<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 JUNE 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 July 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) - June 30, 1997 and
           December 31, 1996. . . . . . . . . . . . . . . . . . . . . .      3

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

         Condensed statements of cash flows (unaudited) - six months
           ended March 31, 1997 and 1996 and the period from March 7,
           1989 (inception) through June 30, 1997 . . . . . . . . . . .      5

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

ITEM 2.  Management's Discussion and Analysis of
           Financial Condition and Results of Operations. . . . . . . .      9



PART II:  OTHER INFORMATION

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

ITEM 5.   Other Information . . . . . . . . . . . . . . . . . . . . . .      14

ITEM 6.   Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . .      15

Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      16


                                       2

<PAGE>

PART I:  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                             BIOCIRCUITS CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

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

<TABLE>
<CAPTION>
                                                     JUNE 30, 1997     DECEMBER 31, 1996
                                                     -------------     -----------------
                                                                             (NOTE)
<S>                                                  <C>               <C>
ASSETS
Current assets:
    Cash and cash equivalents . . . . . . . . . .  .   $   87              $  4,944
    Accounts receivable, net of allowance for                                      
      doubtful accounts of $27, ($43 on                                            
      December 31, 1996) . . . . . . . . . . . . . .      228                   201
    Inventory . . . . . . . . . . . . . . . . . . .     1,175                   928
    Prepaid inventory . . . . . . . . . . . . . . .       682                   375
    Prepaid expenses and other current assets . . .       114                   381
    Restricted cash . . . . . . . . . . . . . . . .       113                   102
                                                      -------              --------
                                                                                  
Total current assets. . . . . . . . . . . . . . . .     2,399                 6,931
                                                                                   
Property and equipment, net of accumulated                                         
    depreciation and amortization of $1,861                                        
    ($1,671 in 1996). . . . . . . . . . . . . . . .     1,349                 1,375
                                                                                   
Restricted cash . . . . . . . . . . . . . . . . . .       255                   376
Other assets. . . . . . . . . . . . . . . . . . . .        52                    44
                                                      -------              --------
                                                      $ 4,055              $  8,726
                                                      -------              --------
                                                      -------              --------
                                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY                                               
                                                                                   
Current liabilities:                                                               
    Accounts payable. . . . . . . . . . . . . . . .   $   852              $  1,108
    Accrued liabilities . . . . . . . . . . . . . .       146                   208
    Accrued compensation and related expenses . . .       157                   142
    Current portion of capital lease obligations. .       103                   118
                                                      -------              --------
Total current liabilities . . . . . . . . . . . . .     1,258                 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, 11,643,237 shares 
      issued and outstanding (12,455,137 shares 
      outstanding at December 31, 1996), 
      aggregate liquidation preference of $.55 
      per share . . . . . . . . . . . . . . . . . .     9,497                 9,903
    Common stock, $0.001 par value, 70,000,000 
      shares authorized, 10,482,038 shares issued 
      and outstanding (8,589,930 shares issued
      and outstanding at December 31, 1996) . . . .    50,762                48,784
    Deficit accumulated during the development 
      stage . . . . . . . . . . . . . . . . . . . .   (57,409)              (51,548)
    Notes receivable secured by common stock. . . .       (15)                  (15)
    Deferred compensation and other . . . . . . . .       (38)                  (46)
                                                      -------              --------
Total stockholders' equity. . . . . . . . . . . . .     2,797                 7,078
                                                      -------              --------
                                                      $ 4,055              $  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         SIX MONTHS ENDED           PERIOD FROM
                                                              JUNE 30,                  JUNE 30,             MARCH 7, 1989
                                                      --------------------       ---------------------    (INCEPTION) THROUGH
                                                       1997         1996           1997         1996          JUNE 30, 1997
                                                      -------      -------       -------       -------        ------------- 
<S>                                                 <C>             <C>           <C>        <C>           <C>      
REVENUES:                                                                                                             
     Product Sales . . . . . . . . . . . . . . . .    $   205      $   111       $   438       $   156          $    859  
                                                                                                                          
