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, 1999

 .............................................................................

                                       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 0-23776
 ...............................................................................

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

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

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

                                 (508) 490-9500
 ...............................................................................
              (Registrant's telephone number, including area code)

                                 Not Applicable
 ...............................................................................
              (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
                                             ---   ---
         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               15,804,269
     --------------------------------------           -------------------
                     Class                      Outstanding at November 5, 1999



<PAGE>




HemaSure Inc.
                                      INDEX

                                                                            Page

<TABLE>
<CAPTION>

PART I               Financial Information
<S>      <C>                                                                                         <C>

Item 1.  Financial Statements........................................................................1

         Consolidated Balance Sheets as of September 30, 1999 and December 31, 1998..................1

         Consolidated Statements of Operations for the Three and Nine Month Periods Ended
           September 30, 1999 and 1998...............................................................2

         Consolidated Statements of Cash Flows for the Nine Month Periods Ended
           September 30, 1999 and 1998...............................................................3

         Notes to Consolidated Financial Statements..................................................4

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

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.................................11

PART II  Other Information

Item 1.  Legal Proceedings..........................................................................12

Item 2.  Changes in Securities and Use of Proceeds..................................................13

Item 3.  Defaults Upon Senior Securities............................................................13

Item 4.  Submission of Matters to a Vote of Security Holders........................................13

Item 5.  Other Information..........................................................................13

Item 6.  Exhibits and Reports on Form 8-K...........................................................13

Signatures.........................................................................................S-1

</TABLE>




<PAGE>



                         Part I -- FINANCIAL INFORMATION

Item 1.  Financial Statements.

<TABLE>
<CAPTION>

                                  HemaSure Inc.
                           Consolidated Balance Sheets
<S>                                                         <C>                             <C>
(In thousands)                                               September 30,                   December 31,
                                                                  1999                           1998
                                                           -----------------               ----------------

ASSETS                                                         (Unaudited)
Current assets:
  Cash and cash equivalents                                         $5,339                        $1,827
  Accounts receivable                                                  124                            --
  Inventories                                                          278                           206
  Deferred financing costs                                             981                         1,024
  Prepaid expenses                                                     160                           326
                                                                  --------                      --------

  Total current assets                                               6,882                         3,383

Property and equipment, net                                          1,339                         1,505

Deferred financing costs long-term                                      --                           725
Other assets                                                            50                            42
                                                                  --------                      --------
  Total assets                                                      $8,271                        $5,655
                                                                  ========                      ========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
  Accounts payable                                                    $610                        $1,542
  Accrued expenses                                                   1,661                         1,549
  Note payable -- current portion                                       30                            27
  Capital lease obligations-current portion                             92                           228
                                                                  --------                      --------

 Total current liabilities                                           2,393                         3,346

Capital lease obligations                                               --                            68
Note payable                                                         5,049                         5,073

 Total liabilities                                                   7,442                         8,487
                                                                  --------                      --------

Stockholders' equity (deficit):
  Common stock                                                         152                            91
  Additional paid-in capital                                        83,118                        71,584
  Accumulated deficit                                              (82,441)                      (74,507)
                                                                  --------                      --------

 Total stockholders' equity (deficit)                                  829                        (2,832)
                                                                  --------                      --------

 Total liabilities and stockholders' equity (deficit)               $8,271                        $5,655
                                                                  ========                      ========

</TABLE>

    The accompanying notes are an integral part of the financial statements.




<PAGE>



                                  HemaSure Inc.
                      Consolidated Statements of Operations
                   For The Three and Nine Month Periods Ended
                           September 30, 1999 and 1998
                                   (Unaudited)


<TABLE>
<CAPTION>

(In thousands, except per share                           Three-month periods               Nine-month periods
amounts                                                   ended September 30,               ended September 30,
                                                         1999            1998               1999            1998
                                                         ----            ----               ----            ----
<S>                                                      <C>               <C>              <C>               <C>
Revenues                                                 $119              $--                $132            $25

Costs and expenses:
  Costs of products sold                                  649               --               1,432            657
  Research & development                                  532              855               1,582          2,866
  Legal expense related to patents                        123              857               1,315          2,313
  Selling, general and administrative                   1,051              955               2,756          3,218
                                                      -------          -------             -------        -------

           Total costs and expenses                     2,355            2,667               7,085          9,054
                                                      -------          -------             -------        -------

Loss from operations                                   (2,236)          (2,667)             (6,953)        (9,029)

  Interest income                                          73               13                 132            133
  Interest expense                                       (380)             (28)             (1,113)           (78)
                                                      -------          -------             -------        -------

Net loss                                               $(2543)         $(2,682)            $(7,934)       $(8,974)
                                                      =======          =======             =======        =======

  Net loss per share -- basic and                      $(0.17)          $(0.30)             $(0.61)        $(1.00)
 diluted                                              =======           ======             =======        =======


Weighted average number of shares                      15,145            9,043              13,087          9,014
of common stock outstanding --
basic and diluted

</TABLE>

    The accompanying notes are an integral part of the financial statements.


