<PAGE>



                              SECURITIES AND EXCHANGE COMMISSION
                                    WASHINGTON, D.C. 20549

                                          FORM 10-Q

   X      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 -----    EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 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  0-19975

                                   BIOCIRCUITS CORPORATION
                    (Exact name of registrant as specified in its charter)

               DELAWARE                                 94-3088884
     (State or other jurisdiction of                 (I.R.S. Employer
      incorporation or organization)                Identification No.)

          1324 CHESAPEAKE TERRACE
          SUNNYVALE, CALIFORNIA                         94089
     (Address of principal executive offices)        (Zip Code)


                                        (408) 745-1961
                 (Registrant's telephone number, including area code)


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
                                          -----      ------ 

At April 30, 1997, Registrant had 10, 281,321 shares of Common Stock issued and
outstanding.


<PAGE>



                                 BIOCIRCUITS CORPORATION


                                          INDEX

PART I:  FINANCIAL INFORMATION

ITEM 1.   Financial Statements and Notes

          Condensed balance sheets (unaudited) - March 31, 1997 and 
          December 31, 1996..............................................    3

          Condensed statements of operations (unaudited) - three months 
               ended March 31, 1997 and 1996 and the period from 
               March 7, 1989  (inception) through March 31, 1997 ........    4

          Condensed statements of cash flows (unaudited) - three months 
               ended March 31, 1997 and 1996 and the period from 
               March 7, 1989 (inception) through March 31, 1997 .........    5

          Notes to Condensed Financial Statements (unaudited)............    6

ITEM 2.   Management's Discussion and Analysis of
               Financial Condition and Results of Operations.............    8



PART II:  OTHER INFORMATION

ITEM 5.   Other Information..............................................   13

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

Signatures ..............................................................   14



                                       2
<PAGE>



PART I:  FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                             BIOCIRCUITS CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                            CONDENSED BALANCE SHEETS
             (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                       MARCH 31, 1997      DECEMBER 31, 1996
                                                                                       --------------      -----------------
                                                                                                                 (NOTE)
<S>                                                                                    <C>                 <C>
ASSETS
 Current assets:
  Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . .           $     593           $   4,944 
  Accounts receivable, net of allowance for doubtful accounts of $54, ($43 
    on December 31, 1996). . . . . . . . . . . . . . . . . . . . . . . . . . . .                 281                 201 
  Inventory  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               1,225                 928
  Prepaid inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 263                 375 
  Prepaid expenses and other current assets. . . . . . . . . . . . . . . . . . .                 199                 381 
  Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 813                 102 
                                                                                           ---------           ---------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               3,374               6,931 

Property and equipment, net of accumulated depreciation and
  amortization of $1,763 ($1,671 in 1996). . . . . . . . . . . . . . . . . . . .               1,441               1,375 

Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 263                 376 
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  44                  44 
                                                                                           ---------           ---------
                                                                                           $   5,122           $   8,726 
                                                                                           ---------           ---------
                                                                                           ---------           ---------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           $     957           $   1,108 
  Accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 220                 208 
  Accrued compensation and related expenses. . . . . . . . . . . . . . . . . . .                 155                 142 
  Current portion of capital lease obligations . . . . . . . . . . . . . . . . .                 121                 118 
                                                                                           ---------           ---------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . .               1,453               1,576 

Long-term portion of capital lease obligations . . . . . . . . . . . . . . . . .                  13                  72 

Stockholders' equity:
  Preferred stock, $0.001 par value, 40,000,000 shares authorized, issuable
    in series:  Series A convertible, 30,000,000 shares designated, 
    12,446,103 shares issued and outstanding (12,455,137 shares 
    outstanding at December 31, 1996), aggregate liquidation preference
    of $.55 per share  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               9,903               9,903 
  Common stock, $0001 par value, 70,000,000 shares authorized,
    8,592,584 shares issued and outstanding (8,589,930 shares issued 
    and outstanding at December 31, 1996). . . . . . . . . . . . . . . . . . . .              48,905              48,784 
  Deficit accumulated during the development stage . . . . . . . . . . . . . . .             (55,096)            (51,548)
  Notes receivable secured by common stock . . . . . . . . . . . . . . . . . . .                 (15)                (15)
  Deferred compensation and other. . . . . . . . . . . . . . . . . . . . . . . .                 (41)                (46)
                                                                                           ---------           ---------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . .               3,656               7,078 
                                                                                           ---------           ---------
                                                                                           $   5,122           $   8,726 
                                                                                           ---------           ---------
                                                                                           ---------           ---------
</TABLE>

