<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
          SEPTEMBER 30, 1996 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 October 31, 1996, Registrant had 7,469,438 shares of Common Stock issued and
outstanding.

                                       1
<PAGE>

                               BIOCIRCUITS CORPORATION
                                           
                                           
                                        INDEX
                                           
PART I:  FINANCIAL INFORMATION

ITEM 1.  Financial Statements and Notes

         Balance sheets (unaudited) - September 30, 1996 and
              December 31, 1995 ............................................. 3

         Statements of operations (unaudited) - three months ended 
              September 30, 1996 and 1995 and nine months ended September 30,
              1996 and 1995 and the period from March 7, 1989 (inception)
              through September 30, 1996 .................................... 4

         Statements of cash flows (unaudited) - nine months ended
              September 30, 1996 and 1995 and the period from March 7, 1989
              (inception) through September 30, 1996 ........................ 5

         Notes to 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 .................................................14

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

Signatures ..................................................................15


                                       2

<PAGE>



PART I:  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
                                           
                               BIOCIRCUITS CORPORATION
                            (A DEVELOPMENT STAGE COMPANY)
                                           
                                    BALANCE SHEETS
                 (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
                                    (UNAUDITED)  
<TABLE>
<CAPTION>
                                                      SEPTEMBER 30, 1996       DECEMBER 31, 1995
                                                      ------------------       -----------------
<S>                                                   <C>                      <C>
ASSETS                                                                              (NOTE)
 Current assets:
         Cash and cash equivalents ....................     $ 3,376                $ 6,028 
         Short-term investments .......................        ---                     605 
         Prepaid expenses and other current assets ....         344                    544 
         Inventory ....................................         638                    ---
         Prepaid inventory ............................         436                    418 
         Restricted cash ..............................         102                     93  
                                                          ----------               ---------
    Total current assets ..............................       4,896                  7,688 
    
    Property and equipment, net of accumulated
         depreciation and amortization of $1,567
         ($1,298 in 1995) .............................       1,269                    975 
    
    Restricted cash ...................................         376                    479 
    Other assets ......................................         137                    125
                                                          ----------               ----------     
                                                            $ 6,678                $ 9,267  
                                                          ----------               ----------
                                                          ----------               ----------
    
    LIABILITIES AND STOCKHOLDERS' EQUITY
    
    Current liabilities:
         Accounts payable .............................     $   636                $   547 
         Accrued liabilities ..........................         169                    205 
         Accrued compensation and related expenses ....         168                    198 
         Current portion of capital lease obligations .         212                    547   
                                                            --------               --------
    Total current liabilities .........................       1,185                  1,497 
    
    Long-term portion of capital lease obligations ....          96                    114 
    Long-term convertible debt ........................       3,781                  3,593 
    
    Stockholders' equity:
       Preferred stock, $0.001 par value, 40,000,000
         shares authorized, issuable in series: Series A
         convertible, 30,000,000 shares designated, 
         12,480,137 shares issued and outstanding
         (12,999,000 shares outstanding at December 31,
         1995), aggregate liquidation preference of $.55
         per share ....................................       9,904                  6,320 
       Common stock, $0.001 par value, 70,000,000 shares
         authorized, 5,532,726 shares issued and
         outstanding (3,673,390 shares issued and
         outstanding at December 31, 1995) ................  39,773                 35,172 
       Deficit accumulated during the development stage ... (47,991)               (37,200)
       Notes receivable secured by common stock ...........     (15)                   (99)
       Deferred compensation and other ....................     (55)                  (130)  
                                                           ----------             -----------
    Total stockholders' equity ............................   1,616                  4,063
                                                           ----------             -----------    
                                                            $ 6,678                $ 9,267    
                                                           ----------             -----------    
                                                           ----------             -----------    
</TABLE>
                                           
Note:  Derived from the audited balance sheet at December 31, 1995.
                                           
                               See accompanying notes 

                                          3
<PAGE>

                               BIOCIRCUITS CORPORATION
                            (A DEVELOPMENT STAGE COMPANY)
                                           