                                        2

<PAGE>



                                  HemaSure Inc.

                      Consolidated Statements of Cash Flows

                                   (Unaudited)

<TABLE>
<CAPTION>

(In thousands)                                                                          Nine-month periods
                                                                                        ended September 30,
                                                                          ------------------------------------------

                                                                                      1999              1998
                                                                          ------------------------------------------
<S>                                                                                                  <C>

Cash flows from operating activities:
  Net loss                                                                         $(7,934)          $(8,974)
  Adjustments to reconcile net loss to net cash used in operating
activities
    Financing costs related to warrants                                                768                --
    Depreciation and amortization                                                      359               396
    Accretion of marketable securities discount                                         --                20
    Loss on disposal of equipment                                                       --                 5
  Changes in operating assets and liabilities:
    Accounts receivable                                                               (124)              436
    Inventories                                                                        (72)             (151)
    Prepaid expenses                                                                   166               (37)
    Accounts payable and accrued expenses                                             (820)              (96)
                                                                                   -------           -------

  Net cash used in operating activities                                             (7,657)           (8,401)
                                                                                   -------           -------

Cash flows from investing activities:
  Purchase of available-for-sale marketable securities                                  --           (20,255)
  Maturities of available-for-sale marketable securities                                --            27,118
  Additions to property and equipment                                                 (193)             (338)
  Increase in other assets                                                              (8)               --
                                                                                   -------           -------
  Net cash (used in) provided from investing activities                               (201)            6,525
                                                                                   -------           -------

Cash flows from financing activities:
  Proceeds from issuance of common stock                                            11,595                43
  Borrowing from notes payable arrangements                                             --             3,000
  Repayments of notes payable                                                          (21)              (18)
  Repayments of capital lease obligations                                             (204)             (184)
                                                                                   -------           -------
  Net cash provided from financing activities                                       11,370             2,841
                                                                                   -------           -------

Net increase in cash and cash equivalents                                            3,512               965
Cash and cash equivalents at beginning of period                                     1,827             1,274
                                                                                   -------           -------
Cash and cash equivalents at end of period                                          $5,339            $2,239
                                                                                   =======           =======
</TABLE>


    The accompanying notes are an integral part of the financial statements.



                                        3

<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
         September 30, 1999 and 1998.

         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,
         1998, which are contained in the Company's Form 10K (File No. 0-23776),
         filed with the Securities and Exchange Commission on March 31, 1999.

2.       Inventories

         Inventories consist of the following:

<TABLE>
<CAPTION>

                                                              September 30, 1999      December 31, 1998
                                                              ------------------      -----------------
<S>                                                                  <C>                    <C>
Raw Materials                                                        $211                   $206
Work in progress                                                       44                     --
Finished goods                                                         23                     --
                                                                   ------                 ------
                                                                     $278                   $206
                                                                   ------                 ------

3.       Property and Equipment

Property and equipment consists of the following:

</TABLE>


<TABLE>
<CAPTION>
                                                              September 30, 1999       December 31, 1998
                                                              ------------------       -----------------
<S>                                                                  <C>                    <C>

Property and equipment                                               $2,927                 $2,904

Less accumulated depreciation and amortization                       (2,208)                (1,849)
                                                                     ------                 ------

                                                                        719                  1,055

Construction in progress                                                620                    450
                                                                     ------                 ------

                                                                     $1,339                 $1,505
                                                                     ------                 ------
</TABLE>

4.       Stockholders' Equity (Deficit)

         In March 1999, the Company completed a private placement financing with
         Sepracor  in which the Company  received  $2,000,000  in  exchange  for
         1,333,334  shares  of  common  stock of the  Company  and  warrants  to
         purchase  an  additional  667,000  shares of common  stock at $1.50 per
         share.   The  warrants  expire  in  the  year



                                       4
<PAGE>



         2004 and have certain  registration  rights  associated  with them.  In
         certain circumstances,  HemaSure may require Sepracor to exercise these
         warrants.

         On May 3, 1999,  the Company  completed a private  placement  financing
         with COBE Laboratories, Inc. ("COBE"). The financing agreement provides
         for an initial  investment  of  $9,000,000  in exchange  for  4,500,000
         shares of the Company's  common stock. The agreement also provides COBE
         with an option to purchase an additional  $3,000,000 of common stock of
         the  Company at any time  between  August 3, 1999 and May 3,  2000.  In
         October 1999,  COBE exercised this option and purchased  498,355 shares
         at a price of $6.02 per share.  The price and number of shares reflects
         the  average  price  of  Hemasure  stock  for the 30 days  prior to the
         exercise date of October 5, 1999. The financing agreement provides that
         COBE will have  representation  on the Company's Board of Directors and
         its  representative  committees and contains among other things various
         registration   rights  and  anti-dilution  and  standstill   provisions
         customary in such agreements.

