<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  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, 1999
                                    -------------


                                       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    333-69207
                                                ---------


                                Careside, Inc.
                                --------------
            (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
               Delaware                                                                  23-2863507
               --------                                                                  ----------
<S>                                                     <C>
(State or other jurisdiction of incorporation or organization)              (IRS employer identification no.)
</TABLE>

                  6100 Bristol Parkway, Culver City, CA  90230
                  --------------------------------------------
      (Address of principal executive offices)                 (zip code)


Registrant's telephone number, including area code (310) 338-6767
                                                   --------------



          Indicate by check 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           No    X
                                                     -------     ---------

          The number of shares outstanding of the Registrant's common Stock, par
value $.01 per share, was 7,084,340 as of August 10, 1999
<PAGE>

                                CARESIDE, INC.

                                     INDEX
<TABLE>
<CAPTION>

                                                                                                      Page
                                                                                                      ----

Part I  Financial Information
<S>     <C>                                                                                             <C>
        Item 1.  Financial Statements (unaudited)
                 --------------------------------
                 Balance Sheets at December 31, 1998 and June 30, 1999..................................  3
                 Statements of Operations for the three and six months ended
                  June 30, 1998 and 1999................................................................  4
                 Statements of Cash Flows for the six months ended
                  June 30, 1998 and 1999................................................................  5
                 Notes to Financial Statements..........................................................  6

        Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations..  7

        Item 3.  Quantitative and Qualitative Disclosures about Market Risk............................. 10

Part II Other Information

        Item 2.  Changes in Securities and Use of Proceeds.............................................. 11

        Item 6.  Exhibits and Reports on Form 8-K....................................................... 12

Signatures.............................................................................................. 15
</TABLE>

                                      -2-
<PAGE>

                                    PART I
                             FINANCIAL INFORMATION

Item 1.     Financial Statements

                                CARESIDE, INC.
                         (a development-stage company)

                                BALANCE SHEETS
              (in thousands, except shares and per share amounts)
                                  (unaudited)

<TABLE>
<CAPTION>

                             ASSETS
                             ------
                                                                   December 31, 1998    June 30, 1999
                                                                   ------------------   --------------
<S>                                                                <C>                  <C>
CURRENT ASSETS
  Cash and cash equivalents.............................................  $  3,926.6       $ 12,423.3
  Inventories...........................................................           -            112.7
  Prepaid expenses and other............................................        82.1            155.7
                                                                          ----------       ----------
     Total current assets...............................................     4,008.7         12,691.7

PROPERTY AND EQUIPMENT, net.............................................     3,386.5          4,926.1
DEFERRED OFFERING COSTS.................................................       498.4                -
DEPOSITS................................................................        17.7             17.7
                                                                          ----------       ----------
                                                                          $  7,911.3       $ 17,635.5
                                                                          ==========       ==========

                LIABILITIES AND STOCKHOLDERS' EQUITY
                ------------------------------------
CURRENT LIABILITIES:
  Current portion of long-term debt.....................................  $    187.0       $  2,200.6
  Accounts payable......................................................     1,369.9          1,868.7
  Accrued expenses......................................................       160.4            234.7
                                                                          ----------       ----------
     Total current liabilities..........................................     1,717.3          4,304.0
                                                                          ----------       ----------

LONG-TERM DEBT..........................................................     2,044.9            750.3
                                                                          ----------       ----------

STOCKHOLDERS' EQUITY
   Preferred stock, $.01 par value, 5,000,000 shares authorized,
      none issued and outstanding at December 31, 1998,
      162,914 Series A Convertible Preferred issued and
      outstanding at June 30, 1999......................................           -              1.6
   Common stock, $.01 par value, 50,000,000 shares authorized,
      5,084,281 issued and outstanding at December 31, 1998,
      7,084,281 issued and outstanding at June 30, 1999.................        50.8             70.8
   Additional paid-in capital...........................................    21,003.5         34,790.3
   Deficit accumulated during development stage.........................   (16,905.2)       (22,281.5)
                                                                          ----------       ----------
     Total stockholders' equity.........................................     4,149.1         12,581.2
                                                                          ----------       ----------
                                                                          $  7,911.3       $ 17,635.5
                                                                          ==========       ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                      -3-
<PAGE>

                                 CARESIDE, INC.
                         (s development-stage company)

                            STATEMENTS OF OPERATIONS
              (in thousands, except shares and per share amounts)
                                  (unaudited)
<TABLE>
<CAPTION>