                               STATEMENTS OF OPERATIONS
                         (IN THOUSANDS EXCEPT PER SHARE DATA)
                                     (UNAUDITED)
                                           
<TABLE>
<CAPTION>
 
 
     
                                                                                        
                                                                                        
                                THREE MONTHS ENDED          NINE MONTHS ENDED               PERIOD FROM     
                                  SEPTEMBER  30,              SEPTEMBER 30,                MARCH 7, 1989    
                                ------------------          -----------------           (INCEPTION) THROUGH 
                                  1996        1995           1996        1995           SEPTEMBER 30, 1996  
                                 ------     --------       --------    --------         ------------------- 
<S>                              <C>           <C>           <C>          <C>                <C>

REVENUES:
    Product Sales..............  $   50      $   ---       $   206     $   ---               $   206 

OPERATING COSTS AND EXPENSES:
    Cost of sales..............     542          ---         1,591         ---                 1,591 
    Research and development ..   1,564        1,139         5,579        3,456               32,855 
    Sales, general and
         administrative........   1,179          700         3,859        1,879               14,721
                                --------      -------     --------      --------            ---------
                                  3,285        1,839        11,029        5,335               49,167 
    
Loss from operations...........  (3,235)      (1,839)      (10,823)      (5,335)             (48,961)
    
Interest and dividend
     income ...................      81          130           277          204                2,280 
Interest and other expense ....     (74)         (63)         (245)        (108)              (1,310)
                                --------     --------     ---------    ----------           ---------   
Net loss ...................... $(3,228)     $(1,772)     $(10,791)    $ (5,239)            $(47,991)
                                --------     --------     ---------    ----------           ---------
                                --------     --------     ---------    ----------           ---------

Net loss per share............. $ (0.60)     $ (0.63)     $  (2.32)    $  (2.01)          
                                --------     --------     ---------    ----------         
                                --------     --------     ---------    ----------
  
Shares used in computing
    net loss per share.........   5,424        2,827         4,650        2,612 
                                --------     --------    ----------    ----------
                                --------     --------    ----------    ----------
</TABLE>











                               See accompanying notes.


                                          4


<PAGE>

                               BIOCIRCUITS CORPORATION
                            (A DEVELOPMENT STAGE COMPANY)
                                           
                               STATEMENTS OF CASH FLOWS
                                    (IN THOUSANDS)
                                     (UNAUDITED)
                                                      
    
<TABLE>
<CAPTION>    
                                                                                            PERIOD FROM
                                                                                           MARCH 7, 1989
                                                           NINE MONTHS ENDED           (INCEPTION) THROUGH
                                                             SEPTEMBER 30,             SEPTEMBER 30, 1996
                                                           -----------------           -------------------
                                                           1996        1995
                                                         --------    --------
<S>                                                       <C>          <C>                 <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss  ........................................   $ (10,791)   $ (5,239)             $ (47,991)
    Adjustments to reconcile net loss to net cash
      used in operating activities:
         Depreciation and amortization ...............         352         278                  3,410 
         Other .......................................         286         ---                    364 
         Changes in:
              Prepaid Inventory ......................         (17)       (543)                  (435)
              Inventory ..............................        (638)        ---                   (638)
              Other current assets ...................         190          (6)                  (424)
              Other assets ...........................         ---         ---                    (69)
              Other current liabilities ..............          22        (321)                   970  
                                                          ---------   ----------             ----------
                 Net cash used in operating activities     (10,596)     (5,831)               (44,813)
                                                          ---------   ----------             ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment ................       (466)         76                 (1,719)
    Short-term investments purchased ..................        ---      (2,965)               (30,337)
    Short-term investments sold/redeemed ..............        597       1,000                 30,337 
    Restricted cash ...................................         91         627                   (514)
                                                           --------    --------               ---------
         Net cash provided by (used in) investing
              activities ..............................        222      (1,262)                (2,233)
                                                           --------    --------               ---------

 