         In connection with the financing,  the Company completed an Amended and
         Restated  Exclusive  Distribution  Agreement  with  COBE.  The  amended
         distribution  agreement  expands  the  territory  in  which  COBE  will
         distribute the Company's products to make it worldwide, excluding sales
         to the American  Red Cross.  In addition,  the  agreement  provides for
         joint  efforts  related to the defense of HemaSure's  products  against
         intellectual  property claims made by third parties. As in the original
         agreement,  there is a  provision  for the  development  of  additional
         products to be  incorporated by COBE into its automated blood component
         equipment.

         In January 1997, the Company entered into a Restructuring  Agreement of
         the debt related to its  acquisition of Novo Nordisk's  plasma products
         unit.  The amount  included in the balance  sheet at December  31, 1997
         includes the effect of the Restructuring Agreement. On January 6, 1998,
         $8,687,000 of debt, which is net of a $3,000,000  contingency amount to
         reflect the most probable result of the Company's  decision to exit the
         plasma business,  was converted into Common Stock at a conversion price
         of $10.50 per share,  or 827,375  shares,  pursuant to the terms of the
         note.  The holder of the note has contested the conversion of the note,
         including the forgiveness of the $3,000,000 amount.

5.       Net loss per share

         The net loss per  share is based  on the  weighted  average  number  of
         common stock outstanding  during the period.  Potential common stock is
         not  included  in the per share  calculation  where  the  effect of its
         inclusion would be antidilutive.  Potential common stock of the Company
         consists of common stock  warrants and stock  options.  The Company had
         5,061,128 and 4,582,028  shares of potential  common stock at September
         30, 1999 and 1998, respectively.

6.       Litigation

         The Company is a  defendant  in a lawsuit  brought by Pall  Corporation
         ("Pall") on its LeukoNet Prestorage  Leukoreduction Filter, which is no
         longer made or sold by the Company. In a complaint filed November 1996,
         Pall alleged  that the  Company's  manufacture,  use and/or sale of the
         LeukoNet product  infringes upon two patents held by Pall. Pall dropped
         its  allegations  concerning  infringment  of one of  the  patents  and
         alleges only that the Company's  LeukoNet filter  infringed U.S. Patent
         No. 4,952,572 ("the '572 Patent").

         With respect to the allegations concerning the '572 patent, the Company
         has answered the complaint  stating that it does not infringe any claim
         of the asserted patent.  Further,  the Company has  counterclaimed  for
         declaratory    judgment    of    invalidity,     noninfringement    and
         unenforceability  of the '572 patent. Pall has amended its Complaint to
         add  Lydall,  Inc.  whose  subsidiary  supplied  filter  media  for the
         LeukoNet product, as a co-defendant.  The Company has filed for summary
         judgment  of  noninfringement,  and Pall has  cross-filed  for  summary
         judgment  of  infringement  at the  same  time.  Lydall  supported  the
         Company's motion for



                                       5
<PAGE>



         summary judgment of noninfringement, and has filed a motion for summary
         judgment  that the asserted  claims of the '572 patent are invalid as a
         matter of law.  The  Company  supported  Lydall's  motion  for  summary
         judgment  that the  asserted  claims of the '572  patent  are  invalid.
         Discovery has been completed in the action.

         On April 5, 1999,  the Company and COBE BCT, Inc.  ("COBE BCT") filed a
         complaint  for  declaratory  relief  against Pall in the U.S.  District
         Court of  Colorado.  The Company and COBE BCT seek  declaratory  relief
         that  Pall's  U.S.  Patent  No's.  4,925,572,   5,229,012,   5,344,561,
         5,451,321, 5,501,795 and 5,863,436 are invalid and not infringed by the
         Company's r\LS filter and methods of using the r\LS filter.  Pall moved
         to dismiss or transfer  to the Eastern  District of New York or, in the
         alternative,  to stay this  action.  The  Company  and COBE BCT opposed
         Pall's motion.  On July 16, 1999,  the U.S.  District Court of Colorado
         denied  Pall's motion to transfer or, in the  alternative,  to stay the
         action, and the action is proceeding.  On September 30, 1999, the Court
         denied Pall's motion to dismiss the action and the case is proceeding.

         On April 23, 1999 Pall filed a  complaint  against the Company and COBE
         BCT, Inc. in the Eastern  District of New York alleging that HemaSure's
         r\LS filter  infringes  Pall's '572 patent,  tortuously  interfered and
         unfairly  competed with Pall's business.  On May 19, 1999, Pall amended
         its  Complaint  and added COBE  Laboratories,  Inc.,  Gambro A.B.,  and
         Sepracor  Inc.  as  defendants.  The Company and COBE BCT have moved to
         dismiss, transfer or stay the action and Pall has opposed the motion.

