<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q
                                QUARTERLY REPORT

                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

          FOR THE QUARTER ENDED                  Commission File Number
             MARCH 31, 1998                              0-20963

                          UROQUEST MEDICAL CORPORATION
             (Exact name of Registrant as specified in its charter)


                DELAWARE                               59-3176454
      (state or other jurisdiction                    (IRS Employer 
    of incorporation or organization)            Identification Number)

             173 CONSTITUTION DRIVE, MENLO PARK, CALIFORNIA  94025
             (Address of principal executive offices)    (Zip Code)

                                 (650) 463-5180
              (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 [ ]

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

<TABLE>
<CAPTION>
            Class                              Outstanding at April 30, 1998
-----------------------------                  -----------------------------
<S>                                            <C>
Common Stock, $.001 par value                           12,033,939
</TABLE>

<PAGE>   2

                                      INDEX

PART I - FINANCIAL INFORMATION

        Item 1 -  Condensed Consolidated Financial Statements

                  Condensed Consolidated Statements of Operations for the Three
                  Months Ended March 31, 1998 and 1997 (unaudited)

                  Condensed Consolidated Balance Sheets as of March 31, 1998
                  (unaudited) and December 31, 1997

                  Condensed Consolidated Statements of Cash Flows for the Three
                  Months Ended March 31, 1998 and 1997 (unaudited)

                  Notes to Condensed Consolidated Financial Statements

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

PART II - OTHER INFORMATION

         Item 1 - Legal Proceedings
         Item 2 - Changes in Securities and Use of Proceeds 
         Item 3 - Defaults upon Senior Securities 
         Item 4 - Submission of Matters to a Vote of Security Holders 
         Item 5 - Other Information 
         Item 6 - Exhibits and Reports on Form 8-K

Signatures


                                       2
<PAGE>   3

PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                          UROQUEST MEDICAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                       Three months ended March 31,
                                                      -------------------------------
                                                          1998               1997
                                                      ------------       ------------
<S>                                                   <C>                <C>         
Net sales ......................................      $  4,022,987       $  3,674,598

Cost of sales ..................................         2,066,515          1,866,563
                                                      ------------       ------------
  Gross profit .................................         1,956,472          1,808,035
                                                      ------------       ------------
Operating expenses:
  Research and development .....................           915,423            583,319
  General and administrative ...................         1,234,984            780,130
  Sales and marketing ..........................           642,276            379,514
  Amortization of goodwill .....................           158,046            171,281
                                                      ------------       ------------
    Total operating expenses ...................         2,950,729          1,914,244
                                                      ------------       ------------
Operating loss .................................          (994,257)          (106,209)

Other income (expense):
  Interest expense .............................           (34,827)           (51,017)
  Interest income ..............................           132,360            141,406
                                                      ------------       ------------
                                                            97,533             90,389

Loss before provision for income taxes .........          (896,724)           (15,820)

Provision for income taxes .....................            11,000             47,000
                                                      ------------       ------------
Net loss .......................................      $   (907,724)      $    (62,820)
                                                      ============       ============
Basic and diluted net loss per share ...........      $      (0.08)      $      (0.01)
                                                      ============       ============
Weighted average shares used in computing
  basic and diluted net loss per share .........        11,957,193         11,844,602
                                                      ============       ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>   4

                      UROQUEST MEDICAL CORPORATION
                 CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                    ASSETS                                         March 31,     December 31,
                                                                                     1998            1997
                                                                                 ------------    ------------
                                                                                 (Unaudited)
<S>                                                                              <C>             <C>         
Current assets:
     Cash and cash equivalents ...............................................   $ 10,448,703    $ 11,054,088
     Accounts receivable, net of allowance for doubtful accounts .............      2,804,347       2,610,764
     Inventories .............................................................      2,436,811       2,449,072
     Prepaid expenses and other current assets................................        264,374         317,319
                                                                                 ------------    ------------
        Total current assets .................................................     15,954,235      16,431,243
                                                                                 ------------    ------------
Property, plant and equipment, net ...........................................      4,418,993       4,413,131

Intangibles, at cost, less accumulated amortization ..........................     10,888,403      11,079,377
                                                                                 ------------    ------------
        Total assets .........................................................   $ 31,261,631    $ 31,923,751
                                                                                 ============    ============
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable ........................................................   $    682,396    $    659,769
     Accrued compensation ....................................................        798,302         599,306
     Accrued selling and distribution expenses ...............................         90,895          73,124
     Accrued severance costs .................................................        559,174         666,376
     Other accrued expenses ..................................................        911,013         737,666
     Current portion of long-term debt .......................................        490,360         490,360
                                                                                 ------------    ------------
        Total current liabilities ............................................      3,532,140       3,226,601
                                                                                 ------------    ------------
Long-term debt, net of current portion .......................................      1,174,189       1,293,175

