<PAGE>   1

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

                                    FORM 10-Q


(Mark One)

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

        For the quarter ended MARCH 31, 2001

                                              OR

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

                        Commission file number: 000-24103

                           COHESION TECHNOLOGIES, INC.
             (Exact Name of Registrant as Specified in Its Charter)

        DELAWARE                                                 94-3274368
     (State or Other                                          (I.R.S. Employer
     Jurisdiction of                                         Identification No.)
    Incorporation or
      Organization)

                      2500 FABER PLACE, PALO ALTO, CA 94303
          (Address of Principal Executive Offices, including Zip Code)

       Registrant's telephone number, including area code: (650) 320-5500

        Securities registered pursuant to Section 12(b) of the Act: NONE

           Securities registered pursuant to Section 12(g) of the Act:
                          COMMON STOCK, $.001 PAR VALUE


Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  YES  [X]   NO  [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

As of April 30, 2001, the Registrant had 9,366,301 shares of common stock
outstanding, exclusive of 515,100 shares held by the Registrant as treasury
stock.



<PAGE>   2

                           COHESION TECHNOLOGIES, INC.

                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>
                                                                                Page No.
                                                                                --------
<S>                                                                             <C>
PART I.        Financial Information

Item 1.     Financial Statements:

               Condensed Balance Sheets -
               March 31, 2001 and June 30, 2000                                     3

               Condensed Consolidated Statements of Operations -
               Three and nine months ended March 31, 2001 and 2000                  4

               Condensed Consolidated Statements of Cash Flows -
               Nine months ended March 31, 2001 and 2000                            5

               Notes to Condensed Consolidated Financial Statements                 6

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

Item 3.     Quantitative and Qualitative Disclosures about Market Risk             17



PART II.       Other Information

Item 6.     Exhibits and Reports on Form 8-K                                       18

Signatures                                                                         19
</TABLE>



                                       2
<PAGE>   3

                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                           COHESION TECHNOLOGIES, INC.

                            CONDENSED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                             MARCH 31,            JUNE 30,
                                                                               2001                2000*
                                                                             --------             --------
                                                                           (UNAUDITED)
<S>                                                                          <C>                  <C>
ASSETS
Current assets:
  Cash and cash equivalents .....................................            $ 11,824             $ 14,154
  Accounts receivable, net ......................................                 504                   78
  Inventories ...................................................               3,720                2,508
  Other current assets ..........................................               1,491                1,981
                                                                             --------             --------
         Total current assets ...................................              17,539               18,721

Property and equipment, net .....................................               4,889                5,881
Investments in equity securities ................................              21,478               37,163
Other assets ....................................................               7,688                4,055
                                                                             --------             --------

                                                                             $ 51,594             $ 65,820
                                                                             ========             ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable ..............................................            $    704             $    920
  Accrued compensation ..........................................                 646                  629
  Accrued liabilities ...........................................               2,957                2,401
  Deferred revenue ..............................................                 350                  150
  Income taxes payable ..........................................                 681                  681
  Current portion of capital lease obligation ...................                 852                  792
                                                                             --------             --------
         Total current liabilities ..............................               6,190                5,573

Long-term liabilities:
  Deferred income taxes .........................................               6,677               10,237
  Deferred revenue ..............................................               1,221                  600
  Obligation under capital lease ................................               1,979                2,639


Stockholders' equity:
  Preferred stock ...............................................                  --                   --
  Common stock ..................................................                  10                   10
  Additional paid-in capital ....................................              21,082               20,571
  Retained earnings .............................................               4,404               14,611
  Accumulated other comprehensive income ........................              12,005               13,553
  Treasury stock, at cost .......................................              (1,974)              (1,974)
                                                                             --------             --------
         Total stockholders' equity .............................              35,527               46,771
                                                                             --------             --------

                                                                             $ 51,594             $ 65,820
                                                                             ========             ========
</TABLE>

The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.

* Amounts derived from audited financial statements at the date indicated.



                                       3
<PAGE>   4

                           COHESION TECHNOLOGIES, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         THREE MONTHS ENDED               NINE MONTHS ENDED
                                                                              MARCH 31,                        MARCH 31,
                                                                       -----------------------         -------------------------
                                                                        2001            2000             2001             2000
                                                                       -------         -------         --------         --------
<S>                                                                    <C>             <C>             <C>              <C>
Revenues:
  Product sales ...............................................        $   722         $   849         $  1,901         $  1,796
  Other revenue ...............................................             87              --              179               --
                                                                       -------         -------         --------         --------
                                                                           809             849            2,080            1,796

Costs and expenses:
  Cost of sales, including manufacturing start-up costs .......          1,849           1,274            4,570            2,842
  Research and development ....................................          2,217           3,422            8,182            9,582
  Selling, general and administrative .........................          1,602           1,515            4,476            5,094
  Compensation expense related to
       cancelled stock options ................................             82             354              348            1,245
                                                                       -------         -------         --------         --------
          Total costs and expenses ............................          5,750           6,565           17,576           18,763
                                                                       -------         -------         --------         --------
Loss from operations ..........................................         (4,941)         (5,716)         (15,496)         (16,967)
Other income (expense):
  Gains on investments, net ...................................             44           1,511              717           26,532
  Interest income .............................................            260             307              999              576
  Interest expense ............................................            (59)            (85)            (188)            (174)
                                                                       -------         -------         --------         --------

Income (loss) before provision for income taxes
       and minority interest ..................................         (4,696)         (3,983)         (13,968)           9,967


Provision (benefit) for income taxes ..........................         (1,685)         (1,593)          (3,632)           3,987
                                                                       -------         -------         --------         --------


