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 March 31, 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                        14,921,071
--------------------------------------                        ----------
                Class                                Outstanding at May 7, 1999

835307.2

<PAGE>



<TABLE>
<CAPTION>
HemaSure Inc.

INDEX
-----

                                                                                                                           Page
                                                                                                                           ----

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

Item 1.         Financial Statements.                                                                                        1

                Consolidated Balance Sheets as of March 31, 1999 and December 31, 1998                                       1

                Consolidated Statements of Operations for the Three Month Periods Ended
                March 31, 1999 and 1998                                                                                      2

                Consolidated Statements of Cash Flows for the Periods Ended March 31, 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

PART II         Other Information.                                                                                          11

Item 1.         Legal Proceedings.                                                                                          11

Item 2.         Changes in Securities and Use of Proceeds.                                                                  12

Item 3.         Defaults Upon Senior Securities.                                                                            12

Item 4.         Submission of Matters to a Vote of Security Holders.                                                        12

Item 5.         Other Information.                                                                                          12

Item 6.         Exhibits and Reports on Form 8-K.                                                                           12

Signatures                                                                                                                  14
                                  
</TABLE>


835307.2

<PAGE>



<TABLE>
<CAPTION>
                         Part I - FINANCIAL INFORMATION

Item 1.    Financial Statements.

                                  HemaSure Inc.
                           Consolidated Balance Sheets



(In thousands)                                             March 31,                     December 31,
                                                             1999                            1998
                                                     ---------------------       -----------------------------
<S>                                                  <C>                         <C>
ASSETS                                                    (Unaudited)

Current assets:
    Cash and cash equivalents                        $                 955       $                       1,827
    Accounts receivable                                                  6                                   -
    Inventories                                                        197                                 206
    Deferred financing costs                                         1,024                               1,024
    Prepaid expenses                                                   264                                 326
                                                     ---------------------       -----------------------------

    Total current assets                                             2,446                               3,383

Property and equipment, net                                          1,448                               1,505

Deferred financing costs long-term                                     469                                 725
Other assets                                                            50                                  42
                                                     ---------------------       -----------------------------

    Total assets                                     $               4,413       $                       5,655
                                                     =====================       =============================


LIABILITIES AND STOCKHOLDERS' (DEFICIT)



Current liabilities:

    Accounts payable                                 $               1,136       $                       1,542
    Accrued expenses                                                 1,688                               1,549
    Notes payable - current portion                                     27                                  27
    Capital lease obligations-current portion                          201                                 228
                                                     ---------------------       -----------------------------

Total current liabilities                                            3,052                               3,346

Capital lease obligations                                               45                                  68
Notes  payable                                                       5,066                               5,073
                                                     ---------------------       -----------------------------

    Total liabilities                                                8,163                               8,487
                                                     ---------------------       -----------------------------

Stockholders' (deficit):
    Common stock                                                       104                                  91
    Additional paid-in capital                                      73,571                              71,584
    Accumulated deficit                                            (77,425)                            (74,507)
                                                     ---------------------       -----------------------------

Total stockholders' (deficit)                                       (3,750)                             (2,832)

Total liabilities and stockholders' (deficit)        $               4,413       $                       5,655
                                                     =====================       =============================


    The accompanying notes are an integral part of the financial statements.
</TABLE>



835307.2
                                        1

<PAGE>



<TABLE>
<CAPTION>
                                  HemaSure Inc.
                      Consolidated Statements of Operations
                        For The Three Month Periods Ended
                             March 31, 1999 and 1998
                                   (Unaudited)


                                                                                    Three-month periods
                                                                                      ended March 31,
                                                                ---------------------------------------------------
                                                                        (In thousands, except per share amounts)
                                                                         1999                              1998
                                                                -----------------------       ---------------------
<S>                                                             <C>                           <C>                  
Revenues                                                        $                     4       $                  25


Costs and expenses:

   Cost of products sold                                                            335                         657
   Research & development                                                           524                         762
   Legal expense related to patents                                                 840                       1,062
   Selling, general and administrative                                              849                       1,011
                                                                -----------------------       ---------------------
      Total costs and expenses                                                    2,548                       3,492
                                                                =======================       =====================

Loss from operations                                                             (2,544)                     (3,467)

Interest income                                                                      11                          74
Interest expense                                                                   (385)                        (36)
                                                                -----------------------       ---------------------


Net (loss)                                                                      $(2,918)                    $(3,429)
                                                                =======================       =====================

Net (loss) per share  -  basic and diluted                      $                 (0.32)      $               (0.38)
                                                                =======================       =====================

Weighted average number of shares of common                                       9,221                       8,991
   stock outstanding - basic and diluted





