<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
(Mark One)

[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: 0-18338
                                                 -------


                               I-Flow Corporation
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            California                                       33-0121984
--------------------------------------------------------------------------------
   (State or other jurisdiction of                        (I.R.S. Employer
   incorporation or organization)                        Identification No.)


  20202 Windrow Drive Lake Forest, CA                            92630
--------------------------------------------------------------------------------
(Address of principal executive offices)                      (Zip Code)


                                 (714) 206-2700
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


                        2532 White Road Irvine, CA 92614
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. 

                                  [ x ] Yes   [   ] No

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

                                  [   ] Yes   [   ] No

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.

               As of June 30, 1997, there were 12,241,234 shares outstanding of
               Common Stock and 656,250 shares outstanding of Series B Preferred
               Stock.


<PAGE>   2
                               I-FLOW CORPORATION

                                    FORM 10-Q

                       FOR THE QUARTER ENDED JUNE 30, 1997

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                 Page
                                                                                                 ----
<S>                                                                                              <C>
Part I:    Financial Information                                                      
                                                                                      
           Item 1.  Financial Statements                                                  
                                                                                      
                    Consolidated Balance Sheets as of June 30, 1997 (Unaudited)       
                      and December 31, 1996                                                        3
                                                                                      
                    Consolidated Statements of Operations for the three and six-month 
                      periods ended June 30, 1997 and 1996 (Unaudited)                             4
                                                                                      
                    Consolidated Statements of Cash Flows for the six-month periods   
                      ended June 30, 1997 and 1996 (Unaudited)                                     5
                                                                                      
                    Notes to Consolidated Financial Statements                                     6
                                                                                      
           Item 2.  Management's Discussion and Analysis of Financial Condition           
                      and Results of Operations                                                    8
                                                                                      
           Item 3.  Quantitative and Qualitative Disclosures about Market Risk            
                                                                                      
Part II:   Other Information                                                                      11
                                                                                      
           Signatures                                                                             12
</TABLE>


                                       2
<PAGE>   3
                               I-FLOW CORPORATION

                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                    JUNE 30,       DECEMBER 31,
                                                                      1997             1996        
                                                                  ------------     ------------
                                                                  (UNAUDITED)
<S>                                                               <C>              <C>
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                       $    937,000     $  1,651,000
  Royalty receivable                                                        --        1,000,000
  Accounts receivable, net                                           5,046,000        3,514,000
  Inventories                                                        4,211,000        3,352,000
  Prepaids and other                                                   205,000          141,000
                                                                  ------------     ------------
     Total current assets                                           10,399,000        9,658,000
                                                                  ------------     ------------
PROPERTY:
  Furniture, fixtures and equipment                                  3,701,000        3,264,000
  Less accumulated depreciation                                     (1,611,000)      (1,326,000)
                                                                  ------------     ------------
     Property, net                                                   2,090,000        1,938,000
                                                                  ------------     ------------
OTHER ASSETS
  Goodwill and other intangibles, net                                4,221,000        4,831,000
  Notes receivable and other                                         1,226,000          807,000
                                                                  ------------     ------------
     TOTAL                                                        $ 17,936,000     $ 17,234,000
                                                                  ============     ============

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                                $  1,739,000     $  1,156,000
  Accrued payroll and related expenses                                 825,000        1,271,000
  Deferred revenue                                                     262,000          429,000
  Current portion of long-term debt                                  1,000,000        1,000,000
  Restructuring reserve                                                305,000          824,000
  Other liabilities                                                     51,000           73,000
                                                                  ------------     ------------
     Total current liabilities                                       4,182,000        4,753,000
                                                                  ------------     ------------
LONG-TERM DEBT                                                       2,000,000        2,500,000
LONG-TERM RESTRUCTURING RESERVE COMMITMENTS AND CONTINGENCIES          350,000          384,000