Note:  Derived from the audited balance sheet at December 31, 1996

                             See accompanying notes 


                                       3


<PAGE>


                            BIOCIRCUITS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

                      CONDENSED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED          PERIOD FROM
                                                                                          MARCH 31,             MARCH 7, 1989
                                                                                 -------------------------   (INCEPTION) THROUGH
                                                                                     1997           1996        MARCH 31, 1997
                                                                                 ------------    ----------  ------------------
<S>                                                                              <C>             <C>         <C>
REVENUES:
  Product Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $     234      $      45       $    655 

OPERATING COSTS AND EXPENSES:
  Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,034            307          3,344 
  Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,480          2,353         35,837 
  Sales, general and administrative. . . . . . . . . . . . . . . . . . . . . . .      1,316          1,250         17,594 
                                                                                  ---------      ---------       --------
                                                                                      3,830          3,910         56,775 

Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (3,596)        (3,865)       (56,120)

Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         64             92          2,412
Interest and other expense . . . . . . . . . . . . . . . . . . . . . . . . . . .        (16)           (89)        (1,388)
                                                                                  ---------      ---------       --------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ (3,548)     $  (3,862)      $(55,096)
                                                                                  ---------      ---------       --------
                                                                                  ---------      ---------       --------
Net loss per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  (0.41)     $   (0.99)               
                                                                                  ---------      ---------
                                                                                  ---------      ---------

 
Shares used in computing net loss per share. . . . . . . . . . . . . . . . . . .      8,592          3,902
                                                                                  ---------      ---------
                                                                                  ---------      ---------
</TABLE>

                            See accompanying notes

                                       4

<PAGE>

                            BIOCIRCUITS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

                      CONDENSED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)
                                  (UNAUDITED)
    
<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED          PERIOD FROM
                                                                                          MARCH 31,             MARCH 7, 1989
                                                                                 -------------------------   (INCEPTION) THROUGH
                                                                                     1997           1996        MARCH 31, 1997
                                                                                 ------------    ----------  ------------------
<S>                                                                              <C>             <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  (3,548)     $ (3,862)       $ (55,096)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
    Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . .          95           114            3,626 
    Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         122           ---              488 
    Changes in:
      Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . .         (56)          (45)            (257)
      Prepaid Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . .         112          (179)            (263)
      Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (297)          (69)          (1,225)
      Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . .         158           178             (293)
      Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         ---            --               12
      Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . . .       (150)           544            1,306  
                                                                                   ---------      ---------       ----------
           Net cash used in operating activities . . . . . . . . . . . . . . . .     (3,564)        (3,319)         (51,702)
                                                                                   ---------      ---------       ----------


CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment . . . . . . . . . . . . . . . . . . . . . .       (133)           (92)          (2,061)
  Short-term investments purchased . . . . . . . . . . . . . . . . . . . . . . .        ---            ---          (30,337)
  Short-term investments sold/redeemed . . . . . . . . . . . . . . . . . . . . .        ---            602           30,337 
  Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (598)            93           (1,109)
                                                                                   ---------      ---------       ----------
    Net cash provided by (used in) investing activities. . . . . . . . . . . . .       (731)           603           (3,170)
                                                                                   ---------      ---------       ----------
 

CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of preferred stock, net of issuance costs . . . . . . . . . . . . . .        ---          5,938           26,933 
  Issuance of common stock, net of issuance costs. . . . . . . . . . . . . . . .        ---              4           27,301 
  Issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . .        ---              6            4,949 
  Payments on long-term obligations. . . . . . . . . . . . . . . . . . . . . . .        (56)          (164)          (3,718)
                                                                                   ---------      ---------       ----------
    Net cash provided by (used in) financing activities. . . . . . . . . . . . .        (56)         5,840           55,465      
                                                                                   ---------      ---------       ----------



Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . .     (4,351)         3,124              593 
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . .      4,944          6,028              ---  
                                                                                   ---------      ---------       ----------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . .   $    593       $  9,152        $     593
                                                                                   ---------      ---------       ----------
                                                                                   ---------      ---------       ----------
</TABLE>

                            See accompanying notes

                                       5


<PAGE>

                           BIOCIRCUITS CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                 NOTES TO CONDENSED FINANCIAL STATEMENTS 
                               MARCH 31, 1997
                                 (UNAUDITED)

1.   NATURE OF BUSINESS AND FINANCING

       Biocircuits Corporation (a development stage company) (the "Company") 
       was incorporated in Delaware on March 7, 1989.  The Company is engaged 
       in developing and commercializing new immunodiagnostic testing systems.