    The accompanying notes are an integral part of the financial statements.
</TABLE>


835307.2
                                        2

<PAGE>



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



(In thousands)                                                                      Three-month periods
                                                                                      ended March 31,
                                                             -----------------------------------------------------------------
                                                                          1999                                1998
                                                             -------------------------------       ---------------------------
<S>                                                          <C>                                   <C>
Cash flows from operating activities:
  Net loss                                                                           $(2,918)                          $(3,429)
  Adjustments to reconcile net loss to net cash
   used in operating activities
    Financing costs related to warrants                                                  256                                 -
    Depreciation and amortization                                                         97                               187
    Accretion of marketable securities discount                                            -                                15
    Loss on disposal of equipment                                                          -                                 5
  Changes in operating assets and liabilities:
    Accounts receivable                                                                   (6)                              436
    Inventories                                                                            9                                13
    Prepaid expenses                                                                      62                               118
    Accounts payable and accrued expenses                                               (267)                             (591)
                                                             -------------------------------       ---------------------------

  Net cash used in operating activities                                               (2,767)                           (3,246)

Cash flows from investing activities:
  Purchase of available-for-sale marketable securities                                     -                           (15,265)
  Maturities of available-for-sale marketable securities                                   -                            17,639
  Additions to property and equipment                                                    (40)                             (136)
  Decrease in other assets                                                                (8)                                -
                                                             -------------------------------       ---------------------------

  Net cash (used in) provided from investing activities                                  (48)                            2,238

Cash flows from financing activities:
  Proceeds from issuance of common stock                                               2,000                                 1
  Repayments of notes payable                                                             (7)                               (9)
  Repayments of capital lease obligations                                                (50)                              (60)
                                                             -------------------------------       ---------------------------

  Net cash provided from (used in) financing activities                                1,943                               (68)
                                                             -------------------------------       ---------------------------

Net (decrease) in cash and cash equivalents                                             (872)                           (1,076)

Cash and cash equivalents at beginning of period                                       1,827                             1,274
                                                             -------------------------------       ---------------------------

Cash and cash equivalents at end of period                   $                           955       $                       198
                                                             ===============================       ===========================

    The accompanying notes are an integral part of the financial statements.
</TABLE>



835307.2
                                        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 March 31, 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.

<TABLE>
<CAPTION>
2.         Inventories

           Inventories consist of the following:



                                                                           March 31, 1999              December 31, 1998
                                                                           --------------              -----------------


<S>                                                                  <C>                             <C>
Raw Materials                                                        $                   197          $                     206
Work in progress                                                                           -                                  -
Finished goods                                                                             -                                  -
                                                                     -----------------------          -------------------------

                                                                     $                   197          $                     206
                                                                     =======================          =========================

3.         Property and Equipment

           Property and equipment consists of the following:


                                                                           March 31, 1999              December 31, 1998
                                                                           --------------              -----------------


Property and equipment                                               $                     2,904      $               2,904

Less accumulated depreciation and amortization                       $                    (1,946)     $              (1,849)
                                                                     ---------------------------      ---------------------

                                                                     $                       958      $               1,055

Construction in progress                                             $                       490      $                 450
                                                                     ---------------------------      ---------------------

                                                                     $                     1,448      $               1,505
                                                                     ===========================      =====================
</TABLE>

4.         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.  The amount  included in the balance sheet at December
           31, 1997

835307.2
                                       4
<PAGE>


           includes  the  effect  of  the  Restructuring   Agreement  net  of  a
           $3,000,000  contingency amount to reflect the most probable result of
           the  Company's  decision to exit the plasma  business.  On January 6,
           1998,  $8,687,000 of debt,  which the Company believes was the entire
           amount  outstanding as of the date of conversion,  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          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 and  additional  667,000 shares of common stock at $1.50 per
           share.  The  warrants  expire  in the  year  2004  and  have  certain
           registration  rights associated with them. In certain  circumstances,
           HemaSure may require Sepracor to exercise these warrants.

6.         Net loss per share

           The net loss per  share is based on the  weighted  average  number of
           common stock outstanding during the period.  Common Share equivalents
           are not  included  in the per share  calculation  where the effect of
           their inclusion would be  antidilutive.  Common Share  equivalents of
           the Company consists of common stock warrants and stock options.  The
           Company had 5,519,028 and 2,889,420 Common Share equivalents at March
           31, 1999 and 1998, respectively.