                                                                                           For the Period
                                         Three Months Ended         Six Months Ended       From Inception
                                              June 30,                  June 30,           (July 10, 1996)
                                     -------------------------   -------------------------    Through
                                        1998          1999          1998          1999      June 30, 1999
                                     -----------   -----------   -----------   -----------  --------------
<S>                                  <C>           <C>           <C>           <C>           <C>
OPERATING EXPENSES:
    Research and development.......  $  2,229.0    $  1,626.6    $  3,699.0    $  3,856.3       $ 19,611.6
    Sales and marketing............        74.0         117.7         127.0         269.2            518.2
    General and administrative.....       116.0         277.1         287.0         535.0          1,832.2
                                     ----------    ----------    ----------    ----------       ----------

      Operating Loss...............    (2,419.0)     (2,021.4)     (4,113.0)     (4,660.5)       (21,962.0)

INTEREST INCOME....................        97.5          27.8         115.5          69.9            517.5
INTEREST EXPENSE...................           -        (381.1)            -        (782.8)          (834.3)
                                     ----------    ----------    ----------    ----------       ----------

NET LOSS...........................    (2,321.5)     (2,374.7)     (3,997.5)     (5,373.4)       (22,278.8)

DIVIDENDS ON SERIES A
      PREFERRED STOCK..............           -          (2.8)            -          (2.8)            (2.8)
                                     ----------    ----------    ----------    ----------       ----------

NET LOSS TO COMMON
      STOCKHOLDERS.................  $ (2,321.5)   $ (2,377.5)   $ (3,997.5)   $ (5,376.2)      $(22,281.6)
                                     ==========    ==========    ==========    ==========       ==========

BASIC NET LOSS PER SHARE...........  $    (0.48)   $    (0.44)   $    (0.96)   $    (1.02)
                                     ==========    ==========    ==========    ==========

SHARES USED IN COMPUTING
 BASIC NET LOSS PER SHARE..........   4,807,144     5,414,010     4,168,019     5,250,086
                                     ==========    ==========    ==========    ==========
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      -4-
<PAGE>

                                 CARESIDE, INC.
                         (a development-stage company)

                            STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                                  For the Period
                                                                                                  From Inception
                                                                                                  (July 10, 1996)
                                                                 Six Months Ended June 30,           Through
                                                          ------------------------------------       June 30,
                                                                1998                   1999            1999
                                                          -----------------   ----------------   -----------------
<S>                                                       <C>                 <C>                <C>
OPERATING ACTIVITIES:
 Net Loss....................................................    $(3,997.5)       $(5,373.4)        $(22,278.8)
 Adjustments to reconcile net loss to net cash used in
  operating activities -
  Depreciation...............................................        108.6            514.5            1,039.9
  Imputed interest on notes payable..........................            -            289.8              298.1
  Amortization of debt discount..............................            -            309.2              330.2
Change in assets and liabilities-
  Increase in inventories....................................            -           (112.7)            (112.7)
  Decrease (increase) in prepaid expenses and other..........       (279.9)            96.0             (155.7)
  Decrease (increase) in deposits............................         80.1                -               (2.5)
  Increase in accounts payable...............................        560.8            498.9            1,868.8
  Increase (decrease) in accrued expenses....................        (17.0)           109.9              289.9
                                                                 ---------        ---------          ---------
     Net cash used in operating activities...................     (3,544.9)        (3,667.8)         (18,722.8)
                                                                 ---------        ---------          ---------

INVESTING ACTIVITIES:
 Purchases of property and equipment.........................       (371.9)        (2,223.7)          (5,462.4)
                                                                 ---------        ---------          ---------

FINANCING ACTIVITIES:
 Net borrowings (repayments) on line of credit...............            -                -                  -
 Proceeds from issuance of notes.............................            -          1,500.0            5,041.1
 Deferred offering costs.....................................            -                -             (690.3)
 Proceeds from the issuance of common stock..................     10,317.7         12,978.4           32,196.2
 Payment on note payable.....................................            -            (90.2)             (90.2)
 Payment of stock subscription...............................            -                -               99.0
 Cash received from SmithKline Beecham Corporation in
  connection with the asset purchase.........................            -                -               52.7
                                                                 ---------        ---------          ---------
     Net cash provided by financing activities...............     10,317.7         14,388.2           36,608.5
                                                                 ---------        ---------          ---------

NET INCREASE IN CASH AND CASH EQUIVALENTS....................      6,400.9          8,496.7           12,423.3
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD.................      1,237.1          3,926.6                  -
                                                                 ---------        ---------          ---------
CASH & CASH EQUIVALENTS, END OF PERIOD.......................    $ 7,638.0        $12,423.3          $12,423.3
                                                                 =========        =========         ==========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      -5-
<PAGE>

                                CARESIDE, INC.
                         (a development-stage company)
                         NOTES TO FINANCIAL STATEMENTS

Note 1:   BASIS OF PRESENTATION

          The accompanying unaudited financial statements for the three and six
months ended June 30, 1999 of Careside, Inc. (the "Company") have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In
management's opinion, all adjustments, consisting of normal recurring
adjustments, which are necessary for a fair presentation of the financial
position and results of operations, have been made. The results of operations
for the three and six months ended June 30, 1999 are not necessarily indicative
of the results expected for the entire year.  These financial statements should
be read in conjunction with the financial statements and notes related thereto
included in the Company's Registration Statement on Form S-1 (File No. 333-
69207). Certain prior period amounts have been reclassified to conform to the
current period presentation.