SHAREHOLDER EQUITY:
  Preferred stock - no par value; 5,000,000 shares authorized;
     656,250 series B shares issued and outstanding at June 30,
     1997 and 1996, respectively (aggregate preference on
     liquidation is $1,575,000)                                      1,494,000        1,494,000
  Common stock - no par value; 40,000,000 shares authorized;
     12,241,234 and 12,081,159 shares issued and outstanding 
     at June 30, 1997 and December 31, 1996, respectively           33,610,000       33,036,000
  Common stock warrants                                                615,000          615,000
  Accumulated deficit                                              (24,315,000)     (25,548,000)
                                                                  ------------     ------------
     Net shareholders' equity                                       11,404,000        9,597,000
                                                                  ------------     ------------
     TOTAL                                                        $ 17,936,000     $ 17,234,000
                                                                  ============     ============
</TABLE>
 
See accompanying notes to consolidated financial statements
 
                                       3



<PAGE>   4
                               I-FLOW CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED         SIX MONTHS ENDED
                                                         JUNE 30,                  JUNE 30,
                                                  -----------------------   -----------------------
                                                     1997         1996         1997         1996
                                                  ----------   ----------   ----------   ----------
<S>                                               <C>          <C>          <C>          <C>
REVENUE:
  Net sales                                       $5,034,000   $  970,000   $9,332,000   $1,686,000
  Interest income and other                           23,000      139,000       30,000      227,000
  Licensing fees                                          --    1,300,000           --    2,600,000
                                                  ----------   ----------   ----------   ----------
     Total revenue                                 5,057,000    2,409,000    9,362,000    4,513,000
                                                  ----------   ----------   ----------   ----------
COSTS AND EXPENSES:
  Cost of sales                                    2,058,000      536,000    3,806,000      906,000
  Selling and marketing                              827,000      445,000    1,620,000      732,000
  General and administrative                         966,000      639,000    2,060,000    1,311,000
  Product development                                278,000      238,000      605,000      470,000
                                                  ----------   ----------   ----------   ----------
     Total costs and expenses                      4,129,000    1,858,000    8,091,000    3,419,000
Income before taxes                                  928,000      551,000    1,271,000    1,094,000
Income taxes                                         (31,000)          --      (37,000)          --
                                                  ----------   ----------   ----------   ----------
NET INCOME                                        $  897,000   $  551,000   $1,234,000   $1,094,000
                                                  ==========   ==========   ==========   ==========
NET INCOME PER SHARE                              $     0.07   $     0.05   $     0.09   $     0.10
                                                  ==========   ==========   ==========   ==========
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
  SHARES OUTSTANDING                              13,659,187   12,773,754   13,628,829   12,519,436
                                                  ==========   ==========   ==========   ==========
</TABLE>
 
See accompanying notes to consolidated financial statements
 
                                       4



<PAGE>   5
                               I-FLOW CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                     SIX MONTHS ENDED JUNE 30,
                                                                    ---------------------------
                                                                       1997            1996
                                                                    -----------     -----------
<S>                                                                 <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                          $ 1,234,000     $ 1,094,000
Adjustments to reconcile net income to net cash provided by
  operations:
  Depreciation and amortization                                         559,000         119,000
  Changes in operating assets and liabilities:
     Royalty receivable                                               1,000,000              --
     Accounts receivable                                             (1,532,000)        457,000
     Inventories                                                       (859,000)       (450,000)
     Prepaid expenses and other                                         (64,000)        (53,000)
     Accounts payable, accrued and other liabilities                   (595,000)          5,000
                                                                    -----------     -----------
Net cash provided by (used by) operating activities                    (257,000)      1,172,000
                                                                    -----------     -----------
CASH FLOWS FROM INVESTMENT ACTIVITIES:
  Property acquisitions (including rental and demonstration
     equipment)                                                        (437,000)       (248,000)
  Change in other assets                                                (83,000)       (157,000)
                                                                    -----------     -----------
Net cash used by investing activities                                  (520,000)       (405,000)
                                                                    -----------     -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on long term debt                                           (500,000)             --
  Proceeds from exercise of stock options and warrants                  563,000       4,048,000
                                                                    -----------     -----------
Net cash provided by financing activities                                63,000       4,048,000
                                                                    -----------     -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                   (714,000)      4,815,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                      1,651,000       5,628,000
                                                                    -----------     -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                          $   937,000     $10,443,000
                                                                    ===========     ===========
</TABLE>
 
See accompanying notes to consolidated financial statements
 
                                       5



<PAGE>   6
                               I-FLOW CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

1.    Basis of Presentation

      The accompanying unaudited consolidated financial statements contain all
      adjustments (consisting only of normal recurring adjustments) which, in
      the opinion of management, are necessary to present fairly the financial
      position of the Company at June 30, 1997 and the results of its operations
      and its cash flows for the six-month periods ended June 30, 1997 and 1996.
      Certain information and footnote disclosures normally included in
      financial statements have been condensed or omitted pursuant to rules and
      regulations of the Securities and Exchange Commission although the Company
      believes that the disclosures in the financial statements are adequate to
      make the information presented not misleading.

