<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, 
              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 October 31, 1997, Registrant had 17,377,153 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) - September 30, 1997 and 
          December 31, 1996 ...............................................   3

         Condensed statements of operations (unaudited) - three months 
          ended September 30, 1997 and 1996 and nine months ended
          September 30, 1997 and 1996 and the period from March 7, 1989 
          (inception) through September 30, 1997 ..........................   4

         Condensed statements of cash flows (unaudited) - nine months
          ended September 30, 1997 and 1996 and the period from March 7, 
          1989 (inception) through September 30, 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 6.  Exhibits and Reports on Form 8-K .................................  13

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

<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>
                                                                                      SEPTEMBER 30, 1997   DECEMBER 31, 1996
                                                                                      ------------------   -----------------
                                                                                                                 (NOTE)
<S>                                                                                    <C>                 <C>
ASSETS
 Current assets:
  Cash and cash equivalents ...........................................................  $   2,632             $  4,944
  Accounts receivable, net of allowance for doubtful accounts
   of $78, ($43 on December 31,1996) ..................................................        143                  201
  Inventory ...........................................................................      1,103                  928
  Prepaid inventory ...................................................................        622                  375
  Prepaid expenses and other current assets ...........................................        108                  381
  Restricted cash .....................................................................        113                  102
                                                                                          --------             --------
 Total current assets .................................................................      4,721                6,931

 Property and equipment, net of accumulated depreciation and
  amortization of $1,965 ($1,671 in 1996) .............................................      1,323                1,375

 Restricted cash ......................................................................        263                  376
 Other assets .........................................................................         42                   44
                                                                                          --------             --------
                                                                                         $   6,349             $  8,726
                                                                                          --------             --------
                                                                                          --------             --------
 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
  Accounts payable ....................................................................   $    385             $  1,108
  Accrued liabilities .................................................................        107                  208
  Accrued compensation and related expenses ...........................................        107                  142
  Current portion of capital lease obligations  .......................................         87                  118
                                                                                          --------             --------
 Total current liabilities ............................................................        686                1,576

 Long-term portion of capital lease obligations .......................................        ---                   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, 11,539,443 shares issued and outstanding (12,455,137
   shares outstanding at December 31, 1996), aggregate liquidation preference
   of $.55 per share ..................................................................      9,464                9,903
  Common stock, $0.001 par value, 70,000,000 shares authorized,
   17,377,153 shares issued and outstanding (8,589,930 shares issued
   and outstanding at December 31, 1996) ..............................................     55,533               48,784
  Deficit accumulated during the development stage  ...................................    (59,286)             (51,548)
  Notes receivable secured by common stock ............................................        (15)                 (15)
  Deferred compensation and other .....................................................        (33)                 (46)
                                                                                          --------             --------
 Total stockholders' equity ...........................................................      5,663                7,078
                                                                                          --------             --------
                                                                                          $  6,349             $  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)

                           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
                                                               1997        1996         1997          1996      SEPTEMBER 30, 1997
                                                              ------      ------       ------        ------     ------------------
<S>                                                          <C>         <C>          <C>          <C>          <C>
REVENUES:
 Product Sales ..........................................    $   158     $    50      $   596      $    206          $  1,017

OPERATING COSTS AND EXPENSES:
 Cost of sales ..........................................        504         542        2,121         1,591             4,431
 Research and development ...............................        794       1,564        3,301         5,579            37,658
 Sales, general and administrative ......................        773       1,179        3,010         3,859            19,288
                                                             -------     -------      -------      --------          --------
                                                               2,071       3,285        8,432        11,029            61,377

Loss from operations ....................................     (1,913)     (3,235)      (7,836)      (10,823)          (60,360)

Interest and dividend income ............................         40          81          128           277             2,476
Interest and other expense ..............................         (4)        (74)         (30)         (245)           (1,402)
                                                             -------     -------      -------      --------          --------
Net loss ................................................    $(1,877)    $(3,228)     $(7,738)     $(10,791)         $(59,286)
                                                             -------     -------      -------      --------          --------
                                                             -------     -------      -------      --------          --------