CASH FLOWS FROM FINANCING ACTIVITIES:
    Issuance of preferred stock, net of issuance costs       7,916       8,530                 26,993 
    Issuance of common stock, net of issuance costs ...         67          36                 21,836 
    Issuance of long-term debt ........................        187       3,531                  5,136 
    Payments on long-term obligations .................       (448)       (288)                (3,543)
                                                           ---------   --------              ----------
         Net cash provided by (used in) financing
              activities ..............................      7,722      11,809                 50,422     
                                                           ---------   --------              ----------

Net increase (decrease) in cash and cash equivalents ..     (2,652)      4,716                  3,376 
Cash and cash equivalents, beginning of period ........      6,028       1,601                    ---
                                                         ----------   ---------             -----------   
Cash and cash equivalents, end of period ..............  $   3,376    $  6,317              $   3,376     
                                                         ----------   ---------             -----------
                                                         ----------   ---------             -----------

</TABLE>
                                           
                                           
                                           
                                           
                                See accompanying notes


                                          5

<PAGE>


                               BIOCIRCUITS CORPORATION
                            (A DEVELOPMENT STAGE COMPANY)
                                           
                            NOTES TO FINANCIAL STATEMENTS 
                                 SEPTEMBER 30, 1996 
                                     (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 September 30, 1996, the Company's accumulated 
         deficit was $48.0 million.  Biocircuits expects to incur 
         additional losses over the next several years.  

         On October 21, 1996, the Company closed a private placement which
         consisted of the sale of 965,231 units at $6.00 per unit (the
         "October 1996 Financing").  Proceeds to the Company were approximately
         $5.3 million, net of issuance costs.  A unit consisted of two shares
         of Common Stock and one warrant (the "Financing Warrants"), 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.

         The Company believes that its existing capital resources will be
         adequate to satisfy its requirements into the second quarter of 1997,
         assuming no exercise of outstanding warrants.  If the remaining
         warrants issued in June 1995, which expire on December 18, 1996, are
         exercised in full for cash, the Company would receive an aggregate
         amount of $2.1 million, which the Company estimates would satisfy the
         Company's cash requirements until late second quarter 1997.  If the
         warrants from the October 1996 Financing are exercised prior to the
         end of second quarter 1997, the Company believes its cash resources
         will be adequate to satisfy its requirements into the fourth quarter
         of 1997.  However, since the warrants from the October 1996 Financing
         expire in October 1997, there can be no assurance that they will be
         exercised prior to the end of second quarter 1997.  The Company has
         the right to call these warrants in the second half of their one year
         life if the Common Stock price equals or exceeds $5.25 per share.  The
         Company's ability to continue its planned operations will be dependent
         upon its ability to obtain additional funds from existing investors,
         new investors or corporate partners.  The Company intends to pursue
         all of these financing options, but there can be no assurance that the
         Company will be successful.  If not successful in obtaining financing,
         the Company's business will be materially and adversely affected.
         
         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.  As of
         September 30, 1996, the Company failed to temporarily meet the Nasdaq
         listing requirements.  However, the proceeds from the sale of the
         Common Stock issued by the Company in the October 1996 Financing
         allowed the Company to meet Nasdaq listing requirements, on a proforma
         basis, for the third quarter of 1996.  If the warrants which expire in
         December 1996 are exercised for cash, the Company believes it will
         meet Nasdaq listing requirements through the end of first quarter
         1997.  If the Financing Warrants are exercised prior to the end of
         second quarter 1997, the Company believes it will meet Nasdaq listing
         requirements at the end of the second quarter of 1997.  Thereafter,
         the Company will be required to generate sufficient revenues or raise
         additional capital to maintain Nasdaq listing requirements.
         