         A prior  lawsuit  brought  by Pall  Corporation  in  February  1996 has
         concluded.  In June 1999,  the U.S.  Court of Appeals  for the  Federal
         Circuit  determined that the LeukoNet product did not infringe claim 39
         of Pall  Corporation's  U.S.  Patent  No.  5,451,321  and  Pall has not
         appealed that decision.

         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 LeukoNet product and
         the r\LS filter do not  infringe  any valid  enforceable  claims of the
         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 financial condition and future business and operations.

7.       Subsequent event

         In  October  1999,  COBE  Laboratories,  Inc.  exercised  its option to
         purchase an additional $3,000,000 of the Company's common stock as part
         of its May 1999 private placement of $9,000,000. In connection with the
         exercise of its option,  COBE  purchased  498,355  shares at a price of
         $6.02 per share.  The price and number of shares  reflects  the average
         price of HemaSure  stock in the 30 days prior to the  exercise  date of
         October 5, 1999.



                                        6

<PAGE>



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


Results of Operations

Overview

HemaSure  was  established  in December  1993 as a wholly  owned  subsidiary  of
Sepracor Inc. ("Sepracor").  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.

In June 1995 the Company received 510(K) premarket  notification  clearance from
the  United  States  Food  and  Drug  Administration  for its  first  generation
leukoreduction system, the LeukoNet Pre-Storage Leukoreduction System ("LeukoNet
System") and began commercialization of this product in the second half of 1995.
In February  1998,  the Company  determined  to  discontinue  manufacturing  the
LeukoNet   System  and  focus  on  the  completion  of  development  and  market
introduction  of its  next-generation  red  cell  filtration  product,  the r\LS
System.  In  May  1998,  the  Company  filed  a  510(K)  premarket  notification
application for the r\LS System. The Company began accepting orders for the r\LS
outside of the U.S. in the first quarter 1999. In May 1999, the Company received
510(K)  premarket  notification  clearance  from the United States Food and Drug
Administration  for  its  r\LS  System.  All  of  the  Company's  other  planned
blood-related products are in the research and development stage, and certain of
these products may require  preclinical and clinical testing prior to submission
of any regulatory  application  for commercial  use. The Company's  success will
depend on development and commercial acceptance of these blood-related products.

The  Company  is  subject  to risks  common to small  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,  access to sources of capital,  protection of proprietary  technology
and compliance with FDA regulations.

Three and nine months ended September 30, 1999 and 1998

The Company  recorded  revenues of $119,000 for the quarter ended  September 30,
1999 compared to no revenues in the same period in 1998.  Revenues were $132,000
for the first nine months of 1999  compared to $25,000 for the first nine months
of 1998.  Revenues for all periods  presented  represent  sales of the Company's
leukocyte filtration products.

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

Research and  development  expenses were $532,000 in the second  quarter of 1999
compared to $855,000 in the second quarter of 1998,  and were  $1,582,000 in the
nine months ended  September  30, 1999 compared to $2,866,000 in the nine months
ended  September 30, 1998. The decrease in both the three and nine month periods
is  primarily  attributable  to costs  associated  with the  development  of the
Company's next generation red cell filtration system, the r\LS system, for which
a  majority  of the  effort  was  expended  in the 1998  periods.  Research  and
development  costs  could  increase in the future as the  Company  continues  to
address the need for additional filtration products for its customers.

Legal  expenses  related to patents were $123,000 in the second  quarter of 1999
compared to $857,000 in the second quarter of 1998,  and were  $1,315,000 in the
nine months ended  September  30, 1999 compared to $2,313,000 in the nine months
ended  September 30, 1998. The expenses in both the three and nine month periods
are related to costs  associated with defending the Company's patent position in
its outstanding  litigation with Pall Corporation.  The



                                       7
<PAGE>



Company  anticipates  such costs in 1999 to  continue  to decline  from the 1998
levels as litigation  activities  related to its former  product are expected to
diminish.

Selling, general and administrative expenses were $1,051,000 in the three months
ended  September  30,  1999  compared  to  $955,000  in the three  months  ended
September  30,  1998,  and were  $2,756,000  in the  first  nine  months of 1999
compared to  $3,218,000  in the first nine months of 1998.  The  decrease in the
nine month period is primarily  attributable to lower general corporate spending
in an effort to  streamline  costs  during a period in which the Company was not
generating  revenues.  Sales and marketing and administrative costs may increase
in future  periods from current  levels as the Company  continues its efforts to
expand sales of its blood filtration products.

Interest  income for the three month period ended  September 30, 1999  increased
compared to the three months ended September 30, 1998 due to higher average cash
and marketable  securities  balances available for investment.  Interest expense
for the three and nine month periods ended September 30, 1999 increased compared
to the same periods in 1998 related to a note  payable and the  amortization  of
deferred financing costs which were initiated in September 1998 offset, in part,
by a lower average capital lease obligation balance.