Deemed dividend on preferred stock ......................        ---         ---          ---        (1,180)           (1,180)
                                                             -------     -------      -------      --------          --------
Net loss after deemed dividend ..........................    $(1,877)    $(3,228)     $(7,738)     $(11,971)         $(60,466)
                                                             -------     -------      -------      --------          --------
                                                             -------     -------      -------      --------          --------
Net loss per share ......................................    $ (0.11)    $ (0.60)     $ (0.65)     $  (2.32)
                                                             -------     -------      -------      -------- 
                                                             -------     -------      -------      -------- 
Net loss per share to common shareholders ...............    $ (0.11)    $ (0.60)     $ (0.65)     $  (2.57)
                                                             -------     -------      -------      -------- 
                                                             -------     -------      -------      -------- 
Shares used in computing net loss per share .............     17,218       5,424       11,952         4,650
                                                             -------     -------      -------      -------- 
                                                             -------     -------      -------      -------- 
</TABLE>

                             See accompanying notes.

                                       4
<PAGE>

                           BIOCIRCUITS CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                      CONDENSED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)
                                 (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                     NINE MONTHS ENDED          PERIOD FROM
                                                                                        SEPTEMBER 30,          MARCH 7, 1989
                                                                                    -------------------     (INCEPTION) THROUGH
                                                                                     1997          1996      SEPTEMBER 30, 1997
                                                                                    ------        ------     ------------------
<S>                                                                                <C>          <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss .....................................................................    $(7,738)     $(10,791)         $(59,286)
 Adjustments to reconcile net loss to net cash
  used in operating activities:
   Depreciation and amortization ..............................................        306           352             3,837
   Other ......................................................................        124           286               490
   Changes in:
    Accounts receivable .......................................................         58           ---             (143)
    Prepaid inventory .........................................................       (247)          (17)             (622)
    Inventory .................................................................       (175)         (638)           (1,103)
    Other current assets ......................................................        273           190              (178)
    Other assets ..............................................................          2           ---                14
    Other current liabilities .................................................       (859)           22               597
                                                                                   -------      --------          --------
     Net cash used in operating activities ....................................     (8,256)      (10,596)          (56,394)
                                                                                   -------      --------          --------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of property and equipment ...........................................       (242)         (466)           (2,170)
  Short-term investments purchased  ...........................................        ---           ---           (30,337)
  Short-term investments sold/redeemed ........................................        ---           597            30,337
  Restricted cash .............................................................        102            91              (409)
                                                                                   -------      --------          --------
   Net cash provided by (used in) investing activities ........................       (140)          222            (2,579)
                                                                                   -------      --------          --------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Issuance of preferred stock, net of issuance costs ...........................        ---         7,916            26,933
 Issuance of common stock, net of issuance costs ..............................      6,187            67            33,488
 Issuance of long-term debt ...................................................        ---           187             4,949
 Payments on long-term obligations ............................................       (103)         (448)           (3,765)
                                                                                   -------      --------          --------
  Net cash provided by (used in) financing activities .........................      6,084         7,722            61,605
                                                                                   -------      --------          --------

Net increase (decrease) in cash and cash equivalents ..........................     (2,312)       (2,652)            2,632
Cash and cash equivalents, beginning of period ................................      4,944         6,028               ---
                                                                                   -------      --------          --------
Cash and cash equivalents, end of period ......................................    $ 2,632      $  3,376          $  2,632
                                                                                   -------      --------          --------
                                                                                   -------      --------          --------
</TABLE>

                            See accompanying notes

                                       5
<PAGE>
                                       
                           BIOCIRCUITS CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)
                                       
                   NOTES TO CONDENSED FINANCIAL STATEMENTS 
                              SEPTEMBER 30, 1997
                                 (UNAUDITED)
                                           
1.   NATURE OF BUSINESS AND FINANCINGS
         
         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, 1997, the Company's accumulated
         deficit was $59.3 million.  Biocircuits expects to incur
         additional losses over the next several years.  
         