         In future periods, 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, development of
         manufacturing capabilities, obtaining regulatory

                                       6

<PAGE>


         approvals and establishing sales, marketing and distribution 
         capabilities.  The Company's longer-term capital requirements will 
         depend on numerous factors, including the success of the Company's 
         products and the rate of increase in product revenue, the progress 
         of the Company's research and 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 establishment of potential collaborative 
         partnerships.  The rate of increase in product revenue will 
         significantly influence the financing requirements and cannot be 
         predicted nor can there be any assurance that it will occur 
         according to the Company's expectations.  The Company intends to 
         seek additional funding through various means, including public or 
         private financings.  Other methods of financing, including working 
         capital financing for accounts receivable and lease financing for 
         the acquisition of capital equipment, may be utilized if available 
         on attractive terms.  The Company also will attempt to obtain funds 
         through arrangements with strategic partners or others that will 
         require the Company to relinquish additional 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.

    
    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 nine month period ended
         September 30, 1996 are not necessarily indicative of the results that
         may be expected for the year ended December 31, 1996.  For further
         information, refer to the consolidated financial statements and
         footnotes thereto included in the Company's annual report on Form 10-K
         for the year ended December 31, 1995.  
         
         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):
  

<TABLE>
<CAPTION>
    
                                                     THREE MONTHS ENDED          NINE MONTHS ENDED
                                                       SEPTEMBER 30,               SEPTEMBER 30,
                                                    --------------------       --------------------- 
                                                    1996          1995          1996           1995
                                                  ----------    --------       -------      --------
  <S>                                            <C>           <C>           <C>           <C>
         Net loss as reported ................   $  (3,228)    $ (1,772)     $ (10,791)    $ (5,239)
                                                 ----------     ---------     ----------    ---------
                                                 ----------     ---------     ----------    ---------
         Shares used in computing net 
              loss per share as reported .....       5,424        2,827          4,650        2,612
    
         Adjustment to include outstanding
              convertible preferred stock 
              previously excluded 
              as it is anti-dilutive .........       3,186        4,035          3,392        1,536
                                                 ----------     ---------     ----------    ---------
    
         Shares used in computing proforma net 
              loss per share .................       8,610        6,862          8,042        4,148    
                                                 ----------     ---------     ----------    ---------
                                                 ----------     ---------     ----------    ---------
         Pro forma net loss per share ........   $   (0.37)    $  (0.26)     $   (1.34)    $  (1.26)
                                                 ----------     ---------     ----------    ---------
                                                 ----------     ---------     ----------    ---------

</TABLE>
    
    
                                       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 FOR THE YEAR ENDED DECEMBER 31, 1995, 
         AND IN THE COMPANY'S REGISTRATION STATEMENT NO. 333-13673.
       
       
         RESULTS OF OPERATIONS
       
         The Company has incurred a loss in each period since its inception. 
         At September 30, 1996, the Company's accumulated deficit was $48.0
         million.  Biocircuits expects to incur additional losses over the next
         several years. The Company expects that currently available funds will
         be used primarily for the continued launch of the IOS point-of-care
         system and development of additional tests for the IOS point-of-care
         system. The losses may vary from period to period, including from
         quarter to quarter, and are generally expected to increase, due to the
         launch of the Company's IOS point-of-care system. 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 and there can be
         no assurance that the Company will be successful in marketing the IOS
         system, that the rate of sales growth will meet expectations or that
         the marketing programs of the Company will achieve the desired
         results.
         
         To date, the number of instrument sales to distributors and placements
         in physicians' offices have been significantly less than the Company's
         expectations.  The Company believes that if instrument sales continue
         to be below expectations, the Company's revenue and financial
         performance will be materially adversely affected.  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.  All changes were
         validated and documented, and shipments to distributors were resumed
         in the middle of June.   In addition, all instruments previously
         shipped to customers were retrofitted.  The requirements to make
         certain design changes to the instrument and the suspension of product
         shipments, together with the need to expand the menu to include the
         TSH test (as described in the following paragraph), had an adverse
         impact on third quarter 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.
         