7.         Litigation

           The  Company  is  a  defendant  in  two  lawsuits   brought  by  Pall
           Corporation  ("Pall")  on  its  LeukoNet  Prestorage   Leukoreduction
           Filter, which is no longer made or sold by the Company. In complaints
           filed in February  1996 and  November  1996,  Pall  alleged  that the
           Company'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 a
           motion 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 and held that the LeukoNet  product
           infringes  a single  claim  from the '321  patent.  The  Company  has
           terminated  the  manufacture,  use,  sale and  offer  for sale of the
           filter  subject to the court's  order.  The Company has  appealed the
           October  1997  decision  to the  Court  of  Appeals  for the  Federal
           Circuit.  Oral arguments were heard in February 1999. The Company now
           waits for a decision from the Federal  Circuit.  Remaining  discovery
           relating to the damages phase of the first action has been completed.

           With  respect  to the  second  action  concerning  U.S.  Patent  Nos.
           4,952,572 (the "'572 patent") and 4,340,479 (the "'479 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 and '479 patents.
           Pall has amended its Complaint to add Lydall,  Inc. whose  subsidiary
           supplied filter media for the LeukoNet product, as a co-defendant and
           has dropped its claims that the LeukoNet  product  infringes the '479
           patent.   The   Company   has   filed   for   summary   judgment   of
           non-infringement,  and Pall has cross-filed  for summary  judgment of
           infringement at the same time.  Lydall supported the Company's motion
           for summary judgment of non-infringement,  and has filed a motion for
           summary  judgment  that the  asserted  claims of the `572  patent are
           invalid  as a matter  of law.  Discovery  has been  completed  in the
           action.

           On April 5, 1999,  the Company and COBE BCT,  Inc.  filed a complaint
           for  declaratory  relief  against Pall in the U.S.  District Court of
           Colorado. The Company and COBE BCT, Inc. seek declaratory relief that
           Pall's U.S. patent No's. 4925,572, 5,229,012,  5,344,561,  5,451,321,
           5,501,795  and  5,863,436  are  invalid 


835307.2
                                        5

<PAGE>

           and not infringed by the  Company's  r\LS filter and methods of using
           the r\LS filter. No response has been filed.

           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.  HemaSure was
           served with the complaint on April 30, 1999.

           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 did not infringe any valid enforceable  claims of
           the Pall patents.  The Company also 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 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.

8.         Subsequent Event

           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. Should COBE exercise its option, the number of shares to
           be issued will be based on the average closing price of the Company's
           common stock for the  thirty-day  period prior to the  exercise.  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.


835307.2
                                        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.  All of the  Company's  other
planned  blood-related  products are in the research and development  state, 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 months ended and 1998 Revenues were $4,000 for the quarter ended  compared
to $25,000  in the same  period in 1997.  Revenues  for the first  quarter  1998
represent the sale of the  Company's  LeukoNet  System.  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.  Revenues for the first quarter 1999 represent the sale
of the Company's r\LS System outside of the U.S.

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  $524,000 in the first quarter of 1999
compared  to $762,000 in the first  quarter of 1998.  The  decrease in the three
month period is primarily  attributable  to a lower level of  development  costs
associated  with  the  development  of the r\LS  System  as the  Company  awaits
clearance of this product by the FDA.

Legal  expenses  related to patents were  $840,000 in the first  quarter of 1999
compared  to  $1,062,000  in the  first  quarter  of  1998.  The  costs  in both
three-month periods are primarily associated with defending the Company's patent
position in its outstanding litigation with Pall Corp.

Selling,  general and administrative  expenses were $849,000 in the three months
ended  compared to  $1,011,000  in the three months  ended March 31,  1998.  The
decrease in the three-month period is primarily  attributable to lower sales and
marketing  costs  associated  with  the  Company's  decision  to  focus  on  the
development  of the r\LS  filter.  The  Company  expects  that  such  sales  and
marketing  costs  will  increase  upon  anticipated  increases  in  sales of its
products.

Interest  income for the  quarter  ended of $11,000  decreased  compared  to the
quarter ended March 31, 1998 of $74,000 due to lower average cash and marketable
securities  balances available for investment.  Interest expense

835307.2
                                        7

<PAGE>

for the quarter ended of $385,000  increased compared to the quarter ended March
31, 1998 of $36,000 related to a note payable which was not in existence  during
the first  quarter  1998  offset by a lower  average  capital  lease  obligation
balance.

Liquidity and Capital Resources

The net  decrease in cash and cash  equivalents  for the three  months ended was
$872,000.  This decrease is attributable primarily to net cash used in operating
activities  of $2,767,000  and net cash used in investing  activities of $48,000
offset in part by net cash provided from financing activities of $1,943,000.

