FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

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

For the quarterly period ended: September 30, 1997

/  /       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                    SECURITIES EXCHANGE ACT OF 1934

For the transition period from............................to....................

Commission File Number........0-19410

                                  HemaSure Inc.
             (Exact name of registrant as specified in its charter)

            Delaware                                    04-3216862
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 organization or incorporation)

                140 Locke Drive, Marlborough, Massachusetts 01752
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (508) 485-6850
              (Registrant's telephone number, including area code)

                                       N/A
           -----------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

          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 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  /  /

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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

       Common Stock, par value $.01 per share               8,127,602
       --------------------------------------               ---------
                       Class                     Outstanding at November 9, 1997



<PAGE>



<TABLE>
                                                   HemaSure Inc.

                                                       INDEX


<CAPTION>
                                                                                                               Page
<S>             <C>                                                                                                <C>
Part I          Financial Information
Item 1.         Financial Statements

                Consolidated  Balance  Sheets  as of  September  30,  1997  and
                December 31, 1996                                                                                   3

                Consolidated  Statements  of  Operations  for the Three and Nine
                Month Periods Ended September 30, 1997 and 1996                                                     4

                Consolidated  Statements  of Cash  Flows for the  Periods  Ended
                September 30, 1997 and 1996                                                                         5

                Notes to Consolidated Financial Statements                                                          6

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

Part II         Other Information                                                                                  12

Item 1.         Legal proceedings                                                                                  13

Item 2.         Changes in Securities and Use of Proceeds                                                          14

Item 3.         Defaults Upon Senior Securities                                                                    14

Item 4.         Submission of Matters to a Vote of Security Holders                                                14

Item 5.         Other Information                                                                                  14

Item 6.         Exhibits and Reports on Form 8-K                                                                   14

                Signatures                                                                                         15
</TABLE>


                                        2

<PAGE>



<TABLE>
                         Part I - FINANCIAL INFORMATION

Item    1.        Financial Statements

                                  HemaSure Inc.
                           Consolidated Balance Sheets



<CAPTION>
(In thousands)                                                                September 30,            December 31,
                                                                                   1997                    1996
                                                                              (Unaudited)                
                                                                           --------------------     -------------------
<S>                                                                                 <C>                     <C>        
ASSETS
Current assets:
   Cash and cash equivalents                                                        $     3,914             $     5,527
   Marketable securities                                                                  6,787                  11,369
   Accounts receivable                                                                      250                     283
   Inventories                                                                              787                     376
   Assets held for sale                                                                     150                     500
   Prepaid expenses                                                                          29                     208
                                                                           --------------------     -------------------
   Total current assets                                                                  11,917                  18,263
Property and equipment, net                                                               1,993                   2,245
Other assets                                                                                 65                      52
                                                                           --------------------     -------------------
   Total assets                                                                     $    13,975             $    20,560
                                                                           ====================     ===================

LIABILITIES AND STOCKHOLDERS' EQUITY
   Current liabilities:
      Accounts payable                                                                $     751             $     1,612
      Accrued restructuring expenses                                                        665                      --
      Accrued expenses                                                                    1,270                   1,573
      Note payable - current portion                                                         28                      --
      Capital lease obligations-current portion                                             242                     234
                                                                           --------------------     -------------------
      Total current liabilities                                                           2,956                   3,419
   Capital lease obligations                                                                381                     525
   Note payable                                                                              91                      --
   Convertible subordinated note payable                                                  8,687                   8,687
                                                                           --------------------     -------------------
   Total liabilities                                                                     12,115                  12,631
                                                                           --------------------     -------------------
Stockholders' equity:
   Common stock                                                                              82                      81
   Additional paid-in-capital                                                            60,753                  60,702
   Unearned compensation                                                                   (250)                   (398)
   Unrealized holding loss of available for sale marketable securities                       (1)                     (3)
   Accumulated deficit                                                                  (58,724)                (52,453)
                                                                           --------------------     -------------------
   Total stockholders' equity                                                             1,860                   7,929
                                                                           --------------------     -------------------
   Total liabilities and stockholders' equity                                      $     13,975             $    20,560
                                                                           ====================     ===================
</TABLE>