Liquidity and Capital Resources

The net  increase in cash and cash  equivalents  for the nine  months  ended was
$3,512,000.  This increase is  attributable  primarily to net cash provided from
financing activities of $11,370,000 offset in part by net cash used in operating
activities of $7,657,000 and net cash used in investing activities of $201,000.

Net cash provided from financing  activities  relates primarily to proceeds from
the  issuance  of  common  stock  of  $11,000,000.  Net cash  used in  operating
activities is primarily attributable to the net loss of $7,934,000,  an increase
in  accounts  receivable  of $124,000  and a decrease  in  accounts  payable and
accrued expense balances of $820,000,  offset in part by financing costs related
to warrants of $768,000 and depreciation and amortization of $359,000.  Net cash
used in investing  activities  relates primarily to the addition of property and
equipment of $193,000.

In January 1997, the Company entered into a Restructuring  Agreement of the debt
related to its  acquisition of Novo Nordisk's  plasma  products unit. The amount
included in the balance  sheet at December  31, 1997  includes the effect of the
Restructuring Agreement. On January 6, 1998, $8,687,000 of debt, which is net of
a  $3,000,000  contingency  amount to reflect  the most  probable  result of the
Company's decision to exit the plasma business,  was converted into Common Stock
at a conversion  price of $10.50 per share, or 827,375  shares,  pursuant to the
terms of the note.  The holder of the note has contested  the  conversion of the
note, including the forgiveness of the $3,000,000 amount.

In March 1999, the Company completed a private placement financing with Sepracor
in which the Company  received  $2,000,000 in exchange for  1,333,334  shares of
common  stock of the Company and  warrants  to  purchase an  additional  667,000
shares of common stock at $1.50 per share.  The warrants will expire in the year
2004 and have  certain  registration  rights  associated  with them.  In certain
circumstances, HemaSure may require Sepracor to exercise these warrants.

On May 3, 1999, the Company completed a private  placement  financing with COBE.
The  financing  agreement  provides for an initial  investment  of $9,000,000 in
exchange for 4,500,000  shares of the Company's common stock. The agreement also
provided  COBE with an option to purchase  an  additional  $3,000,000  of common
stock of the  Company at any time  between  August 3, 1999 and May 3,  2000.  In
October 1999,  COBE  exercised this option.  In connection  with the exercise of
this option,  COBE purchased  498,355 shares at a price of $6.02 per share.  The
price and number of shares  reflects the average price of HemaSure  stock in the
30 days prior to the exercise date of October 5, 1999.  The financing  agreement
provides that COBE will have  representation on the Company's Board of Directors
and its  representative  committees  and contains,  among other things,  various
registration  rights and  anti-dilution and standstill  provisions  customary in
such agreements.



                                       8
<PAGE>



The Company  believes,  based on its current  operating  plan,  that its current
available  cash balances will be sufficient to fund its  operations  through the
first quarter of the year 2000. The Company  expects to continue to evaluate the
need for  additional  capital over the  remainder of 1999 in order to expand the
manufacturing  capacity for the r\LS system and fund related working capital and
general corporate  financing  requirements.  Possible sources of such additional
capital could include  strategic  partnerships,  public or private equity and/or
debt  financing.  No assurance can be given,  however,  that the Company will be
able to obtain  additional  financing on terms acceptable to the Company,  if at
all.  Should the Company  fail to obtain any such  financing,  or to obtain such
financing  on terms  favorable  to the  Company,  the  Company  may be unable to
continue to  commercialize  the r\LS system or complete the  development  of its
proposed products and/or market such products  successfully,  or to continue its
current operations as presently  conducted,  if at all, beyond the first quarter
2000. 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 its products,  patent developments and the introduction
of competitive products.

Readiness for Year 2000

The "Year 2000" issue results from the use in computer  hardware and software of
two digits rather than four digits to define the applicable  year. When computer
systems must process dates both before and after January 1, 2000, two-digit year
"fields"  may create  processing  ambiguities  that can cause  errors and system
failures.  The results of these errors may range from minor undetected errors to
complete  shutdown  of an affected  system.  These  errors or failures  may have
limited  effects,  or the effects may be  widespread,  depending on the computer
chip, system or software, and its location and function. The effects of the Year
2000  problem are  exacerbated  because of the  interdependence  of computer and
telecommunications  systems  in the  United  States  and  throughout  the world.
Because  of this  interdependence,  the  failure  of one  system may lead to the
failure of many other systems even though the other systems are themselves "Year
2000  compliant."  The Company has reviewed the Year 2000 issue as it may affect
the Company's business activity.