OPERATING COSTS AND EXPENSES:                                                                                             
     Cost of sales . . . . . . . . . . . . . . . .        583          742         1,617         1,049             3,927  
     Research and development .. . . . . . . . . .      1,027        1,662         2,507         4,015            36,864  
     Sales, general and administrative . . . . . .        921        1,430         2,237         2,680            18,515  
                                                      -------      -------       -------       -------          --------  
                                                        2,531        3,834         6,361         7,744            59,306  
                                                                                                                          
Loss from operations . . . . . . . . . . . . . . .     (2,326)      (3,723)       (5,923)       (7,588)          (58,447) 
                                                                                                                          
Interest and dividend income . . . . . . . . . . .         24          104            88           196             2,436  
Interest and other expense . . . . . . . . . . . .        (10)         (82)          (26)         (171)           (1,398) 
                                                      -------      -------       -------       -------          --------  
Net loss . . . . . . . . . . . . . . . . . . . . .    $(2,312)     $(3,701)      $(5,861)      $(7,563)         $(57,409) 
                                                      -------      -------       -------       -------          --------  
                                                      -------      -------       -------       -------          --------  



Deemed dividend on preferred stock . . . . . . . .       ---          (578)          ---        (1,180)           (1,180) 
                                                      -------      -------       -------       -------          --------  

Net loss after deemed dividend.. . . . . . . . . .    $(2,312)     $(4,279)      $(5,861)      $(8,743)         $(58,589) 
                                                      -------      -------       -------       -------          --------  
                                                      -------      -------       -------       -------          --------  


Net loss per share . . . . . . . . . . . . . . . .    $ (0.23)     $ (0.80)      $ (0.63)      $ (1.77)
                                                      -------      -------       -------       ------- 
                                                      -------      -------       -------       ------- 

Net loss per share to common
     shareholders. . . . . . . . . . . . . . . . .    $ (0.23)     $ (0.92)      $ (0.63)      $ (2.05)
                                                      -------      -------       -------       ------- 
                                                      -------      -------       -------       ------- 


Shares used in computing net loss per share. . . .     10,048        4,626         9,320         4,264
                                                      -------      -------       -------       ------- 
                                                      -------      -------       -------       ------- 


</TABLE>



                              See accompanying notes.


                                       4

<PAGE>

                             BIOCIRCUITS CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

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


<TABLE>
<CAPTION>

                                                                                                  PERIOD FROM
                                                                     SIX MONTHS ENDED            MARCH 7, 1989
                                                                          JUNE 30,             (INCEPTION) THROUGH
                                                                      1997           1996          JUNE 30, 1997
                                                                   --------       --------         -------------
<S>                                                                <C>            <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss. . . . . . . . . . . . . . . . . . . . . . .              $(5,861)       $(7,563)      $(57,409)
 Adjustments to reconcile net loss to net cash
   used in operating activities:
     Depreciation and amortization . . . . . . . . . .                  197            232          3,728
     Other . . . . . . . . . . . . . . . . . . . . . .                  124            241            490
     Changes in:
        Accounts receivable. . . . . . . . . . . . . .                  (27)          (118)          (228)
        Prepaid inventory. . . . . . . . . . . . . . .                 (307)           (71)          (682)
        Inventory. . . . . . . . . . . . . . . . . . .                 (247)          (332)        (1,175)
        Other current assets . . . . . . . . . . . . .                  267            171           (184)
        Other assets . . . . . . . . . . . . . . . . .                   (8)           --               4
        Other current liabilities. . . . . . . . . . .                 (303)           260          1,153
                                                                    -------        -------       --------
            Net cash used in operating activities. . .               (6,165)        (7,180)       (54,303)
                                                                    -------        -------       --------


CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of property and equipment. . . . . . . . . .                 (163)          (293)        (2,091)
 Short-term investments purchased. . . . . . . . . . .                  ---            ---        (30,337)
 Short-term investments sold/redeemed. . . . . . . . .                  ---            597         30,337
 Restricted cash . . . . . . . . . . . . . . . . . . .                  110             91           (401)
                                                                    -------        -------       --------
     Net cash provided by (used in)
     investing activities. . . . . . . . . . . . . . .                  (53)           395         (2,492)
                                                                    -------        -------       --------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Issuance of preferred stock, net of issuance costs. .                1,448          7,575         28,381
 Issuance of common stock, net of issuance costs . . .                  ---             65         27,301
 Issuance of long-term debt. . . . . . . . . . . . . .                  ---            125          4,949
 Payments on long-term obligations . . . . . . . . . .                  (87)          (308)        (3,749)
                                                                    -------        -------       --------
     Net cash provided by (used in) financing activities              1,361          7,457         56,882
                                                                    -------        -------       --------

Net increase (decrease) in cash and cash equivalents .               (4,857)           672             87
Cash and cash equivalents, beginning of period . . . .                4,944          6,028            ---
                                                                    -------        -------       --------
Cash and cash equivalents, end of period . . . . . . .              $    87        $ 6,700       $     87
                                                                    -------        -------       --------
                                                                    -------        -------       --------
</TABLE>




                            See accompanying notes


                                       5

<PAGE>

                            BIOCIRCUITS CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO CONDENSED FINANCIAL STATEMENTS
                              JUNE 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 June 30, 1997, the Company's accumulated deficit
       was $57.4 million.  Biocircuits expects to incur additional losses
       over the next several years.

       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") 
       consisted 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") consisted 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.  
       Upon closing the first tranches of the April 1997 Financings, 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 1997. The closing of the second and third tranches of the April 
       1997 Financings were conditional upon the Company meeting certain 
       milestones.  The milestone required for the second tranches to close were
       not met and the investors in the April Common Stock Financing elected not
       to fund the Company in the third tranche.

       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 through the second quarter 1998.

       Obtaining additional funds, either from generating sufficient revenue or 
       raising additional capital, 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 1997 
       or 1998.

                                       6
<PAGE>

                            BIOCIRCUITS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

              NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                                JUNE 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 six month period ended June 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         SIX MONTHS ENDED
                                                                          JUNE 30,                 JUNE 30,
                                                                  ---------------------      ----------------------
                                                                     1997         1996         1997         1996
                                                                  -------       -------      -------       -------
           <S>                                                    <C>           <C>          <C>           <C>
           Net loss to common shareholders 
               as reported . . . . . . . . . . . . . . . . .      $(2,312)      $(4,279)     $(5,861)      $(8,743)
                                                                  -------       -------      -------       -------
                                                                  -------       -------      -------       -------
           Shares used in computing net
               loss per share as reported. . . . . . . . . .       10,048         4,626        9,320         4,264

           Adjustment to include outstanding convertible
               preferred stock previously excluded
               as it is anti-dilutive. . . . . . . . . . . .        2,937         3,623        3,025         3,494
                                                                  -------       -------      -------       -------
           Shares used in computing proforma net
               loss per share. . . . . . . . . . . . . . . .       12,985         8,249       12,345         7,758
                                                                  -------       -------      -------       -------
                                                                  -------       -------      -------       -------

           Pro forma net loss per share. . . . . . . . . . .      $ (0.18)      $ (0.52)     $ (0.47)      $ (1.13)
                                                                  -------       -------      -------       -------
                                                                  -------       -------      -------       -------
</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, IN THE
COMPANY'S ANNUAL REPORT ON FORM 10-K/A 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 six month periods ending June 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 June 27, 1997, the Company entered into a letter of intent (the 
"Letter of Intent") with the Becton-Dickinson Microbiology Systems Division 
of Becton, Dickenson and Company ("Becton") to enter into an agreement (the 
"Agreement") that would give Becton exclusive worldwide marketing rights to 
the IOS system and all cartridges currently available as well as those that 
will be developed in the future.  It is also anticipated that Becton may 
assume responsibility for manufacturing the IOS instrument in 1998.  The 
company currently plans to continue to manufacture cartridges for transfer to 
Becton as well as develop new cartridges.  The Letter of Intent is not 
legally binding and the Agreement, which is currently being negotiated by the 
parties, may never be finalized and executed. If the Agreement is executed, 
the Company's operations will be materially affected and the Company's 
results could differ materially from those anticipated in these 
forward-looking statements.