                   The accompanying notes are an integral part
                           of the financial statements


                                        3

<PAGE>



<TABLE>
                                                   HemaSure Inc.
                                       Consolidated Statements of Operations
                                    For the Three and Nine Month Periods Ended
                                            September 30, 1997 and 1996
                                                    (Unaudited)


<CAPTION>
(In thousands, except per share amounts)                      Three-month periods              Nine-month periods ended
                                                              ended September 30,                    September 30,
                                                          ----------------------------     ---------------------------------
                                                             1997            1996               1997               1996
                                                             ----            ----               ----               ----
<S>                                                            <C>               <C>              <C>                  <C>  
Revenues:
   Product sales                                               $ 522             $ 518            $ 1,590              $ 555
   Product sales to related parties                               --                --                 --                 13
   Collaborative research and development                         --                --                 --                 54
                                                          ----------     -------------     --------------      -------------
      Total revenues                                             522               518              1,590                622
                                                          ----------     -------------     --------------      -------------
Costs and expenses:
   Cost of products sold                                         626             1,321              2,505              2,355
   Cost of products sold to related parties                       --                --                 --                 13
   Cost of collaborative research and development                 --                --                 --                 41
   Research & development                                        938             1,166              2,699              4,209
   Selling, general and administrative                           837             1,784              3,450              4,798
   Restructuring charge                                           --                --              1,121                 --
                                                          ----------     -------------     -------------- ---  -------------
      Total costs and expenses                                 2,401             4,271              9,775             11,416
                                                          ----------     -------------     --------------      -------------
   Loss from operations                                       (1,879)           (3,753)            (8,185)           (10,794)
   Interest income                                               117               376                458               1440
   Interest expense                                             (374)              (22)            (1,042)               (63)
   Other income (expense)                                      2,499                --              2,498                 --
                                                          ----------     -------------     --------------      -------------
   Net income (loss) from continuing operations                  363            (3,399)            (6,271)            (9,417)
                                                          ----------     -------------     --------------      -------------
   Discontinued operations:
      Loss from operations of discontinued business               --              (135)                --               (788)
      Loss on disposal of discontinued business                   --                --                 --                 --
                                                          ----------     -------------     --------------      -------------
   Net income (loss)                                         $   363           $(3,534)          $ (6,271)         $ (10,205)
                                                          ----------     -------------     --------------      -------------
   Net income (loss) per share:
   Net income (loss) from continuing operations                $0.04            $(0.42)          $  (0.77)           $ (1.17)
   Loss from operations of discontinued business                  --             (0.02)                --              (0.10)
      Net income (loss) per share                              $0.04             (0.44)             (0.77)             (1.27)
                                                          ----------     -------------     --------------      -------------
      Weighted average number of common and               
      common equivalent shares outstanding                     8,128             8,077              8,122              8,061
</TABLE>


                   The accompanying notes are an integral part
                           of the financial statements

  
                                        4

<PAGE>



<TABLE>
                                                   HemaSure Inc.
                                       Consolidated Statements of Cash Flows
                                                    (Unaudited)



<CAPTION>
(In thousands)                                                                          Nine-month periods ended
                                                                                              September 30,
                                                                                  -------------------------------------
                                                                                        1997                 1996
                                                                                        ----                 ----
<S>                                                                                       <C>                 <C>      
Cash flows from operating activities:
   Net loss                                                                                $(6,271)            $(10,205)
   Adjustments to reconcile net loss to net cash used in operating activities
      Discontinued business                                                                                         788
      Depreciation and amortization                                                            568                  587
      Accretion of marketable securities discount                                                7                   (4)
   Changes in operating assets and liabilities:
      Net assets of discontinued business                                                      350                   --
      Accounts receivable                                                                       33                 (341)
      Inventories                                                                             (411)                 226
      Prepaid expenses                                                                         179                 (838)
      Accounts payable and accrued expenses                                                   (499)                 174
                                                                                  ----------------      ---------------
      Net cash used in continuing operations                                                (6,044)              (9,613)
      Net cash used in discontinuing business                                                   --               (9,954)
      Net cash used in operating activities                                                 (6,044)             (19,567)
                                                                                  ----------------      ---------------