Income (loss) before cumulative effect of change in
  accounting principle and minority interest in net loss
  of consolidated subsidiary ..................................         (3,011)         (2,390)         (10,336)           5,980


Minority interest in net loss of
  consolidated subsidiary .....................................             --            (133)              --             (133)
                                                                       -------         -------         --------         --------


 Income (loss) before cumulative effect of
   accounting change ..........................................         (3,011)         (2,257)         (10,336)           6,113


Cumulative effect of change in accounting for
  derivatives, net of tax .....................................             --              --              129               --
                                                                       -------         -------         --------         --------


Net income (loss) .............................................        $(3,011)        $(2,257)        $(10,207)        $  6,113
                                                                       =======         =======         ========         ========


Income (loss) per common share before cumulative
  effect of accounting change .................................        $ (0.32)        $ (0.25)        $  (1.11)        $   0.71


Cumulative effect of accounting change, net of tax ............             --              --             0.01               --
                                                                       -------         -------         --------         --------

Net income (loss) per common share -- basic ...................        $ (0.32)        $ (0.25)        $  (1.10)        $   0.71
                                                                       =======         =======         ========         ========

Net income (loss) per common share -- diluted .................        $ (0.32)        $ (0.25)        $  (1.10)        $   0.66
                                                                       =======         =======         ========         ========

Weighted average shares outstanding ...........................          9,356           8,900            9,306            8,584
                                                                       =======         =======         ========         ========

Weighted average shares outstanding assuming dilution .........          9,356           8,900            9,306            9,311
                                                                       =======         =======         ========         ========
</TABLE>


        The accompanying Notes to Condensed Consolidated Financial Statements
are an integral part of these statements.



                                       4
<PAGE>   5

                           COHESION TECHNOLOGIES, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  NINE MONTHS ENDED
                                                                                       MARCH 31,
                                                                             -----------------------------
                                                                               2001                 2000
                                                                             --------             --------
<S>                                                                          <C>                  <C>
Cash flows from operating activities:
  Net income (loss) .............................................            $(10,207)            $  6,113

  Adjustments to reconcile net income (loss) to net
     cash used in operating activities:
     Depreciation and amortization ..............................               1,685                1,315
     Cumulative effect of change in accounting principle ........                (129)                  --
     Gains on investments, net ..................................                (717)             (26,532)
     Decrease (increase) in assets:
       Accounts receivable ......................................                (426)                 525
       Inventories ..............................................              (1,212)                (666)
       Other ....................................................              (3,334)                  25
     Increase (decrease) in liabilities:
       Accounts payable, accrued liabilities and other ..........               1,237                 (520)
       Income taxes payable .....................................                  --                2,352
                                                                             --------             --------
     Net cash used in operating activities ......................             (13,103)             (17,388)

Cash flows from investing activities:
  Proceeds from sale of equity investments ......................               8,021               12,614
  Purchase of investments .......................................                  --               (4,342)
  Proceeds from sale of other investments .......................                  --               10,993
  Proceeds (payment) on maturity of equity collars ..............               3,403                4,085
  Expenditures for property and equipment .......................                (573)                (664)
                                                                             --------             --------
      Net cash provided by investing activities .................              10,851               22,686
                                                                             --------             --------

Cash flows from financing activities:
  Proceeds from exercise of stock options .......................                 522                3,355
  Proceeds from sale-leaseback of manufacturing facility ........                  --                4,188
  Payment of capital lease obligation ...........................                (600)                (601)
                                                                             --------             --------
     Net cash provided by (used in) financing activities ........                 (78)               6,942
                                                                             --------             --------

Net increase in cash and cash equivalents .......................              (2,330)              12,240
Cash and cash equivalents at beginning of period ................              14,154                4,239
                                                                             --------             --------

Cash and cash equivalents at end of period ......................            $ 11,824             $ 16,479
                                                                             ========             ========
</TABLE>


The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.



                                       5
<PAGE>   6

                           COHESION TECHNOLOGIES, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Basis of Presentation

        The condensed balance sheet at March 31, 2001, the condensed
consolidated statements of operations for the three and nine months ended March
31, 2001 and 2000, and the condensed consolidated statements of cash flows for
the nine months ended March 31, 2001 and 2000, have been prepared by the Company
and are unaudited. In the opinion of management, all necessary adjustments
(which include only normal recurring adjustments) have been made to present
fairly the financial position, results of operations, and cash flows at March
31, 2001 and for all periods presented. Interim results are not necessarily
indicative of results for a full fiscal year. The condensed balance sheet as of
June 30, 2000 has been derived from the audited consolidated financial
statements at that date.

        Certain amounts in the financial statements for the prior fiscal period
have been reclassified to conform with the current year presentation. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. These condensed consolidated financial statements should
be read in conjunction with the audited consolidated financial statements and
notes included in the Company's Annual Report on Form 10-K for the year ended
June 30, 2000.

  Earnings Per Share

        Basic earnings per share ("EPS") is calculated using the weighted
average number of common shares outstanding for the period. The computation of
diluted EPS includes the effects of stock options, using the treasury stock
method, if such effect is dilutive. Options that had an exercise price greater
than the average market price of the Company's common stock during the three and
nine months ended March 31, 2001 and 2000 were excluded, as their inclusion
would have been anti-dilutive. Below is a reconciliation between the basic and
diluted weighted average shares for the three and nine months ended March 31,
2001 and 2000:

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                          MARCH 31,                         MARCH 31,
                                                    ----------------------            ----------------------
                                                    2001             2000             2001             2000
                                                    -----            -----            -----            -----
                                                        (In thousands)                    (In thousands)
<S>                                                 <C>              <C>              <C>              <C>
Basic (weighted average common
  shares outstanding) ..................            9,356            8,900            9,306            8,584
Dilutive effect of stock options .......               --               --               --              727
                                                    -----            -----            -----            -----
Weighted average common shares
  outstanding, assuming dilution .......            9,356            8,900            9,306            9,311
                                                    =====            =====            =====            =====
</TABLE>



                                       6
<PAGE>   7

2.      INVENTORIES

        Inventories are valued at the lower of cost, determined on a standard
cost basis, which approximates average cost, or market.