      The financial statements included herein should be read in conjunction
      with the financial statements of the Company, included in the Company's
      Annual Report on Form 10-K for the year ended December 31, 1996 filed with
      the Securities and Exchange Commission on March 31, 1997.

      Certain amounts previously reported have been reclassified to conform with
      the presentation at June 30, 1997.

2.    Bank Financing

      The Company has a financing agreement with a bank which provides for a
      working capital line of credit of $4,000,000 expiring in July 1998. There
      were no borrowings under the line during the quarter ended June 30, 1997.

3.    Earnings Per Share

      In 1997, earnings per share is based on the modified treasury stock
      method. Under this method, earnings per share is based on the weighted
      average number of common shares outstanding during the year, the assumed
      exercise of all options and warrants, the use of proceeds of such assumed
      exercises to acquire 20% of the common stock with any remaining proceeds
      being used to retire Company debt.


                                       6
<PAGE>   7
4.    Recent Accounting Pronouncements


      Statement of Financial Accounting Standards No. 128 (FAS 128), "Earnings
      Per Share (EPS)", was issued in February 1997. Under FAS 128, the Company
      will be required to disclose basic EPS and diluted EPS for all periods for
      which an income statement is presented, which will replace disclosure
      currently being made for primary EPS and fully-diluted EPS. FAS 128
      requires adoption for fiscal periods ending after December 15, 1997. Pro
      forma disclosures of basic EPS and diluted EPS for the current reporting
      and comparable periods in the prior year are as follows:

<TABLE>
<CAPTION>
                                 Three Months Ended     Six Months Ended                 
                                       June 30,             June 30,                     
                                 ------------------     ----------------                 
                                 1997          1996     1997       1996                  
                                 ----          ----     ----       ----                  
      <S>                        <C>           <C>      <C>        <C>                   
      Earnings Per Share:                                                                
         Basic                   $.07          $.05     $.10       $.10                  
         Diluted                 $.07          $.05     $.09       $.10                  
</TABLE>


                                       7

<PAGE>   8
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

      Certain disclosures made by the Company in this report and in other
      reports and statements released by the Company are and will be
      forward-looking in nature, such as comments which express the Company's
      opinions about trends and factors which may impact future operating
      results. Disclosures which use words such as the Company "believes,"
      "anticipates," or "expects" or use similar expressions are intended to
      identify forward-looking statements. Such statements are subject to
      certain risks and uncertainties which could cause actual results to differ
      from those expected and readers are cautioned not to place undue reliance
      on these forward-looking statements. The Company undertakes no obligation
      to republish revised forward-looking statements to reflect the occurrence
      of unanticipated events. Readers are also urged to carefully review and
      consider the various disclosures made by the Company in this report which
      seek to advise interested parties of the risks and other factors that
      affect the Company's business, as well as in the Company's periodic
      reports on Forms 10-K, 10-Q, and 8-K filed with the Securities and
      Exchange Commission. The risks affecting the Company's business include
      reliance on the success of the Home Health Care Industry, the
      reimbursement system currently in place, competition in the industry,
      technological changes and product availability and the integration of
      Block Medical, Inc. Any such forward-looking statements, whether made in
      this report or elsewhere, should be considered in context with the various
      disclosures made by the Company about its business.

Results of Operations

      Net sales during the three and six-month periods ended June 30, 1997 were
      $5,034,000 and $9,332,000, respectively, compared to $970,000 and
      $1,686,000 for the same periods in the prior year. However, during the
      three and six-month periods ended June 30, 1996, the Company received
      licensing fees of $1,300,000 and $2,600,000, respectively which brought
      total revenues for these periods to $2,409,000 and $4,513,000,
      respectively. There were no licensing fees during the six months ended
      June 30, 1997. The increase in net sales for the three and six-month
      periods ended June 30, 1997 was primarily due to sales generated by the
      Company's subsidiary, Block Medical, Inc. ("Block"), of $3,835,000 and
      $7,405,000, respectively. Block was acquired by the Company on July 22,
      1996. Interest income decreased during the three and six month periods
      ended June 30, 1997 compared to the prior year, due to the use of funds
      for the acquisition of Block in July 1996. 