   Cash flows from investing activities:
      Purchase of available-for-sale marketable securities                                 (77,642)            (181,690)
      Maturities of available-for-sale marketable securities                                 82,217              195,621
      Unrealized holding loss of available-for-sale marketable securities                        2                    2
      Additions to property and equipment                                                     (130)              (1,171)
      Acquisition of business net of cash acquired                                              --               (4,092)
      Decrease in other assets                                                                 (13)                  45
                                                                                  ----------------      ---------------

   Net cash provided from investing activities                                               4,434                8,715
                                                                                  ----------------      ---------------

   Cash flows from financing activities:
      Proceeds from issuance of common stock                                                    52                  235
      Borrowing from notes payable arrangements                                                140                   --
      Repayments of notes payable                                                              (21)                  --
      Repayments of capital lease obligations                                                 (174)                (153)
                                                                                  ----------------      ---------------
      Net cash (used in) provided from financing activities                                     (3)                  82
                                                                                  ----------------      ---------------
      Net (decrease) in cash and cash equivalents                                           (1,613)             (10,770)
      Cash and cash equivalents at beginning of period                                       5,527               23,028
                                                                                  ----------------      ---------------
      Cash and cash equivalents at end of period                                          $  3,914              $12,258
                                                                                  ----------------      ---------------
</TABLE>


                   The accompanying notes are an integral part
                           of the financial statements


                                        5

<PAGE>



                                  HemaSure Inc.
                   Notes To Consolidated Financial Statements


1.       Basis of Presentation

         The  accompanying  financial  statements  are  unaudited  and have been
         prepared on a basis substantially consistent with the audited financial
         statements.

         Certain information and footnote  disclosures  normally included in the
         Company's  annual  statements  have  been  condensed  or  omitted.  The
         condensed interim financial  statements,  in the opinion of management,
         reflect all adjustments (including normal recurring accruals) necessary
         for a fair  statement of the results for the interim  periods ended and
         1996.

         The results of operations for the interim  periods are not  necessarily
         indicative  of the results of  operations to be expected for the fiscal
         year. These interim financial  statements should be read in conjunction
         with the audited  financial  statements for the year ended December 31,
         1996,  which  are  contained  in the  Company's  Form  10-K  (File  No.
         000-23776),  filed with the Securities and Exchange Commission on March
         31, 1997.


2.       Inventories

         Inventories consist of the following (in thousands):


                                   September 30, 1997         December 31, 1996
                                   ------------------         -----------------
                                   
           Raw Materials           $      177                 $     240
           Work in progress               104                       122
           Finished goods                 506                        14
                                          ---                       ---
                              
                                   $      787                 $     376
                                   ==========                 =========


3.       Property and Equipment

         Property and equipment consists of the following (in thousands):


                                          September 30, 1997   December 31, 1996
                                          ------------------   -----------------

          Property and equipment                  $ 3,777             $ 3,618
          Less accumulated depreciation         
            and amortization                       (1,841)             (1,421) 
                                                  --------            -------- 
                                                
                                                    1,936               2,197

                Construction in progress               57                  48
                                                 --------             --------

                                                  $ 1,993             $ 2,245
                                                 ========             ========



                                        6

<PAGE>



4.       Note payable

         In March  1997,  the  Company  exercised  its  right,  under  the lease
         arrangement  of  its  Marlborough  Massachusetts  facility,  to  have a
         portion of its leasehold improvements financed and received $140,000 in
         connection  with this  arrangement.  This  amount  will be repaid in 60
         equal monthly installments at a rate of 12% per annum.