Stockholders' equity:
     Preferred stock, $.001 par value; 16,000,000 shares authorized;
        none issued and outstanding ..........................................             --              --
     Common stock, $.001 par value; 31,000,000 shares authorized;
         12,033,939 and 11,954,010 shares issued and outstanding
         as of March 31, 1998 and December 31, 1997, respectively ............         12,034          11,954
     Additional paid-in capital ..............................................     37,035,611      36,979,740
     Deferred compensation ...................................................        (42,367)        (45,467)
     Accumulated deficit .....................................................    (10,449,976)     (9,542,252)
                                                                                 ------------    ------------
        Total stockholders' equity ...........................................     26,555,302      27,403,975
                                                                                 ------------    ------------
        Total liabilities and stockholders' equity ...........................   $ 31,261,631    $ 31,923,751
                                                                                 ============    ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>   5
                          UROQUEST MEDICAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                        Three months ended March 31,
                                                                                      -------------------------------
                                                                                          1998               1997
                                                                                      ------------       ------------
<S>                                                                                   <C>                <C>          
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss .....................................................................   $   (907,724)      $    (62,820)
     Adjustments to reconcile net loss to net
       cash (used in) provided from operating activities:
     Depreciation and amortization ................................................        400,085            361,565
     Provisions for inventory reserves ............................................       (169,777)                --
     Changes in operating assets and liabilities:
         Accounts receivable ......................................................       (193,583)           (11,269)
         Inventories ..............................................................        182,038           (131,885)
         Prepaid expenses and other current assets ................................         52,945            120,722
         Accounts payable and accrued expenses ....................................        412,742            159,353
         Accrued severance costs ..................................................       (107,202)                --
                                                                                      ------------       ------------
                Net cash (used in) provided from operating activities .............       (330,476)           435,666
                                                                                      ------------       ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
         Purchases of property, plant and equipment, net ..........................       (211,874)          (160,581)
                                                                                      ------------       ------------
                Net cash used in investing activities .............................       (211,874)          (160,581)
                                                                                      ------------       ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
         Proceeds from issuance of common stock ...................................         55,951                 --
         Repayment of notes payable and long-term debt ............................       (118,986)          (257,536)
                                                                                      ------------       ------------
               Net cash used in financing activities ..............................        (63,035)          (257,536)
                                                                                      ------------       ------------
Net (decrease) increase in cash and cash equivalents ..............................       (605,385)            17,549

Cash and cash equivalents at beginning of period ..................................     11,054,088         12,694,047
                                                                                      ------------       ------------
Cash and cash equivalents at end of period ........................................   $ 10,448,703       $ 12,711,596
                                                                                      ============       ============
Supplemental disclosures of cash flow information:
      Cash paid for interest ......................................................   $     34,827       $     51,017
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>   6

                          UROQUEST MEDICAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1998
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

         The condensed consolidated financial statements include the assets and
liabilities of UroQuest Medical Corporation (the "Company") and its wholly owned
subsidiaries. All significant intercompany transactions have been eliminated in
consolidation.

         In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the Company's
consolidated financial position as of March 31, 1998, and the results of
operations and cash flows for the three months ended March 31, 1998 and 1997.
The results of operations for any interim period are not necessarily indicative
of results to be expected for the full fiscal year. The balance sheet at
December 31, 1997 has been derived from audited financial statements at such
date, but does not include all of the information and footnotes required by
generally accepted accounting principles.

         The accompanying condensed consolidated financial statements should be
read in conjunction with the audited consolidated financial statements and the
notes thereto included in the Company's Form 10-K (File No. 0-20963) for the
year ended December 31, 1997 filed with the Securities and Exchange Commission.

         In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("SFAS 131"), which is effective for years
beginning after December 15, 1997. SFAS 131 establishes standards for the way
that public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. SFAS 131 is effective for financial
statements for fiscal years beginning after December 15, 1997, and therefore the
Company will adopt the new requirements retroactively in 1998. Management has
not completed its review of SFAS 131, but does not anticipate that the adoption
of this statement will have a significant effect on the Company's reported
segments.

         Certain reclassifications were made to the 1997 condensed consolidated
financial statements to conform with the 1998 presentation.

NOTE 2 - NET LOSS PER SHARE

         Basic net loss per share has been calculated based on the weighted
average number of shares of common stock outstanding. If the Company had been in
a net income position in the periods presented, diluted earnings per share would
have been presented separately and would have included the effect of outstanding
stock options and warrants, calculated using the treasury stock method.


                                       6
<PAGE>   7

                          UROQUEST MEDICAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1998
                                   (UNAUDITED)

NOTE 3 - INVENTORIES

         Inventories consist of the following:

<TABLE>
<CAPTION>
                                              March 31, 1998   December 31, 1997
                                              --------------   -----------------
<S>                                           <C>              <C>
Finished goods .............................    $  510,459        $  589,169
Work-in-process ............................     1,246,765         1,046,127
Raw materials and supplies .................       679,587           813,776
                                                ----------        ----------
                                                $2,436,811        $2,449,072
                                                ==========        ==========
</TABLE>


                                       7
<PAGE>   8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

         The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Condensed
Consolidated Financial Statements and the related Notes thereto included
elsewhere in this Report. The following Management's Discussion and Analysis of
Financial Condition and Results of Operations contains forward-looking
statements, within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, that involve risks and
uncertainties. The Company's actual results of operations could differ
materially from those anticipated in such forward-looking statements as a result
of certain factors discussed under "Factors Affecting Operating Results" and
elsewhere in this Report.

OVERVIEW

         Since its inception in April 1992, the Company has devoted its efforts
to the design and development of advanced products for the management and
diagnosis of both male and female urological disorders. The Company's principal
product, the On-Command(R) product, is an intraurethral (inside the urethra)
catheter incorporating a proprietary anchoring system and a proprietary patient
controlled, magnetically activated valve used to regulate urine flow. The
On-Command product is designed to enable persons with either urinary
incontinence or urinary retention to manage their condition without the
restricted mobility, medical complications, discomfort and embarrassment
generally associated with many of the existing management alternatives,
including intermittent, Foley, external and suprapubic catheters, diapers and
absorbents, and penile clamps.

         Since 1996, Bivona Medical Technologies ("BMT") has been a wholly owned
subsidiary of the Company. BMT develops, manufactures and markets a line of
proprietary silicone medical device products and provides engineering design,
development and manufacturing services for silicone products on an OEM basis for
other medical device companies. BMT is one of a limited number of specialty
manufacturers of silicone catheters in the United States.

         The Company has experienced substantial losses since inception and, as
of March 31, 1998, had an accumulated deficit of $10.4 million. In October 1996,
the Company raised approximately $17.8 million through the initial public
offering of its Common Stock.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997:

         Net sales and cost of sales. Net sales, which were generated from sales
by BMT of primarily proprietary airway management products and other medical
device products to OEM customers, increased 9% to $4,023,000 for the three
months ended March 31, 1998 from $3,675,000 for the three months ended March 31,
1997. The increase is attributable primarily to the increase in sales of
proprietary airway management and other proprietary products. Cost of sales of
$2,067,000 for the first quarter ended March 31, 1998 increased 11% from
$1,867,000 for the same quarter of 1997, due primarily to the increase in sales.
The gross margin for the first quarter of 1998 compared to the same period for
the prior year remained at 49%.