        Inventories comprise the following:

<TABLE>
<CAPTION>
                                    MARCH 31,         JUNE 30,
                                      2001              2000
                                    --------          --------
                                          (IN THOUSANDS)
<S>                                 <C>               <C>
Raw materials ...........            $1,318            $  692
Work-in-process .........             1,518               925
Finished goods ..........               884               891
                                     ------            ------
                                     $3,720            $2,508
                                     ======            ======
</TABLE>


3.      EQUITY INVESTMENTS

        The following is a summary of the aggregate estimated fair value, fair
value of equity collars, gross unrealized gains and cost of the Company's
investments in equity securities:

<TABLE>
<CAPTION>
                                                   MARCH 31,          JUNE 30,
                                                     2001               2000
                                                   ---------          --------
                                                          (IN THOUSANDS)
<S>                                                <C>                <C>
Cost ...................................            $ 7,150            $14,316
Gross unrealized gains .................             13,759             20,649
                                                    -------            -------
                                                     20,909             34,965
Fair value of equity collars ...........                569              2,198
                                                    -------            -------
Estimated fair value ...................            $21,478            $37,163
                                                    =======            =======
</TABLE>

        The Company determines the appropriate classification of marketable
securities at the time of purchase and re-evaluates such designation as of each
balance sheet date. All of the Company's investments in equity securities are
classified as available-for-sale.

        To hedge against fluctuations in the market value of a portion of the
Boston Scientific common stock, the Company entered into costless collar
instruments that expire quarterly through May 2001 and will require settlement
in cash. At March 31, 2001, 50,000 shares were hedged under these collars.
Shares of Boston Scientific common stock held by the Company collateralize the
put and call options.


4.      ADOPTION OF NEW FINANCIAL ACCOUNTING STANDARD

        In June 1998, the Financial Accounting Standards Board issued Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which provides a comprehensive and consistent standard for the
recognition and measurement of derivatives and hedging activities. SFAS 133 was
effective for the Company as of July 1, 2000. The cumulative effect of the
change in accounting related to the adoption of SFAS 133 resulted in a decrease
to the net loss of approximately $129,000, net of tax, at the date of adoption.



        Under SFAS 133, the Company's costless collar instruments on Boston
Scientific stock are



                                       7
<PAGE>   8

considered to be derivatives and are carried on the balance sheet at fair value.
The fair value of the collar instruments is determined by broker quotes. The
Company has designated the collar instruments as a "fair value" hedge against
certain fluctuations in the market price of Boston Scientific stock. Changes in
the intrinsic values of the options underlying the collar (measured as the
difference between the current market price and the strike price) are expected
to be effective in offsetting the overall changes in the fair value of the
investment when the share price of Boston Scientific is outside the collar band
resulting in no net impact to earnings. The difference between the intrinsic
value and the fair value of the collar is considered to be an ineffective
portion of the hedge. The ineffective portion of the hedge is recognized
currently in earnings as gains (losses) on investments, net. Gains or losses
from the collar instruments will be recognized as gains on investments, net when
the underlying hedged asset is sold. Until the underlying hedged asset is sold,
these gains or losses are deferred and recorded as accumulated other
comprehensive income.



5.      STOCKHOLDERS' EQUITY

   Cohesion Corporation Stock Options

        In September 1998, the Company's Board of Directors approved a program
to cancel options to purchase shares of the common stock of Cohesion
Corporation. In connection with such program, the Company offered to pay each
holder of these canceled options a per share amount equal to the excess of
$16.70 over the exercise price of the canceled option. The Company will make
this option payment ratably over the original vesting period of the canceled
option so long as the former holder thereof remains an employee or consultant of
the Company. The Company recorded $ 0.1 million and $ 0.3 million of
compensation expense related to these canceled options during the three and nine
months ended March 31, 2001, respectively. The Company expects to record an
additional $ 0.1 million of compensation expense related to these canceled
options through 2001.


6.      COMPREHENSIVE INCOME

        The components of comprehensive income (loss), net of related income
tax, for the three and nine months ended March 31, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED                       NINE MONTHS ENDED
                                                                       MARCH 31,                               MARCH 31,
                                                              ---------------------------             ----------------------------
                                                               2001                2000                 2001                2000
                                                              -------             -------             --------             -------
                                                                     (In thousands)                           (In thousands)
<S>                                                           <C>                 <C>                 <C>                  <C>
Net income (loss) ................................            $(3,011)            $(2,257)            $(10,207)            $ 6,113

Increase (decrease) in unrealized
  gains on securities ............................              1,449               5,571               (4,438)             (6,032)

Adjustment of Boston Scientific stock
  carrying amount for fair value hedge ...........              1,757                  --                3,403                  --

Adjustment for gains recognized in
the income statement for the period ..............                 --                  --                 (513)                 --
                                                              -------             -------             --------             -------

Comprehensive income (loss) ......................            $   195             $ 3,314             $(11,755)            $    81
                                                              =======             =======             ========             =======
</TABLE>


7.      SEGMENT INFORMATION

        The Company develops proprietary surgical products, including
bioresorbable hemostatic devices and biosealants for tissue repair and
regeneration. The Company operated in the following two segments until it
reduced its ownership interest in the NeuColl orthopedics subsidiary during the
March



                                       8
<PAGE>   9

2000 quarter: (1) a surgical business segment, and (2) an orthopedic business
segment. Both segments reported to the Chief Executive Officer ("CEO") of
Cohesion who allocated resources to each business. The CEO was identified as the
Chief Operating Decision Maker as defined by SFAS 131. Management did not
allocate assets between, or evaluate operating profit or loss of the two
segments. As of March 31, 2000, Cohesion's ownership interest in NeuColl fell
below 50%. From that date forward NeuColl's operations were no longer
consolidated with the results of the Company and the Company has operated in
only one segment, the surgical business segment.