5.       Convertible subordinated note payable

         In January 1997, the Company entered into a Restructuring  Agreement of
         the debt related to its  acquisition of Novo Nordisk's  plasma products
         unit.   Pursuant   to  the   Restructuring   Agreement,   approximately
         $23,000,000 of  indebtedness  owed to Novo Nordisk was  restructured by
         way of  issuance  by  HemaSure  to Novo  Nordisk  of a 12%  convertible
         subordinated  promissory  note in the principal  amount of $11,700,000,
         which is due and payable on December 31, 2001,  with  interest  payable
         quarterly  (provided  that up to $3,000,000  may be forgiven in certain
         circumstances).  Approximately  $8,500,000  of the  reduction  of  such
         indebtedness was forgiven.  The remainder of the reduction represents a
         net amount due from Novo Nordisk to HemaSure related to various service
         arrangements  between  the two  companies.  The amount  included in the
         balance  sheet at September 30, 1997 and December 31, 1996 includes the
         effect of the Restructuring Agreement net of the $3,000,000 contingency
         amount to reflect the most probable result of the Company's decision to
         exit the plasma business.  All amounts  outstanding under such note are
         convertible by either party,  commencing  January 1998,  into shares of
         common stock, par value $.01 per share, of HemaSure ("Common Stock") at
         a conversion price equal to $10.50 per share.


6.       Net income (loss) per share

         The net income (loss) per share is based on the weighted average number
         of common and common equivalent shares  outstanding  during the period.
         Common  equivalent shares are not included in the per share calculation
         where the effect of their inclusion would be anti-dilutive. The Company
         has incurred a net loss for the nine month period ended  September  30,
         1997 and expects to recognize a net loss  for the twelve  month  period
         ended  December 31, 1997.  The Company  believes  that the inclusion of
         common equivalent shares for purposes of calculating the net income per
         share  for the three  month  period  ended  September  30,  1997 is not
         meaningful or useful for comparative purposes.


7.       Litigation

         The Company is a defendant in two lawsuits  brought by Pall Corporation
         ("Pall").  In complaints filed in February 1996 and November 1996, Pall
         alleged that  HemaSure's  manufacture,  use and/or sale of the LeukoNet
         product infringes upon three patents held by Pall.  

                                       7

<PAGE>

         On October 14, 1996 in connection with the first action concerning U.S.
         Patent No.  5,451,321  (the "321 patent") the Company filed for summary
         judgment  of  noninfringement.  Pall filed a cross  motion for  summary
         judgment of infringement at the same time.

         In October 1997 the Eastern District of New York granted in part Pall's
         summary judgment motion relating to the 321 patent.  Pall has moved for
         a preliminary injunction.  The Company believes, based on the advice of
         its  patent  counsel,  that  Pall's  application  will be denied in due
         course.  The  court  has not yet ruled on the  validity  of Pall's  321
         patent   claims,   which   HemaSure   has   asserted  are  invalid  and
         unenforceable.  The court now will need to  review  and  determine  the
         validity of this patent prior to any further  action.  No date has been
         set for these proceedings.

         With respect to the second action concerning U.S. Patent Nos. 4,340,479
         (the "479 patent") and 4,952,572  (the "572 patent"),  the Company has
         answered the  complaint  stating that it does not infringe any claim of
         the  asserted  patents.  Further,  the Company has  counterclaimed  for
         declaratory    judgment    of    invalidity,     noninfringement    and
         unenforceability  of the '572  patent,  and a  declaratory  judgment of
         noninfringement of the '479 patent, as a result of a license.

         The Company  believes,  based on advice of its patent  counsel,  that a
         properly  informed  court should  conclude  that the  manufacture,  use
         and/or sale by the  Company or its  customers  of the present  LeukoNet
         product does not infringe any valid enforceable claim of the three Pall
         patents.  However,  there can be no  assurance  that the  Company  will
         prevail in the pending litigations,  and an adverse outcome in a patent
         infringement  action  would  have  a  material  adverse  effect  on the
         Company's future business and operations.

         On November  1, 1996,  the  Company  filed a  complaint  in the Supreme
         Court,  State of New  York,  County of New York,  against  Pharmacia  &
         Upjohn, Inc. ("P&U").  In its complaint,  the Company sought to receive
         damages  arising out of the alleged  breach by P&U of an  agreement  to
         sell to the Company  P&U's plasma  pharmaceutical  business  located in
         Stockholm,   Sweden.   In  September   1997,  the  Company  reached  an
         out-of-court  settlement  with P&U. The terms of settlement  included a
         cash  payment to the  Company  and the  granting of an option to P&U to
         license, on a non-exclusive basis,  certain intellectual  property held
         by the Company and its subsidiaries  relating to plasma  fractionation.
         The cash payment was  recognized  as other income in the quarter  ended
         September 30, 1997.