         Research and development. Research and development expenses include
product development, clinical testing and regulatory expenses. For the three
months ended March 31, 1998 research and development expenses increased to
$915,000 from $583,000 for the three months ended March 31, 1997. The increase
was attributable primarily to expanded number of sites participating in the
clinical study, additional clinical and site-monitoring personnel hired,
increased training and clinical product availability 


                                       8
<PAGE>   9

at the clinical sites in order to obtain product performance feedback necessary
to direct current and future product designs and to assist in the completion of
the clinical study necessary to support a regulatory submission, and increase in
other research and development expenditures primarily related to the On-Command
product. Research and development expenses are expected to continue to increase
in the foreseeable future.

         General and administrative. General and administrative expenses
increased to $1,235,000 for the quarter ended March 31, 1998 from $780,000 for
the quarter ended March 31, 1997. The increase was attributable primarily to
additional personnel costs, professional service costs, facilities expenses and
other expenses that support the expansion of the Company's business. General and
administrative expenses are expected to increase to support anticipated
expansion of the Company's business.

         Sales and marketing. Sales and marketing expenses increased to $642,000
for the three months ended March 31, 1998 from $380,000 for the three months
ended March 31, 1997. This increase was due primarily to the commencement of
marketing and international selling efforts. Sales and marketing expenses are
expected to increase in 1998 partially related to the Company's anticipated
limited product launch of the On-Command product in Europe in the second half of
1998.

         Amortization of goodwill. Amortization of goodwill of $158,000 for the
quarter ended March 31, 1998 and $171,000 for the quarter ended March 31, 1997
related to the goodwill recognized as a result of the acquisition of BMT in
October 1996. The goodwill is being amortized over an estimated life of 20
years.

         Other income (expense). Other income (expense) increased to net
interest income of $98,000 for the three months ended March 31, 1998 from a net
interest income of $90,000 for the same period in 1997. Interest income
decreased to $132,000 for the first quarter of 1998 from $141,000 for the same
quarter of 1997. The decrease in interest income was attributable to lower net
average cash balances, due primarily to net cash being used in operating
activities. Interest expense decreased to $35,000 for the first quarter of 1998
from $51,000 for the same quarter of 1997. The decrease in interest expense was
attributable primarily to the lower net average debt balances as the Company is
repaying existing loans and has not obtained any new loans.

         Provision for income taxes. The Company recorded $11,000 and $47,000 in
provision for state income taxes for the three months ended March 31, 1998 and
1997, respectively, primarily as a result of taxable income earned by its
subsidiary in a state where the Company is required to file tax returns on a
separate company basis. The Company has not paid any federal income taxes since
its inception due to net operating losses. Realization of deferred tax assets is
dependant on future earnings, if any, the timing and amount of which are
uncertain. Accordingly deferred tax asset valuation allowances have been
established as of March 31, 1998 and December 31, 1997 to reflect these
uncertainties.

         As of December 31, 1997, the Company had federal net operating loss
carryforwards of approximately $5,900,000. The net operating loss carryforwards
will expire beginning in 2007, if not utilized. Utilization of the net operating
loss carryforwards may be subject to a substantial annual limitation due to the
ownership change limitations provided by the Internal Revenue Code of 1986, as
amended. The annual limitation may result in the expiration of net operating
loss carryforwards before utilization.

         Year 2000 Compliance. Many currently installed computer systems and
software products are coded to accept only two digit entries in the date code
field. Beginning in the year 2000, these date code fields will need to accept
four digit entries to distinguish 21st century dates from 20th century dates. As
a result, in less than two years, computer systems and/or software used by many
companies may need to be upgraded to comply with such "Year 2000" requirements.
Significant uncertainty exists in the software industry concerning the potential
effects associated with such compliance. The Company is in the process of
establishing procedures for evaluating and managing the risk and costs
associated with Year 2000 problems. While the Company believes its software will
be Year 2000 compliant by the end of the 1998 


                                       9
<PAGE>   10

calendar year, there can be no assurances that the Company's software will
contain all necessary date code changes to prevent processing errors potentially
arising from calculation using the Year 2000 date. Any disruptions in the
Company's business as a result of Year 2000 noncompliance could have a material
adverse effect on the Company's business, financial condition and result of
operations.

         Additionally, the Company believes that the purchasing patterns of
customers and potential customers may be affected by Year 2000 issues. Many
companies are expending significant resources to correct or patch their current
software systems of Year 2000 compliance. These expenditures may result in
reduced funds available to purchase products, such as those provided by the
Company.

LIQUIDITY AND CAPITAL RESOURCES

         The Company has financed its operations primarily through the public
and private sale of equity securities and through bank-provided working capital
financing, short-term borrowings and equipment lease financing and, beginning in
1997, cash generated from operations at BMT. Since inception, the Company has
raised approximately $27 million in net proceeds of equity financing which
includes the net proceeds of $17,803,000 from the initial public offering of the
Company's Common Stock in October 1996.

         During the three months ended March 31, 1998, net cash flows used in
operating activities amounted to $330,000. During the three months ended March
31, 1997, net cash provided from operating activities amounted to $436,000. The
increase in net cash flows used in operating activities in the first quarter of
1998 compared to the same quarter in 1997 was due primarily to increase in
operating expenses.

         Net additions of property and equipment for the quarters ended March
31, 1998 and 1997 were $212,000 and $161,000, respectively. The Company expects
the net addition of property and equipment will increase in 1998 due primarily
to additional purchases of property and equipment to support urological
products.

         The Company's primary internal source of liquidity presently consists
of existing borrowings, cash balances and cash generated from BMT's operations.
The Company's primary external sources of liquidity are equity financings and
bank-provided debt financing.