        Information on reportable segments for the three and nine months ended
March 31, 2001 and 2000 is as follows:

<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED                           THREE MONTHS ENDED
                                            MARCH 31, 2001                               MARCH 31, 2000
                                            (IN THOUSANDS)                               (IN THOUSANDS)
                                  -----------------------------------         -------------------------------------
                                  SURGICAL    ORTHOPEDIC       TOTAL          SURGICAL     ORTHOPEDIC        TOTAL
                                  --------    ----------      -------         --------     ----------       -------
<S>                               <C>         <C>             <C>             <C>          <C>              <C>
Revenue ..................        $   809         $ --        $   809         $   323         $ 526         $   849
Loss from operations .....        $(4,941)        $ --        $(4,941)        $(5,099)        $(617)        $(5,716)
</TABLE>

<TABLE>
<CAPTION>
                                             NINE MONTHS ENDED                               NINE MONTHS ENDED
                                               MARCH 31, 2001                                  MARCH 31, 2000
                                               (IN THOUSANDS)                                  (IN THOUSANDS)
                                    ------------------------------------         -----------------------------------------
                                    SURGICAL     ORTHOPEDIC       TOTAL          SURGICAL        ORTHOPEDIC        TOTAL
                                    --------     ----------     --------         --------        ----------       --------
<S>                                 <C>          <C>            <C>              <C>             <C>              <C>
Revenue ....................        $  2,080         $--        $  2,080         $    620         $ 1,176         $  1,796
Loss from operations .......        $(15,496)        $--        $(15,496)        $(15,302)        $(1,665)        $(16,967)
</TABLE>



                                       9
<PAGE>   10

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

OVERVIEW


        The following discussion should be read in conjunction with the
condensed consolidated financial statements contained herein and notes thereto.
Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" are forward-looking. The forward-looking
statements contained herein are based on current expectations and entail various
risks and uncertainties that could cause actual results to differ materially
from those expressed in such forward-looking statements. These risks include,
but are not limited to, the rate of product adoption by customers, our success
in manufacturing CoStasis and CoSeal, usage order and re-order rates, the
competition from other products, the performance of third-party sales
representatives, the receipt of regulatory approvals including the approvals
from the FDA, the timing of product introductions, the success of scaling up
product production, the ability to achieve product revenue targets or market
share, the timing and terms of sales arrangements with other companies, the
clinical efficacy of and market demand for our products, the assessment of
market size, our position in the market, the results of our clinical studies and
potential unfavorable publicity regarding us, our products, or the medical
device industry, among other matters. In addition, Cohesion may not prevail in
its patent infringement lawsuit claiming patent infringement by Fusion Medical
Corporation, the court may rule against Cohesion on the issue of infringement,
Cohesion may not be awarded damages and/or permanent injunctive relief, the
court could limit Cohesion's ability to enforce its patent, Cohesion could be
served with a counter suit, Cohesion's patent could be declared invalid,
litigation is expensive, lengthy and unpredictable and the cost of litigation
may be substantially greater than anticipated resolutions of litigation. Such
differences in our actual results may be based upon factors within our control,
such as strategic planning decisions by management and reallocation of internal
resources, or on factors outside our control, such as scientific advances by
third parties, court decisions in lawsuits filed by Cohesion, introduction of
competitive products and delays by regulatory authorities, including approvals
from the FDA. For a more detailed discussion of these and other business risks
see "-- Additional Factors That Might Affect Future Results of Operations."

        Cohesion was organized in June 1997 as a Delaware corporation and wholly
owned subsidiary of Collagen Aesthetics, Inc. formerly known as Collagen
Corporation, now known as McGhan Medical since Collagen was acquired by Inamed
Corporation. Effective January 1, 1998, Collagen contributed its research and
development programs for hemostatic devices, biosealants, orthopedics products
and programs, adhesion barriers and recombinant human collagen and thrombin and
other related businesses of its Collagen Technologies Group ("CTG") to Cohesion,
including various equity investments. On August 18, 1998, Collagen distributed
as a dividend to its stockholders, one share of Cohesion's common stock for each
share of Collagen common stock outstanding.

        Cohesion is focused on developing and commercializing proprietary
surgical products, including bioresorbable hemostatic devices and biosealants
for tissue repair and regeneration, to increase the effectiveness of open and
minimally invasive surgeries. CoStasis(R) Surgical Hemostat, our hemostatic
product, is designed for use in cardiovascular, orthopedic and general surgery
indications. We received a CE Mark for CoStasis in fiscal 1999 and received FDA
approval in June 2000 to market the product in the United States. In November
1999, we announced an agreement with U.S. Surgical for the marketing and
distribution of CoStasis. The U.S. Surgical territories include the United
States, Canada, European Union, Eastern Europe, Latin America, Middle East,
Australia, New Zealand and India. In February 2000, we received a CE Mark for
CoSeal(TM) Surgical Sealant, our biosealant product candidate designed for
sealing vascular grafts and in April of 2001 filed a pre-market approval
application with the FDA. We believe that our surgical products will provide
several distinct advantages over currently available technologies, including
ease of preparation and use, better delivery systems, improved safety profiles
and clinical effectiveness. Our products and programs are based on a platform of
proprietary technologies centered around collagen and hydrophilic polymers that
quickly polymerize in-vivo and bind to tissue. We also have research and
development programs in recombinant human collagen and thrombin.