The  Company  is a  developer  and  supplier  of medical  devices  for the blood
transfusion industry.  Currently, the Company has only one product available for
sale. The Company is reliant on a small number of vendors to supply the critical
components for making this product, but has identified  alternative suppliers as
a contingency plan. Only final assembly of this product is done at the Company's
Marlborough,  MA facility.  The Company  sells  primarily  to blood  centers and
hospital  blood banks and through an  international  distributor,  and therefore
there are a limited number of customers.  For internal systems, the Company uses
standardized software from large well-established  software providers on PCs for
inventory management, financial systems and general communications purposes.

The Company has  implemented  a Year 2000 plan (the "Plan") which is designed to
cover all of the Company's  activities,  which will be modified as circumstances
change.  Under the Plan,  the  Company  is using a  five-phase  methodology  for
addressing  the  issue.  The  phases  are  Awareness,  Assessment,   Correction,
Validation and Implementation. A heightened emphasis on completion will continue
through the fourth quarter. Awareness consists of defining the Year 2000 problem
and gaining  executive level support and  sponsorship.  A Year 2000 program team
has been established and an overall strategy  created.  During  Assessment,  all
internal  systems,  products and supply chain partners have been inventoried and
prioritized for renovation.  The Company believes it has completed a majority of
the Awareness and Assessment phases,  however,  ongoing work will be required in
these areas as the Company  completes its  assessment  of existing  supply chain
partners and enters into new supply chain  relationships  in the ordinary course
of  business.  Renovation  consists  of  converting,   replacing,  upgrading  or
eliminating  systems that have Year 2000 problems.  Validation involves ensuring
that  hardware and software  fixes will work properly in 1999 and beyond and can
occur both before and after  implementation.  Validation  will continue  through
1999 to allow for thorough testing before the Year 2000.  Implementation  is the
installation of hardware and software components in a live environment.

The Company has completed the installation of an upgraded  manufacturing system,
which is Year 2000 compliant. Validation of this system is ongoing. Installation
of its  Year  2000  compliant  internal  communications  system  has



                                       9
<PAGE>



also been  completed.  The Company is in the process of upgrading  its financial
reporting  system  with its  current  provider  to be Year 2000  compliant.  The
Company  continues  to  assess  all  of its  internal  systems  for  operational
effectiveness and efficiency beyond Year 2000 concerns.

The impact of Year 2000 issues on the Company will depend not only on corrective
actions that the Company takes but also on the way in which Year 2000 issues are
addressed  by  governmental  agencies,  business  and other third  parties  that
provide  services or data to, or receive  services or data from the Company,  or
whose financial condition or operational capability is important to the Company.
To reduce this exposure,  the Company has an ongoing  process of identifying and
contacting  mission-critical  third party  vendors and other  significant  third
parties  to  determine  their Year 2000 plans and  target  dates.  To date,  the
Company is not aware of any  critical  vendors or  customers  who either are not
addressing the Year 2000 issue or have indicated that there will be a problem.

Risks  associated  with any such third parties located outside the United States
may be  higher  insofar  as it is  generally  believed  that  non-United  States
businesses may not be addressing  their Year 2000 issues on as timely a basis as
United States businesses. Notwithstanding the Company's efforts, there can be no
assurance  that the  Company,  mission-critical  third  party  vendors  or other
significant third parties will adequately address their Year 2000 issues.

The Company is developing contingency plans for implementation in event that the
Company, mission-critical third party vendors or other significant third parties
fail to  adequately  address Year 2000 issues.  Such plans  principally  involve
identifying  alternative  vendors  or  internal  remediation.  There  can  be no
assurance that any such plans will fully mitigate any such failures or problems.
Furthermore,  there  may be  certain  mission-critical  third  parties,  such as
utilities,  telecommunication  companies,  or material vendors where alternative
arrangements or sources are limited or unavailable.

Although it is difficult to estimate  the total costs of  implementing  the Plan
through June 1999 and beyond,  the Company's  preliminary  estimate is that such
costs will total approximately $100,000.  However,  although management believes
its estimates are reasonable,  there can be no assurance, for the reasons stated
in the next paragraph,  that the actual costs of implementing the Plan would not
differ   materially  from  the  estimated   costs.   The  Company  has  incurred
approximately $75,000 through September 30, 1999 on this project, which does not
include the costs to re-deploy existing staff.