         On April 15, 1997, the Company closed two financings; a unit 
         financing at $1.00 per unit with each unit consisting of one share of
         common stock and one warrant to purchase common stock and a common 
         stock financing at $1.00 per share (collectively the "April 
         Financings"). The Company issued a combined total of 1,688,738 
         shares of common stock and 1,157,488 warrants to purchase common 
         stock in the April Financings and received gross proceeds of 
         approximately $1.7 million. The warrants have an exercise price of 
         $0.75 per share and expire eighteen months after April 15, 1997, 
         subject to certain adjustments. At the Company's option, the Company 
         may shorten the exercise period of these warrants in which case they 
         may become redeemable by the Company at $0.01 per share if the 
         closing prices for the Company's common stock is greater than or 
         equal to $2.00 per share for ten days.

         On July 3, 1997, the Company closed a financing (the "July
         Financing") in which the Company sold 6,853,567 units at
         $0.75 per unit, each unit consisting of one share of common
         stock and one warrant to purchase one share of common stock
         (the "July Financing Warrants").  The July Financing
         Warrants have an exercise price of $0.75 per share and
         expire eighteen months after July 3, 1997, subject to
         certain adjustments.  At the Company's option, the Company
         may shorten the exercise period of the July Financing
         Warrants in which case they may become redeemable by the
         Company at $0.01 per share if the closing prices for the
         Company's common stock is greater than or equal to $2.00 per
         share for ten days.  The July Financing resulted in gross
         proceeds to the Company of approximately $5.1 million.  With
         these funds, the Company believes its cash resources will be
         adequate to satisfy its requirements into the second quarter
         of 1998.
              
         Obtaining additional funds, either from generating
         sufficient revenue, raising additional capital from either
         new or existing investors, or the early exercise of the
         outstanding warrants issued in the April and July Financings,
         will be critical to the Company's ability to maintain 
         operations through 1998.  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 the balance of 1997 or
         1998.


                                       6
<PAGE>

                           BIOCIRCUITS CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)
                                       
             NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                             SEPTEMBER 30, 1997
                                 (UNAUDITED)
                                                 
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, 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-3 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):
         
<TABLE>
<CAPTION>
                                                                         THREE MONTHS ENDED    NINE MONTHS ENDED
                                                                            SEPTEMBER 30,        SEPTEMBER 30,
                                                                         ------------------    -----------------
                                                                           1997       1996      1997      1996
                                                                         -------    -------   -------   --------
         <S>                                                             <C>        <C>       <C>       <C>
         Net loss to common shareholders as reported  .................  $(1,877)   $(3,228)  $(7,738)  $(11,971)
                                                                         -------    -------   -------   --------
                                                                         -------    -------   -------   --------
         Shares used in computing net 
              loss per share as reported    ...........................   17,218      5,424    11,952      4,650
         
         Adjustment to include outstanding convertible 
              preferred stock previously excluded 
              as it is anti-dilutive   ................................    2,893      3,186     2,981      3,392
                                                                         -------    -------   -------   --------
         Shares used in computing proforma net loss per share .........   20,111      8,610    14,933      8,042
                                                                         -------    -------   -------   --------
                                                                         -------    -------   -------   --------
         Pro forma net loss per share  ................................  $ (0.09)   $ (0.37)  $ (0.52)  $  (1.49)
                                                                         -------    -------   -------   --------
                                                                         -------    -------   -------   --------
</TABLE>

3.   RECENTLY ISSUED ACCOUNTING STANDARDS

         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.
         In June of 1997, the Financial Accounting Standards Board issued 
         Statements No. 130, Reporting Comprehensive Income, and No. 131, 
         Disclosures About Segments of an Enterprise and Related Information, 
         which are required to be adopted in the year ended December 31, 1998. 
         The Company does not expect any significant impact from the
         implementation of FASB 130 or FASB 131.


                                       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 AND IN THE 
COMPANY'S ANNUAL REPORT ON FORM 10-K/A-3 FOR THE YEAR ENDED DECEMBER 31, 1996.

    The following discussion should be read in conjunction with the unaudited 
condensed consolidated financial statements and the notes thereto included in 
Part 1-Item 1 of this quarterly report and the audited consolidated financial 
statements and notes thereto and Management's Discussion and Analysis of 
Financial Condition and Results of Operations for the year ended December 31, 
1996 contained in the Company's 1996 annual report to stockholders.  The 
results for the three- and nine-month periods ending September 30, 1997 are 
not necessarily indicative of the results to be expected for the entire 
fiscal year ending December 31, 1997.