                                       10
<PAGE>   11

        In February 1999, we formed a new subsidiary, NeuColl, Inc., to
commercialize products in the orthopedics field, which included Collagraft(R)
and NeuVisc(TM), a collagen-based intra-articular implant for the treatment of
pain related to osteoarthritis. In connection with the formation, we granted
NeuColl an exclusive license to certain patents relating to collagen and polymer
technology for orthopedic applications. During the quarter ended March 31, 2000,
NeuColl obtained a total of $4 million in financing from a third party in two
tranches, which reduced our ownership from 100% to approximately 39% as of March
31, 2000. For the quarter ended March 31, 2000, we consolidated NeuColl's
operating loss in our results of operations and reported the related minority
interest for a two-month period. Beginning March 31, 2000, we no longer
consolidated NeuColl into our financial results and instead, reported our share
of NeuColl's operating income or loss under the equity method of accounting.


RESULTS OF OPERATIONS

Three and Nine Months Ended March 31, 2001 and 2000

        Revenues were $0.8 million and $2.1 million for the three and nine
months ended March 31, 2001, respectively, compared to $0.8 million and $1.8
million for the same periods in the prior year. Revenues for the current fiscal
quarter included product sales of $722,000 as well as $87,000 of contract
revenue related to CoStasis and CoSeal for the recognition of a portion of
milestone payments from our marketing partner, U.S. Surgical. As of March 31,
2000, we no longer consolidated NeuColl's operations, which included Collagraft
sales, into our financial results as our ownership interest fell below 50%.
Sales of Collagraft for the three and nine months ended March 31, 2000 were $0.5
million and $1.2 million, respectively. Excluding NeuColl, the increase in
product sales over the prior year is due primarily to CoStasis sales in the
United States which commenced in July 2000, including sales of related delivery
systems and equipment. Pursuant to our agreement with our marketing partner,
U.S. Surgical, our CoStasis product sales include a fixed component as well as,
in certain circumstances, a variable component which is comprised of a
percentage of the price received by U.S. Surgical for sales of CoStasis to the
end-customer. Our CoStasis product sales for the nine months ended March 31,
2000 included sales of CoStasis where we only received the fixed component since
U.S. Surgical shipped the product to their end customer at no-charge for
demonstration and promotional purposes. A number of uncertainties exist
surrounding the marketing and distribution of our products where the primary
means of distribution is through third party firms, such as U.S. Surgical, our
marketing partner. Our business and financial results could be adversely
affected in the event a third party firm is unable to market the product
effectively, anticipate customer demand accurately, or effectively manage
industry-wide pricing and cost containment pressures in health care.

        Cost of sales as a percentage of product sales were 256% and 240% for
the three and nine months ended March 31, 2001, respectively, compared to 150%
and 158% for the same periods in the prior year. This increase was primarily due
to manufacturing startup costs for the CoStasis and CoSeal products. Gross
margins continue to reflect a high level of fixed manufacturing costs. We expect
gross margins to remain negative through at least fiscal year 2001 as CoStasis
production improves and we expand commercial production of CoSeal.

        Research and development ("R&D") expenses were $2.2 million and $8.2
million for the three and nine months ended March 31, 2001, respectively,
compared to $3.4 million and $9.6 million for the same periods in the prior
fiscal year. R&D spending was higher in the prior year as it included NeuColl
R&D expenses. Currently, we expect R&D spending in fiscal 2001 to be at similar
levels as fiscal 2000, excluding NeuColl.

        Selling, general and administrative ("SG&A") expenses were $1.6 million
and $4.5 million during the three and nine months ended March 31, 2001,
respectively, compared to $1.5 million and $5.1 million for the same periods in
the prior year. For the three months ended March 31, 2001, SG&A increased due
primarily to an increase in legal expenses related to the patent infringement
lawsuit against Fusion Medical. SG&A expenses decreased for the nine months
ended March 31, 2001, as the prior year included spending for our orthopedics
segment, NeuColl, which we no longer consolidate, as well as direct marketing
costs for CoStasis. Currently, we expect SG&A expenses to



                                       11
<PAGE>   12

increase through the rest of fiscal 2001 due to increased spending in sales and
marketing and for resources required to support current and future products.
Future levels of SG&A spending will depend on various factors, including the
level of product sales and how future products are distributed throughout the
world.

        During the three and nine months ended March 31, 2001, we recorded $0.1
million and $0.3 million of compensation expense, respectively, compared to $0.4
million and $1.2 million for the same periods in the prior year. This
compensation expense incurred related to the cancellation of the remaining stock
options of Cohesion Corporation. In September 1998, our board of directors
approved a program to cancel options to purchase shares of the common stock of
Cohesion Corporation. In connection with this cancellation, we offered to pay
each holder of canceled options a per share amount equal to the excess of $16.70
over the exercise price of the canceled option. We will make this option payment
ratably over the original vesting period of the canceled option so long as the
former holder thereof remains an employee or consultant of Cohesion. Currently,
we expect to record the remaining $0.1 million of compensation expense with
respect to the cash-out of canceled options, during the remainder of 2001.

        Net gains on investments were $44,000 and $717,000 for the three and
nine months ended March 31, 2001, respectively, which relates to the ineffective
portion of the hedge for our Boston Scientific (NYSE:BSX) common stock, and the
sale of our holdings of Johnson and Johnson common stock, respectively. Net
gains on investments were $1.5 million and $26.5 million for the same periods in
the prior year. The timing and number of additional shares of common stock sold
of our investments will depend on market conditions and our anticipated cash
needs.