         As of March 31, 1998 and December 31, 1997, the Company had cash of
$10,449,000 and $11,054,000, respectively. The decrease since December 31, 1997
was due to the net cash used in operations, purchases of fixed assets and
repayment of long-term debt. As of March 31, 1998, the Company had no
significant noncancelable commitments for capital expenditures or raw material
purchases, although the Company may enter into such commitments in the future.

         The Company's capital requirements depend on numerous factors,
including the extent to which the On-Command product and other products gain
market acceptance, actions relating to regulatory and reimbursement matters,
progress of clinical trials, the effect of competitive products, the cost and
effect of future marketing programs, the resources the Company devotes to
manufacturing and developing its products, the success of proprietary airway
management products and OEM sales, general economic conditions and various other
factors. The timing and amount of such capital requirements cannot accurately be
predicted. The Company believes that existing cash and cash equivalents and cash
anticipated to be generated from BMT's operations will provide adequate funding
for the Company's currently anticipated capital requirements through the
calendar year 1998. Prior to achieving profitability, the Company may require
additional capital and there can be no assurance that such additional funding
will be available on terms satisfactory to the Company, if at all. Any
additional equity financing may be dilutive to stockholders, and debt financing,
if available, may involve significant restrictive covenants. Failure to raise
capital when needed could have a material adverse effect on the Company's
business, financial condition and results of operations.


                                       10
<PAGE>   11
         The Company expects its operating losses to continue until the
On-Command product achieves significant market acceptance. The Company continues
to expend substantial resources in funding clinical trials in support of
regulatory and reimbursement approvals, expansion of marketing and sales
activities, and research and development. In addition, the Company's results of
operations may fluctuate significantly during future quarterly periods. All
management estimates regarding liquidity and capital requirements are subject to
the factors discussed above and in the following section titled "Factors
Affecting Operating Results".

FACTORS AFFECTING OPERATING RESULTS

         The statements contained in this Report that are not purely historical
are "forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. All forward looking statements
involve various risks and uncertainties and include statements regarding the
Company's product developments, commercial opportunities, regulatory approval,
expectations, strategies, plans and intentions for the future. All
forward-looking statements are made as of this date based on information
available to the Company as of such date, and the Company assumes no obligation
to update any forward-looking statement. It is important to note that such
statements may not prove to be accurate and that the Company's actual results
and future events could differ materially from those anticipated in such
statements. Among the factors that could cause actual results to differ
materially from the Company's expectations are described below and elsewhere in
this Report. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by this Section and other factors included elsewhere
in this Report. See other portions of this Item 2. "Management's Discussion and
Analysis of Financial Condition and Results of Operations".

Lack of Regulatory Approval and Limited Clinical Data

         The Company's principal product, the On-Command product, is an
investigational device that has not been approved by the FDA and will not be
available for commercial distribution in the United States unless and until such
approval is obtained. The Male On-Command product is currently in a controlled,
randomized clinical study in the United States with respect to single use
insertions up to 30 days for an acute indication. During the past twelve months,
the Company has expanded the number of sites participating in the clinical
study, hired additional clinical and site-monitoring personnel and increased the
training and clinical product availability at these clinical sites in order to
obtain product performance feedback necessary to direct current and future
product designs and to assist in the completion of the clinical study necessary
to support a regulatory submission. There can be no assurance that the FDA will
determine that the data derived from the clinical study will support the safety
and efficacy of the device nor that the data will be sufficient to file a
regulatory application or that such application will be approved by the FDA. In
addition to the acute study currently underway, UroQuest is preparing to submit
an IDE to begin a multi-center trial in support of a PMA application for a
chronic indication for the Male On-Command product. The Company intends to
submit the chronic study IDE during the second quarter of 1998 and anticipates
beginning this trial during the third quarter of 1998. There can be no assurance
that the FDA will determine that the data derived from the clinical study will
support the safety and efficacy of the device nor that the data will be
sufficient to file a PMA application or that such application will be approved
by the FDA. A feasibility study of the Female On-Command product is nearing
completion. The results of this study will be used to prepare an IDE submission
for a controlled, randomized clinical study of this device. There can be no
assurance that the FDA will approve such a submission. If either the Male or
Female On-Command product does not prove to be safe and effective in clinical
testing to the satisfaction of the FDA, the Company will not be able to market
or commercialize these On-Command products in the United States. Furthermore,
approval for single use insertions of the On-Command product, if obtained, does
not mean that use of successive device insertions will be approved. There can be
no assurance that either single use or successive insertion use of the
On-Command product will prove to be safe and effective in the United States, or
that FDA approval will be obtained on a timely basis, if at all. In addition,
the clinical studies may identify technical, manufacturing, design or other
factors that could delay completion of such testing. If the On-Command product
does not prove to be safe and effective in clinical 


                                       11
<PAGE>   12

testing or if the Company is otherwise unable to obtain necessary regulatory
approval, the Company's business, financial condition and results of operations
will be materially adversely affected.

Dependence Upon the On-Command Product

         The Company expects to derive a substantial majority of its future
revenues from sales of the On-Command product. Although the operations of BMT
are expected to be the sole source of revenues in the short-term, the Company's
long-term revenues and future success are substantially dependent upon its
ability to market and commercialize the On-Command product in the United States
and abroad. Although the Company markets a line of proprietary medical device
products through BMT, there can be no assurance that such products will receive
continued market acceptance or generate significant sales. Furthermore, even
though the Company is in the process of developing new products in addition to
the On-Command product, there can be no assurance that such development efforts
will be successful or that any resulting products will achieve market
commercialization. The life cycle of the On-Command product is difficult to
estimate, particularly in light of current and future technological
developments, competition and other factors. The failure of the Company to
successfully commercialize the On-Command product or to realize significant
revenues therefrom would have a material adverse effect on the business,
financial condition and results of operations of the Company.