       The accompanying financial statements have been prepared assuming that 
       the Company will continue as a going concern. The Company's first sale 
       and shipment of its IOS system occurred in March 1996.  The Company 
       has incurred a loss in each period since its inception.  At March 31, 
       1997, the Company's accumulated deficit was $55.1 million.  
       Biocircuits expects to incur additional losses over the next several 
       years.  

       The Company's bank informed it in late March 1997 that the Company was 
       no longer in compliance with the bank's terms for the Kollsman standby 
       letter of credit. As a result, the bank collateralized the full amount 
       of the standby letter of credit, resulting in a $949,000 reduction in 
       available cash to the Company.  Subsequently, also in late March 1997, 
       the Company and Kollsman reached an agreement to reduce the current 
       amount of the standby letter of credit to $700,000, resulting in an 
       increase of available cash of $249,000.  The collateralization of the 
       standby letter of credit meant that the Company's remaining available 
       cash would satisfy its requirements until only mid-April 1997.  In 
       early May 1997, the Company subsequently agreed with Kollsman to 
       extend the instrument production line shutdown until approximately 
       August 1997. The Company has further agreed to pay Kollsman $436,000 
       to cover the cost of raw material and work in process currently at, or 
       to be delivered to Kollsman.  Such prepaid inventory funds will be 
       credited back against future deliveries of IOS instruments to 
       Biocircuits.  In return, Kollsman has agreed to cancel the $700,000 
       standby letter of credit and the associated funds collateralized by 
       the Company's bank will be released back to the Company.
     
       On April 15, 1997, the Company closed the April 1997 Financings which 
       consisted of the sale of common stock in three tranches.  With the 
       receipt of funds from the first tranche of the April 1997 Financings, 
       the Company believes its cash resources will be adequate to satisfy 
       its requirements until the end of the second quarter of 1997.  If the 
       Company receives funding from the second tranche of the April 1997 
       Financings, the Company believes its cash resources will be adequate 
       to satisfy its requirements into the second quarter of 1998.  If the 
       Company receives funding from the third tranche of the April 1997 
       Financings, the Company believes its cash resources will be adequate 
       to satisfy its requirements into the third quarter of 1998.  There can 
       be no assurance that the Company will meet the milestones that are 
       necessary to receive the funds from the second and third tranches.  If 
       these funds are not available, the Company will be required to 
       significantly curtail or cease its operations and no assurance can be 
       given that any additional financing will be available, or if 
       available, that it would be on acceptable terms.
     
       Obtaining additional funds will be critical to the Company's ability 
       to maintain operations during 1997. The Company will therefore 
       continue to seek funding from various equity financing sources.  
       Raising additional funds from public or private sources will result in 
       significant dilution to then existing shareholders. If adequate 
       funding is not available on a timely basis, the Company will be 
       required to curtail its operations significantly or to cease 
       operations.  There can be no assurance that the Company will be 
       successful in obtaining additional financing during 1997.

                                      6

<PAGE>

2.   BASIS OF PRESENTATION

       The accompanying unaudited condensed financial statements have been 
       prepared in accordance with generally accepted accounting principles 
       for interim financial information and with the instructions to Form 
       10-Q and Article 10 of Regulation S-X.  Accordingly, they do not 
       include all of the information and footnotes required by generally 
       accepted accounting principles for complete financial statements.  In 
       the opinion of management, all adjustments (consisting of normal 
       recurring accruals) considered necessary for a fair presentation have 
       been included.  Operating results for the three month period ended 
       March 31, 1997 are not necessarily indicative of the results that may 
       be expected for the year ended December 31, 1997.  For further 
       information, refer to the consolidated financial statements and 
       footnotes thereto included in the Company's annual report on Form 
       10-K/A for the year ended December 31, 1996.  

       Net loss per share is computed on the basis of the weighted average 
       number of common shares outstanding.  Common equivalent shares are 
       excluded from the computation as their effect is anti-dilutive.