The Company does not believe that the redeployment of existing staff will have a
material  adverse  effect on its  business,  results of  operations or financial
position. Incremental expenses related to the Year 2000 project are not expected
to  materially  impact  operating  results  in any one  period.  The  extent and
magnitude of the Year 2000  problem as it will affect the  Company,  both before
and for some period after January 1, 2000,  are difficult to predict or quantify
for a number of  reasons.  Among the most  important  are lack of  control  over
systems  that  are used by  third  parties  who are  critical  to the  Company's
operation,  dependence  on third  party  software  vendors to deliver  Year 2000
upgrades in a timely manner,  complexity of testing inter-connected networks and
applications that depend on third party networks and the uncertainty surrounding
how others will deal with liability issues raised by Year 2000 related failures.
There can be no assurance,  for example, that systems used by third parties will
be adequately remediated so that they are Year 2000 ready by January 1, 2000, or
by some earlier date, so as not to create a material disruption to the company's
business.  Moreover,  the estimated costs of  implementing  the Plan do not take
into account the costs,  if any, that might be incurred as a result of Year 2000
related  failures that occur despite the Company's  implementation  of the Plan.
Although the Company is not aware of any material  operational issues associated
with preparing its internal  systems for the Year 2000, or material  issues with
respect to the adequacy of mission-critical third party systems, there can be no
assurance that the Company will not experience material  unanticipated  negative
consequences  and/or  material  costs caused by undetected  errors or defects in
such systems or by the Company's  failure to adequately  prepare for the results
of such errors or defects,  including costs of related  litigation,  if any. The
impact  of  such  consequences  could  have a  material  adverse  effect  on the
Company's  business,  financial  condition  or  results  of  operations.  A more
complete discussion of risks and uncertainties  involving the Company's business
is contained  in the  Company's



                                       10
<PAGE>



Annual Report in Form 10-K for the fiscal year ended December 31, 1998 under the
heading "Factors That May Affect Future Results of Operations."

Because of the foregoing  factors,  past financial  results should not be relied
upon  as  an  indication  of  future  performance.  The  Company  believes  that
period-to-period   comparisons  of  its  financial   results  to  date  are  not
necessarily  meaningful and expects that its results of operations may fluctuate
from period to period in the future. See "-- Overview."


Item 3.  Quantitative and Qualitative Disclosures
         About Market Risk.

         Not Applicable



                                       11

<PAGE>



                          PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings.

The Company is a defendant in a lawsuit brought by Pall Corporation  ("Pall") on
its LeukoNet Prestorage  Leukoreduction  Filter, which is no longer made or sold
by the  Company.  In a complaint  filed  November  1996,  Pall  alleged that the
Company's  manufacture,  use and/or sale of the LeukoNet product  infringes upon
two patents held by Pall. Pall dropped its allegations concerning infringment of
one of the patents and alleges only that the Company's LeukoNet filter infringed
U.S. Patent No. 4,952,572 ("the '572 Patent").

With respect to the  allegations  concerning  the '572  patent,  the Company has
answered  the  complaint  stating  that it does not  infringe  any  claim of the
asserted  patent.  Further,  the  Company  has  counterclaimed  for  declaratory
judgment of invalidity, noninfringement and unenforceability of the '572 patent.
Pall has amended its Complaint to add Lydall,  Inc.  whose  subsidiary  supplied
filter media for the LeukoNet product, as a co-defendant.  The Company has filed
for summary  judgment of  noninfringement,  and Pall has cross-filed for summary
judgment of infringement at the same time. Lydall supported the Company's motion
for  summary  judgment  of  noninfringement,  and has filed a motion for summary
judgment that the asserted  claims of the '572 patent are invalid as a matter of
law.  The  Company  supported  Lydall's  motion for  summary  judgment  that the
asserted claims of the '572 patent are invalid.  Discovery has been completed in
the action.

On April 5, 1999, the Company and COBE BCT, Inc.  ("COBE BCT") filed a complaint
for declaratory relief against Pall in the U.S. District Court of Colorado.  The
Company and COBE BCT seek  declaratory  relief that  Pall's  U.S.  Patent  No's.
4,925,572,  5,229,012, 5,344,561, 5,451,321, 5,501,795 and 5,863,436 are invalid
and not  infringed  by the  Company's  r\LS filter and methods of using the r\LS
filter.  Pall moved to dismiss or transfer  to the Eastern  District of New York
or, in the  alternative,  to stay this action.  The Company and COBE BCT opposed
Pall's  motion.  On July 16, 1999, the U.S.  District  Court of Colorado  denied
Pall's motion to transfer or, in the  alternative,  to stay the action,  and the
action is  proceeding.  On September 30, 1999, the Court denied Pall's motion to
dismiss the action and the case is proceeding.

On April 23, 1999 Pall filed a complaint  against the Company and COBE BCT, Inc.
in the  Eastern  District  of New York  alleging  that  HemaSure's  r\LS  filter
infringes Pall's '572 patent,  tortuously  interfered and unfairly competed with
Pall's  business.  On May 19, 1999,  Pall amended its  Complaint  and added COBE
Laboratories,  Inc.,  Gambro A.B., and Sepracor Inc. as defendants.  The Company
and COBE BCT have  moved to  dismiss,  transfer  or stay the action and Pall has
opposed the motion.

A prior lawsuit brought by Pall  Corporation in February 1996 has concluded.  In
June 1999, the U.S. Court of Appeals for the Federal Circuit determined that the
LeukoNet product did not infringe claim 39 of Pall Corporation's U.S. Patent No.
5,451,321 and Pall has not appealed that decision.