       The Company has incurred a loss in each period since its inception.  
At June 30, 1997, the Company's accumulated deficit was $57.4 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, the 
production of the Company's cartridges and in such case that the Agreement 
with Becton is not executed, the sales and marketing programs for its IOS 
point-of-care system.  The losses may vary from period to period, including 
from quarter to quarter, and may increase, due to the uncertainty of whether 
the sales and marketing programs of the Company or 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.

RESULTS OF OPERATIONS-THREE MONTHS ENDED JUNE 30, 1997 AND 1996

       Revenue in the second quarter totaled $205,000, an increase of $94,000 
or 85% from the $111,000 reported in the second quarter of 1996.

       Total operating costs and expenses decreased from $3,834,000 in the 
second quarter of 1996 to $2,531,000 in the second quarter of 1997, a 
decrease of $1,303,000 or 34%.

                                       8

<PAGE>

       Cost of sales decreased from $742,000 in the second quarter of 1996 to 
$583,000 in the second quarter of 1997, a decrease of $159,000 or 21%.  The 
decrease in cost of sales results primarily from a reduction in manufacturing 
overhead due to the reduction in force which occurred in early April 1997 
offset by higher direct labor and material costs associated with the 
increased sales.  In addition, the second quarter 1996 cost of sales included 
a $241,000 charge for a warrant issued to KMC Systems, Inc. ("Kollsman").

       Research and development expenses decreased from $1,662,000 in the 
second quarter of 1996 to $1,027,000 in the second quarter of 1997, a 
decrease of $635,000 or 38%.  This decrease was 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 Kollsman.

       Sales, general and administrative expenses decreased from $1,430,000 
in the second quarter of 1996 to $921,000 in the second quarter of 1997, a 
decrease of $509,000 or 36%.  This decrease was due primarily to the 
Company's reduction in force which occurred in early April and decreased 
sales and marketing expenses.

       Interest income decreased from $104,000 in the second quarter of 1996 
to $24,000 in the second quarter of 1997, a decrease of $80,000 or 77%.  The 
decrease was due to decreased cash balances from ongoing operating losses, 
purchases of property and equipment and payments on long-term obligations.  
Interest and other expense decreased from $82,000 in the second quarter of 
1996 to $10,000 in the second quarter of 1997, a decrease of $72,000 or 88%.  
Interest expense results from the Company's long-term debt and capital leases 
related to its property and equipment.

       Net loss decreased from $3,701,000 or $0.80 per share in the second 
quarter of 1996 to $2,312,000 or $0.23 per share in the second quarter of 
1997, a decrease of $1,389,000 or 38%. Alternatively, after the deemed 
preferred stock dividend, net loss to common shareholders decreased from 
$4,279,000 or $0.92 per share to $2,312,000 or $0.23 per share, a decrease of 
$1,967,000 or 46%.

        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 
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 subsequently agreed 
with Kollsman to extend the instrument production line shutdown until August 
1997.  The Company has further agreed to and has paid Kollsman $436,000 to 
cover the cost of raw material and work in process currently at, or to be 
delivered to, Kollsman. Such prepaid inventory will be credited back against 
future deliveries of IOS instruments to Biocircuits.  In return, Kollsman 
canceled the $700,000 standby letter of credit and the associated funds 
collateralized by the Company's bank have been released back to the Company.  
The Company is entirely dependent on Kollsman as the sole source of 
production of its IOS instruments through the end of 1997 and an undetermined 
duration thereafter should the Agreement with Becton not be executed.  
Kollsman or Becton, in the event that the Agreement is executed, relies upon 
sole-source suppliers for certain components.  Failure of these suppliers to 
deliver the required quantities on a timely basis and at commercially 
reasonable prices, or failure to deliver the IOS instruments on a timely 
basis or at commercially reasonable costs could materially adversely affect 
the Company.