       Following is supplemental proforma earnings per share, calculated 
       giving effect to the conversion of the outstanding convertible 
       preferred stock on an if converted basis (in thousands, except per 
       share data):

                                                         THREE MONTHS ENDED 
                                                               MARCH 31,
                                                        --------------------
                                                           1997        1996
                                                         ---------  ---------

     Net loss as reported............................   $ (3,548)   $ (3,862)
                                                         ---------  ---------
                                                         ---------  ---------

     Shares used in computing net 
          loss per share as reported.................       8,592      3,902

     Adjustment to include outstanding convertible 
          preferred stock previously excluded 
          as it is anti-dilutive.....................       3,113      3,366
                                                         ---------  ---------

     Shares used in computing proforma net 
          loss per share.............................      11,705      7,268
                                                         ---------  ---------
                                                         ---------  ---------

     Proforma net loss per share.....................    $  (0.30)  $  (0.53)
                                                         ---------  ---------
                                                         ---------  ---------


3.   EARNINGS PER SHARE

       In February 1997, the Financial Accounting Standards Board issued 
       Statement No. 128, Earnings Per Share, which is required to be adopted 
       on December 31, 1997.  At that time, the Company will be required to 
       change the method currently used to compute earnings per share and to 
       restate all prior periods.  Under the new requirements for calculating 
       primary earnings per share, the dilutive effect of stock options will 
       be excluded.  The Company expects no impact from the implementation of 
       FASB 128 as common equivalent shares are excluded from the computation 
       as their effect is anti-dilutive. 


                                       7
<PAGE>


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
   
   
          IN ADDITION TO THE HISTORICAL INFORMATION CONTAINED HEREIN, THE 
FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS 
AND UNCERTAINTIES.  THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM 
THOSE DISCUSSED HEREIN.  FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH 
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THIS SECTION, 
IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K/A FOR THE YEAR ENDED DECEMBER 31, 
1996.
     
     RESULTS OF OPERATIONS
     
          Since its inception in 1989, the Company has been engaged in 
research and development and marketing of medical diagnostic applications of 
its technologies. 
     
          The Company has incurred a loss in each period since its inception. 
At March 31, 1997, the Company's accumulated deficit was $55.1 million. 
Biocircuits expects to incur additional losses over the next several years. 
The Company expects that currently available funds will be used primarily for 
sales and marketing programs for its IOS point-of-care system and development 
of additional assays for the IOS point-of-care system. The losses may vary 
from period to period, including from quarter to quarter, and may increase, 
due to the uncertainty of whether the sales and marketing programs of the 
Company will achieve the desired results. Accordingly, the Company believes 
that quarter-to-quarter results are not a useful indicator of the Company's 
performance. 
     
          The Company's first sale and shipment of its IOS system occurred in 
March 1996, with cartridges capable of performing the T4 and T Uptake tests. 
The selling process typically requires the Company's sales force to work 
closely with distributors, generate qualified physician leads and perform 
demonstrations of the IOS system in physicians' offices.  The selling process 
can be time-consuming.  To date, the number of instrument sales to 
distributors and placements in physicians' offices have been, and continues 
to be, significantly less than the Company's expectations. As a result, the 
Company has incurred significant losses.  There can be no assurance that the 
Company will be successful in marketing the IOS system, that the rate of 
sales growth will ever meet expectations or that the marketing programs of 
the Company will achieve the desired results. 
     
          Certain design changes to the IOS instrument were required since 
the first sale and shipment of the IOS system. In April 1996, problems in 
some of the instrument circuitry and software required certain parts and 
software modifications. Further product shipments were suspended at that time 
while the problems were diagnosed and corrected and shipments resumed in the 
middle of June.  The requirements to make the design changes to the 
instrument and the suspension of product shipments had an adverse impact on 
1996 revenue and overall financial performance. There can be no assurance 
that additional design changes may not be required in the future or that the 
system performance will be reliable over time. 
     
          On April 3, 1997, in order to reduce its losses and conserve cash, 
the Company reduced its work force from 92 employees to 54 employees.  The 
Company is highly dependent upon the principal members of its management and 
scientific staff and key individuals in all areas of the Company. Although 
the Company believes it has retained sufficient employees to achieve its 
near-term business objectives after its reduction in force on April 3, 1997, 
there can be no assurance that the loss of services of such employees might 
not impede the achievement of the Company's business objectives. Furthermore, 
there can be no assurance that the reduction in force will not adversely 
affect the Company's ability to retain its remaining employees, however, the 
Company has implemented certain programs which it believes may help in 
retaining the key employees.  The Company faces competition for qualified 
individuals from numerous manufacturers of medical products and other high 
technology products, as well as universities and academic institutions. There 
can be no assurance that the Company will be able to attract qualified new 
personnel on acceptable terms.
     