OVERVIEW

    Since its inception in 1989, the Company has been engaged in research and 
development and marketing of immunodiagnostic medical applications of its 
technologies.  Immunodiagnostic tests, or "assays," are performed on samples 
of bodily fluids to diagnose a variety of infectious diseases and other 
conditions such as endocrine dysfunctions, and to conduct therapeutic drug 
monitoring.  Immunodiagnostic tests utilize biological reagents, such as 
antibodies, and an instrument to detect the presence of a substance of 
interest, or "analyte," such as a virus or hormone.

    On October 24, 1997, the Company entered into a Manufacturing and 
Distribution Agreement (the "Agreement") with Becton Dickinson and Company 
through its Becton Dickinson Microbiology Systems Division ("Becton") whereby 
Biocircuits granted Becton exclusive worldwide marketing rights to the 
IOS-TM- system and all cartridges currently available as well as those that 
will be developed in the future, subject to certain minimum placement 
requirements of instruments in physicians' offices by Becton.  Under terms of 
the four year Agreement, Becton paid a one-time, non-refundable signing fee 
of $750,000 and Biocircuits will sell cartridges and accessories, and 
initially instruments, to Becton. In addition, the Company will continue to 
develop new cartridges.  On January 1, 1998, (the "Manufacturing Date") 
Becton assumes responsibility for manufacturing the IOS instrument while the 
Company continues to manufacture cartridges and accessories for transfer to 
Becton.  After the Manufacturing Date, the Company will cease responsibility 
for manufacturing instruments and will begin earning royalties on sales of 
IOS instruments produced by Becton.  The Agreement will have a material 
impact on the Company in that the Company will cease sales and marketing 
efforts as Becton assumes these responsibilities and that the Company will be 
entirely dependent upon Becton for the sale of its products.  There can be no 
assurances that Becton will be successful in marketing the IOS system, that 
the transition of sales and marketing efforts from Biocircuits to Becton will 
be successful, that Becton will be successful in supplying the required IOS 
instruments upon assuming the responsibility for the manufacturing of IOS 
instruments nor that the Company's financial performance resulting from 
Becton's activities will meet the Company's expectations.  

    The Company has incurred a loss in each period since its inception.  At 
September 30, 1997, the Company's accumulated deficit was $59.3 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 development of additional assays for the IOS point-of-care system and the 
production of the Company's cartridges.  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 Becton will 
achieve the desired results.  Accordingly, the Company believes that 
quarter-to-quarter results are not a useful indicator of the Company's 
performance. 

                                       8
<PAGE>




RESULTS OF OPERATIONS-THREE AND NINE MONTH PERIODS ENDING SEPTEMBER 30, 1997 
AND SEPTEMBER 30, 1996

    Revenue in the third quarter totaled $158,000, an increase of $108,000 or 
216% from the $50,000 reported in the third quarter of 1996. Increased 
revenues result primarily from increased instrument placements and related 
cartridge sales.  Revenue for the nine months ended September 30, 1997 
totaled $596,000, an increase of $390,000 or 189% from the $206,000 reported 
for the first nine months of 1996 when the Company initially launched its IOS 
system.

    Total operating costs and expenses decreased from $3,285,000 in the third 
quarter of 1996 to $2,071,000 in the third quarter of 1997, a decrease of 
$1,214,000 or 37%.  For the nine months ended September 30, 1997, operating 
costs and expenses totaled $8,432,000, a decrease of $2,597,000 or 24% from 
the $11,029,000 reported in the first nine months of 1996.

    Cost of sales decreased from $542,000 in the third quarter of 1996 to 
$504,000 in the third quarter of 1997, a decrease of $38,000 or 7%.  Costs of 
sales for the first nine months of 1997 were $2,121,000, a $530,000 or 33% 
increase from the $1,591,000 reported for the nine months ended September 30, 
1996.  The increase in cost of sales during the first nine months of 1997 
results primarily from reporting cost of sales for a full nine months while 
the cost of sales for the first nine months of 1996 reflects a partial period 
due to the Company launching its IOS system in March 1996.  Cost of sales 
consists primarily of manufacturing overhead and direct manufacturing costs 
associated with revenue generating product.