Note 2:   STOCKHOLDERS' EQUITY

          In June 1999, the Company completed its initial public offering (the
"IPO") of its units (the "Units"), each unit consisting of one share of the
Company's common stock, $.01 par value per share (the "Common Stock"), and one
redeemable common stock purchase warrant (the "Warrant") to purchase an
additional share of Common Stock. Two million Units were sold in the IPO at a
price of $7.50 per unit.  The net proceeds to the Company after underwriters'
fees and expenses were $12.4 million.  The Company effected a 1 for 5.2 reverse
stock split of the Common Stock immediately prior to the IPO.  All references in
the accompanying financial statements to the number of shares and per share
amounts have been restated to show the effect of this reverse stock split.  Upon
consummation of the IPO, $1 million of debt plus accrued interest was converted
into 162,914 shares of the Company's Series A Convertible Preferred Stock
("Series A Preferred Stock").

Note 3:   INCOME TAXES

          As of December 31, 1998, the Company had approximately $2,148,000 and
$225,000 of net operating loss and research and development credit
carryforwards, respectively, for federal income tax purposes, which expire on
various dates between 2011 and 2013.  As of December 31, 1998, the Company had
capitalized approximately $12.9 million of research and development expenses for
federal income tax purposes.

          The availability of the net operating loss carryforward to reduce U.S.
federal taxable income is subject to various limitations under the Internal
Revenue Code of 1986 (the "Code"), as amended, in the event of an ownership
change as defined in Section 382 of the Code. The Company experienced a change
in ownership interest in excess of 50% as defined under the Code upon the
consummation of the IPO.  The Company does not believe that this change in
ownership significantly impacts the Company's ability to utilize its net
operating loss and tax credit carryforwards as of December 31, 1998.

Note 4:   INVENTORIES

          At June 30, 1999, inventories consisted of raw materials to be
utilized in the manufacturing of disposable test cartridges.

Note 5:   NET LOSS PER COMMON SHARE

          Basic loss per share was computed by dividing net loss applicable to
common shareholders by the weighted average number of shares of Common Stock
outstanding during the period.  Dilutive loss per share has not been presented,
since the impact on loss per share using the treasury stock method is anti-
dilutive to the Company's losses.

                                      -6-
<PAGE>

Note 6:   RECENT PRODUCT DISTRIBUTION AND SUPPLY AGREEMENT

          In July 1999, the Company entered into a Product Distribution and
Supply Agreement (the "CDC Agreement") with CDC Technologies, Inc. ("CDC") to
provide the Company with the right to electronically connect the hematology
testing device manufactured by CDC with the CareSide Analyzer and to distribute
CDC's hematology devices.  An additional 20 FDA approved hematology tests will
be available for use in the Careside Analyzer System in professional
laboratories as a result of the CDC Agreement.  The CDC Agreement is effective
as of May 20, 1999.  There is no financial impact of this transaction.

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

FORWARD-LOOKING STATEMENTS - CAUTIONARY STATEMENTS

          Certain statements contained in this Quarterly Report on Form 10-Q,
including statements regarding the anticipated development and expansion of the
Company's business and expenditures, the intent, belief or current expectations
of the Company, its directors or its officers, primarily with respect to the
future operating performance of the Company and other statements contained
herein regarding matters that are not historical facts, are "forward-looking
statements" (as such term is defined in the Private Securities Litigation Reform
Act of 1995). Because such statements include risks and uncertainties, actual
results may differ materially from those expressed or implied by such forward-
looking statements. Factors that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements include, but
are not limited to, those discussed in other filings, including those contained
in the Company's Registration Statement on Form S-1 (File No. 333-69207), made
by the Company with the Securities and Exchange Commission.