          In order for the Company to have success in penetrating the 
point-of-care immunodiagnostic market and to achieve significant sales of IOS 
systems and test cartridges, the Company believes it will need to continue to 
expand its menu of tests. In September 1996, the Company received FDA 
clearance to market a qualitative serum 


                                       8

<PAGE>

pregnancy assay. The Company also received clearances from the FDA for a TSH 
assay in November 1996 and a quantitative hCG assay in December 1996. During 
1996, the Company developed an improved second generation cartridge for its 
new assays as well as existing assays.  In December 1996, the Company 
launched its TSH assay on the second generation cartridge and in March 1997, 
the Company began shipping the T4 and T Uptake tests on the second generation 
cartridge. The second generation cartridge will be utilized for the market 
launch of all new assays, including the FDA cleared assays as well as those 
in development.  Biocircuits is currently developing three additional assays: 
a PSA test for management of prostate cancer patients, a Digoxin test for 
monitoring the therapeutic usage of this drug in the treatment of heart 
disease and a Free T4 test for diagnosing true clinical thyroid status.  In 
the past, the Company has experienced delays in completing the development of 
new tests.  Furthermore, the April 1997 reduction in force reduced the number 
of product development employees, and there can be no assurance that the 
reduction will not result in further delays in completing the development of 
these new tests or that any expansion of the test menu will not be delayed.
     
          Biocircuits has developed its initial proprietary manufacturing 
process for producing the test cartridges for its IOS point-of-care system. 
Various plastic components and other materials for the cartridges are and 
will be obtained from contract manufacturers.  The Company has experienced 
cartridge backlogs at various times since the March 1996 launch of the IOS 
point-of-care system and there can be no assurance that the Company will be 
able to meet customer demand for cartridges in the future, or that any order 
backlog will not materially adversely affect the Company's sales and 
marketing efforts. The Company's cartridge manufacturing milestones include 
improving manufacturing efficiencies, expanding mold and cartridge 
manufacturing capacity as both the test menu and test manufacturing volume 
expand, initiating manufacturing automation efforts and manufacturing the 
cartridge at the Company's targeted cost. The cartridge manufacturing 
scale-up process will require the Company to develop advanced manufacturing 
techniques and rigorous process controls.  The automation effort will be 
critical to meeting the Company's longer-term cartridge manufacturing demands 
and cost targets.  There can be no assurance that the Company will be 
successful in these efforts or that such efforts will result in the Company 
meeting expected cartridge demand or achieving the Company's longer-term 
cartridge manufacturing cost targets. 
     
          In August and December 1995, the Company entered into agreements 
with Nunc to manufacture the plastic components of its disposable test 
cartridges. Under the terms of the agreement, Nunc has the exclusive right to 
supply the plastic components for the test cartridges for all sales in North 
America. The Company will be entirely dependent on Nunc as the sole source 
for the plastic components and treatment thereof.  There can be no assurance 
that Nunc will be able to deliver the required quantities of test cartridge 
components on schedule or at costs acceptable to the Company. 
     
          In December 1992, the Company entered into an agreement with 
Kollsman pursuant to which Kollsman was appointed the exclusive North 
American supplier of the IOS instrument.  The agreement with Kollsman 
contained certain minimum purchase requirements and expired three years from 
the date of first commercial production, subject to certain rights of earlier 
termination.  In April 1996, the Company and Kollsman executed a letter 
agreement to amend the 1992 agreement (the "Letter Agreement"), pursuant to 
which Kollsman will be the exclusive supplier of the IOS instrument through 
1997, the minimum purchase requirements were eliminated and the Company and 
Kollsman agreed to an acceptable fixed transfer price to be paid through 
1997, the revised term of the agreement.  Also pursuant to the Letter 
Agreement, the Company agreed to issue Kollsman a warrant to purchase 250,000 
shares of Common Stock at an exercise price of $7.00 per share, subject to an 
increase of 50,000 shares under certain circumstances.  The warrant expires 
at year end 1997, subject to certain extension rights.  In November 1996, the 
Company and Kollsman amended the Letter Agreement to extend the expiration 
date of the warrant to June 1998, subject to certain extension rights.  In 
order to secure an adequate supply of IOS instruments, the Company 
established a standby letter of credit for the benefit of Kollsman.  In late 
March 1997, the Company and Kollsman agreed to reduce the amount of the 
standby letter of credit by $249,000 in exchange for reducing the exercise 
price of the warrant to $2.00 per share.  Also in late March 1997, the 
Company and Kollsman agreed to issue Kollsman a warrant to purchase 50,000 
shares of Common Stock in exchange for a one month shutdown of instrument 
production.  In early May 1997, the Company subsequently agreed with Kollsman 
to extend the instrument production line shutdown until approximately August 
1997.  The Company has further agreed to pay Kollsman $436,000 to cover the 
cost of raw material and work in process currently at, or to be delivered to, 
Kollsman.  Such prepaid inventory funds will be credited back against future 
deliveries of IOS instruments to Biocircuits.  In return, Kollsman will 
cancel the $700,000 standby letter of credit and the associated funds 
collateralized by the Company's bank will be released back to the Company.  
The Company is entirely dependent on Kollsman as the sole source 


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<PAGE>

of production of its IOS instruments. Kollsman, in turn, relies upon 
sole-source suppliers for certain components. Failure of Kollsman's suppliers 
to deliver the required quantities on a timely basis and at commercially 
reasonable prices, or Kollsman's failure to deliver the IOS instruments to 
the Company on a timely basis or at commercially reasonable costs could 
materially adversely affect the Company. 
     