Uncertainty of Market Acceptance

         The On-Command product represents a new management modality for urinary
outflow dysfunction, and there can be no assurance that the On-Command product
will gain any significant degree of market acceptance among physicians, health
care payers or patients, even if necessary domestic or international regulatory
and reimbursement approvals are obtained. The Company believes that
recommendations of the On-Command product by physicians will be essential for
market acceptance of the On-Command product, and there can be no assurance that
any such recommendations will be obtained. Broad use of the On-Command product
will require the training of numerous physicians and the time required to
complete such training could result in a delay or dampening of market
acceptance. Moreover, health care payers' approval of reimbursement for the
On-Command product will be an important factor in establishing market
acceptance. Patient acceptance of the device will depend on many factors,
including physician recommendations, the degree, rate and severity of potential
complications, the cost and benefits compared to competing products, lifestyle
implications, available reimbursement and other considerations. Failure of the
On-Command product to achieve substantial market acceptance would have a
material adverse effect on the Company's business, financial condition and
results of operations.

Limited Operating History; History of Losses and Expectation of Future Losses

         The Company has a limited history of operations. Since its inception in
April 1992, the urology portion of Company has been primarily engaged in
research and development of the On-Command product. The Company has experienced
substantial operating losses since inception and, as of March 31, 1998, had an
accumulated deficit of approximately $10.4 million. The Company expects its
operating losses to continue until the On-Command product achieves significant
market acceptance. The Company continues to expend substantial resources in
funding clinical trials in support of regulatory and reimbursement approvals,
expansion of marketing and sales activities, and research and development. There
can be no assurance that the Company will achieve or sustain profitability in
the future.

Government Regulation

         The Company's products, including the On-Command product, will continue
to be subject to pervasive and continuing regulation by the FDA. The FDA
regulates the preclinical and clinical testing, manufacture, labeling,
distribution and promotion of medical devices in the United States. Prior to
commercialization in the United States, a medical device generally must receive
FDA clearance or 


                                       12
<PAGE>   13

approval, which can be an expensive, lengthy and uncertain process. Regulatory
agencies in various foreign countries in which the Company's products may be
sold may impose additional or varying regulatory requirements. Noncompliance
with applicable requirements can result in, among other things, fines,
injunctions, civil penalties, recall or seizure of products, total or partial
suspension of production, failure of the government to grant premarket clearance
of approval for devices, withdrawal of marketing clearances or approvals, and
criminal prosecution. The FDA also has the authority to request recall, repair,
replacement or refund of the cost of any device manufactured or distributed by
the Company.

         Companies desiring to market a new medical device generally must obtain
either a premarket notification clearance under Section 510(k) of the FDC Act
("510(k)") or premarket approval ("PMA") prior to the introduction of such
medical device into the market. In addition, changes to a medical device that
significantly affect the safety or efficacy of the device are also subject to
FDA review and clearance or approval. Although generally believed to be a
shorter, less costly regulatory path than a PMA, the process of obtaining a
510(k) clearance generally requires the submission of supporting data, which may
include data from clinical trails of the device. The time period required to
assemble and compile this data can be extensive and can extend the regulatory
process for a considerable length of time. The PMA process can take several
years longer than the 510(k) clearance process and requires the submission of
extensive clinical data and supporting information.

         Regulatory approvals, if granted, may include significant limitations
on the indicated uses for which a product may be marketed. FDA enforcement
policy strictly prohibits the marketing of medical devices for unapproved uses.
The Company will be required to adhere to applicable FDA regulations regarding
Good Manufacturing Practices ("GMP") and similar regulations in other countries,
which include testing, control, and documentation requirements, and with Medical
Device Reporting ("MDR") requirements. Ongoing compliance with GMP and other
applicable regulatory requirements will be monitored through periodic
inspections by state and federal agencies, including the FDA, and by comparable
agencies in other countries. In addition, changes in existing regulations or
adoption of new governmental regulations or policies could prevent or delay
regulatory approval of the Company's products.

         Sales of medical devices outside the United States are subject to
foreign regulatory requirements that vary widely for country to country. The
time necessary to obtain approval for sales in foreign countries may be longer
or shorter than that required for FDA approval, and requirements may differ from
FDA requirements. The Company has received the right to affix the CE mark, an
international symbol of adherence to quality assurance standards and compliance
with applicable European medical device directives, to the On-Command product.
Some countries in which the Company intends to sell devices through distributors
(for example, France, Germany and Spain) either do not currently regulate
medical devices such as the On-Command product or have minimal registration
requirements. However, these countries may develop more extensive regulations in
the future that could impact the Company's ability to market On-Command product.

         There can be no assurance that the Company will be able to obtain FDA
clearance or approval to market the On-Command product or other products in the
United States for their intended uses on a timely basis or at all, and delays in
receipt of or failure to receive such clearances or approvals, or failure to
comply with existing or future regulatory requirements would have a material
adverse effect on the Company's business, financial condition and results of
operations.

         BMT, as a developer and manufacturer of Class I and Class II medical
devices, is also subject to all of the foregoing regulatory requirements of the
FDA. Among its activities, BMT markets a range of proprietary and OEM products,
most of which have received 510(k) clearance. BMT has made modifications to one
or more of its cleared proprietary devices that BMT believes do not require the
submission of new 510(k) notices. There can be no assurance, however, that the
FDA would agree with any of BMT's determinations not to submit a new 510(k)
notice for any of the changes made to BMT's 


                                       13
<PAGE>   14

devices. If the FDA requires BMT to submit a new 510(k) notice for any device
modification, BMT may be prohibited from marketing the modified device until the
510(k) notice is cleared by the FDA.

         In January 1998, BMT received a Warning Letter from the FDA following
BMT's response to the FDA regarding certain deficiencies noted during an on-site
FDA inspection in December 1997. BMT management addressed the FDA's concerns
noted in the Warning Letter in both written and verbal communication in January
and February 1998. In March 1998, BMT received a letter in which the FDA
indicated that BMT's responses and planned actions to address the FDA's concerns
were acceptable and that the FDA was planning a follow-up inspection in 1998.
There can be no assurance that the FDA will determine that BMT has fully
addressed the FDA's concerns. Nor can there be any assurance that the FDA will
not issue additional Warning Letters in the future. Failure by BMT to adequately
address the FDA's concerns could cause the FDA to take additional actions that
might cause disruptions in BMT's operations. These disruptions could have a
material, adverse effect on the Company's business, financial condition and
results of operations.