GENERAL

          The Company is the developer of the Careside Analyzer System, a
proprietary blood testing system.  It is designed to decentralize laboratory
operations and provides a solution to the limitations of central blood testing
laboratories.  The Careside Analyzer System consists of a desktop testing
instrument called the CareSide Analyzer, disposable test cartridges and an
optional hematology device which has been developed and is manufactured by a
third party.  The Careside Analyzer System performs blood tests at the same
location as the patient, or what is commonly called near patient testing.  It
provides rapid test results within 10 to 15 minutes from the time the blood is
drawn from the patient, in contrast to the traditional method of sending blood
samples to hospital or commercial laboratories and waiting between 4 and 24
hours to obtain test results.  Such centralized laboratories are burdened by
transportation time and volume processing steps.  In addition, the Careside
Analyzer System is expected to be cost competitive and will offer a
comprehensive test menu, which the Company believes represents more than 80% of
all routine blood tests ordered on an out-patient basis.  These include all of
the most commonly ordered blood tests, as well as blood tests required for
critical care testing, including chemistry, electrochemistry, coagulation and
immunochemistry tests within a single testing instrument and hematology testing
in an optional separate but integrated instrument.  As of June 30, 1999, the
CareSide Analyzer and 31 tests were cleared for marketing by the FDA or are
exempt and can be marketed for professional laboratory use.  An additional 21
FDA approved hematology tests will be available through the CDC Agreement in
July 1999.  The Company believes that no other product for decentralized blood
testing currently in the market offers nearly as broad a menu of tests or
combines these test categories.

          The Company has no products available for sale and does not expect to
have any products commercially available until the fourth quarter of 1999. The
Company has incurred losses and expects to incur increasing losses for the
foreseeable future as the Company launches its products and its product
development expenditures continue.  The Company's revenue for the immediate
future will be limited to interest income and other miscellaneous income.

          The following is a discussion of the financial condition and results
of operations for the Company for the three and six months ended June 30, 1999
and 1998.  It should be read in conjunction with the Interim

                                      -7-
<PAGE>

Financial Statements of the Company, the Notes thereto and other financial
information included elsewhere in this report.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1999 AND 1998

          Research and Developments Expenses.  Research and development expenses
decreased to approximately $1.6 million for the three months ended June 30, 1999
from $2.2 million for the three months ended June 30, 1998. This decrease of
$0.6 million, or 27%, was primarily attributable to completion of the
development work associated with producing the CareSide Analyzer and a lower
level of staffing associated with new test development.

          Sales and Marketing Expenses.  Sales and marketing expenses increased
to $118,000 for the three months ended June 30, 1999 from $74,000 for the three
months ended June 30, 1998.  This increase of $44,000, or 59%, is primarily
attributable to increases in sales and marketing efforts associated with the
anticipated launch of the CareSide Analyzer System and increases in sales and
marketing staff.

          General and Administrative Expenses.  General and administrative
expenses increased to $277,000 for the three months ended June 30, 1999 from
$116,000 for the three months ended June 30, 1998.  This increase of $161,000,
or 139%, is primarily attributable to increases in legal costs and compensation
related to adding a Chief Financial Officer.

          Net Interest Income (Expense).  Interest income decreased to
approximately $28,000 for the three months ended June 30, 1999 compared to
$98,000 for the three months ended June 30, 1998.  This decrease of $70,000, or
71%, is attributable to lower average balances of cash and cash equivalents
during 1999, given the proceeds from the IPO completed in June 1999 were
available for investment for a limited portion of the second quarter ended June
30, 1999.  Interest expense increased to $381,000 in 1999 from $0 in 1998 due to
equipment lease financing and interest payable on the bridge loan (the "Bridge
Loan") issued to the Company by S.R. One, Limited ("S.R. One")  and the non-cash
interest charge associated with the costs of warrants granted to S.R. One in
connection with the conversion of outstanding debt into shares of Series A
Convertible Preferred Stock.

          Net Loss.  Net loss increased $53,000 during the three months ended
June 30, 1999, or 2%, to $2.4 million for the three months ended June 30, 1999
from $2.3 million for the three months ended June 30, 1998. This increase
reflects the increase in interest expense offset by decreases in research and
development expenses.

SIX MONTHS ENDED JUNE 30, 1999 AND 1998

          Research and Development Expenses.  Research and development expenses
increased to approximately to $3.9 million for the first half of 1999 from $3.7
million for the first half of 1998. This increase of $157,000, or 4%, was
primarily attributable to efforts to complete the production of the CareSide
Analyzer in the first quarter of 1999 and to support additional test submissions
to the FDA.

          Sales and Marketing Expenses.  Sales and marketing expenses increased
to $269,000 for the first half of 1999 from $127,000 for the first half of 1998.
This increase of $142,000, or 112%, is primarily attributable to preliminary
sales and marketing efforts to launch the CareSide Analyzer System and increases
in sales and marketing staff.

          General and Administrative Expenses.  General and administrative
expenses increased to $535,000 for the first half of 1999 from $287,000 for the
first half of 1998.  This increase of $248,000, or 86%, is primarily
attributable to increases in legal costs and compensation related to adding a
Chief Financial Officer.