8.       Restructuring charge

         In April 1997, the Company, primarily as a result of exiting the plasma
         business, determined to focus management resources on its core business
         of  blood  filtration  technologies.   In  connection  therewith,  four
         officers were relieved of their duties. The Company incurred a one time
         charge of  $1,121,000  in the second  quarter of 1997 for severance and
         related charges in connection  with this action.  At September 30, 1997
         there was a balance of $665,000  remaining  to be paid  related to this
         charge.

                                       8

<PAGE>


9.       Other

         In June 1997, the Financial Accounting Standards Board issued Statement
         of Financial  Accounting  Standards No. 130,  "Reporting  Comprehensive
         Income" ("SFAS 130"). SFAS 130 requires the reporting and display, in a
         full set of general purpose financial statements, of all items that are
         required to be recognized under  accounting  standards as components of
         comprehensive  income.  SFAS 130 is effective for statements issued for
         periods  ending  after  December  15,  1997  and   reclassification  of
         financial  statements for earlier periods for  comparative  purposes is
         required.  The adoption of SFAS 130 will have an immaterial  impact on
         the Company's financial statements. 

         This Quarterly Report on Form 10-Q contains forward-looking  statements
         within the meaning of the new Private Securities  Litigation Reform Act
         of 1995, which involve certain risks and  uncertainties.  The Company's
         actual   results  or  outcomes   may  differ   materially   from  those
         anticipated.  The forward-looking  statements relate to various aspects
         of the Company's  sale or other  disposition  of the  Company's  plasma
         fractionation  business  in Denmark;  the  Company's  consideration  of
         pursuing  public or  private  equity  and/or  debt  financing;  and the
         defense of the  Company's  pending or future  patent  litigation.  Each
         forward-looking  statement  that the  Company  believes  is material is
         accompanied  by  a  cautionary  statement  or  statements   identifying
         important  factors that could cause actual results to differ materially
         from those described in the forward- looking statement.  The cautionary
         statements  are set  forth  following  the  forward-looking  statement,
         and/or  elsewhere in this Form 10-Q and the Company's  other  documents
         filed with the Securities and Exchange Commission,  whether or not such
         documents  are  incorporated  herein by  reference.  In  assessing  the
         forward-looking  statements  contained  in this Form 10-Q,  readers are
         urged to read carefully all cautionary statements.




                                        9

<PAGE>



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

Results of Operations

         Overview

HemaSure Inc. (the "Company") was established in December 1993 as a wholly owned
subsidiary of Sepracor Inc.  ("Sepracor").  Prior to that date, its business was
conducted as part of Sepracor's bioprocessing division.  Effective as of January
1, 1994, in exchange for 3,000,000 shares of Common Stock,  Sepracor transferred
to HemaSure its technology relating to the manufacture,  use and sale of medical
devices.

The Company is utilizing  its  proprietary  filtration  technologies  to develop
products to increase the safety of donated  blood and to improve  certain  blood
transfusion  procedures.  The  Company's  products are designed for use in blood
centers and hospital blood banks worldwide.  From inception through fiscal 1995,
the Company has sold non-blood related filter products primarily to Sepracor,  a
related  party,  for use in  chemical  processing  applications.  As the Company
continues to focus its efforts in the medical device sector,  it does not expect
sales of its non-blood related products to continue in any material respect. The
Company's collaborative research and development efforts have been with the U.S.
Department of the Army for blood filtration related practices.

The Company is subject to risks common to  companies  in the medical  technology
industry,  including,  but not  limited  to,  development  by the Company or its
competitors  of new  technological  innovations,  dependence  on key  personnel,
protection  of  proprietary   technology  and  compliance  with  Food  and  Drug
Administration ("FDA") regulations.

         Three and nine months ended September 30, 1997 and 1996

Revenues  were  $522,000 for the quarter  ended  September  30, 1997 compared to
$518,000 in the same period in 1996.  Revenues in both quarters  represent sales
of the Company's LeukoNet system.