         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 expand its menu of tests beyond the T4 and T Uptake 
         tests.  The Company's initial marketing efforts indicate that 
         offering a test for Thyroid Stimulating Hormone ("TSH") to diagnose 
         and manage thyroid function may be a key element in penetrating the 
         physicians' office market.  In April 1996, the Company filed a 
         510(k) pre-market notification with the United States Food and Drug 
         Administration (the "FDA") for a TSH assay.  The Company currently 
         anticipates that it will obtain FDA clearance for the TSH assay in 
         the fourth quarter of 1996, although FDA clearance may actually 
         take longer.  In September 1996, the Company announced FDA 
         clearance to market a qualitative serum pregnancy assay, a test 
         designed to allow physicians to perform this common pregnancy test 
         in their office during the patient visit where they can provide 
         more immediate pre-natal care to patients. Also in September 1996, 
         the Company filed a 510(k) pre-market notification with the FDA for 
         a quantitative hCG assay, a test to track the progress of early 
         pregnancies.  Biocircuits is currently developing three additional 
         assays:  a


                                       8

<PAGE>


         prostate specific antigen ("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.  
         The Company plans to continue to develop additional 
         immunodiagnostic assays commonly requested by office-based 
         physicians.  In the past, the Company has experienced delays in 
         completing the development of new tests.  There can be no assurance 
         that the Company will be successful in expanding its menu of tests 
         and according to schedule, as well as obtaining regulatory 
         approvals for such tests.
         
         The Company is in the process of developing and testing an improved
         second generation cartridge for the new assays as well as existing
         assays.  The Company believes this modified design will be required
         for the market launch of the TSH, qualitative serum pregnancy and
         quantitative hCG tests.  The Company currently expects the improved
         cartridge to be available in the fourth quarter of 1996.  Upon
         completion of the second generation cartridge, the Company plans to
         launch the TSH assay, upon receipt of FDA clearance, followed by the
         serum pregnancy test.  Consequently, even if the Company receives 
         timely clearance of the TSH test from the FDA, the Company does not
         expect to realize any significant revenue from related instrument 
         sales until at least year-end 1996.  There can be no assurance that
         the Company will not encounter difficulties in finalizing cartridge
         design which would result in a delay in the market launch of the new
         tests, that the Company will be successful in completing the modified
         cartridge design at all, that the test cartridges using the design will
         perform as planned, or that Nalge Nunc International, Inc., the 
         Company's cartridge supplier, will be able to deliver the required
         quantities of test cartridge components on schedule or at costs 
         acceptable to the Company.
         
         The Company's other near term 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.  There can be no assurance that the Company will be successful
         in achieving these milestones or that these milestones will be
         achieved on a timely basis.
         
         In December 1992, the Company entered into an agreement with KMC
         Systems, Inc. ("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 would expire 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
         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, subject to an increase of 50,000 shares under certain
         circumstances.  The warrant expires at year end 1997, subject to
         certain extension rights, and has an exercise price of $7.00 per
         share.  In order to secure an adequate supply of IOS instruments, the
         Company has established a standby letter of credit for the benefit of
         Kollsman.  The Company is entirely dependent on Kollsman as the sole
         source 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.
         
         In June 1995, the Company closed a private placement of 17,399,000
         units consisting of convertible Preferred Stock and Warrants at $0.50
         per unit.  Proceeds to the Company were approximately $8.5 million,
         net of issuance costs.  Each unit consisted of one share of Series A
         Preferred Stock and one warrant to purchase approximately .60 shares
         of Series A Preferred Stock at $0.60 per share (Common Stock
         equivalent price of $2.40 per share and the "1995 Warrants").  Series
         A Preferred Stock converts to .25 shares of Common Stock.
         
         In January 1996, the Company amended outstanding 1995 Warrants to
         purchase 2,666,514 shares of Series A Preferred Stock and closed a
         private placement pursuant to which the Company issued new warrants
         (the "1996 Warrants") to purchase 2,852,998 shares of Series A
         Preferred Stock.  One half of the amended 1995 Warrants and one half
         of the 1996 Warrants were exercisable at a purchase price of 70% of
         the current market price upon exercise and expired on May 31, 1996. 
         Ninety-six percent of the warrants expiring on May 31, 1996 were
         exercised at an average purchase price of $1.18 per share (Common
         Stock equivalent price of $4.72 per share). 


