samuel Veazey
---------------------------
W. Samuel Veazey
Vice President of Finance
and Administration


January 8, 1996


                                     - 14 -