Revenues were  $1,590,000 for the first nine months of 1997 compared to $622,000
for the first nine  months of 1996.  Revenues  for the nine month  period  ended
September 30, 1997 represent sales of the Company's  LeukoNet  system.  Revenues
for the nine month period ended  September  30, 1997  include  product  sales to
Sepracor of $13,000  and  collaborative  research  and  development  revenues of
$54,000 related to the Company's SBIR grant.

Total cost of products sold  exceeded  total product sales in all periods due to
the start-up  costs of new product  introduction  and the high costs  associated
with low-volume production.

Research and  development  expenses  were  $938,000 in the third quarter of 1997
compared to $1,166,000 in the third quarter of 1996, and were  $2,699,000 in the
nine months ended  September  30, 1997 compared to $4,209,000 in the nine months
ended September 30, 1996. The decrease in the three


                                       10

<PAGE>



month period is primarily  attributable to a lower level of spending  associated
with the Company's SteriPath Blood Pathogen  Inactivation  System, which program
was suspended in May 1997, offset in part by increased  spending on the LeukoNet
System to effect process improvements.  The decrease in the nine month period is
primarily  attributable  to a  lower  level  of  spending  associated  with  the
Company's SteriPath Blood Pathogen Inactivation System.

Selling,  general and administrative  expenses were $837,000 in the three months
ended  September  30, 1997  compared to  $1,784,000  in the three  months  ended
September  30,  1996,  and were  $3,450,000  in the  first  nine  months of 1997
compared to  $4,798,000 in the first nine months of 1996.  The Company  incurred
costs in both the three and nine month periods ended September 30, 1996 that did
not recur in the same three and nine  month  periods  of 1997  resulting  in the
decrease for these periods.  These non-recurring costs include marketing efforts
completed in 1996  associated with the  introduction  of the Company's  LeukoNet
System and costs  related to efforts  to expand the  Company's  business  beyond
medical  devices.  Sales and marketing costs may increase in future periods from
current levels as the Company continues its efforts to expand sales of its blood
filtration products.

In the  second  quarter  of 1997,  the  Company  recorded  a one time  charge of
$1,121,000  for  severance  and related  charges in  connection  with  executive
management  departures  pursuant to the Company's  decision to focus on its core
filtration business.

Interest  income for both the three and nine  months  ended  September  30, 1997
decreased  compared to the three and nine months ended September 30, 1996 due to
lower average cash and marketable  securities balances available for investment.
Interest  expense for the three and nine month periods ended  September 30, 1997
increased  compared  to the  same  periods  in  1996  related  to a  convertible
subordinated note payable that was not in existence during the first half 1996.

In September 1997, the Company reached an out-of-court settlement with Pharmacia
& Upjohn,  Inc. ("P&U") arising out of the alleged breach by P&U of an agreement
to  sell  to  the  Company  P&U's  plasma  pharmaceutical  business  located  in
Stockholm,  Sweden. The terms of settlement  included a cash payment to HemaSure
and the  granting  of an option to P&U to  license,  on a  non-exclusive  basis,
certain  intellectual  property  held by  HemaSure  Inc.  and  its  subsidiaries
relating  to plasma  fractionation.  The cash  payment was  recognized  as other
income in the third quarter ended September 30, 1997.

Liquidity and Capital Resources

The net  decrease  in cash  and  cash  equivalents  for the  nine  months  ended
September 30, 1997 was $1,613,000.  This decrease is  attributable  primarily to
net cash used in operating  activities of $6,044,000  offset in part by net cash
provided from investing activities of $4,434,000.

Net cash used in operating activities is primarily  attributable to the net loss
of $6,271,000, an increase in inventories of $411,000 and a reduction in accrued
expenses of $499,000 offset in part by depreciation and amortization of $568,000
and the receipt of $350,000 related to the net assets of discontinued  business.
Net cash  provided  from  investing  activities  relates  to  available-for-sale
marketable  securities  investing  activities  of  $4,575,000  offset in part by
additions to property and equipment of $130,000.