                                       9

<PAGE>


         The remaining one half of the amended 1995 Warrants and 1996 
         Warrants were exercised pursuant to automatic exercise provisions 
         at a purchase price of $1.46 per share (Common Stock equivalent 
         price of $5.84 per share) upon the Company's shipment of the first 
         ten IOS instruments and accompanying cartridges, which occurred in 
         March 1996.  1995 Warrants to purchase approximately 3.5 million 
         shares of Series A Preferred Stock remained outstanding at a 
         purchase price of $0.60 per share (Common Stock equivalent price of 
         $2.40 per share), expiring on December 18, 1996.
         
         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 $5.3 million, net of issuance 
         costs. A unit consisted of two shares of Common Stock and one 
         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, the Company entered into an agreement with Beckman
         (the "Agreement") and received $3,500,000 in the form of a note (the
         "Note") in exchange for granting Beckman certain options for licensing
         and marketing rights to testing applications using the Company's
         proprietary lipid/polymer technology.  Pursuant to the terms of the
         Agreement, the Company retains rights to market products derived from
         the technology to the blood banking, allergy, environmental and
         veterinary testing markets, as well as for quantitative testing in
         U.S. physicians' offices and to all other non-Beckman fields.  Beckman
         also was granted the right to commercialize the technology applicable
         to immunoassays and nucleic acid-binding assays for the reference and
         clinical laboratory markets, the cardiac market, qualitative testing
         in U.S. physicians' offices, and the biological and industrial
         research markets.  Pursuant to the terms of the Agreement, the Company
         completed a feasibility study in August 1996 (the "Completion Date").
         
         Beckman has ninety days from the Completion Date to exercise its 
         development license option (the "Development Option").  If Beckman 
         elects to exercise its Development Option in order to retain its 
         rights to the technology, it is required to invest certain minimum 
         funds to develop the technology prior to commercialization.  In 
         such event, upon the first commercial sale of any products derived 
         from such technology, the Note will automatically convert to a 
         royalty-bearing license fee.  After exercising its Development 
         Option, should Beckman decide not to invest further funds to 
         develop the technology, it must convert the Note to Common Stock of 
         the Company at a specified premium rate based upon the then current 
         market price of the Company's Common Stock.  In the event Beckman 
         fails to exercise its Development Option, it may, at its option, 
         convert the Note to Common Stock of the Company at a specified 
         premium rate based upon the then current market price of the 
         Company's Common Stock, or require the Company to repay the Note, 
         with interest, in August 2000.  Should Beckman decline to exercise 
         its Development Option, the Company would regain full rights to the 
         technology, including all improvements made during the feasibility 
         study.  There can be no assurance that Beckman will exercise its 
         Development Option or that Beckman or the Company will be 
         successful in developing or obtaining regulatory approval for or 
         marketing this technology alone or with third parties.  The failure 
         of Beckman to exercise its Development Option may have an adverse 
         effect on the Company's ability to develop the lipid/polymer 
         technology.
         
       
         THIRD QUARTER FY 1996 COMPARED TO THIRD QUARTER FY 1995
       
         Revenue in the third quarter totaled $50,000, including the shipment of
         the $49,000 backlog that existed at the end of the second quarter
         1996 and a revenue reserve of $60,000.
       
         Total operating costs and expenses increased from $1,839,000 in the
         third quarter of 1995 to $3,285,000 in the third quarter of 1996, an
         increase of $1,446,000 or 79%.
       
         The Company recorded $542,000 of cost of sales in the third quarter of
         1996.  These costs consisted primarily of manufacturing overhead and
         startup costs associated with the production of a revenue-generating
         product.
       
         Research and development expenses increased from $1,139,000 in the
         third quarter of 1995 to $1,564,000 in the third quarter of 1996, an
         increase of $425,000 or 37%.  This increase was due primarily to
         outside services,


                                       10

<PAGE>

         primarily non-recurring engineering charges from Kollsman, additional
         staffing and increased general operating expenses.