Lack of Marketing and Sales Experience

         To date, the Company has not sold any On-Command product. The Company
is currently analyzing various sales and marketing methods it intends to use to
market the On-Command product in the United States if and when necessary
regulatory approvals are obtained. The Company currently employs a small number
of marketing and no sales employees for the On-Command product. In addition, the
Company intends to market the On-Command product internationally through
independent foreign distribution arrangements, none of which are currently in
place. There can be no assurance that the Company can attract and retain its own
qualified marketing and sales personnel, establish acceptable international
arrangements or otherwise design and implement an effective marketing and sales
strategy for the On-Command product.

Manufacturing Risks

         Through BMT, the Company has only manufactured the On-Command product
in limited quantities for clinical testing purposes to date. Although BMT has
extensive experience in manufacturing custom silicone products, including
urological products, the Company does not have experience in manufacturing the
On-Command product in commercial quantities. As the Company begins to launch its
On-Command product into various markets, the Company may encounter difficulties,
delays and significant expenses in scaling up production of the On-Command
product, including potential problems involving production yields, quality
control, component supply and shortages of qualified personnel. The Company may
also experience higher than expected manufacturing costs that could prevent the
Company from selling the On-Command product at a commercially reasonable price.
There can be no assurance that difficulties or unfavorable costs will not be
encountered in mass-production of the On-Command product and, in such an event,
these difficulties or costs could result in a material adverse effect on the
Company's business, financial condition and results of operations.

Reliance On Patents and Protection of Proprietary Technology

         The Company's ability to compete effectively will depend, in part, on
its ability to develop and maintain proprietary aspects of its technology. There
can be no assurance that the Company's issued patents, or any patents which may
be issued as a result of the Company's applications, will offer any degree of
protection. Legal standards related to the enforceability, scope and validity of
patents are in transition and are subject to uncertainty due to broad judicial
discretion and evolving case law. Moreover, there can be no assurance that any
of the Company's patents or patent applications will not be challenged,
invalidated or circumvented in the future. In addition, there can be no
assurance that competitors, many of which have substantial resources and have
made significant investments in competing technologies, will not seek to apply
for and obtain patents that may prevent, limit or interfere with the Company's
ability to make, use or sell its products either in the United States or
internationally.


                                       14
<PAGE>   15

         In addition to patents, the Company relies on trade secrets and
proprietary know-how, which it seeks to protect, in part, through proprietary
information agreements with certain of its employees, consultants and other
parties. The Company's proprietary information agreements with employees and
consultants contain standard confidentiality provisions and, in certain
instances, require such individuals to assign to the Company without additional
consideration any inventions conceived or reduced to practice by them while
employed or retained by the Company, subject to customary exceptions. There can
be no assurance that proprietary information agreements with employees,
consultants and others will not be breached, that the Company would have
adequate remedies for any breach, or that the Company's trade secrets will not
otherwise become known to or independently developed by competitors. The Company
also seeks to protect its trademarks through registration. There can be no
assurance, however, that registration of such marks will provide any significant
protection.

Intense Competition and Technological Advances

         Competition in the market for treatment and management of urological
disorders is intense and is expected to increase. The Company believes its
principal competition will come from existing incontinence management
modalities, such as adult diapers and absorbents. The Company also expects to
face significant competition from other domestic and international companies
that are developing similar and other products and technologies for the
management of incontinence. Most of the Company's competitors and potential
competitors have significantly greater financial, technical, research,
manufacturing, marketing, sales, distribution and other resources than the
Company. There can be no assurance that the Company's competitors will not
succeed in developing or marketing technologies and products that are more
effective or commercially attractive than any which may be offered by the
Company, or that such competitors will not succeed in obtaining regulatory
approval, introducing or commercializing any such products prior to the Company.
Such developments could have a material adverse effect on the Company's
business, financial condition and results of operations.

Uncertainty Relating to Third-Party Reimbursement

         In the United States and in foreign countries, third-party
reimbursement is generally available for medical devices such as intermittent,
Foley, external and suprapubic catheters for the management of urinary outflow
dysfunction, including incontinence and retention. Diapers and absorbents
generally do not receive third-party reimbursement and are paid for by the
patient. The Company believes, based on the availability of third-party
reimbursement for certain other medical devices, that the On-Command product
will likely be eligible for coverage by third-party reimbursement programs.
There can be no assurance, however, that such reimbursement will be available
for the On-Command product or, if available, that it will be sufficient to cover
the cost of the product. If third-party reimbursement is unavailable, consumers
will have to pay for the On-Command product themselves, resulting in greater
relative out-of-pocket costs for the device as compared to surgical procedures
and other management options for which third-party reimbursement is available.
The Company does not expect that third-party reimbursement will be available, if
at all, unless and until FDA and foreign regulatory approval is received. After
such time, if ever, as applicable regulatory approval is received, third-party
reimbursement for the On-Command product will be dependent upon decisions by the
Health Care Financing Administration (and its associates) for Medicare in the
United States and similar authorities abroad, as well as by private insurers and
other payers.

         Changes in the availability of third-party reimbursement for the
On-Command product, for products of the Company's competitors or for surgical
procedures may affect the pricing of the On-Command product or the relative cost
to the patient. Regardless of the type of reimbursement system, the Company
believes that physician advocacy of the On-Command product will be required to
obtain reimbursement. There can be no assurance that reimbursement for the
Company's products will be available in the United States or in international
markets under either governmental or private reimbursement systems, or that
physicians will support the On-Command product. Failure to obtain such


                                       15
<PAGE>   16

reimbursement may have a material adverse effect on the Company's business,
financial condition and results of operations.