        Interest income was $260,000 and $999,000 for the three and nine months
ended March 31, 2001, respectively, compared to $307,000 and $576,000 for the
three and nine months ended March 31, 2000. For the three months ended March 31,
2001, the decrease is due to lower average cash balances in the current fiscal
quarter. For the nine months ended March 31, 2001, the increase is due to higher
average cash balances in the current fiscal year.

        Interest expense of $59,000 and $188,000 for the three and nine months
ended March 31, 2001, respectively, compared to $85,000 and $174,000 for the
three and nine months ended March 31, 2000, was related to our obligation under
a capital lease.

        The Company recorded a benefit for income taxes of 26% for the nine
months ended March 31, 2001 and a provision of 40% for the nine months ended
March 31, 2000. The fiscal 2001 benefit for income taxes is reduced from the
statutory rate, by the amount of any tax benefits that, based on currently
available information, are not expected to be realized.

        Effective July 1, 2000, the Company recorded the cumulative effect of a
change in accounting principle related to the adoption of SFAS 133 which
resulted in a decrease to the net loss of approximately $129,000, net of tax, or
$0.01 per share outstanding, for the nine months ended March 31, 2001.


SEGMENT INFORMATION

        Historically, we have operated in two segments: (1) our surgical
business segment and (2) our orthopedics business segment. Our surgical segment
develops proprietary surgical products, including bioresorbable hemostatic
devices and biosealants, such as CoStasis and CoSeal, for tissue repair and
regeneration. In February 1999, we formed a new subsidiary, NeuColl, Inc., to
commercialize products in the orthopedics field, which included Collagraft(R)
and NeuVisc(TM), a collagen-based intra-articular implant for the treatment of
pain related to osteoarthritis. Our ownership in NeuColl decreased from 100% to
below 50% as of March 31, 2000 due to financing received by NeuColl from a third
party. Beginning March 31, 2000, we no longer consolidate NeuColl into our
financial results and instead, report our share of NeuColl's income or loss
under the equity method of accounting. Subsequent to March 31, 2000, we operate
in only one segment, our surgical business.



                                       12
<PAGE>   13

LIQUIDITY AND CAPITAL RESOURCES

        At March 31, 2001, cash and investments were $33.3 million compared to
$51.3 million at June 30, 2000. Net cash used in operating activities was $13.1
million for the nine months ended March 31, 2001 compared to $17.4 million used
for the same prior-year period.

        For the nine months ended March 31, 2001, cash provided by investing
activities of $10.9 million was related to proceeds from the sale of equity
investments and the maturity of our equity collars. Currently, we anticipate
that capital expenditures will not exceed $1.3 million in fiscal 2001. Net cash
used by financing activities for the nine months ended March 31, 2001 was
approximately $78,000 primarily due to payments of $600,000 for capital lease
obligations offset by proceeds of $522,000 from the exercise of incentive stock
options.

        Our principal sources of liquidity include our marketable equity
investments, cash, and cash equivalents. We anticipate that stock sales will be
made from time to time, with the objective of generating cash for, among other
things, capital expenditures as well as funding operations. We may defer sales
of equity investments for tax planning purposes or other reasons, although
decisions concerning prospective stock sales will also be affected by the
then-current market price of the common stock. As another source of financing,
we may in the future establish a credit facility, or sell equity in a private
financing, although there can be no assurance that such financing will be
available to us on acceptable terms, if at all.

        In September 1998, our Board of Directors approved a stock repurchase
program to buy back up to 1.0 million shares of common stock at a price of up to
$4.25 per share. As of March 31, 2001, we had repurchased 515,100 shares of our
common stock under this program, none of which were repurchased in the nine
months ended March 31, 2001.

        In September 1998, our Board of Directors approved a program to cancel
options to purchase shares of the common stock of Cohesion Corporation. In
connection with such program, Cohesion offered to pay each holder of canceled
options a per share amount equal to the excess of $16.70 over the exercise price
of the canceled option. Cohesion will make this option payment ratably over the
original vesting period of the canceled option so long as the holder thereof
remains an employee or consultant of Cohesion. Cohesion expects to record an
additional $0.1 million of compensation expense with respect to the cash-out of
canceled options through 2001.

        We believe that our current sources of liquidity should be adequate to
fund our anticipated capital requirements for the next twelve months. However,
during this period and thereafter, we may require additional financing. Our
capital requirements will depend on numerous factors, including the achievement
of targeted sales levels, progress of our clinical research and product
development programs, the extent to which we enter into collaborative
relationships with third parties and the scope of our obligations in such
relationships, the receipt of, and the time required to obtain, regulatory
clearances and approvals, the resources required to protect our intellectual
property and other factors. We cannot accurately predict the timing and amount
of such capital requirements. Additional financing may not be available to us on
acceptable terms, if at all.

        In February 1999, we formed a new subsidiary, NeuColl, Inc., in order to
commercialize products in the orthopedics field, which included Collagraft(R)
and NeuVisc(TM), a collagen-based intra-articular implant. We provided the
initial funding for NeuColl; however, during the quarter ended March 31, 2000,
NeuColl obtained a total of $4 million in financing from a third party, reducing
our ownership from 100% to below 50%. Accordingly, NeuColl's operations were no
longer consolidated from that date forward and we began to report our share of
NeuColl's operating results under the equity method of accounting. As of June
30, 2000 and March 31, 2001, the carrying value of our investment in NeuColl was
zero. We hold a warrant to purchase an additional 3.0 million shares of common
stock in NeuColl, which expires in February 2006.