         Sales, general and administrative expenses increased from $700,000 in
         the third quarter of 1995 to $1,179,000 in the third quarter of 1996,
         an increase of $479,000 or 68%.  This increase was due primarily to
         the increased sales and marketing expenses resulting from the launch
         of the IOS point-of-care system and general operating expenses.
       
         Net other income and expense decreased from $67,000 in the 
         third quarter of 1995 to $7,000 in the third quarter of 1996, a 
         decrease of $60,000. Interest income decreased from $130,000 in the 
         third quarter of 1995 to $81,000 in the third quarter of 1996, a 
         decrease of $49,000 or 38%.  The decrease was due to decreased cash 
         balances due to ongoing operating losses, purchases of property and 
         equipment and payments on long-term obligations offset by funds 
         received from the 1995 and 1996 private placements.  Interest and 
         other expense increased from $63,000 in the third quarter of 1995 
         to $74,000 in the third quarter of 1996, an increase of $11,000 or 
         17%.  Interest expense results from the Company's long-term debt 
         and capital leases related to its property and equipment.
       
         Net loss increased from $1,772,000 or $0.63 per share in the third
         quarter of 1995 to $3,228,000 or $0.60 per share in the third quarter
         of 1996, an increase of $1,456,000 or 82%.
              
         NINE MONTHS FY 1996 COMPARED TO NINE MONTHS FY 1995
       
         Following the Company's March 1996 launch of the IOS system, the
         Company recorded revenue of $206,000 for the nine months ended
         September 30, 1996.
       
         Total operating costs and expenses increased from $5,335,000 in the
         first nine months of 1995 to $11,029,000 in the first nine months of
         1996, an increase of $5,694,000 or 107%.
       
         The Company recorded $1,591,000 of cost of sales in the first nine
         months of 1996.  These costs consisted primarily of manufacturing
         overhead and startup costs associated with the production of revenue
         generating product and the Kollsman warrant.
       
         Research and development expenses increased from $3,456,000 in the
         first nine months of 1995 to $5,579,000 in the first nine months of
         1996, an increase of $2,123,000 or 61%.  This increase was due
         primarily to outside services, primarily non-recurring charges from
         Kollsman, additional staffing and increased general operating
         expenses.
       
         Sales, general and administrative expenses increased from 
         $1,879,000 in the first nine months of 1995 to $3,859,000 in the 
         first nine months of 1996, an increase of $1,980,000 or 105%.  This 
         increase was due primarily to the increased sales and marketing 
         expenses resulting from the launch of the IOS point-of-care system 
         and general operating expenses.
       
         Net other income and expense decreased from $96,000 in the first nine
         months of 1995 to $32,000 in the first nine months of 1996, a
         decrease of $64,000 or 67%.  Interest income increased from $204,000
         in the first nine months of 1995 to $277,000 in the first nine months
         of 1996, an increase of $73,000 or 36%.  The increase was due to
         increased cash balances arising from funds received from the 1995
         and 1996 private placements and Beckman, offset by ongoing operating
         losses, purchases of property and equipment and payments on long-term 
         obligations.  Interest and other expense increased from $108,000 in
         the first nine months of 1995 to $245,000 in the first nine months of
         1996, an increase of $137,000 or 127%.  Interest expense results from
         the Company's long-term debt and capital leases related to its
         property and equipment.
       
         Net loss increased from $5,239,000 or $2.01 per share in the first
         nine months of 1995 to $10,791,000 or $2.32 per share in the first
         nine months of 1996, an increase of $5,552,000 or 106%.
       
                                       11


<PAGE>


         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 September 30,
         1996, the Company raised a total of approximately $51.9 million in the
         sale of Common and Preferred Stock.
         