Future Capital Needs; Uncertainty of Additional Funding

         The Company's capital requirements depend on numerous factors,
including the extent to which the On-Command product and other products gain
market acceptance, actions relating to regulatory and reimbursement matters,
progress of clinical trials, the effect of competitive products, the cost and
effect of future marketing programs, the resources the Company devotes to
manufacturing and developing its products, the success of non-urological
operations, general economic conditions and various other factors. The timing
and amount of such capital requirements cannot adequately be predicted.
Consequently, although the Company believes existing cash balances and cash
anticipated to be generated from BMT operations will provide adequate funding
for its capital requirements through calendar year 1998, there can be no
assurance that the Company will not require additional funding or that such
additional funding, if needed, will be available on terms satisfactory to the
Company, if at all. Any additional equity financing may be dilutive to
stockholders, and debt financing, if available, may involve significant
restrictive covenants. Failure to raise capital when needed could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Liquidity and Capital Resources".

Intellectual Property Litigation Risks

         The medical device industry has been characterized by extensive
litigation regarding patents and other intellectual property rights, and
companies in the medical device industry have employed intellectual property
litigation to gain a competitive advantage. The Company is aware of patents held
by other participants in the urological disorder management market, and there
can be no assurance that the Company will not in the future become subject to
patent infringement claims and litigation or interference proceedings before the
United States Patent and Trademark Office ("PTO"). The defense and prosecution
of intellectual property suits, PTO interference proceedings and related legal
and administrative proceedings are both costly and time consuming. Litigation
may be necessary to enforce patents issued to the Company. to protect trade
secrets or knowhow owned by the Company or to determine the enforceability,
scope and validity of the proprietary rights of others.

         Any litigation or interference proceedings would result in substantial
expense to the Company and significant diversion of attention by the Company's
technical and management personnel. An adverse determination in litigation or
interference proceedings to which the Company may become a party could subject
the Company to significant liabilities to third parties or require the Company
to seek licenses from third-parties. Although patent and intellectual property
disputes in the medical device area have often been settled through licensing or
similar arrangements, costs associated with such arrangements may be substantial
and could include ongoing royalties. Furthermore, there can be no assurance that
necessary licenses would be available to the Company on satisfactory terms or at
all. Accordingly, an adverse determination in a judicial or administrative
proceeding or failure to obtain necessary licenses could prevent the Company
from manufacturing and selling its products, which would have a material adverse
effect on the Company's business, financial condition and results of operations.

International Sales Risks

         The Company plans to sell the On-Command product and other products
both in the United States and in foreign markets. Any international sales are
expected to be made through independent foreign distributors and involve a
number of inherent risks. Consequently, there can be no assurance that the
Company will be able to achieve significant sales of the On-Command product or
other products in any foreign market. International sales may be adversely
affected by the imposition of government controls, export license requirements,
political instability, trade restrictions, changes in tariffs, distributor
difficulties, communications problems, fluctuations in foreign currency rates,
foreign competition and 


                                       16
<PAGE>   17

other factors. Any one or more of these factors could limit the Company's
international sales and have a material adverse effect on the Company's
business, financial condition and results of operations.

Product Liability Risk; Product Recall Risk

         The manufacture and sale of medical devices entails significant product
liability and recall risks. Product liability may exist despite FDA approval and
future court decisions may also affect the Company's risk of product liability.
Although the Company maintains product liability insurance with respect to its
products, a successful product liability claim or series of claims brought
against the Company which are in excess of the Company's insurance coverage
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, there can be no assurance that
product recalls, which could have a material adverse effect on the Company's
business, financial condition and results of operations, will not occur.

Dependence Upon Key Suppliers

         Through BMT, the Company purchases certain of the components used to
manufacture the On-Command product from several single source suppliers with
whom the Company has no long-term agreements. Any interruptions or delays
associated with any component shortages, particularly as the Company scales up
its manufacturing activities in support of commercial sales of the On-Command
product, could have a material adverse effect on the Company's business,
financial condition and results of operations.

Uncertainty of BMT Operations

         Although the business operations of BMT have continued since 1971,
there can be no assurance that BMT's revenues, cash flow or current
profitability and growth rate will continue in the future. Approximately 45% and
37% of BMT's net sales during 1997 and the three months ended March 31, 1998,
respectively, were derived from its manufacture of OEM medical device products.
BMT maintains no long-term OEM customer contracts and, during 1997 and the three
months ended March 31, 1998, BMT derived approximately 24% and 15%,
respectively, of its net sales from one such customer. Although BMT continues to
develop its OEM business, there can be no assurance that BMT will be successful
in its efforts or that its OEM customers will continue to use BMT as a
manufacturing resource. Furthermore, BMT is subject to general business risks
associated with operations of its size and, in particular, to the same risks
faced by other companies that manufacture and market medical device products.
Because virtually all of BMT's proprietary and OEM products incorporate silicone
components, any cost increase or other negative development associated with this
material could adversely affect its business, financial condition and results of
operations. BMT has faced two labor union election contests in the past seven
years and may face additional elections in the future. In the event BMT becomes
subject to a collective bargaining agreement, it may experience increased labor
and related costs that could have a material adverse effect on the Company's
business, financial condition and results of operations.

Environmental Risks

         BMT utilizes many raw materials in the manufacturing process that are
subject to various environmental laws and regulations. Proper disposal of waste
including metals and chemicals used in the manufacturing process is a major
consideration for medical device manufacturers. In the event of a violation of
environmental laws, the Company could be held liable for damages and for the
costs of remedial actions and could also be subject to revocation of permits
necessary to conduct its business. Any such revocations could require BMT to
cease or limit production at its facilities, which could have a material adverse
effect on the Company's business, financial condition and results of operations.
BMT is also subject to environmental laws relating to the storage, use and
disposal of chemicals, solid waste and other hazardous materials, as well as air
quality regulations. Changes or restrictions on discharge limits, emissions
levels, or material storage or handling might require a high level of unplanned
capital investment 


                                       17
<PAGE>   18

and/or subsequent relocation to another location. There can be no assurance that
BMT will be able to comply with the discharge levels mandated or that the costs
of complying with such regulations will not require additional capital expenses.
Furthermore, there can be no assurance that compliance with such regulations
will not have a material adverse effect on the Company's business, financial
condition and results of operations.