    Research and development expenses decreased from $1,564,000 in the third 
quarter of 1996 to $794,000 in the third quarter of 1997, a decrease of 
$770,000 or 49%. For the nine months ended September 30, 1997, research and 
development expenses totaled $3,301,000, a decrease of $2,278,000 or 41% from 
the $5,579,000 reported in the first nine months of 1996. The decreases were 
due primarily to the reduction in force which occurred in early April 1997 
and a reduction in outside services, primarily non-recurring engineering 
charges from the Company's supplier of IOS instruments.

    Sales, general and administrative expenses were $773,000 for the third 
quarter of 1997 and $3,010,000 for the nine months ended September 30, 1997.  
These are decreases of $406,000 or 34% and $849,000 or 22%, respectively, 
from the $1,179,000 reported for the third quarter of 1996 and $3,859,000 
reported for the nine months ended September 30, 1996.  These decreases were 
due primarily to the Company's reduction in force, which occurred in early 
April, and reduced sales and marketing expenses.

    Interest income decreased from $81,000 in the third quarter of 1996 to 
$40,000 in the third quarter of 1997, a decrease of $41,000 or 51%.  Interest 
income decreased from $277,000 in the first nine months of 1996 to $128,000 
in the first nine months of 1997, a decrease of $149,000 or 54%. The decrease 
was due to reduced cash balances from ongoing operating losses and funding of 
working capital.  Interest and other expense decreased from $74,000 in the 
third quarter of 1996 to $4,000 in the third quarter of 1997, a decrease of 
$70,000 or 95% and decreased from $245,000 in the first nine months of 1996 
to $30,000 in the first nine months of 1997, a decrease of $215,000 or 88%.  
The decrease of interest expense results from a reduction of long-term debt.

    Net loss decreased from $3,228,000 or $0.60 per share in the third 
quarter of 1996 to $1,877,000 or $0.11 per share in the third quarter of 
1997, a decrease of $1,351,000 or 42%.  Net loss for the nine months ended 
September 30, 1997 was $7,738,000 or $0.65 per share, a decrease of 
$3,053,000 or 28% from the net loss of $10,791,00 or $2.32 per share in the 
first nine months of 1996.  Alternatively, after the deemed preferred stock 
dividend, net loss to common shareholders decreased from $11,971,000 or $2.57 
per share in the nine months ended September 30, 1996 to $7,738,000 or $0.65 
per share in the nine months ended September 30, 1997, a decrease of 
$4,233,000 or 35%.

    In late March 1997, the Company and Kollsman, the Company's exclusive 
North American supplier of the IOS instrument, agreed to reduce the amount of 
the standby letter of credit by $249,000 in exchange for reducing the 
exercise price of a warrant issued to Kollsman to $2.00 per share.  Such 
warrant and standby letter of credit was established in order to secure an 
adequate supply of IOS instruments.  Also in late March 1997, the Company and 


                                       9
<PAGE>

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 the quarter ended March 31, 1997, the Company recorded a $124,000 expense 
as manufacturing overhead, $60,000 for the warrant price reduction from $7.00 
to $2.00 and $64,000 for the issuance of the warrant to purchase 50,000 
shares of common stock.  In early May 1997, the Company agreed with Kollsman 
to extend the instrument production line shutdown until August 1997, which 
subsequently was extended through the end of 1997, the remaining term of the 
agreement with Kollsman.  The Company 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.  In return, Kollsman canceled the standby letter of 
credit.  Upon the completion of the Agreement with Becton in which Becton 
assumes responsibility of the manufacturing of the IOS instrument on January 
1, 1998, the Company's manufacturing relationship with Kollsman will 
terminate.  The Company will be entirely dependent upon Becton as the sole 
source of production of its IOS instruments and in turn, Becton may rely on 
itself or upon sole-source suppliers for the instrument or components 
thereof.  Failure of Becton or these suppliers to deliver the required 
quantities on a timely basis and at commercially reasonable prices could 
materially adversely affect the Company.