          Net Interest Income (Expense).  Interest income decreased to
approximately $70,000 for the six months ended June 30, 1999 from $116,000 for
the six months ended June 30, 1998.  This decrease of $46,000, or

                                      -8-
<PAGE>

39%, is attributable to lower average balances of cash and cash equivalents
during 1999. Interest expense increased to approximately $783,000 for the six
months ended June 30, 1999 from $0 for the six months ended June 30, 1998 due to
a non-cash interest charge associated with the Bridge Loan Warrants (as defined
herein) and interest payable on the Bridge Loan and equipment lease financing.

          Net Loss.  The net loss increased $1.4 million, or 34%, to
approximately $5.4 million for the six months ended June 30, 1999 from $4.0
million during the six months ended June 30, 1998.  This increase was
attributable to increases in operating and interest expense.

          The Company expects that results of operations in the future will
fluctuate significantly from period to period. Such fluctuations may result from
numerous factors, including the amount and timing of revenues earned from sales,
proceeds from existing or future collaborative distribution relationships or
joint ventures, if any, the cost of preparing, filing, prosecuting, maintaining,
defending and enforcing patent claims and other intellectual property rights,
the status of competing products and technologies and the timing and
availability of financing for the Company.  In the near term, the Company
believes that comparisons of its quarterly and annual historical results may not
be meaningful and should not be relied upon as an indication of future
performance.

INCOME TAXES

          As of December 31, 1998, the Company had approximately $2,148,000 and
$225,000 of net operating loss and research and development credit
carryforwards, respectively, for federal income tax purposes, which expire on
various dates between 2011 and 2013.  As of December 31, 1998, the Company had
capitalized approximately $12.9 million of research and development expenses for
federal income tax purposes.

          The availability of the net operating loss carryforward to reduce U.S.
federal taxable income is subject to various limitations under the Code, as
amended, in the event of an ownership change as defined in Section 382 of the
Code. The Company experienced a change in ownership interest in excess of  50%
as defined under the Code upon the consummation of the IPO.  The Company does
not believe that this change in ownership significantly impacts the Company's
ability to utilize its net operating loss and tax credit carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

          The Company has financed its operations primarily through the sales of
its capital stock. On June 21, 1999, the Company completed an IPO of two million
Units.  Each Unit included one share of Common Stock and one Warrant.  The IPO
transaction substantially increased cash available to the Company and is
reflected in the financial statements included elsewhere in this document.  As
of June 30, 1999, the Company had cash and cash equivalents of approximately
$12.4 million and working capital of approximately $8.5 million.  The Company
expects that such amounts will be used primarily to complete product development
and to launch its product, to purchase manufacturing equipment and expand the
Company's facilities and build inventory and provide working capital.  As of
June 30, 1999, the Company has a material commitment for capital expenditures
relating to completion of the automated assembly line for producing its test
cartridges.  The Company estimates that its current liquidity, sales revenue
expected after 1999 and equipment lease financing proceeds (under the Company's
current equipment lease facility) will be sufficient to fund the Company's
operating expenses and capital requirements for at least the next 12 months.
The Company's operating expenses will increase as it approaches market launch of
its product in the fourth quarter of 1999.  The Company also expects that the
development of additional tests will require research expenditures at a level
comparable to past spending for test development.  Sales and marketing
activities will require hiring and training approximately 15 additional staff in
1999.  Initiation of manufacturing activities will require hiring approximately
20 staff and capital expenditures to purchase the equipment needed for the
automated assembly line.  The estimate of the period for which the Company
expects its available sources of cash sufficient to meet its funding needs is a
forward looking statement that involves risks and uncertainties.  The Company's
future expenditures and capital requirements will depend on numerous factors,
including, without limitation, the progress of its market launch, development
programs, the time and costs involved in obtaining regulatory approvals, the
cost of filing, prosecuting, defending and enforcing any patent claims and other
intellectual property rights, competing technological and market developments,
changes in or termination of existing

                                      -9-
<PAGE>

collaborative arrangements, the ability of the Company to establish, maintain
and avoid termination of collaborative arrangements and the purchase of capital
equipment and acquisitions of compounds, technologies or businesses. The
Company's cash requirements are expected to continue to increase significantly
each year as it expands its activities and operations. There can be no assurance
that the Company will ever be able to generate product revenue or achieve or
sustain profitability.

YEAR 2000 COMPLIANCE

          The Company has identified Year 2000 risks in the following
categories:  internal business operations software; software utilized within the
CareSide Analyzer; and software used by the Company's external suppliers and
distributors.  A review of the Company's non-information technology systems did
not identify any material risks.