      In March 1996, SoloPak Pharmaceuticals, Inc. ("SoloPak") purchased the
      exclusive right and license to manufacture and sell certain of the
      Company's products in the United States and Puerto Rico. Pursuant to the
      agreement, SoloPak paid the Company $1.3 million in consideration of the
      license in March 1996 and guaranteed royalties of $1.0 million during each
      of the three succeeding quarters in 1996. Additionally, SoloPak agreed to
      pay I-Flow a royalty equal to two percent of SoloPaks' net sales of the
      products for the 1997 and 1998 calendar years. Royalties due for the


                                       8
<PAGE>   9
      quarter ended June 30, 1997 were not significant. Per the terms of the
      agreement, I-Flow has the right of first refusal to supply SoloPak with
      services and assistance in assembling the products until February 1998.
      The Company retained the right to sell the products outside the United
      States and Puerto Rico.

      Cost of sales of $2,058,000 and $3,806,000 were incurred during the three
      and six-month periods ended June 30, 1997, respectively. As a percentage
      of net sales, cost of sales decreased by 14% and 13% for the three and six
      month periods ended June 30, 1997 compared to the same periods in the
      prior year. This increase in gross profit on sales is primarily the result
      of the increased sales volume and cost savings associated with the move of
      a substantial portion of the Company's manufacturing to its manufacturing
      plant in Mexico acquired as part of the acquisition of Block.

      Selling and marketing expenses for the three and six-month periods ended
      June 30, 1997 increased over the same periods in the prior year by
      $382,000, or 86% and $888,000, or 121%, respectively. This increase is
      primarily a result of an increase in the internal sales force which
      increased from four to 15 people as a result of the acquisition of Block.

      General and administrative expenses for the three and six-month periods
      ended June 30, 1997 increased over the same periods in the prior year by
      $327,000, or 51% and $749,000, or 57%, respectively. These expenses
      primarily represent costs for administrative personnel, facilities and
      other administrative items. These costs have increased primarily as a
      result of the acquisition of Block.

      Product development expenses for the three and six-month periods ended
      June 30, 1997 increased over the same periods in the prior year by
      $40,000, or 17% and $135,000, or 29%, respectively. With the acquisition
      of Block, the Company increased its engineering staff and the number of
      new products under development. The Company will continue to incur product
      development expenses as it continues its efforts to introduce new
      improved-technology, cost-efficient products into the market.

Financial Condition

      During the six-month period ended June 30, 1997, funds of $257,000 were
      used by operating activities consisting of non-cash expenses of $559,000
      less net changes in operating assets and liabilities of $2,050,000
      combined with a net income of $1,234,000. These changes in operating
      assets and liabilities consisted of a net increase in accounts and royalty
      receivables of $532,000 combined with increases in inventories, prepaid
      expenses and other of $923,000 and a reduction in accounts payable and
      other liabilities of $595,000.


                                       9
<PAGE>   10
      The Company recorded a restructuring charge of $1,552,000 at December 31,
      1996 to provide for expenses related to consolidating Block's operations
      with its own in 1997. The restructuring charge was comprised of expenses
      for severance, relocation, moving and lease abandonment. During the
      six-month period ended June 30, 1997 charges to the restructuring reserve
      of $388,000 were made for lease payments and expenses. Management believes
      the reserve is sufficient and anticipates that the remaining cash outflow
      should be completed by September 30, 1997.

      The Company used funds for investing activities during the three-month
      period ended June 30, 1997 by acquiring furniture, fixtures, equipment and
      other assets aggregating $520,000 for use in its consolidated operations.

      During the six-month period ended June 30, 1997, funds of $63,000 were
      provided by financing activities consisting primarily of proceeds from the
      exercise of stock options and Series H warrants of $563,000 net of
      payments on long-term debt of $500,000.