    The Company's inventory, including prepaid inventory, increased to 
approximately $1,725,000 as of September 30, 1997.  Of this amount, a major 
portion is associated with the instrument: approximately $622,000 of prepaid 
inventory at Kollsman; $591,000 of IOS instrument finished goods; and 
$143,000 of instrument raw materials.  The instrument production shutdown, 
which will last through the end of 1997, is designed to reduce the inventory 
of instrument finished goods.  In addition, the Company is currently in 
negotiations with both Becton and Kollsman regarding the transfer of the 
prepaid instrument inventory and raw material to Becton.  Therefore, based on 
the estimated build rates for Becton in 1998 and the completion of 
negotiations with Kollsman and Becton regarding the instrument prepaid and 
raw material, the Company does not expect to encounter any major obsolete or 
excess inventory issues which may require writedowns other than issues that 
would be expected in the course of normal operations for which the Company 
has $205,000 of reserves recorded.  There can be no assurance that the build 
rates required to support IOS instrument sales will be adequate to 
significantly reduce instrument related inventory, that the negotiations with 
Becton and Kollsman to transfer the instrument inventory to Becton will be 
successful or that the Company's established reserves will be adequate to 
cover any unexpected obsolete or excess inventory issues.

    On April 3, 1997, in order to reduce its losses and conserve 
approximately $250,000 per month, 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 retain current employees or attract qualified new 
personnel on acceptable terms.

    On April 15, 1997, the Company closed the first tranches in two private 
placements (collectively the "April 1997 Financings") in which the Company 
sold its common stock and issued warrants to purchase common stock. The first 
private placement (the "April Common Stock Financing") was to consist of the 
sale of an aggregate of 2,500,000 shares of common stock at $1.00 per share 
to be issued in three tranches.  The second private placement (the "April 
Units Financing") was to consist of the sale of an aggregate of 5,447,000 
units at $1.00 per unit, each unit consisting of one share of common stock 
and one warrant to purchase one share of common stock (the "April Financing 
Warrants"), to be issued in two tranches.

    The closing of the second tranches of the April 1997 Financings were 
conditional upon the Company installing a minimum of eighty-eight (88) Good 
Manufacturing Practices ("GMP") units of the IOS system during the three 
month period ended June 30, 1997 that were sold directly or indirectly by the 
Company.  Although the Company implemented various sales and marketing 
programs, including evaluation programs targeted to physicians and incentive 
programs for its sales representatives and distributor sales representatives 
in order to reach this milestone, the milestone was not met by the Company 
and the second tranches of the April 1997 Financings did not close.  The 
closing of the third tranche of the April Common Stock Financing was 
conditional upon the Company


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<PAGE>

installing a minimum of two hundred thirty-five (235) GMP units of the IOS 
system that are sold directly or indirectly by the Company.  Investors in the 
April Common Stock Financing have elected not to fund the Company in the 
third tranche.

    The Company issued 531,250 shares of its common stock in the first 
tranche of the April Common Stock Financing and 1,157,488 units in the first 
tranche of the April Units Financing.  The April Financing Warrants have an 
exercise price of $0.75 per share and expire eighteen months after April 15, 
1997, subject to certain adjustments.  At the Company's option, the Company 
may shorten the exercise period of the April Financing Warrants in which case 
they may become redeemable by the Company at $0.01 per share if the closing 
prices for the Company's common stock is greater than or equal to $2.00 per 
share for ten days.  The first tranches of the April 1997 Financings resulted 
in gross proceeds to the Company of approximately $1.7 million.  With these 
funds, the Company's cash resources were adequate to satisfy its requirements 
through the end of the second quarter.

    On July 3, 1997, the Company closed a financing (the "July Financing") in 
which the Company sold 6,853,567 units at $0.75 per unit, each unit 
consisting of one share of common stock and one warrant to purchase one share 
of common stock (the "July Financing Warrants").  The July Financing Warrants 
have an exercise price of $0.75 per share and expire eighteen months after 
July 3, 1997, subject to certain adjustments. At the Company's option, the 
Company may shorten the exercise period of the July Financing Warrants in 
which case they may become redeemable by the Company at $0.01 per share if 
the closing prices for the Company's common stock is greater than or equal to 
$2.00 per share for ten days.  The July Financing resulted in gross proceeds 
to the Company of approximately $5.1 million.  With these funds, the Company 
believes its cash resources will be adequate to satisfy its requirements into 
the second quarter of 1998. 