          With respect to internal operations, most of the Company's computers
and software programs have been recently acquired.  The Company has relied on
the efforts of computer and software vendors to make their latest hardware and
software releases Year 2000 compliant.  As a result, no incremental material
compliance cost is expected to be incurred in this area.  Management of the
Company has contacted vendors to confirm the status of their software that the
Company uses.  In addition, the Company has utilized Year 2000 test software to
evaluate compliance.

          With respect to the CareSide Analyzer, all development work has
occurred since the widespread recognition of the Year 2000 problem.  The Company
designed its products and the software encoded in its system to be Year 2000
compliant.  The Company plans to issue software updates for the CareSide
Analyzer on a routine basis to add additional tests to the menu.  If an
unforeseen Year 2000 issue arises, the Company could distribute compliant
software to its customers at little or no incremental cost as part of these
routine updates.  In the future, it will also be necessary to link the CareSide
Analyzer with customer systems.  If these systems are Year 2000 compliant,
management's time addressing Year 2000 issues on the CareSide Analyzer's
interface with customer systems will be minimal.  If they are not, management's
time may be more significant.  As the specific customers are not known at this
time, it is not possible to measure the opportunity cost.

          Regarding the Company's critical suppliers, the worst scenario that
the Company might encounter would be a short-term disruption of supply if a
vendor were impacted by an unforeseen Year 2000 failure.  The Company inquires
regularly regarding its suppliers' Year 2000 compliance programs.  To date, the
Company believes that its suppliers either are or will be Year 2000 compliant.
The Company expects to establish appropriate contingency plans by the third
quarter of 1999 in the event certain key suppliers are not Year 2000 compliant.
These contingency plans could include utilizing alternative suppliers or
building inventory of critical parts as appropriate.  The Company does not
anticipate any incremental material costs if it is required to implement its
contingency plans.

          The Company expects sales of its product to begin in the fourth
quarter of 1999.  This may include sales pursuant to the Company's distribution
and supply agreement with SmithKline Beecham Clinical Laboratories ("SBCL").
Based on inquiries of SBCL, if the distribution of the Company's product does
commence before the Year 2000, the Company does not believe that Year 2000
problems encountered by SBCL would impact the Company's ability to distribute
its product.  Distribution of the Company's products by other third parties is
not anticipated before the year 2000.

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

          Not applicable

                                      -10-
<PAGE>

                                    PART II
                               OTHER INFORMATION


Item 2.   Changes in Securities and Use of Proceeds

     Sale of Unregistered Securities; Changes in Securities

          Upon consummation of the IPO, S.R. One, pursuant to a Securities
Conversion Agreement, dated as of June 14, 1999, between S.R. One and the
Company (the "Conversion Agreement"), converted $1 million, plus accrued
interest thereon, of the $3 million principal amount of the Bridge Loan into
162,914 shares of Series A Preferred Stock.  The remaining $2 million of the
Bridge Loan matures in December 1999.  The annual interest rate on the remaining
$2 million Bridge Loan increased to 10% on July 1, 1999.  Pursuant to the
Conversion Agreement, S.R. One has the option to convert all or any portion of
the remaining Bridge Loan, plus accrued interest thereon, into shares of Series
A Preferred Stock at a conversion price of $6.375 per common share.

          As part of the conversion of a portion of the Bridge Loan described
above, the warrant ("Bridge Warrant") issued by the Company to S.R. One in
connection with the Bridge Loan was modified such that it will be exercisable in
all events for 235,294 shares of Common Stock.  The Bridge Warrant will become
exercisable on December 16, 1999.

          In June 1999, the Company granted stock options to purchase an
aggregate of 10,815 shares of Common Stock under the Company's 1996 Incentive
and Non-Qualified Stock Option Plan to five of the Company's non-employee
directors.  The per share exercise price of these stock options is $7.50.

          The Company believes that the transactions described above were exempt
from registration under Sections 3(a)(9) and 3(b) of the Securities Act of 1933,
as amended (the "Securities Act") because the securities issued were either (1)
exchanged by the Company with an existing securityholder exclusively where no
commission or other remuneration was paid or given directly or indirectly for
soliciting such exchange or (2) issued pursuant to a compensatory benefit plan
pursuant to Rule 701 under the Securities Act.  In addition, recipients of
securities in each such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates issued in such transactions.  All recipients had adequate access
through their relationship with the Company, to information about the Company.