          On October 21, 1996, the Company closed a private placement which 
consisted of the sale of 965,231 units at $6.00 per unit.  Proceeds to the 
Company were approximately $5.2 million, net of issuance costs.  A unit 
consisted of two shares of Common Stock and a Financing Warrant expiring 
October 20, 1997, to purchase one share of Common Stock at $3.43 per share. 
The Financing Warrants contain an automatic exercise provision which occurs, 
upon notice from the Company, at any time beginning six months prior to the 
expiration date when the average market value for the Company's Common Stock 
equals or exceeds $5.25 per share for 10 consecutive trading days.  If the 
Financing Warrants are exercised, the Company will receive gross proceeds of 
up to an additional $3.3 million. 
     
          In August 1995, Biocircuits entered into an agreement with Beckman 
and received $3,500,000 in the form of a Note in exchange for granting 
Beckman options for licensing and marketing rights to certain testing 
applications using the Company's lipid/polymer technology. Pursuant to the 
terms of the agreement, Biocircuits completed a feasibility study in August 
1996.  Because Beckman subsequently elected not to exercise its development 
license option, Biocircuits regained full rights to the lipid/polymer 
technology in December 1996, including all improvements made during the 
feasibility study.  In connection with their decision, Beckman also elected 
to convert the Note into the Company's Common Stock and a warrant to purchase 
the Company's Common Stock.
     
          On April 15, 1997, the Company closed a private placement which 
consisted of the sale of 2,500,000 shares of its common stock (the "April 
1997 Common Stock Financing") to be issued in three tranches. The first 
tranche resulted in gross proceeds of approximately $530,000 to the Company, 
the second tranche, conditional upon the Company's satisfaction of certain 
milestones for the second quarter of 1997 and stockholder approval of the 
issuance of the shares, will result in gross proceeds of approximately 
$1,190,000 to the Company and the third tranche, conditional upon the 
Company's satisfaction of certain milestones by the end of fiscal 1997 and 
stockholder approval of the issuance of the shares, will result in gross 
proceeds to the Company of approximately $780,000. In addition, on April 15, 
1997, the Company closed a private placement which consisted of the sale of 
5,447,000 units, consisting of one share of common stock and one warrant to 
purchase one share of common stock to be issued in two tranches (the "April 
1997 Unit Financing"). The first tranche resulted in gross proceeds to the 
Company of approximately $1,160,000, and the second tranche, conditional upon 
the Company's satisfaction of certain milestones for the second quarter 1997 
and stockholder approval of the issuance of the shares, will result in gross 
proceeds of approximately $4,290,000 to the Company. The warrants in the 
April 1997 Unit Financing (the "April 1997 Warrants"), which expire eighteen 
months after they become exerciseable, have an exercise price of $0.75 per 
share and cannot be exercised until after stockholder approval which will not 
occur before the Company's 1997 Annual Meeting to be held on June 5, 1997. At 
the Company's option, the Company may shorten the exercise period of the 
April 1997 Warrants in which case the Warrants may become redeemable by the 
Company at $0.01 per share, if the closing price for the Company's common 
stock is greater than or equal to $2.00 per share for ten days. The April 
1997 Common Stock Financing and the April 1997 Unit Financing are referred to 
herein collectively as the "April 1997 Financings." 
          
FIRST QUARTER FY 1997 COMPARED TO FIRST QUARTER FY 1996

     Revenue in the first quarter totaled $234,000, an increase of $189,000 
or 420% from the $45,000 reported in the first quarter of 1996 when the 
Company initially launched its IOS system.

     Total operating costs and expenses decreased from $3,910,000 in the 
first quarter of 1996 to $3,830,000 in the first quarter of 1997, a decrease 
of $80,000 or 2%.