        The Company's inventory, including prepaid inventory, increased to 
approximately $1,857,000 as of June 30, 1997.  Of this amount, a major 
portion is associated with the instrument: approximately $682,000 of prepaid 
instrument inventory; $545,000 of IOS instrument finished goods; and $195,000 
of instrument raw materials.  The instrument production shutdown, which is 
expected to last at least through August 1997, is designed to reduce the 
inventory of instrument finished goods and, with the expected builds for the 
balance of 1997 and early 1998, the Company expects that the instrument 
prepaid inventory and raw materials will be significantly reduced.  
Therefore, based on the Company's build rates for the balance of 1997 and 
early 1998, 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 $90,000 of reserves recorded. There can 

                                       9

<PAGE>



be no assurances that the build rates required to support IOS instrument 
sales will be adequate to significantly reduce instrument related inventory 
nor 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 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 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 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 
until the end of the second quarter of 1998.

                                       10
<PAGE>


RESULTS OF OPERATIONS-SIX MONTHS ENDED JUNE 30, 1997 AND 1996

       Revenue in the first six months totaled $438,000, an increase of 
$282,000 from the $156,000 reported in the first six months of 1996 when the 
Company initially launched its IOS system.

       Total operating costs and expenses decreased from $7,744,000 in the 
first six months of 1996 to $6,361,000 in the first six months of 1997, a 
decrease of $1,383,000 or 18%.

       Cost of sales increased from $1,049,000 in the first six months of 
1996 to $1,617,000 in the first six months 1997, an increase of $568,000 or 
54%.  The increase in cost of sales results primarily from reporting cost of 
sales for a full six month period for 1997 while the cost of sales for the 
first six months of 1996 reflects a partial period due to the Company 
launching its IOS system in March 1996.  These costs consist primarily of 
manufacturing overhead and startup costs associated with the production of 
revenue generating product.

       Research and development expenses decreased from $4,015,000 in the 
first six months of 1996 to $2,507,000 in the first six months of 1997, a 
decrease of $1,508,000 or 38%.  This decrease was due primarily to outside 
services, primarily non-recurring charges from Kollsman, and the Company's 
cost reduction efforts, including the reduction in force in April 1997.

       Sales, general and administrative expenses decreased from $2,680,000 
in the first six months of 1996 to $2,237,000 in the first six months of 
1997, a decrease of $443,000 or 17%.  This decrease was due primarily to the 
Company's reduction in force in April 1997 and reduced sales and marketing 
expenses.

       Interest income decreased from $196,000 in the first six months of 
1996 to $88,000 in the first six months of 1997, a decrease of $108,000 or 
55%.  The decrease was due to decreased cash balances from ongoing operating 
losses, purchases of property and equipment and payments on long-term 
obligations.  Interest and other expense decreased from $171,000 in the first 
six months of 1996 to $26,000 in the first six months of 1997, a decrease of 
$145,000 or 85%.  Interest expense results from the Company's long-term debt 
and capital leases related to its property and equipment.

        Net loss decreased from $7,563,000 or $1.77 per share in the first 
six months of 1996 to $5,861,000 or $0.63 per share in the first six months 
of 1997, a decrease of $1,702,000 or 23%. Alternatively, after the deemed 
preferred stock dividend, net loss to common shareholders decreased from 
$8,743,000 or $2.05 per share to $5,861,000 or $0.63 per share, a decrease of 
$2,882,000 or 33%.

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 June 30, 1997, the Company raised a 
total of approximately $55.9 million in the sale of common and preferred 
stock.

       The Company's cash and cash equivalents and short-term investments 
were $87,000 as of June 30, 1997, compared to $4.9 million at the end of 
1996. The decrease was due primarily to operating losses in the first six 
months of 1997 offset by the funds raised in the April 1997 Financings.

       On April 15, 1997, the Company closed the April 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 Financings, the Company 
received adequate cash resources to satisfy its requirements through the end 
of the second quarter of 1997. With the proceeds from the July Financing, 
which closed on July 3, 1997, the Company believes its cash resources will be 
adequate to satisfy its requirements through second quarter 1998.