                                       13
<PAGE>   14

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

        For a discussion of other risks and uncertainties involving the
Company's business, see "Business -- Government Regulations" in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 2000.


We have a history of operating losses and anticipate continued operating losses

        Prior to July 1, 1998, our historical results of operations reflect the
historical operations of the transferred businesses contributed by Collagen (now
McGhan Medical) to Cohesion. The financial statements, prior to July 1, 1998,
may not necessarily reflect the results of operations, financial position and
cash flows of the transferred businesses had Cohesion been operated as an
independent entity during the periods presented. The transferred businesses
incurred operating losses in each of the past five years, including operating
losses of $21.2 million, $24.9 million and $31.5 million in fiscal 2000, 1999
and 1998, respectively. Cohesion's operating losses have resulted primarily from
expenses incurred in connection with research and development activities,
including preclinical and clinical trials, development of manufacturing
processes and general and administrative expenses, and we expect that such
expenses will continue to increase for the foreseeable future. While we had
sales of Collagraft bone products of $1.2 million, $1.9 million, and $1.5
million for the years ended June 30, 2000, 1999, and 1998, respectively, we no
longer reflect those product sales in our financial results as of March 31,
2000, because our interest in NeuColl fell below 50% at that date. Our ability
to achieve and sustain operating profitability is highly dependent upon
obtaining in a timely and efficient fashion, regulatory approval for, and
successfully commercializing and marketing, our products in development,
particularly CoSeal(TM) Surgical Sealant in the United States, successful
commercialization of CoStasis by our marketing partner, U.S. Surgical, and
developing sales and marketing capabilities for our products, both in Europe,
the United States and other markets. There can be no assurance that we will
obtain required regulatory approvals in a timely fashion, if at all, or
successfully develop, manufacture, commercialize and market products or that we
will ever record significant product revenues or achieve operating
profitability.


We must develop and commercialize our products to generate revenues.

        Except for CoStasis, CoSeal in Europe, and our line of Intermediate
Products, all of our products are in research, preclinical or clinical
development. We are dependent on the efforts and results from our marketing
partner, U.S. Surgical, for the commercialization of CoStasis in the United
States and for CoSeal in most of the larger European countries. The development
and commercialization of new products is highly uncertain, as is the timing
associated with these activities. Among other things, potential products that
may appear to be promising may not reach the market for a number of reasons,
including the possibilities that the potential products will be found to be
ineffective or to cause harmful side effects during preclinical testing or
clinical trials, will fail to receive necessary regulatory approvals, will be
difficult to manufacture on a commercial scale, will be uneconomical, will fail
to achieve market acceptance or will be precluded from commercialization by the
proprietary rights of third parties. We cannot assure you that any of our
development programs will be successfully completed, that clinical trials will
generate anticipated results or will commence or be completed as planned.
Additionally, we cannot assure you that we will be able to obtain CE Marks in
Europe, on a timely basis, if at all, or that any PMA application will be
accepted or ultimately approved by the FDA on a timely basis, if at all, or that
any products for which approval is obtained will be commercially successful. For
example, we have a limited history of CoStasis sales. We cannot reliably predict
whether these sales will continue at historical levels or be increased. If any
of our development programs are not successfully completed in a timely fashion,
required regulatory approvals are not obtained in a timely fashion, or products
for which approvals are obtained are not commercially successful, our business,
financial condition and results of operations will be materially and adversely
affected.



                                       14
<PAGE>   15

We operate in an intense competitive environment.

        We compete with many domestic and foreign medical device, pharmaceutical
and biopharmaceutical companies and organizations across each of our product
categories and areas in which we are conducting research and development
activities. In the hemostatic and biosealant areas, we believe in the United
States that we will face strong competition from existing methodologies for
controlling bleeding and sealing wounds resulting from surgery, such as
hemostatic powders and sponges, collagen-based hemostats and traditional sutures
and staples marketed by companies such as Johnson & Johnson and Tyco Healthcare
Group. In addition, a fibrin sealant product is currently being marketed by
Baxter Healthcare Corporation and Haemacure Corporation. Cohesion faces
competition from more recent products and technologies, such as those developed
by Focal, Inc. (which are marketed by Genzyme BioSurgery) and Fusion Medical
Technologies, Inc. Furthermore, products manufactured by our competition may
infringe upon the patents we have for our products. Outside of the United
States, other competitive products currently being marketed include fibrin
sealants and another class of sealants, cyanoacrylates, which are sold in Europe
and the Pacific Rim countries by Immuno AG (a unit of Baxter Healthcare
Corporation), Centeon L.L.C. and Cryolife. In the United States, there are
several fibrin sealants under development including those by the American Red
Cross. In addition to conventional fibrin sealants, there are a number of other
products in late-stage development using either collagen or polymer
technologies, made by Focal and Fusion, as well as cyanoacrylates. Additionally,
several companies and institutions are engaged in the development of
collagen-based materials, techniques, procedures and products for use in medical
applications we anticipate addressing with our current and proposed products and
research programs.

        Many of these companies and organizations have or will have
substantially greater financial, technological, research and development,
regulatory and clinical, marketing and sales and personnel resources than we do.
They may also have greater experience in developing products, conducting
clinical trials, obtaining regulatory approvals, and manufacturing and marketing
such products. They may also develop alternative technologies and products that
are more effective, easier to use or more economical than those which have been
or are being developed by us or that render our technology and products obsolete
and non-competitive. Recently developed technologies or procedures are, or may
in the future be, the basis of competitive products. There can be no assurance
that our current competitors or other parties will not succeed in developing
alternative technologies and products that are more effective, easier to use or
more economical than those which have been or are being developed by us or that
would render our technology and products obsolete and uncompetitive. In such an
event, our business, financial condition and results of operations would be
materially and adversely affected. Competitors may also obtain approval or
clearance by the FDA or foreign regulatory approval organizations, achieve
product commercialization or obtain patent protection earlier than Cohesion.
Additionally, there can be no assurance that any marketing or other strategic
partners that Cohesion may engage will not pursue parallel development of
technologies or products relating to or competitive with our planned product
portfolio. Also, to the extent Cohesion commences manufacturing activities, we
will also face competition with respect to manufacturing efficiency and
marketing capabilities, areas in which we currently have limited experience.
Failure to successfully address these factors and circumstances could have a
material adverse impact on our business, financial condition and results of
operations.