                                       11

<PAGE>



In January 1997, the Company entered into a Restructuring  Agreement of the debt
related to its acquisition of Novo Nordisk's  plasma products unit.  Pursuant to
the Restructuring Agreement,  approximately  $23,000,000 of indebtedness owed to
Novo Nordisk was  restructured by way of issuance by the Company to Novo Nordisk
of a 12% convertible  subordinated  promissory  note in the principal  amount of
$11,700,000,  which is due and  payable on  December  31,  2001,  with  interest
payable  quarterly  (provided  that up to $3,000,000  may be forgiven in certain
circumstances).  Approximately  $8,500,000 of the reduction of such indebtedness
was forgiven.  The  remainder of the reduction  represents a net amount due from
Novo Nordisk to the Company related to various service  arrangements between the
two  companies.  The amount  included in the balance  sheet at March 31,1997 and
December 31, 1996 includes the effect of the Restructuring  Agreement net of the
$3,000,000  contingency  amount  to  reflect  the most  probable  result  of the
Company's  decision to exit the plasma business.  All amounts  outstanding under
such note are convertible by either party,  commencing January 1998, into shares
of Common Stock of the Company at a conversion price equal to $10.50 per share.

In April  1997,  the  Company,  as a result  of  exiting  the  plasma  business,
determined  to  focus  management  resources  on  its  core  business  of  blood
filtration technologies. In connection therewith, four officers were relieved of
their  duties.  John F.  McGuire  was named  President  and CEO and  Timothy  J.
Barberich was named Chairman of the Board. In connection therewith,  the Company
incurred a one time charge of $1,121,000  in the second  quarter of 1997 related
to these actions.  The Company paid $456,000 of this  obligation as of September
30, 1997.

The Company believes based on its current operating plan that in addition to its
available cash balances,  it will need additional financing in order to fund the
Company's  operations  beyond the second  quarter of 1998.  Possible  sources of
capital include sale of the Company's plasma  fractionation  business in Denmark
and public or private  equity and/or debt  financing all of which the Company is
pursuing.  The Company's cash  requirements  may vary  materially from those now
planned because of factors such as successful  development of products,  results
of product testing,  approval  process at the FDA and similar foreign  agencies,
commercial acceptance of new products,  patent developments and the introduction
of competitive products.


                                       12

<PAGE>



                                    PART II.
                                OTHER INFORMATION

Item 1. Legal Proceedings

The Company is a defendant in two lawsuits brought by Pall Corporation ("Pall").
In  complaints  filed in February  1996 and  November  1996,  Pall  alleged that
HemaSure's  manufacture,  use and/or sale of the LeukoNet product infringes upon
three patents held by Pall.

On October 14, 1996 in connection  with the first action  concerning U.S. Patent
No.  5,451,321  (the "321  patent") the Company  filed for summary  judgment of
noninfringement.  Pall filed a cross motion for summary judgment of infringement
at the same time.

In October  1997,  the  Eastern  District  of New York  granted in part  Pall's
summary  judgment  motion  relating  to the 321  patent.  Pall has  moved  for a
preliminary  injunction.  The Company belives, based on the advice of its patent
counsel, that Pall's application will be denied in due course. The court has not
yet ruled on the  validity  of Pall's  321 patent  claims,  which  HemaSure  has
asserted are invalid and  unenforceable.  The courts now will need to review and
determine the validity of this patent prior to any further  action.  No date has
been set for these proceedings.

With respect to the second action  concerning  U.S.  Patent Nos.  4,340,479 (the
"'479 patent") and 4,952,572  (the "572  patent"),  the Company has answered the
complaint  stating that it does not infringe any claim of the asserted  patents.
Further,  the Company has counterclaimed for declaratory judgment of invalidity,
noninfringement  and  unenforceability  of the '572  patent,  and a  declaratory
judgment of noninfringement of the '479 patent, as a result of a license.

The Company  believes,  based on advice of its patent  counsel,  that a properly
informed court should conclude the  manufacture,  use and/or sale by the Company
or its  customers  of the present  LeukoNet  product does not infringe any valid
enforceable claim of the three Pall patents.  However, there can be no assurance
that the Company will prevail in the pending litigations, and an adverse outcome
in a patent  infringement  action  would have a material  adverse  effect on the
Company's future business and operations.