       Obtaining additional funds, either from generating sufficient revenue 
or raising additional capital, 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 


                                       11

<PAGE>


significant dilution to then existing shareholders. If adequate funding is 
not available on a timely basis, the Company will be required to curtail its 
operations significantly or to cease operations. There can be no assurance 
that the Company will be successful in obtaining additional financing during 
1997 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 Nasdaq listing 
requirements at year end 1996. The Company failed temporarily to meet Nasdaq 
net tangible assets listing requirements 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. In addition, the Company believes the receipt of 
proceeds from the July 1997 Financing should result in it meeting Nasdaq 
listing requirements through year end 1997. Thereafter, the Company will be 
required to generate sufficient revenue or raise additional capital to 
maintain Nasdaq listing requirements.

        Nasdaq Marketplace Rule 4450(a)(5) currently provides that in order 
to remain eligible for continued inclusion in the Nasdaq National Market, a 
security must have a bid price of at least $1.00 per share, or in the 
alternative (i) the aggregate market value of publicly held shares, excluding 
shares held by officers, directors and greater than 10% beneficial owners 
must be at least $3,000,000 (the "Public Float Test") and (ii) a company's 
net tangible assets must be at least $4,000,000 (the "Net Tangible Asset 
Test", and, together with the Public Float Test, the "Alternative Test").  If 
the bid price of the Company's common stock is below $1.00 per share for ten 
consecutive days, under current Nasdaq Rules, the Company must meet the 
Alternative Test in order to maintain its Nasdaq listing.  Although the bid 
price of the Company's common stock is currently above $1.00 per share and 
the Company does not rely on the Alternative Test in order to maintain its 
Nasdaq listing, there can be no assurance that the bid price will remain 
above $1.00 per share in the future. In addition, although the Company 
currently meets the Alternative Test and is therefore in compliance with 
Nasdaq's listing requirements, there can be no assurance that the Company 
will continue to meet the Alternative Test in the future.  Nasdaq has 
proposed new rules for consideration by the Securities and Exchange 
Commission that would eliminate the Alternative Test.  If the rules are 
approved by the Securities and Exchange Commission, the bid price of the 
Company's common stock must remain at or above $1.00 per share in order to 
maintain its Nasdaq listing.  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 bid price of 
the Company's common stock is below $1.00 per share for ten consecutive days, 
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 due to higher expenses.  The Company expects to incur substantial 
additional costs, including costs related to ongoing research and development 
activities, either alone or in collaboration with strategic partners, 
clinical trials, expansion of manufacturing, research and development and 
administrative facilities, development of manufacturing capabilities, 
obtaining regulatory approvals and establishing sales, marketing and 
distribution capabilities in such event the Agreement with Becton is not 
executed.  The Company's long-term capital requirements will depend on 
numerous factors, including the progress of the Company's research and 
product development, the timing and cost of obtaining regulatory approvals, 
the costs associated with patents and other intellectual property rights, the 
levels of resources devoted to the development of manufacturing and marketing 
capabilities and potential collaborative partnerships.  The Company intends 
to seek additional funding through collaborative relationships and public or 
private financings.  Other methods of financing the acquisition of capital 
equipment, including lease financing, may be utilized if available on 
attractive terms.  Raising additional funds from public or private financings 
may result in further dilution to then-existing shareholders.  The Company 
also may attempt to obtain funds through arrangements with strategic partners 
or others that may require the Company to relinquish rights to certain of its 
technologies, products or marketing territories in exchange for funding.  If 
adequate funds are not available from these sources, the Company will be 
required to curtail its operations significantly.  No assurance can be given 
that any additional financing will be available, or, if available, that it 
will be available on acceptable terms.  