     Cost of sales expenses increased from $307,000 in the first quarter of 
1996 to $1,034,000 in the first quarter of 1997, an increase $727,000 or 
236%.  The increase in cost of sales results primarily from a full quarter of 
production activity and expenses in 1997 compared to expenses incurred during 
a partial period in first quarter 1996 as the Company launched its IOS system 
in March 1996.  These costs consist primarily of manufacturing overhead, 
startup costs and material costs associated with the production of a 
revenue-generating product.


                                       10

<PAGE>


     Research and development expenses decreased from $2,353,000 in the first 
quarter of 1996 to $1,480,000 in the first quarter of 1997, a decrease of 
$873,000 or 37%.  This decrease was due primarily to a reduction in outside 
services, primarily non-recurring engineering charges from Kollsman.

     Sales, general and administrative expenses increased from $1,250,000 in 
the first quarter of 1996 to $1,316,000 in the first quarter of 1997, an 
increase of $66,000 or 5%.  This increase was due primarily to the increased 
sales and marketing expenses resulting from the preparation for and marketing 
of the IOS point-of-care system.

     Interest income decreased from $92,000 in the first quarter of 1996 to 
$64,000 in the first quarter of 1997, a decrease of $28,000 or 30%.  The 
decrease was due to decreased cash balances from ongoing operating losses, 
purchases of property and equipment and payments on long-term obligations.  
Interest and other expense decreased from $89,000 in the first quarter of 
1996 to $16,000 in the first quarter of 1997, a decrease of $73,000.  
Interest expense results from the Company's long-term debt and capital leases 
related to its property and equipment.

     Net loss decreased from $3,862,000 or $0.99 per share in the first 
quarter of 1996 to $3,548,000 or $0.41 per share in the first quarter of 
1997, a decrease of $314,000 or 8%.

LIQUIDITY AND CAPITAL RESOURCES
     
          The Company historically has financed its operations primarily 
through sales of common and preferred stock, interest income on the cash 
balances available after such financings, long term debt and capital asset 
lease financings. Since its inception through March 31, 1997, the Company 
raised a total of approximately $54.2 million in the sale of common and 
preferred stock. 
     
          The Company's cash and cash equivalents and short-term investments 
were $0.6 million as of March 31, 1997, compared to $4.9 million at the end 
of 1996. The decrease was due primarily to operating losses in the first 
quarter 1997. 
     
          The Company's bank informed it in late March 1997 that the Company 
was no longer in compliance with the bank's terms for the Kollsman standby 
letter of credit. As a result, the bank collateralized the full amount of the 
standby letter of credit, resulting in a $949,000 reduction in available cash 
to the Company. Subsequently, also in late March 1997, the Company and 
Kollsman reached an agreement to reduce the current amount of the standby 
letter of credit to $700,000, resulting in an increase of available cash of 
$249,000.  The collateralization of the standby letter of credit meant that 
the Company's remaining available cash would satisfy its requirements until 
only mid-April 1997.  In early May 1997, the Company subsequently agreed with 
Kollsman to extend the instrument production line shutdown until 
approximately August 1997. The Company has further agreed to pay Kollsman 
$436,000 to cover the cost of raw material and work in process currently at, 
or to be delivered to, Kollsman.  Such prepaid inventory funds will be 
credited back against future deliveries of IOS instruments to Biocircuits.  
In return, Kollsman has agreed to cancel the $700,000 standby letter of 
credit and the associated funds collateralized by the Company's bank will be 
released back to the Company.
     
          On April 15, 1997, the Company closed the April 1997 Financings 
which consisted of the sale of common stock in three tranches. With the 
receipt of funds from the first tranche of the April 1997 Financings, the 
Company believes its cash resources will be adequate to satisfy its 
requirements until the end of the second quarter of 1997. If the Company 
receives funding from the second tranche of the April 1997 Financings, the 
Company believes its cash resources will be adequate to satisfy its 
requirements into the second quarter of 1998. If the Company receives funding 
from the third tranche of the April 1997 Financings, the Company believes its 
cash resources will be adequate to satisfy its requirements into the third 
quarter of 1998.  There can be no assurances that the Company will meet the 
milestones that are necessary to receive the funds from the second and third 
tranches.  If these funds are not available, the Company will be required to 
significantly curtail or cease its operations and no assurance can be given 
that any additional financing will be available, or if available, that it 
would be on acceptable terms.


                                       11

<PAGE>
     
          Obtaining additional funds will be critical to the Company's 
ability to maintain operations during 1997. The Company will therefore 
continue to seek funding from various equity financing sources. Raising 
additional funds from public or private sources will result in significant 
dilution to then existing shareholders. If adequate funding is not available 
on a timely basis, the Company will be required to curtail its operations 
significantly or to cease operations. There can be no assurance that the 
Company will be successful in obtaining additional financing during 1997. 
     