         The Company's cash and cash equivalents and short-term investments
         were $3.4 million as of September 30, 1996, compared to $6.6 million
         at the end of 1995.  The decrease was due primarily to the receipt of
         approximately $8.0 million in gross proceeds from the exercise of
         warrants, including approximately $7.1 million from the exercise of
         warrants to purchase Series A Preferred Stock which expired on either
         March 31, 1996 or May 31, 1996 and approximately $0.9 million from the
         early exercise of the remaining 1995 Warrants, offset by losses in the
         first nine months of 1996. Additional funds will be required in 1997
         to carry the Company beyond the initial sales of the IOS system and to
         enable the Company to develop and obtain regulatory approval for
         additional tests.  The Company believes that its existing capital
         resources will be adequate to satisfy its requirements into the second
         quarter of 1997, assuming no exercise of outstanding warrants.  If the
         remaining warrants issued in June 1995, which expire on December 18,
         1996, are exercised in full for cash, the Company would receive an
         aggregate amount of $2.1 million, which the Company estimates would
         satisfy the Company's cash requirements until late second quarter
         1997.  If the warrants from the October 1996 Financing are exercised
         prior to the end of second quarter 1997, the Company believes its cash
         resources will be adequate to satisfy its requirements into the fourth
         quarter of 1997.  However, since the warrants from the October 1996
         Financing expire in October 1997, there can be no assurance that they
         will be exercised prior to the end of second quarter 1997.  The
         Company has the right to call these warrants in the second half of
         their one year life if the Common Stock price equals or exceeds $5.25
         per share.  The Company's ability to continue its planned operations
         will be dependent upon its ability to obtain additional funds from
         existing investors, new investors or corporate partners.  The Company
         intends to pursue all of these financing options, but there can be no
         assurance that the Company will be successful.  If not successful in
         obtaining financing, the Company's business will be materially and
         adversely affected.
         
         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.  As of
         September 30, 1996, the Company failed to temporarily meet the Nasdaq
         listing requirements.  However, the proceeds from the sale of the
         Common Stock issued by the Company in the October 1996 Financing
         allowed the Company to meet Nasdaq listing requirements, on a proforma
         basis, for the third quarter of 1996.  If the warrants which expire in
         December 1996 are exercised for cash, the Company believes it will
         meet Nasdaq listing requirements through the end of first quarter
         1997.  If the Financing Warrants are exercised prior to the end of
         second quarter 1997, the Company believes it will meet Nasdaq listing
         requirements at the end of the second quarter of 1997.  Thereafter,
         the Company will be required to generate sufficient revenues or raise
         additional capital to maintain Nasdaq listing requirements.
         
         In future periods, 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, development of
         manufacturing capabilities, obtaining regulatory approvals and
         establishing sales, marketing and distribution capabilities.  The
         Company's longer-term capital requirements will depend on numerous
         factors, including the success of the Company's products and the rate
         of increase in product revenue, the progress of the Company's research
         and 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 establishment of
         potential collaborative partnerships.  The rate of increase in product
         revenue will significantly influence the financing requirements and
         cannot be predicted nor can there be any assurance that it will occur
         according to the Company's expectations.  The Company intends to seek
         additional funding through various means, including public or private
         financings.  Other methods of financing, including working capital
         financing for accounts receivable and lease financing for


                                       12


<PAGE>


         the acquisition of capital equipment, may be utilized if available on
         attractive terms.  The Company also will attempt to obtain funds
         through arrangements with strategic partners or others that will
         require the Company to relinquish additional 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.


                                       13


<PAGE>


                               BIOCIRCUITS CORPORATION
                                           

PART II:  OTHER INFORMATION

ITEM 5.  Other Information

    On October 23, 1996, the Company issued a press release announcing that it
    has received net proceeds of approximately $5.3 million in the October
    1996 Financing, which proceeds allowed the Company to meet Nasdaq listing
    requirements for the third quarter of 1996.  A copy of the press release
    announcing the October 1996 Financing 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 October 23, 1996

              99.2 Proforma September 30, 1996 Balance Sheets and Statements of
                   Operations assuming completion of a private placement and
                   receipt of net proceeds of $5.3 million therefrom


         b)   Reports on Form 8-K
    
              None

         

                                       14

<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:    November 14, 1996

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

 
                                       15