                                       12

<PAGE>

                             BIOCIRCUITS CORPORATION

PART II:  OTHER INFORMATION

ITEM 4. Submission of Matters to a Vote of Security Holders

     a) The Company's Annual Meeting of Stockholders was held on June 5,
        1997.

     b) The following individuals were elected to the Company's Board of
        Directors for a three-year term expiring at the 2000
        Annual Meeting and received the number of votes in favor and
        votes withheld indicated:

        Robert Curry, Ph.D.
          Common Votes in favor:    6,998,891   Common Votes withheld:    71,992
          Preferred Votes in favor: 2,987,061   Preferred Votes withheld:      0

        David Rubinfien
          Common Votes in favor:    6,998,191   Common Votes withheld:    72,692
          Preferred Votes in favor: 2,987,061   Preferred Votes withheld:      0

          The following individual was elected to the Company's Board of 
          Directors for a two-year term expiring at the 1999 Annual Meeting 
          and received the number of votes in favor and votes withheld 
          indicated:

        John Kaiser
          Common Votes in favor:    6,998,534   Common Votes withheld:    72,349
          Preferred Votes in favor: 2,961,112   Preferred Votes withheld: 25,949

        The following individual's term of office as a director continued 
        after the meeting:

        Patrick Latterell

     c) In addition to the election of directors, the following matters were 
        voted upon at the meeting and received the number of affirmative 
        votes, negative votes, abstentions and broker non-votes indicated:

        (i)  Ratify the sale and issuance of the Company's securities in two 
             private financings.

            Common Votes:
            In favor:    3,715,944         Against:             57,560
            Abstentions:    25,241         Broker non-votes: 3,272,138

            Preferred Votes:
            In favor:    2,987,061          Against:                 0
            Abstentions:         0          Broker non-votes:        0



                                       13

<PAGE>



        (ii) Authorize amendment to the Company's Amended and Restated 
             Certificate of Incorporation to effect a 1-for-2.5 reverse split of
             the outstanding shares of the Company's common stock upon the 
             filing of an Amendment to the Company's Amended and Restated 
             Certificate of Incorporation by the Board of Directors at any 
             time on or prior to the Company's 1998 Annual Meeting of 
             Shareholders .

             Common Votes:
             In favor:    6,908,786         Against:          104,918
             Abstentions:    27,644         Broker non-votes:  29,535

             Preferred Votes:
             In favor:    2,977,586         Against:          9,475
             Abstentions:         0         Broker non-votes:     0


       (iii) Ratify the appointment of Ernst & Young LLP as the Company's 
             independent auditors for the fiscal year ending December 31, 
             1997.

             Common Votes:
             In favor:    7,040,903         Against:          18,055
             Abstentions:    11,925         Broker non-votes:      0

             Preferred Votes:
             In favor:    2,987,061         Against:               0
             Abstentions:         0         Broker non-votes:      0


ITEM 5. Other Information

        On July 7, 1997, the Company closed a private placement in which it 
        received net proceeds of approximately $4.8 million, which proceeds 
        allowed the Company to meet Nasdaq listing requirements for the second 
        quarter of 1997 on a proforma basis.

        On June 27, 1997, the Company entered into a letter of intent (the 
        "Letter of Intent") with the Becton-Dickinson Microbiology Systems 
        Division of Becton, Dickenson and Company ("Becton") to enter into an 
        agreement (the "Agreement") that would give Becton exclusive worldwide 
        marketing rights to the IOS system and all cartridges currently 
        available as well as those that will be developed in the future.  It is 
        also anticipated that Becton may assume responsibility for manufacturing
        the IOS instrument in 1998.  The company currently plans to continue to 
        manufacture cartridges for transfer to Becton as well as develop new
        cartridges.  The Letter of Intent is not legally binding and the 
        Agreement, which is currently being negotiated by the parties, may never
        be finalized and executed.

                                       14

<PAGE>

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

               a)   Exhibits

                    27.1 Financial Data Schedule

                    99.1 Proforma June 30, 1997 Balance Sheets and Statements 
                         of Operations assuming completion of a private 
                         placement and receipt of net proceeds of $4.8 
                         million therefrom.

               b)   Reports on Form 8-K

                    Form 8-K filed July 18, 1997


                                       15

<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:     August 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



                                       16