The market may not accept our products.

        CoStasis Surgical Hemostat is a device designed to control diffuse
capillary and small vein bleeding, and CoSeal Surgical Sealant is a device
designed to seal anastomoses and sites of incision, in connection with surgery.
There can be no assurance that either of these products will gain significant
commercial acceptance among physicians, patients and health care payors, even
when and if necessary international and U.S. marketing approvals are obtained.
We believe that recommendations and endorsements by physicians will be essential
for market acceptance of our surgical products, and there can be no assurance
that any such recommendations or endorsements will be obtained. We believe that
surgeons will not use our products unless they determine, based on clinical data
and other factors, that the products are an effective means of controlling
bleeding and sealing anastomoses and sites of incision, and that the clinical
benefits to the patient and cost savings



                                       15
<PAGE>   16

achieved through use of these systems outweigh their cost. Acceptance among
physicians may also depend upon our ability to train surgeons and other
potential users of our products in the application of sprayable surgical
products, which they typically have not used, and the willingness of such users
to learn these new techniques. Additional factors in achieving market acceptance
may include our ability to address competition from U.S. and international
medical device, pharmaceutical and biopharmaceutical companies, to develop a
marketing and sales force, to form strategic partnerships and to manufacture
cost-effective products. Failure of our products to achieve significant market
acceptance will have a material adverse effect on our business, financial
condition and results of operations.


We have limited marketing and sales capabilities.

        We currently have limited experience in marketing and selling our
products, including those under development, and we do not have a significant
marketing and sales staff. In order to achieve commercial success for any
product approved by the FDA, we must either develop a marketing and sales force
or enter into arrangements with third parties to market and sell our products.
If we develop our own marketing and sales capabilities, our SG&A expenses will
increase significantly and we will be competing with other companies that
currently have experienced and well-funded marketing and sales operations. To
the extent that we enter into co-promotion or other marketing and sales
arrangements with other companies, any revenues we receive will be dependent on
the efforts of others, and there can be no assurance that such efforts will be
successful. Failure to develop a sales and marketing force or enter into
arrangements with other companies will reduce our ability to generate revenues.


We depend on the sale of our equity investments to fund operations.

        The market prices of our equity investments are highly volatile. In
connection with our spin-off from Collagen, Collagen transferred to Cohesion,
effective January 1, 1998, all of its equity interest in Boston Scientific and
other investments. We implemented a "hedge" strategy based on purchases of put
options and sales of call options in combination, commonly known as an "equity
collar." Because certain of our collars have matured without the sale of the
underlying stock, the percentage of our stock that is hedged has decreased. As
of March 31, 2001, we held collars covering approximately 7% of our Boston
Scientific holdings. While the strategy is designed to minimize downside risk of
loss should the stock price decline below approximately $32.00 and allow for
limited upside participation should the stock price rise above approximately
$49.00, there can be no assurance that we will be able to sell any of the
remaining unhedged shares of Boston Scientific common stock at attractive prices
if, when and as needed. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."



                                       16
<PAGE>   17

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        Cohesion is exposed to financial market risks, including changes to
interest rates and equity security prices. To mitigate these risks, Cohesion
utilizes derivative financial instruments. Cohesion does not utilize derivative
financial instruments for speculative or trading purposes.

INTEREST RATE RISK

For information regarding interest rate risk refer to the Company's Annual
Report on Form 10K under item 7A.


EQUITY SECURITY PRICE RISK

        Cohesion is exposed to equity security price risks on investments in
Boston Scientific common stock and equity instruments of other biotechnology or
biomedical device companies. To hedge against fluctuations in the market value
of the Boston Scientific common stock, Cohesion entered into costless collar
instruments that expire quarterly through May 2001 and will require settlement
in cash. Shares of Boston Scientific common stock held by Cohesion collateralize
the costless collar instruments. The collars hedge 50,000 shares at prices
between $32 and $49 and represented approximately 7% of the Boston Scientific
stock hedged at March 31, 2001. As of March 31, 2001, the market value of Boston
Scientific common stock was $20.18 per share.

<TABLE>
<CAPTION>
                                                     FAIR
                                                   VALUE AT
                                                   MARCH 31,
EQUITY INVESTMENTS                                   2001
                                                   --------
                                                 (IN THOUSANDS)
<S>                                                <C>
Boston Scientific                                   $14,645
Equity collar on Boston Scientific                      569
Pharming Group N.V                                    6,264
                                                    -------
    Total portfolio                                 $21,478
</TABLE>



                                       17
<PAGE>   18

                           PART II. OTHER INFORMATION

                           COHESION TECHNOLOGIES, INC.

Item 6. Exhibits and Reports on Form 8-K

        A.      Reports on Form 8-K

                None



                                       18
<PAGE>   19

                                   SIGNATURES

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


                                       COHESION TECHNOLOGIES, INC.


Dated: May 14, 2001                    /s/   Sharon Kokubun
                                       -----------------------------------------
                                       Sharon Kokubun
                                       Vice President, Financial Operations
                                       (Principal Accounting Officer)



                                       19