     Use of Proceeds

          On June 15, 1999, the Company's Registration Statement on Form S-1
(File No. 33-69207) (the "Registration Statement") was declared effective by the
Securities and Exchange Commission, which Registration Statement related to the
Company's initial public offering of up to 2,000,000 Units (not including the
over-allotment option granted to the underwriters). The Registration Statement
also related to the shares of Common Stock and Warrants included in such
2,000,000 Units, warrants to purchase up to 200,000 Units granted to the
representatives of the underwriters of the Company in the IPO, and 2,200,000
Shares of Common Stock underlying the Warrants included in all of the Units. The
managing underwriters of the IPO were Paulson Investment Company, Inc.,
Millennium Financial Group, Inc. and marion bass securities corporation. Two
million Units were sold at a public offering price of $7.50 per share, for an
aggregate offering price of $15.0 million. Expenses of the IPO were $2.6
million, including an underwriting discount of $920,000 and other offering
expenses of $1.7, for net proceeds to the Company of $12.4 million. As of June
30, 1999, the net proceeds of the IPO have been invested in short term interest
bearing investments.

                                      -11-
<PAGE>

Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits.
<TABLE>
<CAPTION>

Exhibit No. Description
<S>         <C>
3.1         Amended and Restated Certificate of Incorporation of Careside, Inc.
3.2         Certificate of Designations of Series A Convertible Preferred Stock
3.3         Amended and Restated Bylaws of Careside, Inc.
4.1*        Specimen Stock Certificate
4.1a        Specimen Warrant Certificate
4.1b        Specimen Unit Certificate
4.2*        Placement Agent Warrant Agreement dated as of January 31, 1997 by and between Careside, Inc. and Spencer Trask
            Securities Incorporated (including Form of Warrant)
4.3*        Placement Agent Warrant Agreement dated as of March 6, 1998 by and between Careside, Inc. and Spencer Trask Securities
            Incorporated (including Form of Warrant)
4.4*        Securities Purchase Agreement dated as of December 17, 1998 by and between S.R. One, Limited and Careside, Inc.
            (including Form of Note) (as amended)
4.5*        Warrant Issued to S.R. One, Limited dated December 17, 1998
4.6         Warrant Agreement dated June 21, 1999, by and between Careside, Inc. and Paulson Investment Company, Inc.
4.7         Warrant Agreement dated June 21, 1999, by and between Careside, Inc. and American Stock Transfer & Trust Company, as
            Warrant Agent
4.8         Warrant issued to S.R. One, Limited dated June 21, 1999
4.9         New Note issued to S.R. One, Limited dated June 21, 1999
10.1*       Registration Rights Agreement dated as of November 7, 1996, by and among SmithKline Beecham Diagnostic Systems Co.,
            SmithKline Beecham Corporation and Careside, Inc.
10.2*       Registration Rights Agreement dated as of December 4, 1996, by and among Careside, Inc., Exigent Partners, L.P., W.
            Vickery Stoughton, Thomas H. Grove, Kenneth B. Asarch, William S. Knight, Donald S. Wong, Ashok K. Sawhney and Philip B.
            Smith
10.3*       Amendment No. 1 to Registration Rights Agreement dated as of January 31, 1997, by and among Careside, Inc., Exigent
            Partners, L.P., W. Vickery Stoughton, Thomas H. Grove, Kenneth B. Asarch, William S. Knight, Donald S. Wong, Ashok K.
            Sawhney and Philip B. Smith
10.4*       Registration Rights Agreement dated as of December 4, 1996, by and between Careside, Inc. and Spencer Trask Securities
            Incorporated
10.5*       Registration Rights Agreement dated as of January 31, 1997, by and among Careside, Inc. and the Investors signatory
            thereto
10.6*       Stockholders Agreement dated as of December 4, 1996, by and among Careside, Inc., SmithKline Beecham Corporation,
            SmithKline Beecham Diagnostic Systems Co., Spencer Trask Securities Incorporated, Exigent Partners, L.P., W. Vickery
            Stoughton, Thomas H. Grove, Kenneth B. Asarch, William S. Knight, Donald S. Wong, Ashok K. Sawhney, Philip B. Smith and
            each Investor signatory thereto
10.7*       Consulting Agreement by and between Careside, Inc. and Cedar Capital Investors dated August 8, 1997
10.8*       Employment Agreement dated as of March 3, 1997, between Careside, Inc. and W. Vickery Stoughton
10.9*       Employment Agreement dated as of March 3, 1997, between Careside, Inc. and Thomas H. Grove
10.10*      Employment Agreement dated as of July 30, 1998, between Careside, Inc. and James R. Koch
10.11*      1996 Incentive and Non-Qualified Stock Option Plan, as amended and restated
10.12*      1996 Key Executive Stock Option Plan, as amended and restated
10.13*      1998 Incentive and Non-Qualified Stock Option Plan
10.14*      1998 Director Stock Option Plan
</TABLE>