      As of June 30, 1997, the Company had available funds of $937,000 and net
      receivables of $5,046,000. To date, the Company has financed its
      operations and working capital requirements primarily through equity
      financings and bank borrowings. Management believes the Company's funds
      are sufficient to provide for its short-term projected needs for
      operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk. 

        Not Applicable


                                       10
<PAGE>   11
                         PART II - OTHER INFORMATION


Items 1. - 3.   Not Applicable

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

                (a)  On May 14, 1997, the Company held its annual Shareholders'
                     Meeting.

                (b)  Donald M. Earhart, Jack H. Halperin, Dr. John H. Abeles,
                     Erik H. Loudon, Dr. Henry T. Tai, Charles C. McGettigan,
                     Joel S. Kanter and James J. Dal Porto were elected as
                     directors of the Company at the Annual Shareholders'
                     Meeting.

                (c)  A total of 11,575,644 of the outstanding voting securities
                     were represented at the Annual Shareholders by proxy or in
                     person. All matters voted upon and approved at the Annual
                     Shareholders' Meeting were as follows:

                     (1) The separate tabulation of the votes for each Director
                         elected is as follows, with no abstentions, or broker
                         non-votes:

<TABLE>
<CAPTION>
                Director Nominee                Votes For               Votes Against
                ----------------                ---------               -------------
                <S>                             <C>                     <C>
                Donald M. Earhart               11,511,557                 64,087
                Jack H. Halperin                11,511,557                 64,087
                Dr. John H. Abeles              11,512,057                 63,587
                Erik H. Loudon                  11,511,557                 64,087
                Dr. Henry T. Tai                11,512,057                 63,587
                Charles C. McGettigan           11,512,057                 63,587
                Joel S. Kanter                  11,512,057                 63,587
                James J. Dal Porto              11,512,057                 63,587
</TABLE>

Item 5.         Not applicable

Item 6.         Exhibits and Reports on Form 8-K

                (a)  Exhibits - The list of exhibits contained in the
                     accompanying Index to Exhibits is herein incorporated
                     by reference.

                (b)  During the quarter ended June 30, 1997, the Company
                     filed a Current Report on Form 8-K dated April 25, 1997
                     reporting that the Company entered into a lease
                     agreement for a new primary facility.








                                       11
<PAGE>   12
                                  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.                                          
                                                                                
                                                                                
                                          I-FLOW CORPORATION                    
                                          (Registrant)                          
                                                                                
                                                                                
Date: August 13, 1997                     /s/ DONALD M. EARHART                 
                                          ------------------------------      
                                          Donald M. Earhart,                    
                                          Chairman, President and CEO           
                                                                                
                                                                                
                                                                                
Date: August 13, 1997                     /s/ GAYLE L. ARNOLD                   
                                          ------------------------------      
                                          Gayle L. Arnold,                      
                                          Vice President, Finance, Chief        
                                          Financial Officer (Principal
                                          Financial Officer)
                     


                                       12
<PAGE>   13
                                INDEX TO EXHIBITS

Set forth below is a list of the exhibits included or incorporated by 
reference as part of this report:                                              
                                                                               
   Exhibit No.                           Exhibit                               
   -----------                           -------                               
     3.1 (1)        Restated Articles of Incorporation of the Company          

     3.2 (2)        Certificate of Amendment to Restated Articles of           
                    Incorporation dated June 14, 1991                          

     3.3 (3)        Certificate of Amendment to Restated Articles of           
                    Incorporation dated May 12, 1992                           

    10.1 (4)        Lease Agreement Between Industrial Developments
                    International, Inc. as Landlord and I-Flow 
                    Corporation as Tenant

    27              Financial Data Schedule                                    
                                                                               
---------------                                                       
(1)   Incorporated by reference to exhibit with this title filed with the 
      Company's Form 10-K for its fiscal year ended September 30, 1990.   
                                                                               
(2)   Incorporated by reference to exhibit with this title filed with the 
      Company's Registration Statement (#33-41207-LA) declared effective 
      August 8, 1991.                 
                                                                               
(3)   Incorporated by reference to exhibit with this title filed with the 
      Company's Post Effective Amendment to its Registration Statement 
      (#33-41207-LA) declared effective November 6, 1992. 

(4)   Incorporated by reference to exhibit with this title filed with the
      Company's Report on Form 8-K dated April 25, 1997.




                                       13