On November 1, 1996, the Company filed a complaint in the Supreme  Court,  State
of New York, County of New York,  against Pharmacia & Upjohn,  Inc. ("P&U").  In
its complaint,  the Company sought to receive damages arising out of the alleged
breach by P&U of an agreement to sell to the Company P&U's plasma pharmaceutical
business located in Stockholm, Sweden. In September 1997, the Company reached an
out-of-court  settlement  with P&U.  The  terms of  settlement  included  a cash
payment  to  HemaSure  and the  granting  of an option to P&U to  license,  on a
non-exclusive basis, certain intellectual property held by HemaSure Inc. and its
subsidiaries relating to plasma  fractionation.  The cash payment was recognized
as other income in the third quarter ended September 30, 1997.




                                       13

<PAGE>



Items  2  -  4.    None



Item   5.          Other information


On October 28,  1997 the  Company's  shares of Common  Stock were  included  for
quotation on The Nasdaq SmallCap Market and removed from quotation on The Nasdaq
National  Market.  This transition  results from a  determination  of the Nasdaq
Listing  Qualifications  Panel  that,  as of June 30,  1997 and  currently,  the
Company does not meet the $4 million net tangible  assets Nasdaq National Market
listing maintenance requirement.  The Company's Common Stock will continue to be
listed on The Nasdaq  SmallCap  Market via an  exception  from the net  tangible
asset requirement subject to satisfying certain  conditions.  The exception will
expire on January  12,  1998.  If the Company is deemed to have met the terms of
the  exception by then,  it shall  continue to be listed on the Nasdaq  SmallCap
Market. The Company believes it can meet the conditions,  however,  there can be
no assurance that it will be able to do so.


Item   6.          Exhibits and Reports on Form 8-K


a)  Exhibits

The exhibits listed in the Exhibit Index immediately  preceding the exhibits are
filed as part of this Quarterly Report 0n Form 10-Q.

b)  Reports on Form 8-K  -  None







                                       14

<PAGE>



                                   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.


                                HEMASURE INC.
                                (Registrant)


Date:  November 13, 1997        By:________________________________
                                   Name:   John F. McGuire
                                   Title:  President and Chief Executive Officer
                                           (Principal Executive Officer)



Date:  November 13, 1997        By:__________________________________
                                   Name:   James B. Murphy
                                   Title:  Senior Vice President Finance and
                                           Administration
                                           (Principal Financial Officer)



<PAGE>



                                  Exhibit Index

         The following exhibits are filed as part of this Quarterly Report on
Form 10-Q.



<TABLE>
<CAPTION>
                                                                                                  Sequential
Exhibit No.                                  Description                                           Page No.
-----------                                  -----------                                           --------

<S>        <C> 
2.1**      Heads of Agreement, dated as of January 31, 1996, between the Company
           and Novo Nordisk A/S.
           
3.1*       Certificate of Incorporation of the Company.
           
3.2*       By-Laws of the Company.
           
4.1*       Specimen  Certificate for shares of Common Stock,  $.01 par value, of
           the Company.
           
4.2***     Registration  Rights Agreement,  dated January 23, 1997, by and among
           the Company and Novo Nordisk A/S.
           
10.1****   Restructuring Agreement, dated January 23, 1997, between the Company,
           HemaPharm Inc., HemaSure A/S and Novo Nordisk A/S.
           
10.2***    Convertible  Subordinated Note Due December 31, 2001 in the amount of
           U.S.  $11,721,989,  issued by the Company to Novo Nordisk A/S,  dated
           January 23, 1997.
           
27.1       Financial Data Schedule.
</TABLE>
         
------------------------

*      Incorporated herein by reference to the Company's  Registration Statement
       on Form S-1, as amended (File No. 33-75930).

**     Incorporated  herein by reference to the Company's  Annual Report on Form
       10-K for the year ended December 31, 1995.

***    Incorporated  herein by reference to the Company's  Annual Report on Form
       10-K for the year ended December 31, 1996.

****   Incorporated  by reference to the  Company's  Current  Report on Form 8-K
       filed with the Securities and Exchange Commission on February 27, 1997.




                                       16