Possible Volatility of Stock Price

         The stock market has from time to time experienced significant price
and volume fluctuations that are unrelated to the operating performance of
particular companies. These broad market fluctuations may adversely affect the
market price of the Company's Common Stock. In addition, the market price of the
Common Stock has been volatile. Factors such as fluctuations in the Company's
operating results, announcements of technological innovations or new products by
the Company or its competitors, FDA and international regulatory actions,
actions with respect to reimbursement matters, developments with respect to
patents or proprietary rights, public concern as to the safety of products
developed by the Company or others, changes in health care policy in the United
States and internationally, changes in stock market analyst recommendations
regarding the Company, other medical device companies or the medical device
industry generally and general market conditions may have a significant effect
on the market price of the Common Stock. In addition, it is likely that during
future quarterly periods, the Company's results of operations may fluctuate
significantly or may fail to meet the expectations of stock market analysts and
investors and, in such event, the Company's stock price could be materially
adversely affected. In the past, securities class action litigation has been
initiated following periods of volatility in the market price of a company's
securities. Such litigation, if brought against the Company, could result in
substantial costs and a diversion of management's attention and resources, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.


                                       18
<PAGE>   19

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

         Not applicable.

Item 2 - Changes in Securities and Use of Proceeds

         The following information is provided as an amendment to the initial
report on Form SR, "Report of Sales of Securities and Use of Proceeds
Therefrom", regarding the use of proceeds from the sale of common stock under
the Company's Registration Statement on Form S-1 (SEC file number 333-07277),
which was declared effective on October 24, 1996 (CUSIP number 917285). The
information provided is for the period from October 24, 1996 through March 31,
1998. All amounts in the table below represent actual payments, unless otherwise
stated.

<TABLE>
<CAPTION>
Use of Net Proceeds                           Directors/Officers(1)   Others(3)          Total
----------------------------------            ---------------------  ----------        ----------
<S>                                           <C>                    <C>               <C>
Construction of plant, building,
     and facilities                                        --                --                --
Purchases and installation of
     machinery and equipment                               --           193,842           193,842
Purchases of real estate                                   --                --                --
Acquisition of other business                       8,476,330         1,523,670        10,000,000
Repayment of indebtedness                             152,219           750,331           902,550
Working capital/general corporate
     purposes                                         683,001         2,180,013         2,863,014
Other purposes:
   - Clinical trials and
research and development                              101,121         1,102,023         1,203,144
   - Sales and marketing activities                    98,476           429,473           527,949
   - Severance payments                               277,802(2)         39,829           317,631
                                                   ----------        ----------        ----------
                                                    9,788,949         6,219,181        16,008,130
Temporary investment:
   - Cash and cash equivalents                             --         1,795,220         1,795,220
                                                   ----------        ----------        ----------
                                                    9,788,949         8,014,401        17,803,350
                                                   ==========        ==========        ==========
</TABLE>

(1)   Direct or indirect payments to directors, officers, general partners of
      the Company or their associates; to persons owning ten percent or more of
      any class of equity securities of the Company; and to affiliates of the
      Company.

(2)   Direct or indirect payments to former officers of the Company who resigned
      in 1997.

(3)   Direct or indirect payments to others.

         There is no material change in the use of net proceeds as described in
the prospectus, except that the Company has used approximately $2.9 million for
working capital and general corporate purposes.

Item 3 - Defaults upon Senior Securities

         Not applicable.

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

         Not applicable.

Item 5 - Other Information

         Not applicable.


                                       19
<PAGE>   20

Item 6 - Exhibits and Reports on Form 8-K

          (a)      Exhibits:

<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER     EXHIBIT
    -------    -------
    <S>        <C>
    10.4*      Employment Agreement dated January 2, 1998 between the Company
               and Terry E. Spraker, Ph.D.

    10.5*      Employment Agreement dated January 2, 1998 between the Company
               and Jeffrey L. Kaiser

    10.8*      Employment Agreement dated January 2, 1998 between the Company
               and Keith W.L. Ward

    10.10*     Employment Agreement dated February 18, 1998 between the Company
               and Alan L. Marquardt

    10.15      Note and Security Agreement between the Company and Richard C.
               Davis, Jr., M.D. dated January 9, 1998 (the note was repaid on
               March 30, 1998.)

    27.1       Financial Data Schedule
</TABLE>

----------

* Management contract or compensatory plan arrangement

         (b)      Reports on Form 8-K:

                  The Company did not file any reports on Form 8-K during the
                  three months ended March 31, 1998.


                                       20
<PAGE>   21
                                   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.

                                       UROQUEST MEDICAL CORPORATION


Date: May 14, 1998                     /s/ Terry E. Spraker, Ph.D.
                                       -----------------------------------------
                                       Terry E. Spraker, Ph.D.
                                       President and Chief Executive Officer


Date: May 14, 1998                     /s/ Jeffrey L. Kaiser
                                       -----------------------------------------
                                       Jeffrey L. Kaiser
                                       Vice President, Chief Financial Officer,
                                       Treasurer and Secretary
                                       (Principal Financial Officer)


                                       21
<PAGE>   22
                               INDEX TO EXHIBITS

                                  Description

<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER
    -------
    <S>        <C>
    10.4*      Employment Agreement dated January 2, 1998 between the Company
               and Terry E. Spraker, Ph.D.

    10.5*      Employment Agreement dated January 2, 1998 between the Company
               and Jeffrey L. Kaiser

    10.8*      Employment Agreement dated January 2, 1998 between the Company
               and Keith W.L. Ward

    10.10*     Employment Agreement dated February 18, 1998 between the Company
               and Alan L. Marquardt

    10.15      Note and Security Agreement between the Company and Richard C.
               Davis, Jr., M.D. dated January 9, 1998 (the note was repaid on
               March 30, 1998.)

    27.1       Financial Data Schedule
</TABLE>

----------

* Management contract or compensatory plan arrangement



                                       22