Net cash used in operating activities is primarily  attributable to the net loss
of $2,918,000 and a decrease in accounts payable and accrued expense balances of
$267,000,  offset in part by  financing  costs  related to warrants of $256,000,
depreciation  and  amortization of $97,000 and lower prepaid expense balances of
$62,000.  Net cash  provided  from  financing  activities  relates  primarily to
proceeds from the issuance of common stock of $2,000,000 in March 1999.

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 net of a $3,000,000  contingency  amount to reflect the
most probable result of the Company's  decision to exit the plasma business.  On
January 6, 1998,  $8,687,000 of debt,  which the Company believes was the entire
amount outstanding as of the date of conversion, 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
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.  Should
COBE exercise its option, the number of shares to be issued will be based on the
average  closing price of the Company's  common stock for the thirty-day  period
prior to the  exercise.  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.

The Company  believes,  based on its current  operating  plan,  that its current
available cash balances together with the private placement  financing completed
in May 1999 with COBE will be  sufficient to fund its  operations  into the year
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

835307.2
                                        8

<PAGE>

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  outside of the United  States and is awaiting  approval for
sale in the United  States.  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 second  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 June 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 also been completed.  The Company's  financial  reporting  system is already
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.

835307.2
                                        9

<PAGE>

          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 less than  $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  $30,000  through March 31, 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.  For a more complete discussion of risks and uncertainties involving
the Company's business, please see the risks factors described 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."

835307.2
                                       10

<PAGE>



                                   
                           PART II - OTHER INFORMATION


Items  1.            Legal Proceedings.

                     The Company is a defendant in two lawsuits  brought by Pall
                     on its LeukoNet Prestorage  Leukoreduction Filter, which is
                     no longer made or sold by the Company.  In complaints filed
                     in February 1996 and November  1996,  Pall alleged that the
                     Company'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 the '321 Patent,  the Company filed a motion 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 and held that the
                     LeukoNet  product  infringes  a single  claim from the '321
                     patent.  The Company has terminated the  manufacture,  use,
                     sale  and  offer  for  sale of the  filter  subject  to the
                     court's  order.  The Company has  appealed the October 1997
                     decision to the Court of Appeals  for the Federal  Circuit.
                     Oral arguments were heard in February 1999. The Company now
                     waits for a decision  from the Federal  Circuit.  Remaining
                     discovery relating to the damages phase of the first action
                     has been completed.

                     With  respect  to the  second  action  concerning  the '572
                     patent and the '479  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 and '479
                     patents. Pall has amended its Complaint to add Lydall, Inc.
                     whose  subsidiary  supplied  filter  media for the LeukoNet
                     product,  as a co-defendant and has dropped its claims that
                     the LeukoNet product infringes the '479 patent. The Company
                     has filed for  summary  judgment of  non-infringement,  and
                     Pall has cross-filed  for summary  judgment of infringement
                     at the same time. Lydall supported the Company's motion for
                     summary  judgment  of  non-infringement,  and  has  filed a
                     motion for summary judgment that the asserted claims of the
                     `572 patent are invalid as a matter of law.  Discovery  has
                     been completed in the action.

                     On April 5, 1999,  the Company and COBE BCT,  Inc.  filed a
                     complaint for  declaratory  relief against Pall in the U.S.
                     District Court of Colorado.  The Company and COBE BCT, Inc.
                     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.  No
                     response has been filed.

                     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.  The  Company  was served  with the
                     complaint on April 30, 1999.

                     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. The Company also 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 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.

835307.2
                                       11
<PAGE>

Items  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,  who is an  accredied  investor.  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,  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. The number
                     of shares to be issued will be based on the average closing
                     price of the  Company's  common  stock  for the  thirty-day
                     period prior to the exercise.

                     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).

Items  3 - 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(5)         Registration  Rights  Agreement,  dated  as of  March  23,  1999,
               between the Company and Sepracor.

835307.2
                                       12

<PAGE>

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

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            Stock  Subscription  Agreement,  dated as of May 3, 1999, between
               the Company and COBE
                                                                   
4.10           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           Amended and Restated Exclusive Distribution  Agreement,  dated as
               of May 3, 1999, between the Company and COBE

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

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

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

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.


           b)  Reports on Form 8-K -                None


835307.2
                                       13

<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:      May 17, 1999                /s/ John F. McGuire
                                       -------------------------------------
                                         John F. McGuire
                                       President and Chief Executive Officer
                                        (Principal Executive Officer)


Date:      May 17, 1999                /s/  James B. Murphy
                                       -------------------------------------
                                         James B. Murphy
                                       Senior Vice President Finance
                                            and Administration
                                       (Principal Financial Officer)

835307.2
                                       14

<PAGE>