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, 1997, the Company 
raised a total of approximately $60.4 million in the sale of common and 
preferred stock. 

    The Company's cash and cash equivalents and short-term investments were 
$2.6 million as of September 30, 1997, compared to $4.9 million at the end of 
1996. The decrease was due primarily to operating losses in the first nine 
months of 1997 offset by the funds raised in the April 1997 and July 1997 
Financings. 

    On April 15, 1997, the Company closed the April 1997 Financings and on 
July 3, 1997, closed the July 1997 Financings, which consisted of the sale of 
common stock and warrants to purchase common stock. With the receipt of funds 
from the April 1997 and July 1997 Financings, the Company believes its cash 
resources will be adequate to satisfy its requirements into the second 
quarter 1998.

    Obtaining additional funds, either from generating sufficient revenue, 
raising additional capital from either new or existing investors, or the 
early exercise of the outstanding warrants issued in the April and July 
Financings, will be critical to the Company's ability to maintain operations 
through 1998.  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 the balance of 1997 or 1998. 

    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 the Nasdaq net tangible asset listing 
requirement at year end 1996. The Company failed temporarily to meet Nasdaq 
net tangible assets listing requirement at the end of both the first and 
second quarters of 1997. However, the proceeds from the April 1997 Financings 
allowed the Company to meet Nasdaq listing requirements, on a proforma basis, 
for the first quarter of 1997 and proceeds from the July Financing allowed 
the Company to meet Nasdaq listing requirements, on a proforma basis, for the 
second quarter of 1997. The


                                       11
<PAGE>

proceeds from the July 1997 Financing enabled the Company to meet the Nasdaq 
listing requirements for the third quarter of 1997 and should allow the 
Company to meet these requirements through year end 1997. Thereafter, the 
Company will be required to generate sufficient revenue or raise additional 
capital to maintain Nasdaq listing requirements.

    The Securities and Exchange Commission has approved Nasdaq's proposed 
rules which went effective on August 22, 1997.  Under terms of the revised 
rules, the bid price for the Company's common stock must remain at or above 
$1.00 per share.  Currently, the bid price of the Company's common stock is 
below $1.00 per share, and therefore, the Company does not meet Nasdaq's new 
listing requirements.  Companies which fail to meet Nasdaq's listing 
requirements have six months from August 22, 1997 in order to take 
appropriate action to correct such failure.  If necessary, the Company's 
shareholders have authorized the Board of Directors to effect a 1-for-2.5 
reverse stock split at any time prior to the Company's 1998 Annual Meeting. 
Therefore, if the Company's bid price of its common stock remains below $1.00 
per share, the Company may effect the reverse stock split to increase the 
common stock price.

    The Company believes its cash requirements may increase in future 
periods.  The Company expects to incur substantial additional costs, 
including costs related to ongoing research and development activities, 
clinical trials, expansion of manufacturing, research and development and 
administrative facilities, development of manufacturing capabilities and 
obtaining regulatory approvals.  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 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.  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. 




















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<PAGE>

                           BIOCIRCUITS CORPORATION


PART II:  OTHER INFORMATION


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

              a)   Exhibits

                 + 10.53 Manufacturing and Distribution Agreement between the 
                         Registrant and Becton Dickinson and Company through 
                         its Becton Dickinson Microbiology Systems Division 
                         dated October 24, 1997.

                   27.1  Financial Data Schedule

              ---------------
              +    Confidential treatment has been requested for portions of 
                   this Exhibit


              b)   Reports on Form 8-K
     
                   Form 8-K filed July 18, 1997

                                       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:     November 13, 1997

                                       By:    /s/ John Kaiser
                                          -------------------------------------
                                          John Kaiser
                                          President and Chief Executive Officer


                                       By:    /s/ James Welch
                                          -------------------------------------
                                          James Welch
                                          Vice President and Chief Financial 
                                          Officer













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