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  LeukoNet  product  and the r\LS filter do not
infringe any valid enforceable claims of the 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 financial condition and future business and operations.



                                       12

<PAGE>



Item 2.  Changes in Securities and Use of Proceeds.

On March 23, 1999,  the Company  completed a private  placement  financing  with
Sepracor in which the Company  received  $2,000,000  in exchange  for  1,333,334
shares of common  stock of the  Company and  warrants to purchase an  additional
667,000  shares of common stock at $1.50 per share.  The warrants will expire in
the year 2004 and have certain  registration  rights  associated  with them.  In
certain circumstances, HemaSure may require Sepracor to exercise these warrants.

On May 3, 1999, the Company completed a private  placement  financing with COBE.
The  financing  agreement  provided for an initial  investment  of $9,000,000 in
exchange for 4,500,000  shares of the Company's common stock. The agreement also
provided  COBE with an option to  purchase,  subject to certain  conditions,  an
additional  $3,000,000 of common stock of the Company at any time between August
3, 1999 and May 3,  2000.  In October  1999,  COBE  exercised  this  option.  In
connection with the exercise of this option,  COBE purchased 498,355 shares at a
price of $6.02 per share.  The price and number of shares  reflects  the average
price of HemaSure  stock in the 30 days prior to the exercise date of October 5,
1999.

In each case set forth in this Item 2, the  securities  were issued  pursuant to
exemptions from the registration  requirements of the Securities Act of 1933, as
amended, under Section 4(2).

Item 3.  None

Item 4.  None

Item 5.  None

Item 6.  Exhibits and Reports on Form 8-K

         Exhibit Index

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

Exhibit No.                    Description
-----------                    -----------

2.1(2)   Heads of Agreement,  dated as of January 31, 1996,  between the Company
         and Novo Nordisk A/S.

3.1(1)   Certificate of Incorporation of the Company.

3.2(1)   By-Laws of the Company.

4.1(1)   Specimen Certificate for shares of Common Stock, $.01 par value, of the
         Company.

4.2(3)   Registration Rights Agreement, dated January 23, 1997, by and among the
         Company and Novo Nordisk A/S.

4.3(4)   Registration Rights Agreement,  dated as of September 15, 1998, between
         the Company and Sepracor.

4.4(4)   Warrant Agreement,  dated as of September 15, 1998, between the Company
         and Sepracor.

4.5(4)   Warrant  Certificate,  dated as of  September  15,  1998,  between  the
         Company and Sepracor.

4.6(4)   Registration Rights Agreement,  dated as of March 23, 1999, between the
         Company and Sepracor.

4.7(5)   Warrant Agreement,  dated as of March 23, 1999, between the Company and
         Sepracor.

4.8(5)   Warrant  Certificate,  dated as of March 23, 1999,  between the Company
         and Sepracor.

4.9(6)   Stock  Subscription  Agreement,  dated as of May 3, 1999,  between  the
         Company and COBE.

4.10(6)  Stockholder's  Agreement,  dated as of May 3, 1999, between the Company
         and COBE.

10.1(5)  Securities Purchase Agreement,  dated as of March 23, 1999, between the
         Company and Sepracor.

10.2(6)  Amended and Restated Exclusive Distribution Agreement,  dated as of May
         3, 1999, between the Company and COBE.

10.3(6)  Senior Management  Retention  Agreement,  dated as of December 7, 1998,
         between the Company and John F. McGuire.



                                       13
<PAGE>



10.4(6)  Senior Management Retention  Agreement,  dated as of December 15, 1998,
         between the Company and James B. Murphy.

10.5(6)  Senior Management Retention  Agreement,  dated as of December 22, 1998,
         between the Company and Peter C. Sutcliffe.

10.6(7)  Master  Purchase  Agreement,  dated  as of July 1,  1999,  between  the
         Company and The American National Red Cross.

27.1     Financial Data Schedule.

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

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

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

4        Incorporated  by reference to the  Company's  Quarterly  Report on Form
         10-Q for the quarter ended September 30, 1998.

5        Incorporated herein by reference to the Company's Annual Report on Form
         10-K for the year ended December 31, 1998.

6        Incorporated  herein by reference to the Company's  Quarterly Report of
         Form 10-Q for the quarter ended March 31, 1999.

7        Incorporated  herein by reference to the Company's  Quarterly Report of
         Form 10-Q for the quarter ended June 30, 1999.

(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.

Date:  November 15, 1999                         /s/ John F. McGuire
                                ------------------------------------------------
                                                   John F. McGuire
                                         President and Chief Executive Officer
                                              (Principal Executive Officer)



Date:  November 15, 1999                         /s/ James B. Murphy
                                ------------------------------------------------
                                                   James B. Murphy
                                            Senior Vice President, Finance
                                                  and Administration
                                            (Principal Financial Officer)



                                       S-1