                                      -12-
<PAGE>

<TABLE>

<S>         <C>
10.15*      Standard Industrial/Commercial Single-Tenant Lease-NET dated as of October 14, 1996, by and between Fox Hills Business
            Park, a California Limited Partnership and Careside, Inc.
10.16*      Agreement dated as of April 13, 1999, by and between Fuji Photo Film Co., Ltd. and Careside, Inc.+
10.17*      Agreement dated as of December 12, 1995, by and between United Medical Manufacturing Company and SmithKline Beecham
            Corporation and assignment
10.18*      Product Development and Supply Agreement dated as of July 18, 1997, by and between Careside, Inc. and UMM Electronics,
            Inc.
10.19*      Agreement executed December 7, 1995 and February 28, 1996, by and between SmithKline Beecham Corporation and Hauser,
            Inc. and assignment
10.20*      Agreement Number CP032284 Cost Type executed December 5 and 17, 1996 by and between Battelle Memorial Institute and
            Careside, Inc.
10.21*      Joint Research and Development Agreement dated as of October 28, 1996 by and between Careside, Inc. and International
            Technidyne Corporation
10.22       Collaborative Agreement dated as of May 20, 1999 by and between Careside, Inc. and CDC Technologies, Inc.+
10.23*      Distribution and Supply Agreement dated as of November 7, 1996, by and between SmithKline Beecham Clinical Laboratories,
            Inc. and Careside, Inc., as amended on February 12, 1999.+
10.24*      Asset Purchase Agreement dated as of November 7, 1996, by and among SmithKline Beecham Clinical Laboratories, Inc.,
            SmithKline Beecham Diagnostic Systems Co. and Careside, Inc.
10.25*      Loan and Security Agreement dated as of October 1, 1996, by and between Careside, Inc. and SmithKline Beecham
            Corporation
10.26*      Placement Agency Agreement dated as of December 10, 1996, by and between Careside, Inc. and Spencer Trask Securities
            Incorporated
10.27*      Placement Agency Agreement dated as of January 29, 1998, by and between Spencer Trask Securities Incorporated and
            Careside, Inc.
10.28*      Investment Banking Agreement dated as of January 31, 1997, by and between Careside, Inc. and Spencer Trask Securities
            Incorporated
10.29*      Agreement of Limited Partnership of Exigent Partners, L.P. dated as of October 1996, by and between Kevin Kimberlin and
            those persons listed on Schedule A attached thereto
10.30*      The Lincoln National Life Insurance Company Standardized 401(k) Salary Reduction Plan and Trust Prototype Plan Adoption
            Agreement Plan #008, effective January 1, 1997, by and between Careside, Inc., W. Vickery Stoughton and Thomas Grove
10.31*      Employee Stock Purchase Plan
10.32*      Registration Rights Agreement dated as of March 6, 1998, by and among Careside, Inc. and the Investors signatory thereto
10.33*      Registration Rights Agreement dated as of March 6, 1998, by and between Careside, Inc. and Spencer Trask Securities
            Incorporated
10.34*      Registration Rights Agreement dated as of December 17, 1998, by and between Careside, Inc. and S.R. One, Limited
10.35*      Waiver Letter Agreement dated as of May 25, 1999, by and between Careside, Inc. and Spencer Trask Securities
            Incorporated
10.36*      Letter Agreements between Advanced Medical Information Technologies, Inc. and Careside, Inc. dated January 11, 1999,
            January 25, 1999 and February 19, 1999+
10.37       Securities Conversion Agreement dated as of June 14, 1999, between S.R. One, Limited and Careside, Inc.
</TABLE>

                                      -13-
<PAGE>

<TABLE>

<S>         <C>
10.38       Amended and Restated Registration Rights Agreement dated as of June 21, 1999, between S.R. One, Limited and Careside,
            Inc.
27.1        Financial Data Schedule
</TABLE>
_____________
*    Incorporated by reference to the exhibit of the same number filed with
     Careside, Inc.'s Registration Statement on Form S-1 (File No. 333-69207)
+    Portions of these documents have been omitted pursuant to a request for
     confidential treatment.  The omitted material has been filed separately
     with the Securities and Exchange Commission.

     (b)  Reports on Form 8-K.

          No reports on Form 8-K were filed during the quarter ended June 30,
1999.

                                      -14-
<PAGE>

                                    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 hereunto duly authorized.


                                  CARESIDE, INC.


Date:  August 13, 1999            By:  /s/ W. Vickery Stoughton
                                       -----------------------------------------
                                           W. Vickery Stoughton
                                           Chairman and Chief Executive Officer
                                           (Principal Executive Officer)



                                  By:  /s/ James R. Koch
                                       -----------------------------------------
                                           James R. Koch
                                           Executive Vice President and
                                           Chief Financial Officer (Principal
                                           Financial and Accounting Officer)

                                      -15-