          The Company believes that maintaining its listing on the Nasdaq 
National Market System ("Nasdaq") is central to its ability to raise 
additional funds as well as to provide liquidity to investors. The conversion 
of the Beckman Note resulted in the Company meeting Nasdaq listing 
requirements at year end 1996. The Company failed temporarily to meet Nasdaq 
net tangible assets listing requirements at the end of the first quarter of 
1997. However, the proceeds from the first tranche of the April 1997 
Financings allowed the Company to meet Nasdaq listing requirements, on a 
proforma basis, for the first quarter of 1997. The Company also expects not 
to be in compliance with Nasdaq listing requirements at the end of the second 
quarter of 1997. However, if the Company receives proceeds from the second 
tranche of the April 1997 Financings in July 1997, the Company believes it 
would meet Nasdaq listing requirements, on a proforma basis, for the second 
quarter in 1997. In addition, the Company believes the receipt of proceeds 
from the second tranche of the April 1997 Financings would result in it 
meeting Nasdaq listing requirements through year end 1997. If the Company 
receives proceeds from the third tranche of the April 1997 Financings, the 
Company believes it will meet Nasdaq listing requirements through the first 
quarter of 1998. Thereafter, the Company will be required to generate 
sufficient revenue or raise additional capital to maintain Nasdaq listing 
requirements.  There can be no assurance that the Company will meet the 
milestones that are necessary to receive the funds from the second and third 
tranches.
     
          The Company believes its cash requirements may increase in future 
periods due to higher expenses.  The Company expects to incur substantial 
additional costs, including costs related to ongoing research and development 
activities, either alone or in collaboration with strategic partners, 
clinical trials, expansion of manufacturing, research and development and 
administrative facilities, development of manufacturing capabilities, 
obtaining regulatory approvals and establishing sales, marketing and 
distribution capabilities.  The Company's long-term capital requirements will 
depend on numerous factors, including the progress of the Company's research 
and product development, the timing and cost of obtaining regulatory 
approvals, the costs associated with patents and other intellectual property 
rights, the levels of resources devoted to the development of manufacturing 
and marketing capabilities and potential collaborative partnerships.  The 
Company intends to seek additional funding through collaborative 
relationships and public or private financings.  Other methods of financing 
the acquisition of capital equipment, including lease financing, may be 
utilized if available on attractive terms.  Raising additional funds from 
public or private financings may result in further dilution to then-existing 
shareholders.  The Company also may attempt to obtain funds through 
arrangements with strategic partners or others that may require the Company 
to relinquish rights to certain of its technologies, products or marketing 
territories in exchange for funding.  If adequate funds are not available 
from these sources, the Company will be required to curtail its operations 
significantly.  No assurance can be given that any additional financing will 
be available, or, if available, that it will be available on acceptable 
terms. 


                                       12

<PAGE>

                             BIOCIRCUITS CORPORATION

PART II:  OTHER INFORMATION

ITEM 5.   Other Information

          On April 16, 1997, the Company issued a press release announcing 
          that it had closed a private placement and had received net 
          proceeds of approximately $1.5 million in the first tranche of the 
          April 1997 Financings, which proceeds allowed the Company to meet 
          Nasdaq listing requirements for the first quarter of 1997 on a 
          proforma basis.  A copy of the press release announcing the April 
          1997 Financings is attached hereto as Exhibit 99.1 and incorporated 
          by reference herein.

ITEM 6.   Exhibits and Reports on Form 8-K.

               a)   Exhibits
 
                    27.1   Financial Data Schedule

                    99.1   Press Release dated April 16, 1997

                    99.2   Proforma March 31, 1997 Balance Sheets and 
                           Statements of Operations assuming completion 
                           of a private placement and receipt of net proceeds 
                           of $1.5 million therefrom.


               b)   Reports on Form 8-K
     
                    None


                                      13

<PAGE>

                            BIOCIRCUITS CORPORATION

                                   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.


                                      BIOCIRCUITS CORPORATION



Date:     May 13, 1997

                                      By:          /s/ John Kaiser 
                                          ------------------------------------
                                          John Kaiser
                                          President, Chief Executive Officer
                                          and Acting Secretary (Principal 
                                          Executive officer)


                                       By:         /s/ Donald Hawthorne      
                                          ------------------------------------
                                          Donald Hawthorne
                                          Vice President and Chief Financial 
                                          Officer (Duly Authorized Officer and 
                                          Principal Financial and Accounting 
                                          Officer)



                                      14